Export railway transportation increased by 22.6% y/y in the first half of 2023

Almost 40% of railway exports are cargoes of iron and steel companies

In the first half of 2023, Ukrainian Railways (UZ) transported 70.5 million tons of cargo, which is 17.1% or 14.5 million tons less compared to the same period in 2022. At the same time, 12.4 million tons were transported in June, which is 8.1% more than the volume of May-2023 and 32% more than the same period last year.

In January-June, 15.4% less cargo was transported in the export connection compared to the same period – 28.2 million tons. In June, export transportation amounted to 4 million tons, which is 5.2% more than the level of May-2023 and immediately 24.3% compared to the same period last year. About 30.7% of export transportation by railway is for iron and manganese ore and 8.2% – for steel products.

The potential to increase the export of Ukrainian iron and steel products to Europe is definitely there. According to GMK Center’s estimates, now steel enterprises are loaded at 70%, and Minings – less than 50% of the pre-war indicators. On the other hand, there are additional problems with logistics. Amid the cancellation of the grain agreement, agricultural exporters will even more try to increase exports through the Danube ports and western border crossings, reducing the opportunities to export iron and steel products. Although agrarians have restrictions here – neighboring countries are trying in every way to ban the export of Ukrainian grain.

If we do not take into account the indicators of peacetime transportation in January-February 2022, then the general and export transportation of UZ in March-June 2023 is already higher, compared to the same period of the previous year. This testifies to the adaptation of Ukrainian Railways and shippers to the conditions of martial law.

The volume of export shipments increased in June, in particular, at the expense of ore (iron and manganese). Export transportation of ore by rail amounted to 1.43 million tons, which is 3.8% more than the level of May 2023. However, in the first half of 2023, ore transportation is 44.7% lower than in the same period of 2022, it amounted to 8.67 million tons. The dynamics of transportation of iron and manganese ore is affected by a decrease in demand caused by a decrease in production at individual steel plants, and equipment repair on the part of consumer enterprises.

At the same time, the dynamics of transportation of steel products is worse than the indicators for ore. In June, the volume of transportation of steel products amounted to 378,000 tons, which is 19.9% less than in May. In general, for January-June, the volume of export transportation of ferrous metals amounted to 2.32 million tons, which is 62.2% less compared to the same period of 2022. The destruction of the Kakhovska HPP’s dam caused a negative impact on the work of nearby enterprises, leading to a reduction in the production and shipment of steel products.

The main border crossings through which products of Ukrainian steel enterprises are exported:

in Poland – Izov and Mostyska-2;
to Slovakia – Chop-Cierna and Uzhhorod;
to Hungary – Batyovo.

In the first half of 2023, the volume of iron and steel products exports to/through neighboring countries mainly increased compared to the second half of last year:

Poland: ore – 1.66 million tons (2.9%), steel products – 1.42 million tons (20%);
Slovakia: ore – 5.41 million tons (63.6%), steel products – 63.1 thousand tons (10.7%);
Romania: ore – 876.5 thousand tons (15.3%), steel products – 164.7 thousand tons (-59.5%);
Hungary: ore – 852.5 thousand tons (10.4%), steel products – 31.8 thousand tons (-27%);
Moldova: ore – 116.6 thousand tons (5.4 times), steel products – 95.4 thousand tons (-0.14%).

Regarding the Danube ports, the main export cargo flows went through the port of Izmail. In January-June 2023, the volume of iron and steel products exports through the Izmail Port compared to the second half of 2022 increased as follows:

ore – by 2.3%, up to 766.2 thousand tons;
steel products – 3.2 times, up to 624.2 thousand tons.

In the second half of 2022, 749,000 tons of iron ore and 195,600 tons of steel products were transshipped through the Izmail Port. In the first half of 2023, iron and steel products were not exported through the Reni Port.