The shutdown of the ports of Greater Odessa due to Russian attacks is already leading to the shutdown of enterprises, a drop in exports and loss of foreign exchange earnings.. Half of Ukrainian iron ore exports are under threat, and experts do not expect a quick resumption of maritime transport, writes NV.
After ships stopped calling at Ukrainian ports on July 22, shipowners began canceling voyages due to attacks on port infrastructure and merchant ships. One of the ships carrying Ferrexpo products was damaged by Russian drones, killing a crew member.
The company announced the impossibility of resuming sea exports in the near future.. The Poltava Mining and Processing Plant plans to suspend operations from August 3 due to the inability to ship products and due to the government increasing freight tariffs of Ukrzaliznytsia..
Southern Mining and Processing Plant also announced the suspension of production. Other industry enterprises are expecting production cuts due to the same logistics restrictions..
According to experts, in the first half of the year about 50% of Ukrainian iron ore products were shipped by sea. We are talking about approximately 1 million tons per month, primarily about the supply of concentrate to China.
" It is impossible to replace this channel; it can only be partially redirected to other routes,” says economist Irina Kosse.
Alternative routes via the Danube, Poland, Romania and Bulgaria have limited capacity and are significantly more expensive. With current world prices for iron ore and rising railway tariffs, such supplies often become unprofitable.
According to the head of the GMK Center Stanislav Zinchenko, in 2022, exports through European ports were possible due to higher ore prices. Currently, rising operating and transportation costs make such routes economically unfeasible.
An additional problem is weak demand in Europe and the stoppage of some traditional consumers of Ukrainian ore. The ability to increase overland supplies is also limited by the capacity of border crossings and low water levels in the Danube.
According to estimates, only due to the reduction in iron ore exports, Ukraine may lose $60–70 million in foreign exchange earnings monthly, or $700–800 million per year. Iron ore output could fall by 40%.
The situation is complicated by CBAM, new EU quotas on Ukrainian steel, increased railway tariffs and military risks. Dragon Capital notes: the industry is just entering its most difficult period, since the full effect of the new restrictions has not yet emerged.
In a comment to the publication, Metinvest stated that restoring the safe operation of ports should become one of the key government priorities. Without the resumption of shipping, Ukraine risks losing a significant part of exports, tax revenues and foreign exchange earnings, and industry enterprises face long-term downtime and further reduction in production.