ArcelorMittal Kryvyi Rih, Ukraine‘s largest steel mill, has announced that it will close its blooming mill in the second quarter of 2026 due to increasing economic pressures resulting from both European environmental regulations and repeated energy disruptions caused by Russian attacks. The decision was announced by the company itself, citing the difficulties of operating in a context of rising costs and increasingly limited commercial outlets.
The rolling mill that will be closed produces billets, a semi-finished product used by departments for the production of low-thickness steel and metal wires. The closure of this department has been deemed necessary because economic conditions have compromised its production feasibility, with negative effects on the company’s accounts.
The role of environmental regulations
A key factor behind the decision is the entry into force on 1 January 2026 of the European Union’s Carbon Border Adjustment Mechanism (CBAM), a regulation that imposes a fair price on carbon emitted during the production of energy-intensive goods destined for the European market. According to ArcelorMittal, this mechanism has effectively closed access to a significant part of the EU markets for Ukrainian metallurgical products, making exports from the Kryvyi Rih site to its main European trading partner less competitive.
The CBAM aims to ensure that goods imported into Europe pay a price for carbon emissions comparable to that which would apply to local production, with the aim of avoiding carbon leakage. However, for energy-intensive industries such as Ukrainian steel, this new regulation translates into additional costs and stricter trade barriers.
Russian attacks and energy costs
A further difficulty highlighted by the company concerns Russian attacks on Ukraine’s energy infrastructure. The continuous increase in the intensity of the attacks has damaged power lines and distribution facilities, leading to power outages and widespread blackouts in large industrial areas.
To address the electricity shortage, the Kiev government has incentivised energy imports from the European Union, but this solution has resulted in significantly higher electricity costs, further exacerbating the competitiveness of metallurgical products. According to ArcelorMittal, the more expensive energy added to the difficulties caused by the CBAM and contributed to the impossibility of maintaining the rolling mill’s economic viability.
Effects on the Ukrainian metallurgical sector
The situation at ArcelorMittal Kryvyi Rih reflects the broader tensions facing the Ukrainian metallurgical sector. In recent months, other companies such as Ferrexpo, a supplier of iron ore pellets, have also announced suspensions of operations and operational cuts related to energy supply difficulties and infrastructure instability.