Ukraine's Metinvest hopes EU will agree alternative to steel duty

12 October 2017

The chief executive of Ukraine’s largest steelmaker on Wednesday said he was hopeful the government would reach an agreement with the European Commission to replace a new anti-dumping duty on Ukrainian hot-rolled steel with a minimum pricing mechanism.

On Friday, the European Union imposed tariffs on hot-rolled steel from Brazil, Iran, Russia and Ukraine after a complaint by EU producers that the construction and machinery product was being sold at excessively low prices.

The duty amounts to around 60 euros ($71) per ton for Ukrainian steelmakers such as Metinvest, which sells 150,000-200,000 tonnes of hot-rolled coils to Europe per year.

Metinvest CEO Yuriy Ryzhenkov said the Ukrainian government had initiated talks to find an alternative arrangement for Ukraine due to its EU association agreement that established closer political and trade ties with the bloc as of September.

“The proposition from the government was related to self-imposed price restrictions, which we’re proposing instead of the anti-dumping duties,” Ryzhenkov said in an interview after Metinvest published its first-half results.

“Hopefully the European Commission will consider those and we’ll find an acceptable mechanism,” he said.

Ryzhenkov did not say what minimum price had been proposed by the government at the talks, which he described as ongoing.

He pointed to a reference to the Ukraine-EU association agreement in the latest anti-dumping regulation as a sign the Commission might accept the Ukrainian government’s proposal.

According to the online text of the regulation, the Commission is committed to “analyze the significance” of the association agreement.

Metinvest posted first-half net profit of $72 million earlier on Wednesday, 20 percent less than it reported for the same period of 2016.

The company, which is part of the business empire of Ukraine’s richest man, Rinat Akhmetov, lost some production in early 2017 after steel and coal assets in separatist eastern regions were seized by pro-Russian rebels.

CEO Ryzhenkov declined to make specific financial forecasts for 2017 as a whole, but said ongoing steel production curbs in China would help stabilize the global market.

“All in all that will help to bring the steel and iron ore markets back into balance, so we feel that we are looking at a more stable outlook than what we’ve seen so far,” he said.

Output in the second half is expected to be in line with the first six months of 2017, when Metinvest produced 3.9 million tonnes of crude steel and 13.6 million tonnes of iron ore.

Ryzhenkov said Metinvest would continue to supply hot-rolled coils to Europe and pay the required duty, while negotiations on the tariff continue.