Archive for February 21st, 2013

h1

Import limitations – Ministry of Energy & Coal Ukraine

February 21, 2013

UKTVED 2701 12 10 00 – UKTVED 2701 12 90 00 – UKTVED 2701 19 00 00.

What am I on about?

No my computer is not making some form of public code error.  No it is not some form of SEO optimisation effort.  And no, whilst some will consider me a sandwich or two short of a full picnic, this is not a sign of any mental disorder on my part.

These are the codes, similar to GOST codes for oil, relating to types coking coal now subject to import restrictions in Ukraine as announced by the Energy & Coal Ministry of Ukraine on their website.

There is now an annual importation limit of 7.7 million tons.

To give this figure some kind of perspective, in 2009 Ukraine imported 7.5 millions tons, in 2010 9.1 million, in 2011 10.7 million, and in 2012 just over 12 million tons.

And?

Well, Ukraine now has huge quantities of domestically produced coking coal stockpiled – stockpiled to the point where it is running out of storage space.  All in all, including all types of coal currently stockpiled in Ukrainian warehouses, there sits about 2.5 million tons of coal.

2.5 million tons of coal not only takes up a lot of space, but coking coal can be rather combustible and can spontaneously ignite on occasion.

That together with the ever decreasing storage space generates problems of where to put the continuously produced coal from the Ukrainian mines – not to mention the diversion of capital to external economies when importing other nation’s coking coal.

The question then is why, with so much domestically produced coking coal (and coal in general) is Ukraine importing it at all?  The answer is not necessarily one of price as many will automatically assume, but of chemical composition of the coking coal itself.

Quite simply, Ukrainian coking coal, and coal in general, has a far higher than internationally (and domestically in some cases) desired sulphur content – and low ash, low sulphur coking coal is what blast furnace operators desire to prevent the sulphur transferring to the pig iron in the smelting process.

Thus, it is becomes obvious to even the most simple of readers, that when Ukrainian metal producers are competing with global metal producers, not only on price but quality, high sulphur content domestically produced coking coal is less desirable than imported low sulphur coking coal.

Quite how the actions of the Ministry of Energy & Coal are going to sit with the metal producing oligarchy such as Messrs Akhmetov and Pinchuk (to name but two) we will see.  Perhaps they will get the entirety of the imported coking coal and the smaller producers will be forced to use the domestically produced high sulpher coking coal – and be forced to deal with the sulphur migration to their pig iron in the blast furnace process.

Maybe it is just a method to monopolise the import of low sulphur coking coal? – After all Mr Akhmetov does own a production plant in Kazakhstan that produces a product that meets the usual specifications of the international community relating to sulphur content.

It remains to be seen what impact this decision will have on the metal producers in Ukraine – as well as the coal miners.

Advertisements
%d bloggers like this: