People’s assessment of their well-being in 2021-2022
Source: Open4Business.com.ua and experts.news
Oil prices are declining on Thursday morning after an increase in the previous session.
Investors are assessing the actions of the Federal Reserve and data on fuel reserves in the U.S., writes Trading Economics.
Quotes for May futures on Brent at London’s ICE Futures Exchange totaled $76.08 per barrel as of 7:02 a.m., down $0.61 (0.8%) from the close of the previous session. Those contracts rose $1.37 (1.8%) to $76.69 a barrel on Wednesday.
The price of WTI futures for May oil at NYMEX fell by $0.74 (1.04%) to $70.16 per barrel on Thursday morning. The contract value grew by $1.23 (1.8%) to $70.9 a barrel at the end of previous session.
U.S. commercial oil inventories rose 1.12 million barrels to 481.18 million last week, the Energy Department’s weekly report showed. That’s the most since May 2021.
Meanwhile, gasoline reserves fell 6.4 million barrels and distillates fell 3.31 million barrels.
Analysts had expected oil reserves to fall by 5.5 million barrels, gasoline by 2 million barrels and distillates by 1.3 million barrels, according to the S&P Global Commodity survey.
The Federal Reserve raised its benchmark rate by 25 basis points at the end of Wednesday’s meeting. Its range is now 4.75-5% per year – the highest since September 2007. The decision coincided with the forecasts of most economists and analysts.
Meanwhile, Fed Chairman Jerome Powell said he did not expect any rate cuts this year. At the same time, he admitted that if inflation proves too stable, the rate could be raised more than currently expected.
Rafael Goroyan, the owner and Chairman of the Supervisory Board of Prometheus Group, talks about the risks and prospects of the Ukrainian agricultural sector, exporters’ adaptation to war conditions and the support that the industry needs from the state.
Prometheus Group has more than 20 years of experience on the grain market of Ukraine and is rapidly developing. The year 2022 was a huge challenge for the export-oriented agribusiness, but the company is overcoming the challenges.
How has the full-scale Russian invasion affected agricultural exports and your company in particular?
The war practically wiped out exports. But we adapted and, while the ports were closed, we used road and rail. Thanks to these channels we exported almost 50,000 tons a month. After the opening of the grain corridor we resumed export through the Bosphorus, increased our monthly exports to 80,000-100,000 tons and plan to reach 150,000 tons.
Before the war we had an annual turnover of 1.5 million tons and this year we aimed to export 2 million tons. It is clear that we will not reach those figures, but we believe it is possible to export 1 million tons.
Did your business incur losses because of the war?
We had eight grain elevators under occupation. As of January four of them remained in the occupied part of Zaporizhzhya region. And the four that were liberated from the enemy, were significantly damaged by shelling, robbery and require significant repairs. One of them will have to be rebuilt from scratch.
Do agro-exporters feel any support from the state in such a difficult situation?
The agrarian sector remains one of the few industries that work and we feel great but multidirectional attention from the government. On the one hand, modern patriotically-minded government representatives are working to provide subsidies, cheap loans, etc.
On the other hand, there is the interest of corrupt officials because of whom VAT refunds are very difficult in Ukraine. In particular, the Prometheus Company has accumulated hundreds of millions of unrecovered VAT. We are struggling and publicly report this fact. Because if this practice continues, the export potential of the agricultural sector will be destroyed.
In other words, the forecasts for the harvest and agricultural export in the current conditions are disappointing?
This year our country harvested about 60mln tonnes of crops against 120mln tonnes last season. Next year we will probably gather 40 million tons and export will fall to 20 million tons. This is a consequence of the fact that now it is not profitable for the agro-producers to sow because of the traders’ work stoppage. The latter suffer from corruptive discount on the price and long downtime (up to a month or more) of ships in the Bosphorus, because every day of downtime costs $15,000.
Then the infrastructure business, which has been built up for 30 years (elevators, ports, logistics facilities), will suffer huge losses and these assets will fall in value.
Let me remind you that the export-oriented agro-sector in Ukraine was not built in a day. In 1990s, after the collapse of the USSR, the potential of the Ukrainian agriculture amounted to 15-20 million tons of grains, and export was almost non-existent. By investing into new technologies, seeds, agricultural machinery, construction of elevators, logistics capacities, we reached 120 million tons, and the country was ready for 140-160 million tons. It is important not to miss these 30 years of progress.
What can the government do to prevent the development of a negative scenario?
The participation of the state is super important. One of the directions of support should be the establishment of fast VAT refunds. In addition, farmers need to be provided with subsidies and affordable loans. Financial assistance should be available to small, medium and large agricultural producers.
It is also necessary to remove bureaucratic obstacles as much as possible. We must realize that not only our military potential is important for the future of Ukraine, but also its agricultural sector which has become a global brand in 30 years. If we leave the market, other countries will take our share. Winning the world market again will be harder and more expensive than holding on to our position now.
What can be the positive scenario of development with the support of the agricultural sector by the state?
To do this, the transnational companies which used to export grains from our country but had to leave because of corruption during VAT refunds should be returned to the market. Support for small and medium-sized farmers is necessary. If our partners see the fields planted and the government involved, we will not lose the international market.
But the impression is that the government doesn’t care about business. The country closes up to 10,000 companies a month, and the outflow of 10 million people is acutely felt. Because of personnel problems, in order to find and keep specialists, we already offer European salaries. Therefore, we should remind ourselves that business is a necessary rear. Without a capable economy and provision, the country will not be able to fight effectively.
How should this agricultural season be for your company?
This year will be a period of opportunity for us. If the state does not support small farmers, Prometheus will have to expand its land bank. In other words, we will increase our production in order to preserve our export potential.
The war is an unfavorable period for investments. However, despite this, how can we assess the prospect of capital investment in the Ukrainian agricultural sector?
In the midst of the coronavirus pandemic, huge amounts of money were injected into the global economy. As a consequence, the multiplier for some US companies has reached 100, while Ukrainian companies do not have more than 3. That means that our country, with a low multiplier, has a chance to reach high profits after victory.
For those who believe in Ukraine’s victory investments into Ukrainian business should already be very attractive. Because $30-50 billion a year or even more will be coming into Ukraine for post-war recovery, thanks to which Ukraine can become a leader in terms of profitability after victory.
Austria’s voestalpine AG will invest about €1.5 billion in the construction of two electric arc furnaces, the steelmaker said in a statement.
Construction will start in 2024. The facilities will be commissioned in Linz and Donavitz, Austria, in 2027.
The new equipment will replace two blast furnaces and will run on green electricity, which could allow the company to reduce its carbon dioxide emissions by 30%. Voestalpine plans to replace two more blast furnaces after 2030.
The combined capacity of the two new electric furnaces is about 2.5 million tons of steel per year.
Voestalpine shares are down 0.5 percent in trading in Vienna on Wednesday.
Cherkasy-based Azot, part of Ostchem’s nitrogen holding company, produced 235,000 tons of mineral fertilizers in January-February 2023, up 23% from January-February last year, Group DF press service said Wednesday.
“Production in February 2023 was 123,700 tons of products per month, the highest since the start of the all-out war,” the release specified.
According to it, urea was the key product, due to which the company showed an increase in production volumes in January-February 2023. Its production for two months increased almost three times – up to 67.4 thousand tons.
UAN production also increased by more than 10%, from 50.9 thousand tons to 56.2 thousand tons, while the volume of ammonium nitrate production slightly decreased – by 2%, to 102.2 thousand tons.
“This year, because of military risks, farmers delayed until the last moment the decision to buy mineral fertilizers, there was a significant deferred demand. As a result, in January-February demand for our products increased significantly. It is logical that the company increased its capacity utilization to 70-75%,” Vitaliy Sklyarov, Cherkasy Azot’s chief executive officer, said in a statement.
According to him the enterprise is not reducing loading in March because the agrarians continue to actively buy fertilizers and many have not formed the stocks enough for the spring sowing campaign.
Sklyarov stressed that in March and April the company will continue to work at 70-80% of its capacity, “as long as there will be a high demand from the side of farmers”. He specified that today all basic fertilizer production facilities of ammonia, ammoniac acid, ammonium nitrate, urea and UAN are operating at the plant.
“The catalyst for the sharp increase in demand in 2023 was a decrease in selling prices for mineral fertilizers during the ‘hot’ season, which was possible due to lower prices for gas, the main raw material for the production of fertilizers,” also noted the head of the board.
According to him, the growth of demand is limited by the financial capabilities of fertilizer consumers: on the one hand, the support of farmers by the state has a significant effect, but on the other hand, access to finance for small and medium agrarians is still very limited.
It is reported that since the beginning of 2023 Nitrogen Holding Ostchem reduced the cost of urea by 9 thousand UAH – to 29 thousand UAH/ton, ammonium nitrate – by 8.5 thousand UAH, to 28.5 thousand UAH/ton, UAN – by 4 thousand UAH, to 29 thousand UAH/ton.
Ostchem enterprises produced 1.75 million tons of mineral fertilizers in 2022, of which Cherkassy Azot produced 1.117 million tons.
The National Anti-Corruption Bureau of Ukraine (NABU) under the procedural guidance of prosecutors of the Special Anti-Corruption Prosecution Office (SAP) states the exposure of a criminal organization led by the former chairman of the State Property Fund (SPF) of Ukraine, whose participants during 2019-2021 seized over 500 million UAH funds of JSC “Odessa Port Plant” (OPP) and JSC “United Mining and Chemical Company” (UMCP).
“At the same time, the amount of unlawful benefit received by members of the criminal organization for the entire period of control of JSC “OPZ” is more than 2 billion UAH,” the NABU reported on its website on Wednesday.
In the message there is no direct reference to the name of the head of the IGF, except “DS” or “Dima”. Meanwhile, at the time in question, the Fund was headed by Dmytro Sennichenko, who in 2019-2020 three times surrendered to the NABU who offered him bribes, including $5 million for the appointment of OPZ director.
As the NABU now claims, the criminal organization led by Sennichenko also included a person close to him (co-organizer), an adviser to the head of the IGF, two acting OPZ director, the acting head of the OGHK, two owners of LLC – the winner of the auction for toll processing at the OPZ and two more individuals.
The report indicates that the OPZ’s acting director and an adviser to the head of the State Property Fund have been detained. Seven persons – the former head of the SPF, a person close to him, the acting director of the OPZ, the acting head of the OGCC, two LLC owners and one individual – were notified of the suspicion in accordance with Article 135, Article 278 of the Code of Criminal Procedure (in writing), while one more person was personally detained.
As reported, the OPZ has been idle since late April 2018. The company called work on give-and-take conditions the only possible option for the resumption of its work in conditions of failed attempts at privatization and accumulated debt for gas to Naftogaz of Ukraine, which exceeds 1.5 billion UAH.
In August 2019, the plant resumed work under the contract signed with Agro Gas Trading LLC (Kiev, “ATG”) under the tolling scheme until December 1, 2019.
In September 2019, Dmitry Sennichenko was appointed head of the GPF instead of Vitaly Trubarov, who reported on December 11 that the updated composition of the new leadership of the GPF board of directors agreed with the davalter to increase the price for processing.
In mid-December, it was announced that the OPZ’s board of directors had agreed to a supplementary agreement with AGT to the tolling agreement for the period from January 1 to April 30, 2020.
At the end of January, 2020 OPZ announced a tender for the selection of a supplier of 50-60 million cubic meters of gas per month on give-and-take terms for the work of the enterprise in May-December the same year. The minimum bid price was $37 per ton of ammonia and $48 per ton of urea (excluding VAT).
At the end of February 2020 First Deputy Director of OPZ Mykola Shchurikov said that the company accepted bids from eight companies to participate in the tender for the selection of a partner for toll processing of gas into mineral fertilizers during May-December 2020: IBE Trade (USA), Basis Trade AG, MADDOX SA (both Switzerland) and Ukrainian Agro Gas Trading LLC, Trading House Socar Ukraine LLC, Tech Prom Gas LLC, Ukrnaftoburnia JSC and Yug Gas LLC.
In early March, Shchurikov said that Ukrnaftoburinnya (UNB), owned by Igor Kolomoysky and Vitaliy Khomutynnyk, offered the best price conditions in the final stage of the tender: $77 for processing a ton of urea and $39.5 for processing ammonia.
On March 10, when the results were officially announced, the OPZ National Assembly cancelled the tender for the selection of the investor. The SPF stated that the reason for the cancellation was “an overpriced, economically unreasonable proposal” by UNB, which, in the opinion of the agency, is unprofitable for the mining company.
The OPF Board of Directors stated that it saw in such actions of the “UNB” owners “an aspiration to gain leverage to manage the plant and take it under their control, which will result in the return of corrupt schemes at the plant, reducing its market value and creating the preconditions for the transfer of the OPF into private hands for next to nothing.
NABU, SENNICHENKO, ОГХК, ОПЗ
