Firtash might monopolize sulfuric acid market in Ukraine – media

Ukrainian oligarch Dmytro Firtash has secured state-level lobbying of his enterprise, Sumykhimprom, aimed at driving out of the market all foreign suppliers of sulfuric acid required for steel production and monopolizing the segment.

A report by Obozrevatel tells about plans by the Interdepartmental Commission for International Trade to conduct an investigation against importers, which may result in imposition of a special duty on raw material imports to Ukraine.

The initiators of the move were PJSC Sumykhimprom, SE Eastern Mining and Processing Plant, RPE Zorya Ltd., and First Chemical Association LLC, all controlled by Firtash.

However, if the scenario is implemented, competition ensured by imports will be practically destroyed, while Ukrainian producers will be forced to buy raw materials from Sumykhimprom at prices set at the company's own discretion. This is due to the fact that there are only eight sulfuric acid plants in Ukraine. Noteworthy, only four of them, including Sumykhimprom, produce sulfuric acid not only for internal needs, but also for major industrial consumers.

Read alsoFirtash's companies suspected of tax evasion worth UAH 500 mln: PGOHowever, negative consequences of such developments will fall solely on the shoulders of Ukrainian industrial players, already troubled by the dangerous initiative in the oligarch's interests.

They are concerned over the fact that sulfuric acid deficit for production purposes accounts for at least 30%. As of the first half of 2017, the share of sulfuric acid imports in the demand coverage was 55%. Obviously, many enterprises will simply not be able to operate if imports are suspended.

The arguments that it is possible to operate using only domestic raw materials are groundless, as the sulfuric acid imports to Ukraine have become traditional for a variety of objective reasons.

First, Ukraine lost control over its territory in Donbas with its high-sulfur coal and PJSC Crimean Titan ("Ukrainian Chemical Products"), while Kostiantynivka Chemical Plant went bankrupt in 2017. These enterprises accounted for about 50% of raw materials produced.

Read alsoVienna court rejects Spain's extradition request for Ukrainian oligarch Firtash – mediaSecondly, even if the said enterprises remained under Ukraine's control, it would still be impossible to refuse from imports. After all, Ukrainian raw materials for the production of sulfuric acid often fail to meet the standards and quality indicators as they contain various impurities increasing harmful emissions, thus causing serious environmental problems.

Thirdly, in addition to the inadequate production capacity, the problem of the shortage of transportation tanks is also acute.

Thus, the initiated investigation against sulfuric acid imports to impose import duties will lead to an increase in profits of Firtash's business alone, rather than state enterprises, the report claims.