The Metinvest mining and metallurgical holding owned by Rinat Akhmetov and Vadym Novynskyi is gradually leaving the Russian market and diversifying metal exports to other regions, according to reports by the Insider publication.
According to the publication, the market of CIS countries, especially Russia, is becoming increasingly closed to Ukrainian steel producers because Russia, like Ukraine, is a major exporter of metals.
Metinvest increased the sale of steel products in European countries by 28% to 2.424 million tons in the period of January-June. Exports to the Middle East and North Africa (MENA) increased by 44% to 1.826 million tons while exports to CIS countries reduced by 10% to 1.072 million tons. In monetary terms, exports to CIS countries fell even more - by 27%. In terms of revenue from sale of Metinvest’s metal products, countries in the Middle East and North Africa have overtaken CIS countries for the first time in the past five years. According to estimates by the publication, sales in the MENA region in monetary terms could be 25% more than sales in the CIS by the end of the year if the trend that was registered in the first half of the current year continues.
At a time of uncertainty and increasing competition in the global market, Russian manufacturers, such as the Russian Steel trade association, are demanding that the Russian government impose restrictions on imports. In addition, Russian steel producers are proposing legislation mandating the use of Russian rolled metal by companies participating in the implementation of government programs in Russia.
Russian steel producers have already achieved some success. On November 20, the Eurasian Economic Commission - the regulatory body of the Customs Union of the Common Economic Area - announced the commencement of an anti-dumping investigation into importation of hot-rolled bars originating from Ukraine. The main producers of these products in Ukraine are ArcelorMittal Kryvyi and Metinvest.
"We expect the situation on the world market of metal and iron-ore products to remain complicated in 2014," said Metinvest’s General Director Ihor Syryi, commenting on the results of the company’s operations in the first half of 2013. The profits of its parent holding company Metinvest BV increased by 31% to USD 443 million and its revenues reduced by 3% to USD 6.515 billion in the first half of 2013, compared with the first half of 2012.
The failure to extend the quotas for duty-free import of Ukrainian pipe products into Russia to the second half of 2013 was one of the main reasons for a technical loan default by Viktor Pinchuk’s Interpipe pipe and wheel company. The company failed to make the latest payment of USD 106 million scheduled for November 2013 to its creditors and has begun negotiations on debt restructuring. Judging from statements by the senior management of Interpipe, the company has no hope of regaining the quota for exports to Russia, and it intends to increase sales in South America, the Middle East, and Europe.
