OREANDA-NEWS  On 06 October was announced, that Ukrainian steelworks output plunged across the industry by 23% m-o-m in September with all the producers decreasing production. On 9M08 basis the companies with positive growth rate are Alchevsk MP (+30% y-o-y), Enakievo MP (+10%), Azovstal (+4%) and Dnirpospetsstal (+7%). After 9 months the steel industry total output is now 1% below the last year level both in steel and rolled products.

Combination of weak demand, sliding steel prices and fixed cost structure have been a major factor in forcing steelworks to decline output. Steel prices by now have dropped by 50-60% from their peak in July and are now just 10%-15% up YTD. Nevertheless, average 9M08 so far is 70% above the average 9M07 price suggesting steelworks should see their sales growing. Ukrainian steelmakers use the market slowdown for equipment overhaul stopping blast furnaces and steel making units, therefore October is likely to become another weak month.

It is positive that domestic consumption will gradually compensate weak exports market as Ukraine ramps up infrastructure development for EURO 2012 boosting internal demand for steel over the next four years.