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PrintUkraine's steel sector is in 'critical' shape due to falling demand overseas with urgent measures needed to help the industry weather the crisis, steelmakers said Tuesday.
"Output fell 19% [on the month] in August, but in September the situation was simply critical," Vasyl Kharakhulakh, the head of steelmakers association MetallurgProm, said in a statement.
This development could have an extremely negative impact on Ukraine's economic growth prospects and would immediately increase downward pressure on the hryvnia, the national currency, due to falling steel exports.
Almost 40% of Ukraine's hard currency earnings come from exports of steel and steel products, according to the State Statistics Committee. Ukraine, the world's eighth biggest producer of steel, has been suffering from declining overseas demand for steel as construction activity slows in reaction to the credit squeeze plaguing international markets.
EMERGENCY MEASURES
In reaction to the crisis, Ukraine's steel associations, joined by organizations uniting producers of iron ore, coke, steel products and steel pipes, met Monday to discuss emergency measures needed to revive the industry.
The industry groups decided to appeal to the government to ask for the emergency measures to revive the sector, including setting up a special commission that would draft the measures.
The government had earlier considered some measures to boost the sector, including reducing special surcharge on natural gas price and easing transportation costs to help the steel companies. The measures, however, were never approved and the industry has been seeking stronger action, analysts said.
Ukraine's production of steel rose 4.2% year-on-year to 25.85 million mt in January-July, up from 24.81 million mt produced one year ago, according to the state statistics committee. Ukraine produced 42.83 million mt of crude steel in 2007, up from 40.8 million mt produced in 2006, the committee said. -Platts
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