Exclusive Defense orders named the main driver of steel consumption in Ukraine

Construction of fortifications and fortifications has kept the rolled steel market afloat for three years

Defense projects have been a key driver of metal consumption growth in Ukraine over the past two years and will remain so in 2025. This was stated by Sergiy Kovalenko, Commercial Director of Vartis, during a panel discussion at the Metal Expert conference “Ferrous Metallurgy of Ukraine 2025”.

According to him, by the end of 2023, it became clear that the state would invest in large-scale construction of fortifications, defenses, and fortification areas. These projects have determined the rate of consumption of rolled steel, and they are the main source of demand in the market.

“All the growth in steel consumption is due to government funding. Commercial housing and infrastructure construction had virtually no impact on the market. Although these segments have somewhat revived, their growth is only 2-3% per year,” Kovalenko explains.

In 2025, he estimates that active consumption of rolled steel will continue. And again, it will be driven solely by government orders for the construction of defense structures. He also emphasized that after the active phase of the war is over, the need for fortifications will not disappear instantly – projects will continue for at least another six months or even a year.

After that, the market may be affected by another important factor: the reconstruction of the destroyed territories. At the same time, Kovalenko emphasizes that despite the apparent pause, many projects in the private sector are ready to start – developers are only waiting for clear signals of security and funding.

“Any real improvement at the frontline or political shifts towards ending the war will signal the start of massive civilian construction,” Kovalenko summarized.

As GMK Center reported earlier, in January-March 2025, Ukraine increased consumption of steel products (rolled and semi-finished products) by 41.4% year-on-year – to 863.1 thousand tons. Imports account for 38.9% of the domestic rolled steel consumption market in the country.