Ukrainian pig iron returned to the US market and rolled products are sold around the world

The war brought a number of challenges for the iron and steel sector of Ukraine. Hostilities, missile attacks, raw materials, energy deficit, logistics. But the last factor was the key one, which had the maximum impact on production and export volumes during the year for plants located on the territory controlled by Ukraine.


In the first months of the war no one understood what the real capacities of the railway Western border crossings and what cargo volumes could be passed from Ukraine to Europe by rail. Are there bottlenecks and opportunities for quick wins? Now it has become obvious that the capacity of border crossings is about 6 million tons per month or about 80 million tons per year, that`s quite a lot. But it could be used by only 50%. And the problem is on the European side of the border, where the reloading onto European standard railcars, the rearrangement of railcars bogies takes place. It is impossible to correct the situation quickly. And we need to be honest – nothing is being done or planned in this direction.

Problems with transportation similar to the iron and steel sector are also experienced by the agricultural sector of Ukraine. The conclusion of the Black Sea Grain Deal did little to ease the problem. About a million tons of grain per month stayed on the railway and about half a million on the river. Today the situation is changing. We see the ban on the import of Ukrainian grain in Poland, similar initiatives in Romania and Bulgaria. These measures should support the export of ferrous metals and iron ore. But on the other hand, the risks are represented by the unclear prospects of the Grain deal.

The next problem is related to the previous one. European ports were not ready to receive millions of tons of cargo from Ukraine. The sea gate of Ukraine today is the port of Constanta. Through it last year exported 200–250 thousand tons of iron ore from Ukraine per month and 70–80 thousand tons of ferrous metals. Polish ports are more focused on, reducing iron ore exports by 30%. In summer, there was the ban on the transportation of iron ore from Ukraine to the port of Szczecin. Also, Polish ports also do not have the necessary depth for loading large–capacity vessels.

The Danube ports of Ukraine began to play an important role in exports. The Danube connects Ukraine with 9 European countries, including the port of Constanta by sea. The port of Izmail last year provided up to a third of all exports of iron and steel from Ukraine. But the port has only 7 meters depth, that makes possible to load no more than 6 thousand tons on a barge. Therefore, cargoes from Izmail arrive in Constanta in small batches of 6 thousand tons to form a batch of 30 thousand tons.

The capacity of the Izmail port of 8 million tons was designed on the basis that part of the cargo is delivered by water, and part by rail. Last year, 9 million tons were handled, with transportation only by rail. So, the opportunities for growth in traffic through the port of Izmail are exhausted. In the Danube ports, a number of projects are being implemented to deepen the bottom, build warehouse complexes, and expand the capacity of the Bystroe estuary. But the expansion of bottlenecks requires complex solutions, incl. coordination and investment by the railway operator.

Solution for pig iron

But despite these difficulties, Ukrainian iron and steel companies continue to work and supply their products around the world, not limited to the European market. For example, the US market enjoys the return of Ukrainian pig iron. The US is the key market for pig iron, while Poland has become a logistics hub.

When we see that about a quarter of a million tons of pig iron was delivered to Poland from Ukraine in 1Q 2023, then this product goes through the Mostyska and Izov border crossings to the United States through ports on the Baltic Sea. This route accounts for up to 60% of pig iron exports from Ukraine in the 1Q of this year. Ukrainian pig iron isn`t sold to the Polish market or only in minor volumes.

Another way for Ukrainian pig iron is through the port of Izmail on the Danube, then through the Romanian port of Constanta to customers in the USA, Southern Europe, and Turkey. Up to 30% of ferrous metals are exported through this route.

Solution for iron ore

The main difficulties in export affected iron ore as it`s bulky – 44 million tons were exported before the war. Today, iron ore exports have fallen by 65%. As of the 1Q 2023 key markets are Eastern Europe countries: Czech Republic, Slovakia, Poland, where iron ore delivers by rail. Also Serbia and Hungary. Therefore, traffic goes mainly through three border crossings. Two of them with Slovakia – Uzhgorod and Chop–Chierna. There is also a flow to Czech and Austria. And the third one with Poland – the Izov point.

Poland and Romania are used as transit hubs. Test deliveries last year were through Polish ports. But it was economically more profitable to go through Izmail to Constanta and further to Turkey, UAE, Asia. In the 1Q 2023, coal imports to Poland declined and an opportunity arises for Ukrainian iron ore. And the traffic turned towards Poland.

As the result, only 5% of iron ore was exported through Izmail in the 1Q 2023. Rather, there were deliveries up the Danube to Serbia. This route is commonly used for Austria as well, competing with railway supplies.

The queues for railcars with iron ore at the border as of April are about 10 days, that is acceptable. But this was achieved due to the fact that Ukrzaliznytsya introduced a digital system for managing the traffic of goods for export. The company does not accept cargo for export if the system does not have free volumes registered with a European carrier. It eliminated the problem of queues at the border, but did not raise the volume of cargo. In other words, this did not solve the problem of volumes, but somewhat organized the export process.

In the coming months, there may be some improvement for the export of iron ore to Poland by railway. The ban on grain imports creates some room for iron ore. For a while we are talking about temporary measures until June. Also there are similar initiatives in Romania and Bulgaria. In other words, this will make it possible, first of all, to increase the export of iron ore by 0.5 million tons per month, including the direction to Polish ports. We are seeing some revival, perhaps a resumption of supplies to Asia.

Solution for semis and rolled products

Export of semi–finished products from Ukraine is now represented by a square billet. For the most part, these are intragroup deliveries to Poland to ArcelorMittal plants and to Bulgaria to Metinvest’s plant in Burgas.

But through the Polish ports, billet is exported to Denmark. We also see deliveries to the Dominican Republic. Judging by the volumes, this was a test delivery. Deliveries to Southern Europe were made probably in the direction of Izmail–Constanta.

Interesting changes are taking place in the logistics of rolled products and pipes. Ukrainian products have become available all over the world. For example, in such countries as Iraq, Israel, USA, Canada, Great Britain and others. This became possible thanks to the active use of container transportation. Containers are mobile, which gives opportunities for delivery planning. However, this path works on relatively small volumes.

System solution

Various options can be used for Ukrainian iron and steel exports. These options are in demand in different periods with different utilization and costs. Flexibility and creativity help Ukrainian producers overcome challenges and ensure stable supply to customers even in times of war.

Yes, when we talk about all of these logistic opportunities and solutions we mean limited export volumes. Ukrainian companies have adapted to the existing challenges. But this does not fundamentally solve the issue of further growth in exports. It is possible only if the Ukrainian ports of the Black Sea are unblocked. According to the local steelmaking association Ukrmetallurgprom, free access to Ukrainian Black Sea ports could raise iron and steel exports by $8 billion and in result support Ukrainian economy.