In 2022, steel production in Ukraine may fall to 7.6 million tons

According to the optimistic scenario, steel production in Ukraine in 2022 will reach 7.6 million tons, rolled steel output – 6.9 million tons, and steel exports – 4.7 million tons, SteelOrbis reported with reference to Roman Perepelytsia’s, Head of Strategy and Business Development at Metinvest, speech at the SteelOrbis Spring 2022.

There are two probable post-war scenarios in Ukraine, he added. Both include a deep economic recession. If Ukraine wins soon, the economy will recover to pre-war levels in about five years. If the war prolonged, economic downturn will last one to two years, after, in the long run, there will be economic stagnation.

“In 2022, Ukraine’s real GDP, according to various forecasts, will fall by 30-40%. At best, the Ukrainian economy will reach the level of 2021 in 2026. If Ukraine wins, steel production in Ukraine may reach 7.6 million tons in 2022 and 8.3 million tons in 2023, production of rolled products – 6.9 million tons in 2022 and 7.6 million tons in 2023. Exports of rolled steel are expected at 4.7 million tons in 2022 and 5.1 million tons in 2023. If the war prolonged, production is expected at 6.5 million tons in 2022 and 6.1 million tons in 2023, rolled steel output at 5.9 million tons in 2022 and 5.5 million tons in 2023. The export of rolled products is expected at 4.1 million tons in 2022 and 3.8 million tons in 2023,” Roman Perepelytsia said.

According to Roman Perepelytsia, economic activity gradually resumes after the shock of the first weeks of the war. In March 2022, 32% of all Ukrainian companies ceased their activities. In April, this number dropped to 17%. However, 60% of enterprises operate below the pre-war level. Since the beginning of the war, production in Ukrainian steel industry has decreased several times, but in April there was a slight recovery. In March, steel production fell by 89%, in the first three months – by 35%.

In addition to logistical disruptions and loss of markets, production is disrupted by curfew, port blockade, payment discipline worsening, and occupied or destroyed production facilities, including 37% of steel production facilities, 40% of semi-finished production facilities and 37% of finished metal products.

According to the expert, domestic demand for steel in Ukraine is very limited since the beginning of the war. In March 2022, apparent steel consumption decreased by more than ten times compared to the average monthly level of 2021. The reasons for this were the closure of enterprises, disruptions in the work with the occupied territories, logistical problems and difficult access to financial resources. At the same time, metal consumption in April was higher than in March, but still far from pre-war levels.

Earlier GMK Center reported that Ukrainian steel plants in 2021 increased steelmaking by 3.6% compared to 2020, to 21.37 million tons. The production of pig iron increased by 3.6%, to 21.17 million tons.