Due to high prices and inflation

For several weeks already, the Ukrainian mechanical engineering enterprises have been on hunger rations. Many types of rolled products have disappeared, but the most dramatic situation has arisen with regard to sheet steel. Today it is impossible to find in Ukraine even a few tons of ferrous sheet metal up to 3 millimeters thick. Naturally, prices skyrocketed: since last July they have risen 2.2 to 2.6 times. There is adequate reason to regard this not as a coincidence or manifestation of the nature of our pseudo-market economy, but the result of the policy pursued by the current executive, which is eager to increase exports at any cost, even to the expense of the domestic producer.

On the eve of payments under the 2000 foreign debt ($3.2 billion), the government is trying hard to draw foreign currency into this country. But the possibilities are limited. And looming on the horizon is default. This is why metallurgists were given the green light for exports.

The dramatic increase in prices has just as dramatically complicated the situation concerning the working capital of enterprises and middlemen. The latter have sharply decreased metal imports. Kyiv’s metal depots at the moment have only reinforcing bar-steel, and at some other locations there are plate steel remnants. As a result, the mechanical engineering enterprises have reduced their output even more.

This process has impacted not only large, but small businesses as well, and threatens to stop enterprises currently operating. Later this could entail an increase in prices for all goods and services, and, thus, inflation. Consequently, the foreign debt will be paid at the expense of the ever poorer people of Ukraine.

COMMENTARY

Deputy Minister of Industrial Policy Viktor Panteleyenko (in charge for metallurgy), in a conversation with The Day, put down the shortage in sheet metal on the domestic market to “increased business activity” in other sectors using such products. He had hard time, however, naming such sectors. And it is quite obvious: as we know, that mechanical engineering in general and shipbuilding, automobile and aircraft construction industries, in particular, are declining. However, “According to statistical data, I can see an increase in the number of sales on the territory of Ukraine without imports,” Mr. Panteleyenko insisted.

Volodymyr Pikovsky, manager of the metal department of the Derzhzovnishinform state-owned enterprise shared more accurate data with The Day. In the first nine months of this year, 5.5 million tons of flat section steel was produced, of which 3.95 million tons was exported. Thus, it is not difficult to calculate that slightly more than 1.5 million tons remained in Ukraine. Mr. Pikovsky said that sheet accounts for about one third of this amount, or 500,000 tons. He confirmed that last August and September saw an enormous demand for such products. According to the data of Derzhzovnishinform, in only a few months the price increase was 40% to 55% depending on the region. “I cannot find an explanation for this within the country. None of the machine building industry branches has increased its turnover,” said Mr. Pikovsky, “but I know how our operators work. As a good price for such products appeared last summer in Russia ($270 per ton), because its industry, including automobile manufacturing, was set in motion, our “quasi-domestic” sheet, when sold, was officially registered according to internal procedures, and immediately through second or third hands exported. This caused a sudden change in prices. They will not fall, but they cannot increase any further either.