UKRAINE ANALYSIS

CONTENTS:-Location on World MapNatural resources of UkraineChief ExportsChief ImportsUkraine metallurgy OverviewProduction scenario & Export of steel to

Ukraine 2011-2012 Ukraine Scrap metalFOB prices

Ukraine is situated in Eastern Europe

Natural Resources of Ukraine

5% of world reserves of iron ore which is about 46% of all of the former USSRCoal reserves amount to 47.1 billion tonsDeposits of iron ore (estimated at 28 billion tons), manganese ore (3 billion tons), chalk and limestone (1.5 billion tons) are also large in Ukraine.Natural gas reserves of 39.6 trillion cubic feet

Chief Exports/Imports

Ferrous and non-ferrous metals Fuel and petroleum productsOil and gas, machinery and parts

Ukraine metallurgy OverviewMining-metallurgical complex (MMC) Companies of Ukraine accounts for

65% of the country’s steel productionThe MMC of Ukraine supplies only 20% of metal products to the domestic

market and exports 80%Even with the powerful metal industry Ukraine has been lately importing

over 1 million tons of metal per yearIt should be expected that in the near future the metallurgists of China and

India, due to quick development, would drive foreign metal products from

their markets and would increase their shares in the Near East countries and

IndochinaUkraine uses 52.8 man-hours to produce one ton of steel, while Russia uses

38.1 and Germany - 16.8 man-hourAt full loading of metal works in Ukraine with full metallurgical cycle the

productivity of labor is around 200-250 tons of steel per 1 worker per year,

while the modern electric-metallurgical mini-mills with capacity of 1.5-2

million tons of steel per year yield 3000-4000 tons

Production scenario & Export of steel to Ukraine 2011-2012

Products/Year "2007" "2010" "2011"

Pig iron 35,6 27,4 28,9

Steel 42,8 32,7 34,7

Steel products 36,2 30,7 31,7

Year/Region

ECMiddle East

CIS AsiaEurope (not EC)

Africa America

2010 5,7 5,6 3,2 3,7 2,6 1,9 0,8

2011 6,4 5,3 3,3 3,1 2,2 1,5 0,7

UKRAINIAN STEEL EXPORT (million ton)

STEEL PRODUCTION IN UKRAINE (million ton)

Nov.11*

Dec.11*

Jan.12* Feb.12 Mar.12 Apr.12

HR sheet 2-8 mm,

CPT

Ukraine 825 750 750 750 780 805

Billet, FOB Black

SeaUkraine

575 590 605 605 615 600

Steel Scrap

domestic prices

Ukraine

350 325 330 385 375 360

Iron ore Concentra

te domestic

pricesUkraine

125 125 105 105 105 115

Pelletsdomestic

pricesUkraine

140 140 135 130 130 135

CIS: price forecast in key markets, $/t

Scrap FOB Prices at various ports

Sea ports (Odessa,

Nikolayev)• $400-410/t FOB

River ports (Kherson,

Nikolayev)• $398-399/t FOB

Pig iron prices start growing in Europe

According to the data,Ukrainie has quoted its material to Italy at$375-385/t C&F ($350-360/t FOB Azov-Black Sea ports).

While the last quote by Ukrainian-origin pig iron was at $375-380/t C&F.

Comparative Analysis of various products Importers from Ukraine

Country Material ports Prices

FOB C&F

Italy Pig iron Azov-Black Sea ports

$350-360/t $375-385/t

Turkey Pig Iron Azov-Black Sea ports

$360-370/t $375-385/t

Long/Semi Fin

$520-525/t

Flat $550-560/t

Iraq Re-Bar $670-685/t offer prices

UAE(Emirati buyers)

HRC $555-565/t

Plates $580-590/t

THANK YOUSURABHI SINGHResearch analyst