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Ukraine Steel Market Faces Uncertainty Amidst Shifting Geopolitical Tensions

The Ukrainian steel market is facing increasing uncertainty. While steel plant activity has shown some recovery in recent months, evolving geopolitical tensions, particularly those highlighted in news articles concerning potential shifts in US foreign policy, create significant headwinds.

Observed changes in plant activity cannot be directly linked to the news articles “UN-Generaldebatte im Liveticker: ++ Trump kritisiert europäische Migrationspolitik – danach setzt Baerbock eine Spitze ++“, “Trump attackiert UNO und warnt Europa vor Ruin“, “UN-Generaldebatte im Liveticker: ++ Trump befürwortet Abschuss russischer Jets bei Verletzung des Nato-Luftraums ++” and “UN-Generaldebatte im Liveticker: ++ Trump befürwortet Abschuss russischer Jets bei Verletzung des Nato-Luftraums – Kehrtwende bei Ukraine-Kurs ++“, which primarily discuss potential changes in US foreign policy and their implications for the region. However, these geopolitical shifts introduce a layer of instability that could impact future steel production and trade.

Here’s an overview of recent activity levels:

Bar chart and satellite map of steel production activity in Ukraine

Overall, the mean steel plant activity in Ukraine has shown a general upward trend, increasing from 20.0% in March to 37.0% in September. Metallurgical Plant Kametstal mirrors this trend, rising from 36.0% in April to 43.0% in September. Donetsksteel Metallurgical Plant activity remains low and relatively stable. Alchevsk Iron & Steel plant shows the highest activity levels and the most consistent performance, increasing from 58.0% in March to 64.0% in September.

Metallurgical Plant Kametstal, located in Dnipropetrovsk, is an integrated steel plant with a crude steel capacity of 4.2 million tonnes per annum (ttpa) based on BOF technology. The plant produces semi-finished and finished rolled products like square billets, wire rods, and rails, serving the energy and transport sectors. Kametstal’s activity has increased steadily over the observed period, reaching 43% in September. No direct connection between this increased activity and the political shifts described in the named news articles can be established.

Donetsksteel Metallurgical Plant, situated in the Donetsk region, has a pig iron capacity of 1.5 million ttpa using BF technology. The plant’s crude steel production capacity is listed as zero, with BOF and OHF equipment either dismantled or mothballed. Satellite data shows consistently low activity, fluctuating slightly between 15% and 19% in the last seven months, dropping to 15% in September. It is difficult to determine whether this drop is associated with general political instability. A link with the potential geopolitical changes outlined in the provided news articles cannot be explicitly established.

Alchevsk Iron & Steel plant, located in the Luhansk region, is another integrated steel plant with a crude steel capacity of 5.472 million ttpa, relying on BF and BOF technologies. Its product range includes slabs, square billets, and structural shapes. Satellite observation shows relatively high and stable activity at this plant, with activity steadily increasing to 64% in September. There is no concrete evidence suggesting a direct impact of the geopolitical uncertainty highlighted in “UN-Generaldebatte im Liveticker: ++ Trump kritisiert europäische Migrationspolitik – danach setzt Baerbock eine Spitze ++”, “Trump attackiert UNO und warnt Europa vor Ruin”, “UN-Generaldebatte im Liveticker: ++ Trump befürwortet Abschuss russischer Jets bei Verletzung des Nato-Luftraums ++” and “UN-Generaldebatte im Liveticker: ++ Trump befürwortet Abschuss russischer Jets bei Verletzung des Nato-Luftraums – Kehrtwende bei Ukraine-Kurs ++” on the plant’s production.

Given the increasing geopolitical uncertainty reflected in the news, despite recent increases in activity at Kametstal and Alchevsk, steel buyers should:

  • Prioritize securing supply from Kametstal: As one of the more active plants, Metallurgical Plant Kametstal represents a more reliable source. Buyers reliant on products like square billets and rails should attempt to secure longer-term contracts.
  • Closely monitor Alchevsk Iron & Steel: Despite the relatively high activity and production levels, its location in the Luhansk region means it remains vulnerable to disruption. Evaluate alternative supply chains as a precautionary measure.
  • Negotiate flexible contract terms: Incorporate clauses that allow for adjustments based on political and security developments, considering potential disruptions to transportation and production.