The steel industry in Ukraine is on the brink of collapse, with production plummeting to just 131,000 tons in September, a staggering reduction of nearly five times compared to the previous year. By the end of the month, production had nearly ceased entirely, exacerbated by multiple Russian strikes, including 17 ballistic missiles launched against the Zaporizhstal plant, resulting in the deaths of eight workers.
In response to ongoing threats, ArcelorMittal Kryvyi Rih has decided to suspend operations until the end of the war after suffering four attacks in just five weeks. Other key players in the industry, such as Kametstal and the Interpipe plant in Dnipro, have also halted production. Analysts from Dragon Capital estimate that the shutdowns in metallurgy and a decline in ore extraction could cost the Ukrainian economy approximately 1.5% of its GDP.
In addition to the physical damage from Russian bombardments, the sector is grappling with power outages, port blockades, European Union quotas, and the carbon border adjustment mechanism (CBAM). Approximately 80,000 employees directly work in metallurgical enterprises, while an additional 250,000 people rely on related industries, impacting nearly one million individuals when including their families.
Industrial hubs such as Zaporizhzhia, Kryvyi Rih, Kamianske, Dnipro, Nikopol, and Horishni Plavni face the greatest risks, with potential mass migrations and budget collapses looming. To save the industry, substantial state aid is necessary, including the restoration of sea corridors, a dedicated support fund for metallurgy, tax relief, job preservation measures, war risk insurance, and easing EU quotas and CBAM regulations. There remains a chance to preserve the steel sector, but without prompt decisions, the risk of losing this vital industry escalates.
