---
title: "Ukrainian metallurgy on the brink: production could shrink by 50% by the end of 2026"
description: "Ukrainian metallurgy risks losing up to 50% of production by the end of 2026 due to Russian strikes, the closure of the Odesa ports, EU quotas, and rising tariffs. The industry is demanding up to €10 billion in state support."
date: 2026-08-31T10:04:00.000Z
lang: en
url: https://xab.info/en/posts/ukrainian-metallurgy-on-the-brink-of-crisis
tags: [ukraine-metallurgy, steel-production, eu-quotas, cbam, logistics, odessa-ports]
publisher: "XAB.info"
---

# Ukrainian metallurgy on the brink: production could shrink by 50% by the end of 2026

![Steelworkers in protective gear beside a furnace with molten metal at a Ukrainian plant amid threat of production cuts](https://xab.info/media/2026/08/31/ukrainskaya-metallurgiya-na-grani-krizisa/ukrainskaya-metallurgiya-na-grani-krizisa-1.webp)

## 🎯 Key Points

- In July 2026, pig iron production in Ukraine fell by 37.6% year on year, steel by 21.3%, and rolled products by 30.7%.
- New EU quotas have reduced the industry's export potential by approximately 60% (GMK Center estimate).
- The closure of the Greater Odesa ports and the 30% increase in Ukrzaliznytsia tariffs make a significant portion of exports unviable.
- The industry estimates its need for additional state and external support at several billion euros, up to €10 billion.

In the summer of 2026, Ukraine's mining and metallurgical complex came under simultaneous pressure from several factors: Russian strikes on major enterprises, the closure of the Greater Odesa ports, new EU export quotas, the introduction of the CBAM carbon levy, high electricity prices, and a 30% increase in Ukrainian Railways (Ukrzaliznytsia) freight tariffs. According to industry estimates, the issue is no longer about recovery but about the risk of losing an entire sector, so decisions are needed at the state level. This is reported by RBC-Ukraine, citing a publication by Delo.ua.

### A multiple blow: from Russian attacks to EU quotas

According to GMK Center estimates, the new EU quotas have reduced Ukraine's export potential by approximately 60%. This could lead to a 35–40% decline in flat-rolled steel production and roughly a 25% decline in long products. Due to the restrictions, the industry has already lost about 1.5 million tonnes of potential exports. The introduction of the CBAM carbon levy has become an additional barrier: under wartime conditions, Ukrainian enterprises have limited ability to invest in the decarbonization required for compliance.

### July figures: production is falling faster than it appears

In July 2026, pig iron production in Ukraine fell by 37.6% year on year — to 432,200 tonnes. Steel production declined by 21.3% — to 457,000 tonnes, while rolled products fell by 30.7%, to 382,700 tonnes. At the same time, as the authors of the material emphasize, these figures do not yet fully reflect the consequences of the closure of the Greater Odesa ports in August and Russian strikes on major enterprises, in particular Metinvest's Zaporizhstal and ArcelorMittal Kryvyi Rih.

### Logistical collapse: ports, Gdansk and doubled tariffs

The biggest logistical blow was the closure of the Greater Odesa ports. According to Andrii Tarasenko, chief analyst at GMK Center, delivering billets via Gdansk costs about $50–60 per tonne; with the world price of ore around $93–97, such logistics make a significant portion of exports economically unviable. The Danube ports and western border crossings cannot fully replace the sea routes — according to Oleksandr Kalyenkov, president of the Ukrainian Metallurgical Prom (Ukrmetallurgprom), they can handle at most 20–25% of the required volumes. The situation is compounded by high electricity prices (around €300 per MWh in certain periods, versus €50–60 for European competitors) and the August 30% increase in Ukrzaliznytsia freight tariffs, which has effectively doubled domestic logistics costs for some enterprises.

### Contradictory data

Different assessments of the scale of the threat are circulating in the public domain. Oleksandr Kalyenkov acknowledges that, by the end of 2026, the decline in industry production could be no less than 50%. At the same time, a number of Ukrainian media outlets (including Obozrevatel and TSN) speak in their headlines of a threat to 72% of steel production. These figures reflect different methodologies: the first is a forecast of annual production dynamics based on the industry association's assessment, the second is an estimate of the share of production capacity placed under direct risk of shutdown. Neither version refutes the other; however, for decision-making it is important that both point to a systemic, rather than isolated, nature of the crisis.

### What the industry is demanding from the state

The industry names the restoration of safe operations at the sea ports as the top-priority measure. The second area is negotiations with the EU to raise quotas to the level of actual exports in 2024–2025, as well as a temporary easing of CBAM and trade restrictions. The third is reducing the logistical and energy burden: revising the 30% increase in Ukrzaliznytsia tariffs, supporting the railway and energy sectors with partners' funds, and restoring "chains of solidarity" for the transit of Ukrainian cargo to EU ports. In addition, the industry needs war-risk insurance and external financing. The domestic market cannot compensate for the loss of exports: about three-quarters of the metallurgy is oriented toward external markets, and over seven months, imports of metal products grew by 23.2%, with their share of the domestic market reaching 46.1%.

### The price tag: up to €10 billion

According to the authors of the material, preserving the enterprises and their workforces may require anywhere from several to €10 billion in additional support. This would allow the metallurgy to operate for another 1.5–2 years and avoid mass shutdowns. Previously, the Federation of Metallurgists of Ukraine had already called on the government to take urgent measures to preserve the industry, warning of the risk of enterprise shutdowns, job losses, reduced tax revenues, and a weakening of the country's defense capabilities.

## 🔍 Fact-Check Verification

- [Metallurgy could lose 50% of production: what decisions the industry expects from the state](https://www.rbc.ua/ukr/news/metalurgiya-mozhe-vtratiti-50-virobnitstva-1788170565.html) - Первичный источник: цифры июля, оценки GMK Center, заявления Каленкова и Тарасенко, требования отрасли и оценка в 10 млрд евро.
- [Ukrainian metallurgy on the brink of systemic collapse: media report a threat to 72% of production ...](https://www.obozrevatel.com/ekonomika-glavnaya/ukrainskaya-metallurgiya-na-grani-sistemnogo-kollapsa-smi-zayavili-ob-ugroze-dlya-72-proizvodstva-stali1.htm) - Подтверждает системный характер кризиса; в заголовке фигурирует цифра 72% производства, отличающаяся от прогноза в 50%.
- [Ukrainian metallurgy has fallen into a deep crisis: this is only the beginning](https://inosmi.ru/20260826/ukraina-279864222.html) - Контекстное подтверждение глубокого кризиса отрасли.
- [Ukrainian metallurgy on the verge of systemic shutdown: 72% of steel production at risk — media](https://tsn.ua/ru/groshi/ukrainskaya-metallurgiya-na-grani-sistemnoy-ostanovki-pod-ugrozoy-72-proizvodstva-stali-smi-3155375.html) - Повторяет версию о 72% производства стали под угрозой; согласуется с оговоркой о различии методологий.

## ❓ FAQ

### Q: How much could production in Ukrainian metallurgy shrink by the end of 2026?
**A:** According to Oleksandr Kalyenkov, president of Ukrmetallurgprom, the decline in production by the end of the year could be no less than 50%. A number of media outlets, meanwhile, estimate the share of capacity at risk at 72%.

### Q: What factors are hitting the industry simultaneously?
**A:** Russian strikes on enterprises, the closure of the Greater Odesa ports, new EU quotas, the CBAM carbon levy, high electricity prices, and the 30% increase in Ukrzaliznytsia freight tariffs.

### Q: What measures is the industry demanding from the state?
**A:** Restoring safe operations at the sea ports, negotiations with the EU on raising quotas and temporarily easing CBAM, reducing the logistical and energy burden, as well as war-risk insurance and external financing — estimated at up to €10 billion.