Ukraine Steel Output Jumps, but Possible Coking Coal Loss Clouds Outlook

Ukraine Steel Production Surges, Coking Coal Concerns Persist

KYIV (Reuters) - Ukraine has increased its steel production so far in 2024 by 23.1% to 7 million metric tons, data from the country's steel producers union showed on Monday, but the possible loss of a key coking coal mine makes the outlook uncertain.

Steel production has suffered since Russia's invasion of Ukraine on Feb. 24, 2022, and the destruction of leading steel plants in fighting since then. The country was a major steel producer and exporter before the war began.

Ukraine's rolled steel output rose by 18% to 5.7 million tons in the January to November period, while pig iron production rose by 19.8% to 6.5 million tons, the union said in a report.

However, its steel output could fall sharply if Ukraine loses its sole supplier of coking coal due to Russian troops moving closer to a mine located in the eastern town of Pokrovsk.

Ukrainian military analyst DeepState said Russian troops were less than 7 km (4.4 miles) from Pokrovsk's outskirts. The mine lies 10 km (6.2 miles) west of the town, a strategic supply hub, in the opposite direction to the advancing Russian forces.

An industry source told Reuters last week that the mine is still operating.

The steelmakers union said in October the potential closure of the mine could cause steel production to slump to 2-3 million metric tons next year, from the 7.5 million expected in 2024.

Producers hope to find alternative sources of coking coal from within Ukraine if the mine is seized by Russian troops, but imports would inevitably be needed, increasing costs.

In 2022, Ukrainian steel output fell by 70.7% to 6.3 million tons, while in 2023 the country produced 6 million tons.

(Reporting by Pavel Polityuk; Editing by Alexander Smith)