IUD to increase concentrate import in 2008

Industrial Union of Donbass (IUD) plans to increase purchases of Brazilian concentrate from current 55,000tpm to 250,000tpm in 2008. The material will be supplied in accordance with a three-year contract with an annual price review.

The increase of iron ore import (concentrate in particular) by Ukrainian producers without own iron ore producing facilities has resulted from continuing consolidation of iron ore suppliers in Ukraine. After a merger of Metinvest Holding and Smart Group (Inguletskiy, and, partly, Yuzhny GOKs), the joint company will control 75% of non-integrated concentrate market and 60% of pellet market. Besides, the consolidation will be intensified by the acquisition of KGRK (15% of domestic sintering ore market) by Metinvest Holding.

The growth of iron ore purchases by IUD is attributed to the planned for 2008 growth of pig iron output. Alchevsk and Dzerzhinsky Plant together will boost pig iron output by 1.6mtpy to 8.4mtpy in 2008. Thus, monthly concentrate consumption by IUD may grow by 150,000 tonnes (24%) to 780,000 tonnes by the end of 2008, according to Metal Expert.

Apart from Brazilian material, additional volumes of Russian concentrate may be supplied to IUD to meet the demand of Alchevsk and Dzerzhinsky Plant. Today, monthly shipments from Kovdor GOK make around 50,000 tonnes, under the annual contract. IUD is going to start purchasing concentrate from Stoilensky GOK which, according to Metal Expert estimations, may result in cessation of concentrate purchases from Ukrainian spot market, particularly from Inguletskiy GOK.

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