Key highlights from last week: Russian forces sharply intensified front-line assaults but their territorial gains remained minimal at under 40 km2, with Donetsk region alone remaining responsible for around 90% of all Russian attacks. Heavy fighting also continued along a stretch of the norther border in Russia’s Kursk and Belgorod and Ukraine’s Sumy region after a new Ukrainian incursion. Russia redirected its strikes against civilian targets in Ukraine towards large urban areas after declaring its compliance with a US-proposed energy ceasefire but based on its own list of targets.

The IMF Board has approved the seventh review of its $15.6bn 4-year EFF program for Ukraine, disbursing an eighth loan tranche of $0.4bn.

Russian President Vladimir Putin took his earlier rejection of Ukrainian President Volodymyr Zelensky’s legitimacy to a new level yesterday, stating that the entire system of government in Ukraine was illegitimate and it was necessary to place the country under external administration, possibly under a UN mandate. Putin said this was necessary in order to hold elections in Ukraine and then negotiate a peace treaty with newly elected authorities. Putin also claimed Russian forces had the strategic initiative on the battlefield in Ukraine, adding “there are reasons to believe that we will finish them off.”

Naftogaz Commercial Director Dmytro Abramovych said that Russian attacks on the Ukrainian energy system had caused 0.7 bcm in domestic gas production losses in February–March. The company needs to import approximately 4.5 bcm of gas before the start of the next heating season to reach inventory levels comparable to the previous year (13 bcm), of which 0.8 bcm has been imported YTD. He expects domestic gas consumption to remain largely unchanged y-o-y in 2025, at around 20.7 bcm.

Bank of New York Mellon reported that on Mar. 14, Metinvest repurchased and cancelled EUR 4.3m of its 2025 Eurobonds.

Ukraine’s State Statistical Service (SSS) reported 2024 industrial production (IP) growth of 3.6% y-o-y, down from 6.8% in 2023. The government agency also published 2024 growth data for select sectors including construction (+16% y-o-y vs. +25% in 2023) and retail turnover (+12% y-o-y vs. +17% in 2023). It also reported 2024 passenger transportation growth of 4.3% y-o-y, marking a sharp slowdown from +33% in 2023, and recovery in cargo transportation to +13% y-o-y from -2.0% in 2023.

According to Prime Minister Denys Shmygal, the EBRD has approved a EUR 270m loan for Naftogaz to finance gas purchases for the next two heating seasons. Additionally, Norway will provide a EUR 140m grant to the company, via the EBRD, also for gas procurements.

At its primary bond auctions in March, the Ukrainian Ministry of Finance placed UAH 30bn ($719m) of hryvnia-denominated paper, up from UAH 16bn in February ($384m), and $406m of F/X bonds. With UAH 24bn ($577m) of UAH and $670m of F/X-denominated debt redeemed ($1.2bn in total), MinFin will register a net redemption of $122m in March, with $142m worth of net proceeds on UAH bonds offset by a $264m net redemption on F/X bonds. The aggregate rollover rate stood at 91% in March (79% YTD), improving from 64% in February ($351m redeemed) and 79% ($170m) in January.

The US administration has announced following its talks with Ukraine and Russia in Saudi Arabia on Mar. 23-25 that it achieved agreement with both sides to “ensure safe navigation, eliminate the use of force, and prevent the use of commercial vessels for military purposes in the Black Sea.” In two statements summarizing its separate negotiations with the Ukrainian and Russian delegations, the White House said the sides also agreed to continue working towards the so called energy ceasefire, which President Donald Trump discussed with his Ukrainian and Russian counterparts last week, namely “develop measures for implementing … agreement to ban strikes against energy facilities of Russia and Ukraine.” However, questions quickly arose about how the agreements will be implemented, as Russia conditioned its adherence to the maritime ceasefire on the lifting of sanctions against Russian banks, companies and ships involved in global food and fertilizer trade. US President Donald Trump said the US was studying the Russian conditions. In another comment made yesterday, Trump said, in reference to Russia, “it could be they’re dragging their feet.” Meanwhile in Russia, a Kremlin spokesperson said no trilateral (US-Ukraine-Russia) meeting was being discussed for the time being and another Trump-Putin call was not being prepared either. Also, the Russian Foreign Ministry said yesterday Ukraine’s Zaporizhya Nuclear Power Plant (ZNPP), which Russia occupied in 2022, was Russian property and could not be transferred to any other country or operated jointly. Earlier, Trump and the White House said the US was interested in owning and operating Ukrainian nuclear power capacity, which was widely seen as being in reference to ZNPP.

The stock of outstanding hryvnia-denominated loans issued by Ukrainian banks rose by 2.1% m-o-m to UAH 857bn in February following a 1.1% increase in January, bringing the y-o-y growth tally to +17%. F/X-denominated loans inched up by 0.3% m-o-m to $6.1bn last month, sliding by 4.8% y-o-y.

The US administration has announced following its talks with Ukraine and Russia in Saudi Arabia on Mar. 23-25 that it achieved agreement with both sides to “ensure safe navigation, eliminate the use of force, and prevent the use of commercial vessels for military purposes in the Black Sea.” In two statements summarizing its separate negotiations with the Ukrainian and Russian delegations, the White House said the sides also agreed to continue working towards the so called energy ceasefire.

Ukraine’s provisional merchandise trade deficit stood at $2.6bn in February, widening slightly from $2.4bn in January as monthly imports rose by 3.7% m-o-m and 16% y-o-y to $5.8bn, while exports declined by 2.2% m-o-m and 8.9% y-o-y to $3.1bn. In 2M25, the goods trade deficit reached $5.0bn, widening sharply from $3.2bn in 2M24 as imports rose by 13% y-o-y to $11.3bn and exports fell by 7.7% y-o-y to $6.3bn.

US and Russian mid-level delegations held talks in Saudi Arabia yesterday, reportedly focusing on implementing partial “energy” and “maritime” ceasefires. Reuters quoted a White House source as saying that progress was made and a “positive announcement” would follow shortly, reportedly later today. A member of the Russian negotiating team said “many problems were discussed [and] there was an intense, challenging dialogue … useful for us and for the Americans,” adding that “the impression was of a constructive dialogue, which is needed and necessary.” Meanwhile, the Ukrainian delegation in Riyadh, which met with US negotiators on Sunday, ahead of the US-Russian talks, is expected to hold another meeting with the US team today.

Ukraine’s iron ore exports stood at 5.6 Mt in 2M25 (+1.2% y-o-y), implying February exports of 2.5 Mt (-21% m-o-m, -3.3% y-o-y). In value terms, iron ore exports totaled $0.4bn in 2M25 (+19% y-o-y), suggesting an 18% m-o-m drop in February, to $202m (-21% y-o-y). The average iron ore export price fell 18% y-o-y to $82/t, still up 4.2% m-o-m.

Ferrexpo announced that Ukrainian tax authorities have suspended VAT refunds to its subsidiaries Ferrexpo Poltava and Ferrexpo Yeristovo Mining for the month of January 2025 following the imposition by Ukraine of personal sanctions on Ferrexpo’s largest shareholder, Kostyantyn Zhevago. The combined amount of suspended VAT refunds was reported at UAH 513m ($12.5m). According to Ferrexpo, the suspension of VAT refunds will pressure its liquidity and force it to reduce production and sales, ultimately resulting in lower tax payments to the Ukrainian state. Ferrexpo also said that the personal sanctions targeting Zhevago should not affect the company, as 50.5% of its shares are held by other investors.

Key highlights from last week: Russian forces expanded their offensives in different front-line sectors but their weekly territorial gains remained marginal at 50-60 km2. Ukrainian forces continue to hold a small bridgehead in Russia’s Kursk region. Russia intensified targeted drone attacks on large cities after Trump-Putin call on energy and maritime ceasefire; US and Ukrainian delegations held “technical” talks in Saudi Arabia yesterday, before US-Russian talks today.