Artificial gas shortage jeopardizes steel industry – Longobardo

Due to the extension of PSO, the industry is forced to buy gas at the TTF price with a markup

The Ukrainian iron and steel industry, which accounts for about 7% of GDP and is one of the main sources of funding for the Armed Forces, has come under pressure from uncompetitive energy prices. After prolonged problems with high electricity tariffs, which have already cost the industry hundreds of millions of dollars in additional expenses, the industry is facing a new threat: a sharp increase in the cost of natural gas. This was stated by Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, in a comment to NV.

According to him, in the third quarter of 2025, gas prices in Ukraine exceeded the level of the European TTF hub. This was the result of special obligations (PSO) imposed on the state-owned companies Ukrnafta and Ukrgazvydobuvannya, which were required to fill underground storage facilities before winter. As a result, domestic gas supply decreased, and industrial consumers were forced to purchase imported resources through traders at the TTF price plus a markup and transportation costs.

Businesses expected the government to abolish PSO in September, opening up the domestic market to national producers. Instead, the Cabinet of Ministers extended the mechanism until March 2026.

«This decision has once again created a domestic gas shortage. Traders sell at the TTF price plus their premium. ArcelorMittal Kryvyi Rih is a large consumer of natural gas, and purchasing at a premium to the European price further reduces our competitiveness in the domestic and export markets. The rise in gas prices has already led to additional costs of over UAH 100 million per month,» Longobardo notes.

Against the backdrop of the company’s unprofitability, this could lead to the shutdown of key production facilities – iron, steelmaking, and rolling. The loss of metallurgical capacity will not only reduce tax revenues but also weaken the economic support for financing the army.

Longobardo emphasizes that the Cabinet’s decision creates an artificial deficit, as Ukrainian storage facilities are already filled with over 13 billion cubic meters – enough to get through the winter.

“The government’s desire to support the population is understandable, but if industry is lost, such a policy may only be a step towards the collapse of the national economy, and the population will certainly not benefit from this,” he concluded.

It should be noted that ArcelorMittal Kryvyi Rih has been operating at a loss for the fourth year in a row. In particular, the share of electricity costs in the price of products has increased from 7% in 2021 to 20% in 2025. This trend makes the production of steel and iron ore concentrate economically unviable. Additional pressure is created by increased costs for other energy resources and logistics.