Steel without margin: the domestic market faces pressure from imports and falling demand

The Ukrainian steel trading market is experiencing a significant cooling of demand. This was predictable, as after a sharp recovery in 2023, the market was expected to stabilize. That is why the baseline scenario for the industry in 2025 is to maintain last year’s results.

Current situation

The beginning of 2025 was difficult for all industry participants. Excess inventories at traders’ and manufacturers’ warehouses led to a general surplus of steel, which stimulated price competition and a sharp decline in prices.

At the same time, pressure from imports is increasing, primarily from Turkey and China. On the one hand, this expands the available range of products, but on the other hand, it puts price pressure on domestic producers. The result is a decline in margins and a transition of the market into a stagnant mode.

Thus, the first six months of 2025 showed a cooling of consumer demand in the rolled steel market. Vartis’ sales declined by approximately 5% compared to the same period last year. This is a predictable trend, indicating a gradual saturation of the market after an intense recovery in 2023. At the end of 2024, the company reached 91% of its pre-war volumes. However, it is too early to talk about a full return to 2021 levels: the year is still ongoing, and the market environment remains volatile.

Demand structure

The main consumers remain mechanical engineering, the agricultural sector, and private construction. In the western regions, against the backdrop of business relocation and growing demand for housing, private construction and commercial properties continue to generate stable demand. A significant part of the activity falls on the agricultural sector – farms are investing in warehouses, logistics infrastructure, and technical facilities. At the same time, large-scale development and heavy industrial construction remain on hold, which reduces their share in the overall consumption structure.

The infrastructure restoration segment is directly dependent on government and donor funding. Positive signals — funds coming into treasury accounts — are immediately converted into growth in demand.

However, payment delays remain the biggest barrier. In such conditions, the financial burden falls on contractors and suppliers of rolled steel, which significantly slows down the pace of project implementation. Demand exists, but the lack of payment discipline limits its realization.

The structure of demand clearly correlates with the needs of the economy in wartime. Consumption of products for the production of steel structures – pipes, sheet steel, and channels – is growing.

At the same time, demand for materials used for fortifications and defense infrastructure, such as mesh and profile pipes, is increasing. On the other hand, procurement volumes from the railway car manufacturing and mining industries remain limited, with these sectors showing subdued growth.

Industry challenges

One of the systemic challenges is the shortage of personnel. Wartime has made it much more difficult to recruit and retain qualified specialists, especially in physically demanding fields. Despite this, we see new opportunities: women are actively entering technical professions and often demonstrate high performance.

Logistics remains no less critical: extended delivery times, unstable transport costs, and difficulties at border crossings. All this is exacerbated by aggressive competition from imports, which puts pressure on profitability and long-term business sustainability.

Cautious forecast

Expectations for the steel trading market are balanced: the baseline scenario is to maintain the results of 2024. The Ukrainian steel market has adapted to the conditions of war, but growth is only possible if large-scale recovery programs are implemented. If it is possible to stabilize the energy sector and ensure uninterrupted financing for construction, this will be a driver of recovery.

However, a significant part of the risks are beyond the control of the business: these include the security situation, mobilization challenges, and the volume of international aid.

For our company, 2025 is likely to be a year of stabilization and conservation of positions, with preparation for growth in the medium term.