Ukraine's national energy company Naftogaz has reduced deliveries of natural gas to chemical and metallurgical companies, which are the country's biggest industrial consumers of gas, in order to stabilize the work of the Ukrainian gas transmission system.
As Naftogaz spokesman Valentin Zemlyansky stated, during the current period of crisis, domestic chemical and metallurgical companies have stored a significant amount of products, and, thus, the temporarily shortening of gas supply does not have to worsen their production results. Regardless, the country's steelmakers have been already forced to start cutting their output.
Moreover, Naftogaz has also requested metallurgical companies to start using their own gas reserves or to increase their usage of alternative energy sources to replace gas, especially coal. According to the Association of Ukrainian Coke Producers, in December the national coke output rose to 38,000 mt a day from 32,000 mt in November.
Earlier this year Ukraine's metallurgical companies voluntarily decreased their gas consumption by 20 percent, while some of them started to use coke in their BF production, refusing gas consumption.
Since the second half of October, the Ukrainian steelmaker Azovstal, a subsidiary of the Ukrainian iron ore and steel producing company Metinvest Holding, has been taking natural gas out of its production cycle, replacing it with higher coke consumption, and by November it completely stopped gas usage.
In addition, as SteelOrbis previously reported, Ukrainian steel producers Ilyich Iron and Steel Works of Mariupol and Zaporizhstal are carrying out projects to switch to pulverized coal injection (PCI) technology, which will allow them to completely replace natural gas with coal dust and also to decrease the use of coke.
To maintain production operations in the month of January, Ukrainian steelmakers need 398.1 million cubic meters of natural gas, pipe producers need 25.8 million cubic meters, ferroalloy producers require 0.8 million cubic meters, and mining companies need 41.1 million cubic meters.