Ukrainian steelmakers reduced the production of rolled products by 3.5% m/m in May

In May 2023, steel enterprises of Ukraine reduced the production of rolled products by 3.5% compared to the previous month – to 470 thousand tons. This is evidenced by Ukrmetalurgprom’s data.

Pig iron smelting in May 2023 increased by 10.8% compared to April 2023 – up to 603 thousand tons. Steel production for the month amounted to 583 thousand tons, which is 1.6% more m/m.

Compared to May 2022, production of rolled products increased by 31.7%, steel production – by 86.3%, and pig iron – by 53.8%.

In January-May 2023, Ukrainian steelmakers produced 1.98 million tons of rolled steel, which is 47.8% less than in the same period of 2022. Production of steel and pig iron decreased by almost 44% y/y in 5 months – to 2.39 million tons and 2.35 million tons, respectively.

The low volumes of production of Ukrainian steelmakers are connected with logistical problems, the unfavorable situation of the world market, as well as with the destruction due to hostilities of the two largest steel enterprises of Ukraine – Azovstal and Ilyich Iron and Steel Works in Mariupol.

The only way to deliver Ukrainian pig iron abroad now is by rail. Due to the large influx of cargo, as the sea ports are blocked, Ukrainian Railways cannot process and transfer wagons with Ukrainian products to the European Union quickly and on time. In addition, logistics costs for the delivery of goods have increased at least by 2 times.

Due to the above-mentioned factors, Ukrainian iron and steel enterprises operate with a low level of capacity utilization and even temporarily stop some of them. In addition, since October 2022, the Russian Federation shelled the state electricity infrastructure of Ukraine, which caused problems with energy supply of regions and industry.

Since the beginning of 2023, the situation with energy supply has stabilized. Steel enterprises are gradually restoring capacity and increasing production. In particular, Zaporizhstal in March took out blast furnace №2 from forced hot preservation. From now on, the blast furnace shop of the enterprise will work with three blast furnaces. For the full recovery of steel production capacities in Ukraine, the unblocking of domestic seaports for iron and steel products is required.

As GMK Center reported earlier, in 2022 steelmakers of Ukraine reduced steel production by 70.7% compared to 2021 – to 6.26 million tons. The production of rolled products fell by 72% y/y – to 5.35 million tons, and iron smelting fell by 69.8% y/y – to 6.39 million tons.