Ukraine’s dry bulk exports, primarily iron ore and steel, have faced significant challenges due to the ongoing war and domestic economic pressures. These issues have disrupted traditional shipping routes and trade relationships, leading to a decline in export volumes despite some recent recovery efforts.
Challenges to Dry Bulk Exports
The war has created several major challenges for Ukraine’s dry bulk exports:
- Security Risks and Logistics: The conflict has created security risks in the Black Sea, leading to higher insurance premiums and forcing exporters to reroute shipments through EU ports like Constanta and Sulina. This has increased logistics costs and shipping times. For example, Ukrainian iron ore loadings through Romania in the first seven months of 2025 have already surpassed the full-year 2024 total, highlighting the shift in trade routes.
- Production and Financial Hurdles: The conflict has impacted key mining and steel production facilities, particularly in the Donetsk region. Additionally, the government’s non-refund of Value Added Tax (VAT) on exports has created significant financial strain for companies, forcing some to curb or even halt production. The Kryvyi Rih Iron Ore Plant (KZRK), for instance, shut down after the destruction of the Mariupol steel mills and a delay in VAT refunds.
- Soaring Operating Costs: Ukrainian miners and steel producers are grappling with soaring costs. Elevated railway tariffs for transporting goods to ports are 1.5 times higher than pre-war levels, and port dues have more than doubled compared to European ports. Furthermore, electricity costs have risen significantly due to damage to power generation infrastructure.
Iron Ore Exports
Historically a top global exporter, Ukraine’s iron ore sector has been severely impacted by the war. In 2020, Ukraine was the fifth-largest exporter, with roughly 85% of its iron ore shipped to China on Capesize vessels. However, exports collapsed from a peak of 30.2 million metric tons in 2020 to just 4.0 million metric tons in 2022. While a partial recovery to 15.2 million metric tons was seen in 2024, supported by a “safe maritime corridor,” the future of this rebound remains uncertain due to ongoing instability. The recovery in iron ore shipments has, however, provided a much-needed boost to ton-miles and vessel rates for the shipping industry.
Steel Exports
Similar to iron ore, Ukraine’s seaborne steel exports have plummeted from 10.9 million metric tons in 2021 to a historical low of 0.5 million metric tons in 2023. Beyond the domestic issues affecting iron ore, the steel sector is also facing stiff competition from China. Over the past few years, Chinese steel exports have surged, making significant inroads into key Ukrainian markets, including the Mediterranean, Black Sea, and Arabian Gulf. This influx of Chinese steel, which is benefiting geared bulkers with increased ton-miles, is putting additional pressure on Ukrainian producers.
Future Outlook
The outlook for Ukraine’s ferrous exports remains challenging as long as the war continues. The sustained high production and logistics costs, combined with a consistent decline in global iron ore prices, pose significant headwinds. Furthermore, the structural demand for both Ukrainian iron ore and steel is facing compression. China, once Ukraine’s largest iron ore buyer, is now emerging as a major competitor in the downstream steel sector. The anticipated delivery of the Simandou project’s first cargo, which is a major iron ore development in Guinea, is expected to create further competition for Ukrainian suppliers.
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Source: Breakwave Advisors
