Standoff Does not Impede Ukraine's Steel and Grain Flow

By Pavel Polityuk and Maytaal Angel, Reuters

Steel and grain exports continue to flow from key global supplier Ukraine via Black Sea terminals with ports operating normal schedules, despite concerns raised by the tense political backdrop, officials and traders said on Tuesday.

Ukraine exports grain, steel, coal, chemicals, fuel and petroleum products, machinery and transport equipment.

Its ports have shipped some 22.7 million tonnes of various cargoes since the start of 2014, roughly equal to turnover by the same date a year ago.

Political instability and violence had caused some traders in Ukraine, the world's third-biggest maize exporter, to hold back from agreeing new contracts, while Russian maize export prices have been rising for two weeks.

"All the loading and unloading operations are being conducted in time; all the stevedore companies ... are working normally as well," Ukraine's infrastructure ministry said in a statement.

The UkrAgroConsult consultancy also confirmed that ports were operating as usual and that farmers had started sowing crops.

The country's grain exports are likely to total 8.7 million tonnes in the remaining four months of the 2013/14 season, the agriculture ministry said earlier on Tuesday.

During the current campaign Ukraine plans to sow 8.7 million hectares to spring grains, including 3 million hectares to early spring grains, such as wheat and barley. It has sown 27,700 hectares to early spring grains as of March 3, according to official data.

Ukraine has exported 24.7 million tonnes of grains so far this season, which runs from July to June.

Steel Flows, Prices drop
Steel export prices in the former Soviet republic have dropped by some $20-30 per tonne or 5 percent since mid-February, largely due to the fast-falling local hryvnia currency, and as international traders struggle to get finance from banks.
 
But while prices are depressed, flows of material are still moving.

"So far all the transport and ports are working and mills are producing," a Europe-based steel trader said.
 
Another Europe-based trader added: "We have consistent flows of steel goods from Ukraine. We are carefully watching the transportation of goods there ... some ports are in the Crimea area, but even there we don't see anything that indicates a problem."

Some even forecast more material to arrive on the market, barring any major disruption.
 
"We can expect Ukrainian exports of coal, billet, scrap and pig iron to the Mediterranean to surge," steel raw materials data provider Ruslom said on its website. That would not be the case if transportation were to collapse, blocking physical shipments, Ruslom added.

Ukraine is the world's fifth-largest steel exporter, according to the International Steel Statistics Bureau, a data provider.

It exported 24 million tonnes of steel mill products in 2013 - accounting for 28 percent of the country's entire exports.
 
"While it is true that some international buyers are finding it difficult to secure credit for their purchases of Ukrainian material (steel), we believe that the main ports of Odessa and Illichevsk remain open for business, and the impact of current events is yet to undermine the efforts of Ukrainian producers," said Metal Bulletin Research analyst Keval Dhokia.

According to the World Steel Association, Ukraine's crude steel output fell 8.3 percent in January from December. Finnish steelmaker Rautaruukki confirmed to Reuters it closed its plant near Kiev for three days last month due to the unrest, though operations have since returned to normal.

(Additional reporting by Alexander Winning in London, Jussi H. Rosendhal in Helsinki and Diana Asonova in Moscow; Writing by Polina Devitt and Veronica Brown; Editing by Dale Hudson)