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Metinvest predicts a drop in steel production in Ukraine to 6.5 million tons this year

Ukraine / Ferrous metallurgy
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In the event of a protracted war, Ukrainian steel production will drop to 6.5 million tons this year, and if Ukraine wins the war with Russia, this amount could reach 7.6 million tons, Metinvest predicts.

Metinvest predicts a drop in steel production in Ukraine to 6.5 million tons this year

Under the optimistic scenario for Ukraine of conducting a military special operation of the Russian Federation, steel production in the country in 2022 will reach 7.6 million tons, the production of finished metal products will amount to 6.9 million tons, and the export of rolled steel is projected at 4.7 million tons Rinat Akhmetov and Vadim Novinsky spoke about this in his speech at the 86th meeting of the members of the association of manufacturers of long products IREPAS Roman Perepelitsa, Head of Strategy and Business Development at Metinvest Group.

According to him, in any scenario for the continuation of events, Ukraine will face a deep economic recession, while in the event of a victory in the Russian Federation, the restoration of its economy to the pre-war level is expected within about five years, and in the event of a protracted war, the fall of the economy will last from one up to two years, after which there will be economic stagnation in the long term.

“In 2022, the real GDP of Ukraine, according to various forecasts, will fall by 30-40%. At best, the Ukrainian economy will reach the level of 2021 only in 2026. If Ukraine wins, it is predicted that steel production in Ukraine will reach 7.6 million tons in 2022 and 8.3 million tons in 2023, and the output of rolled products will be 6.9 million tons in 2022 and 7.6 million tons in 2023 year. Rolled steel exports are projected at 4.7 million tons in 2022 and 5.1 million tons in 2023. In the event of a protracted war, steel production is expected to be at 6.5 million tons in 2022 and 6.1 million tons in 2023, rolled products at the level of 5.9 million tons in 2022 and 5.1 million tons in 2023 , and the export of rolled products is expected to reach 4.1 million tons in 2022 and 3.8 million tons in 2023,” said Roman Perepelitsa.

He noted that economic activity gradually resumed after the shock of the first weeks of the war: if in March 2022 32% of Ukrainian manufacturers ceased their activities, then in April this number decreased to 17%. However, 60% of enterprises operate below the pre-war level. Since the beginning of the war, production in Ukrainian metallurgy has decreased several times, but in April there was a slight update. If in March steel production decreased by 89%, then in the first three months the output fell by 35%. Export of metals in March suffered a loss of 880 million dollars.

In addition to the disruption of logistics and the loss of markets, production is limited by curfews, blockades of ports, deteriorating payment discipline, and occupied or destroyed production facilities – currently, about 40% of the pre-war capacities of Ukrainian steel production are under occupation or located in close proximity to the region conducting military operations; of which 37% are steel production, 40% are semi-finished products and 37% are finished metal products.

As the expert noted, domestic demand for steel in Ukraine has remained very limited since the beginning of the war. In March 2022, apparent steel consumption decreased by more than ten times compared to the average monthly level in 2021. The reasons for this were the shutdown of enterprises, disruptions in work with the occupied territories, logistical problems and difficult access to financial resources. At the same time, metal consumption in April was higher compared to March, but still far from the pre-war level.

“Ukraine’s foreign trade remains limited mainly due to a naval blockade, limited capacity of railways, interruptions in trade with Russia and the introduction of foreign exchange restrictions, Ukraine is looking for alternative ways to export metal products, and the capacity of the existing infrastructure for exporting steel is limited to 500 thousand tons per month,” said Roman Perepelitsa.

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