Logistics problems ArcelorMittal Krivoy Rog

According to the company's general director Mauro Longobardo, ArcelorMittal Krivoy Rog (AMKR) can only export finished products to nearby European countries due to high transportation costs.

“In the middle of this year, the enterprise managed to reach half the pre-war level of metallurgical production and improve the situation with the extraction of iron ore concentrate,” he said at a conference organized by the European Business Association. “However, in the second half of 2024, AMKR faced significant external and internal challenges that threaten the maintenance of production at the planned level, its growth and further development, and also threaten the loss of competitiveness.”

“Logistics restrictions for Ukrainian industrial manufacturers are just one of the external factors hindering the expansion of production at our plant,” he added.

As one of these factors, Longobardo also named the slowdown in iron ore consumption by China, which led to a decrease in world prices for iron ore and limited sales volumes of the Krivoy Rog enterprise.

“European and other manufacturers have a number of competitive advantages, in particular due to the lower cost of electricity in production costs and cheaper logistics,” Longobardo noted. “For example, we are talking about Poland, Romania and the Baltic countries.”

“In addition, steel markets in Europe are currently stagnating. The reasons for this are geopolitical uncertainty in the region, high inflation, a slowdown in the work of construction companies, rising prices for energy and raw materials,” the general director noted. “This is creating a glut of ore and steel products, and a number of producers in Europe are mothballing production capacity and suspending production.”

In July, AMKR warned that it would be forced to significantly reduce production and lay off about 1,200 employees due to new government electricity import standards. On June 1, the Ukrainian government decided that the guarantee of an unlimited supply of electricity would apply only to those enterprises that import at least 80% of their consumption.

AMKR increased production in May by restarting blast furnace No. 6 and coke oven batteries No. 3-4 in April. The steelworks increased crude steel production in May by 28% month-on-month and 68% year-on-year to 208,000 tonnes. Rolled steel production increased 27% month-on-month and 66% year-on-year to 193,000 tonnes.

In the first quarter, AMKR increased steel production by 93% compared to the same period last year to 278 thousand tons, and pig iron production by 49.8% to 403 thousand tons.