Ukraine’s steel sector is preparing for another challenging year

Ukraine’s steel industry faces new challenges in 2025 that could have a significant impact on steel production and exports. The stagnant domestic market, coupled with the challenging situation on foreign markets, casts doubt on the industry’s ability to maintain even its current performance. This is stated in GMK Center’s article “Prospects for the Ukrainian steel industry in 2025”.

According to the forecasts, steel production in Ukraine may decline by 9.3% – to 6.8 million tons in 2025. The main reasons for this decline are problems in the supply chain, stagnant domestic demand and deteriorating export conditions. At the same time, the pessimistic scenario assumes a complete shutdown of some steel and mining facilities.

In 2024, steel consumption in Ukraine remained at 3.4 million tons, showing no growth despite the economic recovery. Steel-consuming industries showed contradictory dynamics: building construction increased by 26% in the first half of 2024, but the area of new residential real estate projects decreased by 6.6%. Production of building steel structures increased by 21.7%, but vehicle production fell by 2.5%.

External markets also remain unfavorable. The European steel industry continues to be in crisis, which affects Ukraine, which is an integrated part of this market. In 2025, steel consumption in the EU is expected to decline further, and prices for flat products could fall by another 4%.

An additional risk factor is the decline in iron ore prices, which negatively affects the margins of Ukrainian producers. In 2024, the average price of ore decreased by 10%, and next year it is expected to fall further by 13-14%.

Despite the pessimistic forecasts, the end of the active phase of hostilities could be a driver for the industry’s development. However, even if the war ends in early 2025, it is too early to expect a significant increase in steel consumption. The Ukrainian economy needs time to recover, and the industry needs large-scale investments to maintain production.

Obviously, 2025 will be another challenge for Ukraine’s mining and metals industry, and the future of the steel sector will depend on its ability to overcome the challenges. Currently, the key issues for the industry include rising energy and logistics costs, lack of qualified personnel, etc. It is becoming increasingly difficult for steel and iron ore producers to remain competitive in both domestic and foreign markets as electricity prices rise above European levels and railroad tariffs increase for the second time in three years.

As GMK Center reported earlier, in 2023, Ukrainian steelmakers increased rolled steel production by 0.4% compared to 2022, to 5.37 million tons. Pig iron production during the year amounted to 6 million tons, down 6.1% compared to 2022, and steel production amounted to 6.23 million tons (-0.6% y/y).

Exports of rolled steel products in 2023 amounted to 1.78 million tons, while in 2022 – 2.47 million, and in 2021 – 8.34 million tons. Imports of the relevant products reached 1.18 million tons last year, 621.6 thousand tons in 2022, and 1.12 million tons in 2021.