Ukraine's ferro alloy exports drop y-o-y in H1CY'24, outlook positive

GMK Center - In the first half of 2024 (H1CY'24), Ukraine's ferro alloy industry exported 24.2 thousand tonnes (t) of products, marking a 91.2% y-o-y decrease from 275.8 thousand t during the same period in 2023, as per data from the State Customs Service of Ukraine. Despite this significant drop, there has been a gradual recovery in shipments since April 2024, with exports reaching 17.54 thousand t in June, the highest volume since July 2023.

This recovery follows a period of stagnation, with minimal exports of 0.1-0.3 thousand t per month in the first quarter. Notable increases were seen in April (0.4 thousand t), May (5.5 thousand t), and June (17.5 thousand t). Key consumers during this period included Poland (6.51 thousand t over six months and 4.5 thousand t in June), Turkey (5.66 thousand t), and Romania (3.67 thousand t over six months and 0.39 thousand t in June).

Reasons for the recovery:

Resumption of production: The partial resumption of the Zaporizhzhya Ferro alloy Plant (ZFP) in May has contributed to this increase in shipments. Operating at only 7% of its total capacity with two furnaces, ZFP's revival highlights the industry's slow recovery.

Meanwhile, the Nikopol Ferro alloy Plant (NFP) is considering a relaunch, while other major plants like Pokrovsk Mining, Manganese Mining, and Pobuz Ferronickel Plant remain idle.

Challenges for the sector:

Ukraine's heavy industry faces several challenges, including reduced demand, energy supply issues, and labour shortages due to mobilisation.

High electricity tariffs and mandatory imports of 80% of electricity at European prices further strain the industry. These factors have escalated production costs, threatening the economic viability of continued operations and potentially leading to production shutdowns.

Outlook

According to Sergiy Kudryavtsev, Executive Director of the Ukrainian Association of Ferroalloy Producers (UkrFA), the industry's future hinges on three factors: shelling, logistics, and affordable electricity. It is crucial to scan these factors properly while decision making.

Source: GMK Center