The main risks of the new coronavirus pandemic are the additional expansion of the trade deficit and the increase in the cost of external borrowing for Ukraine, Oleksandr Martynenko, the head of the corporate analysis unit at ICU Investment Group, has told Interfax-Ukraine. “Possible restrictions on the movement of people and goods, the deterioration of business sentiment due to an epidemic in China could lead to a slowdown in economic growth in this country. In turn, this may affect the global foreign economic situation, including the demand of countries that are the main foreign trade partners of Ukraine,” he explained.
“Many commodity markets will suffer, as they reflect the expectations of markets for the growth of the global economy as a whole, and these expectations will inevitably worsen in the event of a pandemic. In particular, prices for agricultural exports from Ukraine may also decrease,” Dmytro Khoroshun, an analyst from Concorde Capital, said.
He specified that in Ukraine in the event of an epidemic expansion and a decline in consumption in China, the mining and metallurgy sector (iron ore mining, steel production) could suffer most of all, while a drop in oil prices would be positive for Ukraine. At the same time, the analyst suggested that after the situation with the epidemic/pandemic is resolved, China would dare to further stimulate the economy, which could be a positive factor for iron and steel prices.
At the same time, Martynenko said that the flows of negative information about coronavirus had already done great damage to raw material prices, first of all, oil sagged (about minus 10% since the beginning of last week), followed by copper (5% down) and other metals.
“In the event of a prolonged fight against the virus, the Ukrainian mining and metallurgical complex may suffer due to lower export prices for steel and iron ore. At the same time, a decrease in the world oil prices could compensate for at least part of Ukraine’s losses of export revenue from the mining and metallurgical complex,” the ICU analyst state
Ukraine in 2019 increased import of oil (according to foreign trade activity code 2709) by 3.1% (by 23,796 tonnes) compared to 2018, to 790,628 tonnes.
According to the State Customs Service, last year oil was imported for $405.748 million, which is 6% less than in 2018 ($431.735 million).
Azerbaijan supplied raw materials worth $309.443 million (a share of 76.26%), the United States for $90.999 million (22.43%), Kazakhstan for $2.596 million (0.64%), and other countries for $2.710 million (0.67%).
In 2019, Ukraine exported 103 tonnes of oil worth $53,000. The entire volume was delivered to Latvia in June.
Ukraine since the beginning of the marketing year 2019/2020 (MY, July-June) and as of January 27, 2020 had exported 35.03 million tonnes of grain and legumes, which is 28.8% more than on the same date last MY.
According to the information and analytical portal of the agro-industrial complex of Ukraine, to date, the country has exported 15.61 million tonnes of wheat, 15.11 million tonnes of corn, and 3.85 million tonnes of barley.
As of January 27 this year, 216,300 tonnes of flour has been also exported.
As reported, Ukraine in the 2018/2019 MY exported a record 50.4 million tonnes of grain, legumes and flour, which is 23% more than in the previous MY.
The U.S. Department of Agriculture (USDA) in January raised its forecast for grain exports for the 2019/2020 MY by 1.2 million tonnes compared with the October forecast, to 56.14 million tonnes due to indicators for corn and wheat.
Ukraine in 2019 reduced import of coal and anthracite (foreign trade activity code 2701) by 1.4% (by 305,334 tonnes) compared to 2018, to 21.082 million tonnes.
According to the State Fiscal Service, coal was imported for $2.816 billion, which is 7.2% less than in 2018 ($3.035 billion).
At the same time, coal for $1.638 billion (a share in imports is 58.18%) was supplied from Russia, while the United States delivered coal for $888.485 million (31.55%), Kazakhstan for $134.228 million (4.77%), and other countries for $154.912 (5.5%).
In addition, in 2019 Ukraine exported 14,938 tonnes of coal and anthracite for $724,000, including to Moldova for $585,000, Hungary for $103,000, Poland for $32,000, and other countries for $4,000.
Ovostar Union, a leading egg producer in Ukraine, cut egg sales by 17% in 2019, to 1.147 billion eggs.
According to a company report on its website, egg production last year fell by 2.35, to 1.587 billion. The share of exported eggs of total sales grew by 4 percentage points in 2019, to 46%, and exports totaled 525 million eggs compared with 587 million in 2018.
“The decrease of shell eggs sales is accounted for by the significant reduction of trading operations in 2019. Average price of eggs in UAH terms fell by 12% y-o-y and reached UAH 1.606/egg, while in U.S. dollar terms the decrease was 7% y-o-y and the price for the year was $0.062/egg (2018: UAH 1.819/egg or $0.067/egg respectively),” the company said.
In 2019 the volume of eggs processed was 577 million, which by 9% exceeds the level of the previous year.
The volume of dry egg products output grew slightly y-o-y and reached 2,969 tonnes. The output of liquid egg products increased by 12% y-o-y up to 13,904 tonnes.
The shareholders of HD-group (formerly the Khlibodar group of companies), Serhiy Chekalsky, Borys Shestopalov and Agroservice 2000, which is part of HD-group, have announced the creation of the Stock Capital (Fondovy Kapital) investment fund, whose assets will amount to $20 million, the group’s press service has said. According to its press release, the fund was created with the aim of consolidating the resources of HD-group, managing core acquisitions in 2020-2021, and implementing direct and portfolio investments in the agri-food segment (processing, production and food startup projects).
The group indicated that Stock Capital would be managed by AMC Slavutich Invest.
“Opening an investment fund is the next step on the way to the development of HD-group. We have implemented most of the project in the field of transformation, created a whole set of internal services that ensure the functioning of all business processes related to the fulfillment of the key mission of the enterprises included in HD-group: delivery of high-quality and safe products to customers. We believe that the holding is ready for not only organic market growth, but also inorganic through transactions to acquire new enterprises,” the press service said citing co-owner of HD-group Borys Shestopalov.
HD-group was founded in 1998 as Khlibodar in Zaporizhia. In 2019, it was transformed into HD-group. The group includes grain processing plants, bakeries and flour confectioneries, a plant for production of jam, preserves, groceries, procurement and logistics companies.
