9,179.48 TL BIST 100 BIST 100
4.35 CNY CNY CNY
31.13 $ USD USD
€33.79 EUR EUR
0.13 CNY CNY/EUR CNY/EUR
44.36 TL Interest Interest
83.30 $ Fossil Oil Fossil Oil
22.41 $ Silver Silver
3.84 $ Copper Copper
115.68 $ Iron Ore Iron Ore
394.00 $ Ship Dismantling Ship Dismantling
2,041.87 TL Gold (gr) Gold (gr)

Ukrainian iron ore industry is in crisis

The majority of the steelmaking facilities were destroyed during the war in the Donbass and the Northern Military District, and metal production in Ukraine itself decreased. As a result, there is now an enormous surplus of iron ore on the market in this country. 

Ukrainian iron ore industry is in crisis

The international mining and metallurgical company Metinvest owns nearly 70% of Ukraine's iron ore production capacity, making it one of the top ten iron ore producers in the world. Thus, it owns the largest mining and processing facility in Europe, PJSC "Northern GOK," which creates iron ore concentrate and pellets. 

Until mid-March 2017, Metinvest sold a significant part of this volume on the domestic market of Ukraine, providing this type of raw material to Azovstal, Mariupol Metallurgical Plant, Zaporizhstal and Enakievsky Metallurgical Plant; "Alchevsk Metallurgical Plant" and "Dneprovsky Metallurgical Plant; as well as Donetskstal-metallurgical plant. And the group sold the remaining most of the iron ore mainly to the far abroad markets, delivering it there by sea through Ukrainian ports.

However, by the end of February 2022, the number of consumers of iron ore produced by Metinvest within Ukraine had decreased to only two steel enterprises. Moreover, due to the Special Military Operation, the total volume of metal production at both plants decreased by more than 2 times. At the same time, all Ukrainian ports through which Metinvest could reorient the released volumes of iron ore for export turned out to be unavailable. For these reasons, in March, the average volume of loading of iron ore capacities in Ukraine as a whole, compared with the pre-war period, also decreased by about 2 times.

However, even in the spring months, due to the rather favorable conjuncture of foreign markets and thanks to the construction of new logistics routes, the group managed to send excess volumes of iron ore for export. According to the company, 8.8 million tons of iron ore were produced in the first half of 2022

By mid-June, the situation on the foreign iron ore markets had already started to deteriorate, and as a result, only 30% of the three biggest mines owned by Metinvest were operating at full capacity. The production of iron ore had become wholly unprofitable due to the decline in iron ore prices on the global market and a significant increase in the cost of product transportation.

Thus, the Central GOK was the only iron ore asset that Metinvest had operating from mid-August to early November. In January-September 2022, the volume of concentrate production at all its enterprises, with the exception of YuGOK, decreased by 59% compared to the same period in 2021, to 9.7 million tons. In other words, if the company produced 8.8 million tons of this kind of raw material in the first half of 2022, it produced only 900,000 tons in the third quarter.

Another factor contributing to this drop in production in addition to the unfavorable market conditions and exorbitant transportation costs, there was a power shortage brought on by the Russian Federation's missile strikes in early October

Metinvest's iron ore segment will, at best, be able to work only at the lowest speed, and in the worst case, it will be completely stopped, as long as the entire set of negative factors - insufficiently high prices for iron ore on foreign markets, the inaccessibility of Ukrainian ports, and the worsening electricity shortage in the country - remain in force. However, it is still unclear to what extent the group will be interested in keeping such a sizable amount of unused raw material capacities.

Comments

No comment yet.

Only +plus subscribers can access this content.

SUBSCRIBE now to share your thoughts on the markets and get more comments.
SUBSCRIBE If you already have an account Sign In

Most read news

China's iron ore futures recovered

Wednesday, February 28, 2024

Low-grade iron ore export tax under discussion in India

Monday, February 26, 2024

Guinea-Conakry greenlights Simandou iron ore project

Monday, February 26, 2024

Iron ore prices in decline: Abundant supply and weak demand continue to pressure

Saturday, February 24, 2024

How was the steel market trend in Europe this week?

Thursday, February 22, 2024
Follow List
Expand
Your watch list is empty

Add your favorite commodities for quick access and don't miss the latest price change news.


There are no news categories you follow
Edit Notification Preferences
E-bulletin subscription
Sign up to receive the latest news and daily iron prices by e-mail and sms
Become a Plus Subscriber Now!
Try it free for 3 days!
Subscribe Now
Neutral Prices
Be informed
Provincial Iron Prices
Comments and Analysis
Subscribe Now