Two steelmakers in Ukraine have placed their plants in conservation mode. This comes after the country’s invasion by Russian armed forces in the early hours of Feb. 24. Metinvest Holding announced that it would suspend operations for seven days throughout its hot end at the Azovstal plant as well as at the plant’s coke shop.
Azovstal’s plate mill as well as rail and structural mills will also stop operations. The group will also halt production at Ilyich Iron and Steel Works’ sinter plant, the hot ends as well as Mills 1700 and 3000. Any decisions on the plants’ further operations, will stem from how the situation in the country develops.
Azovstal has a crude steel capacity of 5.3 million metric tons per year. The plant has five blast furnaces and two 350-ton basic oxygen furnaces. In addition, the plant also has four two-strand billet casters, an ingot caster, and a blooming mill. A slab caster on site also produces the semi-finished product in 220-300mm gauges, 1,250-2,100mm widths, and in lengths of 5,000mm to 12,000mm.
Ilyich has five blast furnaces, one BOF, and two open-hearth furnaces. One analyst estimated its crude capacity at 5 million metric tons per year. The site poured 4.26 million tons of crude steel in 2021, up 4.6% year on year from slightly over 4.07 million metric tons, the analyst added.
Azovstal and Ilyich plants are in the port city of Mariupol, on the Sea of Azov, and is in the part of Donetsk region that is under Ukrainian control.
Russia wants to control the coast of the Sea of Azov
“Capturing it now would let Moscow link Russian-controlled Crimea overland to the separatist enclaves and secure complete control over the coast of the Azov Sea, increasing economic pressure on Ukraine’s government,” according to a recent Reuters report.
In addition, ArcelorMittal also said via Twitter earlier on Feb. 24 that it would slow production to a technical minimum at the Kryviy Rih plant. Furthermore, the steel producer stopped production at its underground mines there. That plant, in the Dnipropetrovsk region, can produce an estimated 6 million metric tons per year of crude steel via the BF/BOF route. Finally, the facility casts into billets for rolling into long products, such as wire rods, rebar, and merchant bar.
About 70% of Ukraine’s finished and semi-finished products go for export, including to Europe, Turkey, Asia, and Africa. The current situation will undoubtedly impact steel markets in Europe, one trader said.
Metal price impact
“It is clear that prices are going up, but to what level is unclear,” that source told MetalMiner.
End-users in Central and Eastern Europe will likely feel the brunt of events in Ukraine. These companies are large consumers of Ukrainian steel, the trader added.
The current situation in Ukraine also prompted several end-users from Poland to call and say that they were prepared to pay almost any price for steel, regardless of its origin, the trader claimed.
Energy prices also on the rise
European energy prices also soared on Feb. 24 as TTF Amsterdam gas finished the day at €119 ($133.23) per megawatt-hour, up by one-third from €88.89 ($99.49). Prices did touch €140 ($156.13) in the course of trading.
The city of Kharkiv, about 70 kilometers from the border with Russia also came under attack on Feb. 24. A live stream of Kyiv’s Maidan square throughout the evening of Feb. 24 showed a quiet city, though explosions in the distance were audible.
State rail operator Ukrazaliznytsia stated on its website that it was adding evacuation trains, but did not indicate what was happening with freight movements in the country. The Ukrainian government’s main website has also ceased to function during the day but was up later.
MetalMiner will continue to provide coverage of the Russian invasion. Analysis will focus on impacts to global metal supply and prices including energy (raw material) input costs.
By AG Metal Miner
More Top Reads From Oilprice.com: