Browse the complete Report on: Ukraine Petrochemicals Report Q4 2010
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The weakness of the hryvnia will help sustain Ukrainian petrochemicals export growth, with the Russian market picking up pace, according to BMI’s latest Ukraine Petrochemicals Report. While production volumes are still below pre-crisis levels, the extent of the collapse in output throughout the 2009 crisis, combined with a tentative recovery in external demand, will help push growth levels higher in our view. However, continued poor performance in the Ukrainian automotive sector means it will operate well below maximum output capacity over the forecast period, leading to low levels of engineering plastics consumption by this crucial industrial sector. The country’s construction industry, a major consumer of PVC in Ukraine, is also plagued with lingering problems following a 40% contraction in 2009. It will take until 2014 at the earliest for plastics demand from the construction sector to return to 2008 levels.
Consequently, exports to Russia will feature strongly in the Ukrainian petrochemicals recovery. Exports will be encouraged by the warming relations between Russia and Ukraine following the election in February 2010 of pro-Russian candidate Viktor Yanukovych to the presidency. This prompted an immediate and positive response from Moscow towards trade and investment with Ukraine. The improved political relationship should prevent a return of the gas supply crises that have plagued the Russian petrochemicals industry over the past two years and has already prompted a downward revision in the cost of gas. However, the petrochemicals industry lacks competitive edge and is burdened by high costs and inefficiency. Unless the industry is modernised, there is a risk of permanent low capacity utilisation, loss-making and possible closure.
Notwithstanding plant closures, while Ukraine’s petrochemicals industry is not expected to contract any further, due to the depth of the decline, it will take until at least 2014 before it reaches 2008 levels, based on the slow recovery in the Ukrainian and Russian market. BMI forecasts plastics output of 365,000 tonnes in 2010, up by around 17.5% over 2009 levels. Although growth will be strong, it is largely due to base effects. Output will still be 16% down on 2008 levels, and Ukraine’s petrochemicals sector will be operating at around 70% capacity – which is well below the 80-85% level which BMI regards to be the break-even point for the industry. A diversification in markets and feedstock sourcing to remove the industry’s dependence on domestic and Russian demand would enhance Ukraine’s petrochemical prospects. With the kind of economic growth rates seen in 2000-2007 unlikely to be repeated, the petrochemicals industry will be more heavily reliant on export markets. The depreciation of the hryvnia may provide some slight relief in terms of competitiveness, but equally it raises the cost of feedstock; which has to be passed on to the consumer or simply absorbed by the industry – which is already financially precarious. This has, however, been mitigated by the Russian gas deal.
Ukraine is in 10th place in BMI’s Central and Eastern Europe Petrochemicals Business Environment matrix, with a score of 37.5, down 0.1 point since the previous quarter due to a decline in the country risk rating. This puts Ukraine 2.6 points behind Bulgaria and 4.3 points ahead of Azerbaijan. The score is the result of the imminent start of operations at a 300,000tpa PVC plant in Kalush and an improvement in market risk ratings due to a deal with Russia over cut-price gas supplies. The score has been strengthened by the election of a new Moscow-oriented government which provides some stability in the operating environment for the petrochemicals industry and trade relations with its largest market, Russia. However, the score is held back by very weak a long-term financial markets outlook, although this can get better in the event that IMF credit is sustained and the banking system revived. The overall petrochemicals rating score has plenty of upside potential.
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Browse All - Business Monitor International Market Research Reports
The weakness of the hryvnia will help sustain Ukrainian petrochemicals export growth, with the Russian market picking up pace, according to BMI’s latest Ukraine Petrochemicals Report. While production volumes are still below pre-crisis levels, the extent of the collapse in output throughout the 2009 crisis, combined with a tentative recovery in external demand, will help push growth levels higher in our view. However, continued poor performance in the Ukrainian automotive sector means it will operate well below maximum output capacity over the forecast period, leading to low levels of engineering plastics consumption by this crucial industrial sector. The country’s construction industry, a major consumer of PVC in Ukraine, is also plagued with lingering problems following a 40% contraction in 2009. It will take until 2014 at the earliest for plastics demand from the construction sector to return to 2008 levels.
Consequently, exports to Russia will feature strongly in the Ukrainian petrochemicals recovery. Exports will be encouraged by the warming relations between Russia and Ukraine following the election in February 2010 of pro-Russian candidate Viktor Yanukovych to the presidency. This prompted an immediate and positive response from Moscow towards trade and investment with Ukraine. The improved political relationship should prevent a return of the gas supply crises that have plagued the Russian petrochemicals industry over the past two years and has already prompted a downward revision in the cost of gas. However, the petrochemicals industry lacks competitive edge and is burdened by high costs and inefficiency. Unless the industry is modernised, there is a risk of permanent low capacity utilisation, loss-making and possible closure.
Notwithstanding plant closures, while Ukraine’s petrochemicals industry is not expected to contract any further, due to the depth of the decline, it will take until at least 2014 before it reaches 2008 levels, based on the slow recovery in the Ukrainian and Russian market. BMI forecasts plastics output of 365,000 tonnes in 2010, up by around 17.5% over 2009 levels. Although growth will be strong, it is largely due to base effects. Output will still be 16% down on 2008 levels, and Ukraine’s petrochemicals sector will be operating at around 70% capacity – which is well below the 80-85% level which BMI regards to be the break-even point for the industry. A diversification in markets and feedstock sourcing to remove the industry’s dependence on domestic and Russian demand would enhance Ukraine’s petrochemical prospects. With the kind of economic growth rates seen in 2000-2007 unlikely to be repeated, the petrochemicals industry will be more heavily reliant on export markets. The depreciation of the hryvnia may provide some slight relief in terms of competitiveness, but equally it raises the cost of feedstock; which has to be passed on to the consumer or simply absorbed by the industry – which is already financially precarious. This has, however, been mitigated by the Russian gas deal.
Ukraine is in 10th place in BMI’s Central and Eastern Europe Petrochemicals Business Environment matrix, with a score of 37.5, down 0.1 point since the previous quarter due to a decline in the country risk rating. This puts Ukraine 2.6 points behind Bulgaria and 4.3 points ahead of Azerbaijan. The score is the result of the imminent start of operations at a 300,000tpa PVC plant in Kalush and an improvement in market risk ratings due to a deal with Russia over cut-price gas supplies. The score has been strengthened by the election of a new Moscow-oriented government which provides some stability in the operating environment for the petrochemicals industry and trade relations with its largest market, Russia. However, the score is held back by very weak a long-term financial markets outlook, although this can get better in the event that IMF credit is sustained and the banking system revived. The overall petrochemicals rating score has plenty of upside potential.
About Us
ReportsandReports comprises an online library of 10,000 reports, in-depth market research studies of over 5000 micro markets, and 25 industry specific websites. Our client list boasts almost all well-known publishers of such reports across the globe. We as a third-party reseller of market research reports employ a number of marketing tools, such as press releases, email-marketing and effective search-engine optimization techniques to drive revenues for our clients. We also provide 24/7 online and offline support service to our customers.
Contact:
Ms. Sunita
7557 Rambler road,
Suite 727, Dallas, TX 75231
Tel: +1-888-989-8004
http://reportsandreports.blogspot.com/
http://reportsandreports.proarticles.co.uk/
http://reportsnreports.wordpress.com/
