The market for metal products for machine-building purposes in Ukraine, although much smaller than the construction range, is difficult to overestimate its importance in wartime. The key customers are enterprises of the defense-industrial complex, and it is thanks to them that our country can effectively resist Russian aggression. What is happening in the market for metal products for machine-building?

Market picture

Since 2023, we have been observing a gradual recovery of the Ukrainian market in the segment of metal products for machine-building. According to the results of last year, it grew by 25-30%. In turn, “TAKT Metal” increased its sales in 2024 by 20-25%.

For certain types of metal products, sales increased even above this level. For example, sales of calibrated rolled products from structural alloyed steel grades increased by 45%. If we talk about the structure of consumption in mechanical engineering, then 80% is a circle, 10% is a hexagonal cross-section profile, and 5% is a square and a strip.

Metal rolling for mechanical engineering is further processed either hot – at blacksmithing enterprises, where various parts and products are forged, or cold (mechanical) – on automated lathes, various components and parts of mechanisms are also turned.

The part that is processed mechanically is growing faster – this is due to the fact that enterprises are actively updating their equipment fleet. Enterprise development and renewal programs are partially financed by the state and at the expense of foreign grants.

According to our estimates, the Ukrainian market of metal rolling for mechanical engineering in 2024 amounted to approximately 140-145 thousand tons. Imports prevail over domestic production. Last year, local producers supplied 55-60 thousand tons of special steel grades to the domestic market, and we estimate the volume of imports in this segment at 85 thousand tons.

I would also like to emphasize that the volume of imports is also affected by logistics. At the moment, there is no possibility of accepting containers to Ukrainian ports, so Ukrainian companies are forced to use European ports, which leads to an increase in prices and increases the delivery time of products.

The cost of road logistics is high, and European carriers, due to military operations in Ukraine and increased risks, do not want to deliver to front-line zones – Kharkiv, Zaporizhia, Sumy, Dnipro, Kherson. Ukrainian road carriers are experiencing personnel difficulties, including due to mobilization and difficulties with booking. These and other processes, such as queues at the borders, have had a negative impact on logistics processes – their cost and delivery time.

Development driver

The main driver of the growth of demand for steel from the engineering sector is the defense-industrial complex. The industry is actively developing, many enterprises are putting new equipment into operation, leading foreign concerns are opening their production facilities in Ukraine, and joint ventures are being formed.

Among the important trends in engineering, the following can be noted:

1. Short delivery times. There is a lot of foreign military equipment in Ukraine that needs to be repaired. This requires the availability of the necessary metal products already in stock.
2. The ban on the export of military products during the period of hostilities limits the development of the industry. Ukrainian manufacturers are moving their production and leading personnel to Europe to ensure safety and be able to export their products.
3. Ukraine is actively updating its industrial equipment fleet at the expense of European grants and programs financed by the state. Currently, Ukrainian enterprises are receiving modern automated machine tools from Europe, Japan, and South Korea, where it is only necessary to enter the product drawing into the computer, and the machine tool will independently machine it from a steel billet. At the same time, this equipment has high requirements for the quality of the workpiece.
4. Dispersion of production. The organization of the military-industrial complex in the USSR provided for the concentration of production at closed full-cycle plants for the production of a certain product. Currently, Ukrainian military-industrial complex enterprises are a priority target for the Russian Federation, so the capacities are dispersed, and a separate machine-building plant produces some part of the total product.

If we talk about other segments of mechanical engineering, then the recovery is much slower. We are observing lower demand from railway and agricultural engineering, as well as manufacturers of hydraulic equipment. In the mining segment, we see stagnation due to the cessation of coal mining due to the loss of mining capacities and the destruction of generating ones.

Domestic production and import

In Ukraine, only one plant specializes in the production of metal products for mechanical engineering. It is the only Ukrainian manufacturer of special steel grades, produces all types of rolled products and various remelts – conventional open arc smelting, vacuum arc and electroslag, and has a forging production. Such production is very difficult to relocate somewhere, so the company is at risk, and at some point may suspend production.

Other Ukrainian manufacturers, to a lesser extent, but also produce products for mechanical engineering. ArcelorMittal Kryvyi Rih produces a limited range of “engineering” products in terms of size and brand, since the company has specialized in the construction range from the beginning. In turn, Metinvest produces and develops new products for engineering, including its foreign assets.

Ukrainian metallurgy has been seriously affected by military operations, some assets were lost back in 2014, in particular, enterprises specializing in engineering products – Donetskstal, Isteel, DMPZ.

Operating enterprises are experiencing difficulties, in particular, a shortage of workers due to problems with booking, since enterprises are able to book only 50% of their employees. Against this background, the need for imports may inevitably arise.

Imports of metal products for engineering make it possible to cover the needs of Ukrainian consumers relatively quickly. Its geography is quite wide. The simplest machine-building steel products – structural carbon steel grades – are mainly imported from Turkey. More complex ones are supplied from European countries – Poland, Romania, Bulgaria, the Czech Republic, Germany and Italy.

Outside Europe, the main supplier is China, which produces all types of complex steel products – electroslag, vacuum, vacuum-induction remelting, which the Ukrainian defense industry needs. If there is only one such plant in Ukraine, then in China, perhaps 90% of enterprises produce specialized products. That is why imports from this country have been growing in recent years.

Prospects for machine-building

In the first quarter, we already see an increase in sales of metal products by 10-12%, so by the end of 2025 we expect continued recovery and an increase in sales by at least 15%.

In general, Ukrainian machine-building has enormous potential. The Ukrainian defense industry alone can produce products worth $35 billion per year, but today it produces only $14 billion. We will have to work hard both within the framework of the post-war reconstruction of the country and the industry, since as a result of the occupation and destruction, Ukraine needs to restore entire segments of mechanical engineering.

There are huge opportunities in the framework of infrastructure restoration. We have a colossal wear and tear of the freight car fleet, and at the same time, car-building enterprises are under-utilized. Energy and oil and gas infrastructure need restoration and development.

Agricultural machinery manufacturing in terms of the production of soil-tillage equipment is making great efforts to develop export potential, many Ukrainian brands present their products at international platforms. Ukraine has huge agricultural potential and it can be realized with the help of products of Ukrainian agricultural machinery manufacturers.

Source: https://gmk.center/