Turkey is expected to respond after Russia banned imports from Turkey. Ukraine’s minister of agrarian policy has already hastened to declare that Ukraine can fully replace Russian products on the Turkish market. What is the situation regarding the possibility of increasing exports of steel, coal, and iron ore from Ukraine to Turkey?
Out of the products of the mining and metals industry, Russia exports coal, iron ore, steel, and cast iron to Turkey. In addition to coal, Ukrainian products can successfully replace all the other products of the mining and metals industry.
Iron-ore pellets are exported. Exports totaled just over 2 million tons in 2014 and 1.4 million tons in the first 10 months of 2015. The Ukrainian companies Ferrexpo and Metinvest may seek to export these quantities. Since these companies currently export iron-ore pellets to Turkey (Ferrexpo exported 0.6 million tons of iron-ore pellets to Turkey in the first 10 months of 2015 and Metinvest exported 0.34 million tons), there is no need to establish new trade links.
Ukrainian products can replace practically all the exports of ferrous metals from Russia to Turkey. Most of the ferrous metals exported from Russia to Turkey are flat products – slabs and hot- and cold-rolled coils and sheets. In addition to flat-rolled products, Turkey traditionally imports billets. These products account for 88% of exports. Billets account for about a quarter of the total exports and flat products account for more than 60%.
In Ukraine, the Illich iron & steel works, Azovstal, and Zaporizhstal (Metinvest) produce flat-rolled steel and slabs. Slabs are also produced at the Alchevsk iron & steel works (ISD). These companies can increase exports to Turkey by 3-3.5 million tons a year combined. Apart from Zaporizhstal and the Illich iron & steel works, all other Ukrainian steel producers produce and export billets. Therefore, if Russian exports leave the market, Ukrainian steel producers will be able to occupy the vacant niche (1.5 million tons).
Turkey is one of the key markets for Ukrainian steel producers, and it ranks first in terms of exports of ferrous metals from Ukraine. Export of steel products from Ukraine to Turkey totaled 2.4 million tons in the first 10 months of 2015, accounting for 15% of all Ukrainian exports. Practically all Ukrainian steel producers have permanent trade links with the Turkish consumers.