The War in Ukraine: What It Means for The Steel Market

The war in Ukraine has been a turbulent one for investors. Steel is one of the most significant productions and export commodities in Ukraine. Iron and Steel works in Mariupol is, one of the biggest steel mills in the world.

Following the Russian invasion of Ukraine, the steel industry has experienced a great shock. Mariupol is one of the cities invaded by Russia, meaning a lot of its activities have been interrupted. Bombs are falling in the city’s furnaces, making it hard to run production companies.

The prices of Steel are expected to surge with the limited production in the country. The price inflation will not be felt in Ukraine alone but globally since many steel products are imported from Ukraine. The prices are expected to increase by at least 20% in the coming months.

The price inflation will be a big blow to the economy since Steel is one of the biggest export commodities in Ukraine. The country exports almost 50% of its steel products to Russia, which will now face a shortage due to the invasion. This means that Russia will have to import its steel products from other countries increasing their prices and making them less competitive on the market.

A lot of companies have been forced to stop their production because of the war making it hard for them to import raw materials needed for production. With this development, the companies are looking for international suppliers who can provide them with raw materials at a very low price. This means that even if they find international suppliers, they will still need more money than previously expected since they need to pay higher transportation costs since they cannot use Ukrainian ports due to blockages by Russia. All this will result in higher steel prices for the consumer.

The price inflation of Steel will be a significant blow to the economy. It will force Ukrainians to spend more on steel products, which will reduce their spending on other commodities. This will result in reduced demand for other commodities and a reduction in the GDP of Ukraine.

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