Ukraine’s production of rolled products rose 17.5% m-o-m to 248,000 tonnes (t) in August 2022. However, on an annualised basis, production dropped 6.8 times compared to August 2021.
Pig iron ore production by metallurgical enterprises in Ukraine stood at 335,000 t in August, up by 20.9% compared to July. Steel production, on the other hand, stood at 366,000 t, up 30.2% m-o-m in August. Notably, steel production and production of rolled products touched a record high since the outbreak of the Russia-Ukraine war.
In the first eight months (January-August) of the current calendar year, rolled products production plunged 65.6% to 4.48 million tonnes (mnt). Iron and steel production, too, fell 64% y-o-y to 5.15 mnt and 5.19 mint, respectively, during the period.
Why production dropped?
Logistical issues, unfavourable global market conditions as well as destruction of the two largest Ukrainian mills, Azovstal and MMK, resulted in lower production.
Post Russia’s invasion, Europe became the only market for Ukrainian products. Moreover, delivering goods by rail became difficult and expensive. Expenses incurred in shipping rolled products increased two times, while demand fell due to unfavourable market conditions.
In addition, Ukrainian mills are operating with low capacity utilisation and some have even suspended production. For instance, Zaporizhstal is operating only two blast furnaces and is considering cutting production. Kametstal is operating at about 80% of capacity, while ArcelorMittal has cut its workforce by 2/3rd since July.
In 2021, Ukraine’s steel production rose 3.6% 21.37 mnt against 2020. The production of rolled products in Ukraine in 2021 increased by 3.5% y-o-y to 19.08 mnt, while pig iron production increased by 3.6% y-o-y to 21.17 mnt.
~ Inputs from GMK center.
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