The share of imported construction materials in the Ukrainian market increased from 14% in 2021 to 23% in 2023, and the domestic construction materials market needs systematic support from the state.
This opinion was expressed by Volodymyr Vlasiuk, CEO of Ukrpromvneshexpertiza, Chairman of the CCIU Committee on Industrial Modernization, during the round table “Building Materials. Preparedness for Market Needs for Recovery” held at the Interfax-Ukraine news agency on Tuesday.
“The share of imports in covering domestic consumption has increased from 14% in 202 to 23% in 2023. Thus, even the funds that go through the public procurement procedure can be largely used for imports. More research is needed on individual materials, but the upward trend in the use of imported materials in a developed industry is generally negative for the economy,” Vlasiuk said.
He said that the second study of the construction materials market and its ability to meet the country’s needs since the beginning of the war is currently underway.
“The situation is changing dynamically. But there are still no glass production plants, as before. There are several (investment) projects, but they are not yet operational. As for such commodities as PVC, production has resumed and capacities have increased. New capacities are being built in the cement industry. But electrical equipment is still not available, as it was before the war. This is still a field for investment projects that should be stimulated by the state,” Vlasiuk said.
The expert highlighted key issues that businesses will not be able to solve without government involvement.
“In terms of stimulating demand, the role of the state is huge, as it increases procurement (for defense and recovery projects). It is extremely important that these funds are not spent on imported materials. We understand the extraordinary conditions in which Ukraine exists, we are at war. Therefore, in accordance with international law, we can apply, for example, Article 21 of the WTO, which allows a country to temporarily suspend its obligations assumed when joining the WTO,” Vlasiuk said.
He emphasized the need to focus on localization, purchasing materials (for budgetary or donor funds) only if at least some of them are produced in Ukraine.
The issue of booking specialists is also important. “It is necessary to find a balance between the needs of the economy and the frontline. Both areas are necessary for the country’s sustainability,” he said.
Another key task is to provide autonomous energy supply. “Obviously, it is necessary to move to a model of autonomous energy supply, for example, from alternative sources, primarily solar power plants. The state, together with partners, should offer good, cost-effective tools, as this requires a significant amount of funds,” Vlasiuk said.
Cement consumption in the domestic Ukrainian market in 2023, which increased by 17% compared to 2022 and reached 5.4 million tons, will continue to grow moderately, according to Pavlo Kachur, chairman of the Ukrcement Association.
“Even in a state of war, we have undergone some adaptation. If 2022 was a shock year, and our cement consumption dropped to 4.6 million tons of cement per year against 10.5 million tons the previous year, in 2023 we adapted to the situation and reached 5.4 million tons. I think this is a good growth for wartime. I don’t think there will be such a jump in 2024, but we will probably reach 6 million tons of domestic cement consumption,” Kachur said at the roundtable discussion “Building Materials. Preparedness for Market Needs for Recovery” at Interfax-Ukraine on Tuesday.
In addition, at the end of 2023, exports amounted to 1.24 million tons of cement, while imports amounted to 23 thousand tons of special cements that are not produced in the country.
According to Kachur, the potential for cement production by enterprises in Ukraine today is 13.6 million tons of cement, while current financial and human resources provide for consumption of 12.5 million tons. Despite the ability of Ukrainian companies to fully cover the market’s needs, it makes sense to plan to expand production, he said.
“We are also preparing for other options. Processes may overlap, and one of them may be the negotiation process with the European Union. If it is successful, European infrastructure projects may also take place during the recovery period. This may lead to increased cement consumption, and we must be prepared for this,” said the head of Ukrcement.
The expert noted that production could be increased in three stages: the construction of new clinker kilns and capacity expansion, the restoration of plants in Balakliya and Kramatorsk, and the construction of new cement plants. The two companies are already considering the construction of two new clinker kilns, which will increase their cement production capacity by 2.4 million tons, but the construction will be launched after they reach the consumption level of 10.5 million tons of cement.
Kachur also emphasized the importance of localizing production in the recovery prospects and protecting the Ukrainian market.
“I support the thesis of maximum localization. This is the only way for Ukraine’s economy to develop. But it is also important to protect our market. We realize that the countries that are donors of funds for the recovery can also supply construction materials. However, I believe that we should have a separate policy for countries that are not on the side of supporting Ukraine today, during the war. We need to think about how to treat them if, after the war, they want to participate in the reconstruction with their materials. I think it would be unfair if they get the opportunity to make money on the Ukrainian market,” he said.
The Ukrcement Association was established in January 2004 through the reorganization of the Ukrainian Concern of Cement Industry Enterprises and Organizations Ukrcement.
State enterprise “NAEK Energoatom” on April 16 reported that IC “Mega-Policy” was recognized as the winner of the tender for insurance of liability for high-risk facilities, for damage that may be caused as a result of emergencies.
As reported in the system of electronic public procurement Prozorro, the expected cost -139,515 thousand UAH, the company’s price offer of 79,520 thousand UAH.
IC “Industrial Insurance Company” also took part in the tender with the offer of UAH 41,7 thousand.
As it was informed, IC Mega-Policy was registered in 2000, specializing in risk insurance.
Ukraine is creating the most favorable investment climate possible to encourage potential investors, said Taras Melnychuk, the representative of the Cabinet of Ministers in the Verkhovna Rada.
“Today we have met with representatives of some of the largest American companies willing to invest in Ukraine or already doing business here. In turn, Ukraine is creating the most favorable investment climate to encourage potential investors,” he wrote on his Telegram channel.
Melnychuk noted that the Ukrainian economy needs to attract American investment to recover and grow.
According to him, special attention is paid to developing cooperation with American arms and ammunition manufacturers.
“The main prerequisite for this is to provide Ukraine with additional air defense systems. This will help protect our entire civilian infrastructure from Russian terrorism,” the Cabinet representative emphasized.
In addition, Ukraine is also interested in developing logistics routes and the energy sector.
As previously reported, Prime Minister of Ukraine Denys Shmyhal and U.S. Special Representative for Ukraine’s Economic Recovery Penny Pritzker met with American businesses.
“Ukrainian Danube Shipping Company” (UDP) ended 2023 with a record profit of UAH 719 million, having eliminated its existing debt, the Ministry of Communities, Territories and Infrastructure (MinRestoration) reported.
“The company paid over UAH 140 million to the state budget, fulfilling its obligations to the state in full. Dividends amounted to almost UAH 216 million, which is a record figure for all the years of the Ukrainian Danube Shipping Company’s existence. At the same time, the company liquidated its existing debts,” the statement said.
The result was made possible mainly due to a single logistics service – combining freight with transshipment in Ukraine and Constanta. In addition, since the beginning of the full-scale invasion, there has been a high demand for river transportation, which takes place without intermediaries at market prices. The procurement system has also been structured and a large number of anti-corruption measures have been taken, the Ministry of Reconstruction noted.
“Ukrainian Danube Shipping Company has been steadily showing growth in all indicators. In addition to budget revenues, it is expanding its own capacities by modernizing the old fleet,” Deputy Prime Minister for Recovery and Head of the Ministry of Recovery Oleksandr Kubrakov was quoted as saying in the statement.
Kubrakov expressed his gratitude to the entire team of Ukrainian Danube Shipping Company for their work.
In January-March 2024, Kokhava Paper Mill (KPM, Lviv region), which produces sanitary paper products, increased its production by 23% year-on-year to UAH 343 million, according to statistics from Ukrpapir Association.
Earlier it was reported that in January-February, the mill increased this figure by 12.8% compared to the same period in 2023.
According to the data provided to Interfax-Ukraine, in physical terms, the production of the base paper for sanitary products increased by 16.4% to 12 thousand tons.
Production of toilet paper in rolls increased by 12.5% to 37.7 million units. KBF is confidently ranked second in terms of its output after Kyiv pulp and paper mill.
As reported, in October last year, Kokhava Pulp and Paper Mill put into operation a paper machine for the production of pulp base paper (previously, it produced only waste paper-based products). To organize such production in 2021, the CF attracted a EUR 13.8 million loan from the EBRD.
Operating since 1939, the Kokhavynsk Pulp and Paper Mill produces base paper for sanitary and hygiene products, as well as toilet paper and paper towels. Before the new machine was put into operation, the mill had two paper machines with a total capacity of 40 thousand tons of base paper per year.
In 2023, the plant increased its production by 18% compared to 2022, to UAH 1 billion 151.2 million, and its net profit increased 2.7 times to UAH 137 million.
