Ukraine's ferro alloys exports drop in Jan-Aug'24 amid energy and production hurdles

GMK Center: The ferro alloys industry in Ukraine faces a challenging recovery as exports from January to August 2024 dropped by 83.1% y-o-y to only 52,810 tonnes (t) compared to 312,440 t in the same period of 2023. Although the industry is gradually recovering after some capacities were restarted, particularly with the partial reopening of the Zaporizhzhia Ferroalloy Plant (ZFP) in May, it is still far from pre-crisis levels.

In August 2024, 13,110 t of ferro alloys were exported, which is 15.3% less than in July, marking a second consecutive month of declining shipments. However, exports have shown some improvement compared to the low volumes seen earlier in the year. In January-August 2024, the key importers were Poland (11,530 t), Turkey (15,300 t), and Italy (9,650 t).

The ferro alloys industry, especially energy-intensive plants such as ZFP, is burdened by high electricity costs and limited power availability. With other producers such as Pokrovske Mining, Marganets Mining, and Pobuzhsky Ferronickel Plant (PFP) remaining idle, the industry's ability to sustain production is heavily constrained. Rising energy costs are making production less economical, raising concerns about further production cuts or potential shutdowns.

Despite these challenges, export revenue in August saw a y-o-y increase of 50.5%, although it dropped 16.1% m-o-m to $15.67 million. Cumulatively, revenue from ferro alloys exports in the first eight months of 2024 fell 76.5% y-o-y, totalling $63.8 million. The ongoing issues, particularly electricity shortages and high tariffs, are expected to further impact the industry's output and profitability.

In 2023, Ukraine's ferro alloys production dropped by 57.4% compared to 2022, while exports fell by 4.9% y-o-y to 344,200 t. This marked a 48.5% decline from pre-war 2021 levels.

Outlook

According to Sergiy Kudryavtsev, Executive Director of UkrFA, the industry's 2024 outlook depends on the impact of shelling, logistics, and electricity availability. Between January and August 2024, production plunged 4.6-fold y-o-y to 41,050 t due to these ongoing challenges.