Ukrainian steelmaker ArcelorMittal Kryvyi Rih (AMKR) has called on the Ukrainian government to revise its long-term electricity auction mechanism, citing high and unpredictable electricity costs as one of the biggest challenges facing the country's steel industry after Russian attacks.
According to AMKR CEO Mauro Longobardo, the share of electricity and natural gas in the company's production cost structure has almost tripled compared to 2020, reaching 40 percent. He stated that the company's average CPT electricity price stood at $170/MWh in August 2026 and that electricity costs are expected to be considerably higher during the winter.
Although electricity prices temporarily declined in the second half of August amid lower demand, he noted that Ukrainian industrial producers continue to face significantly higher electricity costs than their EU competitors.
Call for changes to long-term electricity auctions
The company had expected the long-term electricity contracts introduced by the Ukrainian government to reduce exposure to price volatility. However, according to Longobardo, traders won most of the initial auctions, indicating that the mechanism should be revised to provide industrial end-users with better access to electricity under long-term contracts.
In this regard, Longobardo called for amendments to Cabinet of Ministers Resolution No. 499, including increasing the amount of electricity offered through special bilateral-contract auction sessions from the current 0.5-2 percent of planned annual sales. He also proposed setting starting prices at the weighted-average day-ahead market price for the preceding period with a discount of at least 30 percent.
Changes to auction conditions proposed
Other proposed changes include removing the minimum number of auction participants or reducing it to two, regulating contract performance guarantees and setting a minimum lot size of 50-60 MW.
Longobardo also pointed to energy support measures available to energy-intensive industries in the EU, stating that Ukrainian industry lacks comparable support. He called for changes to the auction mechanism before the winter to allow industrial consumers to purchase electricity several months in advance at more affordable and predictable prices.
