Ukraine’s military and political situation has strongly impacted the steel industry, not only in Ukraine but also in the markets of Europe, Turkey, and China. The current uncertainty in these markets has every chance of escalating into a protracted economic crisis.
In Ukraine, since the beginning of the full-scale invasion, several large metallurgical enterprises have been stopped or partially stopped. These include Azovstal, Ilyich iron and steel works of Mariupol, ArcelorMittal, Zaporizhstal, Interpipe Ukraine, Ferrexpo, and others. As a result, the export market was completely lost, which is about 80% of the total Ukrainian production or more than 14 million tons of products per year.
Another urgent task that all metal traders had to solve is to find and strengthen new logistics supply chains for raw materials and products in the world. The blockade and occupation of ports have forced national producers to look for alternatives. Some routes go to Europe by road and rail, also supplies can be made from the Black Sea ports to Romania and Bulgaria and from the Baltic Sea ports to Poland.
As a result, due to the shutdown of several Ukrainian enterprises, logistical delays, and sanctions against the russian economy, the supply of steel products to the global market has become a major issue. This is more than 58 million tons.
The situation with raw materials on the global market also does not look quite positive at the moment. For example, Ukraine and russia supplied totally about 60% of pig iron (approximately 7 million tons) to the US, Turkey, Italy, and other countries for further smelting into steel.
In addition, Ukraine and russia were major producers of square billets and slabs. Official data show that in 2021, Ukraine produced 50% of square billets and about 35% of slabs for the EU (for export) of the EU’s total demand. At the same time, Ukraine and russia controlled about 85% of the EU semi-finished products market. In other words, this is a huge volume of products that cannot be replaced in the short or long term, directly affecting global supply chains, raw material processing, and sales.
The Black Sea shipping channel has also been closed for the moment. The shipment of metal and iron ore from the seaports of Ukraine has been stopped. Looking at the numbers, third-party statistics tell us that in 2021, 44.46 million tons of iron ore were exported from Ukraine only. 42% of wich were shipped to China. At the same time, Ukraine’s mining and production complex announces its readiness to continue shipments and demonstrates it. However, due to logistical constraints, deliveries are partial and only to Europe.
The behavior of ore mining companies in Brazil and Austria is not entirely predictable. Brazilian iron ore producers are still recovering from the consequences of large-scale environmental accidents in 2015 and 2019.
In general, looking at the geopolitical situation, unfortunately, we can say that we can expect a deficit of products, and rising prices for rolled metal products and delivery services. For its part, MKS Metal is making great efforts to provide our customers with the necessary range of rolled metal products on individual terms. Our customer focus always allows us to find compromise solutions, and our hard work helps us build long-term business relationships.