The loss of Mariupol-based Azovstal and Ilyich Iron and Steel Works had a strong impact on the domestic market of steel products – production of slabs, thick plates over 8 mm, I-beams, railroad rails, etc. ceased leading to a shortage of these products. Metinvest almost immediately started to produce certain “lost” types of steel products at the remaining Ukrainian enterprises and began to buy imported rolled products.
Evgeniy Alekseenko, CEO of Metinvest-SMC, told GMK Center about trends in the domestic steel trading market, logistics and steel import, as well as about his vision of post-war recovery of Ukrainian infrastructure.
– The steel trading market has changed with the beginning of full-scale hostilities in 2022. Small players who could not adapt to the new realities left the market. There was a consolidation of the industry towards key national players – steel traders. Due to lower demand, competition increased, which reduced margins.
Our company, due to the loss of a significant line of products manufactured at Ukrainian assets, has also transformed from a distribution network into a full-fledged steel trader, which has to purchase imported rolled products on the free market.
– Due to the outbreak of a full-scale war, demand in 2022 fell by 57%. Then in 2023, against the background of a low comparison base, demand grew by 47%, and in 2024 – by 10%. But even with this growth, market capacity in 2024 remained 30% below the level of 2021. This is due to both the loss of territories where large consumers were located and the destruction of production facilities. Due to uncertainty and high risks, investment activity in Ukraine is restrained.
Among the sectors with the highest consumption of rolled steel products are construction, steelware and pipes, steel processing and iron and steel industry.
– Today the situation has somewhat stabilized, but, unfortunately, we still feel certain logistical difficulties. The war has brought long-term changes to logistics routes and forced us to rethink our usual logistics schemes. We are talking about delivery of raw materials for production sites in Ukraine, as well as semi-finished products to Metinvest’s rolling assets in the EU, the products of which are sold at Metinvest-SMC service centers.
Shelling of port infrastructure, damage to railroad tracks, blocking of border crossings force us to adapt and change seemingly well-established logistics routes.
With the increase in product imports, we have also started to use leased transshipment facilities near ports to optimize logistics costs for delivery to cities where we do not yet have our steel centers, but where our customers are located.
In addition to optimizing current logistics routes, an important objective is to open new logistics routes by using fleets that ship ore to distant markets. Such step will reduce not only logistics costs but also delivery time of supplied products. One such route is currently being tested by our team.
We realize that efficient logistics is critical to ensure smooth operations and meet our customers’ requests. Therefore, our team is constantly on the lookout for optimal routes, including the use of multimodal transportation, adapting to wartime realities and preparing for future economic recovery.
– We are in the process of formatting our current network of steel centers.
At several steel centers we have organized separate warehouses for medium and small business customers – it already allows us to ensure prompt shipment. We are working on the development of services for retail customers, as well as an online store with the ability to pay by card and order steel delivery.
We are considering opening new facilities in different formats and regions to meet the needs of our current and future customers. With the expansion of imports, additional facilities near seaports have appeared.
– The warehouses in Poland are designed to meet the needs of the European customers with rolled products manufactured by Metinvest Group enterprises.
– After the full-scale invasion, a number of Metinvest’s Ukrainian assets were halted and destroyed. The greatest damage in terms of finished steel products and semi-finished products was caused by the loss of the Mariupol-based Azovstal and Ilyich Iron and Steel Works. In Ukraine, the production of slabs, plates over 8 mm thick, I-beams, mainline rails and other products has completely ceased.
Since 2022, the remaining Ukrainian assets have started to “re-capture” certain sizes and grades of products lost together with the Mariupol sites: at Zaporizhstal – steel slabs to supply Metinvest’s European plants, hot-rolled and cold-rolled coils and sheets; at Kametstal – shaped sections (channels, angles) and large grinding balls.
Metinvest-SMC compensates for the deficit of steel products, the production of which was technically impossible in Ukraine, by shipping them from the Group’s European plants, as well as by importing rolled products from third parties. Since mid-2022, the first deliveries to Ukraine from Metinvest’s Italian assets, such as Trametal S.p.A. and Ferriera Valsider, have started. Further geography of suppliers expanded to include Romania, Slovakia, Bulgaria, Poland, Turkey and China. We remain the leading supplier of plate products, including those from Metinvest Group’s European assets.
We have also implemented various cooperation schemes with other Ukrainian producers. For example, in cooperation with Dnipro Metallurgical Plant (DCH) we have established a tolling scheme to supply the domestic market with long rolled products for construction and machinery purposes, and cooperation with domestic pipe plants (Cominmet, Trubostal, etc.) allowed us to fill the shortage of electric-welded pipes and sections.
– In 2025, we forecast our own imports at 200 thousand tons of rolled steel products.
The main product in our import portfolio is thick plate, which was previously produced at Azovstal and Ilyich Iron and Steel Works. We also specialize in import of specific items.
We import all products that are not produced at Metinvest’s Ukrainian facilities or if there are customer requirements for a specific manufacturer or a specific project:
We continue to work towards expanding the range of imported products in both commercial and project sales, focusing on rolled products with and without coating.
In terms of specialized rolled products, such as rails, we continue to strengthen our cooperation with producers for whom Metinvest is also a supplier of iron ore and remains a reliable partner for key sectors of the Ukrainian economy.
– The greatest pressure is observed on the part of Turkish producers. Based on the current global market conditions, Turkey sees great potential for itself in increasing supplies to the Ukrainian market and is actively developing it, having production capacities and attractive prices. The proximity to Ukraine after the opening of sea ports has provided Turkey with optimal logistics.
Cheap raw materials supplied to Turkish producers – slabs from Russia for flat steel production and hot-rolled coil from China for pipe production – make it possible to obtain low production costs and provide low prices for export. A similar situation is happening with slab imports to Europe; there is an interest of Czech producer Vitkovice Steel in supplying Ukraine with thick hot-rolled plate from Russian slabs.
The key segments in which imports are growing are products previously produced at Mariupol mills, primarily thick hot-rolled plate, galvanized steel, I-beams, large angles, and rail products. At the same time, there is a growing share of domestic production of polymer-coated rolled products, but the share of imports is still significant.
While in the European market there are duties and import quotas for many products, in Ukraine anti-dumping duties have been introduced only for few products. In case of trade flows redistribution in the world trade there is a risk of additional imports to the Ukrainian market.
– Infrastructure projects in 2023-2024 gave a significant increase in demand and consumption of rolled steel products. So, we observed the growth in demand for rebar and thick hot-rolled plates (to rebuild destroyed bridges and dams, to protect power facilities), as well as for pipe and hardware products (for defense fortifications).
– The war brought a lot of destruction and losses to various sectors and this figure, unfortunately, is increasing every day. According to the latest official data, by the end of 2024, the total direct damage to the Ukrainian economy amounted to more than $170 billion. The most affected were the residential segment and transportation infrastructure, followed by energy and industry.
This is mainly housing (more than 27 thousand apartment buildings are completely destroyed) and social infrastructure (400 educational institutions, 200 medical institutions, etc.) To help this sector we have developed the concept “Staleva Mriya”, which has a set of ready-made projects using steel framework for rapid recovery and increase in steel consumption.
If we talk about transportation infrastructure, more than 300 bridges have been completely destroyed, which will require a large amount of thick plate and rebar in the future. Power generation facilities (thermal and hydro) have also suffered significant damage.
At the moment it is difficult to talk about clear figures on the amount of steel to be rebuilt, plus we need to take into account the construction of new projects in various sectors, but according to our preliminary estimates it is more than 2 million tons over the first 10 years. And we are doing everything possible to ensure this volume.
– The main focus will be on the development of customer service and assortment for small and medium-sized businesses, as they are now the backbone of the Ukrainian economy. As far as warehouse infrastructure development is concerned, the main focus now is on increasing indoor storage capacity, as customers’ requirements to the appearance of products are increasing, which makes it an important factor when choosing a supplier of rolled steel products.
– For the next two years the company has a restrained forecast at 6-10% of annual growth. If hostilities continue, the demand will be generated by the defense-industrial complex, as well as construction of defensive fortifications.
In case of cessation of hostilities and peace, the focus will be shifted to the restoration of infrastructure, and here, of course, demand growth may be much higher. The demand for steel products will be determined by the investments that will come into the Ukrainian economy, and this will depend on the confidence that peace and the security of made investments will be maintained.
The growth in demand and economic revitalization will lead to the restoration of margins, the recovery of regional steel traders, as well as investments in the development of steel depots and services provided.
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