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The hostilities and the loss of vital logistics routes through the Black Sea ports in the south have significantly affected the production, export volumes and sales geography of Ukrainian producers.
But the countries of Eastern and Central Europe have become the new strategic partners for Ukraine’s mining and metallurgical complex during these challenging times of war and have accepted the major share of Ukrainian exports.
In 2023, Ukraine’s total iron ore exports fell to 17.75 million tonnes, down by 26% from 22.37 million tonnes in 2022, according to the data from Ukraine’s State Customs Service. The 2023 total was also down by 60% from 28.4 million tonnes tonnes in 2021 – the year preceding Russia’s invasion.
Slovakia became the largest consumer of Ukrainian iron ore in 2023, accounting for 28.39% of total exports in monetary terms, with the Czech Republic taking 19.7% of the total and Poland 19.6%.
Back in 2021, China was the main destination for iron ore exports from Ukraine, accounting for 41.9% of the total, with the Czech Republic taking 9.6% and Poland 8%.
In terms of semi-finished steel, Ukraine’s exports dropped to 1.2 million tonnes in 2023, down by 36.7% compared with 2022’s 1.64 million tonnes and down 82.2% from 2.19 million tonnes in 2021, according to the State Customs Service data.
Around 90% of the 2023 exports was as steel billet because the key mills that produced slab – Azovstal and Ilyich Iron & Steel – were both located in the Azov Sea port city of Mariupol and were destroyed by Russia in 2022.
Bulgaria has become the main destination for Ukraine’s semi-finished exports in 2023, accounting for 36.7% in monetary terms, followed by Poland with 23%. In 2021, the main export destinations were Italy, on 30.9%, Turkey at 12.8%, and the Dominican Republic on 8%.
A similar scenario has been seen in finished steel exports.
According to the data from Global Trade Tracker (GTT), Ukraine exported around 361,000 tonnes of various finished long steel products in 2023, which is around 75% lower than the 1.5 million tonnes shipped in 2021.
Of the total, nearby countries in Europe took 292,000 tonnes, representing about 80% of the export total.
The share going to Europe was only 20% in 2021, while the countries of Africa imported 36.6%, 20.6% went to the Middle East and 15.4% to South America.
In terms of flat steel exports in 2023, Ukraine shipped 603,916 tonnes of HRC to the EU, up by 18.4% from 509,896 tonnes in 2022, according to GTT data.
Poland was the major destination for Ukraine-origin HRC exports, accounting for about 42% of the total.
“Ukrainian suppliers are mainly active in the commodity-grades HRC market,” a buyer in Poland said.
Fastmarkets weekly price assessment for steel hot-rolled coil domestic, exw Central Europe, was €720-730 ($780-791) per tonne on February 21, down from €740-745 per tonne on February 16.
Market participants said that Ukraine-origin coil was normally sold with a discount of about €20 per tonne compared with Europe-origin material.
In addition, European steel processors using Ukraine-origin feedstock to manufacture finished steel products (including tubes and sections among other things), are able to ship those products to the US without facing import taxes.
The US suspended Section 232 import tariffs on steel from Ukraine in May 2022, following to Russia’s invasion earlier in the year and in May 2023, US Department of Commerce confirmed that it had extended the suspension for another year.
Ukraine was also exempted from all anti-dumping duties and safeguard measures in the EU.
In September 2023, Ukraine managed to ship two vessels of steel and raw materials via the Black Sea – the first time it had used its traditional route for steel exports since it was blocked by Russia at the start of the invasion.
Since then, sources have reported sporadic offers for Ukraine-origin HRC in Italy on a CFR basis, although such deep-sea HRC exports have remained irregular and most flat steel deliveries from Ukraine go by rail to Central and Eastern European destinations.
The most recent HRC offers to Italy from Ukraine were reported at €660-680 per tonne CFR at the beginning of February.
The opposite situation now prevails in terms of pig iron supplies and, in contrast to all other products, Ukraine reduced its pig iron exports to the EU during the past two, war-affected years.
In 2023, Ukraine exported a total of 1.39 million tonnes of pig iron, according to data from GTT, but only 228,878 tonnes, or 16% of the total, was supplied to EU countries. In 2022, the EU share of Ukraine’s pig iron exports was 23% and in 2021 it was 29.86%.
The US was a preferred destination for Ukrainian pig iron suppliers in 2023, because of the price premium there.
In 2022, Fastmarkets’ average price assessment for pig iron import, cfr Gulf of Mexico, US was $643.27 per tonne, whereas Fastmarkets’ average price assessment for pig iron, import, cfr Italy, was $526.11 per tonne – putting the premium to the US market over Italy at $117.16 per tonne.
Fastmarkets understands, however, that Ukrainian pig iron supplies to the EU may increase this year, due to the reducing attractiveness of the US market.
The gap between the EU and US reduced to $68.49 per tonne in 2023, but by mid-February the gap had narrowed to $45 per tonne, with the average price assessment for pig iron imports in the US at $480 per tonne CFR, while the price from Italy was $435 per tonne CFR.
“The Italian market is becoming more and more attractive to us,” a supplier said. “The US still has some premium, but considering the difference in the freight rates, it is pretty likely that we can switch shipments to Italy.
“Freight to Italy is around 30% cheaper than to the US, because the available fleet for 10.000-15.000 tonne cargoes is larger.”
Ukraine used to be one of the key steel plate suppliers to the EU until Russia’s invasion and the EU was the key export outlet for Ukraine-origin plate.
Ukraine had an individual quota for steel plate, with a quarterly allocation of about 218,557 tonnes.
According to statistics from the regional steel industry association Eurofer, in 2021, Ukraine shipped 864,637 tonnes of plate to the EU, which accounted for 43% of the total 2.02 million tonnes of steel plate imported to the bloc that year.
But, in 2022, exports from Ukraine to the EU dropped to just 195,719 tonnes, and in 2023 that had fallen to zero.
Ukraine’s key plate-producing assets were Metinvest’s Mariupol-based plants Azovstal and Ilyich Iron & Steel, which were destroyed by Russia in the invasion.
Russia, which had been the second-largest supplier of steel plate to the EU, was also out of the European market, because the ban that was imposed on deliveries of Russian finished steel on March 15, 2022, in response to the invasion.
Since then, the European Union has had to rely on increased deliveries of steel plate from Asian suppliers, – although these volumes cannot fill the gap left by Ukraine and Russia.
Inside, the EU trading bloc, sources said they had noticed a shift in trade flows, with an increased presence of Italian heavy plate in Germany, Central and Eastern European markets.
Trading has been slow in the European heavy plate market in recent weeks, however, with buyers avoiding restocking amid downbeat price expectations and slow downstream sales. But the market situation was a bit better in Central and Eastern Europe due to supply issues, sources said.
“Prices [for heavy plate] are better in Central Europe due to limited supplies, with Ukraine and Russia gone and with two local mills [domestic producers in Poland and Romania] no longer producing for various reasons. [So it] looks like all re-rollers will try to fill up their order books in Central Europe,” a buyer source said.
Fastmarkets’ weekly price assessment for steel domestic plate, 8-40mm, exw Northern Europe, was €800-830 per tonne on Wednesday, widening down by €10 per tonne from €810-830 per tonne ex-works seven days earlier.
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