All-Ukrainian exports last year decreased by 38% compared to 46-72% in iron and steel industry
The indicators of the decline in exports of iron and steel products in 2022 are lower than the overall decline in Ukrainian exports. The drop in commodity exports of iron and steel last year amounted to 46% and 72%, respectively. This once again emphasizes the fact that steel sector suffered more from the war than other sectors of the economy.
Iron and steel export
Due to the destruction of capacities in Mariupol and logistical problems, the production of iron and steel, mainly in the part of steel products, decreased in the rating of export products. Iron ore ranked third in the list of export products in terms of value, after corn ($5.94 billion) and oil ($5.46 billion). In general, the export of iron ore in 2022 amounted to 23.9 million tons (-45.9%) worth $2.9 billion (-57.8%). The key factor for the drop in iron ore exports was the closure of seaports and a decrease in demand on the European market.
The situation with the export of steel products corresponds to the general situation of the industry, where the volume of production decline is about 70%.
“Semi-finished steel products and hot-rolled products show the whole tragedy of Ukrainian steel industry. Fall in volumes during the year – 72%. The total volume of exports of semi-finished products was 1.9 million tons worth $1.1 billion, and hot-rolled products were 1.3 million tons worth $1 billion. But it is even brighter to compare January and December. In January – 404 thousand tons, in December – 31 thousand tons,” emphasizes deputy Minister of Economy, trade representative of Ukraine Taras Kachka.
Against the background of the indicators of the iron and steel complex, the general characteristics of Ukrainian exports fell significantly less.
In 2022, Ukrainian commodity exports amounted to 99.8 million tons (-38.4% by 2021) worth $44.1 billion (-35%). The Ministry of Economy believes that such results are quite positive for wartime conditions.
“Ukrainian business exported goods worth $44.1 billion and weighing 99.8 million tons ( 16.3 million tons of them – through the grain corridor). In the conditions of war, this is a feat,” notes Julia Svyridenko, first vice prime minister, Minister of Economy of Ukraine.
In the conditions of blocked ports, Ukrainian exports were reoriented to European markets, where 63% of domestic production worth $27.9 billion (+4.1% by 2021) went, in particular, to the following countries:
- Poland – $6.6 billion;
- Romania – $3.8 billion;
- Hungary – $2.27 billion;
- Germany – $2.23 billion.
In addition to European countries, Turkiye ($2.9 billion) and China ($2.46 billion) remained Ukraine’s major foreign trade partners, but exports to these countries fell by 29% and 69%, respectively.
In the conditions of the war, logistics became one of the main problems of the entire economy and, in particular, of exporters. The logistics of Ukrainian exports in 2022 looked like this:
- sea transport – 53.8 million tons (-55% by 2021);
- railway – 33.7 million tons (+3.4%);
- motor vehicles – 12 million tons (+32.4%).
In the conditions of restrictions on the delivery of part of iron and steel products by rail, the companies of the industry have partially switched to exporting products by road transport. This was facilitated by the fact that by the end of the year, the offer for road transportation to Europe and EU countries increased, and the cost of road delivery decreased (compared to the first months of the war).
The key issue for the export of iron and steel is the unblocking of the Black Sea ports, but the grain agreement does not apply to other export products, and no one gives guarantees of its inclusion.
“At the beginning of the war, the Russian fleet blocked Ukrainian seaports. This destroyed Ukrainian maritime exports. According to our estimates, monthly export losses for Ukraine reach $420 million due to blocked seaports (1.3 million tons of iron ore, 151 thousand tons of pig iron, 192 thousand tons of semi-finished products and 218 thousand tons of finished steel products). To mitigate the first wave of war consequences, which include disruption of supply chains, Ukrainian seaports must be unblocked. This will support the Ukrainian economy and restore supply chains,” summarizes Stanislav Zinchenko, CEO of GMK Center.