Ukrainian companies engaged in transactions with ferrous scrap metal will continue reducing the production of scrap metal in 2013 by 5%, to 5.7 million tonnes, while its exports will be down by 18.3%, to 300,000 tonnes, the head of the marketing department at the state-run Ukrpromzovnishekspertyza, Yuriy Dobrovolsky, has said.
According to his data, in 2012, scrap metal production in Ukraine fell to the minimum indicator over the past 15 years, at around six million tonnes.
“The reduction in scrap metal production is not unexpected, as the average annual purchase price in 2012 fell by almost $53 compared to 2011, to $318. In our country, taking into account the high share of individuals involved in the production of scrap metal, the purchase prices of scrap metal is the key factor of activity of scrap metal producers. In addition, the law payment discipline of mills to suppliers also affected the situation, as suppliers permanently faced a lack of working capital,” Dobrovolsky said.
The expert referred to the annual study entitled “Ferrous scrap metal market in the world and in Ukraine: modern trends and forecast for 2013” conducted by analysts from the Delphica project, under which it is anticipate that the stable shortage of scrap metal will be seen – around 400,000 tonnes on the domestic market and the fall in exports of scrap metal to 300,000 tonnes will be linked to the artificial retaining of export barriers.
The expert noted that in total in 2012 only 367,000 tonnes of scrap metal was exported from the country – the minimum volume over the period of Ukraine’s independence. The major part of the volume was exported under contracts of 2011.
“At present, the market is being redistributed. It’s obvious that metallurgical lobbyists will win, as in their interests the scrap metal flows are returned back to the country,” Dobrovolsky said, adding that in 2012 over one hundred companies had to leave the market in the said conditions.
Earlier experts of Ukrpromzovnishekspertyza projected that in coming three years scrap metal shortage in Ukraine will more than double, from 537,000 tonnes in 2012 to 1.1 million tonnes in 2015, while by 2020 it will reach 3.4 million tonnes. In several years Ukraine will become an importer of scrap metal instead of an exporter.
According to the forecast, scrap metal production on the domestic market will grow very slowly and will reach the largest volumes in 2018 – 5.8 million tonnes. The total need in scrap metal will expand to over nine million tonnes in 2020, which is linked to a rise in steel smelting in Ukraine.
Ukrpromzovnishekspertyza was founded in 1993. Its core business is strategic management, information and analytical projects, drawing up of business strategies, examinations and business assessment.
