Iron ore market looks good for Ukrainian exporters

In March-April of the current year, the steel market in the CIS and in the world stabilized a little, leading to stabilization in the world consumption of iron ore, which is currently at high levels. This in turn led to an increase in iron ore prices. This rise in the world iron ore demand was particularly due to increasing steel production in the East and Central Europe region. The rise in pig iron output in the region started to be seen at the end of the fourth quarter of 2005, which led to an increase in iron ore exports' volumes from the CIS states in general and from Ukraine in particular. Another factor affected the world prices of iron ore is the rise in demand of iron ore in China. Thus, the export of pellets from the CIS to China increased dramatically during 2005: from Ukraine by 867,000 tons to 938,000 tons and from Russia by 3.552 million tons to 4.486 million tons. This sharp rise in the export volumes from the CIS to China affected first of all domestic CIS consumers and consumers in the East Europe. In March-April of 2006, China's demand for imported iron ore started to rise again mainly because of rise in domestic production of pig iron and establishment of favorable conditions in the market for finished steel products. In the process of lowering of the domestic inventories of iron ore, Chinese consumers started to buy more and more of the materials in the spot market causing the spot market prices to move upward. Those tendencies in China's market for iron ore affected much the Ukrainian domestic market. Generally, the export of iron ore from Ukraine in April 2006 was characterized by slow upward tendencies, however it has been done in expense of supplies to the domestic market, where the delivery volumes have been decreased in the first quarter of 2006. In general, the world market for iron ore gives good perspectives for increase in iron ore exports from Ukraine. Another factor, favoring the exports of iron ore from Ukraine is the industrial boom in India. India was, until recently, the biggest supplier of iron ore in the world market. However, now the country uses most of its iron ore domestically, forcing the importers of iron ore to search for the other suppliers. In this condition, more and more attractive becomes the suppliers from South Africa, China, Russia, Kazakhstan and especially Ukraine, where the domestic steel production decreasing due to high prices of energy and other problems of the domestic metallurgical industry.