Address of the President of UAVtormet
In confrontation of steelmakers and scrap procurement companies of Ukraine, which was particularly acute during the last two years, there were used all possible means, including informal.
Suffice it to recall the Law "On the scrap metal"; the distribution of quotas in the manual mode under the control of steelmakers; injunctions, suspending scrap metal export permissions and duty, which currently has practically stopped exports.
All this has led to a catastrophic fall of scrap metal collection volumes in the country, which is able to collect at least 8.0 mln tons of scrap metal per year according to the most pessimistic estimates.
The result of this is a deficit of scrap metal in Ukraine, departure from this business of a large number of businessmen, who lost faith that it is possible to run this business profitably and predictably. As a result, everybody incurred losses: both steelmakers and scrap metal procurement companies. It's time to count losses, to summarize and to negotiate about the future cooperation.
The first steps in the search for mutual compromises have already shown their effectiveness. Close communication with steelmakers has helped to figure out that there are more common interests than contradictions. Among them:
1. The mutual interest to increase both steel output and scrap collection volumes in the country.
2. The maximum possible deregulation of our industries.
3. Settlement of VAT administration issues in the mining and metals sector.
4. Building of relationships with monopolists under transparent, market-based and mutually beneficial conditions.
5. Development of the domestic market of consumption of rolled metal products.
And I, as the newly elected president of the Ukrainian Association of Secondary Metals, will focus my efforts on approximation of positions of scrap metal procurement companies and steelmakers, search for mutually beneficial solutions, as well as unification of efforts to achieve jointly developed goals and objectives.
I am sure that we would succeed if we will unite our efforts and will build a constructive dialogue with all stakeholders.
One of the most important directions in which I have found full support of Association Ukrmetallurgprom in the person of A.F. Kalenkov is the compilation of Balance of steel production and scrap metal collection in Ukraine, on a basis of an entirely different methodology, based on the following indicators:
1. Steel production forecast.
2. Forecast of prices for main types of rolled metal products.
3. World scrap metal prices forecast.
4. Metal inventories of Ukraine and its evaluation from the point of possible scrap metal collection.
5. Forecast of scrap metal collection volumes on the basis of economically feasible minimum price for scrap metal which can support economic activity of scrap metal collectors.
6. Calculation of demand for scrap metal by negative and positive trends in the production of rolled metal products, taking into account the volumes of scrap metal collection, depending on the level of procurement prices.
7. Definition of economically feasible level of export duty, stimulating economic activity of market participants.