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Dam Rupture Complicates Steel Production In Ukraine

  • ArcelorMittal Kriviy Rih (AMKR) has suspended steelmaking and rolling operations due to concerns over water consumption following a dam rupture at the Kakhovska Hydropower Plant.
  • Although the plant's blast furnaces, coking coal ovens, and iron ore mining operations continue, and deliveries are on schedule, the halt in production could impact steel prices.
  • The dam rupture caused severe flooding downstream and significant disruptions in water supplies to the plant, prompting management to ask staff to work from home or take unpaid leave.

Via AG Metal Miner

Ukrainian steelmaker and longs producer ArcelorMittal Kriviy Rih (AMKR) recently stopped steelmaking and rolling operations. A spokesman for the company told MetalMiner that the halt stems from a rupture of the Kakhovska Hydropower Plant’s dam after a suspected Russian operation. So far, there is no consensus on how this might affect steel prices.

The source added that concerns over water consumption prompted the plant to stop production on June 6, the same day the incident occurred. “Production will resume once water levels in the Kakhovka Reservoir stop falling,” the spokesman said. However, he declined to say when that could happen. Meanwhile, AMKR’s blast furnaces are continuing to operate. The same goes for the coking coal ovens and iron ore mining operations. The source also told MetalMiner that deliveries are also continuing on schedule.

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Production Loss Could Impact Steel Prices

The dam is on the Dnipro River in Ukraine’s Kherson region. According to international and local reports, the breach caused severe flooding downstream, necessitating urgent evacuations. Steel plants like ArcelorMittal mainly use water in their rolling mills for cooling purposes. However, water is also integral to the steelmaking process. The source declined to indicate Arcelor Mittal Kryviy Rih’s average water consumption levels before the dam’s explosion.

It was also unclear at what percentage of capacity the plant was pouring steel and rolling. However, reports indicate that the combined crude steel production from Ukrainian steelmakers in the first four months of 2023 fell 54% year on year. According to a May report from local steelmaking association Ukrmetalurgprom, this represents a drop from 3.93 million metric tons to almost 1.81 million metric tons. Such a large drop in supply must also be factored into current steel prices.

Water Supplies Severely Impacted

On June 7, AMKR announced that there would be no water supplies to the plant on June 8. Management then asked that staff either work from home or, upon agreement with relevant supervisors, take unpaid leave. The plant also said that it would give updates on water supplies for subsequent days.

ArcelorMittal predecessor Mittal Steel acquired the plant in 2005. This was after the government at the time annulled the plant’s 2004 sale to Ukrainian pipe and railway producer Interpipe. AMKR can produce about 6 million metric tons per year of crude steel via the BF/BOF route. The plant casts this into billets for rolling into long products, such as wire rod, rebar, and merchant bar.

Also on June 7, compatriot company Interpipe Group announced that operations would continue at its Niko Tube plant. According to Interfax-Ukraine, company management noted that it was closely monitoring the situation. Niko Tube, which also lies in the Dnipropetrovsk region, produces seamless pipes for the gas and oil, transport, and mechanical engineering sectors as well as for general applications. Its products range in diameter from 42-325mm with 2.5-40mm wall thicknesses.

By Christopher Rivituso 

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