Antidumping duties on clinker and Portland cement from Russia, Belarus and Moldova introduced by Ukraine in the summer of 2019 served as an incentive to increase the load and production volumes of Ukrainian cement plants, market participants surveyed by the Interfax-Ukraine agency have said.
“We regard this step as positive, which allowed us to increase the load of enterprises and output of marketable products. Now our capacities are 90% loaded,” Mykola Kruts, the chairman of the board of PrJSC Ivano-Frankivskcement, told Interfax-Ukraine.
PrJSC Dyckerhoff Cement Ukraine agrees with his opinion. The company is witnessing the revival of market relations, the restoration of healthy competition and par prices for cement in the market, which creates conditions for further stable doing business.
“We consider the decision to impose duties on import of cement from the countries at dumping prices to be absolutely correct. This decision helped maintain a stable market position for Ukrainian producers, which, in turn, by developing their production, are able to satisfy the demand of all consumers in Ukraine. Otherwise, the dumping position of cement imported from Russia, Belarus, and Moldova could significantly worsen the financial results of PrJSC Dyckerhoff Cement Ukraine and lead to significant financial losses,” the company said.
In the eight months of 2019, the enterprise overfulfilled its plan for the growth of production volume by 17%, increasing the figure by 25% compared to the same period in 2018.
The growth of the company’s budget indicators this year is associated with cement supplies to various construction projects.
“In addition to deliveries to such a traditional sector as housing and commercial real estate construction, PrJSC Dyckerhoff Cement Ukraine also supplies cement for the construction of infrastructure facilities of national importance,” the company said.
In particular, the matter concerns the construction of a number of roads, a runway in Odesa, the reconstruction of the runway at Zaporizhia airport, the construction of wind power farms in Kherson and Mykolaiv regions, grain terminals, the development of berths in seaports, etc.
According to PrJSC HeidelbergCement Ukraine, in connection with the growth in cement sales, its production over the eight months of 2019 at Kryvy Rih plant rose by 14.7% compared to the same period in 2018 and amounted to 526,300 tonnes.
At the same time, the company notes that the production capacity is still low.
“Protection of Ukrainian producers against cement and clinker of Belarusian and Russian producers allowed to stabilize cement prices in the domestic market, but over the last three months, cement from Turkey aggressively entered the cement market, which, like Belarusian, is sold at low prices in the south and east of Ukraine. The state is obliged to protect domestic producers in the key sectors of the economy, this will allow enterprises to focus on the development of production, maintain jobs, improve work efficiency,” the company said.
According to HeidelbergCement Ukraine’s forecasts, cement production growth in Ukraine next year could reach 5-7%, provided that antidumping duties are maintained.
“The current political course of the country and the statements of the country’s leadership give hope for the development of the economy and, as a result, the construction market as a whole. As a result, we predict that the market growth in the next years will be 5-7%, which opens up the possibility of loading production capacities by 90-95%,” the company noted.
According to the company, there are currently ten cement plants operating in the Ukrainian market, the production capacities of which are 65% loaded, therefore each enterprise seeks to increase production, which significantly toughens competition.
“This year, the production capacities of PrJSC Dyckerhoff Cement Ukraine are 60% loaded of their design capacity. If there is demand in the market, the company is ready to increase production to the full utilization of design capacities,” the report says.
Ukraine in January-March 2019 increased cement production by 23% compared to the same period in 2018, Executive Director of the Ukrcement Association Roman Skylsky has said.
“In the first quarter of 2019, the growth of the construction market was already 24%, and cement production rose by 23%. Exports grew by 66%, imports by 2.8 times. These figures will obviously change after the introduction of a number of restrictive measures by the Ukrainian government regarding imports from neighboring markets,” he said during the international conference UkrCemFor 2019 in Kyiv.
According to the expert, cement production in 2018 decreased by 0.8%, which is associated with a slight drop in demand and the limited capacity of railway logistics, which accounts for 65% of all cement transportation.
“However, the year of 2018 showed a rise in clinker production by 4.3%, which means that producers have the reserves and resources to produce goods, but they decide not to manufacture final products due to a drop in demand or logistic restrictions on the delivery of goods to end consumers,” he explained.
The Ukrainian government has broadened its list of banned Russian commodities to include Portland, alumina, blast furnace, sulfate resistant, and similar types of neat cement, both dyed and non-dyed, ready-to-use or clinker, as well as plywood, veneered boards, and similar plywood materials.
The decision was made at a government meeting on Wednesday.
“It is prohibited to import into Ukraine such groups of Russian commodities as industrial goods, mineral fertilizers, agricultural products, and transportation vehicles, including cement and plywood,” the Ukrainian First Deputy Prime Minister and Economic Development and Trade Minister, Stepan Kubiv, said presenting the resolution.
According to the Ministry of Economic Development and Trade, Ukraine imported almost $17 million worth of cement products from Russia in 2018, while plywood imports amounted to $19.7 million over that period.