12 July 2023
In June, Ukrainian enterprises reduced the production of pig iron and steel m-o-m.
According to preliminary information from the Ukrmetallurgprom association, in June Ukrainian steel mills produced 436,000 tons of steel, which is 25% less than in the previous month, but 48% more than last year's June figure.
Decrease in production compared to May (by 147 thousand tons) relates to the ArcelorMittal Kryvyi Rih plant, which suspended steel production after the explosion of the Kakhovskaya HPP, in order to reduce water consumption under critical conditions, as well as Zaporizhstal, which reduced steel output by 25% (or by 54 thousand tons) to 159 thousand tons (due to repair works).
According to our estimates, production at Kametstal was more or less stable (Kametstal was the largest Ukrainian steel producer by the volume of output in Y2022).
As for the production of pig iron, it also decreased in June, amounting to 487 thousand tons (603 thousand tons in May, 544 thousand tons in April).
In total, in the first half of 2023, Ukrainian steel mills produced 2.8 million tons of pig iron (-37% compared to last year, due to the high level of production before the full-scale invasion - in January and February 2022), and about the same amount of steel (-38%).
During the reporting month, global steel prices were at a relatively stable level, which allows Ukrainian metallurgical companies to export their products through the Danube river ports and the western borders under the conditions of the still blocked Ukrainian deep-water ports.
On the other hand, we can expect further gradual recovery of domestic demand for steel related to Ukrainian construction sector and other industries demand.
After the loss of the metallurgical plants in Mariupol (which produced approximately 40% of Ukrainian steel production in the years before the full-scale Russian invasion), the main producers are Kametstal (formerly DMK, part of the Metinvest group), Zaporizhstal (also controlled by Metinvest) and ArcelorMittal Kryvyi Rih.
After the recent explosion of the Kakhovskaya HPP, AMKR announced the suspension of steel production at the plant, which will have a negative impact on production figures in June.
On the positive side, after the decrease in global steel prices during March-April, prices stabilized in May and early June. This will allow Ukrainian companies to continue exporting their products through Ukraine's western borders, which from a logistical point of view is significantly more expensive than exporting through ports that remain blocked for metallurgical production.