Interview with Viktor Vukusic

• Could you please tell us about the current activities of Metinvest? In which markets has Metinvest been most active recently?
  At Metinvest we are currently altering our product mix in response to the changing market environment. While semi-finished products accounted for 81 percent of our total sales volume in 2008, we plan to increase production of finished products in 2009. At the moment we produce fewer billets, having shifted our focus to long products. Before we used to export about 300,000-350,000 mt of billets per month; now our export volume is a maximum of 150,000 mt a month. Our most active sales have been to the Middle East and Far East markets.
  
  
• What is the situation nowadays as regards semis in the CIS?
  Russian billet exports in the first quarter of 2009 reached 2,060,000 mt, which is almost the same as in the fourth quarter of 2008 but 12 percent higher year on year. Ukraine exported 2,140,000 mt of billets in the first quarter of 2009, up six percent year on year but 39 percent higher than in the fourth quarter of 2008.
  
  Since the middle of January this year CIS billet prices have been going down continuously. However, starting from the middle of March, prices jumped from $280-290/mt to $360-370/mt FOB in the middle of April.
  
  
• What is your general sentiment regarding the tendency of the markets today, after facing two depressed quarters? How do you see the steel markets handling such difficult conditions?
  The situation was really critical in the second half of 2008. However, after excessive inventories were digested (over 1.5 million mt of steel billets were stocked at CIS ports at the beginning of the fourth quarter of 2008) the picture presented by the market has not been so depressing. Furthermore, a relative revival in demand may occur due to seasonal factors as the spring season is traditionally a strong period for construction. Although the situation has improved, consumption levels are still down and will remain so on account of the financial crisis. We do not expect any leaps in prices. A lot will depend on producers and their flexibility in adjusting their volumes to the low demand levels.
  
  
• What is your view of the most recent price recovery in the longs markets?
  Prices in the billet and longs markets had been balanced almost at breakeven point and most players understood that this situation would not last long. We now expect a stable trend without sharp fluctuations.
  
  
• Which part of the world has been affected most by the global tightening?
  According to the recent WSA reports, it seems that the regions most affected have been the US and Europe, which as a consequence of the tough times are now utilizing only 40 percent and 50 percent of their capacities respectively. The CIS countries have decreased their production considerably. For example, Ukraine decreased its production of steel in the first quarter of 2009 by 37 percent year on year due to its great dependence on the export markets. The main reasons behind the reduced production were the considerable fall in demand and the high production costs.
  
  
• Turkish mini-mills (EAFs) recently turned their attention to CIS billet instead of buying scrap. Do you think this will happen again in the near future?
  Indeed, in early March rebar prices fell while the scrap market remained at a high level ($210-220/mt CIF). Thus, in terms of costs for Turkish mills the production of finished products from billets at prices within the range of $350-355/mt became more attractive than production from scrap. Purchases of CIS billets by Turkish mini-mills are still possible in the future assuming that scrap prices remain at high levels.
  
  
• How do you see the competition with the Turkish billet producers in the export markets?
  At present we don't see much interest expressed in exports by Turkish billet producers because of the high scrap prices and also the relatively low levels of activity in the billet markets.
  
  
• We have observed strong participation at this latest IREPAS meeting. How would you explain this level of interest?
  In my opinion, the IREPAS meeting is the most important world event dedicated to long products. The interest in the event is high, and this seems to be logical if you take into consideration the wide profile of attendees (from scrap suppliers to finished longs producers, from Brazil to the Far East), the huge number of trading companies and the willingness of every market participant to go deeply into understanding the present market situation as well as its future perspectives. This possibility has been provided by IREPAS since the very beginning and was again seen in Athens.  Besides, the IREPAS meeting draws attention to and focuses on the situation in the Middle East which has a great influence on long products trading worldwide.
  
  
• What do you think about the recent changes at the IREPAS meetings?
  The recent changes have led to more detailed analysis of the product segments, which, in my opinion, provides us with better market intelligence.
  
  
• What kind of a role would you like to see IREPAS play in the steel industry in the future?
  I see IREPAS continuing its key role as one of the main events for the steel industry. In the current hard times we consider IREPAS as a platform for exchanging information on the long products market. We hope IREPAS will continue to deepen its role and attract many more participants who, in turn, will evaluate and confirm the role of IREPAS.

SteelOrbis Daily