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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

MONOPOLIZATION THREATENS DOMESTIC METAL MARKET, WARNS ECONOMY MINISTRY

13 November, 2012 - 00:00

“There is a clear tendency that the domestic metal market is going to be monopolized by several Ukrainian steel producers. Using their monopolistic position, these companies impose prices for domestic customers which are 1.2 - 1.5 times higher than export or world prices,” says a Ministry of the Economy Report of June 3 released in the aftermath of the introduction, as of May 13, of ceiling prices for steel products.

The Economy Ministry believes that higher domestic prices on steel will render products produced by customers of steel companies unprofitable and noncompetitive. For instance, throughout 1997, domestic prices (excluding VAT) for hot-rolled sheets and for hot-rolled reels imposed by the Zaporizhstal plant were higher than export prices by 20-21% and 33-40%, respectively, the report continues. The Mariupol-based Illich plant imposed prices for domestic customers which topped export prices by 36% percent for hot-rolled sheets, 17% for hot-rolled reels, and 17% for pig iron. Donetsk steel plant domestic prices were higher than its export prices by 20-70% for billets and 30-50% for pipe billets. Kryvy Rih steel plant domestic prices for reinforcing bar steel topped export prices by 17%.

Higher domestic prices for steel raise the profitability of domestic sales, says the Economy Ministry report. Export sales of hot-rolled sheets by Zaporizhstal involves a loss of 0.16%, while domestic sales were gave a profit margin of 24.6%. The figures for hot-rolled reels are respectively -2.7% and +29.5%.

Price ceilings on some steel products were approved by the Economy Ministry on May 4 and became effective on May 13. The ceiling prices will be valid for six months. The new prices are to be supervised by the State Tax Administration.

Ceiling prices have been imposed only for some products of the Zaporizhstal, Kryvorizhstal, Azovstal and Illich Steel plants.

 

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