Prospects of Ukraine on the world steel market

Formed with data from [6]

During the period under review, China exhibited a remarkable growth rate of 21,8% in crude steel production, solidifying its position as the leading producer globally. The continuous expansion of China's industrial sector, rapid urbanization, and infrastructure development have contributed to this substantial increase. China's dominant role in the global steel market can be attributed to its vast production capabilities and domestic demand. India also witnessed significant growth in crude steel production, with an impressive rate of 23,0%. The country's efforts to support its manufacturing sector, infrastructure projects, and increasing urbanization have fueled the demand for steel. On the other hand, Japan experienced a decline of 14,8% in crude steel production, reflecting challenges faced by its steel industry. Factors such as decreased domestic demand, competition from other Asian economies, and an overall economic slowdown have contributed to this contraction. Similarly, South Korea witnessed a decrease of 7,3% in crude steel production during the reviewed period. Global market fluctuations, intensified competition, and reduced demand from key sectors have impacted South Korea's steel industry. The USA recorded a modest decline of 1,1% in crude steel production. This marginal decrease can be attributed to factors such as trade policies, market saturation, and fluctuations in the domestic manufacturing sector.

In general, while China and India continue to demonstrate impressive growth, Japan and South Korea face challenges in their steel sectors. The USA maintains a relatively stable performance, while the global steel industry as a whole has experienced overall growth.

The consumption of steel holds extraordinary centrality for the economy. Steel could be a key pointer of financial movement as its request reflects the wellbeing and development of different divisions. It powers the development of buildings, bridges, and transportation systems, driving financial advance and making work openings. Steel consumption moreover drives the fabricating division by serving as a significant crude fabric for businesses like car, apparatus, and machines. In general, the usage of steel serves as a imperative driver of financial development, improvement, and mechanical development. Over the period from 2017 to 2021, China's crude steel consumption growth was the highest at 232,6 million tones. India, on the other hand, showed a decline in consumption, decreasing by 1,3 million tones, which can be attributed to the economic slowdown and the impact of the COVID-19 pandemic. The United States and Japan showed a significant drop in consumption volumes, decreasing by 12,3 million tones and 15,1 million tones. The decrease can be caused by the decline in demand from the sectors such as automotive and construction, as well as the shift towards the use of alternative resources. South Korea, however, showed a positive growth rate in crude steel consumption, increasing by 0,2 million tones over the period. Overall, the world's consumption of crude steel increased slightly by 0,43 million tones over the period, indicating a stable demand for steel despite the challenges [7].

The export of steel plays a crucial role in a country's economy. Steel is a widely traded commodity, and its export contributes to a nation's trade balance and economic growth. Furthermore, steel exports enhance a country's global competitiveness and reputation in the international marketplace. By supplying steel to other countries, a nation can establish itself as a reliable and high -quality provider, attracting potential trade partners and investors. Increased demand from foreign markets can result in expanded production capacities, job creation, and overall economic development.

China has witnessed a significant increase of 55,5% in steel exports, which can be attributed to various factors such as changes in demand, government policies, or improvements in production efficiency. Similarly, India has experienced a remarkable growth rate of 81% in steel exports, indicating a substantial rise in its export activities. This growth may be influenced by similar factors as China, along with cost-effective production or access to raw materials. Additionally, countries like the USA, Japan, and South Korea have also observed growth in steel exports over the past five years.

The global growth rate for steel exports stands at a strong 49,7%, indicating a growing demand for steel products worldwide driven by economic growth and infrastructure development.

The import of steel holds noteworthy significance for the economy. Steel may be a crucial asset that's not continuously liberally accessible in each nation. Bringing in steel permits a country to meet its residential request, satisfy mechanical necessities, and bolster different divisions of the economy. It makes a difference to bridge the crevice between supply and demand, empowering businesses such as development, fabricating, and framework advancement to proceed their operations easily. It permits companies to source the foremost reasonable steel for their particular needs, upgrading the quality and competitiveness of their items. China has experienced the growth in imports with a percentage increase of 102,72%. This is not surprising given China's position as a global manufacturing hub and its increasing demand for the materials like steel. The imports a percentage has increased up to 35,03% as the US is a major producer of various goods and products, and therefore, it relies less on imports of them. Japan and India have faced moderate growth in imports with percentage increases ranging from 17,34% to 18,59%. This indicates their steady growth in the import sector. South Korea has decreased in imports to 10,99%. In the main, the overall world tendency of import has experienced a percentage growth of 44,03% in the last 5 years from 2017 to 2021.

Setting steel prices involves considering economic, political, and technical factors. Prices can be determined based on production costs and profitability, allowing the market to determine competitiveness. Alternatively, collective agreements, exchanges, and auctions play a role in price setting. Supply and demand significantly impact steel prices. For instance, Indian steel demand increased by 23%, while Europe and the US experienced decreases of 5% and 9% respectively. Political events, such as EU tariffs on steel imports, can also affect prices. Stock exchanges and auctions serve as infrastructure entities for steel trading. International steel exchanges like the London Metal Exchange, the Chicago Mercantile Exchange, and the Shanghai Metal Exchange facilitate futures and options trading. Steel prices have fluctuated in recent years, reaching a peak in 2021 at over $1,000 USD/MT before declining due to the COVID-19 pandemic and changes in demand. The pandemic led to a 13% drop in global steel prices according to the World Steel Association (fig. 1).

Fig. 1. Dynamic of steel price 2015-2023, USD/MT

Source: formed with data from [7]

The recovery of the global economy and increased construction activity may also be contributing to the rise in steel prices. Overall, the steel market is subject to fluctuations due to various factors, and it is important for industry stakeholders to monitor and respond to these changes to remain competitive in the market. The increase in steel prices may be due to several factors, such as increased demand from China, supply chain disruptions, and rising raw material costs. However, from the beginning of 2022, steel prices began to rise again against the background of the recovery of the global economy and increased demand for this material. So, the understanding the factors influencing steel prices is essential for stakeholders in the steel market.

Based on the average growth rate in the following table we can assume that production and consumption will decline slightly in the next year. Fortunately, export and import of the steel will increase 15% and 9%. All these predictions could be true and turn into reality.

However, Russia's war of aggression against Ukraine has caused a huge crisis for our economy and all sectors. Major manufacturing of steel have faced a lot of challenges. According to the Organisation for Economic Cooperation and Development, «ArcelorMittal Kryvyi Rih fully stopped operations in March 2022 due to Russia's full-scale invasion, fortunately small part of it restarted in April 2022. Metinvest Group has been badly impacted by Russia's aggression. According to its report from the second quarter of 2022, its Azovstal plant and its Ilyich plant could not produce crude steel at all in the period. Kamet Steel could produce only 0,45 mmt, a drop of 26% from the first quarter of 2022. As a result, the total production of the company dropped sharply by 77% to 0,45 mmt during the same period. Zaporizhstal produced 1 mmt in the first seven months of 2022, down by 56,3% year-on-year. According to the company, this decline was associated with a shortage of raw materials and logistical problems caused by the war [4].

Table 2 provides a forecast of Ukraine's position on the world steel market, focusing on key indicators such as production, consumption, export, and import. The forecast indicates a challenging period for Ukraine's steel industry in the short term, with significant declines expected in production, consumption, and export. However, there are indications of recovery in the long term, with a gradual increase in production and stabilization of import levels. These forecasts highlight the potential volatility and uncertainties in the global steel market and the need for effective strategies to address market challenges and leverage growth opportunities.

Table 2. Forecast of Ukraine's position on the world steel market in thousand tonnes