KIEV, March 26 - Average profit margins in Ukraine's steel industry will drop by more than half in 2008, to 6.5% from 14.75% last year due to higher prices for raw materials, energy and transportation, Vasyl Kharakhulakh, head of industry association Metallurgprom, forecasts.

The average margin already dropped to 6% in January, as four companies operated at a loss, four were close to the breakeven point, and seven had a profit margin that was half the figure a year earlier, Kharakhulakh said at a press conference on Tuesday.