The Ukraine enjoyed positive news in an otherwise bleak scenario when Lukoil agreed to reopen the Karpatneftekhim’s facilities in September last year after being offline for a year, following an agreement with the government. BMI expects a revival in petrochemicals output levels in 2014, but recovery will be slow and tenuous due to endemic economic problems and sluggish external markets. If exports don’t pick up, especially in Eastern Europe, Ukraine’s petrochemicals sector will be unable to reach full operational capacity.
Sales and demand
With the domestic economy in recession, the Ukrainian petrochemicals industry is facing a tough outlook which is compounded by a weak export base and currency instability. In July 2013, year to date retail sales fell to a three year low of 7%, while real wage growth has remained anchored in single digit territory since May despite a collapse in consumer prices. Both are reflected in the very poor performance of Ukraine’s chemicals and petrochemicals industries, where challenges of an overvalued exchange rate and high energy prices have been compounded by falling prices of key exports.
Karpaneftekhim’s plans for an emulsion PVC complex with a capacity of up to 30 000 tpa and a plant producing profiles from PVC with a capacity of 20 000 tpa could be brought back on track as a result of the revival of its operations. The reopening of its 300 000 tpa will boost the development of an integrated sector that promises to make the country both self sufficient and a supplier to the Russian market. When run at full operational capacity, at least half the plant’s supply can be exported after fulfilling all domestic requirements.
Adapted from a press release by Claira Lloyd.
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