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[USPRwire, Fri Jul 12 2013] Ukraine's metal sector will see modest growth over the coming years, with a handful of new projects set to push production growth higher. However, production will not return to its pre-crisis highs as we expect steel prices to remain relatively low by historical standards and global overcapacity to remain. These two factors will disincentivise significant expansions. Indeed, none of the major players in either the aluminium or steel industries have announced substantial investment in Ukraine.
The figures from the start of 2013 have certainly been disappointing. During the first four months of the year Ukraine registered a 2.5% increase in its finished steel production output, to 9.280mn tonnes, a 0.6% fall in its crude steel output to 11.058mn tonnes and a 0.7% rise in its pig iron production to 9.760mn tonnes, according to data issued by Ukraine's Cabinet of Ministers. This does not bode well for the nearterm outlook and for Ukraine's attempts to hit its production targets this year.
Ukraine has the added disadvantage of an overvalued hryvnia, which has made Ukrainian steel exports uncompetitive. Recent currency weakening may not be sufficient to ameliorate the situation. The most recent example of the ongoing decline in Ukrainian steelmaking is the closure in November of Mechel's 1mn tonnes per annum EAF in Donetsk ,due to weak markets and poor export demand. Mechel is trying to sell the loss-making plant to drive down its own debt, but has failed to attract interest.
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