Chemical industry

Ukraine inherited its chemical industry from a self-sufficient chemical organization within the Soviet Union. A peculiarity in the former USSR was that often chemical enterprises were located within regional frameworks, and as a rule, close to raw stock bases. Only fertilizer producing companies were built near consumers in agrarian regions.

The companies based on raw stock of Ukrainian origin turned out to be more stable. In particular, Titan, Crimean Soda Plant, Lisichanskiy Soda Plant, Artem Solt, as well as mining and dressing works and by-product coke plants prospered.

By geographical location, Ukrainian chemical enterprises are situated in different regions of the country, which helps them not compete against each other, but at the same time makes each a natural monopolist in its own region.

Note that mineral fertilizers and ammonia have been strategic staple Ukrainian exports for a long time. Ukraine has 8 large producers of fertilizers, of which 6 specialize in the production of nitric fertilizers and are the cornerstone of export and production potential of Ukraine. Ukraine is one of the top exporters of nitric mineral fertilizers in the world. The country exports mineral fertilizers to 70 countries of the world. The production of nitric fertilizers is based on ammonia as a raw stock, which is turn is produced natural gas. In this light, the gas price is a serious determinant of the ammonia cost and has an important share in the value of fertilizers.

Ukraine has large reserves of raw stock to produce inorganic chemicals, but at the same time there is no raw material for organic chemical production. The country’s own explored reserves of oil are scarce, which had its effect on the absence of raw stock for petrochemical production and the manufacturing of plastics and polymers. As a result, most oil refineries already belong to Russian capital, which also managers facilities processing organic agents, polymers, and plastics. As regards complex chemical compounds, dyers, glues, ferments, and composites, as well as plant protecting agents, they contribute less than 15% to the chemical market’s volume.

Special attention should be paid to alumina (aluminum oxide). The issues of alumina deliveries were not put for public discussion in Ukraine. However, if ammonia exports totaling $403 mn are made by 6 producers, alumina, whose export volumes consist of $ 257 mn come from a single enterprise – Nikolayev Alumina Plant. As regards the chemical group showing the highest growth dynamics, polymers, Ukraine has just a few polymer producers. The polymer industry is a major environmental polluter, and was mostly set up close to raw stock deposits or not far from them in large industrial centers consuming polymers and plastics. Hence, production was mostly concentrated in eastern and central Siberia as well as in Privolzhsky region of Russia.

Hundreds of companies in Ukraine are involved in processing of polymers into plastics. Commodities leading the way in Ukraine are polypropylene, polyethylene and polystyrene.

The chemical industry of Ukraine is mostly oriented at industrial consumers, the agricultural segment, and export shipments. Ukrainian chemicals get the widest demand from farmers and processors of agricultural produce, which buy fertilizers, plant protecting agents, as well as polymer packing. Also, Ukrainian-made chemicals are used as semi-products in metallurgy, light and textile industries, and pharmaceutical business. There is a small volume of demand for Ukrainian chemicals by the public, since the country does not have a sufficient level of chemical processing. Nonetheless, the consumer segment is stable and developing. As a supplier of raw stock for the industry, Ukraine’s chemical production depends heavily on foreign economic factors, the conditions of the end-product markets, and prices for energy sources.

Ukraine’s chemical industry has been oriented toward exports since independence. Despite heavy dependence on Russia’s energy sources and raw stock, Ukraine has been successfully competing with the RF at the world market. The competitive advantages are:

• Geographical location;

• Availability of powerful and relatively modern chemical plants;

• Transportation infrastructure, railways, and ports;

• Coordinated actions of enterprises which are very often near each other.

Summing up, chemical production in Ukraine, having survived after the USSR collapse and remaining on the world market, already boasts long standing ties with other economic segments, a good reputation on the world market with regards to exported articles, and a high rating of investment appeal. This is especially illustrative by prices within Ukraine, tendencies on the world market, and growing imports in large spectrum of polymers, caoutchouks, and plastics. The increase in natural gas prices will seriously hurt Ukraine’s chemical industry. Also, as the chemical industry often has environmental risks, firms in markets with greater controls often locate and develop chemical production in emerging countries such as Ukraine. In the light of Ukraine’s advantages, the country’s chemical industry will become one of the most profitable and promising sectors.