Ukrainian mining and steel group Metinvest recently opened a representative sales office in Romania, Metinvest Carpathia, and hopes to reach sales of USD 200 million this year, according to the group’s representatives.

“We expect steel consumption to increase in Romania due to new infrastructure projects but also due to the economic growth of the country. I see Metinvest in Romania as a key player in the steel market. We are on track to achieve USD 200 million in revenues this year,” said Veselin Sokolov, general manager of Metinvest Carpathia.

He said that Metivest is already a known supplier of steel on the Romania market, as Metinvest iron and steel works from Ukraine, Bulgaria and Italy have been exporting to Romania for some time. By opening this office, the group wants to consolidate its presence on the market and to strengthen ties with local clients, but also to bring in new customers.

The group’s representatives pointed out that Romania currently has one of the lowest steel consumptions per capita in the European Union, which also means that the market has great potential. They quoted data from the World Steel Association, which show that total demand for steel in Romania was some 3.4 million tons in 2013 and it should grow to 3.7 million tons this year.

“Consumption for our market segments is estimated at some 2.5 million tons,” said Sokolov. He expects the construction sector to start recovery this year, on positive economic development. In Romania, Metinvest sells mainly steel for the construction industry, but also has clients in the machine building and pipe production sectors.

Metinvest’s decision to open office in Romania comes as the local steel industry has been facing difficulties in the last five years. ArcelorMittal, the largest steelmaker in the world, which also owns Romania’s largest steel plant reduced its production and posted heavy losses, while Russian group Mechel, which had five steel plants in Romania, gave them away practically for free and existed the market. Some of those plants are now insolvent.

Romania currently produces less than 3 million tons of steel per year, half what it produced in 2007. In 1989, Romania’s steel production was more than 14.4 million tons per year. The country exports some 2.2 million tons and imports 2.6 million tons of steel each year.

One of the import sources is Ukraine. In 2013, imports of laminated steel from Ukraine were some 185,000 tons and accounted for 21 percent of Romania’s imports from this country, according to data from the Romania-Ukraine Chamber of Commerce.

Metinvest is a vertically integrated steel group which owns coal and iron ore mines as well as steel plants in Ukraine, but also in Bulgaria, Italy, Great Britain and in the U.S. The group’s largest operations are based in the Donbas region of Ukraine, one of the regions most affected by the conflict between the Ukrainian Government and pro-Russian militias.

In 2013, Metinvest had total sales of USD 12.8 billion. The group is controlled by Ukrainian billionaire Rinat Akhmetov, who also owns the Shakhtar Donetsk football club, the most succesful club in Ukraine in the last ten years. The manager of the football team, which in 2009 won the UEFA Cup is Romanian Mircea Lucescu.

Andrei Chirileasa, andrei@romania-insider.com