Ukraine trade deficit surges on September gas imports

Ukraine’s trade deficit almost doubled yoy to USD 2.3 bln in September vs. USD 1.2 bln a year ago, according to state statistics released on November 14. Exports declined 10.3% yoy while imports grew 7.6% yoy in September. In 9M13, the trade deficit reached USD 9.7 bln, still below USD 11.3 bln in the same year-ago period.

Alexander Paraschiy: The main reason for the wider deficit in September was a sharp increase in natural gas imports (up to 4.4 bcm of gas from 2.9 bcm a month ago). Falling fertilizer (-64.8% yoy), railway machinery (-52.5% yoy) and cooking oil (-50.7% yoy) exports only strengthened the result. The overall tendency was in line with our estimates though we did not expect that the gas import upsurge would be mitigated by a generous discount (USD 260/tcm instead of USD 410) that Gazprom provided for 5 bcm of technical gas imported by oligarch Dmytro Firtash in September.

We expect the October trade deficit will be above year-ago levels due to the ongoing high level of gas imports (3.2 bcm, which is almost double the monthly average of 1.7 bcm in 1H13). The year’s remainder looks uncertain given Naftogaz’s declaration it will stop importing gas from Russia in November and December. We are keeping our forecast on trade deficit at USD 14.5 bln in 2013 (according to Ukrstat methodology), which is still below the USD 14.8 bln deficit observed in 2012.