An increase in state monopoly tariffs is completely unacceptable for Ukraine’s iron and steel sector – Kametstal CEO

The increase in railway tariffs and tariffs for the transmission and dispatching of electricity in the context of unfavorable conditions on the world market could lead to a critical decline in the competitiveness of Ukrainian steelmakers. At the same time, the country is losing strategically important scrap due to loopholes in export duties, and the domestic market remains unprotected from dumping.

This was stated by Olexander Tretyakov, CEO of Kametstal, during a meeting between Prime Minister Yulia Svyrydenko and business representatives in Dnipro.

According to Olexander Tretyakov, today the Ukrainian steel industry is facing a large number of internal problems that could significantly worsen the situation in the industry. In particular, an increase in railway tariffs is absolutely unacceptable for the steel industry, since it takes about three tons of raw materials to produce one ton of steel products.

“According to our logisticians, Ukrzaliznytsia’s freight tariffs are already higher than the actual rates in Poland and Slovakia. Even a slight increase will lead to a serious increase in the cost of steel and a deterioration in competitiveness,” the head of the enterprise emphasized.

Oleksandr Tretyakov added that Ukrainian Railways (UZ) has a chronic problem with unprofitable passenger transportation. He proposed supporting the passenger segment from the 2026 state budget in the amount of about UAH 20 billion to cover losses. At the same time, freight transportation is profitable and does not require state support.

He also drew attention to the planned increase in tariffs for transmission and dispatching by NPC Ukrenergo next year by $5/MWh. At the same time, some of the state-owned company’s expenses appear to be overstated.

“In conditions of low markets and high competition from other countries, any increase in tariffs leads to a decline in the competitiveness of Ukrainian exporters. We ask that you prevent an increase in NEC tariffs in 2026,” said the CEO of Kametstal.

Steelmakers are particularly concerned about the rapid growth in scrap exports – up to 50,000 tons per month, which is 11 times more than in 2022. At the same time, the provision of the Association Agreement with the European Union, which allows for the non-payment of export duties (zero rate applies), is being actively used. Scrap is exported to the EU and then re-exported to third countries, in particular Turkey. Before the war, such exports were carried out directly from Ukrainian ports to Turkey with the payment of duties.

«The processing of one ton of scrap into rolled products in Ukraine generates about UAH 15,000 in taxes and fees, as well as approximately $1,200 in foreign exchange earnings from the export of high value-added products. At the same time, direct exports of scrap at zero customs duties generate minimal tax revenues due to the semi-shadow and shadow nature of the market and only $250-350 in foreign exchange earnings,» explained Oleksandr Tretyakov.

According to him, this trend is dangerous not only because of the loss of billions of hryvnia in taxes and customs revenues, but also because Ukraine is depriving itself of a strategically important resource that will be key in the process of the “green transition” in Ukraine and the EU. As a temporary measure for the period of martial law, he proposed banning the export of scrap to countries for which this duty does not apply.

The CEO of Kametstal also warned of growing risks for the domestic market amid changing global trade flows. Imports of products analogous to Ukrainian steel products have already increased in Ukraine.

“The reasons are obvious: tighter trade restrictions in the US and EU are forcing manufacturers from third countries to look for less protected markets. Ukraine is becoming one of those markets,” said Alexander Tretyakov.

He also added that the risks for the Ukrainian market will increase after the introduction of the Carbon Border Adjustment Mechanism (CBAM) next year and the possible renewal of EU protective measures in 2026.

«We see a real threat of massive dumping from China, Turkey, and Russia through friendly countries to circumvent sanctions on the Ukrainian market. Dumping means a reduction in domestic production, job losses, and a decrease in tax revenues to the budget,» the top manager emphasized.

In this regard, he appealed to the Ukrainian authorities to take effective protective measures so that Ukrainian producers are not squeezed out of their own market.

Earlier, Oleksandr Vodoviz, Head of Metinvest Group’s CEO Office, noted that Ukraine needs a predictable tax and tariff policy, without which it is impossible to attract foreign investment. Without the capital raised, it is now impossible to develop projects in the mining sector, which are capital-intensive and have a very long payback period.

As GMK Center reported earlier, the main obstacle to attracting foreign investment, apart from a full-scale war, is the NBU’s currency restrictions. Currently, the Ukrainian economy is facing a critical shortage of investments, which are difficult to attract domestically, and the instruments for raising capital, such as guarantees for investors, risk insurance, etc. are not working properly.