Ukraine reduced pig iron exports by 22.6% m/m in July

In January-July, shipments of products abroad fell by 26.1% y/y

In July 2024, Ukrainian steelmaking companies reduced exports of commercial pig iron by 22.6% compared to the previous month, to 71.06 thousand tons. The figure fell by 33.4% compared to the same month in 2023. This is evidenced by data from the State Customs Service.

The main destinations for pig iron exports in July were Turkey – 36.14 thousand tons (+17.3% m/m), Italy – 20.94 thousand tons (+319% m/m), and Poland – 4.2 thousand tons (+17.4% m/m). At the same time, shipments to the US, the main consumer of Ukrainian pig iron, came to a complete standstill during the month.

In January-July of this year, pig iron shipments abroad amounted to 669.98 thousand tons, which is 26.1% less than in the same period of 2023. During this period, 451.65 thousand tons of relevant products were shipped to the United States, 66.95 thousand tons – to Turkey, 57.65 thousand tons – to Italy, and 34.13 thousand tons – to Poland.

Pig iron exports from Ukraine have been gradually slowing down since the beginning of 2024. This is due to an increase in its processing in the domestic market to produce value-added products, which is a priority. Metallurgical enterprises are increasing production of finished products amid the opening of new markets through exports via the sea corridor.

At the same time, the industry’s performance may deteriorate in the short term due to a number of negative factors, including lower demand for products, problems with energy supply, shortage of personnel due to mobilization, etc.

Thus, 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 from the EU at the European price to avoid forced electricity supply restrictions. Previously, the mandatory share of imports was 30%.

This decision of the Ukrainian government may lead to numerous negative consequences for domestic energy-dependent industrial companies, especially iron ore producers and metallurgists. The share of electricity in the production of iron ore concentrate is 60%, pellets – 32%, steel products in electric arc furnaces – 24%, blast furnaces and converters – 3.5%.

The rise in electricity costs is leading to a sharp rise in production costs, making it economically unprofitable to continue production, and some mining and metals companies warn that this could lead to a complete shutdown. In general, the restriction of electricity supplies will inevitably lead to a significant decline in production and exports.

Revenue from pig iron exports in January-July 2024 decreased by 26.8% compared to the same period in 2023 – to $253.92 million. In July, it amounted to $27.91 million, down 26% y/y and 23.4% m/m.

As GMK Center reported earlier, in 2023, Ukraine reduced pig iron exports by 5.8% compared to 2022, to 1.25 million tons. Compared to the pre-war year of 2021, pig iron shipments abroad decreased by 61.4%, or 1.99 million tons. Export revenues of domestic enterprises decreased by 26.2% y/y – to $471.5 million.

Poland was the largest consumer of Ukrainian pig iron in 2023, accounting for 51.9% in monetary terms. Spain accounted for 21.4% of export shipments and the United States for 13.1%.