Ukrainian steel can help balance EU supply: Zinchenko

The share of exports in Ukrainian steel production is decreasing, with a greater focus now on the domestic market, GMK Center chief executive Stanislav Zinchenko said during the Kallanish Europe Steel Markets 2023 conference in Amsterdam this week.

Zinchenko also emphasised that in the event of a steel shortage in the EU, Ukraine can assist in balancing the market.

The consultancy ceo projects Ukraine’s crude steel output this year will fall within the range of 5.5-6 million tonnes. Prior to the war, Ukraine used to export 70-80% of its steel; however, this year, approximately 50% of steel production is expected to be consumed domestically. Consequently, exports will amount to around 2.5mt of finished steel and semis.

Despite facing challenges related to safety, energy supply, logistics, and raw materials, due to Russia’s invasion, Ukrainian steel companies have achieved significant progress this year, with all steel plants under Ukraine’s control operating.

“Three blast furnaces have been launched since the beginning of this year. But one furnace at Zaporizhstal will soon be stopped for repairs,” Zinchenko observed.

Despite a greater domestic sales share, Ukrainian iron and steel companies continue to supply their products worldwide. Ukrainian pig iron has re-entered the markets of Italy, Spain, and Turkey, while Poland and Romania have become crucial logistics hubs for Ukrainian steel exports.

There are two primary routes for exporting Ukrainian pig iron. The first involves shipping around a quarter of a million tonnes of pig iron from Ukraine to Poland, which is then shipped to the US through Baltic Sea ports. This route accounts for up to 60% of pig iron exports from Ukraine. Ukrainian pig iron is typically not intended for the Polish market or is consumed there in insignificant volumes, Zinchenko pointed out.

The second route involves utilising Izmail port on the Danube. From Izmail, pig iron is transported through the Romanian port of Constanta, reaching southern Europe and Turkey. This route facilitates up to 30% of ferrous exports.

The export of semi-finished products from Ukraine primarily consists of square billet, which are mainly intragroup deliveries by ArcelorMittal to plants in Poland and by Metinvest to its Bulgarian mill. Billet is also exported to Denmark through Polish ports.

Two-thirds of Ukraine’s rolled product exports, including hot and cold rolled flat products, are directed to Central and Eastern Europe. Ukrainian products have also become available worldwide through container transport, with Iraq, Israel, the USA, Canada, and UK among the buyers.

Zinchenko said EU steel-consuming sector activity is currently satisfactory but concerns remain regarding the potential negative impact of falling raw material prices and cheaper imports. These could cause short-term declines in EU prices, possibly by $100-130/tonne. Nevertheless, any such decline will be temporary.

Given the scarcity of supply from European steelmakers and the cautious approach of EU buyers towards imports due to price fluctuations, Ukrainian steel products can be an option for EU consumers, according to Zinchenko.

Steel from Ukraine is available for delivery in late July or early August, and rolled products from Ukraine are not subject to quotas, creating opportunities for Ukrainian steel on the European market.

Zinchenko also emphasised that Ukraine’s steel industry will not compete with EU steelmakers but will assist consumers in balancing prices in the market. The EU is going to extend the suspension of duties on Ukraine for a further year, he concluded.

Elina Virchenko UAE