WHAT WILL BE WITH METALLURGY OF UKRAINE IN 2018 – FORECAST
In 2017, revenues from export of products of the mining and metallurgical complex of Ukraine could grow by 16% to USD 12 billion. Revenues from exports of MMC will grow thanks to exceptionally favorable export conditions, despite the fall in steel production in Ukraine. Квадратная стальная заготовка, металлургия Украины
  This opinion was voiced by the head of the financial analysis section of the corporations of the non-banking sector of the ICU group Alexander Martynenko. In his view, in 2017, steel production in Ukraine will decrease by 11% compared to 2016 to 22 million tons - primarily due to the trade blockade of territories not controlled by the Ukrainian authorities in the Donbass and the loss in the beginning of this year of factories, located in these territories. "Loss of control over Alchevsk Iron and Steel, Enakievo and Donetsk metallurgical plants deprived Ukraine of the contribution of these enterprises to the national volume of production of metallurgical products. In addition, the loss of control over the coke-chemical enterprises in the territory of ORDLO violated the channels of coke supplies to the metal plants located in the controlled territories of Ukraine. The most severe blow was caused by the cessation of coke deliveries from the Alchevsk Coke Plant to the Dneprovsky Iron and Steel (DMK), as a result of which the DMK suspended production of steel at the end of March this year, "Martynenko said. Nevertheless, according to ICU, export prices for Ukrainian steel rose by 30-40% in January-November 2017 compared to the same period last year, which more than compensated for losses from the fall in production and contributed to the growth of foreign exchange earnings in the country. "The main drivers of growth in world metals prices in 2017 were the policy of the Chinese authorities, which carried out intensive lending of steel consumption within the country, reduction of Chinese steelmaking capacities, as well as an increase in speculative operations with metals and iron ore on the Chinese commodity exchanges," Martynenko explained. The expert also noted the reduction of the destabilizing influence of Chinese exports on other key markets for Ukrainian metallurgy, primarily in Europe. In addition, he predicts that by the end of 2017 steel consumption in the European market will grow by 2.5-3%. In general, according to ICU forecasts, the growth of export prices for Ukrainian steel by the end of this year will be 27-30%. Speaking about the prospects for 2018, Martynenko predicts a possible increase in Ukrainian steel production by 5%. One of the main factors is the resumption of production at the DMC in July 2017 as a result of alternative supplies of raw materials to Metkombin set up by Metinvest. However, it is expected that in the next year the prices for steel in the key markets for Ukraine are expected to decline by 5-8% due to weaker metal consumption in China. "In 2018, China's consumption growth will slow down. The authorities of the country demonstrate their readiness not to allow the economy to overheat, and already there is a process of limiting the financing of real estate sectors and infrastructure construction, which are the main consumers of metallurgical products. However, it is expected that Beijing will successfully implement its plans to limit the supply of steel, which should keep prices from a significant decline, "said Martynenko. Among the risks for the export of Ukrainian steel products in 2018 are: - a slowdown in demand for steel in China; - further growth of global production capacities; - increased competition; - the introduction of new protectionist measures in the markets of Europe and the Middle East. The expert ICU considers the most likely scenario to reduce the export earnings of the GMK of Ukraine by 1-4% in 2018, while its total volume will remain close to the level of USD 12 billion.
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