Director of the Sales Department of ArcelorMittal Kryvyi Rih Evgeniy Chumachenko: “We had to reorient trade flows”

| the GMK Center resource was told by Evgeniy Chumachenko Director of the Sales Department of ArcelorMittal Kryvyi Rih for Ukraine and the CIS countries. This year has further confused the cards in the global steel market. At first, countries were quarantined one after another and reduced metal consumption. In the second half of the year, demand for rolled products and prices began to recover, but not everywhere and not as quickly as metallurgists would like. Moreover, the situation was aggravated by a new wave of protectionism. Many governments that are in charge of the largest national economies, wanting to support their own producers, have stepped up protective measures against imports. Against this background, the Ukrainian market remains fairly open for foreign suppliers. And this is not at all pleasing to domestic manufacturers. The COVID-19 coronavirus pandemic is by far the main event of 2020. How did the epidemic situation and quarantine affect the company’s performance? – In the first half of the year, the pandemic had a significant impact on all manufacturers. The second half of the year is more positive. Now on the foreign market there is an improvement in the situation with the demand for steel products and prices for it. It is too early to summarize the results of the company’s activities, however, most likely, the results of the year will not be as we would like. How has the geography of supplies changed this year? – This year, the states have introduced all sorts of restrictive measures. As a result, due to the pandemic, some markets were simply closed, others were paralyzed. Ports and enterprises were closed, activity in many foreign markets was minimized. Through lockdowns, a decline in demand, which is very sensitive for us, occurred in the European market. MENA countries (Middle East and North Africa) also significantly reduced activity. Therefore, we had to reorient trade flows to other regions. How difficult was it to change the logistics? – ArcelorMittal is an international corporation. Therefore, given the experience and understanding of markets around the world, it was probably easier for our company to transform logistics and sales than some other players. But all the same, reorientation from familiar markets to new ones required some effort. In general, we believe that ArcelorMittal Kryvyi Rih passed the test with flying colors, although it was not easy. Reorientation to new sales markets is always a very laborious process. After all, new markets provide new standards. We have to re-pass the product certification process, taking into account the legislation of the countries in which it is planned to supply the goods. And the governments of these countries, when they see that imports are growing, come up with various barriers. It can be just duties, as in the USA, quotas, as in the EU countries, or strengthening of certification rules by states. Therefore, it can be completed for six months, a year, or even a longer period. How acute is the company experiencing the influence of protectionism in foreign markets? – Recently, our company has faced the fact that most states are increasing protectionist measures against the import of our rebar and wire rod. In principle, we have already stated that we have lost, for example, Egypt. Every year we sold 500 thousand tons of products there. The Lebanese market is 100 thousand tons lost. In the countries of the Persian Gulf, 200 thousand tons per year are lost. In Latin America, some countries have stepped up certification, and there about 100 thousand tons were lost. In total, this is already almost 1 million tons. This volume needs to be reoriented to other directions, to Southeast Asia, including. How do you assess the dynamics of the domestic market? – On the whole for the year in monetary terms, the volume of construction is decreasing. For our main consumers – builders – the lockdown did not go unnoticed. Let’s hope that the second half of the year will pull out statistics due to infrastructure projects. However, infrastructure projects, unfortunately, do not consume metal products in such quantities as we would like. In the housing construction sector, apart from lockdown, the situation was affected by the problems of large developers – Arkada and Ukrstroy. So, “Kievgorstroy” partially saved the situation by picking up a number of projects of “Ukrstroy”, but it only started working there two or three months ago. As a whole, this had a rather negative effect on the pace of work in the construction segment. Therefore, we estimate a possible reduction in consumption of rolled products in construction by the end of the year by 12-15%. This means that by the end of 2020, the domestic rebar market may not reach the level of 900 thousand tons. At the same time, rebar imports into the country are growing. How keenly do you feel the competition from importers? – Competition is felt, especially from the Belarusian Metallurgical Plant. Chrome

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