Ukraine's steel industry, one of the pillars of its wartime economy, may produce almost no steel at all next month. Output fell 57.3% in August under Russian strikes and could approach zero in October, and the recovery of giants like Zaporizhstal and ArcelorMittal Kryvyi Rih depends less on Kyiv than on Brussels, says Stanislav Zinchenko, director of the GMK Center, the center for industrial, mining, and metals sector expertise, in an analysis for ThePage.

Steel is Ukraine's second-largest foreign-currency earner and a prop for the hryvnia, employing more than 70,000 people directly and another 250,000 in related industries, and paying close to $1 billion a year in taxes.

Russian missile strikes on the big plants, compounded by an energy crisis, closed ports, and EU competition, have cut production to a fraction and threaten to halt it, Zinchenko says.

He calls it the worst crisis the industry has faced since independence, "a perfect storm" that has struck all at once. The sector supplies 6% of Ukraine's GDP and 13% of its foreign-currency earnings.

Output could hit zero

The fall has been precipitous. In August, steel output dropped 57.3 percent year on year to 277,000 tonnes and pig iron 65.6%, Zinchenko says. Across eight months, the decline is 12.5%, and he warns that October could bring output to zero. Exports have cratered too: iron ore down 27% over eight months, long rolled steel down 45.8%, semi-finished products down 76% in a single month, and pig-iron exports halted entirely.

September may yield just 100,000 to 150,000 tonnes of steel, he says. Four producers bore the brunt: Zaporizhstal, Kametstal, ArcelorMittal Kryvyi Rih, and Interpipe.

Rebuilding breaks new ground

"No one in the world has learned how to rebuild metallurgical giants after missile strikes," Zinchenko says.

In reality, it means technical audits, clearing rubble, and ordering unique new equipment, at a cost the plants cannot meet after four and a half years of war spent at a loss or at zero margin, their reserves gone.

Three steps for Kyiv

Zinchenko sets out three moves the state could make at once to stabilize the industry:

• Frontline rail. Give steelmakers priority access to locomotives from the state railway Ukrzaliznytsia within 150 kilometers of the front, so the product can still be moved out.
• Energy parity. Scrap or soften the rule forcing industry to import 80% of its electricity, which leaves plants paying European prices they cannot match.
• Market protection. Tax scrap-metal exports to keep raw material for decarbonization at home, and curb Turkish imports that undercut Ukrainian steel.

However, the recovery depends not on Kyiv, but on Brussels

Recovery is impossible without international funds and guarantees. No one will provide loans to enterprises on foreign capital markets during the war. No one will invest in recovery "into a void," the expert says.

He names four steps that would support the industry:

• A recovery fund. A dedicated fund for the steel industry, modeled on those partners built for Ukraine's energy sector, to pool grants and cheap loans.
• A safe sea corridor. Reopen the deepwater ports, as Ukraine managed in 2023 and 2024; without them, rail costs make exports unprofitable.
• No EU quotas. Remove the European Union's restrictive quotas and tariffs on Ukrainian metal.
• A CBAM exemption. Free Ukrainian steel, for the duration of the war and reconstruction, from the EU's carbon border levy, which Zinchenko says would otherwise finish off its competitiveness.

Meet those, he says, and bringing the plants back to baseline could take three to six months, with a full rebuild one to two years.

Russian missile strikes shut down or damaged four of Ukraine's largest steel plants in August and September, halving steel output and prompting the operator of the country's largest plant to call on the government to pass a dedicated rescue plan, RBC-Ukraine reported.

Russia's full-scale war has already cost Ukraine the Azovstal plant in Mariupol, one of its largest steel mills, and more than two years of disrupted production across the sector. The latest strikes hit plants that produce the bulk of remaining capacity, concentrated in a single month, in what the industry describes as a deep crisis for a sector that supplies 6% of the country's GDP.

Steel output halved as missiles hit plants producing 70% of Ukraine's steel

The 11 August strike on Zaporizhstal killed seven workers and injured 21 as they headed for a shelter, Metinvest said; a second ballistic strike on the plant followed on 27 August. Two died and 13 were injured at ArcelorMittal Kryvyi Rih, and five were killed at Kametstal. Russia also hit the Dnipro Metallurgical Plant. On 12 September, Russia struck both Zaporizhstal and ArcelorMittal Kryvyi Rih again with ballistic missiles.

Zaporizhstal and Kametstal, both part of the Metinvest group, stopped entirely. ArcelorMittal Kryvyi Rih—Ukraine's largest steel plant—partially shut down. Zaporizhstal and ArcelorMittal alone produce more than 70% of Ukraine's steel.

August steel production fell to 277,000 tons, down 57.3% year on year and 39.4% from July, according to Ukrmetalurhprom data cited by GMK Center. Rolled-metal output dropped to 270,000 tons.

Strikes, a port blockade, and rising costs hit at once

The strikes came on top of a Black Sea port blockade that has shut down maritime exports of iron ore and steel since late July. A 30% increase in rail tariffs took effect on 1 August. Alternative routes—rail through western border crossings, Danube ports, and roads—can carry at most 50% of what the Black Sea ports handled, GMK Center analyst Andrii Hlushchenko said. Steelmakers also have to compete with farmers for that limited rail capacity.

Rail exports of iron ore and metals dropped 2.5 times in the first 15 days of September compared with the same period last year, Ukrzaliznytsia said. Shipping iron-ore pellets through European ports costs $50–60 per ton, making many deliveries unprofitable.

The steel sector generated 6% of Ukraine's GDP last year, brought in 13% of all foreign-currency earnings, and paid UAH 27 billion (about $606 million) into budgets between January and July. Deputy chair of the parliamentary economic committee Dmytro Kysylevskyi called the situation "a perfect storm."

Meanwhile, Türkiye re-rolls Russian slabs and sells the resulting steel on Ukraine's domestic market. China uses cheap Russian energy to undercut Ukrainian prices.

"We are effectively importing Russian metal in the form of finished products," Ukrmetalurhprom President Oleksandr Kalenkov said.

ArcelorMittal calls for a Cabinet rescue resolution

ArcelorMittal Kryvyi Rih CEO Mauro Longobardo said the government should pass a dedicated Cabinet resolution assigning specific tasks and deadlines to multiple agencies at once.

"No single agency can solve the full set of problems. Without a single document with assigned responsibilities and deadlines, each issue is dealt with in isolation and stalls," ArcelorMittal Kryvyi Rih representatives said.

The resolution should cover EU negotiations on deferring the carbon border tax (CBAM) until at least the end of martial law plus one year, restoring steel quotas to last year's level, stabilizing rail tariffs, securing long-term electricity contracts for industry, and launching anti-dumping investigations against Turkish and Chinese imports, Longobardo said.

Ukraine's Economy and Environment Ministry said it is in talks with the European Commission on easing CBAM and expanding quotas. A Cabinet source told the outlet that Black Sea trade negotiations with Russia are possible in October, after the Duma elections that ended on 20 September.