Business news from Ukraine

UKRAINE’S METALLURGICAL ENTERPRISES REDUCE GAS AND ELECTRICITY CONSUMPTION

Metallurgical enterprises of Ukraine reduced the consumption of natural gas by 1% in January-September this year compared to the same period last year, which accounted for 1.39 billion cubic meters.
According to the information from the Ukrmetalurgprom association, electricity consumption by metallurgical enterprises amounted to about 8.22 billion kWh for this period (95% compared to January-September in 2019).
As reported, Ukrainian metallurgical enterprises reduced consumption of natural gas by 2% in 2019 compared to 2018, which accounted for 1.8 billion cubic meters. Electricity consumption by metallurgical enterprises amounted to about 11.2 billion kWh in 2019 (95% compared to 2018).
In 2018, metallurgical enterprises, including those in the temporarily uncontrolled territory reduced consumption of natural gas by 4% compared to 2017, but increased it by 4% without the uncontrolled territory, which accounted for 1.840 billion cubic meters. Electricity consumption by metallurgical enterprises amounted to 11.76 billion kWh in 2018 (102% of the consumption in 2017 with uncontrolled territory, and 106% without it).

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UKRAINE RAISES GAS CONSUMPTION IN SIX MONTHS

Ukraine in January-June 2020 increased gross natural gas consumption by 1.2% (by 190 million cubic meters) compared to the same period in 2019, to 15.66 billion cubic meters.
According to the quarterly monitoring data of the National Energy and Utilities Regulatory Commission of Ukraine (NEURC), in the second quarter of this year, consumption increased by 17.6% (720 million cubic meters) compared to April-June 2019, to 4.8 billion cubic meters.
The use of natural gas by household consumers (the population) in the first half of 2020 amounted to 4.76 billion cubic meters (6.5% less from January-June 2019), in the second quarter 1.17 billion cubic meters (31.5% more against April-June 2019).
Thus, the share of household consumers in the total structure of gross consumption in the first half of the year amounted to 30.4% against 32.9% in January-June 2019.

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STRUCTURE OF CONSUMPTION OF MOTOR FUELS IN UKRAINE NEEDS TO BE CORRECTED

The structure of consumption of motor fuels in Ukraine needs to be corrected in order to maximize the use of oil refining capacities, equalize the trade balance and increase tax revenues, according to the A-95 Consulting Group (Kyiv).
According to the group, the main distinguishing feature of the Ukrainian fuel market is the high share of liquefied petroleum gas (LPG), which has reached a world record 33% in the retail sales of motor fuels. In terms of the use of LPG in transport, Ukraine is one of the five largest on the planet – in 2020 the consumption of LPG will exceed 2 million tonnes.
“The Ukrainian basket of motor fuels is atypical from the point of view of world practice and gives rise to a number of serious problems. These are, first of all, the decline and quite likely disappearance of domestic oil refining, a decrease in tax revenues, an increase in imports of liquefied gas and diesel fuel from Russia and Belarus,” Director of the A-95 consulting group Serhiy Kuyun said.
In his opinion, the main reason for the disproportion in the consumption of petroleum products is unbalanced taxation. The excise tax on LPG is four times lower than on gasoline – EUR 52 against EUR 213 per 1,000 liters, which is almost half the excise tax on gasoline and the tax on diesel fuel – EUR 139.5 per 1,000 liters. This curving has led to a distortion in consumption, as fuel with low excise duty becomes more attractive to consumers: from 2013 to 2019, consumption of liquefied gas increased by 115%, diesel fuel – by 17%, while gasoline consumption fell by 43%.
“The huge demand for LPG and diesel fuel stimulates their imports, more than 70% of which comes from Russia and Belarus. Meanwhile, Ukrainian refineries operating on Ukrainian and non-Russian imported raw materials are loaded by less than 50%. They cannot sell gasoline, but refuse from its production is impossible due to technology,” Kuyun said.
At the same time, the transition of consumers to low-tax fuels also affects the national budget, since excise taxes on oil products are the main source of filling the road fund, from which the construction and repair of roads are financed.
To reach the optimal basket of petroleum products consumption, the excise rates need to be adjusted. According to the calculations of the A-95 Consulting Group, if today the excise tax on gas is 24.4% of the excise tax on gasoline, then in order to solve the problem of balanced oil product supply, this ratio should be at least 70-75%. At the same time, the excise tax on diesel fuel can be left at the current level.
The transition to a new consumption structure should be smooth, which will take at least five years. “Gasoline will become more affordable, liquefied gas will rise in price, but it will retain its price attractiveness. Refineries will receive a development perspective, the market will reduce dependence on imports, and the state will receive additional taxes,” the A-95 group said.

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UKRAINIAN ENTERPRISES INCREASE CONSUMPTION OF METAL BY 3.26%

Ukrainian enterprises increased the consumption of metal by 3.26% in January-May of this year compared to the same period last year, to 1.66 million tonnes.
According to an Ukrmetallurgprom association press release published on Friday, 434,700 tonnes, or 26.2% of the domestic metal consumption market, were imported in the first five months of the year.
“In January-May 2020, 1.66 million tonnes of rolled metal were delivered to domestic consumers, of which 434,700 tonnes, or 26.2%, were imported. For five months of 2020, there was an increase in the consumption of rolled metal in the domestic market compared to January-May 2019 by 3.26% with a simultaneous decrease in the share of the imported component by 7.6%,” the association said in the press release.
According to Ukrmetallurgprom, in January-May 2020, Ukrainian metal enterprises produced 7.43 million tonnes of rolled metal (93.8% compared to the same period in 2019), of which about 6.21 million tonnes or 83.5% were exported, according to information from ETR-Spectrum LLC.
The share of semi-finished products of export deliveries in January-May 2020 accounted for 49.74%, which exceeds the indicator for the period January-May 2019 (45.38%). The share of flat products of export deliveries in the first five months of 2020 is slightly lower than in the same period in 2019 (32.05% and 34.00%, respectively). The same picture is observed with regard to long products – 18.21% in January-May 2020 compared with 20.62% for the same period in 2019.
The main export markets for Ukrainian metal products in January-May 2020, according to ETR-Spectrum LLC, were the countries of the European Union (31.1%), Africa (14.8%) and other European countries (14.1%).
Among the metallurgical importers in January-May, the CIS was at the first place (39.1%), the EU-28 was the second (26.1%), and the Asian countries third (18.0%).

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UKRAINE CUTS ELECTRICITY CONSUMPTION IN JAN-MARCH

Electricity consumption in Ukraine in January-March 2020, taking into account in-process losses in power grids, fell by 5.6% (by 2.366 billion kWh) compared to January-March 2019, to 39.644 billion kWh, the Ministry of Energy and Environment Protection has told Interfax-Ukraine.
Excluding in-process losses, electricity consumption over the period decreased 3.6% (by 1.179 billion kWh), to 31.965 billion kWh.
The country’s industry, excluding in-process losses, reduced electricity consumption by 5.8%, to 12.429 billion kWh. In particular, metallurgical industry consumed 6.746 billion kWh (9.5% less compared to January-March 2019), fuel industry some 849.9 million kWh (6.6% less), machine building industry some 959.9 million kWh (14.2% less), chemical and petrochemical some 2.029 billion kWh (24.2% more), food and processing some 1.088 billion kWh (1.2% less), construction materials some 483.4 million kWh (2.1% less), and others some 1.283 billion kWh (0.8% down).
In addition, agricultural enterprises consumed 854.8 million kWh (4.2% less), transport some 1.708 billion kWh (6.8% less), and developers some 282.5 million kWh (7.6% down).
In January-March 2020, the country’s population consumed 10.407 billion kWh (0.9% up), households some 4.138 billion kWh (6.7% down), and other non-industrial consumers some 2.145 billion kWh (1.3% down).
The share of industry in total electricity consumption in January-March 2020 fell from 39.8% to 38.9%, and the share of the population grew to 32.6% from 31.1%.
In March 2020, electricity consumption, taking into account in-process losses, decreased by 7% (by 948.2 million kWh) compared to the same month of 2019, to 12.611 billion kWh, excluding in-process losses it fell by 3.9% (417.8 million kWh), to 10.374 billion kWh.

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UKRAINE REDUCES GAS CONSUMPTION BY 7% IN 2019

Ukraine in 2019 reduced consumption of natural gas (excluding in-process losses) by 7% compared to 2018, to 26.4 billion cubic meters.
According to JSC Ukrtransgaz, the use of natural gas for in-process losses by the companies of the Naftogaz group (excluding the volumes of gas distribution network operators, private production companies, etc.) amounted to 3.4 billion cubic meters last year, which is 8% less than in 2018.

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