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Review of the Ukrainian fertilizer market

Today, the chemical industry in Ukraine is going through difficult times. This is due to the fact that the foundation is the production of fertilizers. The uncertain political and economic situation in the country affected the slowdown in growth of the market and the volume of fertilizer consumption.Fertilizer production in Ukraine demonstrates a downward trend in recent years. In 2016, production decreased by 22.3% compared to 2015. This is due to the fact that two large operators for the production of fertilizers were closed, resulting in a sharp drop in the production of the investigated product, also the unstable political and economic situation in the affected areas and the reduction of drop in demand for fertilizer. Farmers have to give up the soil prevention, use less fertilizer and reduced consumption of imported fertilizers. There is a shift from the expensive fertilizer to cheaper analogues, or on animal manure, organic.The key factors influencing the market of Ukraine of fertilizers are:- Unstable exchange rate, inflation, lack of long-term planning possible activity, rising prices for imported goods, the sharp rise in natural gas prices;- The decline in agricultural production: decrease in production of mineral fertilizers and falling profits of market operators;- Reducing the number of operators on the market: the decline in production, the failure to meet the needs of local farmers in the required quantities of fertilizers;- Unstable political situation: reducing the number of market operators, acreage and fertilizer consumers, export sophistication, imports of the product;- Feature custom work: increase the customs value of the exported products to foreign markets, the loss of customers in the foreign markets, increase in terms of customs clearance of the goods;-Unstable legal regulation of economic activity;- Capacity of the market shows a downward trend, due to the sharp decline in production volumes.Dynamics of import of fertilizers shows growth in 2016 by 28.6% compared to 2015. This is due to the fact that the volume of domestic production decreased, decreased number of operators, and farmers were forced to find a replacement fertilizer. Some focused more on the segment of organic fertilizer, some reduced use of fertilizers and crop area. There are also farmers and agricultural companies that shifted to imported fertilizers (Russian and Belarusian most).Exports of fertilizers declined by 11.9% in 2016 compared to 2015 due to reduced production volumes and the number of operators. This situation generally has a negative impact on the chemical industry of Ukraine, as fertilizer occupy the lion's share of exports of all products of chemical industry of Ukraine.Thus, the restoration of the previous volumes of exports of fertilizers will not happen in the coming years. Recovery is possible only if the stabilization of the economic and political situation and the return of the major operators on the Ukrainian market.In the structure of imports has been no change, Russia and Belarus are still leaders, but import volumes declined. Thus, one can predict that the domestic operators will in 2016 look for partners that can provide fertilizer in the middle and low price segment in the amounts that are required for domestic farmers. There will be a reorientation of importers with LICs markets in Europe and Asia markets.Prices for chemical products, as well as on most of the products in Ukraine in the periodshowed growth. Fertilizers in Ukraine in the period increased in price due to lower production volumes, shortage of certain types of fertilizer and thus increase the demand for the other. Also at the rising prices rise in impact energy and ultimately production in general. In 2016, the price index below, as was the period of active demand for fertilizers.Forecast of market development is not optimistic because of the fact that a large number of factors affect negatively on the analyzed market, and their leveling is not possible in the coming years. However, the most dramatic decrease in market capacity Ukraine has already passed, further reduction will occur not because of the loss of large enterprises for the production of fertilizers, but because of increased cost of production, fertilizer prices and a gradual decline in sales.
Market recovery will begin when stabilize the economic situation in the country, but a full recovery is possible only if the return of major market operators on the territory of Ukraine, controlled by, or analyzed the market will not be able to restore its normal production, which do not fully meet the needs of domestic consumers.
The normalization of the economy will also lead to an increase in domestic consumption of fertilizers by farmers, increasing demand and thus the attractiveness of this sector. This will increase the chances entry of new operators in the fertilizer or fertilizer importers economy with Europe.