The EU, US, UK and Canada’s decision to lift import duties previously imposed on Ukraine may not lead to a significant increase in Ukrainian steel and raw materials exports, says GMK Center chief Analyst Andrii Tarasenko.
Export logistics in Ukraine remain restrictive and the situation is compounded by steelmakers’ difficulties in importing 4-5 million tonnes of coking coal previously provided by Russia and now supplied partly by Poland, Tarasenko said at Monday’s Kallanish European Steel Markets 2022 conference in Milan.
The bottlenecks created by grain cargos and global pressure to export grains are providing further obstacles to steel exports. However, if Russia allows foreign countries to provide a military escort for grain cargos leaving Ukrainian ports, this may also ease steel exports, Tarasenko commented.
Before the war, Ukraine was the world’s second-largest pig iron exporter, the fourth-largest iron ore supplier, the third-largest semi-finished products exporter and the sixth-largest supplier of hot rolled coil. Steel and pig iron production was concentrated in four cities, at the now-lost Mariupol plants; Zaporizhshia, about 50km from the frontline; ArcelorMittal’s Kryvyi Rih; and Dnipro, which is far from the hostilities but a target of periodical shelling.
Since March, Ukraine has lost over 40% of pig iron and 100% of slab and plate exports, and over 1 million tonnes of iron ore exports mainly to China, Tarasenko affirmed. Steelmakers in the country are trying to resolve the current logistical issues by planning for exports from the Constanta seaport in Romania. However, despite its proximity, Constanta has limited capacity and strong competition from grain cargos.
Another route is by railway through Poland to Baltic ports with larger capacities, but this is extremely expensive. Shipping iron ore through Baltic ports costs $100/tonne. In March and April, Ukrainian companies doubled their railway exports to the EU. However, bottlenecks have become the norm because of the limited capacity of European railway and port infrastructure, which is unprepared for such high volumes of cargo.
Natalia Capra France