OREANDA-NEWS. September 11, 2009. The increase of steel production in Ukraine during few last months has led to coke deficit. The Ukrainian Coke Association estimates the deficit at 1.4mn tones till the end of the year. The coke coal extraction decreased by 8.6% y/y to 15.19mn tones. It will take half a year for the coal industry to restore last year extraction volumes because of last year’s partly conservation of company’s capacities due to decrease in demand.

Millennium Capital sees this news as NEGATIVE. Coke producers are forced to buy imported coke coal which is more expensive then Ukrainian one. Therewith, Ukrainian coal will be sold through a number of auctions (this scheme was offered by the Ukrainian Prime Minister) thus leading to increase in coal prices. Coal price tendency leaves ahead steel prices which eventually will decrease the steel producer’s profitability. The companies from Metinvest Holding (Azovsteel < AZST UZ U/R > and Enakievo Steel Works < ENMZ UZ U/R >) are in the better situation because of presence in the Holding structure of domestic coal mines as well as coal producers from abroad, what allows to buy coal at transfer prices.

Millennium Capital is an integrated financial services provider. Established in 2000 by a group of professionals with solid background in securities and corporate finance, Millennium Capital is now one of tickets selling for its flights due to high arrearage to the creditors of the company.