Russian strikes choke Ukraine’s economy as steel shuts down and grain
exports stall
[November 03, 2026] By
SAMYA KULLAB
KAMIANSKE, Ukraine (AP) — The furnaces are cold, the factory floor
deserted, and twisted metal litters the grounds of Kamet Steel, a vast
industrial complex that once helped power Ukraine’s economy but closed
after a Russian attack.
Across the country, grain — a key export — piles up in fields and silos
as farmers struggle to find routes safe from airstrikes and wait for
prices to rise.
Russia’s intensified air campaign is slowly strangling Ukraine’s
economy, targeting industrial and energy plants and the logistics
networks, railways and export routes that keep it afloat. The near-daily
strikes with ballistic missiles and jet-powered drones disrupt
production and drive up transport costs.
As a result, Ukraine’s government faces a deepening cash crunch as the
air war chokes its revenue from steel, agriculture and other key
sources. The damage ripples across interconnected sectors just as Kyiv
faces uncertainty over future U.S. support.
Ukraine’s central bank last week forecast a 0.4% economic contraction in
2026, reversing its previous projection of 1.8% growth, due to the
attacks and a surge in global energy prices. Gov. Andriy Pyshnyy said
the bank had also raised its inflation forecast to 12.5%, from 10% in
July.
Ukraine spends some 40% of its gross domestic product on defense — far
beyond what it can cover alone, notes Torbjörn Becker, director of the
Stockholm Institute of Transition Economics. Raising taxes only would
bring in a fraction of what is needed.
Ukraine’s steel industry, a pillar of the economy, grinds to a halt
Missile strikes have halted steel production across Metinvest Group, the
country’s mining and metals giant.
Kamet Steel, in the industrial city of Kamianske, accounted for more
than a quarter of Ukraine’s steel output in 2025. The complex employed
thousands producing steel and pig iron for domestic construction. It
also supplied semi-finished steel to Metinvest’s facility in Bulgaria
for the market there and elsewhere in Europe.
But five ballistic missiles struck the site on Sept. 5. Its closure has
hurt Ukraine’s industrial economy, affecting construction, mining,
engineering, energy and logistics.
Ukrzaliznytsia, the national railway operator, relies heavily on steel
transport and other freight revenue. Businesses that rely on the plant
could lose jobs and face bankruptcy, said Oleksandr Tretyakov, Kamet
Steel’s CEO. European Union trade restrictions could hinder recovery by
narrowing the market for Ukrainian steel exports, he said.
“This is the worst situation since the Second World War,” Tretyakov
said, noting that steel once accounted for about 6% of Ukraine’s GDP.
“It did,” he said. “Right now, it’s zero.”
Grain is trapped behind export bottlenecks
Agriculture accounts for up to 60% of Ukraine’s foreign currency
earnings, making it critical to the wartime economy.
But Russian attacks on Black Sea shipping have sharply reduced traffic
through Ukraine’s deep-water ports just as farmers need cash to prepare
for the next planting season.
Ukraine’s Black Sea trade has collapsed with attacks on ports, vessels
and logistics infrastructure, according to maritime data and analytics
company Lloyd’s List Intelligence. There were only 21 ship arrivals at
Black Sea ports in August, down about 90% from a year earlier.
Soaring insurance premiums and the constant threat of Russian strikes
deter shipowners. Dozens of sailors have been killed in attacks this
year.
“All our developments and all the innovations we achieved will be
crossed out by this situation and we will need to start from zero
later,” said Volodymyr Scavinskyi, trade director at Nibulon, one of
Ukraine’s leading agricultural exporters.
Ship traffic from Ukraine's lower-capacity ports on the Danube River to
the Black Sea has surged, even under the threat of Russian bombardment.
But it is costly. The Danube delta's Sulina Channel is too shallow for
the largest vessels, and dozens of ships often wait days to enter or
leave the river.
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Pigeons fling over a barn in Kyiv region, Ukraine, Friday, Oct. 9,
2026. (AP Photo/Evgeniy Maloletka)
 Record low Danube water levels due
to drought also constrain the route. Barges that once carried 1,500
tons are loading only 800 to 900 tons, Scavinskyi said. Nearly twice
as many barges are needed to move the same volume, raising costs.
Transporting each ton of corn from central Ukraine to Spain cost up
to $50 earlier this year. Now, it can reach $150, he said.
“It’s still risky and you don’t have any guarantees that your voyage
will be successful,” Scavinskyi said.
Farmers caught between breaking even and losses
For Olena Shelest, commercial director at HarvEast, a major
agricultural holding, the immediate challenge is finding buyers.
HarvEast is holding wheat in enormous silo bags, waiting for market
prices to stabilize. But the grain must be sold by year's end to
free up cash for next year’s planting. The company risks running out
of money to sow the next crop, turning today’s export bottleneck
into next year’s production crisis.
Corn prices have fallen sharply, from an average of $210 to $230 per
ton last year to around $130, further squeezing farmers, Shelest
said.
About 60% of HarvEast's sales used to go through Black Sea ports.
The Danube ports of Reni and Izmail can handle only about 15% to 20%
of overall national export volumes, Shelest said. Land routes
through Poland and elsewhere in Europe offer alternatives but have
higher transport costs.
The pressure is forcing farmers to cut spending on seeds and
fertilizer, risking future yields.
Ukraine faces worst cash squeeze since Russia's invasion
Roksolana Pidlasa, head of the parliament’s budget committee, said
Ukraine is facing its worst cash squeeze since Russia's 2022
invasion. Falling tax revenues have left the treasury struggling to
cover planned spending despite international funding commitments.
Ukraine faces a gap of just under $25 billion in funding for 2026,
with dozens of bills tied to international commitments requiring
parliamentary approval by the end of the year. In 2027, the gap is
expected to reach about $32.6 billion, plus around $45 billion for
in-kind military support.
The loss of U.S. budget support has compounded the pressure.
Washington provided $50 billion in purely budget support under
President Joe Biden between 2022 and 2024, helping fund teachers and
doctors’ salaries and pensions, according to the U.S. Government
Accountability Office.
Since President Donald Trump returned to office, there has been no
authorization of significant aid to Ukraine. Some aid appropriated
under the Biden Administration is still in the pipeline, though the
Trump administration has temporarily paused some deliveries,
according to the Council on Foreign Relations.
Europe has become Ukraine’s largest source of overall support,
providing 137 billion euros ($153 billion) in financial,
humanitarian and military aid since the start of the war, compared
with 115 billion euros ($129 billion) from the U.S., according to
the Kiel Institute for the World Economy.
Defense, public sector salaries, pensions and social assistance take
priority. The government has postponed construction, reconstruction
and some winter preparation projects.
If Ukraine doesn't find a way to cover the deficit next year, “it
will mean that we will not be able to pay teachers and doctors’
salaries and maintain hospitals,” Pidlasa said.
—-
Associated Press Business Writer David McHugh in Frankfurt, Germany,
and AP journalist Volodymyr Yurchuk in Kyiv contributed to this
report.
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