Ukraine’s steel industry faces a perfect storm in 1H 2026

Ukraine’s steel industry entered 2026 under pressure from several directions at once. The sector continues to operate during Russia’s full-scale war, with production facilities exposed to attacks, power disruptions, logistics problems, and a growing shortage of workers. At the same time, Ukrainian steelmakers are facing tighter access to the European market and stronger competition from imported products at home.

In 1H 2026, crude steel production fell by 3.0% y-o-y, while iron ore production declined by 18.8%. Production remains vulnerable to missile and drone attacks, blackouts, staff shortages, and damage to industrial and transport infrastructure.Ukrainian producers also face some of the highest energy prices in Europe. The decline in production could cost Ukraine 0.6% of GDP this year, reflecting the reduced contribution of the iron and steel sector to the economy.

Exports of flat-rolled products declined by 8.1%, while exports of long-rolled products fell by 41.7%. This deterioration is closely linked to changes in the European market, which has traditionally been the key destination for Ukrainian steel: last year, 85% of finished long products and 86% of finished flat products were exported to the EU.

The introduction of CBAM and new tariff-rate quotas has raised the cost of Ukrainian products entering the EU. In practice, these measures amount to new trade barriers, and Ukraine could be among the countries hardest hit by the regulations. The new quotas alone are expected to reduce exports by 1.3-1.5 million tonnes of steel per year.

Steel imports are taking over the Ukrainian domestic market. In 1H 2026, imports of flat-rolled products grew by 2.3%, while imports of long-rolled products surged by 64.0%. The main suppliers behind this trend are Türkiye and China, which benefit from lower energy costs, more stable operating conditions, and access to cheaper raw materials, including Russian semi-finished products.

As a result, domestic steelmakers are losing ground on the Ukrainian market: in 1H 2026, domestic steel supply decreased by 7.6% y-o-y, while imports share in steel consumption increased to 43.8% from 37.0% in 1H 2025.

Looking ahead, continued EU trade restrictions, including CBAM and TRQs, are expected to deepen the pressure: Ukraine’s steel production is projected to reach 6.5 million tonnes in 2026 and 5.8 million tonnes in 2027 that would be below the historical low of 6.2 million tonnes recorded in 2023.