Ukraine may lose EUR 700 million due to restrictions on the supply of Ukrainian metal products as part of the introduction by the European Union of the Carbon Border Adjustment Mechanism (CBAM), according to a study by the information and analytical center GMK Center presented at a roundtable devoted to the impact of CBAM on the metallurgy of Ukraine held on April 9.
According to the press release, early March 2021, the European Parliament approved a resolution introducing the Carbon Border Adjustment Mechanism (CBAM). The European Union regards the CBAM as a special fiscal instrument that will force manufacturers of imported products to pay the same price for CO2 emissions that European producers pay. The official proposal for CBAM from the European Commission is expected to appear by the end of the second quarter of 2021. CBAM is planned to be in effect no later than 2023.
According to the study conducted by analysts of GMK Center, the negative impact on the metallurgy of Ukraine from the introduction by the European Union of the CBAM can reach EUR 700 million, or 0.5% of the gross domestic product compared to 2019.
“The metallurgical industry of Ukraine will be one of the most affected as a result of the introduction of CBAM. This will happen due to our close partnership with the EU. After all, domestic metallurgists supply 26% of marketable products to the European market, which is more than to our domestic market. Our competitors do not have such a high dependence on the EU market. The introduction of the CBAM will mean a decrease in the competitiveness of Ukrainian exports, losses for the domestic economy, a rupture of production chains between European and Ukrainian enterprises,” Director of GMK Center Stanislav Zinchenko said.
According to him, the annual export losses of Ukrainian metallurgy from the introduction of CBAM by the European Union are estimated at EUR 155-200 million per year, depending on the scenario. It will also reduce the financial results of the industry by EUR 105-200 million per year.
The CBAM covers about EUR 2.5 billion of metallurgical exports per year. The exact scale of damage to national producers depends on the form of implementation of the CBAM.
As a result of the effect of the carbon tax, one can expect a decrease in the volume of pig iron production by 500,000 tonnes (2.5% down compared to the level of 2019) and long products (including square billets) by 110,000 tonnes (1.4% down).
According to Chief Analyst at GMK Center Andriy Tarasenko, this could also lead to a decrease in the volume of capital investments in the amount of up to EUR 130 million per year (12% down compared to the level of 2019). In the long run, this will mean chronic investment lag and a competitive disadvantage.
“The CBAM should not be applied to Ukraine, since we have already taken on the goals of the European Green Deal. The exclusion of Ukraine from the CBAM, on the contrary, will be an incentive for the Ukrainian economy,” Zinchenko said.
The Georgian ambassador to Ukraine, who was recalled for consultations in May 2020 in connection with the situation related to former Georgian President Mikheil Saakashvili, will be sent back to Kyiv in the near future.
The decision to bring the Georgian ambassador back to Kyiv will be made shortly, Georgian Foreign Minister David Zalkaliani said on the Rustavi 2 television channel on Saturday. “This is the wrong time and the wrong circumstance – tensions escalating around Ukraine – to not have our ambassador in place,” Zalkaliani said, adding that Georgia would seek dynamic development of relations with Ukraine.
“We have a lot of common challenges, bilateral relations have been affected, but we are a state and we act to the benefit of state interests,” Zalkaliani said, adding that Ukraine took Georgia’s decision to recall its ambassador with understanding.
The Georgian Foreign Ministry recalled Ambassador Teimuraz Sharashenidze from Kyiv for consultations in May 2020 after former Georgian President Mikheil Saakashvili (2004-2013) was naturalized by Ukraine and took charge of the Executive Committee of Ukraine’s National Reform Council. Tbilisi explained its demarche with the appointment of a person convicted in Georgia to an official position in Ukraine in contradiction to the spirit of bilateral cooperation. In addition, the Georgian authorities repeatedly called Kyiv’s attention to the fact that Saakashvili kept interfering in Georgia’s internal affairs.
Ukraine in January-March this year increased exports of coke and semi-coke in quantity terms by 6.7 times compared to the same period last year, to 48,970 tonnes.
According to statistics released by the State Customs Service, in monetary terms, exports of coke and semi-coke increased by 14.2 times over this period, to $11.880 million.
At the same time, main exports were carried out to Turkey (52.68% of supplies in monetary terms), Bosnia and Herzegovina (12.58%) and Kazakhstan (12.28%).
Ukraine in January-March 2021 imported 84,895 tonnes of coke and semi-coke, which is 2.4 times more compared to January-March 2020. In monetary terms, imports increased by 2.5 times, to $21.141 million.
The products were mainly imported from the Russian Federation (57.24% of deliveries in monetary terms), Poland (24.37%) and the Czech Republic (14.53%).
National bank of Ukraine’s official rates as of 12/04/21
Source: National Bank of Ukraine
Official rates of banking metals from national bank as of April 12
One troy ounce=31.10 grams
Ukrainian vehicle manufacturers produced 1,829 vehicles in January-March of this year, which is 34% more than in the same period in 2020, according to a posting on the website of the Ukrautoprom association.
As reported, in January-February 2021, vehicle production exceeded the figure for the same period last year by 3%.
According to the preliminary data of the association, in the first quarter the production of passenger cars increased by 43%, to 1,690 units, production of buses decreased by 24%, to 133 units, and only six commercial vehicles were produced versus 12 a year earlier.
In March alone, car production increased 2.5 times compared with March 2020, to 722 units, including cars produced 2.7 times more – 665 units, which is also 48% more than the February indicator of the current year.
At the same time, the association recalled that in March last year, statistics in this segment were formed only by one plant – Eurocar, and the Zaporizhia Automobile Plant (ZAZ) resumed production of passenger cars only in September.
In the March statistics on commercial vehicles, as in the previous year, only two vehicles assembled at the Cherkasy Bus plant are announced, and AvtoKrAZ still does not disclose information on its production figures (since August 2016).
The production of buses in March grew by 37.5%, to 55 units.
