Capital investment in the steel industry grew by 34% in 9 months

According to the State Statistics Service, in January–September 2019, the volume of capital investment in production of steel and finished metal products grew by 34.1% to ₴20.43 billion compared to the same period of the previous year.

At the same time, however, the capital investment growth rate in the steel industry hit a decline in Q3.

In July–August, capital investment in the steel industry grew only by 29.5% compared to the same period of 2018. While in Q1 2019, capital investment grew by 34.5%, and by 42% in Q2.

“In 2018, Ukrainian steel companies invested around $800 million ($37 per ton of steel) in the steel segment. It was the largest investment since 2013,” says Andrii Tarasenko, GMK Center Chief Analyst. “This year’s target was 40% higher — $1.1 billion ($51 per ton of steel). But it failed due to the deterioration of the situation in the foreign markets, especially in Q3. Companies decided to shrink their investment programs and focus on maintenance projects. In the recent years, maintenance cost up to 75% of capital investment.”

Nevertheless, over the first three quarters of 2019, the steel industry ranked second by the volume of utilized capital investment among all sectors of the processing industry.

The leader was production of food, beverages and tobacco products — the companies in this sector spent ₴20.52 billion in the first nine months of 2019.

In 2018, the share of the steel industry in the total volume of capital investment increased from 13.2% to 14.2% compared to 2017.