OREANDA-NEWS. January 14, 2010. According to the total production plans of Ukrainian steel producers for 2010, the output of rolled metal is to increase by 30% to 36.2mntones, that of crude steel is to go up 28.4% to 38.2mntones, and pig iron output is to add 27.2% to reach 32.66mntones. These numbers were disclosed voiced by Mr. Kharakhulakh , general director of the Ukrainian Association of Steel and Iron Ore producing enterprises “Metallurgprom” during the membership meeting in Dnipropetrovsk. He also expressed doubts about the feasibility of these plans, first of all because of the coke deficit.  The Ukrainian mines will not be able to increase the coke coal extraction by a sufficient amount. At the same time, imports from Russia will be constrained because of a growth in demand from the local producers.  The second problem will be availability of the market for Ukrainian steel products.

Millennium Capital completely agrees with Mr. Kharakhulakh’s doubts. Millennium Capital wrote about the coke deficit in our previous news and analytical notes. But the increased competition between Ukrainian and foreign producers (first of all those from Russia, China, and India) will be the main challenge for Ukrainian steel producers in 2010. Moreover, even if the plans are fulfilled only by one half as compared to the stated level, this fact will be a great success for Ukrainian steel makers, because forecasts for the Ukrainian steel industry have been a lot more modest, with around a 4-7% output growth.