SYNTHETIC FIBER INDUSTRY TO BE PRIVATIZED
A month has passed since the Cabinet of Ministers confirmed the conditions for privatization of the Khimvolokno (chemical fiber) open joint-stock Co. of Chernihiv. This enterprise drew much attention from domestic and foreign investors, but it now seems the state will still not leave it alone. A blocking interest (26%) will be in the state’s possession for three more years.
Production of synthetic fiber in Ukraine is concentrated in five large Khimvolokno enterprises in Chernihiv, Kyiv, Cherkasy, Zhytomyr and Sokal. All of except the smallest in Sokal are located in large industrial centers with highly developed light industry or in the centers of light industry regions. Even the Sokal enterprise is orienting in many ways to the industrial potential of its neighbor, Chervonohrad, which is the largest center of light industry in Lviv oblast.
Due to market conditions, Ukrainian producers of artificial fibers have to switch their orientation from the considerably shrunken domestic market toward foreign ones. The new Asian markets of China, Pakistan, Turkey, and India are considered the most promising.
Although the European market is glutted, it also seems to hold significant promise. But in order to be admitted to the European market Ukrainian producers must meet tough quality requirements. The worn out equipment in Ukrainian plants is not able to provide high product quality, and as a result of its high energy consumption and low production rate, production costs are rising.
The current economic status of the enterprises producing chemical fiber is far below their potential. One main reason is the decline of Ukrainian light industry, the main consumer of synthetic fiber. However, there is a stable demand for synthetic and artificial fibers on the world market, and our producers are opening it up.
Despite the general economic crisis and the decline of industrial production in Ukraine, chemical fiber output will be increased. Moreover, the largest Khimvolokno enterprises in Chernihiv and Cherkasy showed profits in 1995-1996. In 1996 the Chernihiv plant has increased its output by 82.16% over the previous year.
Viscose filament is in a great demand abroad. Cherkasy plant used to be the main producer of this filament in the former USSR. Today this enterprise has the largest production of viscose filament in Ukraine. Despite the fact that according to the production sizes it is preceded by Chernihiv plant, the prospects for its further development are rather obvious.
The chemical fiber industry enterprises have a considerable export potential. For example, Cherkasy Khimvolokno exports over half its production which can be explained by its product line (viscose filament and potassium sulfate) as well as beneficial contracts signed with foreign partners.
Other enterprises also have significant potential. Among them are Kyivvolokno which is not that busy, and the small plant in Sokal which produces artificial filaments used in the textile industry, and draws great attention from strategic investors.
