Ukrainian Journal quoted UkrFA, ferroalloy maker association, as saying that Zaporozhye Ferro Alloys Plant, Ukraine No 2 ferroalloy producer, would probably suspend production of silicomanganese this month due to weak demand on world and domestic markets.
The association said the company, which currently operates at 25% of its capacity, has been gradually reducing output of ferroalloys during the past three months due to a seasonal drop in demand, but also due to high production costs.
In July this year the largest Ukrainian ferroalloy producer Nikopol Ferroalloy Plant decreased its production of manganese alloys by 10.74% as compared to June and by 19.3% compared to May to 71,929 tons. Another producer, Stakhanov Ferroalloy Plant, saw its July ferroalloy output fall by 15.7% as compared to June and by 28.35% as compared to May to 11,488 tons.
However, the worst situation is currently seen at Zaporozhye Ferro Alloys Plant, the output of which in July amounted to 11,842 tons, down by 37% as compared to June and down by 65% as compared to May this year. Currently, the plant produces at just a quarter of its production capacity.
In August Zaporozhye Ferr Alloys Plant was forced to halt its silicomanganese production and plans to produce only 11,000 tons of ferroalloys during the month. Meanwhile, Nikopol Ferroalloy Plant and Stakhanov Ferroalloy Plant also plan to cut their production in August to 67,000 tons and 11, 000 tons respectively.
UkrFA said that the main reasons for the current situation facing domestic producers are the complicated state of the world ferroalloy market, the seasonal decline in consumption, high production costs and the high volume of ferroalloy imports in Ukraine.
The ferroalloy producers noted that, in the current year as compared to the previous year, the cost of electricity has increased from $46 to $51 per 1,000 kilowatt-hours, while coke prices have gone up from $97 to $282 per dry metric ton.
Among other negative factors, UkrFA noted the Ukrainian government’s abolition of preferential treatment for domestic mining and metallurgical companies, the increase in railway transportation tariffs, and non-payment of VAT refunds. (Ukrainian Journal)
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