Ukrainian Journal quoted UkrFA ferroalloy maker association as saying that Zaporizhia Ferroalloy Plant, Ukraine No 2 ferroalloy producer, will probably suspend production of silicomanganese this month due to weak demand on world and domestic markets.

The association said the company, which currently operates at 25% of its capacity, has been gradually reducing output of ferroalloys during the past three months due to a seasonal drop in demand, but also due to high production costs.

In July this year the largest Ukrainian ferroalloy producer Nikopol Ferroalloy Plant decreased its production of manganese alloys by 10.74% as compared to June and by 19.3% compared to May to 71,929 tonnes. Another producer Stakhanov Ferroalloy Plant saw its July ferroalloy output fall by 15.7% as compared to June and by 28.35% as compared to May to 11,488 tonnes.

However, the worst situation is currently seen at Zaporozhye Ferro Alloys Plant, the output of which in July amounted to 11,842 tonnes down by 37% as compared to June and down by 65% as compared to May this year. Currently, the plant produces at just a quarter of its production capacity, UkrFA noted.

In August this year, Zaporozhye Ferro Alloys Plant has been forced to halt its silicomanganese production and plans to produce only 11,000 tonnes of ferroalloys during the month. Meanwhile, Nikopol Ferroalloy Plant and Stakhanov Ferroalloy Plant also plan to cut their production in August to 67,000 tonnes and 11, 000 tonnes respectively.

UkrFA said that the main reasons for the current situation facing domestic producers are the complicated state of the world ferroalloy market, the seasonal decline in consumption, high production costs and the high volume of ferroalloy imports in Ukraine.
The ferroalloy producers noted that, in the current year as compared to the previous year, the cost of electricity has increased from US 46 to USD 51 per 1,000 kilowatt hours, while coke prices have gone up from USD 97 to US 282 per dry metric tonne.

Among other negative factors, UkrFA noted the Ukrainian government's abolition of preferential treatment for domestic mining and metallurgical companies, the increase in railway transportation tariffs, and non-payment of VAT refunds.

(Sourced from Ukrainian Journal)