Improvement on global steel market expected not sooner than in H2 2025 – expert’s opinion

The relevant statement was made by GMK Center CEO Stanislav Zinchenko during the discussion ‘What Prevents Metallurgical Production Growth?’, which had been organized by the Centre for Economic Strategy, an Ukrinform correspondent reports.

“For the second month in a row, we have been observing a decline in Ukraine’s metallurgical production output. But, this is happening not only here, it is a global trend. And no one expects the European economy and steel consumption to start recovering before the middle or the third quarter of 2025. It is the biggest problem we see today,” Zinchenko told.

In his words, at the end of the year, the global demand for steel is expected to decrease by 1%, which reflects certain economic cycles accompanying deindustrialization in a number of European countries, a tight monetary policy of central banks, and structural changes in the industrial policies of large countries.

“This global problem also affects Ukraine. Prior to the war, we exported 70% of steel products. Now, it is 45-50% of what we produced, although our production volumes are much lower. This indicator is a little higher for raw materials,” Zinchenko explained.

Along with the global decline in the demand, Ukraine’s metallurgical production and exports are influenced by some other factors.

Firstly, the instability of the Ukrainian maritime corridor. Secondly, increased logistics costs due to a rise in sea freight rates, which makes Ukrainian products non-competitive.

“For example, the cost of ore that we ship to China, in contrast to Brazilian or Australian ones, is three to six times higher due to freight rates,” Zinchenko noted.

Additionally, in terms of price, Ukrainian products lose against Russian ones, for example pig iron.

“Europe is reducing the purchase of Ukrainian pig iron and increasing that of the Russian one. They have already taken up a quota on pig iron this year, because it is cheaper, for obvious reasons,” the expert mentioned.

Trade barriers remain another factor restraining the development of Ukraine’s metallurgical industry. According to Zinchenko, there is a number of anti-dumping duties on Ukrainian products, which were imposed back in the 1990s and are still remaining in effect today.

“But, the main thing is the reduced demand for metallurgical products. Prior to the war, we exported such products to more than 90 countries. Due to expensive logistics, we do not have such an opportunity today, so our market is the European Union. And there is currently economic stagnation,” the expert concluded.

A reminder that, in September 2024, Ukraine’s metallurgical enterprises reduced core production volumes compared to the previous month.