Steel Industry In Ukraine

The Steel Industry in Ukraine April 2008

STEEL INDUSTRY IN UKRAINE AGENDA

Steel demand volume

Flat product demand

Steel tube demand

Capacity expansion plans

More CIS steel information

Opportunities …

STEEL DEMAND VOLUME

Ukrainian steel market in 2007 amounted to ~8.0mt demand

Flat : long : tube mix was 56:33:11

Ukraine crude steel production was ~43mt [around 3.2% of world output]

Ukraine in 2007 was world’s 3 rd largest steel exporter [~30mt], after China [66mt] and Japan [36mt] but ahead of Russia [29mt]†

Source: MCI assessments. Figures are for finished steel. 2007 steel consumption in Ukraine † : Finished and semi-finished steel products [source: IISI] 8.04 Total 0.89 Tube 2.67 Long 4.48 Flat mt Product

FLAT PRODUCT DEMAND † Figures are Ukrainian finished steel demand estimates for 2007. Source: MCI assessments. Source: MCI assessments. † : For corresponding Ukrainian or other CIS steel long product figures, please contact MCI. Note the very marked export orientation Coated ratio at 15% of flat is very low – ratio is ~44% in EU 4.48 Demand 9.29 Export 1.19 Import 12.58 Production mt 2007 data 4.48 Total 0.67 Coated 0.52 Cold rolled 1.70 Hot rolled 1.59 Plate mt Product

STEEL TUBE DEMAND Figures are MCI estimates. LDP denotes large diameter pipe; SDP and MDP are small and medium diameters. Source: MCI assessments. LDP demand structure, 2007 Primarily Khartyzsk [MetInvest Holding] but also Novomoskovsk [Interpipe]† † : Both plants produce longitudinal weld rather than spiral weld large diameter pipe (LDP). LDP is defined in terms of a 16” cut-off point [equivalent to 406.4mm diameter and above.] 0.89 Demand 0.43 Welded – SDP/MDP 0.06 Welded - LDP 0.40 Seamless mt 2007 data 4.48 Total 60 Demand 538 Export 16 Import 582 Production Kt Item

CAPACITY EXPANSION PLANS Source: Iron & Steel Works of the World, steel sector press reports incl www.steelonthenet.com/news.php . Long product modernisation plans include 2009 long product Mill 390 modernisation at the Makeevsky Metallurgical Works [720 kt/year facility, 8-60mm diameter] and two new long product rolling mills at Enakievsky [2010 upgrade] Modernisation timeframe above is the next ~5 years approx. Flat includes pickling and possibly hot rolling Y Y Y Zaporozhstal Rumoured; could be Bulgaria / Romania Y Y Y VoestAlpine DRI based EAF steelmaking; slab only Y Y Vorksla Stal MCI expectation Y Y Y Krivoy Rog Funding issue? Y Y Ilyich Incl billet cc for long product modernisation Y Dneprovsky New HSM under discussion: see ISWW Y Y Y Alchevsk Comment Flat Slab Steel Company

MORE CIS STEEL INFORMATION

MCI website http:// www.steelonthenet.com runs a free CIS news page at http:// www.steelonthenet.com/feeds/russia.php

We also publish a monthly report called ‘Memo from Moscow’ which covers topical CIS steel industry issues. This can be accessed free at http:// www.steelonthenet.com/moscow.html