The Ukrainian steel industry is facing a double blow: new EU regulations could cost Ukraine $1.2 billion
19 August 15:24
The Ukrainian steel industry, which accounts for about 15% of the country’s exports, has faced new restrictions in the European market. Following the EU’s reduction of duty-free steel import quotas, the industry is simultaneously suffering from Russian attacks, logistics problems, and rising rail tariffs. According to estimates by the Federation of Employers of Ukraine, the new trade restrictions could cost the country $1.2 billion in foreign exchange earnings and reduce GDP by 0.6%. Reuters reports this, as noted by "Komersant Ukrainian".
The EU has cut Ukraine’s quota by 60%
As of July 1, the European Union has nearly halved its total duty-free quotas for steel imports, and shipments exceeding the established limits are subject to a 50% tariff. For Ukraine , the quota will amount to about 1 million metric tons— roughly 60% less than trade volumes in 2025 , according to GMK Center’s calculations.
“Now … we see that the situation is changing fundamentally. Instead of support from the European Union, we are facing restrictions,” Metinvest Group Chief Operating Officer Oleksandr Mironenko told Reuters.
The EU explains the new quotas as necessary to protect its own producers from a global steel surplus. Carbon payments under the CBAM mechanism, which took effect on January 1 and are based on production emissions, have become an additional challenge for Ukrainian producers.
About 80% of Ukraine’s steel exports go to the EU, making the new trade restrictions particularly painful for the industry.
Zaporizhstal May Lose Up to Half of Its Production Capacity
The new rules are already forcing companies to seek ways to adapt. In particular, Zaporizhstal may shift part of its production from steel to cast iron, which is not subject to European quotas.
However, such a scenario would come at a high cost. According to Myronenko, about 50% of the company’s production capacity could remain unused, and employees would have to be transferred to other departments.
At the same time, steelmakers are facing challenges related to wartime logistics. Due to the de facto closure of the Black Sea route, coking coal must be shipped through European ports, which increases costs by approximately $30–40 per metric ton. Since August, domestic rail freight rates have risen by another 30%.
Russian attacks continue to deal an additional blow. According to Reuters, seven workers were killed during the latest strike on “Zaporizhstal,” and operations at the plant were temporarily suspended.
Industry representatives warn that the combination of EU trade restrictions, costly logistics, and military risks is increasingly undermining the competitiveness of Ukrainian steel.
“For us to survive until the end of the year, a lot of different things need to happen,” said Oleksandr Kalenkov, president of Ukrmetallurgprom.
According to estimates by the Federation of Employers of Ukraine, the new EU restrictions could cost Ukraine $1.2 billion in foreign exchange earnings and lead to a 0.6% decline in GDP. The industry is calling on Kyiv to seek exemptions from the new restrictions for Ukrainian steel and a special trade regime with the EU.
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At the same time, the steelmakers’ investment plans are also under threat. In particular, Metinvest’s $8-billion program to transition to “green steel” production has effectively been put on hold: given the war, the company considers the implementation of such a project unrealistic.
Metinvest
Metinvest is controlled by Rinat Akhmetov’s SCM investment group. SCM owns 71.24% of Metinvest B.V., while another 23.76% is held by Smart Steel Limited, which is affiliated with the Smart Group. The remaining 5% consists of a separate class of shares.
Forbes estimates Akhmetov’s net worth at $7.8 billion. His assets include not only the steel and energy businesses but also one of the world’s largest private superyachts, the Luminance.
The 138.8-meter -long vessel was built by the German shipyard Lürssen. The yacht is estimated to be worth approximately $500 million. It was launched in 2023, and construction was completed in 2024. Forbes identifies Akhmetov as its likely owner.
