When Bombs Meet Tariffs: Ukraine’s Steel CEO Warns Collapse Is “Almost Inevitable”

(SeaPRwire) –   By: Alisa Mercer

The Black Sea is not just blocked. It is weaponized. Russian mines, drone strikes, and coastal missile systems have kept commercial shipping lanes impassable for well over four years now. Ukraine’s steel industry, which once pumped out 21 million metric tons annually, learned early that the sea was gone. The land corridor through European borders became the only viable lifeline. Then in July, the EU moved the goalposts. New import tariffs were applied across the board to steel entering the bloc. Ukraine’s specific tariff-rate quota was slashed by 60% starting July 2026. The GMK Center, a Ukrainian think tank, estimates this will reduce Ukrainian steel exports to Europe by 1.3 million metric tons per year. That is not a rounding adjustment. It is a structural amputation of the market Ukraine needs to survive. Yuriy Ryzhenkov, who has steered Metinvest since 2013, was unfazed by diplomatic language. He said Ukraine was “pretty much dumped” alongside every other non-EU steel exporter. The EU had acknowledged that Ukraine’s circumstances were exceptional when the invasion hit. Restrictions were lifted back then, which Ryzhenkov called the “correct answer.” But now the quotas are being applied as though logistics were normal, energy was stable, and personnel availability was not hollowed out by war. Ryzhenkov called it “too harsh, given the circumstances.” He is not exaggerating. The seaport blockade is more severe now than it was in 2022, he said. That means the land corridor is not a backup plan. It is the only plan. And even that is now being rationed. When a steelmaker loses 60% of its market access overnight, there is no way to absorb that with operational efficiency. You simply cannot produce enough to cover fixed costs if you cannot sell the output.

The production numbers are not just down. They are collapsing. From 2021 to 2025, Ukrainian steel output dropped from 21 million metric tons to 7.4 million. Export values fell from $22 billion to $6 billion. Tax revenues from the sector dropped from $3.5 billion to $870 million. These are not temporary dips. They represent the steady erosion of an entire industrial sector. Metinvest has been hit repeatedly over four and a half years of bombardment. August and September of this year brought the worst campaign Ryzhenkov has seen since the invasion began. Both of the company’s steel mills were forced to shut down entirely. Fourteen people were killed in one strike. That was the largest single-bombing loss since 2023. Across the entire war, hundreds of Metinvest colleagues have died. Over 8,500 of the company’s 33,700 employees are currently fighting Russian forces at the front. Every factory that takes a hit gets rebuilt, but never fully. Ryzhenkov was explicit on this point. “In wartime you cannot afford to restore to the original state. You do the best you can to continue operating and that best is never the ideal.” Each rebuild cycle is less effective than the last. Factories degrade. Energy systems degrade. Railways degrade. You lose a little more with every attack. The compounding damage is what makes this so different from ordinary industrial disruption. It is not a single shock event. It is a slow hemorrhage that never stabilizes. The war economy forces constant triage. Every decision to rebuild one facility means leaving another exposed. There is no comprehensive recovery plan in a theater where the next strike is always around the corner. Russia is also hitting energy supply systems and railways that feed the mills, which means even the factories that survive intact are starving for fuel and feedstock.

Steel is unforgiving in its economics. Even in normal times, you need 90% capacity utilization to break even. You need long-term market commitments to justify capital investment. Today, Ukrainian steelmakers can offer neither. The seaport is closed. The land corridor quota is cut by 60%. Energy infrastructure keeps coming under fire. Railways are degraded. The supply chain feeding the Ukrainian military is shrinking alongside the civilian industry. Ryzhenkov was not equivocal when asked whether we were witnessing the end of Ukrainian steelmaking. “If nothing is done, it’s almost inevitable.” He laid out the logic without hedging. If Ukraine cannot participate fully in the European market and cannot attract meaningful capital investment, everything comes to an end eventually. The EU has acknowledged Ukraine’s unique position and says negotiations are ongoing. But acknowledgments do not keep blast furnaces running. Quota compromises do not replace killed workers. The real question is whether the political will to unblock market access exists before the physical infrastructure erodes beyond recovery. Steel businesses run on long-term commitments. You do not invest in a new furnace if you cannot guarantee output for the next five years. You do not train a workforce if you cannot guarantee a market for their production. The EU’s quota framework, designed for normal trade conditions, is fundamentally incompatible with a wartime economy where supply is interrupted monthly and demand is uncertain by the quarter. Ryzhenkov himself frames the choice starkly. He said the option to walk away is always there. But with 33,700 families behind him and 8,500 of those employees fighting at the front, walking away is not a choice anyone seriously entertains. His grandmother was a coal plant chemical engineer tied closely to steelmaking. His mother, father, and uncle all worked in the sector. That family history gives him a level of determination that numbers alone cannot explain. He told me he could not find a reason to slam the door and walk out. The question that remains is whether the market access he is still fighting for will still exist when the war ends. Or whether by then the factories will have simply worn out beyond the point of return.

Author bio: Alisa Mercer, a commodity risk desk lead specializing in industrial metals logistics, with over fifteen years tracking supply chain shocks across emerging and conflict-affected markets.