Many of the nation’s steel factories, mills and mines, located in the volatile Luhansk and Donetsk regions, have been forced to shut down. Many buildings have been taken over or destroyed by artillery fire during the last few months.
The world’s fifth-largest steel exporter has already seen its overall production fall more than 7% in the first half of 2014, and has seen substantial drops (almost 40%) in exports to Russia. There are concerns that Russian shipments could drop by as much as 50% by year’s end.
In 2013, three quarters of Ukraine’s overall steel output was sold to its Russian neighbors. While a 50% hit would obviously be a devastating blow to the industry, Serhuy Taruta, the governor of Donetsk, remains confident that other buyers will be found.
In fact, other markets have already begun picking up some of the slack. For instance, Ukrainian exports to Egypt have gone up by 830%.
However, local producers in Egypt have begun to call for regulations against foreign steel imports, calling for the return of anti-dumping duties.
Ukraine steel exports have been further hindered by the same Chinese steel dumping that has caused uproar among U.S. steel producers. This is making it much more difficult for Ukrainian producers to find alternative markets.
Overall, Ukraine steel exports dropped 10% so far this year, and there’s no expectation that it’s going to get much better any time soon.
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