Ukrainian coke makers ramped up output in 10M07 on soaring global demand for steel. The market rewarded coke stocks with 173% YTD growth. While we see demand for coke rising at 8% annually in 2008-2009, only manufacturers with secured coal supplies and free capacity will be able to expand production.
Global steel boom & Chinese coke export restrictions load capacities
Demand for coke continued to increase from domestic steel producers who utilize soaring demand for steel on global markets. Export deliveries also unexpectedly recovered after the Chinese government raised its export duty in June, making Ukrainian products more price competitive. All in all, Ukrainian coke output climbed in 10M07. Most of the growth is coming from producers linked to growing steel smelters. The stronger the consumer, the greater the potential for further expansion. In terms of demand, we order the sector: Avdiyivka, Alchevsk, Yasynivsky, ZaporizhCoke, Bagliy, Donetsk Coke.
Access to coal becoming the second & crucial competitive advantage
The sharply widening coal deficit in Ukraine in 2H07 (after accidents at large Russian mines earlier this year) resulted in a jump in the spot coal and coke prices, giving local producers with ensured input supplies, such as Yasynivsky and Avdiyivka, market power.
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