Asian earnings: what countries offer better prospects for Ukrainian exports

Author

Oleksandr Tsyganok

The Asian market for Ukrainian exports has been growing steadily over the past three years. In what countries and for what products from our country is the demand better?

Positive Asian direction

Asia is the only steadily growing market for the export of Ukrainian products over the past three years. If in 2019 the volume of domestic exports to this region increased by 12%, then in 2020 the growth reached 20% in monetary terms. And judging by the operational data of the State Customs Service for January-April, the growth rate is maintained in the current year. In the first four months of 2021, Ukraine shipped $6.69 billion worth of products to Asia (compared to $5.57 billion in the same period a year earlier).

Other regions of the world are less "hospitable". Last year, there was a negative trend in Ukrainian exports to Europe. For the second year in a row, the volume of shipments of goods to Africa has been decreasing. And in 2019, our exports to America decreased. In addition, a significant drop was recorded—from 10 to 26% (depending on the region and terms). So, it is right to look for stability and positiveness in Asia. Moreover, now more than a third of Ukrainian merchandise exports belong to this region.

Most dynamic Asian takeover

The largest increase in Ukrainian exports among Asian countries is shown by China. In 2020, the volume of supplies here from Ukraine increased by $3.52 billion and in the first 4 months of this year—by another $1.00 billion. And the fastest increase of exports is recorded in Pakistan and Taiwan. Accordingly, 5.3 times by the first of these countries during 2020 and 2.1 times by the second one in January-April 2021.

The top 10 Asian countries, where exports from Ukraine increased more or faster last year (that is, in monetary terms or as a percentage) and according to similar interim results for the first four months of this year, certainly includes four countries such as China, Pakistan, Qatar, and Iran.

Domestic exporters succeed in rapidly and steadily increasing supplies of Ukrainian products to the "dynamic" four primarily by increasing the volume of shipments of iron ore concentrates, corn, oil, barley, and seed cake. These five commodity items alone added almost $2.6 billion in additional earnings to Ukrainian suppliers in China, Pakistan, Qatar, and Iran together over the past year, and even more $1.2 billion in the first four months of this year.

Already these facts are enough to conclude that there are good prospects for suppliers of domestic products, first of all, for the aforementioned four Asian countries.

It should also be noted that this year, Turkey and India were also included in the top five Asian states with the largest increase of Ukrainian exports in terms of money (although by the end of 2020 they did not even make it into the top 10 according to this indicator). For instance, Turkey's consumption of Ukrainian goods increased in January-April 2021 by $353 million, and in India—by $177 million (compared to January-April 2020).

And Taiwan and Japan burst into the top five most dynamic importers in Asia in 2021. A year earlier, they were outside the top 10 countries in terms of growth rates (in percent) of Ukrainian exports. So, in the first 4 months of this year, exports from Ukraine to Taiwan increased by 106%, and to Japan—by 51%. But on the whole, our commodity flow to Asia is increasing much more slowly—its value for the same period increased by only 20%.

Rating of countries-importers of Ukrainian products in Asia in terms of growth rates in 2021 (in percent, for January-April, compared to the corresponding period of the previous year, according to the State Customs Service of Ukraine):

1. Taiwan—106.4

2. Qatar—102.8

3. Pakistan—84.0

4. China—56.1

5. Japan—50.9

6.Turkey—41.2

7.Iran—39.6

8. Oman—32.9

9. India—32.4

10. Thailand—20.5

A generalized analysis of Ukrainian exports to Asia at the end of 2020 was recently published by . The latest data on shipments to foreign markets this year is regularly reported by the State Customs Service of Ukraine. Let's try to find out how specifically Asian countries are interested in Ukrainian products, and what kind of domestic products have good demand and good prospects in the markets of magic Asia.

The potential of the Chinese market has already been investigated in a certain way, and there are many publications regarding it, in particular, on the Unified Export Web Portal. It seems to us that the information on the potential and prospects, first of all, of the steadily growing markets of Pakistan, Qatar, and Iran, should be more interesting for the readers of . It is also worth finding out in more detail the earning opportunities in the most dynamic markets in recent months in Turkey, India, Taiwan, Japan and some other Asian countries.

Grain Pakistan

Ukraine is only a "minority" importer of products to Pakistan. Our country ranks 18th in the ranking of importers to Pakistan. Chinese imports reign here. At the end of the second half of 2020, Ukraine received a share of only 1.3% of the total imports to this Asian country.

At the same time, the volume of imports from Ukraine, according to the Pakistan Bureau of Statistics, increased by 10 times in 2020 compared to 2019. Total Pakistani imports also increased by 10%. By the end of July-December 2020, its volume reached 3.99 trillion Pakistani rupees, that is, about a third more than the same Ukrainian indicator. So, in general, the market is promising for our exporters.

Potentially good opportunities are emerging, particularly in areas such as transport machinery and equipment, vegetable and animal oils and fats, as well as beverages and tobacco products. Pakistani imports in these segments increased in the second half of 2020, according to the official statistics of this country, by 41%, 24%, and 18%, respectively (compared to the same indicators in 2019). Especially since imports of oil and fats have grown in Pakistan before, on average by 13% annually during 2015-2019. However, mainly due to palm oil.

Unfortunately, so far Ukrainian exporters have not taken advantage of their chance in Pakistan. For example, Pakistan imported $1.47 billion worth of ground transport vehicles and parts to it in 2019, while Ukraine exported them here worth only $25,000. And a threefold increase in Ukrainian exports of such vehicles in 2020 (up to $87,000) is a drop in the desert. And Ukraine practically does not supply popular beverages and tobacco to the Pakistani market.

De facto Ukraine mainly exports wheat to Pakistan. It is due to this agricultural, raw product domestic producers and exporters achieved a tenfold increase in the supply of Ukrainian goods to the Pakistani market at the end of 2020, that was recorded by the local bureau of statistics.

By the way, Ukraine did not supply wheat to Pakistan before, at least during 2017-2019. Moreover, in 2020-2021, such Ukrainian novelties as pine timber, beans, kraft-paper and the like appeared on the Pakistani market.

Steel Qatar

Despite a slight decrease in global imports to Qatar during 2020, imports began to increase in the final months of that coronavirus year. The Q4 was 13% more successful than the previous one, according to the Qatar Planning and Statistics Authority. Over the last three months of last year, imports increased for most commodity groups. Even some of the corresponding indicators of the previous, pre-crisis year were exceeded. In particular, in October-December 2020, imports of vegetable oils and animal fats increased by 19%, and industrial goods and materials—by 4% in money terms (compared to the same period in 2019).

However, it should be noted that these are not the main commodity items of Qatari imports. In general, machinery and transport equipment prevail in its structure. The industrial orientation of imports is evidenced by the fact that the most in demand in the last quarter of last year were such imported goods as components for aircraft, mobile phones, parts for gas turbines, rubble, and medicines (according to HS8 classification). And in March 2021, gas turbines and parts for them became the leading commodity item in Qatari imports. And, for example, imports of telecommunications equipment in January 2021 increased by 34% relative to their volumes in the same period of the previous year.

The total volume of imports in Qatar at the end of 2020 amounted to 94 billion Qatari riyals, that is, about $29 billion. The share of Ukraine in Qatari imports for the last accounting quarter of 2020 barely reached 0.54%. Our country ranks only 22nd in the ranking of the countries exporting goods to Qatar. But this rating is headed by China and the United States. Together they supply about 28% of imported products to the Qatari market.

The basis of Ukrainian exports to Qatar during 2020-2021 is semi-finished steel products, sunflower oil, weatings, and pipes. And first of all, the good positions of Ukrainian metallurgical products in the Qatari market should be noted. For example, at the end of October-December 2020, Ukrainian semi-finished steel products accounted for about 45% of the total world imports of these products to Qatar (according to Qatari official statistics, HS8 code is 72071100). Qatar bought it from Ukraine for 84 million riyals, and at that time imported such semi-finished products worth 185 million riyals.

It is significant that Ukraine did not export these semi-finished products to Qatar earlier, at least in 2017-2019. Over the past year and a half, polyvinyl chloride in primary forms, pine timber, several types of rolled steel, and the like were also added to the range of Ukrainian imports in Qatar.

The situation with the import of Ukrainian sunflower oil in Qatar is even "brighter" than that with the steel. In the same accounting, last quarter of 2020, Ukrainian suppliers provided 54% of Qatar's needs for crude and refined oil (codes 15121100 and 15121900). Qatar bought oils from our exporters for 10.1 million riyals, while in total it spent 18.7 million riyals on imported oil, according to official Qatari statistics.

It is semi-finished steel products, and partially refined sunflower oil, weatings, and rolled steel that currently provide a twofold increase in domestic exports to Qatar. And in terms of steel, positive dynamics, apparently, will be sustained here for at least another year and a half—until the construction of sports facilities for the final part of the FIFA World Cup in this country at the end of 2022 is completed. It would be appropriate if the major Ukrainian motives continued to be heard in Qatar in the future, and not only those performed by metallurgists.

Corn Iran

Despite unfavorable foreign policy factors, imports of goods and services in Iran during 2019-2020 (Iranian year 1398 ended on March 20, 2020) increased by 1%. The volume of annual imports in the structure of national GDP, according to the Statistical Center of Iran, reached 2863 trillion Iranian rials at current prices, that is, about $70 billion. And the indicator of the last accounting quarter (Q4 of 2019-2020) increased by 13% or more than $2 billion compared to the same period last year.

Ukraine is trying to keep pace with Iranian import demand. In 2020, the volume of supplies to Iran from Ukraine increased by 21%, and in the first four months of this year—already by 40% in money terms. However, the volumes of our imports are still small. According to Iranian official sources—only about 0.2% of total imports to this country. And in the export of Ukraine to Iran, only 1% of the total volume belongs to supplies of goods to foreign markets. However, there are prerequisites for a significant improvement in these indicators.

In particular, Iran has recently been increasing imports of food and chemical products. For example, in 2019, purchases of vegetable products in foreign markets increased by 37%, vegetable oil and animal fats—by 9%, and chemicals—by 13%. And Ukraine, with its powerful agricultural and chemical industries, should take full advantage of these circumstances.

It would also be appropriate to significantly diversify Ukrainian exports to Iran. So that in its structure, much less than the current 75% and last year's 86% belong to corn. For example, it is worth considering that Iran imports a lot, not only food, but also engineering products (commodity groups 84 and 85 according to HS2). After all, boilers and mechanical devices are the most in demand in Iran. Moreover, electrical equipment is also among the three most popular product groups among imports. Together, these two product groups account for over a quarter of total imports. However, Ukraine, unfortunately, supplies very little of such products to Iran. In 2020—worth only $7 million, and in the first four months of 2021—worth $0.4 million, according to statistics from the State Customs Service.

So, not only exporters of Ukrainian mining and smelting products and raw food, but also domestic mechanic engineers, chemists, food producers, and numerous entities of other economy sectors can count on high earnings in Pakistan, Qatar, and Iran. Next time will talk about the prospects of Ukrainian exports in another attractive four countries of Asia—Turkey, India, Taiwan, and Japan.