It is reported that the improving situation in the world steel market and the stabilization of companies’ profits have allowed Ukrainian steelmakers to restart their investments projects, which were initiated before the crisis but postponed in late 2008. Meanwhile, the market situation has forced Ukrainian steelmakers to switch their investment priorities from the increase of output towards improvement of production efficiency.
Metallurgprom said in April to May the Ukrainian producers would proceed with projects for the modernization of their production facilities. “The Ukrainian steelmakers have no other alternatives. The lack of modernization will lead in the medium term to the decrease of competitiveness and loss of sales markets.”
Metallurgprom said, Ukrainian steelmakers’ profitability per one metric ton of steel produced amounted to 3% to 5% while the rate for their Russian counterparts was 10% to 12%, and that of European producers stood at about 25%.
Mr. Alexey Pertin, CEO of Smart Holding, said “The Ukrainian mining and steelmaking sector has several competitive advantages over other regions, but in order to improve its efficiency about $10 billion to $15 billion must be invested in the modernization of companies.”
According to the deputy chairman of the Ukrainian flat steel producer Mariupol Ilyich Iron and Steel Works, during the next two to three years the main goal of domestic producers will be the reduction of production costs, mainly through the switch from the use of natural gas, and the securing of cheaper coal by investing in the expansion of port capacities, which, according to the investment company Troika Dialog will, allow a reduction of 18% to 20% in the coal price in the domestic market, and will cut the production cost by 10% to 12%.
In 2010 the main investment programs of the Ukrainian steelmakers will be directed towards the construction of pulverized coal injection plants, of continuous billet casters, of power plants which operate on blast furnace or coke gas.
The main large-scale projects announced since the beginning of the current year and which are planned to be finalized in the next three to five years are the construction of oxygen-converter shops to replace the existing open-hearth shops at Zaporizhstal and Ilyich, the installation of a new continuous billet caster and a new ladle furnace at ArcelorMittal Kriviy Rih, the construction of power plants at Alchevsk, Dneprovsky Iron and Steel Works named after F. Dzerzhinsky, and Azovstal, and the construction of PCI plants at the seven largest Ukrainian steelmakers, including Ilyich and Alchevsk which plan commissioning of their PCI plants in 2010. (SteelOrbis)