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BMI Industry View
The Ukrainian petrochemicals industry will remain in crisis, with Lukoil seeking to withdraw from the
sector, announcing that it is putting its local polymers subsidiary, Karpatneftekhim, up for sale. With much
of the country's petrochemicals industry effectively mothballed and the industrial sector in the doldrums,
any growth will come from a very low base. Consumption will increasingly require imports, although this
will be moderated by currency depreciation.
Ukraine's largest petrochemicals producers - the fertiliser producer Stirol, which operates in the troubled
east, and Lukoil-owned Karpatneftekhim - have been shut, with no firm plans to re-open them at the time
of writing. As a result, we have removed from our forecast Ukraine's ammonia, urea, polyethylene and
polyvinyl chloride (PVC) capacities.
On the demand side, low consumer confidence and spending and a weak business investment will mean
domestic demand will not be able to pick up the slack from falling export demand. The majority of
manufacturers operating in Ukraine are heavily linked to the Russian market. Thus, the breakdown in
Russia-Ukraine relations due to the ongoing political and economic malaise in the country presents the most
severe downside pressure for our production forecasts, as trade relations between Ukraine and Russia are
likely to deteriorate further without a clear solution to the crisis.
? In H116, imports of polyethylene (PE) increased 33% y-o-y to 128,000 tonnes, according to MRC
Datascope. Imports were led by high density polyethylene (HDPE) and linear low density polyethylene
(LLDPE). Meanwhile, imports of polypropylene (PP) into Ukraine increased 36% y-o-y to about 57,600
? In H116, monthly rubber output growth averaged 66.5% y-o-y, but plastic output grew just 3.3%. The
main factor was base effects, with rubber having seen a sharper drop in previous quarters. However,
plastic has yet to make this recovery, largely due to the operational problems at the country's polymer