Coal Output at Ukrainian State Mines Expected to Grow by 9% in 2008
OREANDA-NEWS On 23 October was announced, that the Ukrainian Ministry of Coal Industry expects that Ukrainian state-owned mines, (which produce some 65% of the country’s total output) are expected to increase coal production by 9% y-o-y to 51-52 mmt. The news is positive for steel makers as this will help to alleviate the heavy coal shortage that the industry is facing. Private mines decreased output this year owing to a number of accidents and total coal output may increase by 4-5% y-o-y to 79 mmt in 2009.
Coal prices have declined more slowly than coke prices over this seasonal drop owing to a coal shortage. This has therefore decreased the dollar difference margin (between coke and coal prices) for coke makers. Coke prices have dropped by 30% m-o-m from USD 520/t in September to USD 360/t in October, while coal prices declined by only 16% m-o-m in September. We expect that coke makers will see a worsening in their 4Q08 financial results.