PROSPECTS FOR IRON AND STEEL INDUSTRY IN UKRAINE

Abstract

In 2014, the industry of our country fell into the deepest crisis. The situation was worsened by the military actions in Donetsk region and economic difficulties in our country. As there were no portfolio of orders, the steel production decreased considerably at the iron and steel works of our country on the whole and Metinvest Corporation in particular. Another problem of iron and steel industry in Ukraine was a significant slump of iron ore prices. The importance of developing the enterprises of iron and steel industry is predetermined by the fact that they play the key role in forming a stable development of the economy in particular and the state on the whole. The iron and steel enterprises of Ukraine face all the new challenges that are caused not only by the internal factors, but also by the global impact of the world production. They call for urgent managerial decisions and, above all, the study and understanding of both objective and subjective patterns of development of the iron and steel industry. Since iron and steel industry is one of the leading realms for filling in the state budget, monitoring of this realm is carried out on a regular basis by the State Department of Statistics of Ukraine. The Worldsteel Association, one of the most influential world agencies, also distinguishes Ukraine in the top 10 world leading manufacturers of this kind of produce. It is difficult to overview even one per cent of the researchers who have studied this issue. At the same time, because of the transience of objective circumstances on the market there appear new conditions for the existence of the industry on the whole and its iron and steel branch in particular. Therefore, constant monitoring of the market is an inalienable part of the economic strategy. The objective of the article is to study the iron and steel industry by the example of the Metinvest Group and determine the prospects for its further development. There has been an ousting of Ukrainian production out of a number of export markets (CIS countries and Asia) as a result of increased competition with major players and as a consequence of the import substitution policy introduced by some consumer countries. Against the background of reduction in the price of raw materials (IORM, coal) and energy, decrease in freight and rapid devaluation of national currencies relative to the US dollar, the cost of key competitors in steel and IORM continue to decline, and the market is becoming all the more global, as short logistics has ceased to be a significant advantage. Under these conditions, lower costs are a chance to maintain competitiveness. Therefore, the introduction of innovative ways of development is probably the only chance to save and possibly increase the production potential of this industry. It is necessary to provide support to the basic industries, the iron and steel one in particular, which is the foundation of the Ukrainian economy ensuring its stability and persistency. A national support program which implies substantial change in legislation should be introduced.