Chemical companies resume operations after the sanctions on goods from Russia – analysis

Химпредприятия возобновляют работу после санкций на товары из РФ, - анализ

The journalists analyzed the conditions under which producers of complex fertilisers will come back to stable operation

The embargo, which came into force on July 1, 2019, extends to a long list of products, among which mineral fertilizers (nitrogen, potassium and phosphorous) and fertilizers with the contents of two or three nutrient elements, the so – called “complex fertilizers”, writes RBC-Ukraine with reference to the article “Censor.NO.”

“Earlier, the state represented by the Cabinet and the national security Council has imposed restrictive measures mainly in response to the expansion of Russian fertilizers in the Ukrainian market, which partly helped the domestic chemical industry to make ends meet. But this time the government decided to go ahead under the ban were more and complex fertilizers from Russia, whose share in total imports only the first four months of this year amounted to about 55%,” writes the author of the material.

As noted, the may decision of the Cabinet was the first major and unambiguous step that demonstrated the commitment of the government to defend the national interest.

“Manufacturers of all kinds of fertilizers were given a clear signal to the policy of double standards when the Cabinet is balanced between the interests of the Russian and Ukrainian producers, rooted in the past. The market should learn to live without the Russians”, – writes “Censor.”

The author draws attention that the protective measures against Russian corporations have been taken not only to support domestic production, but also in response to the actions of the government of the Russian Federation, extended in April this year, the sanctions list of Ukrainian goods.

According to the publication, particularly favorably the may decision of the Cabinet affected the work of the state enterprise “Sumykhimprom” and Dneprovsky plant of mineral fertilizers (JMU).

“These two companies are in Ukraine, the major manufacturers of so-called complex fertilizers, the need in Ukraine is about 1 million tons per year,” the article says.

According to the “Censor”, Ukrainian “Sumykhimprom” and renewable production JMU today is quite capable of producing all the necessary requirements of the market – about 70 thousand tons of fertilizer per month. According to the author, even if the capacities of Ukrainian producers for some reason become insufficient, the import from Belarus will cover all the needs, not to mention products from the Netherlands and Finland.

“Despite the fears of farmers and the efforts of the Russian lobbyists, constantly accusing the Cabinet to allow Ukrainian corporations, in the past year, it is possible to observe gradual emergence of the domestic chemical industry from years of spin. So, today, enterprise “Cherkasy Azot” and “Rovnoazot” work almost 100% of its capacity. For the first time since the outbreak of hostilities in the East of Ukraine began to increase production volumes and Severodonetsk Azot working in the vicinity of the demarcation line in the Donbas, which in turn is not only an important factor for the market, but also for the whole socio-economic situation in close proximity to the area of environmental protection. Restores production and people back to work after almost complete inactivity in 2018 one of the flagships of the domestic chemical industry “DneprAzot”, reports “Censor”.

In the opinion of the author, it is the current situation for nitrogen enterprises in Ukraine is the best proof that if the government will keep the sanctions against the Russian chemical industry, or at least wouldn’t give them up unilaterally, then within a few months, and producers of complex fertilizers “Sumykhimprom” and JMW – will return to stable operation.

It is noted that protective measures, up to a total ban on the import of Russian fertilizers in Ukraine, in the coming years to reduce the dependence of Ukrainian agriculture from Russian influence, and allows for complete replacement of Russian products on the Ukrainian market.

“The Ukrainian market will remain competitive for all except the corporations from Russia, and it is equally able to openly compete as domestic manufacturers, and the Belarusians, the Dutch, the Finns, the Balts and other importers”, – stated in the material.

According to the author, the next government is unlikely to take unilateral lifting of sanctions against Russian goods, including products of Russian chemical industry.

“Yet the rhetoric and actions of the new government suggests that gifts of the Russian Federation, the new government of Ukraine unilaterally is unlikely to do so,” the paper concludes.