Ukraine’s steel sector faces collapse as Russian strikes and EU trade barriers mount

Key points

• ArcelorMittal Kryvyi Rih suspended operations on Sept. 25 after four strikes in five weeks killed five workers and damaged critical infrastructure, marking the sector’s worst year since 2022.
• Russian attacks have cost the steel sector approximately $100 million, with the metallurgy industry contributing 7% of Ukraine’s GDP last year.
• The closure of Black Sea ports has increased logistics costs by 50-60%, making the import of raw materials and export of goods prohibitively expensive.
• EU trade policies, including the Carbon Border Adjustment Mechanism (CBAM) and new quotas, are limiting Ukraine’s access to European markets and increasing production costs.
• Industry leaders are proposing a steel recovery fund and urging the EU to remove Ukraine from its tariff regime to prevent total industrial collapse.

Background

Ukraine’s steel sector previously accounted for 15% of national exports. In late September, Russian strikes had already cut output by 90%, shutting down major mills in Zaporizhzhia and Dnipropetrovsk. The current crisis follows a pattern of escalating attacks on economic infrastructure, which President Zelenskyy has described as targeting 'daily life' to undermine resilience.

How outlets are covering it

The Kyiv Independent emphasizes the strategic and economic threat posed by the sector’s collapse, highlighting the knock-on effects on construction costs and inflation. It details specific barriers, such as oligarch-owned companies being ineligible for international financing and the high cost of overland logistics. The Guardian focuses on the immediate operational impact, noting that ArcelorMittal cited 'safe and sustainable' operations as impossible after the strikes. It also contextualizes the closure within Zelenskyy’s broader appeal for $27 billion in additional defense funding and his criticism of Russia’s targeting of civilian infrastructure, including datacenters and food warehouses.

Why it matters

The collapse of Ukraine’s steel industry would not only eliminate tens of thousands of jobs but also trigger a spike in construction costs and inflation, complicating post-war reconstruction. It underscores the dual pressure Ukraine faces from military attacks and restrictive trade policies, threatening its economic sovereignty and ability to sustain the war effort.

What to watch

Industry leaders are pushing for the creation of a steel recovery fund and negotiations with the European Bank for Reconstruction and Development to allow financing for oligarch-owned firms. They are also urging the EU to remove Ukraine from its tariff regime and provide financial support for logistics costs. However, restarting production will take months and tens of millions of dollars, assuming no further strikes occur.