Ukrainian steelmakers see recovery signs, challenges remain: GMK

Ukrainian steelmakers plan to increase production after a difficult fourth quarter in 2022, which followed 40% of steel capacities being seized or destroyed in Mariupol, according to Ukraine-based GMK Center.

In 2022, Ukraine’s average annual steel capacity utilisation was 30%, while in Q4 it was only 15-20%. As electricity supply stabilises, monthly production dynamics in early 2023 are showing the first signs of improvement.

In February, Ukrainian steelmakers increased steel production by 49.3% compared to January to 424,000 tonnes, and production of rolled products by 30% to 334,000t. However, output was down on-year.

“Other problems remain unresolved, in particular, one of the main ones is logistical: the sea ports, through which in peacetime we exported 70% of steel products, remain closed to us, as before,” says Ukrmetalurgprom president Oleksandr Kalenkov.

At present, Metinvest’s enterprises are 60-65% utilised. According to ArcelorMittal Kryviy Rih (AMKR), the production situation has recently improved somewhat, but the level of capacity utilisation still remains at 25-30%.

Metinvest’s four mining and processing enterprises are meanwhile at 25-40% utilisation.

The main market for Ukrainian iron and steel products remains Europe, so the situation in the Ukrainian steel industry will largely depend on the economy of the EU, Kallanish notes. Ukrainian enterprises supply iron ore, semi-finished products and finished products to the EU.

“The volume of scrap collection has significantly decreased due to the fighting in the industrial regions and forecasts for 2023 are not encouraging,” says head of analytical centre CMD-Ukraine Igor Guzhva. “In the optimistic scenario, the collection of scrap will be about 800,000tl; in the pessimistic scenario, 600,000t. At the same time, the need of steelmakers in the base scenario will reach 1 million tonnes.”

In addition to everything, Ukrainian scrap exports have also increased. In 2022 shipments abroad decreased to 53,600t, but in January-February 2023 exports increased by 3.5 times on-year to 24,800t. The restart of more steel mills in Europe has contributed to an increase in the export of this raw material.

Svetoslav Abrossimov Bulgaria