Crisis is over. Officially26 April 2016
In early 2015, prices for the main export commodities of Ukraine literally collapsed (although they fell before), after which the hryvna collapsed too. Now the situation is quite the opposite. Recently, the commodity market prices are rising, and the economy of Ukraine has started to grow against that background.
A month ago, experts chose their words carefully when evaluating positive trends in the global markets as a temporary phenomenon. Good statistics from the US and China (increase in lending, construction, economic growth is not worse than expected) now make it possible to state unequivocally - the global crisis in commodity markets is over. "Foreign markets continue to delight Ukraine, I would even say to surprise," - wrote last Friday on his Facebook account Andriy Gerus, Executive Director of Concorde Capital. He gives an example: this week, steel increased by another 10% -15% (depending on a product), rolled steel - up to 540 dollars per ton. Since the beginning of the year + 70% -90%. Iron ore this week increased by 14% - up to 66.3 dollars per ton. Since the beginning of the year + 50%.
Global markets go up
The graph shows that prices for reinforcement metal and rod iron have already exceeded the indicator of the beginning of 2015. For other goods, they are close to a return to the year-ago levels.
Also, price of oil affects the world market. The lower is the oil price, the lower logistics costs are and, consequently, prices for metals and ores. Falling oil prices reduce the cost of agricultural products. Biofuel production (of cereals and oilseeds) becomes less cost-effective, and free crops put pressure on prices in the agricultural market.
Industry follows closely
Recovering commodity markets have positive effect upon the Ukrainian industry. The steel industry accounts for 28% of total exports, iron ore - 11.3%. As a result, in March the industry grew by 4.8%. Metallurgy is the growth driver - 19% vs. March 2015. The growth is also supported by the low comparative base - the notorious phrase "pushed from the bottom." Until then, the industry has been collapsing for three years.
The hryvna will be stable
Due to the growth of export industries, the foreign currency inflow has increased and this has a positive effect on the hryvna exchange rate. But this is not the only factor. The heating season has ended, and there is no need to buy gas in Europe the currency, which allowed the National Bank to reduce the discount rate last week without fear of rate fluctuations.
The new Prime Minister Vladimir Groisman is lucky to have the favorable market conditions. Ukraine has stepped closer to the visa-free regime with Europe, and the economy has started to grow. It's time, in keeping with the best traditions of the Ukrainian authorities, to lie on oars. At the same time, the current growth is both a break and a second chance for Ukraine, the best time for reforms, privatization of state property.
We have time for a while. “According to our estimates, prices of Ukrainian suppliers for export areas in April and May should continue to grow with monthly increments about 15%", - says Dmitry Zheltyakov, expert of the State Enterprise Ukrpromzovnishexpertyza.