Ukrainian ferroalloy producers reduced production by 57% y/y in 2023

In 2023, Ukrainian ferroalloy companies reduced production by 57.4% compared to 2022. This was stated by Sergiy Kudryavtsev, Executive Director of the Ukrainian Ferroalloy Association UkrFA, in an interview with the Ministry of Industry.

The industry’s performance was affected by the complete shutdown of the Nikopol Ferroalloy Plant, Zaporizhzhia Ferroalloy Plant and Marhanets Mining and Processing Plant in November 2023. This happened, among other things, due to the intensification of hostilities, falling prices for ferroalloys, and logistical constraints. One of the main reasons for the shutdown was the increase in electricity transmission tariffs, which affected production costs and profitability.

In addition, according to Sergiy Kudryavtsev, even if the plants are able to resume production in the summer, they will face significant staffing problems due to the imperfect mechanism of reservations for mobilization, in particular, specialists of the main production equipment.

«Enterprises in the industry faced this, employees were booked until November, but it is difficult to say what will happen now, because the reservation itself is issued for six months. That is, the reservation period should end in May, and it is difficult to say what will happen next,» he comments.

According to UkrFA’s director, the government should take steps to restore the industry’s operations. While the government’s influence on tariff regulation is unlikely, it is much more important to establish logistics and regulate the booking of workers.

«In terms of logistics, we can probably achieve greater security with the sea corridor, so we will have more opportunities not only to export products but also to receive imported raw materials. Last year, we actually received imported raw materials under old contracts, which resulted in a low cost of the final product,» added Sergiy Kudryavtsev.

In 2024, the state of Ukraine’s ferroalloy industry will depend on three factors: shelling, logistics and electricity.

«As long as these issues persist, the plants are unlikely to be able to resume operations,» Kudryavtsev summarizes.

As GMK Center reported earlier, in 2023, Ukraine reduced exports of ferroalloys by 4.9% compared to 2022, to 344.2 thousand tons. Compared to the pre-war year of 2021, shipments of ferroalloys abroad decreased by 48.5%, or 324.4 thousand tons. Poland was the largest consumer of Ukrainian-made ferroalloys in 2023, accounting for 52.8% in monetary terms. Turkiye accounted for 14.1% of export shipments and the Netherlands for 8.5%.