OREANDA-NEWS. May 13, 2010. The negative financial results of Ukrainian steel makers have increased by 5% y/y to UAH 2.7bn in 1Q2010, despite the sales that have grown by 23% over the same period.  Their production profitability amounted to -8.6%. These data were announced at the Balance Meeting of the representatives of the Ukrainian metal and mining companies in Dnipropetrovsk this Wednesday. The meeting made note of the steel products demand decline that has been in evidence since the middle of April and has continued to be felt in May. Another point made during the meeting was the shortage of the working capital of the companies, one of the factors at play in the situation being the Government’s arrears in VAT refunds: its total debt reached UAH 2.850bn on April 1st.

Millennium Capital: the negative profitability of the Ukrainian steel makers’ operations has been caused primarily by the steeper pace of price growth for the raw materials that the dynamics of the finished goods price hikes. The current demand for steel goods is not strong enough to date to swallow the raw materials price growth. As Millennium Capital had predicted earlier, this fact has led to a decline in demand and to corrections in the production plans of the companies. The steel makers output is likely to decline by 4% in June m/m.