The refusal of Ukraine from European integration can adversely affect Russian metallurgists

After the abolition of the signing of the Association agreement with the EU Ukraine, experts predict the further rapprochement of Kyiv with Moscow. At the same time, Russian metallurgical companies see little benefit in this, as this means that they will have to compete with Ukrainian metallurgists.

Ukraine is in a difficult economic situation and, in connection with the refusal to unite with the European Union, will try to relate its products to Russia again, while the products sold by the metallurgical plants of Ukraine are the lion's share of the country's export.

"Russian steelmits, of course, consider Ukrainian competition as a threat to their business," said Sergey Donskoy, an industrial analyst in Societe Generale in Moscow.

In 2012, Ukraine produced 33 million tons of raw steel, which is 10 million less than in the “shock” in 2007, while about 24 million steel semi -finished products were exported in total, which is 28% of the country's total export.

Russia produced 70 million tons of steel last year. Despite stability in production in the Russian market, there is the largest surplus of products among all countries of the former USSR. In the case of the organization of free trade between neighboring countries, the competition will only intensify, especially against the background of a decline in demand for metal around the world.

Russian metallurgists have obtained from their government an introduction of restrictions on the import of Ukrainian metal, which 3 million tons were imported last year.

"The lack of prospects for the growth of domestic demand, as well as a huge number of idle capacities, may force Ukrainian companies to resort to the export of their products to the neighboring countries of the former USSR, including under the Customs Union," said the representative of the Russian Metallurgical Company Severstal. In addition, he added that this year the share of Ukrainian products in Russian steel imports will be about 65 percent.

Russian metallurgical companies expect that in the event of a significant increase in imports from Ukraine, the internal metallurgical industry will seriously suffer.
Russian analysts believe that a significant increase in supplies can occur only in connection with a serious drop in price. Severstal evaluates that the Ukrainian Qatanka is sold to the Customs Union at prices at 12.6 percent lower than in other markets. Russian companies believe that Ukrainian suppliers play "not according to the rules."

Russian companies "Mechel" and "Evraz" recently filed a petition for their government regarding financial assistance, which they need for restructuring and returning competitiveness.