It is reported that the steelmaking subsidiaries of the Ukrainian steel producer Industrial Union of Donbass, namely Alchevsk Iron and Steel Works and Dneprovsky Iron and Steel Works named after F. Dzerzhinsky (DMKD), have sharply decreased their steel outputs in late May to early June.
According to Ukrainian association of metal producers Metallurgprom, when its operations are stable Alchevsk average daily pig iron output amounts to 11,000 tons to 12,000 tons. In March up to the first half of May this year the plant was producing about 11,000 tons of pig iron per day, but at the end of May it started to gradually decrease its output, which now stands at the level of about 2,000 tons of pig iron per day. In the third week of May the plant was forced to halt two of its blast furnaces. Meanwhile, DMKD has also decreased its average daily pig iron output from 8,000 tons to 9,000 tons in previous months to 3,000 tons to 5,000 tons.
M.r Alexander Pilipenko, vice president of IUD, said the output decrease was most likely due to lack of orders. He said that “When in mid-April plans to raise the iron ore prices were heard, many traders began to buy cheap steel for fear that steel prices would increase significantly. Thus, they overstocked their warehouses and from May up to now demand for steel products has been low.”
On the other hand, the plants say that the main reason for production cuts is the lack of iron ore. However, Ukrainian Ministry of Industrial Policy stated that currently the country does not face an iron ore shortage and that the main problem is in price agreements for the supply of iron ore. Meanwhile, according to some market sources, the cause of this situation could also be the lack of working capital, which is connected with the country’s VAT refund issue. (Interfax-Ukraine)