It is reported that the increase of steel production in Ukraine during few last months has led to coke deficit.
The Ukrainian Coke Association estimates the deficit at 1.4 million tones till the end of the year. The coke coal extraction decreased by 8.6%YoY to 15.19mn tones. It will take half a year for the coal industry to restore last year extraction volumes because of last year’s partly conservation of company’s capacities due to decrease in demand.
According to Millennium capital analyst “We see this news as NEGATIVE. Coke producers are forced to buy imported coke coal which is more expensive then Ukrainian one. Therewith, Ukrainian coal will be sold through a number of auctions thus leading to increase in coal prices. Coal price tendency leaves ahead steel prices which eventually will decrease the steel producer profitability. The companies from Metinvest Holding are in the better situation because of presence in the Holding structure of domestic coal mines as well as coal producers from abroad what allow buying coal at transfer prices.” (Millennium capital)
