Business news from Ukraine

KOKHAVYNSKA PAPER FACTORY RAISES PRODUCTION IN 2018

Kokhavynska paper factory (Lviv region), a tissue and toilet paper producer (the Kokhavynka trademark), in 2018 increased production by 27.8% compared with 2017, to UAH 538.78 million.
According to the Ukrpapir association, production of paper at the factory in kind increased 11%, to 37,050 tonnes. At the same time, production of toilet paper rose by 6.1%, to 111.07 million rolls (a total of 683.77 million rolls was made in Ukraine in 2018, a rise of 1%).
Kokhavynska paper factory has been operating since 1939. The factory producers base paper for hygienic goods, toilet paper and paper towels. The capacity of paper making machines is 19,000 tonnes per year, processing equipment 90 million rolls a year.
As reported, in 2017 the factory produced goods worth UAH 421.5 million, which is 23% more than a year earlier, paper production grew by 23.7%, to 33,350 tonnes.
In 2018 the factory planned to increase production to UAH 550 million.
The factory exports about 40% of the products. The main consumers abroad are the Czech Republic, Romania, as well as companies from Belarus, Moldova, Hungary, and the Netherlands.

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ZHYDACHIV PULP AND PAPER MILL EXCEEDS PRODUCTION TARGET IN 2018

Zhydachiv Pulp and Paper Mill (Lviv region), which resumed operations in May 2017, made products for UAH 453.64 million in 2018.
As reported, the mill last year initially planned to double production compared with 2017, when production volume was UAH 210.5 million (in May-December).
According to the UkrPapir association, last year the plant produced 4,740 tonnes of paper and 31,420 tonnes of cardboard (including corrugated paper), as well as 15.35 million square meters of corrugated boxes.
Another enterprise of the holding, Izmail Pulp and Paper Mill (Odesa region), produced goods for UAH 98.62 million in 2018, which was 28% more than a year ago. The mill increased package cardboard output by 26%, to 14,830 tonnes and corrugated box output by 23.7%, to 18.33 square meters.
Zhydachiv Pulp and Paper Mill, once one of the top three enterprises in the industry and the only manufacturer of newsprint in Ukraine at that time, was put into operation in 1951, in the best 2000s its output reached UAH 500 million. It had been standing idle since September 2014 till May 2017.

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BRITAIN’S OIL AND GAS COMPANY REGAL INCREASES AVERAGE DAILY PRODUCTION IN POLTAVA REGION BY 67%

Britain’s oil and gas company Regal Petroleum Plc with assets in Ukraine boosted average daily production in 2018 at the MekhediviskaGolotvshinska (MEX-GOL) and Svyrydivske (SV) gas and condensate fields (both are located in Poltava region) by 67% or 1,088 barrels of oil equivalent per day (boepd) compared with 2017, to 2,717 boepd.
According to a company press release, totally gas production at the two fields last year came to 341,216 cubic meters (a rise of 72.3% on 2017), and condensate production – 70 cubic meters (a rise of 48.9%) and LPG output – 36 cubic meters (a rise of 50%).
Average daily production at the Vasyschevskoye (VAS) gas and condensate field in Kharkiv region in 2018 grew by 11.2%, to 674 boepd. Average daily gas production rose by 10.1%, to 94,752 cubic meters and condensate – by 26.1%, to 8.2 cubic meters.
In Q4 2018, average daily production at the three fields totaled 4,139 boepd, which is 48% more than a year ago (2,803 boepd).
The company said that At the MEX-GOL field, preparations are continuing for the drilling of the MEX-119 well. At the VAS field, acquisition of additional 3D seismic is underway, to complete the acquisition of a field-wide 3D seismic data set.
Energees Management, part of Smart-Holding of Vadim Novinsky, holds 54% in Regal.

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ARTYOMSOL INCREASES SALT PRODUCTION BY 22%

The state salt producing enterprise Artyomsol (Artyomsalt) in 2018 produced, processed and shipped 2.1 million tonnes of salt to consumers, which is 22.4% more than in 2017. According to a press release, production of packaged salt was 197,800 tonnes, which is 1.7% more than in 2017, ground salt, shipped in bulk without additives, some 469,300 tonnes (43.9%), ground salt, shipped in bulk with an anti-caking additive, some 1.018 million tonnes (27%), and unpacked ground salt some 66,900 tonnes (35.4%).
Artyomsol also increased the production of salt, packaged in bulk bags. This type of product amounted to 82,100 tonnes, which is 17% more than in 2017. Production of iodized salt increased to 62,800 tonnes (7.7% more than in 2017).
The company exported 952,200 tonnes of salt in the 12 months of last year, which is more than 45% of the total volume of products shipped. For comparison, in 2017 the export volume amounted to 761,400 tonnes of salt.
Artyomsol in 2018 shipped salt to Hungary, Poland, Slovakia, Romania, Serbia, and other countries.

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FERREXPO BOOSTS PELLET PRODUCTION IN 2018

Ferrexpo Plc (the U.K.), controlling Poltava and Yeristovo mining combines, in 2018 increased total pellet production by 1.6% compared with 2017, to 10.607 million tonnes.
According to a press release of the company issued on Tuesday, over the period production of 65% Fe pellets (Ferrexpo Premium Pellets, FPP and Ferrexpo Premium Pellets plus, FPP+) totaled 9.95 million tonnes (a rise of 0.4%) and 62% Fe pellets (Ferrexpo Basic Pellets, FBP) – 682,490 tonnes (a rise of 22.2%).
Production of 65% Fe pellets from own ore was 9.824 million tonnes (a fall of 0.1%) and 62% Fe pellets – 682,490 tonnes (a rise by 22.2%).
In Q4 2018, total pellet production grew by 7.2% compared with Q3 2018, to 2.851 million tonnes.
“Total 2019 pellet production is expected to be in line with 2018 at 10.6 million tonnes as a result of ongoing maintenance,” the company said.
2018 sales volumes will be approximately 10.2 million tonnes (2017 sales volumes: 10.5 million tonnes). Sales volumes were impacted by reduced barge shipments given the low water levels on the Danube River in H2 2018. Slower than expected rail shipments in December 2018 and the timing of a capesize shipment falling into January 2019 also impacted sales volumes. The group expects these sales volumes to be caught up in H1 2019.
The group’s average received price was approximately 9% higher in 2018 compared to 2017, reflecting stronger premiums for higher quality iron ore, including higher average pellet premiums, offset by a slightly lower average 62% Fe iron ore fines price and higher international freight rates.
“The full year average 2018 cash cost of production is expected to be approximately $44 per tonne compared to $33 per tonne in 2017 due to higher energy prices and increased mining costs. Net debt as of December 31, 2018 was approximately $340 million (December 31, 2017: $403 million). The group’s cash balance as of December 31, 2018 was approximately $60 million while undrawn available debt facilities amounted to $205 million, the press service said.

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GOVT APPROVES ZEROING IMPORTS DUTY ON YARN FOR PRODUCTION OF SEWING THREAD

The Cabinet of Ministers of Ukraine has approved a bill reducing the preferential imports duty on yarn (other than sewing thread) of synthetic staple fibers used for production of sewing thread from 4% to nil.
The bill amending the Customs Tariff of Ukraine was approved at a government meeting on Thursday.
According to the bill, the law will take effect in 45 days from the moment of its publication.
Nil rates are set for multiple (folded) or cabled yarn (Ukrainian Commodity Code 5509 22 00 00, as well as mixed mainly or solely with cotton yarn (5509 53 00 00). At present the preferential rate is 4% and the full rate is 15%.
According to the explanatory note to the document, the bill was designed pursuant to an order from the Cabinet of Ministers on the results of a meeting between the Prime Minister and the heads of light industry enterprises in Bohuslav in January 2018.
Today the work of light industry enterprises is more than 90% dependent on imports of raw materials, including cotton fiber, chemical fibers and threads, wool, yarn, fabrics, dyes that are not produced in Ukraine or are limited.
Over the past three years, imports of sewing threads only from synthetic staple fibers made of yarn mentioned in the draft and widely used by the population and more than 1,500 domestic enterprises producing clothing reached more than 1,100 tonnes worth $8.1. million, according to the document.
At the same time, more than 80% of volumes are imported from China (60%) and Turkey (20%) with a zero rate of duty.
At the same time, at the end of 2017, a new domestic facility producing sewing threads under the Barva trademark (the group of companies Textile-Contact) was created in Ukraine, and the raw materials for their production are subject to a 4% import duty.
The main suppliers of this yarn are China, India, and Indonesia.

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