Ukrainian steel market may grow by 30% in the second half of the year

There is no shortage of steel products on the Ukrainian market, except for some specific items

Despite hostilities in a number of Ukrainian regions, operators of the steel trade market are facing growing demand for steel products in safe regions. This is due to the intensification of business activity in the last few months and the beginning of the construction season. The revival of sales in the first half of the year gives reason to expect that the dynamics will not be worse in the second half of the year.

Revival of the market

Steel sales increased slightly in the first half of 2023. In January-June, we see an increase in demand for steel products by approximately 20% of last year’s level. We encounter a large number of inquiries from customers regarding order amounts and tender purchases. That is, compared to last year, the market has revived a little.

The increase in sales of steel products is related to the adaptation of business to war conditions. It is also possible to note the delayed demand: business continues to invest in its development, and private buyers do not want to keep all the funds under the pillow and invest them in development.

One of the peculiarities of the metal trade market is that orders from customers began to appear suddenly, rather than planned. The market has become more dynamic in terms of applications for the purchase of steel products, in particular for deficit positions. Most often, steel traders in warehouses do not store as much steel products as the customer may suddenly need.

Specificity of demand

Currently, we see an increase in demand for profiled round pipe, sheet steel, and rebar. The increase in sales of rebar is related to the improvement of the situation in the construction industry, in particular, activation in the housing construction segment, in particular by private customers.

The demand for sheet steel is mainly formed by machine-building enterprises and small construction companies. In particular, we bought a lot of sheet steel and profile pipes for the construction of modular houses for displaced people.

We also see demand for steel products from enterprises recovering from the consequences of hostilities. At the same time, it cannot be said that the demand for steel products for the restoration of infrastructure destroyed by the war is significant.

We import profile pipe from Turkiye and rolled sheet steel from Europe. Thanks to well-established logistics, we sometimes import metal products from Turkey, analogues of which are produced by Ukrainian enterprises. These products can be imported both through the Danube ports and directly by road transport. Through ports, such logistics are a little cheaper than by road, but the difference is small.

We do not see a shortage of steel products on the Ukrainian market, except for certain specific positions – round welded pipe (type 325, Ukrainian producers produce such products), rolled sheet (from 8 mm), steel S355. These are the positions that are not produced by Ukrainian steel enterprises. Deficit positions are closed relatively quickly, since there is enough on the world market now. So it is even more likely not a deficit, but relatively long terms of delivery of imported products.

Market forecasts

At the beginning of the year, there was a slight increase in the prices of rolled steel, and then there was a sharp decrease. Today, the dynamics of prices for steel products is downward. The supply of steel products from Asia is pushing prices down, but I think they will bottom out in August-September. Next, we assume that there will be an increase in steel prices.

I think the second half of 2023 will be better in terms of prices than the first half. Many of our customers have already signed the specifications, which allows us to expect an increase in sales within 30%. Our customers expect an increase in their loading, which requires them to order metal products in advance. Moreover, customers take into account the possible shortage of a number of items, so they rush to reserve the required amount of one or another steel product in advance.