Russia
August 2016 www.coatingsworld.com Coatings World | 31
percent out of their full capacities.
Market participants admit that in
fact coating producers in the country
faced the period of the perfect storm
with numerous challenges brought by the
strongest demand since the time of independency political and economical crisis,
which took place in the country during
the recent two years.
Economy crisis
Over the last two years the Ukraine experienced the collapse of the national currency against the dollar by almost two times,
causing the similar rise in prices for most
type of coatings. Pro-Consulting estimates
show strong shifts in consumers demand
towards cheaper product, so as the result
today 50 percent of the market accounts
for coatings in the sub-economy segment
which roughly involve coatings with the
price lower UAH 50 (US$ 1.8) per pack of
1.5 kg, while the basic economy segment
occupy shares of 30 percent.
“We have been also strongly affected
with the growth of the exchange rate [of
hryvnia], which led to rise in price of imported raw materials, energy and fuel. As
a result, manufacturers were forced to cut
imports of raw materials from abroad and
to increase prices for their products by at
least half,” Khomenko explained.
As the result, in monetary terms collapse
seems to be much smaller, than in natural
terms. According to the data of UPCA the
fall of production volumes in the country
has been primarily associated with the
bankruptcies of small manufacturers. Since
the beginning of the crisis they were trying
to cut spends, changing receipts in the first
place substituting imported components
with cheap domestic analogues.
As the result, quality of the final product has been damaged and a large number of such firms have been forced to
leave the market, as they immediately lost
all customers. At the same time, medium-sized and large producers have been able
to take advantage from this situation, increasing their market share also because
of the falling import.
“In Ukraine, there are operating
more than 200 manufacturers of coat-
ing, which in better times have been
producing 300,000 – 350,000 tons per
year,” said Khomenko. “In 2015, ac-
cording to the State Statistics Service,
the volume of production amounted
to 190,000 tons, which is 12. 3 percent
less than in 2014. Overall, in contrast
to other industries, we can not talk
about an extremely critical situation,”
he stated, meaning that some industries,
like automotive, since the beginning of
crisis showed reduction of production
volumes close to 90 percent.
He added, that the crisis in the industry has been partly connected with the
Russian annexation of Crimea and armed
conflict at the east of the country. Because
of these two factors the number of private customers was reduced by 3 million
people, so with the average rate of coating use in Ukraine at 6 kg per capita it
means a decrease of the market size by
18,000 tons.
Domestic analogues
Ukraine imports 20 types of raw materials for coating manufacture primarily
from Europe and despite numerous attempts of the UPCA and other market
participants, there is no progress in any
localization initiatives.
“In 2015, we saw the rise in the share
of domestic production in Ukraine market with falling share of imported. We
expect this trend to continue in future. As
for raw materials, we are importing them
almost fully from Europe, maybe with the
exception of semi-finished nail for organ-ic-soluble coatings,” Khomenko stated.
According to the data of UPCA at the
moment the market for raw materials
for the coating industry in the country
has not even started developing. In the
country there is no scientific base and
money for the development of such types
of business, while foreign companies refrain from any investments into Ukraine’s
economy into its current state.
“Real foreign investors do not see the
investment attractiveness of our territory. First of all, they absolutely do not
Top: JSC Voloshino – one of Ukraine’s small manufacturers of coating in Ukraine is going through
hard times. Right: Ukriane produces 190,000 tons
of coatings per year.
