The plants have been shut down since November 2023, mainly due to the proximity of the front line, the drop in ferroalloy prices and the high cost of production
In 2023, Ukrainian ferroalloy companies reduced production by 57.4% compared to 2022. This was stated by Sergio Kudryavtsev Executive Director of the Ukrainian Ferroalloy Association UkrFA, in an interview with the Ministry of Industry.
The industry's performance was affected by the complete closure of the Nikopol ferroalloy plant, the Zaporizhzhia ferroalloy plant and the Marhanets mining and processing plant in November 2023. This happened, among other things, due to the intensification of hostilities, falling prices of ferroalloys and logistical restrictions. . One of the main reasons for the stoppage was the increase in electricity transmission tariffs, which affected production costs and profitability.
In addition, according to Sergiy Kudryavtsev, even if the factories manage to resume production in the summer, they will face significant staffing problems due to the imperfect reserve mechanism for mobilizing, in particular, specialists of the main production equipment.
«Companies in the sector faced this, employees were booked until November, but it is difficult to say what will happen now, because the reservation itself is issued for six months. In other words, the reservation period should end in May, and it is difficult to say what will happen next», he comments.
According to the director of UkrFA, the government should take measures to restore the industry's operations. Although government influence on tariff regulation is unlikely, it is much more important to establish logistics and regulate the hiring of workers.
«In terms of logistics, we will probably achieve greater security with the maritime corridor, so we will have more opportunities not only to export products, but also to receive imported raw materials. Last year, we received imported raw materials under old contracts, which resulted in a low cost of the final product,” added Sergiy Kudryavtsev.
In 2024, the state of Ukraine's ferroalloy industry will depend on three factors: bombing, logistics and electricity.
“As long as these problems persist, it is unlikely that the factories will be able to resume operations,” summarizes Kudryavtsev.
As previously reported by Compraço, in 2023, Ukraine reduced ferroalloy exports by 4.9% compared to 2022, to 344.2 thousand tons. Compared to the pre-war year of 2021, shipments of ferroalloys abroad decreased by 48.5%, or 324.4 thousand tons. Poland was the largest consumer of ferroalloys manufactured in Ukraine in 2023, representing 52.8% in monetary terms. Turkey accounted for 14.1% of export shipments and the Netherlands 8.5%.
