Covid-19 causes Ukrainian steel consumption to fall, prices to rise

Covid-19 causes Ukrainian steel consumption to fall, prices to rise

What are the trends in consumption of hot-rolled sheets and fittings in construction and mechanical engineering?

We estimate that compared to last year, the market for hot-rolled sheets and rebar, decreased by about 5-10%. Mostly – due to the Covid-19 pandemic. Many companies have cut back on their production programs and have frozen their current projects.

Have the prices for hot-rolled sheets and fittings changed over the past 2 months?

Over the past few months, prices for hot-rolled sheets and rebar have shown significant growth, which is possible to associate with an increase of foreign markets prices. In our opinion, they have reached record levels.

Are there any changes in consumption and prices comparing to the past year?

Consumption of rolled metal products has significantly decreased. The main reason, as we have already mentioned, is the Covid-19 pandemic. In comparison with prices of the same period last year, the current price level for some items increased up to 40%. 4. What influences demand now – budgets, end of the year, price, deficit or excess?

What influences demand now?

The main factors affecting the current demand are seasonality (in December and January there is always a reduced demand for rolled metal) and the price. Some buyers still cannot accept the current price level, due to previously approved budgets, all of above leads to a decrease in purchases volume.

How do Ukrainian consumers react to the price now?

Due to the sharp rise in prices and the forecast for further growth, many buyers purchased significant quantities of rolled products in early December, others – decided to postpone the purchase until the end of the New Year holidays in the hope that the cost of rolled metal will reduce. Systemic developers did not suspend the purchasing company, small builders dependent on investors – slowed down the pace of construction and suspended their purchases.

How does the growth of exports from manufacturing plants affect the price?

The situation with shipments, after a constant deficit in the summer (due to their export orientation), has stabilized, and cases when some positions “fall out” of availability are quite rare. Domestic market prices are formed on the basis of export parity (FOB Black Sea basis), quotes show only growth, which leads to increase in prices in the domestic market.

The answers are given by Sergey Kovalenko – the commercial director of the Vartis.

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