Metinvest-SMC transforms from group dealer into trader with import purchases of insufficient items due to war – CEO
The network of service metal centers of the Metinvest group in Ukraine – Metinvest-SMC – transformed from a group dealer into a full-fledged trader with import purchases of insufficient items of metal products due to the loss of the Mariupol metallurgical plants due to the full-scale war, stated the company's CEO Yevhen Oleksienko.
According to him, the loss of the Mariupol-based plants, Azovstal and Ilyich Steel, had a significant impact on the domestic rolled steel market, halting the production of slabs, steel plates over 8 mm, I-beams, railway rails and so on. This led to a shortage of them. In response, Metinvest almost immediately began producing certain “lost” steel products at its remaining Ukrainian enterprises and started procuring imported rolled steel.
“The metals trading market has changed since the start of full-scale hostilities in 2022. Small players who were unable to adapt to the new realities have exited the market. The sector has consolidated around the main national metals traders. A decline in demand has intensified competition, leading to lower margins. Due to the loss of a significant product range manufactured at Ukrainian assets, our company also transformed from a distribution network into a full-fledged metals trader that needs to source imported rolled steel on the open market,” said the top manager of Metinvest-SMC in an interview with GMK Center.
According to him, since the start of the full-scale war, demand has dropped by 57%. In 2023, from a low base, demand grew by 47%, and in 2024 by 10%. However, even with this growth, market capacity in 2024 remains 30% below the 2021 level. This is due to both the loss of territories where large consumers were located and the destruction of production facilities. Uncertainty and high risks are holding back investment activity in Ukraine.
The sectors with the highest consumption of rolled metal include construction, hardware and pipe manufacturing and metalworking, as well as the mining and metals complex itself.
“While the situation has somewhat stabilised, unfortunately, we are still experiencing certain logistical difficulties. The war has brought long-term changes to logistical routes and forced us to rethink our usual logistical arrangements. This relates to the delivery of raw materials to production sites in Ukraine, as well as semi-finished products to Metinvest’s rolling assets in the EU, whose products are sold in Metinvest-SMC service centres,” the CEO said.
He also pointed out that shelling of port infrastructure, damage to railway tracks, and blocking of border crossings force us to adapt and change seemingly well-established logistics routes. With the increase in product imports, the company also began to use leased transshipment facilities near ports to optimize logistics costs for delivery to cities where their metal centers do not yet exist, but where customers are present.
In addition to optimizing current logistics routes, an important task is to open new logistics routes through the use of a fleet that ships ore to distant markets. This will allow the company to reduce not only logistics costs, but also the delivery time of imported products - one of such routes is currently being tested by the team.
Separate warehouses have been organized at several metal centers for medium and small business clients, which already allows them to ensure prompt shipment. They are working on developing a service for retail customers, creating an online store with the ability to pay by card and deliver metal.
According to him, since 2022, work has begun on the remaining Ukrainian assets to "redevelop" individual sizes and brands of products lost along with the Mariupol sites. At Zaporizhstal, steel slabs to supply Metinvest's European plants, hot-rolled and cold-rolled coils and sheets; at Kamet Stell, shaped profiles (channels, angles) and large grinding balls.
