Azovstal Purchases Brazilian Sintered Ore.

Azovstal bought a probe party of 90 thousand mt of sintered ore from Brazilian Rio Tinto. Usually AZST acquires ore from Krivy Rih Iron Ore (KRIO: BUY). Brazilian ore with a 66% Fe content is of superior quality, but after crossing the ocean, it is 30-35% more expensive than Ukrainian ore. Though Azovstal (AZST:SELL) is an important customer, accounting for ~9% of KRIO?s monthly sales, it will be not difficult for KRIO to compensate for this, given the current tight iron ore markets. Azovstal, which is controlled by SCM, claims they have to buy the iron ore at prices higher than agreed upon with the government and steel and iron ore producers. The recent move may be considered as pressure on Privat who controls KRIO, to ease prices. The government monitors price agreements, and may also intervene with regulative actions if they continue to stay above agreed upon levels.