Severe economic problems in Ukraine and neighbouring countries since the financial crisis have really hit demand for chemicals hard. GDP plummeted by 15% last year with all sectors of the economy affected.
According to a new report out by companiesandmarkets.com, the construction sector virtually ground to a halt, with activity falling by around a half.
All this is grim news for chemical producers in Ukraine. The report says from January-November 2009, production of commdity plastics totalled 279,500 tonnes, down by 32.5%.
It suggests that demand will not recover to 2007 levels until 2012 at the earliest. This seems to be roughly in line with most recovery forecasts. The industry should receive a boost in the 2010-12 period as a result of construction and other activity related to the country’s joint hosting of the UEFA football championships.
Profits will be hard to find: “Ukrainian petrochemicals sector will be operating at around 70% capacity – which is well below the 80-85% level which we regard to be the break-even point for the industry. The economy will begin a modest recovery in 2010, with GDP real growth at just 1.9%, with higher rates of growth in subsequent years.”
With Russia in the doldrums for the foreseeable future, Ukraine will need to turn its sights to the Eurozone for exporting opportunities. Of course this region is only staging a shaky recovery at best too.