Ferroalloy industry of Ukraine in the first half of the year exported 24.2 thousand tons of products

Shipments of ferroalloys are gradually recovering after the restart of some capacities, but are still down 91.2% y/y

In January-June 2024, the ferroalloy industry of Ukraine reduced exports of products by 91.2% compared to the same period in 2023 – to 24.21 thousand tons (275.8 thousand tons in January-June 2023). This is evidenced by the data of the State Customs Service of Ukraine.

In June, Ukrainian producers exported 17.54 thousand tons of ferroalloys, which is the maximum volume since July 2023. In general, the recovery of shipments after a long stagnation in the industry has been observed since April of this year – 0.4 thousand tons in April, 5.5 thousand tons in May, and 17.5 thousand tons in June. During the first quarter, exports were on the verge of stopping, not exceeding 0.1-0.3 thousand tons.

The main consumers of products are Poland – 6.51 thousand tons for 6 months, and 4.5 thousand tons (+233% m/m), Turkey – 5.663 thousand tons and 5.66 thousand tons, respectively, as well as Romania – 3.67 thousand tons and 0.39 thousand tons (-88% m/m), respectively.

Shipment of ferroalloys is gradually increasing due to the partial resumption of work of the Zaporizhzhya Ferroalloy Plant (ZFP) in May. As previously reported, the company operates two furnaces, which is only 7% of the total capacity, and has no visible plans to increase the load. At the same time, the Nikopol Ferroalloy Plant (NFP) is also considering launching. Pokrovsk Mining, Manganese Mining and Pobuz Ferronickel Plant (PFC) are idle.

At the same time, heavy industry in Ukraine faces many problems, including reduced demand for products, problems with energy supply, lack of personnel due to mobilization, etc. Special pressure on the ferroalloy industry is created by high electricity tariffs and problems with its shortage, since the production of ferroalloys is an energy-intensive process.

In particular, on June 1, 2024, CMU Resolution No. 661 amended the «Regulation on the peculiarities of electricity imports under the legal regime of martial law in Ukraine,» which obliges Ukrainian producers to buy at least 80% of electricity in the EU at a European price in order to avoid forced restriction of electricity supply. Previously, the mandatory share of imports was 30%.

Such a decision of the Ukrainian government can lead to numerous negative consequences for domestic energy-dependent industrial companies, especially for manufacturers of air defense systems and metallurgists. Thus, the share of electricity in the production of iron ore concentrate is 60%, pellets – 32%, steel products EAF – 24%, BF-BOF – 3.5%.

Rising electricity costs lead to a sharp increase in cost, which makes the continuation of production economically unprofitable, and some MMC enterprises warn that this may entail a complete shutdown of production. In general, limiting the supply of electricity will inevitably lead to a significant decrease in production and exports.

Rising electricity costs lead to a sharp increase in cost, which makes the continuation of production economically unprofitable, and some iron and steel enterprises warn that this may entail a complete shutdown of production. In general, limiting the supply of electricity will inevitably lead to a significant decrease in production and exports.

Revenues from export of ferroalloys for 6 months of 2024 decreased by 87.8% y/y – to $29.34 million, and in June – increased by 14.3% y/y and 236.4% m/m – up to $19.79 million

As reported by GMK Center, in 2023 the production of ferroalloys in Ukraine decreased by 57.4% compared to 2022. Exports of products fell by 4.9% y/y – up to 344.2 thousand tons Compared to pre-war 2021, shipments of ferroalloys abroad decreased by 48.5%, or 324.4 thousand tons. The largest consumer of ferroalloys of Ukrainian production in 2023 was Poland – 52.8% in monetary terms. 14.1% of export shipments fell on Turkey and 8.5% on the Netherlands.

In 2024, according to Sergiy Kudryavtsev, Executive Director of the Ukrainian Association of Ferroalloy Producers (UkrFA), the state of the ferroalloy industry in Ukraine will depend on three factors – shelling, logistics and affordable electricity.