Additional logistics costs of the enterprise reached $100 per ton

ArcelorMittal Kryvyi Rih is currently in a state of emergency, which it will probably be able to maintain until the end of 2022, if the military situation does not improve. CEO of ArcelorMittal Kryvyi Rih, Mauro Longobardo, told about it in the interview for German Stahl.

“It’s a shame, considering that we were one of the most competitive plants in the ArcelorMittal group,” the plant’s CEO noted.

According to Mauro Longobardo, the steel plant currently operates only one blast furnace, producing 100,000 tons of products per month and operating at 20-25% capacity.

The CEO of ArcelorMittal Kryvyi Rih noted that long products of Kryvyi Rih steel plant occupy a high share in the Ukrainian market – about 1.2 out of 6 million tons per year. The rest was exported through ports (our own port in Mykolaiv with a capacity of up to 3 million and Odesa port). Since the beginning of the war, the main problem of the enterprise was logistics. The solution was to transfer it to rail transport, the development of the process took four months. Since transshipment has to be carried out between the Ukrainian and European railway systems due to the difference in track width, this leads to time losses.

“Now we send our products to the ports of Poland and the Baltic countries, from where they go to our customers. But these ports are not equipped for our type of products and the quantity we ship. Even in a favorable situation on the market, the entire system can occupy only about 50% of our capacity,” Mauro Longobardo noted.

According to him, the logistics costs of the enterprise have increased significantly – by $100 per ton. This means that transport costs are higher than the market price of the product, so the company does not start a second blast furnace. Relaunching the BF is viable if there is confidence in using the unit profitably for a long period of time.

“However, if the situation improves and the ports open, our losses can quickly approach zero, as we will immediately save on additional logistics costs. This would be enough to start another blast furnace and reach maximum capacity,” says the CEO of ArcelorMittal Kryvyi Rih.

Mauro Longobardo calls the supply of coking coal, the use of which previously amounted to 300,000 tons per month, a problem for the steel plant. It used to ship from several countries, including Australia and the US, but is no longer available. Currently, the company is dependent on coking coal coming through Polish ports and Ukrainian coal.

“Since Metinvest, another large Ukrainian steel company, lost its plants in Mariupol, we can use coking coal that could have been consumed there. But none of this gives us the power we need,” says Mauro Longobardo.

As GMK Center reported earlier, ArcelorMittal Kryviy Rih is on the edge of a shutdown due to the blockade of Ukrainian ports and low steel prices. This was stated by the plant’s CEO Mauro Longobardo in an interview with the Financial Times. He noted that it is unprofitable to export steel by land through European countries.

Also, ArcelorMittal Kryvyi Rih has started resuming the work of the mining department after the forced shutdown from August 1, 2022. The plant has already put into operation one of the two quarries and two factories – a crushing and an iron ore beneficiation ones.