Regions
Industries
- Agriculture
- Mining industry
- Processing industry
- Electric power supply
- Water supply
- Construction
- Wholesale and retail trade
- Transport and warehousing
- Accommodation and food-and-beverage services
- Information and communications
- Finance and insurance
- Real estate
- Professional activities
- Administrative activities
- Public administration
- Education
- Healthcare and social services
- Art and entertainment
- Other services
- Home
- Regions
- Industries
Agriculture Mining industry Processing industry Electric power supply Water supply Construction Wholesale and retail trade Transport and warehousing Accommodation and food-and-beverage services Information and communications Finance and insurance Real estate Professional activities Administrative activities Public administration Education Healthcare and social services Art and entertainment Other services
- Business conditions
- Rankings
- Registry
- State support
Processing industry
- Review on ferrous metallurgy (cast iron and ferrous alloys)
- Review on ferrous metallurgy (pipes and fittings)
- Review on ferrous metallurgy (sandwich panels)
- Review on ferrous metallurgy (pins and bars, shapes, wire)
- Review on packing industry
- Review on ferrous metallurgy (primary and rolled steel products)
- Review on sugar industry
- Review on leather and wool production
- Review on fruit processing industry
- Review on vegetable processing industry
- Review on meat processing industry
- Review on fodder production
- Review on confectionery and chocolate
- Review on milk industry
- Review on metallurgical industry
- Review on engineering industry
- Review on oil-and-fat industry
Review on ferrous metallurgy (cast iron and ferrous alloys)
1. Introduction
Ore mining and smelting industry (OMSI) is a leading sphere of Kazakhstan’s national economy accounting for 15,2% in the overall industrial production. Many ore mining and smelting plants are backbone enterprises and therefore OMSI development means urban development, workplaces for more than 200 th. people.
Ore mining and smelting complex encompasses various activity spheres from geological exploration and up to production of a finished product, its marketing both within internal and external markets, therefore, several brief reviews have been prepared.
The first part of this review describes Kazakhstan ferrous metallurgy structure followed by review of the internal ferrous alloys and cast iron production market, potential sale markets. The principal players and their market share, existing barriers and restrictions have been identified, the list of potential opportunities for business initiatives has been drawn.
1.1. Industry Structure
Production volume for metallurgical industry products of Kazakhstan in 2014 constituted 1915,250 mln .tenge in current prices or 122% against the level of 2010 (1569,969 mln. tenge).
In the overall industrial production structure of Kazakhstan 10,4% and in the processing industry structure (5872 834 mln. tenge) 32,5% accounted for metallurgy under the results of 2014.
The production volume for ferrous metallurgy products constituted 765,441 bln. tenge in current prices or 86,68% in 2014 against the level of 2010.
Table 1. Production volumes for ferrous metallurgy products in value terms for 2010-2014, mln. tenge
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010 |
Ferrous metallurgy |
883001 |
785432 |
1964416 |
1752059 |
765 441 |
86,68 |
Source: under the data of the Committee on Statistics of MNE of RK
In the overall industrial production structure of RK 4,2%% and in the metallurgy industry structure - 39,8% accounted for ferrous metallurgy under the results of 2014.
The rate of growth of steel-making iron production within manufacture of ferrous metallurgy products increased in physical terms for 2010-2014 - 110,3%.
The rate of growth on ferrous alloys decreased – 98,7%.
Table 2. Volumes of cast iron and ferrous alloys production in physical terms for 2010-2014
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010, % |
|
Steel-making iron, tonnes |
2891682 |
3141081 |
2707009 |
2622745 |
3189388 |
110,3 |
Ferrous alloys, tonnes |
1737953 |
1668625 |
1724065 |
1707512 |
1715328 |
98,7 |
Source: under the data of the Committee on Statistics of MNE of RK
In 2014 OMSI of RK attracted 566,8 bln. tenge of investment in fixed capital or 168% as compared with 2010. In 2014 the internal funds volume of the enterprises in fixed capital constituted 368,4 bln. tenge (or 64,99 % of the total investment volume in OMSI), of bank loans – 26,4 bln. tenge (or 4,67%), of other investment – 171,9 bln. tenge (or 30,33%).
The major relative share in the total investment volume in OMSI of RK accounts for metallurgy – 52,57% or 299,1 bln. tenge, for metallic ore mining – 47, 23% (or 267,68 bln. tenge).
Iron ore extraction
|
Base metal ores extraction
|
Cast iron, steel and ferrous alloys production |
Production of steel pipes, pipelines, shapes, fittings
|
Figure 1. Structure of invited investment in fixed capital of OMSI in 2014, %
Source: under the data of the Committee on Statistics of MNE of RK
In metallic ores extraction the major investment volume in fixed capital accounted for base metal ores extraction – 80,9% (or 216,4 bln. tenge), cast iron, steel and ferrous alloys production – 25,5% n 2014.
In metallurgy the major relative share of investment in fixed capital accounted for production of base noble and non-ferrous metals - 49,8% (or 149,9 bln. tenge), for cast iron, steel and ferrous alloys production – 48,3% (or 144,5 bln. tenge) in 2014.
In 2010-2014 the similar tendency was seen in formation of sources of investment into fixed capital within ORSI spheres. In this way, the major relative share in the total volume of investment in fixed capital accounts for the enterprises’ own funds. However, the relative share of enterprises’ own funds decreased due to growth of the relative share of other loan resources including foreign investment for this period.
The investment in fixed capital of ORSI sub-industries was mainly channeled to purchase machinery and equipment, tools and stock.
In assessment of the dynamics of foreign investment invitation to ORSI of RK it should be noted that the primary objective of the state is achievement of favourable investment climate in the country and further stimulation of direct foreign investment inflow in Kazakhstan’s economy. In this way, under the data of the National Bank of Kazakhstan for 2005, on the 1st of April 2015 the gross foreign investment inflow to ORSI of RK constituted 25 923,6 mln. USD including metallic ore extraction - 6707,0 mln. USD (or 25,87% of all investment to the industry), metallurgic industry and production of finished metal products except machinery and equipment - 19216,6 USD (or 74, 12%).
Metallurgic industry and production of finished metallic products except machinery and equipment
|
Metallic ore extraction
|
Figure 2. Gross foreign investment inflow for 2005, 1st of April, 2015, mln. USD
Source: National Bank of RK
Taking into account the substantial part of direct foreign investment accounting for metallurgic industry, in processing industry the major relative share accounted for the Netherlands - 5332,1 mln. USD (or 37,2% from gross returns FDI in processing industry); Switzerland - 3838,7 mln. USD (26,8%); UK - 1 405,7 mln. tenge (9,8%); Hong Kong (Siangang) - 696,3 mln. USD (4,9%), Russia - 479,9 mln. USD (3,4%). Less than 2,0% accounted for other countries.
As of August 1, 2015, 166 enterprises operated with foreign capital in ORSI of RK including 8 enterprises - in iron ore extraction, 42 – in ferrous metallurgy, 8 - in metal casting fields.
Table 3. The number of operating ORSI enterprises with engaged foreign capital as of August 1, 2015
Total |
Joint enterprises (with foreign involvement) |
foreign |
|
Iron ore extraction (071) |
8 |
4 |
4 |
Production of cast iron, steel and ferrous alloys, steel pipes, pipelines, shapes, fittings, production of other steel products through primary treating (FERROUS METALLURGY (241,242,243)) |
42 |
20 |
22 |
Metal casting (245) |
8 |
4 |
4 |
Source: under the data of the Committee on Statistics of MNE of RK
Assessing ORSI performance figures for Kazakhstan for 2010-2014 it should be noted that industrywide the actual personnel number increased from 678,0 th. people in 2010 to 696,4 th. people in 2014, or by 2,7%.
The opposite tendency was observed in processing industry of Kazakhstan. The actual personnel number dropped from 360,7 th. people in 2010 to 333, 7 th. people in 2014, or 92,5%.
In metallurgic industry personnel number was being decreased with higher rates comparing to processing industry of Kazakhstan in general. In this way, headcount decreased from 129, 4 th. people in 2010 to 79,7 th. people in 2014, or 61,9%. The actual headcount dropped sharply from 125,6 th. people in 2010 to 77,0 th. people in 2014, or 61,3%. The difference between the headcount and actual headcount in 2014 constituted 2,7 th. people which is 29% less than that in 2010 (i.e., 3,8 th. vacant positions).
The highest rates of personnel number decrease were inherent for cast iron, steel and ferrous alloys production where the headcount and actual headcount for 2010-2014 decreased by one third.
Export of metals and metal products for 2011-2014 decreased from 9,7 bln. USD in 2011 to 6,7 bln. USD in 2014, or 70,1%.
11,5% and 8,5% accounted for metals and metal products in the overall export structure of Kazakhstan in 2011 and in 2014 accordingly, or the relative industry share decreased by 3,0%.
The ratio of export to CIS counties and non-CIS countries constituted 25,4 and 74,6% in 2011 accordingly; 29,3% and 70,7% in 2014 accordingly, i.e. the tendency of product export growth to CIS countries and decreased volume of export to other countries was visible for 2011-2014.
Kazakhstan’s export of processed ORSI products to the Customs Union countries in 2014 constituted 1209 mln. USD, or 45,3% of the overall processed RK export to the Customs Union countries.
The structure of processed products export included ferrosilicon manganese and ferrochrome silicon.
Table 4. Structure of the processed ORSI product export of Kazakhstan to the Customs Union countries in 2014
|
2014 * |
||
Mln. USD |
in % to the processed product export volume |
2014 in % against 2013 |
|
Total processed products of RK |
2 666,9 |
100,0 |
83,1 |
from them: |
|
|
|
Natural uranium and its compounds; |
217,3 |
8,1 |
66,6 |
Other galvanized differently flat mill products of iron or non-alloy steel with a width of 600 mm or more |
198,6 |
7,4 |
83,6 |
ferrosilicon manganese |
94,1 |
3,5 |
99,7 |
Hot rolled, unclad, non-galvanized or differently coated flat mill products of iron or non-alloy steel with a width of 600 mm or more |
79,4 |
3,0 |
83,7 |
ferrochrome silicon |
68,4 |
2,6 |
131,7 |
Other ferrous metal casing, tubing, drilling pipes to drill oil and gas wells |
58,1 |
2,2 |
76,5 |
Source: under the data of the Committee on Statistics of MNE of RK
Metal and metal products import increased in 2011-2014 from 3,7 bln. USD in 2011 to 4,3 bln. USD in 2014, or 116,3%.
10,1% and 10,5% accounted for metal and metal products in the overall import structure of Kazakhstan in 2011 and 2014 accordingly, or the relative industry share increased by 0,4%.
The ratio of import from CIS and non-CIS countries in 2011 constituted 55,6% and 44,4% accordingly; 50,7% and 49,3% in 2014 accordingly, i.e. within these years the tendency of growth of import from other countries in the world is visible.
Kazakhstan’s import of raw ORSI products to the Customs Union countries in 2014 constituted 277,7 mln. USD or 34,0% of all raw material export of RK to the Customs Union countries.
Kazakhstan didn’t import processed ORSI products from the Customs Union countries in 2014.
1.2. Internal Market Capacity
Formation of the capacity of the ORSI product market and of its growth rates were affected by both the external (changes in the world market condition of the industry product) and the internal factors identified by the prospects of development of the national enterprises and national economy industries.
To determine the ORSI product market capacity the analysis of production, export and import of ferrous metallurgy products was conducted for 2010 and 2014 on basis of the data of the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan.
Therefore, on basis of the analysis it was defined that the highest level of capacity of the ferrous metallurgy product market in 2014 was observed for the following products:
The granules and powders of steel making iron, mirror iron and steel – market capacity is 1 174 399,4 tonnes and decreased in comparison with 2010 by almost 2,0 times;
Ferrous alloys – market capacity is 489 774,4 tonnes and increased against 2010 by 22, 51%.
Table 5. Market capacity and use of ferrous alloys, granules and powders of steel making iron, mirror iron, steel for 2010-2014, tonnes
Ferrous alloys |
|||
|
2010 |
2014 |
2014 against 2010, % |
Market capacity |
399 768,40 |
489 774,40 |
122,51 |
Production |
1 701 790,00 |
1 715 137,00 |
100,78 |
Import |
16 062,70 |
19 720,40 |
122,77 |
Consumption |
399 768,40 |
489 774,50 |
122,51 |
Export |
1 318 084,30 |
1 245 083,00 |
94,46 |
Granules and powders of steel making iron, mirror iron, steel |
|||
|
2010 |
2014 |
2014 against 2010, % |
|
2 164 014,40 |
1 174 399,40 |
54,27 |
Production |
2 163 547,00 |
1 174 452,00 |
54,28 |
Import |
1 207,40 |
987,2 |
81,76 |
Consumption |
2 164 014,40 |
1 174 399,40 |
54,27 |
Export |
740 |
1 039,80 |
140,51 |
Source: under the data of the Committee on Statistics of MNE of RK
1.3 Potential Sales Markets
1. Cast iron
The internal market of Kazakhstan turned into the primary cast iron sales market as in precedent years. In this way, under the results of 2014 99,9% of national cast iron demand were directed to the internal market of Kazakhstan which constituted 3189434,7 tonnes or 110,0% against 2010.
Table 6. Cast iron sale in RK
|
2010 |
Rel.share,% |
2014 |
Rel.share,% |
2014/2010, % |
Sale at RK market |
2898781,5 |
100 |
3189434,7 |
99,9 |
110,0 |
Sale at external markets |
0,0 |
0 |
4117,6 |
0,1 |
0 |
Source: under the data of the Committee on Statistics of MNE of RK
In the long term the internal market of Kazakhstan will remain the potential cast iron sale market by 99,9% as in precedent years. The only cast iron producer at the territory of Kazakhstan is JSC “Arcelor Mitall Temirtau” disposing of four blast furnaces. It should be additionally noted that all cast iron produced at AMT covers the needs of its steelmaking production.
In CIS countries under the results of 2014 the unalloyed steel making iron which mass contains more than 0,5% of phosphorus in bars, lumps and other initial forms was exported to Uzbekistan in a volume of 3018,8 tonnes that amounts to 730,5 th. USD. Cast iron wasn’t sold to other countries of the world.
In case of decrease in the steel product demand Uzbekistan may become the potential cast iron sale market where about 1100 tonnes of unalloyed steel making iron containing more than 1 mass % of silicon; 3100 tonnes of unalloyed steel making iron which mass contains more than 0,5% of phosphorus in bars, lumps and other initial forms can be sold.
JSC “Uzbek Metallurgical Industrial Complex” which structure provides for: steelmaking, rolling, non-ferrous metals production, consumer goods production, scrap and ferrous metal waste treatment and processing warehouse may become the primary cast iron consumer in Uzbekistan. UMIC comprises ХРУП «Vtorchermet» that includes 13 affiliated companies:
The plant produces:
-ferrous metals mill (mixed);
-copper and copper products mill (mixed);
-metal products (wire, electrodes, construction nails, steel mesh grids, enamel utility ware of 43 designated names and more than 264 types).
There will be no special conditions for penetration into Uzbekistan’s market as these products have already been supplied to this market likely to be expanded as the country has heavy requirement for these products due to lack of ferrous metals which export is banned by the Government of Kazakhstan till December 2015 as well as by development of small casthouse productions in Uzbekistan.
2. Ferrous Alloys
The recent growth of the world demand for qualitative steel has caused raise of use of ferrous alloys, the principal constituent within steel production.
The primary ferrous alloys users are the producers of steel pipes, flat products, non-ferrous castings, steel blanks and semifinished materials etc.
The ferrous alloys bulk is highly demanded by metallurgic plants, the enterprises of machine building complex producing castings for own production needs.
Deoxidants, conditioning agents and addition alloys on basis of ferrous alloys are used in the global industry.
Ferrous alloys sale to the internal market of Kazakhstan in 2014 constituted 489 774,5 tonnes or 122,5% against 2010. 28,2% of the overall capacity of this products’ market was directed to the internal market of Kazakhstan and 71,8% - to the external markets in 2014.
Table 7. Ferrous alloys sale
|
2010 |
Rel.share,% |
2014 |
Rel.share,% |
2014/2010, % |
Sale at RK market |
399 768,4 |
23,3 |
489 774,4 |
28,2 |
122,5 |
Sale at external markets |
1 318 084,3 |
76,7 |
1 245 083,0 |
71,8 |
94,5 |
Source: under the data of the Committee on Statistics of MNE of RK
Taking this fact into consideration, the following enterprises will still remain the primary consumers of ferrosilicon manganese of LLP “Taraz Metallurgical Plant” at the internal market of Kazakhstan:
1. JSC “Sokolovsk Sorbaysk Mining and Concentrating Production Association»;
2. LLP “KazFerroStal”;
3. LLP “Hermes-BE”;
4. LLP “Lesshintorg Taraz »;
5. LLP “MK Zhanatas”;
6. JSC “Zapchast”.
The following enterprises are the primary consumers of ferrosilicon manganese of LLP “Temirtau Electrometallurgical Complex” (TEMC) in Kazakhstan:
1. JSC “Arselor Mittal Temirtau”;
2. LLP “PromInvestAlmaty”;
3. JSC “Vostokmashzavod”;
4. JSC “Kazzinc”;
5. JSC “Eurasian Energetic Corporation”;
6. LLP JV “Arves”
The ferrous alloy plants of Kazakhstan have initially been built as export oriented plants therefore in prospect external market will be the primary ferrous alloy sale market.
Nevertheless, unfavourable tendency has been observed at the world ferrous alloys market. In this way, in Japan the ferrous alloy demand remains poor, the prices have remained at the same level since January 2015.
“After the New Year celebrations in China in 2015 the activity both of ferrosilicon producers and other metallurgic plants has remained low because of price crash both for ferrosilicon and steel products. Small plants take it slow to resume operations. The market surveyors expect that steel casting plants build up their rates of growth within 2015 that will lead to increase of ferrosilicon use. According to them, the long-term suspension from ferrosilicon production will enable to establish demand - offer balance, impact of cheap Indian goods will level off due to foreign markets.
The price for Indian silicon manganese in Japan remains low, steel casting plants reject it in favour of ferrosilicon. The antidumping investigation of the European Commission regarding Indian silicon manganese stimulates growth of its supply to Asian market. In India itself from April 1, 2015 export stimulation has dropped, the sellers sell their stock in a rush that will lead to price falling for these products.
From the end of February 2015 the contracts in Japan have become cheaper by more than 70$. Japanese clients and foreign producers are finalizing their negotiations on charge chrome volume supply in the financial year of 2015.
The volume of stainless steel production in 2015 is expected to be higher than that in 2014. Nevertheless, there are various negative factors affecting the ferrochrome market– it is a probability of excess charge chrome production and tariff revision for electricity in South Africa from April 2015” [1].
The prices for low carbon ferrochrome remain stable in the context of fixed demand in Japan. However, despite the lack of supplies, clients in Japan don’t need to replenish their warehouse stock and therefore the prices remain at the same level.
The market of CIS counties where Uzbekistan was the primary consumer became an important ferrosilicon manganese sale market in Kazakhstan in 2014 that may be expanded to 300,0 tonnes annually. In 2014 Uzbekistan purchased 255,7 tonnes of ferrosilicon manganese amounting to 334,2 th. USD from Kazakhstan.
Other countries of the world namely – Japan with remaining favourable market conditions to sell these products may be the potential ferrosilicon manganese sale markets. In this way, in 2014 Japan imported 53275,7 tonnes amounting to 52298,4 th. USD from Kazakhstan. In prospects the volume of these products may be built up to 55 th. tonnes.
The markets of Czech Republic (which in 2014 imported ferrosilicon manganese in a volume 2905,3 tonnes amounting to 2617,7 th. USD) and Germany (in 2014 purchased 1518,4 tonnes amounting to 1421,2 th. USD) may become the potential expanding sale markets.
In developing countries (first of all, in India and China) the tendency of more frequent use of ferrochrome, one of ferrous alloys kinds is observed. The developed countries conversely reduce toxic chrome production applying stricter standards of ecologic norms to ferrochrome.
In general the prospects of ferrochrome sale market prospects are estimated by the experts as high. Spreading of production of low-cost nickel-free stainless steels (grade 200) is observed in the world that opens new directions of ferrous alloys use.
The market of CIS countries, namely –Ukrainian market, may become the potential sale market of ferrochrome containing more than 6 mass % of carbon and that may be expanded to 9500 tonnes (in 2014 Ukraine imported these products in a volume of 9173,2 tonnes amounting to 12768,2 th. USD).
Other countries of the world where similar hazardous industries are not available might become the potential sale markets of ferrochrome containing more than 6 mass % of carbon. In this way, in 2014 these products were supplied to other countries in a volume of 926 647,4 tonnes amounting to 1 149 234,4 th. USD.
China as well as Japan (304 623,7 tonnes amounting to 396 986,7 th. USD accordingly) may become the major large ferrochrome sale market which in 2014 imported these products in a volume of 323 460,8 tonnes amounting to 361167,5 th. USD.
Ferrochrome sale markets may be expanded due to Germany market (in 2014 it imported these products in a volume of 95818,6 tonnes amounting to 125499,8 th. USD); USA market (in 2014 - 85344,7 tonnes amounting to 110128,8 th. USD); Korea market (in 2014 – 34529 tonnes amounting to 43760,5 th. USD); Netherlands market (in 2014 - 27458,6 tonnes amounting to 37814,5 th. USD), Italian market (in 2014 - 21213 tonnes amounting to 28034,3 th. USD) and Slovenian market (in 2014 - -17863 tonnes amounting to 23660,4 th. USD).
The sale market may be expanded in such counties as Australia (up to 2500 tonnes), India (2200 tonnes), Taiwan (2800 tonnes), Czech Republic (10000 tonnes).
Sale of other types of ferrochrome containing more than 0,05% in masse however not more than 0,5% of carbon, may be expanded to 13000 th. tonnes due to other countries of the world (in 2014 Kazakhstan exported 12924 tonnes amounting to 34955,6 th. USD to other countries of the world).
Japan (in 2014 it was exported 8917,8 tonnes amounting to 24270,1 th. USD); USA (in 2014 it imported 2621,8 tonnes amounting to 6866,1 th. USD) and Korea (in 2014 it imported 1384,8 tonnes amounting to 3819,4 th. USD) may become the most significant markets to sell these products.
As to other types of ferrochrome containing more than 0,5% in mass however not more than 4% of carbon, the market may be expanded due to Germany (in 2014 it was exported 6565,6 tonnes amounting to 15087,2 th. USD), the Netherlands (in 2014 - 4201,4 tonnes amounting to 9818,9 th. USD), Japan (in 2014 - 3773,7 tonnes amounting to 9712,9 th. USD).
Ferrous alloys market may be expanded due to sale of ferrochrome silicon to USA (in a volume about 14600 tonnes), Korea (13000 tonnes); Germany (5500 tonnes) and Japan (5700 tonnes) as well as of ferronickel to Germany (around 500 tonnes) and the Netherlands (25 tonnes).
The following fundamental factors and conditions for penetration to the markets of EU countries, Japan, China, Korea and USA may comprise:
1) Deoxidants, conditioning agents and addition alloys on ferrous alloys basis consistently expand their application. The worldwide tendency is bulk production of silicon manganese as producers prefer using it instead of ferrosilicon and ferromanganese mixes. Currently the relative share of silicon manganese has already reached 47% in the overall world manganese alloys production;
2) As to ferrosilicon manganese, Kazakhstan producers at the external markets shall periodically conduct moderate dumping policy reckoning upon taking the position of leading suppliers;
3) Japan, Turkey, Russia, Italy, USA and UK are the most active importers of ferrosilicon manganese. These countries as well as Iran are the primary importers of high carbon ferromanganese. Canada may be added to the specified importing countries in case of ferromanganese import with carbon content less than 2%. This group of countries is also primary importers of ferrosilicon;
4) When analyzing the level of the ferrous alloys prices, the sources providing for the prices on ddu basis Europe, fob ports of India and South Korea, cif ports of Japan, ddu market of USA (North America), ddu market of Russia should be used as a reference;
5) More than 80% of ferrochrome in the world is used in production of stainless and special steel. In the context of growing population in the world and growth of its demand, ferrochrome demand will be growing;
6) The prices for ferrochrome vary widely depending on the quantity of content of various components in it; the high carbon ferrochrome is considered as less deficient therefore within ferrochrome production and export to external markets the tolerable carbon parameters should be maintained;
7) The deficiency of raw chrome is aggravated at the world market. In contrast to manganese, more than half of raw chrome in the world is extracted in one region (RSA – 52%). Together with Kazakhstan (28%) it is 80% of ore that is reflected on the prices for these products;
8) The developed countries have been reducing toxic chrome productions including ferrochrome for a long time. The level of competition of chrome producers in America and EU falls and the developing countries (first of all, India and China) expand its production and application. The new tendency of recent years is expansion of cheap nickel-free stainless steels production (grade 200), i.e. expansion of new chrome sale sector;
9) Japan predominantly uses imported ferrochrome under the quarter contracts;
10) The Government of China imposed the 5% export duty for ferrochrome. It directs producers to top-priority satisfaction of the internal market demands;
11) In contrast to developed countries, Russia builds up ferrochrome production (predominantly, on Kazakh raw material) mainly for export. Ecology is rather negative;
12) In general, the ferrochrome markets prospects are highly estimated by the experts.
13) Nevertheless, currently there are antidumping measures of USA in respect of silicon manganese from the Republic of Kazakhstan applied up to 2018 inclusively.
2. Number of Enterprises (Players) at the Market
The market capacity with the current number of market players:
1. Cast iron
The cast iron market capacity in Kazakhstan constituted 3189434,7 tonnes or 110,17% against 2010 under the results of 2014. 100% of these products are manufactured in the Republic of Kazakhstan.
Table 8. Cast iron market capacity
|
2010 |
2014 |
2014/2010, % |
Market capacity |
2898781,5 |
3193599,0 |
110,17 |
Production |
2891682,0 |
3193552,3 |
110,4 |
Import |
7099,5 |
4164,3 |
58,65 |
Consumption |
2898781,5 |
3193599,0 |
110,17 |
Export |
0,0 |
4117,6 |
0 |
Source: under the data of the Committee on Statistics of MNE of RK
The major national player at the cast iron market are JSC “Arselor Mittal Temirtau” and 99,87% account for it. Also Russian companies participated at the cast iron market in 2014 and only 0,13% accounted for them.
Table 9. Cast iron market share for players
Name |
2014 |
|
tonnes |
Market share % |
|
Production |
3193552,3 |
100 |
Export |
4 117,6 |
100 |
Shares of RK players |
3 189 434,7 |
99,87 |
Share of foreign players |
4164,3 |
0,13 |
Russia |
4164,3 |
0,13 |
RK market capacity |
3 193 599,0 |
100,00 |
Source: calculated on basis of the data of the Committee on Statistics of MNE of RK, Customs Control Committee of the Ministry of Finance of RK and ORSI enterprises in RK.
2. Ferrous alloys (products of CPEA (Classification of products by economic activity) 241012 which comprises 15 denominations under the FEACN (Foreign Economic Activity Commodity Nomenclature ) codes 720211, 720219, 720221, 720219, 720230, 720241, 720249, 720250, 720260, 720270, 720280, 720291, 720292, 720293, 720299).
The ferrous alloys market capacity for Kazakhstan in 2014 constituted 489774,5 tonnes or 122,5% against 2010. 98,9% of these products are manufactured in the Republic of Kazakhstan, the other part (1,1%) is imported from abroad.
6 enterprises are the major national players at this market- JSC “TEMC”, LLP “Taraz Metallurgical Plant”, Aktobe Ferrous Alloys Plant, Affiliate of JSC “TNC Kazchrome”, PF LLP “KSP Steel”, Aksu Ferrous Alloys Plant, Affiliate of JSC “TNC “Kazchrome”; LLP “AIK”.
China is the major player at the ferromanganese market in Kazakhstan, the national players are not presented at this Kazakhstan market.
Table 10. Ferromanganese market shares for players
Наименование |
2014 |
|
|
tonnes |
Market share % |
Production |
0 |
|
Export |
0,0 |
|
Shares of RK players |
0,0 |
0 |
Share of foreign players |
540,0 |
100,00 |
China |
540 |
100,00 |
RK market capacity |
540,0 |
100,00 |
Source: calculated on basis of the data of the Committee on Statistics of MNE of RK, Customs Control Committee of the Ministry of Finance of RK and the enterprises
Ukraine used to be the major player at the internal ferrosilicon market in Kazakhstan from all CIS-countries. From other countries – South Africa.
Table 11. Ferrosilicon market share for players
Наименование |
2014 |
|
|
tonnes |
Market share % |
Production |
0 |
|
Export |
0,0 |
|
Shares of RK players |
0,0 |
|
Share of foreign players |
140,00 |
100,00 |
Ukraine |
60 |
42,86 |
South Africa |
80,0 |
57,14 |
RK market capacity |
140,00 |
100,00 |
Source: calculated on basis of the data of the Committee on Statistics of MNE of RK, Customs Control Committee of the Ministry of Finance of RK and the enterprises
The following national players work at the internal ferrosilicon manganese market in Kazakhstan: JSC “TEMC”, LLP “Taraz Metallurgic Plant”, Aksu Ferrous Alloys Plant (Affiliate of JSC “TNC “Kazchrome”). China represents foreign players.
Table 12. Ferrosilicon manganese share for players in RK
Name |
2014 |
|
tonnes |
Market share % |
|
Production |
200 802,0 |
|
Export |
56955 |
|
Shares of RK players |
143 847,0 |
99,96 |
JSC “TEMC” |
67608,1 |
47 |
LLP " Taraz Metallurgic Plant” |
idle due to lack of raw material |
|
Aksu Ferrous Alloys Plant (Affiliate of JSC “TNC “Kazchrome”) |
76 238,9 |
53,00 |
Share of foreign players |
62,4 |
0,04 |
China |
62,4 |
0,04 |
RK market capacity |
143 909,4 |
100,00 |
Source: calculated on basis of the data of the Committee on Statistics of MNE of RK, Customs Control Committee of the Ministry of Finance of RK and the enterprises
Aktobe Ferrous Alloys Plant (Affiliate of JSC “TNC “Kazchrome”) and Aksu Ferrous Alloys Plant (Affiliate of JSC “TNC “Kazchrome”) are the national players operating at the ferrochrome market. Only Ukraine participates at the internal market of RK from all CIS-countries. The foreign players in 2014 were not represented at this market in 2014.
Table 13. Ferrochrome market share for players
Name |
2014г. |
|
tonnes |
Market share % |
|
Production |
1 351 896,0 |
|
Export |
967731,6 |
|
Shares of RK players |
384 164,4 |
99,98 |
Aktobe Ferrous Alloys Plant (Affiliate of JSC “TNC “Kazchrome”) |
222 815,35 |
57,99 |
Aksu Ferrous Alloys Plant (Affiliate of JSC “TNC “Kazchrome”) |
161349,048 |
41,99 |
Share of foreign players |
59,3 |
0,02 |
China |
54 |
0,01 |
Ukraine |
5,3 |
0,001 |
Market capacity |
384 223,7 |
100,00 |
Source: calculated on basis of the data of the Committee on Statistics of MNE of RK, Customs Control Committee of the Ministry of Finance of RK and the enterprises
Only China worked at the ferromolybdenum market in a volume of 40,3 tonnes.
Germany – at the ferrowolfram market in a volume of 0,8 tonnes.
Brazil – at the ferrovanadium market in a volume of 20,0 tonnes.
Brazil (71,8%) and Canada (28,2%) – at the ferroniobium market in a volume of 430,0 tonnes.
The national players didn’t participate at the markets of these products in RK as the country doesn’t produce these kinds of products.
3. Barriers, Limitations and Recommendations for Their Elimination
The restrictive measures applied by third parties to the products of the states members of Eurasian Economic Union including Kazakhstan
In accordance with the Report of Eurasian Economic Commission, as of December 2014 the effects of 128 measures having impact upon and likely to negatively affect the conditions of the products access of the state members of the Customs Union and Common Economic Area (hereinafter – CU and CEA) to the markets of third countries were identified.
61% of them (78 measures) represent the market protection measures - antidumping, special protective or compensational measures including corresponding conducted investigations.
Among other measures applied at the markets of third parties more stringent than the import excises, bans (threats of ban introduction), import quota limitations including tariff quotas, levies, SPS and TBT measures as well as other non-tariff administrative measures applied to the national products may be emphasized.
The specified measures are valid at the markets of 27 countries 20 of which are non-CIS countries and 7 – the former Soviet Union countries.
The biggest number of measures among non-CIS countries are applied by EU (21 measures), India (17 measures) and USA (10 measures).
Among CIS-countries the major number of restrictive measures account for Ukraine (20 measures) and Uzbekistan (7 measures).
Depending on the effect upon export from the states-members of CU and CEA, the applied measures may be subdivided on trade barriers, potential trade barriers as well as restrictive measures.
In this way, 75 measures may be referred to trade barriers practically and negatively affecting export from the states-members of CU.
Antidumping and special protective measures (in cases where the imposed duties affect goods supply from the states-members of CU and CEA), bans and restrictions within SPS and TBT measures, discriminative excises and levies, quantitative restrictions as well as other administrative measures refer thereto[2].
The biggest number of measures in the metallurgy sphere classified as trade barriers refer to the Russian Federation and then to the Republic of Belarus.
The antidumping, compensation and special protective investigations conducted by third countries are considered as potential trade barriers in case if the preliminary duty is not imposed within the investigation period. This category also comprises the threats of introduction by third countries of bans and technical barriers as well as other non-tariff measures the matter on imposure of which is considered by third countries and which currently don’t affect however may affect supplies to the markets of these countries from the states-members of CU in future. 23 measures are currently treated as potential trade barriers.
The restrictive measures comprise the measures which direct negative impact upon export from the states-members of CU hasn’t yet been found as well as the measures of third countries relating to the products supply of which from the states-members of CU are either currently absent or insignificant. 30 measures relate to this category.
Table 14. Тrade barriers applied at the markets of third countries in respect of the metallurgy production of the states-members of CU and CEA in 2014
No. |
The country at the territory of which this measure is applied |
Measure description |
1 |
Azerbaijan |
Application of elevated excise rate to a range of imported products. |
2 |
Argentina |
From February 1, 2012 any product may be imported to Argentina only after receipt of non-automatic license. License issue may be linked to assumption of obligations on voluntary volume or export cost limitation, investment to Argentina’s economy and on other limitations from the exporter. |
3 |
Argentina |
From March 2011 the unpublicized rule is applied in Argentina according to which the major importers shall present the detailed programme compensating for import with export supplies in the Entry Summary Declaration. In present the companies intending to import finished products and spare parts to the country shall sign the agreement on mandatory export of Argentina products to the certain amount with the government. |
6 |
EU |
Requirements to marking and packing of nickel containing products. |
8 |
EU |
The antidumping measure relating to ferrosilicon from the Russian Federation. Validity term of the measure terminates in 2019. |
26 |
Turkmenistan1 |
Application of elevated excise rate to a range of imported products.
|
29 |
Uzbekistan |
Application of elevated excise rate to a wide range of imported products.
|
Source: Report of ECE for 2014
Table 15. Potential trade barriers identified at the markets of third countries in 2014
The country at the territory of which this measure is applied |
Measure description |
EU |
A possibility to set more stringent rules of filling in and documents issue conditions within import of the product being the subject of import surveillance within the special protective investigation up to the possibility to set abridged validity terms for import documents and determine the conditions for cancellation thereof. |
Ukraine |
Application of special sanctions in case of violation of Ukrainian legislation relating to foreign economic activity (the regime of individual licensing, temporary suspension of foreign economic activity) in accordance with the article 37 of the Law of Ukraine “On foreign economic activity”. |
Source: Report of ECE for 2014.
Table 16. Restrictive measures for the metallurgy products in 2014 applied at the markets of third countries
The country at the territory of which this measure is applied |
Measure description |
India |
Mandatory certification of certain metal product types. |
Moldova |
Duties for products import which use pollutes environment. The list of imported products consists of 180 denominations of FEACN codes. |
Uzbekistan |
Consumer’s credit is granted to those organizations which sell the products produced in Uzbekistan. |
Uzbekistan |
The permission for conversion of the funds received from ticket sale in the local currency at the territory of Uzbekistan is not granted. |
Uzbekistan |
The procedure of national currency conversion to hard currency is delayed for the period from 3 months and more. |
Uzbekistan |
The determined list of imported products shall be sold within one year after customs registration. |
Source: Report of ECE for 2014
Industry Barriers to Entry to Russian market
There are also industry barriers to entry to the Russian market the major economy in EEU within development of ore mining and smelting complex of Kazakhstan. In this way, ferrous metallurgy of Russia has an essential role in the world economy significantly influencing all key industry spheres and construction. Russia takes the 5th place in the world on steel production (yielding only to China, Japan, India and USA), 2nd place on steel pipes production (yielding to China), 3rd place on metal products export (yielding to China and Japan), 5th place on saleable iron ore production (after China, Australia, Brazil and India).
In ferrous metallurgy ten major vertically and horizontally integrated holdings comprising the enterprises of all technological production chain from coal and ore extraction and their processing to infrastructure subdivisions, scrap metal processing, energy, ports and railroad transport have formed that enables to minimize the risk both within the internal and external markets, optimize investment policy and provide own raw material safety.
About 90% of rolled ferrous metal products manufactured in Russia accounts in aggregate for the holdings. The companies are actively developing own services on metal processing and finished metal products trading at various regions country and world wide as well as build electric furnace melting plants in Russian regions in order to reach the consumer and increase competitive advantage due to reduction of transportation costs.
The measures undertaken by the Government of the Russian Federation have contributed to internal market protection, modernization (due to cancellation of the import duties for the main kinds of advanced technology equipment), reduction of a range of restrictions applied at the external markets in respect of Russian metal products.
The primary competitive advantages of Russian ferrous metallurgy are: own developed iron ore, fuel and energy sector, modern capacities on cast iron, steel smelting, metal product manufacture; formed vertically integrated structures competitive at the external markets.
The priority objectives of the Ferrous metallurgy development strategy of the Russian Federation to 2030 will comprise stimulation of metal consuming sectors development as well as promotion of investment processes in the industry also due to creation of extra opportunities for its participants and resolution of tasks which can’t be resolved solely by business (for instance, development of required infrastructure within the state and private partnership, protection of Russian manufacturers at the internal market as well as support of Russian exporters abroad).
The strategy provides for compliance with the following conditions as of required ones:
-expedient overcoming the financial crisis and its consequences guaranteeing macroeconomic stability and improvement of legal and regulatory framework of the economy creating the basis for investment inflow;
-increase of the capacity of the internal metal product market via development of the major metal consuming economy sectors primarily – of machine building complex (including MIC) and construction industry;
-increase of the scopes of geological exploration works to identify the deposits of the ore containing iron, chrome and manganese within implementation of “The long-term state programme on mineral resource study and mineral raw material base recovery in Russia on a basis of consumption balance and mineral raw material recovery” also due to parity the federal budget’s and private investors’ funds us;
-consolidation of the role of the state in protection of the Russian metal producers’ interests at the world markets in particular – assistance on behalf of trade delegations.
In this way, improvement of the legal and regulatory framework comprising the following is provided for:
-elaboration and adoption of the regulatory documents providing for the obligation on exclusively national metal products supplies for public use;
-enforcement at the legislative level of compliance with the metal product service period standards (for pipes, metal intensive structures, plants, rolling equipment);
-creation at the legislative level of stimulating conditions for development of the intensive metal consuming sectors of machine building in order to increase the level of metal products use at the internal market;
-optimization of the customs administration procedures;
-stimulation of resource saving and ecologic technologies implementation at the metallurgic industry’s enterprises.
Support of the national metal producers at the internal and international metal products markets suggests:
-guarantee of protection of the individual segments at the internal metal product market (with due account for the interests of consumers, actual and potential level of access of foreign suppliers to every segment, availability of the relevant legislative and regulatory legal framework);
-implementation of the active policy at the international organization in order to guarantee interests of national metallurgy (The Committee on Steel of OECD; WSA etc.);
-intensification of the integration processes in the relationships with countries -partners.
4. List of Potential Opportunities for Business Initiatives. Value Chain Structure.
The gaps existing in the value chain for ferrous metallurgy products
Assessment of the ferrous metallurgy process stages in Kazakhstan performed on basis of the information provided by the Committee on Statistics of MNE of RK “Resources and use of certain kinds of products (goods) and raw material in the Republic of Kazakhstan” over the wide range of ORSI products has revealed that at the initial process stages (cast iron and steel production) the high level of satisfaction of the national economy sectors with this product is observed. Nevertheless, at the stage of production of various types of rolled metal products, regardless of the wide range of manufactured products, the issue on insufficient satisfaction of demand of the national economy sectors is observed.
In this way, on the basis, for the ferrous metallurgy products relating to the process stage “Steel production” high level of dependence of Kazakhstan (84,3%) is observed only for the 1st group of CPEA products:
Table 17. Gaps (blank spaces) in the value chain of ferrous metallurgy product
1 stage |
2 stage |
3 stage |
4 stage |
5 stage |
6 stage |
Ore extraction |
Processing |
Cast iron production |
Steel production |
Rolled metal product manufacture |
Finished metal products manufacture |
Iron ore |
Iron concentrate |
Granules and powder of steel making iron, mirror iron, steel (CPEA 241014) |
Non-alloy steel in slabs or other original forms and semifinished carbon steel products (non-alloyed) (CPEA 241021) |
Hot rolled flat products of non-alloyed steel without further processing with a width not less than 600 mm (CPEA 241031) |
Bridges and bridge elements of ferrous metals (CPEA 251121) |
|
|
Non-alloyed steel making iron containing more than % mass of silicon |
Stainless steel in slabs or other original forms and semifinished stainless steel products (CPEA 241022) |
Cold rolled flat products of non-alloyed steel without further processing with a width of not less 600 mm (CPEA 241041) |
Blocks and lattice towers of ferrous metals (CPEA 251122) |
|
|
Non-alloyed steel making iron containing more than 0,5 % mass of phosphorus in billets, lumps and other original forms |
Alloyed steel in slabs or other original forms and semifinished alloyed steel products (CPEA 241023) |
Flat products of non-alloyed steel with a width of not less 600 mm iron clad with galvanic or other coating (CPEA 241051)
|
Other structures, structure parts, slabs, bars, corners, profiles and similar products of ferrous metals or aluminum (CPEA 251123) |
Source: compiled by Association of Mining and Metallurgical Enterprises
Table 18. List of potential opportunities for business initiatives
No. |
Products |
Approximate market capacity |
|
tonnes |
Th. USD |
||
1 |
Stainless steel in slabs or other original forms and semifinished stainless steel products ( CPEA 241022). |
|
|
1.1. |
Other types of rolled or continuously casted stainless steel of square cross section (72189911) |
11,4
|
9,7
|
1.2. |
Other types of rolled or continuously casted stainless steel (72189920). |
2150,9 |
1259,8 |
7 |
Cold rolled steel flat products with a width of not less than 600 mm without coating ( CPEA 243210) |
|
|
7.1. |
Iron or non-alloyed steel flat products with a width of not less than 600 mm with iron clad without coating, further processing except for cold rolling containing less than 0,25 of mass % of carbon of electrical sheet steel ( CPEA 721123) |
9,9
|
7,7
|
7.2. |
Iron or non-alloyed steel flat products with a width of not less than 600 mm with iron clad without coating, further processing except for cold rolling containing less than 0,25 of mass % of carbon not o felectrical sheet steel, thickness =>0.35 mm ( CPEA 721133) |
32,0
|
49,8
|
7.3. |
Iron or non-alloyed steel flat products with a width of not less than 600 mm with iron clad without galvanic or other coating, perforated ( CPEA 721190) |
2,7 |
10,6 |
Source: compiled by Association of Mining and Metallurgical Enterprises
The Causes for the Gaps Existing in Value Chain for ORSI Products
The main causes for the gaps existing in the value chain of ORSI products are:
1) Lack of well established state programme on the value chain development in ORSI of RK within the first State programme of industrial innovative development of RK for 2010-2014 (State program of Accelerated Industrial and Innovative Development of the Republic of Kazakhstan);
2) Lack of experience in detection of the value chain gaps not enabling to including the relevant measures on their development within the first State program of Accelerated Industrial and Innovative Development of the Republic of Kazakhstan;
3) The priority directions in the value chain development as well as in other processing industry sectors of Kazakhstan have been identified not with the help of scientifically based economic methods but intuitively thus not enabling to develop the required value chains within the first State program of Accelerated Industrial and Innovative Development of the Republic of Kazakhstan which are indeed in high demand within the Kazakhstan’s national economy sectors;
4) The State program of Accelerated Industrial and Innovative Development of the Republic of Kazakhstan was elaborated before adoption of the regulation enactments governing the matters on state industrial and innovative activity support (Land Code of the Republic of Kazakhstan “On state industrial and innovative activity support”; comprehensive enterprise support programmes “Performance 2020”; rehabilitation programme, “Business road map 2020”) thus not enabling to stimulate the processes of value chain development by the medium and small business enterprises;
5) Within the Industrialization map for 2020-2014 the raw material orientation of sold investment projects is observed in the ORSI sphere. Only 14 projects totally amounting to 54493 mln. tenge or 8,6% of the total scope of implemented projects finance in the ORSI sphere accounted for the projects on high value added products manufacture of the total number of implemented projects. Similar tendency is observed within the second Industrialization map for 2015-2019.
6) Impracticality for the foreign investors to develop value chain in Kazakhstan especially in ferrous metallurgy of the country due to unfavourable world market condition for the ORSI products, high amount of profit from ferrous and non-ferrous metal ores rather than from the high value added product sale.
5. Industry’s Strength
Ore mining and smelting industry is one of the most important industries which define economic, social and technological development of the Republic of Kazakhstan alongside with oil and gas industry and energy sector. The long-term forecasting as well as identification of innovative potential of technological directions are the priority objectives to successfully plan development of this industry.
Ore mining and smelting industry of Kazakhstan has a range of favourable conditions for the industry to successfully develop in the long-term prospects from which the following may be distinguished:
- transport and geographical location of the enterprises and access to the world markets (proximity of the Republic to South-Eastern Asia and Russia, major enterprises-exporters also have multidivisional access to the EU and USA markets);
- availability of energy resources and own raw material basis represented by the ferrous and non-ferrous metal ores, metallurgical coal, rare, rare-earth, radioactive and noble metals;
-availability of powerful production base and developed infrastructure of the enterprises with specialized scientific and research centers (factory laboratories);
- external investment attractiveness of the industry;
-existing raw material orientation of the economy if not process stages are available.
Table 19. Strength of legislation and government regulation
-availability of a rather comprehensive national legislation in various spheres; -availability of approved fundamental strategic and programme documents; -availability of various measures of government support of the ORSI business entities; -availability of necessary legal framework and infrastructure to develop the internal processing and manufacture of products with high value added in metallurgy. |
Source: compiled by Association of Mining and Metallurgical Enterprises
Table 20. Strength of ferrous metallurgy
-strategic role of ferrous metallurgy in achievement of GDP volume; -principal part of exported products corresponds to the quality requirements set by the consumers; --globalization of ore mining and metallurgy industry of the Republic (ARselor Mittal, Kazakhmys, ENRC, Kazzinc etc.) and its compliance with the level of high industrial culture; -defining role of metallurgy in the Republic’s economy; -high demand for ferrous and non-ferrous metals in the long-term prospects; -complexity of the mineral resource ores; -overall content of mineral components of the deposits; -significant demand for metal and metal products at the external markets; -development of related national economic sectors requiring metals (machine building, construction, railroad transport, energy etc); -possibility to create new enterprises to produce products with high added value on basis of the manufactured basic and rare metals; -availability of own mineral and raw material base (ores of ferrous, rare, rare-earth and radioactive metals etc); -availability of the developed production infrastructure (mines, large mining and reefing plants, metallurgic enterprises including full cycle ones, railroad transport, electric networks); -availability of industry scientific centers, institutes, engineering national and university laboratories, enterprise’s research centers; -wide range of produced metals including rare and rare earth ones; -availability of the national scientific and technical developments to organize production on advanced and comprehensive raw material processing; -presence of leading companies on metal extraction and production with an access to the world markets; -availability of competitive technologies to extract metals deficient at the world market; -availability of the deposits having potential for development. |
Source: compiled by Association of Mining and Metallurgical Enterprises
[1]Source | http://www.infogeo.ru
[2]Source www.eurasiancommission.org/.
Review on ferrous metallurgy (pipes and fittings)
1. Introduction.
Mining and metallurgical industry – is a leading sector of the national economy of Kazakhstan, which accounts for 15.2% of total industrial production. A lot of mining and metallurgical production is town-forming, and therefore the development of MMC – is the development of cities, jobs for more than 200 thou. people.
Mining and metallurgical complex encompasses various activities ranging from geological exploration to production of finished goods and its promotion, both at the domestic and foreign markets, that’s why several short reviews are prepared.
The first part of this review is a description of Kazakhstan’s ferrous metallurgy industry structure, and then the domestic market for the production of pipes and fittings and potential markets are considered, the key players and their market shares, barriers and limitations are outlined and a list of potential opportunities for entrepreneurial initiatives is provided.
1.1. Sectoral structure.
The volume of production of metallurgical industry in Kazakhstan amounted to 1915.250 mln. tenge in current prices in 2014 or 122% compared to 2010 (1569.969 mln. tenge).
In the overall structure of the industrial production in Kazakhstan, the share of metallurgical industry was 10.4% at the end of 2014, in the structure of the manufacturing industry (5872 834 mln. tenge) – 32.6%.
The volume of production of products of ferrous metallurgy amounted to 765.441 billion tenge in current prices in 2014 or 86.68% compared to 2010.
Table 1. The volume of production of products of ferrous metallurgy in terms of value for 2010-2014., mln. tenge
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010 |
Ferrous metallurgy |
883001 |
785432 |
1964416 |
1752059 |
765 441 |
86.68 |
Source: According to the MNE RK Statistics Committee
In the overall structure of industrial production in the Republic of Kazakhstan, the share of ferrous metallurgy accounted for 4.2% at the end of 2014, in the structure of the metallurgical industry – 39.8%.
In the production of ferrous metallurgy the growth rate of production of pipes of different diameters, sections seamless steel increased in volume terms to 532.9% over 2010-2014.
Table 1. The volume of pipe production in volume terms over the 2010-2014
2010 |
2011 |
2012 |
2013 |
2014. |
2014/2010, % |
|
Pipes of different diameters, seamless steel sections, tons |
158303 |
188114 |
164085 |
190989 |
189065 |
532,9 |
Source: According to the MNE RK Statistics Committee
During 2014 MMC RK invited 566.8 billion tenge of investments in fixed assets, or 168% compared to 2010. During 2014 the volume of own funds of enterprises in the fixed assets amounted to 368.4 billion tenge (or 64.99% of the total investment in MMC), bank loans – 26.4 billion tenge (or 4.67%) and other investments – 171.9 billion tenge (or 30.33%).
The largest share in the total volume of investments into MMC RK accounted for metallurgy – 52.57% or 299.1 billion tenge; mining of metal ores – 47.23% (or 267.68 billion tenge). The share of production of pipes in the total volume of investments in MMC was 0.12%.
1) Iron ore mining; 2) Mining of non-ferrous ores; 2) Production of iron, steel and ferroalloys; 4) Production of pipes, pipelines, sections, fittings of steel; 5) Production of other steel products by primary treatment; 6) Production of basic precious and non-ferrous metals
Figure 1. Structure of investments invited in the fixed assets of MMC in 2014.,%
Source: According to the MNE RK Statistics Committee
In 2014 the share of investment in fixed assets for the production of tubes, pipes, sections, fittings made of steel in metallurgy – was 0.18%, or (0.544 billion tenge). It should be noted that this tendency was also observed in 2010.
Evaluating indicators of labour of the MMC of Kazakhstan for 2010-2014, it should be noted that the actual number of employees increased from 678.0 thou. people in 2010 to 696.4 thou. people in 2014, or for 2.7% in the industry as a whole.
The opposite tendency was observed in the manufacturing industry of Kazakhstan. The actual number of employees decreased from 360.7 thou. people in 2010 to 333.7 thou. people in 2014, or 92.5%.
However, in 2010-2014 the list-based and actual number for 2010-2014 grew in the production of tubes, pipes, sections and fittings made of steel, and in the production of other steel products by primary treatment.
Kazakhstan export of manufactured MMC goods into the Customs Union countries in 2014 amounted to 1209 billion USD, or 45.3% of the total manufactured export of RK in the Customs Union countries.
The structure of export of manufactured products included: natural uranium and its compounds; other flat-rolled products of iron or non-alloyed steel of width of 600 mm or more, galvanized by other means; ferrosilicon manganese; other pipes – casing, tubing and drilling for drilling of oil or gas wells, ferrous.
Table 1. The structure of Kazakhstan export of manufactured products of MMC in the Customs Union countries in 2014
|
2014 * |
||
mln. USD |
in % to the volume of the exports of manufactured goods |
2014 in % to 2013 |
|
Manufactured goods – total RK |
2 666.9 |
100.0 |
83.1 |
of them: |
|
|
|
Natural uranium and its compounds; |
217.3 |
8.1 |
66.6 |
Other flat-rolled products of iron or non-alloyed steel of width of 600 mm or more, galvanized by other means |
198.6 |
7.4 |
83.6 |
Ferrosilicon manganese |
94.1 |
3.5 |
99.7 |
Flat-rolled products of iron or non-alloyed steel of width of 600 mm or more, hot-rolled, not clad, plated or coated |
79.4 |
3.0 |
83.7 |
Ferrochrome silicon |
68.4 |
2.6 |
131.7 |
Other pipes – casing, tubing and drilling for drilling of oil or gas wells, of ferrous |
58.1 |
2.2 |
76.5 |
Source: According to the MNE RK Statistics Committee
The structure of export of finished products of MMC RK in the Customs Union countries in 2014 included other pipes – casing, tubing and drilling for drilling of oil or gas wells, ferrous (other than iron cast); as well as other fitting for pipes, boilers, tanks, vats or the like, which were exported in the amount of $ 87.8 mln. USD, or 10.3% of the total export of the RK finished products. It was exported for nearly ¼ less of finished products of MMC in 2014 compared with the year 2013.
Таблица 1.
Table 1. |
|
2014 г. |
||
mln. USD |
in % to the volume of the export of manufactured goods |
2014 in % to 2013 |
|
Finished products (out of the total export of manufactured goods of RK) |
848.7 |
100.0 |
68.6 |
of them: |
|
|
|
Other pipes – casing, tubing and drilling for drilling of oil or gas wells, of ferrous (other than iron cast) |
58.1 |
6.8 |
76.5 |
Other fitting for pipes, boilers, tanks, vats or the like |
29.7 |
3.5 |
73.4 |
Source: According to the MNE RK Statistics Committee
1.2. Home market capacity.
The formation of the product market capacity of MMC and its growth rate was influenced by both external (changes at the world market for the products of the industry), as well as internal factors, determined by the prospect of the development of individual domestic enterprises and domestic industries.
In 2014 the highest level of market capacity of the production of ferrous metallurgy was observed in the production of pipes casing and drilling for drilling of oil and gas wells, seamless, steel – market capacity was 216 939.9 tons, or increased by 45.29% compared to 2010;
The highest rates of growth of market capacity for the 2010-2014 were typical for the following steel products:
Pipes and tubes of non-circular cross section and hollow sections of steel – the rate of market capacity growth left 736%;
Pipes for oil and gas pipelines welded, the external diameter of which doesn’t exceed 406.4 mm, steel – 622.6%;
Pipes and tubes of non-circular cross section, welded, the external diameter of which doesn’t exceed 406.4 mm, steel – 218.10%;
Fittings for pipes of steel, not cast – 176.02%.
However, the crisis situation in the world economy, the decline in business activity in some steel-consuming industries of the national economy, decline of demand for the products of MMC industries in 2010-2014, led to a sharp narrowing of the market capacity for the following steel products:
Pipes of large and small diameters; hollow sections of cast iron – 44.1%;
Pipes for oil and gas pipelines seamless, steel – 47%.
Таблица 2.
Table 2. |
Pipes for oil and gas pipelines seamless, steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
85 451.28 |
40 193.90 |
47.04 |
Production |
70 593.00 |
42 250.00 |
59.85 |
Import |
22411.18392 |
45 596.80 |
203.46 |
Consumption |
85 451.28 |
40 193.90 |
47.04 |
Export |
7 552.90 |
47 652.90 |
6.31 times |
Pipes casing and drilling for drilling of oil or gas wells seamless, steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
149 317.50 |
216 939.80 |
145.29 |
Production |
76 469.00 |
109 123.00 |
142.70 |
Import |
142 052.80 |
208 706.20 |
146.92 |
Consumption |
149 317.50 |
216 939.80 |
145.29 |
Export |
69 204.30 |
100 889.30 |
145.78 |
Other tubes and pipes of circular cross section steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
78 778.10 |
97 518.70 |
123.79 |
Production |
11 861.00 |
6 364.00 |
53.65 |
Import |
76 275.40 |
97 731.30 |
128.13 |
Consumption |
78 778.10 |
97 518.70 |
123.79 |
Export |
9 358.30 |
6 576.60 |
70.28 |
Pipes and tubes of non-circular cross section and hollow sections of steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
602.30 |
44 336.50 |
73.61 times |
Production |
0 |
26 916.00 |
0 |
Import |
2 057.50 |
19 624.40 |
953.80 |
Consumption |
602.30 |
44 336.50 |
73.61 times |
Export |
1 455.20 |
2 203.90 |
151.45 |
Pipes for oil and gas pipelines welded, the external diameter of which exceeds 406.4 mm, steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
70 474.20 |
140 963.00 |
200.02 |
Production |
0 |
14 717.00 |
0 |
Import |
71 129.20 |
127 720.30 |
179.56 |
Consumption |
70 474.20 |
140 963.00 |
200.02 |
Export |
655 |
1 474.30 |
225.08 |
Other tubes and pipes of circular cross section, welded, the external diameter of which exceeds 406.4 mm, steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
47 812.10 |
39 917.90 |
83.49 |
Production |
9 |
235 |
in 26.11 times |
Import |
47 830.30 |
39 683.60 |
82.97 |
Consumption |
47 812.10 |
39 917.90 |
83.49 |
Export |
27.2 |
0.7 |
2.57 |
Pipes for oil and gas pipelines welded, the external diameter of which doesn’t exceed 406.4 mm, steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
4 363.80 |
27 169.20 |
622.60 |
Production |
4 263.00 |
9 431.00 |
221.23 |
Import |
6 068.50 |
18 161.70 |
299.28 |
Consumption |
4 363.80 |
27 169.20 |
622.60 |
Export |
5 967.70 |
423.5 |
7.10 |
Other tubes and pipes of circular cross section, welded, the external diameter of which doesn’t exceed 406.4 mm, steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
142 196.80 |
141 333.40 |
99.39 |
Production |
76 864.00 |
88 484.00 |
115.12 |
Import |
72 027.30 |
65 514.40 |
90.96 |
Consumption |
142 196.80 |
141 333.40 |
99.39 |
Export |
6 694.50 |
12 665.00 |
189.19 |
Tubes and pipes of non-circular cross section, welded, the external diameter of which doesn’t exceed 406.4 mm, steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
23 480.90 |
51 211.10 |
218.10 |
Production |
0 |
21 693.00 |
0 |
Import |
23 671.80 |
29 519.30 |
124.70 |
Consumption |
23 480.90 |
51 211.10 |
218.10 |
Export |
190.9 |
1.2 |
0.63 |
Fittings for pipes of steel, not cast |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
13 774.70 |
24 246.20 |
176.02 |
Production |
440 |
1 135.00 |
257.95 |
Import |
13 449.20 |
23 794.70 |
176.92 |
Consumption |
13 774.70 |
24 246.20 |
176.02 |
Export |
114.5 |
683.5 |
596.94 |
Source: According to the MNE RK Statistics Committee
1.3. Potential markets of sales for steel products
1. Pipes for oil and gas pipelines seamless, steel
The sales of pipes for oil and gas pipelines seamless, steel amounted to 41193.9 tonnes at the domestic market of Kazakhstan in 2014, or decreased and amounted to 47.0% compared to 2010. 45.8% of products capacity was sold at the domestic market, 54.2% – was aimed at export.
Таблица 3.
Table 3. |
2010 |
Sp. gr,% |
2014 |
Sp. gr,% |
2014/2010, % |
|
Sales at the RK market |
85 451.3 |
91.9 |
40 193.9 |
45.8 |
47.0 |
Sales to the outer markets |
7 552.9 |
8.1 |
47 652.9 |
54.2 |
6.3 times |
Source: According to the MNE RK Statistics Committee
However, an untoward condition was observed at the global market of pipes for oil and gas pipelines seamless, steel in 2015. Thus, China produced 28.2 mln. tons of seamless steel pipes in 2014. Production increased by 9% compared with the year 2013. However, due to a low domestic demand, the main supply was aimed at foreign markets.
At the same time, the diminution of demand by 30% is expected at the world market of seamless pipes, according to the experts of Japanese steel company NipponSteel & SumitomoMetal. Prices for oil fell to a six-year minimum in March 2015, the leading oil companies have reconsidered their investment plans in the direction of reduction, cancelling of the planned contracts for the supply of pipes.
Consumption in European countries is being reduced; its own production is actively developing in Russia and Turkey. Production capacity in Russia is abundant. Thus, when the level of use of production capacity in the industry was about 75% in 2007, it was already 30% in 2011-2014. These factors lead to the outcome that it becomes more difficult to sell pipes.
Conditions are not satisfactory for Russian and Kazakh producers at the moment. They are pressured by European duties, the crisis of the world economy.
Accordingly, Kazakhstan’s domestic market should become a potential market of pipes for oil and gas pipelines seamless steel, namely, the participation of the sectoral enterprises in the implementation of the “Package plan for the development of oil and gas sector for the years 2014-2018”, approved by the enactment № 567 (hereinafter the Plan) of the Government of the Republic of Kazakhstan dated May 28, 2014, where under the direction of “Development of oil and gas industry of the Republic of Kazakhstan” there will be the growth of the level of gasification in Almaty city, Akmola, Aktobe, Almaty, Atyrau, West Kazakhstan, Kostanay, Mangystau, Jambyl regions financed from the republican budget within the scope of the budget program 024 “Target transfers to regional budgets, budgets of the cities of Astana and Almaty on the development of the gas transportation system”. The realization of projects on construction of oil pipeline Kazakhstan – China until 2018 is within the scope of “Systematic implementation of transportation projects” of the Plan.
It is possible to expand the outer markets of this group of goods by the following products:
1) pipes for oil or gas pipelines of rust-resisting steel, the external diameter of which doesn’t exceed 168.3 mm: from the CIS countries – it is possible to expand the existing market of Azerbaijan to 4500 tons (in 2014, 4319.5 tons were exported for 840.4 thou. USD); from other countries of the world – existing market in Iran up to 7000 tons (6775.5 tons for 1340.1 thou. USD); in Georgia up to 90 tons (in 2014, 82.0 tons were exported for 12.3 thou. USD); in Turkey up to 50 tons (in 2014, 40.8 tons were exported for 8.8 thou. USD); in Italy up to 5.0 tons (in 2014, 0.2 tons were exported for 100.0 thou. USD);
2) other pipes for oil and gas pipelines of rust-resisting steel with the external diameter exceeding 168.3 mm but not exceeding 406.4 mm: from the CIS countries – it is proposed to expand the existing market of Azerbaijan up to 2000 tons (in 2014, 1600 tons were exported for 320.0 thou. USD); from other countries of the world – a market in Iran up to 550 tons (in 2014, 475.0 tons were exported for 95.0 thou. USD);
3) other pipes for oil or gas pipelines of rust-resisting steel with external diameter more than 406.4 mm: from the CIS countries – expansion of the existing markets in Azerbaijan up to 1800 tons (in 2014, 1500 tones were exported for 255.0 thou. USD), in Uzbekistan up to 3000 tons (in 2014, 2562.2 tons were exported for 410.0 thou. USD); from other countries of the world – in Iran up to 5000 tons (in 2014, 4723.5 tons were exported for 776.0 thou. USD);
4) Pipes for oil and gas pipelines the external diameter of which exceeds 406.4mm, other: from the CIS countries – expansion of existing markets in Azerbaijan up to 230 tons (in 2014, 180 tons were exported for 43.0 thou. USD), from other countries of the world – in Iran up to 950 tons (in 2014, 662.2 tons were exported for 114.4 thou. USD); in Italy up to 5.0 tons (in 2014, 0.6 tons were exported for 16.5 thou. USD).
5) Other pipes for oil or gas pipelines, the external diameter of which exceeds 168.3mm, but not more than 406.4 mm: the expansion of existing markets in the UK up to 10.0 tons (in 2014, 4.0 tons were exported for 15.1 thou. USD); in Italy up to 15.0 tons (in 2014, 9.4 tons were exported for 70.4 thou. USD).
The basic preconditions for the expansion of the market of pipes for oil or gas pipelines will be characterized by the following parameters. For example, 60-70% of economy in Azerbaijan depends on the oil and gas industry. The realization of the second stage of “Shah-Deniz” project begins in the country. The presence of Azerbaijan in the international energy markets will increase. In this regard, the gas export strategy of the country is not just the subject of the commercial interests of the State Oil Company of Azerbaijan (SOCAR), but also an important push factor of economic development of Azerbaijan. Particular attention is paid to the Trans-Anatolian pipeline. Thus, on October 27, 2011 an agreement was signed in the Turkish city of Izmir about the sale of gas since 2017 from Azerbaijan field “Shah Deniz-2” to Turkey, as well as an agreement on the transit of gas from “Shah-Deniz-2” through Turkey in 2017- 2042’s through the networks of the Turkish state pipeline company Botas. To export the larger volume of gas (from 50 billion m3), that Azerbaijan intends to recover by 2025, SOCAR and the Turkish company Botas are going to build a new gas pipeline on the territory of Turkey. These agreements constitute the full package of documents for the transportation of Azerbaijan gas to Turkey’s border with Greece and Turkey with Bulgaria. This project has been named Trans-Anatolian Gas Pipeline (TAG).
In addition, Azerbaijan is currently diversifying its export delivery and possible re-export of gas while maintaining deliveries to Russia. These circumstances may extend Kazakhstan markets of pipes for oil or gas pipelines, as the ferrous metallurgy of Azerbaijan does not produce them.
Iran, according to experts is the fourth largest oil reserve in the world and is one of the ten largest producers in the world. The state has a very high potential to increase oil and gas recovery. The most basic factor that inhibits recovery of the above-mentioned natural resources is the USA and European sanctions. These limitations have led to the situation, when the volumes of oil and gas production have significantly decreased (for example, the recovery of oil decreased by 11 mln. tons in 2013). In addition, the biggest investment projects in the oil and gas industry have been suspended in the state. In 2013, a meeting was held between the Iranian government and the representatives of five countries – permanent members of the UN Security Council structure – Russia, France, the USA, China and Great Britain. The result of these negotiations was the “Joint Plan of Action”, after the publication of which the situation in the oil and gas industry began to improve significantly. Already during the first six months of 2014, Iran showed a fairly high growth of oil recovery – up to 40 000 tons per day. Experts calculated that by this everyday rate, the total annual production growth could reach up to 200 mln. tons already before 2020. To do this, the infrastructure of oil pipelines must be developed. This fact can also expand Kazakhstan markets of pipes for oil or gas pipelines, as Iran’s ferrous metallurgy is in decline.
At present, the Special safeguard measure relating to seamless tubes, pipes and hollow sections of iron or non-alloyed steel is taken in India. The term of the measure expires in 2017. A special safeguard investigation in respect of seamless and welded pipes is taken in Columbia.
2. Pipes casing and drilling for drilling of oil or gas wells, seamless, steel
Sales at the Kazakhstan market of pipes casing and drilling for drilling of oil and gas wells, seamless, steel amounted to 216 939.8 tons in 2014, 145.3% compared with 2010. 68.3% of the production was sold on the domestic market of Kazakhstan, 31.7% – was directed for export.
One of the potential markets for pipes casing and drilling for drilling of oil and gas wells, seamless, steel must become Kazakhstan domestic market, the main directions of development of which are described in detail in paragraph “7. Pipes for oil and gas pipelines seamless, steel”.
Таблица 4.
Table 4. |
2010 |
Sp. gr,% |
2014 |
Sp. gr,% |
2014/2010, % |
|
Sales at the RK market |
149 317.5 |
68.3 |
216 939.9 |
68.3 |
145.3 |
Sales to the outer markets |
69 204.3 |
31.7 |
100 889.3 |
31.7 |
145.8 |
Source: According to the MNE RK Statistics Committee
Potential outer markets of pipes casing and drilling for drilling of oil and gas wells, seamless, steel may be the following:
1) Pipes for oil and gas pipelines of rust-resisting steel, the external diameter of which doesn’t exceed 168.3 mm: from the CIS countries – it is possible to expand the existing market in Azerbaijan to 4500 tons (in 2014, 4319.5 tons were exported for 840.4 thou. USD); from other countries of the world – existing market in Iran up to 7300 tons (6775.5 tons for 1340.1 thou. USD); in Georgia up to 100 tons (in 2014, 82.0 tons were exported for 12.3 thou. USD); in Turkey up to 50 tons (in 2014, 40.8 tons were exported for 8.8 thou. USD); in Italy up to 5 tons (in 2014, 0.2 tons were exported for 100.0 thou. USD);
2) Pipes for oil and gas pipelines of rust-resisting steel, other, the external diameter of which exceeds 168.3 mm but does not exceed 406.4 mm: from the CIS countries – it is possible to expand the existing market in Azerbaijan up to 2000 tons (in 2014, 1,600 tons were exported for 320.0 thou. USD); from other countries of the world – in Iran up to 500 tons (in 2014, 475 tons were exported for 95.0 thou. USD);
3) Pipes for oil and gas pipelines of rust-resisting steel, other, the external diameter of which exceeds 406.4 mm: from the CIS countries – it is possible to expand the existing market in Azerbaijan up to 200 tons (in 2014, 180.0 tons were exported for 43.0 thou. USD); from other countries of the world – in Iran up to 700 tons (in 2014, 662.2 tons were exported for 114.4 thou. USD); in Italy up to 5.0 tons (in 2014, 0.6 tons were exported for 16.5 thou. USD);
4) Pipes for oil and gas pipelines, the external diameter of which exceeds 168.3 mm, but does not exceed 406.4 mm, other: from other countries of the world it is possible to expand the existing market in Great Britain up to 5.0 tons (in 2014, 4.0 tons were exported for 15.1 thou. USD); in Italy up to 10 tons (in 2014, 9.4 tons were exported for 70.4 thou. USD);
5) Drilling pipes of rust-resisting steel, steel with a minimum yield limit of 724 MPa or more: from other countries of the world it is possible to expand the existing market in Lithuania up to 85 tons (in 2014, 79.5 tons were exported for 245.58 thou. USD);
6) Drilling pipes of rust-resisting steel, other: it is possible to expand the existing market in Turkey up to 250 tons (in 2014, 192.0 tons were exported for 163.8 thou. USD), and also development of a new market in Canada, where this production is barely exported.
7) Drilling pipes other, steel with a minimum yield limit of 724 MPa or more: from other countries of the world it is possible to expand the existing market of the UAE up to 70 tons (in 2014, 56.7 tons were exported for 198.5 thou. USD);
8) Drilling pipes other, designed to operate in an environment containing hydrogen sulfide (h2s), of steel with a minimum yield limit of 655 MPa or more, with threaded tool joints: from the CIS countries – it is possible to expand the existing market in Turkmenistan up to 12.0 tons (in 2014, 8.2 tons were exported for 367.5 thou. USD); from other countries of the world – expansion of the market in China up to 500 tons (in 2014, 497.0 tons were exported for 1568.6 thou. USD); in Turkey up to 50 tons (in 2014, 44.2 tons were exported for 12.1 thou. USD); in Australia up to 25.0 tons (in 2014, 19.8 tons were exported for 103.8 thou. USD); in Great Britain up to 20 tons (in 2014, 15.7 tons were exported for 144.0 thou. USD);
9) Tubes, pipes and hollow sections, seamless, ferrous (other than cast iron): other, of rust-resisting steel, the external diameter of which doesn’t exceed 406.4 mm: other: from the CIS it is possible to expand the existing markets in Turkmenistan up to 2.0 tons (in 2014, 0.5 tons were exported for 21.0 thou. USD); in Azerbaijan up to 8.0 tons (in 2014, 5.8 tons were exported for 73.7 thou. USD); from other countries of the world – in Afghanistan up to 350 tons (in 2014, 300.0 tons were exported for 60.0 thou. USD); as well as the development of new markets of this production in Iran;
10) Drilling pipes for drilling of oil and gas wells, the external diameter of which doesn’t exceed 168.3 mm, pipes casing and tubing steel with a minimum yield limit of 758 MPa and more: expansion of the market in Germany up to 50 tons (in 2014, 34.0 tons were exported for 48.0 thou. USD);
11) Other pipes, the external diameter of which doesn’t exceed 168.3 mm: expansion of the existing markets in the CIS on account of Azerbaijan up to 12000 (in 2014, 11879.2 tons were exported for 2504.9 thou. USD); in Turkmenistan up to 50 tons (in 2014, 36.5 tons were exported for 11.4 thou. USD); Kirghizia up to 20.0 tons (in 2014, 15.0 tons were exported for 8.6 thou. USD).
In other countries of the world it is possible to expand the market in Iran up to 3200 tons (in 2014, 2950.0 tons were exported for 413.0 thou. USD); in the USA up to 1200 tons (in 2014, 1044.1 tons were exported for 1328.5 thou. USD), and also the development of new markets in Italy, the Netherlands, Romania and Turkey;
12) Pipes casing and tubing for use in the medium, hydrogen sulphide (h2s), made of steel with a minimum yield limit of 517 MPa and more, with highly hermetic threaded connections 1) outer diameter > 168.3mm but <= 406.4mm, other: possible expansion of the existing market of Ukraine up to 200 tons (in 2014, 159.9 tons were exported for 378.3 thou. USD);
13) Tubes, pipes and hollow sections, seamless, ferrous (other than cast iron): the external diameter of which exceeds 168.3 mm, but not more than 406.4 mm: other: it is possible to expand the existing market in Azerbaijan up to 300 tons (in 2014, 260 tons were exported for 59.8 thou. USD); from other countries of the world – in the USA up to 350 tons (in 2014 году, 334.7 tons were exported for 423.3 thou. USD);
14) Pipes for oil and gas pipelines, pipes casing with an external diameter 508 mm and more: from the countries of the CIS it is possible to expand the existing market in Azerbaijan up to 120 tons (in 2014, 99.8 tons were exported for 22.9 thou. USD);
15) Pipes for oil and gas pipelines with an external diameter more than 406.4 mm, but less than 508 mm: from the countries of the CIS it is possible to expand the existing market in Azerbaijan up to 4200 tons (in 2014, 3950 tons were exported for 553.0 thou. USD).
Terms of the market entry to the outer and, most importantly, the large market of Azerbaijan, Turkey, Iran to sale pipes casing and drilling for drilling of oil and gas wells, seamless, steel are described in detail in paragraph “7.Pipes for oil and gas pipelines, seamless, steel”.
In Turkmenistan, practically all gas from this country is absorbed by China. The export of Turkmenistan gas to China is expected to reach 40 billion cu m in 2016, but this figure can reach its peak of 65 billion cu m by 2020.
Per capita energy consumption in China in the coming years will be closer to the level of South Korea, which means that the total consumption will amount to 2 trillion cu m per year. This is a very large figure, since the total gas consumption in the world is 3.3 trillion cu m. Gas from Turkmenistan is exported to China via the Central Asian gas pipeline, the expected through capacity of which should reach 55 billion cu m in 2015. But all four lines of the pipeline will be completed by 2020; the capacity will reach 80 billion cu m per year. Thus, the importance of Turkmen gas supplies to China will only grow, and the active investments of CNPC in the development of recovery in Turkmenistan are associated with this. This fact can also expand Kazakhstan markets of pipes casing and drilling for drilling oil and gas wells, seamless, steel, as Turkmenistan ferrous metallurgy is not developed.
At present, the Special safeguard measure relating to seamless tubes, pipes and hollow sections of iron or non-alloyed, steel is taken in India. The term of the measure expires in 2017. A special safeguard investigation in respect of seamless and welded pipes is taken in Columbia. The Special safeguard measure relating to pipes steel seamless, casing and tubing is in Ukraine. Currently it’s under review in connection with the expiry of the terms of the measure, the measure (in the form of quotas for the supply) is remaining.
3. Sections and angles, cold formed or folded of non-alloyed steel (carbon)
Sales on the Kazakhstan market of sections and angles, cold formed or folded of non-alloyed steel (carbon) amounted to 202436 tons in 2014, or 680% compared with 2010. 95.1% of this production is used at the domestic market at the companies of Kazakhstan, 4.9% – is directed for export.
Таблица 5.
Table 5. |
2010 |
Sp. gr,% |
2014 |
Sp. gr,% |
2014/2010, % |
|
Sales at the RK market |
29 791.0 |
67.4 |
202 436.4 |
95.1 |
6.8 times |
Sales to the outer markets |
14 378.1 |
32.6 |
10 436.7 |
4.9 |
72.6 |
Source: According to the MNE RK Statistics Committee
Based on this, one of the potential markets for sections and angles, cold formed or folded of non-alloyed steel (carbon), will be an internal market of Kazakhstan, whose activities are currently focused on implementation of the priorities of the “State program of infrastructure development “Nurly Zhol” for the years 2015 – 2019” (hereinafter – the Program). “The program aims to create a single economic market of Kazakhstan through the formation of macro-regions of the country with the definition of Almaty, Astana, Aktobe, Shymkent and Oskemen – as hub cities at the national and international level”.
“The development of hubs and macro-regions will be accompanied by a strengthening of the housing infrastructure, modernization of housing and communal services and heat networks, water supply and sewerage. Particular attention will be paid to the development of social infrastructure of the macro-regions (schools, kindergartens, universities).”
“The program is aimed at solving the most pressing problems in the field of education – schools in bad repair, lack of kindergartens, as well as material and technical base of universities.”
“Related activities will be undertaken within the scope of the existing program documents – the State program of development and integration of transport infrastructure up to 2020; State program of industrial-innovative development for 2015 – 2019 (GPIIR), the Program for regional development up to 2020, the State program of education development for 2011 – 2020 and others.
The development of transport and communication, energy, social and housing and communal spheres within the scope of the above programs will cause a significant demand for building materials, industrial products, which will become an important stimulus for the sales of sections and angles, cold-formed, as well as other products of MMC for their implementation at the domestic market of Kazakhstan.”
Potential markets of sections and angles cold formed or folded, of non-alloyed steel may become the outer markets for the following production:
1) Angles, shaped and special sections, without the further treatment apart from cold working or cold finishing, of flat-rolled products, other: it is possible to expand the existing market in the Kyrgyz Republic up to 50 tons (in 2014, 41.9 tons were exported for 18.9 thou. USD), and also the development of new markets of the countries in Central Asia, and the bordering Azerbaijan;
2) Shaped steel, cold-worked or cold-finished, of flat-rolled products: it is possible to expand the existing market in the Kyrgyz Republic up to 500 tons (in 2014, 480.9 tons were exported for 752.1 thou. USD); in Tajikistan up to 500 tons (in 2014, 466.1 tons were exported for 204.9 thou. USD), and also the development of new markets of the countries in Central Asia, and the bordering Azerbaijan;
3) Other sheets, cold-worked or cold-finished, of flat-rolled products: it is possible to expand the existing market in the Kyrgyz Republic up to 10 tons (in 2014, 4.1 tons were exported for 6.6 thou. USD); in Tajikistan up to 120 tons (in 2014, 96.2 tons were exported for 245.6 thou. USD), and also the development of new markets of the countries in Central Asia, and the bordering Azerbaijan;
4) Angles, shaped and special sections, of iron or non-alloyed steel other: it is possible to expand the existing market in Uzbekistan up to 8500 tons (in 2014, 8223.2 tons were exported for 2161.7 thou. USD); in the Kyrgyz Republic up to 50 tons (in 2014, 39.6 tons were exported for 37.5 thou. USD); Turkmenistan up to 800 tons (in 2014, 778.6 tons were exported for 546.7 thou. USD); and also the development of a new market in Tajikistan.
Terms of the market entry to the outer market of sections and angles, cold formed or folded of non-alloyed steel (one of the kinds of rolled products) in Tajikistan, Turkmenistan, Iran, Uzbekistan, Afghanistan will be favorable and are described in the paragraph “5. Flat-rolled products of non-alloyed hot-rolled steel without further treatment with width of not less than 600 mm.”
3. Pipes and tubes other, of circular cross section, the external diameter of which doesn’t exceed 406.4 mm, steel
Sales at the Kazakhstan market of pipes and tubes other, of circular cross section, the external diameter of which doesn’t exceed 406.4 mm amounted to 141333 tons in 2014, or 99.4% compared with 2010. 91.8% of the product capacity was delivered to the domestic market, 8.2% – exported to other countries. Sales of pipes and tubes other, welded, of circular cross section, the external diameter of which doesn’t exceed 406.4 mm, steel is demonstrated in Table 30.
Таблица 6.
Table 6. |
|
2010 |
Sp. gr,% |
2014 |
Sp. gr,% |
2014/2010, % |
Sales at the RK market |
142 196.8 |
95.5 |
141 333.4 |
91.8 |
99.4 |
Sales to the outer markets |
6 694.5 |
4.5 |
12 665.0 |
8.2 |
189.2 |
Source: According to the MNE RK Statistics Committee
The main potential market for this production should remain the internal market of Kazakhstan for the implementation of the State program of infrastructure development “Nurly Zhol” for 2015 – 2019 (hereinafter – the Program), which is described in the paragraph “9. Sections and angles, cold formed or folded of non-alloyed steel (carbon)”. To increase sales of pipes and tubes other, welded, of circular cross section it is necessary to fully expand the share of Kazakhstan in comparison with external suppliers of similar products by the use of the state support measures.
Expansion of the market of pipes and tubes other, welded, of circular cross section, the external diameter of which doesn’t exceed 406.4 mm, steel is also possible through the expansion of existing and development of new outer markets. Thus, potential outer sales markets may be the following:
1) Pipes of square and rectangular cross-section of rust-resisting steel, other: it is possible to expand a small market in Georgia up to 1.0 tons (in 2014, 0.7 tons were exported for 8.2 thou. USD), and also in the countries in Central Asia and bordering countries;
2) Pipes of square and rectangular cross-section with a wall thickness not more than 2 mm, other: it is possible to expand a small market in the Kyrgyz Republic up to 1.0 tons (in 2014, 0.1 tons were exported for 0.3 thou. USD), and also in other countries in Central Asia and bordering countries;
3) Other pipes welded, of non-circular cross-section, not of rust-resisting steel, other: it is possible to expand a small market in Turkmenistan up to 1.0 tons (in 2014, 0.5 tons were exported for 1.5 thou. USD), and also in other countries in Central Asia and bordering countries;
Terms of the market entry to the outer market of pipes and tubes other, welded, of circular cross section, the external diameter of which doesn’t exceed 406.4 mm in Tajikistan, Turkmenistan, Azerbaijan, Iran, Uzbekistan, Afghanistan will be favorable and are described in the paragraph “7. Pipes for oil and gas pipelines seamless steel”.
2. The number of enterprises (players) at the market.
The market capacity with the current number of players at the market of ferrous metallurgy
1. Pipes for oil and gas pipelines seamless, steel (CPEA 242011 production, which includes 2 articles under FEACN codes 730411, 730419).
Market capacity of pipes for oil and gas pipelines seamless, steel in Kazakhstan amounted to 41193.9 tons in 2014, or decreased to 47.0% compared to 2010. 48.1% of this production was produced in the Republic of Kazakhstan and the rest (51.9%) was imported from outside the country.
The main domestic players at this market were the following 11 enterprises:
- LLP “Almaty Pipeline Plant – APP”;
- PF LLP “KspSteеl”;
- LLP “TMK-Kaztrubprom”;
- LLP “Sts Steel Center”;
- LLP “Sonik Company”;
- LLP “Alsib”;
- LLP “Antara Steel”;
- LLP “Metall Prom Group”;
- Branch LLP “Petropavlovsk Pipe Plant” in Almaty;
- LLP “Akras Metal”;
- LLP “Zhambylmetsnab”.
However, their production, including stocks in the warehouses of enterprises, was fully exported from Kazakhstan in 2014. Therefore, domestic enterprises had no share at the domestic market in 2014. The main foreign players at the market of Kazakhstan were Russia – 53.94%, Italy – 15.98%, Germany – 12.10%, China – 9.94% and Azerbaijan – 4.18%. Other countries had less than 1% at the market of Kazakhstan.
Таблица 7.
Table 7. |
|
2014 |
|
tons |
market share, % |
|
Production |
42 250.00 |
|
Export |
47 652.90 |
|
Share of RK players |
0.00 |
0 |
Share of foreign players |
45 596.80 |
100 |
Azerbaijan |
1903.7 |
4.18 |
Ukraine |
41.1 |
0.09 |
Austria |
50.2 |
0.11 |
Great Britain |
113.3 |
0.25 |
Germany |
5515.5 |
12.10 |
Spain |
408.2 |
0.90 |
Italy |
7284.5 |
15.98 |
Canada |
4.7 |
0.01 |
China |
4 530.10 |
9.94 |
UAE |
0 |
0 |
USA |
26.8 |
0.06 |
Turkey |
6.8 |
0.01 |
France |
48 |
0.11 |
Czech Republic |
358.4 |
0.79 |
Sweden |
10.8 |
0.02 |
South Africa |
10.9 |
0.02 |
Japan |
16.3 |
0.04 |
India |
0.2 |
0.00 |
Slovakia |
13.9 |
0.03 |
Armenia |
0.1 |
0.00 |
Argentina |
1 |
0.00 |
Netherlands |
12.3 |
0.03 |
Poland |
115.1 |
0.25 |
Romania |
207 |
0.45 |
Croatia |
15.9 |
0.03 |
Brazil |
0.3 |
0.00 |
Georgia |
301 |
0.66 |
Mexico |
6.1 |
0.01 |
Russia |
24594.6 |
53.94 |
Market capacity |
40 193.90 |
100.00 |
Source: Calculated on the basis of data of the MNE RK Statistics Committee, CТC MF RK and enterprises
2. Pipes casing and drilling for drilling of oil and gas wells, seamless, steel (CPEA 242012 production, which includes 4 articles under FEACN codes 730422,730423, 730424, 730429).
Market capacity of pipes casing and drilling for drilling oil and gas wells, seamless, steel in Kazakhstan amounted to 216 939.8 tons in 2014, or 145.3% compared to 2010. 34.3% of this production was produced in the Republic of Kazakhstan, the rest (65.7%) was imported from outside the country. 68.3% of the production was used at the enterprises of Kazakhstan, 31.7% was directed to export.
The main domestic players at this market were the following 11 enterprises:
- LLP “Almaty Pipeline Plant – APP”;
- PF LLP “KspSteеl”;
- LLP “TMK-Kaztrubprom”;
- LLP “Sts Steel Center”;
- LLP “Sonik Company”;
- LLP “Alsib”;
- LLP “Antara Steel”;
- LLP “Metall Prom Group”;
- Branch LLP “Petropavlovsk Pipe Plant” in Almaty;
- LLP “Akras Metal”;
- LLP “Zhambylmetsnab”.
The main foreign players at the market of Kazakhstan were: China, Russia, Ukraine, Japan and Italy. Other countries had less than 1% at the market of Kazakhstan.
Таблица 8.
Table 8. |
|
2014 |
|
tons |
market share, % |
|
Production |
109 123.00 |
|
Export |
100 889.30 |
|
Share of RK players |
8 233.70 |
3.94 |
LLP “Almaty Pipeline Plant – APP” |
823.37 |
0.38 |
PF LLP “KspSteеl” |
2 058.43 |
0.95 |
LLP “TMK-Kaztrubprom” |
1 235.06 |
0.57 |
LLP “Sts Steel Center” |
411.69 |
0.19 |
LLP “Sonik Company” |
329.35 |
0.15 |
LLP “Alsib” |
247.01 |
0.11 |
LLP “Antara Steel” |
411.69 |
0.19 |
LLP “Metall Prom Group” |
247.01 |
0.11 |
LLP “Petropavlovsk Pipe Plant” |
1 646.74 |
0.76 |
LLP “Akras Metal” |
411.69 |
0.19 |
LLP “Zhambylmetsnab” |
411.69 |
0.19 |
Share of foreign players |
208 706.20 |
96.20 |
Australia |
201.5 |
0.09 |
Ukraine |
5404.5 |
2.49 |
Austria |
820.6 |
0.38 |
Great Britain |
24.6 |
0.01 |
Germany |
317.8 |
0.15 |
Spain |
23.8 |
0.01 |
Italy |
2389 |
1.10 |
Canada |
9.7 |
0.00 |
China |
88 152.00 |
40.63 |
UAE |
221.3 |
0.10 |
USA |
824.4 |
0.38 |
Turkey |
19.4 |
0.01 |
France |
385.9 |
0.18 |
Czech Republic |
1.5 |
0.00 |
Sweden |
2.4 |
0.00 |
Kirghizia |
4.9 |
0.00 |
Japan |
2721.4 |
1.25 |
Argentina |
1906.6 |
0.88 |
Netherlands |
0.9 |
0.00 |
Romania |
2863 |
1.32 |
Mexico |
14578.2 |
6.72 |
Russia |
87827.4 |
40.48 |
Korea |
4.10 |
0.00 |
Singapore |
1.3 |
0.00 |
Market capacity |
216 939.90 |
100 |
Source: Calculated on the basis of data of the MNE RK Statistics Committee, CТC MF RK and enterprises
3. Pipes for oil and gas pipelines welded, the external diameter of which exceeds 406.4 mm, steel (CPEA 242021 production, which includes 3 articles under FEACN codes 730511, 730512, 730519).
Market capacity of pipes for oil and gas pipelines welded, the external diameter of which exceeds 406.4 mm, steel amounted to 140 963 tons in Kazakhstan in 2014, or 200% compared to 2010. 10.3% of this production was produced in the Republic of Kazakhstan; the rest (89.7%) was imported from outside the country. At the domestic market 99% of the production was used at the enterprises of Kazakhstan, 1.0% was directed to export.
The main domestic player at this market was JSC “ArcelorMittalTubularProductsAktau”.
The main foreign players at this market were: Ukraine, Russia, and China.
Таблица 9.
Table 9. |
|
2014г. |
|
tons |
market share, % |
|
Production |
14 717.00 |
|
Export |
1 474.30 |
|
Share of RK players |
13 242.70 |
9.39 |
JSC “ArcelorMittalAktau” |
26162.405 |
9.39 |
Share of foreign players |
127 720.30 |
90.61 |
Ukraine |
65 383.8 |
46.38 |
Brazil |
189.8 |
0.13 |
Germany |
5.9 |
0.00 |
Italy |
488.2 |
0.35 |
China |
13 545.44 |
9.61 |
Russia |
44685.48 |
31.70 |
Kirghizia |
3 421.7 |
2.43 |
Market capacity |
140 963.00 |
100 |
Source: Calculated on the basis of data of the MNE RK Statistics Committee, CТC MF RK and enterprises
4. Pipes and tubes other of circular cross section, welded, the external diameter of which exceeds 406.4 mm, steel (CPEA 242023 production, which includes 2 articles under FEACN codes 730531, 730539).
Market capacity of pipes and tubes other of circular cross section, welded, the external diameter of which exceeds 406.4 mm, steel in Kazakhstan amounted to 39917.9 tons in 2014, or 83.5% compared to2010. 0.6% of this production was produced in the Republic of Kazakhstan, the rest (99.4%) was imported from outside the country. At the domestic market 100% of this production was used at the enterprises of Kazakhstan.
The main domestic player at this market was JSC “ArcelorMittalTubularProductsAktau”.
The main foreign players at this market were: Russia, China and Turkey.
Таблица 10.
Table 10. |
|
2014 |
|
tons |
market share, % |
|
Production |
235 |
|
Export |
0.7 |
|
Share of RK players |
234.30 |
0.59 |
JSC “ArcelorMittal Tubular Products Aktau” |
26162.405 |
0.58 |
Share of foreign players |
39 683.60 |
99.41 |
Ukraine |
350.90 |
0.88 |
Czech Republic |
32.3 |
0.08 |
Germany |
527.4 |
1.32 |
Italy |
585.6 |
1.47 |
China |
2 103.39 |
5.27 |
Russia |
34892.99 |
87.41 |
Azerbaijan |
32.43 |
0.08 |
Turkey |
1 158.60 |
2.90 |
Market capacity |
39 917.90 |
100 |
Source: Calculated on the basis of data of the MNE RK Statistics Committee, CТC MF RK and enterprises
5. Pipes for oil and gas pipelines welded, the external diameter of which doesn’t exceed 406.4 mm, steel (CPEA 242031 production, which includes 2 articles under FEACN codes 730611, 730619).
Market capacity of pipes for oil and gas pipelines welded, the external diameter of which doesn’t exceed 406.4 mm, steel in Kazakhstan amounted to 27169.2 tons in 2014, or 620% compared to 2010. 34.2% of the production was produced in the Republic of Kazakhstan; the rest (65.8%) was imported from outside the country. At the domestic market 98.5% of the production was used at the enterprises of Kazakhstan. 1.5% was exported to other countries.
Таблица 11.
Table 11. |
|
2014 |
|
tons |
market share, % |
|
Production |
9 431.00 |
|
Export |
423.5 |
|
Share of RK players |
9 007.50 |
33.15 |
LLP “Petropavlovsk Pipe Plant” |
4503.75 |
16.58 |
LLP “AntaraSteel” |
450.38 |
1.66 |
LLP “Pavlodar Tube Rolling Plant” |
2 251.88 |
8.29 |
LLP “TMK-Kaztrubprom” |
1 801.5 |
6.63 |
Share of foreign players |
18 161.70 |
66.85 |
Germany |
1 208.4 |
4.45 |
China |
538.77 |
1.98 |
Russia |
15672.41 |
57.68 |
Netherlands |
0.20 |
0.00 |
Great Britain |
1.50 |
0.01 |
France |
12.50 |
0.05 |
Ukraine |
712.5 |
2.62 |
Italy |
15.40 |
0.06 |
Market capacity |
27 169.20 |
100 |
Source: Calculated on the basis of data of the MNE RK Statistics Committee, CТC MF RK and enterprises
The main domestic players at this market were LLP “Petropavlovsk Pipe Plant”, LLP “AntaraSteel”, LLP “Pavlodar Tube Rolling Plant”, LLP “TMK-Kaztrubprom”. The main foreign players were – Russia, Germany, Ukraine, and China.
6. Pipes and tubes other, welded, of circular cross section, welded, the external diameter of which doesn’t exceed 406.4 mm, steel (CPEA 242033 production, which includes 3 articles under FEACN codes 730630, 730640, 730650).
Market capacity of pipes and tubes other, welded, of circular cross section, welded, the external diameter of which doesn’t exceed 406.4 mm, steel in Kazakhstan amounted to 141333 tons in 2014, or 99.4% compared to2010. 57.5% of this production was produced in the Republic of Kazakhstan; the rest (42.5%) was imported from outside the country. At the domestic market 91.8% of this production was used at the enterprises of Kazakhstan. 8.2% was exported to other countries.
The main domestic players at this market were:
- LLP “Petropavlovsk Pipe Plant”;
- LLP “AntaraSteel”;
- LLP “Pavlodar Tube Rolling Plant”;
- LLP “TMK-Kaztrubprom”.
The main foreign players at this market were Russia and China. Other players had less than 1 %.
Таблица 12.
Table 12. |
2014 |
||
tons |
market share, % |
|
Production |
88 484.00 |
|
Export |
12 665.00 |
|
Share of RK players |
75 819.00 |
53.65 |
LLP “Petropavlovsk Pipe Plant” |
37909.5 |
26.82 |
LLP “AntaraSteel” |
3 790.95 |
2.68 |
LLP “Pavlodar Tube Rolling Plant” |
18 954.75 |
13.41 |
LLP “TMK-Kaztrubprom” |
15 163.8 |
10.73 |
Share of foreign players |
65 514.40 |
46.35 |
Germany |
296.8 |
0.21 |
China |
4 758.66 |
3.37 |
Russia |
59685.6 |
42.23 |
Ukraine |
41.7 |
0.03 |
Italy |
50.90 |
0.04 |
Turkey |
138.70 |
0.10 |
USA |
154.7 |
0.11 |
Other |
387.29 |
0.27 |
Market capacity |
141 333.40 |
100.00 |
Source: Calculated on the basis of data of the MNE RK Statistics Committee, CТC MF RK and enterprises
7. Pipes and tubes of non-circular cross section, welded, the external diameter of which doesn’t exceed 406.4 mm, steel (CPEA 242034 production, which includes 2 articles under FEACN codes 730661, 730669).
Market capacity of pipes and tubes of non-circular cross section, welded, the external diameter of which doesn’t exceed 406.4 mm, steel in Kazakhstan amounted to 51211 tons in 2014, or 220% compared to 2010. 42.4% of this production was produced in the Republic of Kazakhstan; the rest (57.6%) was imported from outside the country. At the domestic market 100% of this production was used at the enterprises of Kazakhstan.
The main domestic players at this market were LLP “Petropavlovsk Pipe Plant”, LLP “AntaraSteel”, LLP “Pavlodar Tube Rolling Plant”, LLP “TMK-Kaztrubprom”.
The main foreign player was: Russia. Other players had less than 1% of the market.
Таблица 13.
Table 13. |
|
2014 |
|
tons |
market share, % |
|
Production |
21 693.00 |
|
Export |
1.2 |
|
Share of RK players |
21 691.80 |
42.36 |
LLP “Petropavlovsk Pipe Plant” |
10845.9 |
21.18 |
LLP “AntaraSteel” |
1 084.59 |
2.12 |
LLP “Pavlodar Tube Rolling Plant” |
5 422.95 |
10.59 |
LLP “TMK-Kaztrubprom” |
4 338.4 |
8.47 |
Share of foreign players |
29 519.30 |
57.64 |
Germany |
13.9 |
0.03 |
China |
273.61 |
0.53 |
Russia |
28941.1 |
56.51 |
Vietnam |
63.90 |
0.12 |
Great Britain |
63.20 |
0.12 |
Ukraine |
135.0 |
0.26 |
Other |
28.36 |
0.06 |
Market capacity |
51 211.10 |
100.00 |
Source: Calculated on the basis of data of the MNE RK Statistics Committee, CТC MF RK and enterprises
8. Fittings for pipes steel, not cast (CPEA 242040 production, which includes 8 articles under FEACN codes 730721, 730722, 730723, 730729, 730791, 730792, 730793, 730799).
Market capacity of fittings for pipes steel, not cast in Kazakhstan amounted to 24246 tons in 2014, or 176% compared to 2010. 4.6% of this production was produced in the Republic of Kazakhstan, the rest (95.4%) was imported from outside the country. 97.3% of this production was used at the domestic market at the enterprises of Kazakhstan. 2.7% – was directed to export.
The main domestic player at this market was LLP “KSP Steel”. The main foreign players were – Russia, China and Spain. The other players had less than 1%.
9. Share of players at the market of fittings for pipes steel, not cast
|
2014 |
|
tons |
market share, % |
|
Production |
1 135.00 |
|
Export |
683.5 |
|
Share of RK players |
451.50 |
1.86 |
LLP “KSP Steel” |
0.00 |
1.86 |
Share of foreign players |
23 794.70 |
98.14 |
Germany |
35.3 |
0.15 |
China |
1 506.00 |
6.21 |
Russia |
21877.6 |
90.23 |
Italy |
101.60 |
0.42 |
India |
18.10 |
0.07 |
Spain |
14.8 |
6.15 |
Other |
240.80 |
0.99 |
Market capacity |
24 246.20 |
100 |
Source: Calculated on the basis of data of the MNE RK Statistics Committee, CТC MF RK and MMC enterprises
3. Barriers and limitations.
The largest number of measures in the field of metallurgy, classified as trade barriers, belongs to the Russian Federation, followed by the Republic of Belarus. A small number of measures accounts for the Republic of Kazakhstan.
Anti-dumping, countervailing and special safeguard investigation conducted by the third countries is considered as potential trade barriers in the case, if a provisional duty is not introduced for the time of the investigation. This category also includes the threat of the introduction of bans and technical barriers by the third countries and, as well as other non-tariff measures, the introduction of which is considered by the third countries, and which haven’t affected yet, but in the future may affect the delivery from the states – members of the Union to markets of these countries. At present, 23 measures are referred to potential trade barriers.
Limiting measures include measures, the direct negative impact of which on export from the states – members of the Union has not been revealed yet, as well as measures of the third countries in respect of goods, the supply of which from the states – members of the Union in these countries is currently absent or insignificant. This category includes 30 measures.
10. Trade barriers, taken at the markets of the third countries concerning the metallurgy production of the states – members of CU and EEA in 2014
The country, on the territory of which the measure is taken |
The measure description |
Azerbaijan |
Application of an increased rate of excise duty to a number of imported goods. |
Argentina |
Since February 1, 2012 the importation of any goods to Argentina can be carried out only after obtaining a non-automatic license. Issuance of the license can be linked to the exporter’s entering into commitments about voluntary restraints on the scope or value of exports, investments in the Argentine economy, and other restraints. |
Argentina |
Since March 2011, an unwritten rule is followed in Argentina, under which the major importers are required to submit a detailed program of compensating import by export sales in the Pre-declaration of import. At the moment, companies that want to bring finished products or components into the country must sign an agreement with the government on the mandatory export of Argentine goods for a definite sum. |
ЕС |
Anti-dumping measure in respect of welded non-alloyed pipes from the Republic of Belarus. Currently under review in connection with the expiration of the term of the measure, the duty remains in effect. |
ЕС |
Requirements for labeling and packaging of nickel-containing products. |
ЕС |
Anti-dumping measure in respect of seamless pipes from the Russian Federation. Term of the measure expiry – 2017. |
ЕС |
Anti-dumping measure in respect of welded non-alloyed pipes from the Russian Federation. Currently under review in connection with the expiration of the term of the measure, the duty remains in effect. |
ЕС |
Anti-dumping measure in respect of fittings for pipes of steel and iron from the Russian Federation. Term of the measure expiry – 2018. |
India |
Special safeguard measure in respect of seamless pipes, pipes and hollow sections of iron and non-alloyed steel. Term of the measure expiry – 2017. |
Turkmenistan1 |
Application of an increased rate of excise duty to a number of imported goods. |
Uzbekistan |
Application of an increased rate of excise duty to a large number of imported goods. |
Ukraine |
Special safeguard measure in respect of pipes steel seamless, casing and tubing. Currently under review in connection with the expiration of the term of the measure, the measure (in the form of quotas for the supply) is remaining. |
Source: Report of EEC for 2014.
11. Potential trade barriers, identified at the markets of the third countries in 2014
The country, on the territory of which the measure is taken |
The measure description |
ЕС |
Anti-dumping investigation in respect of the transformer steel from Russia. |
Columbia |
Special safeguard investigation in respect of the seamless and welded pipes. |
Ukraine |
Application of special sanctions in case of violation of Ukrainian legislation in the sphere of foreign economic activity (individual licensing regime, the temporary suspension of foreign economic activity) in accordance with Article 37 of the Law of Ukraine “On Foreign Economic Activity”. |
Source: Report of EEC for 2014.
Branch barriers of entry to the market of Russia
Domestic market of steel pipes. Currently pipe industry almost fully meets the needs of all sectors of the national economy in terms of production and quality of the pipes. The total production capacity of the pipe companies in 2013 amounted to 15.5 mln. tons of pipes and significantly exceeded demand. More than 60% of the production is produced by innovative technologies, the labor productivity increased by 56.7%. The volume of investments for 13 years has amounted to about US 12 billion USD.
At present, the problem of import substitution of pipes and blanks for them has been basically solved with the exception of certain types of pipes – rust-resisting, ball-bearing, some types of threaded pipes.
As a result of the introduction of new technological equipment at the individual process stages of production, Russian steel and pipe companies will meet 100% demand of pipes for various purposes in the coming years.
4. The list of potential opportunities for entrepreneurial initiatives. The structure of the value chain.
Existing gaps in the value chain of steel products
Evaluation of process stages in the ferrous metallurgy of Kazakhstan, which is carried out on the basis of the information of the Committee on Statistics NEM RK “The resources and the use of certain types of products (goods) and raw materials in the Republic of Kazakhstan” within a wide range of products of MMC showed that at its initial process stages (production of iron and steel) there is a high degree of satisfaction of domestic industries in these products. However, at the stage of production of various types of rolled metal products, in spite of the wide range of products, there are problems with incomplete satisfaction of the demand of sectors of the national economy.
So, on the base, for production of ferrous metallurgy, which refers to the process stage of “Production of steel”, there is a high dependence of Kazakhstan (84.3%) on only 1 group of CPEA goods:
Stainless steel cast slab or in shapes primary other and semi-processed products of stainless steel (CPEA 241022). However, within this group (CPEA 241022) 100% dependence is observed on the following products:
- other stainless steel of square cross-section, rolled or obtained by continuous casting (FEACN 72189911), which was imported in volume of 11.4 tons for 9.7 thou. USD in 2014;
- other stainless steel, rolled or obtained by continuous casting (FEACN 72189920), 2150.9 tons was imported for 1259.8 thou. USD in 2014.
At another process stage of “Production of steel” there is a high provision of Kazakhstan by the following products:
- Steel non-alloyed cast slab or in shapes primary other and semi-processed products of carbon steel (non-alloyed) (CPEA 241021) – provision of Kazakhstan 97.9%;
- Steel alloyed cast slab or in shapes primary other and semi-processed products of alloyed steel (CPEA 241023) – 72.3%.
At the process stage “Products of rolled metal”, there is 100% dependence (so-called white spots) on the following products of the industry, which are fully imported from outside the country:
Bars and rods other of stainless steel, pressed, hot-rolled, hot-stretched, hot-pressed, but without further treatment (including those twisted after rolling) (CPEA 241064).
In this group, the largest volume of import was carried out for bars other of stainless steel (FEACN 7222309709), which were imported in volume of 64.7 tons for 604.6 thou. USD in 2014;
Bars (rods) and sections, cold-drawn, of stainless steel (CPEA 243130). In this group 100% dependence is observed for all codes FEACN 722220.
The high level of dependence from 90 to 99.9% is observed for the following CPEA codes of ferrous metallurgy:
1) Pipes and tubes other of circular cross section steel (CPEA 242013) – dependence of RK 93.9%. In this group, 100% dependence is observed for the following products:
- precision tubes other, cold-drawn and cold-rolled (cold reduced), other, of circular cross section, of iron or non-alloy steel (FEACN 730431), in 2014, 777.2 tons were imported for 185.1 thou. USD;
- other, of circular cross-section of stainless steel: other: not processed, straight, of a uniform wall thickness to use solely in the production of tubes of another section and with a different wall thickness: the external diameter of which doesn’t exceed 168.3 mm (FEACN 730449), in 2014, 250.4 tons were imported for 3426.8 thou. USD.
2) Pipes and tubes other of circular cross section, welded, with an external diameter more than 406.4 mm, steel (CPEA 242023). – Dependence of RK 99.4%.
In this group, 100% dependence is observed on the following products:
- other welded pipes longitudinally welded, of circular cross section, the external diameter of which exceeds 406.4 mm, ferrous (FEACN 730531), in 2014, 1932.3 tons were imported for 1514.4 thou. USD;
- other pipes welded of circular cross section, the external diameter of which exceeds 406.4 mm, ferrous (FEACN 730539), in 2014, 2858.4 tons were imported for 6897 thou. USD;
3) Fittings for pipes steel, not cast (CPEA 242040) – Dependence of RK 95.4%. In this group, 100% dependence is observed on the following products:
- other fittings for butt-weld of stainless steel (FEACN 730723), in 2014, 26.9 tons were imported for 829.1 thou. USD;
- fittings for pipes or tubes (for example, joints, elbows, couplings), ferrous (FEACN 730729), in 2014 133.5 tons were imported for 1923.8 thou. USD;
- other fittings for pipes or tubes of stainless steel for welding (HS 730729), in 2014, 11.5 tons were imported for 148.5 thou. USD.
4) Pipes of large and small diameters; hollow sections of cast iron (CPEA 245120) – Dependence of RK 90.3%.
There is a high dependence for 80-90% on the following CPEA codes:
1) pipes for oil and gas pipelines welded, the external diameter of which exceeds 406.4 mm, steel (CPEA 242021) – Dependence of RK 89.7%.
In this group, 100% dependence is observed on the following products:
- pipes for oil and gas pipelines longitudinally welded, produced by the method of submerged arc welding, the external diameter of which is 530 mm and more, of steel with rupture strength (ultimate stress) 565 m (FEACN 730511), in 2014, 74172.6 tons were imported for 147131.7 thou. USD;
- other pipes for oil and gas pipelines of circular cross section, the external diameter of which exceeds 406.4 mm, ferrous (FEACN 730519), in 2014, 4532.9 tons were imported for 6306.7 thou. USD.
There is the next level of dependence of Kazakhstan on other production of the process stage “Products of rolled metal”:
- Pipes for oil and gas pipelines welded, with an external diameter not exceeding 406.4 mm, steel (CPEA 242031) – 65.8%;
- Pipes and tubes of non-circular cross section, welded, with an external diameter not exceeding 406.4 mm, steel (CPEA 242034) – 57.6%;
- Pipes for oil and gas pipelines seamless, steel (CPEA 242011) – 51.9%;
- Pipes and tubes other, welded, of circular cross section, with an external diameter not exceeding 406.4 mm, steel (CPEA 242033) – 42.5%;
- Pipes and tubes of non-circular cross section and hollow sections made of steel (CPEA 242014) – 42.2%.
12. A list of potential opportunities for entrepreneurial initiatives
№ |
Product name |
Approximate market capacity |
|
tons |
thou. USD |
||
4 |
Pipes and tubes other of circular cross section steel (CPEA 242013) |
|
|
4.1. |
Other precision tubes, cold-drawn or cold-rolled (cold reduced), other, of circular cross section, of iron or non-alloy steel ( FEACN 730431) |
777.2
|
185.1
|
4.2. |
Other, of circular cross-section of stainless steel: other: not processed, straight, of a uniform wall thickness to use solely in the production of tubes of another section and with a different wall thickness: the external diameter of which doesn’t exceed 168.3 mm (FEACN 730449). |
250.4 |
3426.8 |
5 |
Pipes and tubes other of circular cross section, welded, with an external diameter more than 406.4 mm, steel (CPEA 242023) |
|
|
5.1. |
Other welded pipes longitudinally welded, of circular cross section, the external diameter of which exceeds 406.4 mm, ferrous (FEACN 730531) |
1932.3
|
1514.4
|
5.2. |
Other pipes welded of circular cross section, the external diameter of which exceeds 406.4 mm, ferrous (FEACN 730539) |
2858.4 |
6897 |
6 |
Fittings for pipes steel, not cast (CPEA 242040) |
|
|
6.1. |
Other fittings for butt-weld of stainless steel (FEACN 730723) |
26.9
|
829.1
|
6.2. |
Fittings for pipes or tubes (for example, joints, elbows, couplings), ferrous (FEACN 730729) |
133.5
|
1923.8
|
6.3. |
Other fittings for pipes or tubes of stainless steel for welding (FEACN 730729). |
11.5 |
148.5 |
8 |
Pipes for oil and gas pipelines welded, the external diameter of which exceeds 406.4 mm, steel (CPEA 242021) |
|
|
8.1 |
Pipes for oil and gas pipelines longitudinally welded, produced by the method of submerged arc welding, the external diameter of which is 530 mm and more, of steel with rupture strength (ultimate stress) 565 m (FEACN 730511) |
74172.6
|
147131.7
|
8.2 |
Other pipes for oil and gas pipelines of circular cross section, the external diameter of which exceeds 406.4 mm, ferrous (FEACN 730519) |
4532.9
|
6306.7
|
Source: done by AMME
5. The strengths of the industry.
Mining and metallurgical industry is one of the most important industries, which on a par with oil and gas industry and energy industry determines the economic, social and technological development of the Republic of Kazakhstan. Long-term forecasting, and identifying of innovative potential of technological areas are priorities for the successful planning of development of the industry.
Mining and metallurgical industry of Kazakhstan has a number of favorable conditions for the successful development of the industry in the long run, among which are the following:
- transport and geographical situation of enterprises and access to global markets (closeness of the Republic to the South-East Asia and Russia, the large exporting companies also have a branched access to EU and the US markets);
- availability of energy resources and own raw material base, represented by ores of ferrous and non-ferrous metals, coking coal, rare, rare-earth, radioactive and precious metals;
- a strong industrial base and a developed infrastructure of enterprises with specialized research centers (factory laboratories);
- foreign investment attractiveness of the industry;
- the existing raw material orientation of the economy in the absence of any redistribution.
13. Strengths of legislation and government regulation:
- a sufficiently complete national legislation in various areas; - approved fundamental strategic and program documents; - a variety of measures of state support for businesses in the MMC; - the necessary legal basis and infrastructure for the development of domestic processing and production of products with high added value in the metallurgy. |
Source: done by AMME
14. Strengths of ferrous metallurgy
- strategic role of the ferrous metallurgy in the provision of GDP volume; - most of the exported products meet the requirements of consumers for quality; - globalization of the mining and metallurgical industry of the Republic (ArcelorMittal, Kazakhmys, ENRC, Kazzinc and others) and its high level of compliance with the industrial culture; - defining role of the metallurgy in the national economy; - high demand for ferrous and nonferrous metals in the long term; - ores of mineral deposits are multicomponent; - complex assay of useful components of deposits; - great demand for metal and metal products at foreign markets; - development of related domestic industries that consume metal (engineering, construction, railways, energy, etc.); - possibility of creating new industries of the production with high added value on the basis of the produced base and rare metals; - its own mineral resources base (ores of ferrous, rare, rare-earth and radioactive metals and others); - a well-developed industrial infrastructure (mines, large mining and processing integrated plants, metallurgical enterprises, including those of the complete cycle, railway, electrical networks); - industrial research centers, institutes, national and university laboratories such as engineering, research centers and enterprises; - a wide range of produced metals, including rare and rare-earth; - national scientific and technological developments for the organization of production on deep and complex processing of raw materials; - presence of leading companies in mining and production of metals with access to the world markets; - competitive technologies for extracting scarce in the global market metals; - potential for the deposits development. |
Source: done by AMME
Review on ferrous metallurgy (sandwich panels)
1. Introduction.
Mining and metallurgical industry is the leading sector of the national economy of Kazakhstan, which accounts for 15.2% of the total industrial output. Many mining and metallurgical production facilities are town-forming, and therefore the development of mining and metallurgical complex (MMC) is the development of cities, jobs for more than 200 thousand persons.
Mining and metallurgical complex covers a variety of activities ranging from the geologic exploration to the production of finished goods and their promotion both on domestic and on foreign markets, so we have prepared some brief reviews.
In this review, the first part describes a structure of ferrous metallurgy in Kazakhstan, following which we consider a domestic market for production of sandwich panels and finished metal products, prospective sales markets, outline key players and their market shares, existing barriers and limitations, and provide a list of potentialities for entrepreneurial initiatives.
1.1. Sectoral Structure.
The volume of output of Kazakhstan's metallurgical industry products in 2014 in current prices amounted to 1915.250 mln. tenge or 122% compared to 2010 (1569.969 mln. tenge).
In the overall structure of industrial production in Kazakhstan, metallurgy at year-end 2014 accounted for 10.4%, and in the structure of processing industry (5,872,834 mln. tenge) — 32.6%.
The volume of output of ferrous metallurgy products in 2014 in current prices amounted to 765.441 bln. tenge or 86.68% compared to 2010.
Table 1. Volumes of output of ferrous metallurgy products in terms of value for 2010-2014, mln. tenge
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010 |
Ferrous metallurgy |
883,001 |
785,432 |
1,964,416 |
1,752,059 |
765,441 |
86.68 |
Source: According to the RK NEM Statistics Committee
In the overall structure of industrial production in the Republic of Kazakhstan, ferrous metallurgy at year-end 2014 accounted for 4.2%, and in the structure of metallurgical industry — 39.8%.
In the output of ferrous metallurgy products in volume terms over 2010-2014, the growth rate for a coated steel sheet sandwich panel increased by 119.4%.
Table 2. Volumes of sandwich panel production in volume terms over 2010-2014
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010, % |
|
Coated steel sheet sandwich panels, tons |
27,032 |
17,020 |
18,218 |
21,825 |
24,609.0 |
119.4 |
Source: According to the RK NEM Statistics Committee
In the metallurgical industry, headcount reduction occurred at a faster pace as compared to the processing industry of Kazakhstan as a whole. Thus, the payroll number of employees has decreased from 129.4 thousand people. in 2010 to 79.7 thousand people in 2014, or 61.9%. The actual number of employees has sharply decreased from 125.6 thousand people. in 2010 to 77.0 thousand people in 2014, or 61.3%. Difference between the payroll number of employees and the actual number of employees in 2014 amounted to 2.7 thousand people, which is 29% less compared to 2010 (ie 3.8 thousand vacancies).
However, in 2010-2014, the payroll number of employees and the actual number of employees for 2010-2014 have increased in the production of other steel products by means of primary processing.
1.2. Home Market Capacity.
Forming a capacity of MMC product market and its growth rate was influenced by both external (changes in the world market conjuncture to industry products) and internal factors defined by the prospect for further development of individual domestic enterprises and sectors of the national economy.
The highest rates of growth of market capacity for 2010-2014 were peculiar to coated steel sheet sandwich panels – 244.59%.
So, based on the analysis, it was found that the highest level of capacity of the market for ferrous metallurgy products in 2014 is observed on the following products:
Metal products made of non-precious (basic) metals that are not included in other groupings, whose market capacity amounted to 100,043,037.8 tons or increased by 87.67% as compared to 2010;
However, in 2010-2014, a downfall in the world economy, a decline in business activity in some steel-consuming industries of the national economy, a decline in demand for products of MMC industries, led to a sharp narrowing of the market capacity on the following ferrous metallurgy products:
Metal products obtained by direct reduction of iron, other sponge iron, in lumps, pellets or similar forms; iron having a minimum purity by weight of 99.94% in lumps, pellets and similar forms – 19.08% compared to 2010;
Bridges and bridge sections of ferrous metals — 50.67%.
Table 3. Market capacity and consumption of Kazakhstan's ferrous metallurgy products for 2010-2014, tons
Coated steel sheet sandwich panels |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
54,774.30 |
133,971.60 |
244.59 |
Production |
9,401.00 |
25,779.00 |
274.22 |
Imports |
55,967.90 |
127,252.50 |
227.37 |
Consumption |
54,774.30 |
133,971.60 |
244.59 |
Exports |
10,594.60 |
19,059.90 |
179.90 |
Bridges and bridge sections of ferrous metals |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
8,453.40 |
4,283.60 |
50.67 |
Production |
7,116.00 |
897 |
12.61 |
Imports |
1,364.60 |
3,387.10 |
248.21 |
Consumption |
8,453.40 |
4,283.60 |
50.67 |
Exports |
27.2 |
0.5 |
1.84 |
Lattice towers and masts of ferrous metals |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
12,932.40 |
18,536.70 |
143.34 |
Production |
12,546.00 |
15,682.00 |
125.00 |
Imports |
665.4 |
2,911.70 |
437.59 |
Consumption |
12,932.40 |
18,536.70 |
143.34 |
Exports |
279 |
57 |
20.43 |
Other structures, parts of structures, plates, rods, angles, shapes and similar products of ferrous metals or aluminum |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
195,585.10 |
168,167.20 |
85.98 |
Production |
184,130.00 |
144,788.00 |
78.63 |
Imports |
14,020.20 |
24,213.10 |
172.70 |
Consumption |
195,585.10 |
168,167.20 |
85.98 |
Exports |
2,565.10 |
833.9 |
32.51 |
Metallic doors and doorsills, windows and their frames |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
24,610.00 |
42,086.10 |
171.01 |
Production |
13,571.00 |
27,524.00 |
202.81 |
Imports |
11,039.20 |
14,606.50 |
132.31 |
Consumption |
24,610.00 |
42,086.10 |
171.01 |
Exports |
0.2 |
44.4 |
220.0 times more |
Fabrics, grills, netting and fencing of steel or copper wire; metal meshes of ferrous metals or copper |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
11,144.90 |
16,727.50 |
150.09 |
Production |
2,832.20 |
7,637.40 |
269.66 |
Imports |
8,459.80 |
11,566.10 |
136.72 |
Consumption |
11,144.90 |
16,727.50 |
150.09 |
Exports |
147.1 |
2,476.00 |
16.83 times more |
Metal products made of non-precious (basic) metals that are not included in other groupings |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
53,306,890.90 |
100,043,037.90 |
187.67 |
Production |
16,847,765.00 |
27,321,927.00 |
162.17 |
Imports |
40,363,401.30 |
78,776,500.60 |
195.17 |
Consumption |
53,306,890.90 |
100,043,037.90 |
187.67 |
Exports |
3,904,275.40 |
6,055,389.70 |
155.10 |
Source: According to the RK NEM Statistics Committee
1.3. Prospective Sales Markets
Coated steel sheet sandwich panels
Sales of coated steel sheet sandwich panels on the market of Kazakhstan in 2014 amounted to 133,971.5 tons or 240% compared to 2010.
87.5% of the capacity of these products have been consumed in the domestic market of Kazakhstan, 12.5% have been exported.
Table 4. Sales of coated steel sheet sandwich panels
2010 |
Spec. weight, % |
2014 |
Spec. weight, % |
2014/2010, % |
|
Sales on the market of Kazakhstan |
54,774.3 |
83.8 |
133,971.6 |
87.5 |
2.4 times more |
Sales on the foreign markets |
10,594.6 |
16.2 |
19,059.9 |
12.5 |
179.9 |
Source: According to the RK NEM Statistics Committee
One of the prospective sales markets for sandwich panels will be the domestic market of Kazakhstan, considering the high demand for these products, a high rate of sales, as well as the growing capacity of these products in the country.
Prospective sales markets can also become external markets of the CIS countries and the rest of the world. Thus, in the CIS countries, we need to expand existing markets of Uzbekistan to 18,000 tons (16,421.4 tons for 3,823.8 thou. USD were delivered in 2014, ie 93.1% of all deliveries to the CIS countries); and of Turkmenistan to 700 tons (601.9 tons for 1,481.2 thou. USD were delivered in 2014), of Tajikistan to 25.0 tons (17.4 tons for 73.1 thou. USD were delivered in 2014); of Kyrgyzstan to 50.0 tons (33.4 tons for 132.7 thou. USD were delivered in 2014); as well as the development of a new market for these products in Azerbaijan.
In the rest of the world, it is proposed to expand existing sales markets of China to 500 tons (480.1 tons for 1,021.3 thou. USD were delivered in 2014); of Afghanistan to 80.0 tons (49.0 tons for 15.0 thou. USD were delivered in 2014); of Iran to 50 tons (37.1 tons for 14.1 thou. USD were delivered in 2014).
Main conditions of the entrance to a receptive market of Uzbekistan should become quality, specific features of exported sandwich panels and their price competitiveness, because about 7 companies, producing various sandwich panels, the largest of which are Panel Construction LLC, PANELPLAST JV, and TEXNOPROGRESS LLC, operate in the market of this country.
Panel Construction, LLC specializes in the manufacture of building sandwich panels with polyurethane foam filler;
PANELPLAST, JV is engaged in the production of wall and roof sandwich panels with expanded polystyrene thermal insulation;
TEXNOPROGRESS, LLC produces wall and roof metal sandwich panels with expanded polystyrene and basalt thermal insulation.
2. Number of Enterprises (Players) in the Market.
Coated steel sheet sandwich panels (CPEA code 243330 products, which includes 1 name under HS code 730890).
Capacity of the market for coated steel sheet sandwich panels in Kazakhstan in 2014 amounted to 133,971.5 tons or 240% compared to 2010. 16.8% of these products are produced in the Republic of Kazakhstan and the rest (83.2%) are imported from outside the country. In the domestic market, 87.5% of these products are used by businesses in Kazakhstan, 12.5% are exported.
Table 5. Key domestic players of the market for coated steel sheet sandwich panels
1 |
Petropavlovsk Plant of Building Materials, LLP |
12 |
ZPH Tekhol KZ, LLP |
2 |
Metall Con, LLP |
13 |
Nur-Zhas Kurylys, LLP |
3 |
Zhana Tas-Tv, LLP |
14 |
Cokaz Line, LLP |
4 |
Ulbinsk Modular Company (UMC), LLP |
15 |
Centrostal-Domstal, LLP |
5 |
PolymerMetal-T, LLP |
16 |
Span Enclosing Structures Plant, LLP |
6 |
Tair-Sv, LLP |
17 |
Agrotechmash, LLP |
7 |
Krovlya NS, LLP |
18 |
UPTOK Branch of Volkovgeologiya, JSC |
8 |
Smart Group, LLP |
19 |
Kyzylzhar-2030, LLP |
9 |
Temir Firm, LLP |
20 |
Avtomaster Kz, LLP |
10 |
Kazakhmys Corporation, LLP |
21 |
Pride, LLP |
11 |
Aktobe Metal Structures Plant, LLP |
22 |
Fet-Group, LLP |
Source: According to the RK NEM Statistics Committee
Key foreign players are: Russia, China, Turkey, UAE, Ukraine, Germany, Singapore, Italy, and Iran. Other participants in this market had less than 1%.
Table 6. Share of players in the sandwich panel market
|
2014 |
|
tons |
market share, % |
|
Production |
25,779.00 |
|
Exports |
19,059.90 |
|
Share of RK players |
6,719.10 |
5.02 |
Petropavlovsk Plant of Building Materials, LLP |
1,007.865 |
0.75 |
Metall Con, LLP |
201.57 |
0.15 |
Zhana Tas-Tv, LLP |
67.191 |
0.05 |
Ulbinsk Modular Company (UMC), LLP |
335.96 |
0.25 |
PolymerMetal-T, LLP |
268.764 |
0.20 |
Tair-Sv, LLP |
134.38 |
0.10 |
Krovlya NS, LLP |
67.191 |
0.05 |
Smart Group, LLP |
268.764 |
0.20 |
Temir Firm, LLP |
134.38 |
0.10 |
Kazakhmys Corporation, LLP |
1,343.82 |
1.00 |
Aktobe Metal Structures Plant, LLP |
470.337 |
0.35 |
ZPH Tekhol KZ, LLP |
134.38 |
0.10 |
Nur-Zhas Kurylys, LLP |
335.955 |
0.25 |
Cokaz Line, LLP |
201.57 |
0.15 |
Centrostal-Domstal, LLP |
403.15 |
0.30 |
Span Enclosing Structures Plant, LLP |
268.764 |
0.20 |
Agrotechmash, LLP |
67.191 |
0.05 |
UPTOK Branch of Volkovgeologiya, JSC |
134.382 |
0.10 |
Kyzylzhar-2030, LLP |
268.764 |
0.20 |
Avtomaster Kz, LLP |
67.191 |
0.05 |
Pride, LLP |
134.382 |
0.10 |
Fet-Group, LLP |
403.146 |
0.30 |
Share of foreign players |
127,252.40 |
94.98 |
Ukraine |
3,946.5 |
2.95 |
China |
24,688.2 |
18.43 |
Turkey |
6,326.6 |
4.72 |
Singapore |
1,441.6 |
1.08 |
UAE |
4,790.2 |
3.58 |
Italy |
1,511 |
1.13 |
Azerbaijan |
137 |
0.10 |
United Kingdom |
670.2 |
0.50 |
Germany |
3,232.6 |
2.41 |
Iran |
1,639.5 |
1.22 |
Luxembourg |
398.3 |
0.30 |
Netherlands |
202.4 |
0.15 |
Poland |
427.3 |
0.32 |
USA |
276.6 |
0.21 |
Estonia |
791 |
0.59 |
Russia |
75,412.9 |
56.29 |
Others |
1,233.6 |
0.92 |
Market capacity |
133,971.5 |
100.00 |
Source: Calculated on the basis of data from the the RK NEM Statistics Committee, the RK MF Customs Control Committee and businesses
3. Barriers and Restrictions.
The largest number of measures in the field of metallurgy classified as trade barriers belongs to the Russian Federation, and then to the Republic of Belarus. A small number of measures falls on the Republic of Kazakhstan.
Third countries conducted anti-dumping, countervailing and special safeguard investigations in cases, when a provisional duty is not introduced for the duration of any investigation, shall be considered as potential trade barriers. This category also comprises threats of prohibitions and technical barriers, which may be introduced by third countries, as well as other non-tariff measures, the issue of introducing of which is considered by the third countries, and, which do not affect but in the long term, may affect supplies from the Member-States of the Union to the markets of such countries. Potential trade barriers include 23 measures to date.
Restrictive measures consist of measures, having exerted no direct negative influence on the export from the Member-States of the Union until now, as well as measures of third countries, affecting the goods not supplied to specified countries from the Member-States of the Union or supplied in small quantities. This category includes 30 measures.
Table 7. Trade barriers applied in the third countries’ markets to the metallurgy products of the Member-States of the CU and SES in 2014
Country, within which the mea-sure is applied |
Description of the measure |
Azerbaijan |
Application of an increased excise tax rate to a number of imported goods. |
Argentina |
Starting from February 1, 2012 any goods may be imported to Argentina only after a non-automatic license is obtained. Issue of such license may be connected with the exporter’s assuming obligations on a voluntary restriction of the extent or cost of exported goods, investments to the economy of Argentina and other restrictions. |
Argentina |
Starting from March, 2011 an unpublicized rule has become in effect in Argentina, whereby high volume importers shall submit in the preliminary declaration of imports a detailed program compensating import by export supplies. As of the present moment the companies willing to import to the country finished |
Turkmenistan1 |
Application of an increased excise tax rate to a number of imported goods. |
Uzbekistan |
Application of an increased excise tax rate to a wide range of imported goods. |
Ukraine |
Special safeguard measure against steel seamless pipes, casing pipes and tubing pipes. As of the present moment the measure is reviewed due to expiry thereof, the measure (in the form of quotas to supplies) is still in effect. |
Source: EEC Report for 2014
Table 8. Potential trade barriers identified in the third countries’ markets in 2014
Country, within which the mea-sure is applied |
Description of the measure |
EU |
Possibility to establish more severe rules to fill in and conditions to issue documents while importing the goods subject to import supervision in the course of special safeguard investigations including the possibility to provide for reduced duration of import documents and to determine the conditions for cancellation thereof. |
Ukraine |
Application of special sanctions in case of violation of the Ukrainian law in the field of foreign economic activity (individual licensing treatment, temporary suspension of foreign economic activity) pursuant to article 37 of the Ukrainian Law “On Foreign Economic Activity”. |
Source: EEC Report for 2014
Table 9. Restrictive measures for metallurgy products in effect in the third countries’ markets in 2014
Country, within which the mea-sure is applied |
Description of the measure |
India |
Mandatory certification of certain types of metal products. |
Moldova |
Charge for import of goods contaminating environment in the process of use thereof. The list of imported goods consists of 180 Customs commodity codes. |
Uzbekistan |
Consumer loan is disbursed to those organizations selling goods of only Uzbek origin. |
Uzbekistan |
No permit to convert cash funds obtained from sale of tickets on the territory of Uzbekistan in local currency is given. |
Uzbekistan |
Procedure to convert national currency into freely convertible currency is delayed by 3 and more months |
Uzbekistan |
A certain list of import goods must be sold within the year following customs clearance. |
Source: EEC Report for 2014
4. List of Potentialities for Entrepreneurial Initiatives. Structure of the Value Chain.
Existing gaps in the value chain of ferrous metallurgy products
Evaluation of process stages in the ferrous metallurgy of Kazakhstan, which is carried out on the basis of information from the RK NEM Statistics Committee "Resources and the Use of Certain Types of Products (Goods) and Raw Materials in the Republic of Kazakhstan" on a wide range of MMC products, showed that at its initial process stages (cast iron and steel production) there is a high degree of satisfaction with these products in sectors of the national economy. However, at the stage of producing various types of rolled metal products, despite a wide range of manufactured products, there are problems with incomplete satisfaction of the demand in sectors of the national economy.
In the process stage "Manufacture of rolled metal products", we can observe a 100% dependency (so-called blind spots) on the following industrial products, which are fully imported from outside the country:
At the level of 80-90%, there is a high dependence on the following CPEA codes:
1) Coated steel sheet sandwich panels (CPEA code 243330) – Kazakhstan dependence of 83.2%. These products are domestically manufactured according to all the HS codes;
On products of the process stage "Manufacture of fabricated metal products", we can observe the following level of dependence of Kazakhstan:
1) Bridges and bridge sections of ferrous metals (CPEA code 251121) – 79.1%.
2) Fabrics, grills, netting and fencing of steel or copper wire; metal meshes of ferrous metal or copper (CPEA code 259313) – 60.2%. This group is 100% dependent on the following products:
- endless bands of corrosion-resistant steel for machinery of ferrous metals (HS code 731412), 5.0 tons for 24.8 thou. USD were imported in 2014;
- other woven fabrics of corrosion-resistant steel (731414), 16.5 tons for 360.7 thou. USD were imported in 2014;
- other wire cloth of ferrous metal (HS code 731419), 143.6 tons for 304.9 thou. USD were imported in 2014;
- grill, netting and fencing, welded at intersections, of ribbed wire with a maximum cross sectional dimension of 3 mm or more and having a mesh size of 100 cm2 or more (HS code 73142010), 27.6 tones for 95.1 thou. USD were imported in 2014;
- other grill, netting and fencing, welded at intersections, of wire with a maximum cross sectional dimension of 3 mm or more and having a mesh size of 100 cm2 or more (HS code 73142090), 81.7 tons for 52.2 thou. USD were imported in 2014;
- other galvanized grating, wire mesh and fencing, welded at intersections (HS code 731410), 401 tons for 1,213.7 thou. USD were imported in 2014;
- other grill, netting and fencing, welded at intersections (HS code 731439), 453.6 tons for 2,468.3 thou. USD were imported in 2014;
- galvanized wire meshes with hexagonal cells (HS code 73144110), 83.0 tons for 172.1 thou. USD were imported in 2014;
- other galvanized wire mesh, grating and fencing (HS code 73144190), 357.3 tons for 844.2 thou. USD were imported in 2014;
3) Metallic doors and doorsills, windows and their frames (CPEA code 251210) – Kazakhstan dependence of 34.7%;
4) Lattice towers and masts of ferrous metals (CPEA code 251122) – 15.7%.
5) Other structures, parts of structures, plates, rods, angles, shapes and similar products of ferrous metals or aluminum (CPEA code 251123) –14.3%.
Table 10. Existing gaps (blank spots) in the value chain of ferrous metallurgy products
1st stage |
2nd stage |
3rd stage |
4th stage |
5th stage |
6th stage |
Ore mining |
Benefi-cation |
Cast-iron production |
Steel production |
Manufacture of rolled metal products |
Manufacture of fabricated metal products |
Iron ore |
Iron concentrate |
Granules and powders of pig iron and specular cast iron, steel (CPEA code 241014) |
Unalloyed steel in ingots or other primary forms and semi-finished products of carbon steel (unalloyed) (CPEA code 241021) |
Flat-rolled products of non-alloy steel, hot-rolled, not further worked, with a minimum width of 600 mm (CPEA code 241031) |
Bridges and bridge sections of ferrous metals (CPEA code 251121) |
|
|
Pig iron unalloyed, containing by weight more than 1 % of silicon |
Stainless steel in ingots or other primary forms and semi-finished products of stainless steel (CPEA code 241022) |
Flat-rolled products of non-alloy steel, cold-rolled, not further worked, with a minimum width of 600 mm (CPEA code 241041) |
Lattice towers and masts of ferrous metals (CPEA code 251122) |
|
|
Non-alloy pig iron, containing by weight 0.5 % of phosphorus in pigs, blocks and other primary forms |
Alloy steel in ingots or other primary forms and semi-finished products of alloy steel (CPEA code 241023) |
Flat-rolled products of non-alloy steel, with a minimum width of 600 mm, plated with galvanic or other coating (CPEA code 241051) |
Other structures, parts of structures, plates, rods, angles, shapes and similar products of ferrous metals or aluminum (CPEA code 251123) |
|
|
|
|
|
Metallic doors and doorsills, windows and their frames (CPEA code 251210) |
|
|
|
|
Sandwich panels of coated steel sheet (CPEA code 243330) |
|
|
Products are manufactured, the dependence of Kazakhstan is low |
Source: Prepared by AMME
Table 11. List of potentialities for entrepreneurial initiatives
No. |
Product name |
Estimated size of the market |
|
tons |
thou. USD |
||
16.1 |
Endless bands of corrosion-resistant steel for machinery of ferrous metals (HS code 731412) |
5.0
|
24.8
|
16.2 |
Other woven fabrics of corrosion-resistant steel (731414) |
16.5
|
360.7
|
16.3 |
Other wire cloth of ferrous metal (HS code 731419) |
143.6
|
304.9
|
16.4 |
Grill, netting and fencing, welded at intersections, of ribbed wire with a maximum cross sectional dimension of 3 mm or more and having a mesh size of 100 cm2 or more (HS code 73142010) |
27.6
|
95.1
|
16.5 |
Other grill, netting and fencing, welded at intersections, of wire with a maximum cross sectional dimension of 3 mm or more and having a mesh size of 100 cm2 or more (HS code 73142090) |
81.7
|
52.2
|
16.6 |
Other galvanized grating, wire mesh and fencing, welded at intersections (HS code 731410) |
401
|
1,213.7
|
16.7 |
Other grill, netting and fencing, welded at intersections (HS code 731439) |
453.6
|
2,468.3
|
16.8 |
Galvanized wire meshes with hexagonal cells (HS code 73144110) |
83.0
|
172.1
|
16.9 |
Other galvanized wire mesh, grating and fencing (HS code 73144190) |
357.3 |
844.2 |
Source: Prepared by AMME
Reasons for existing gaps in the value chain of MMC products
Main reasons for existing gaps in the value chain of MMC products include the following:
1) Lack of a reasonable state program on the development of value chain in the RK MMC within the first State Program on Accelerated Industrial and Innovative Development (SPAIID) of Kazakhstan for 2010-2014;
2) Lack of experience in identifying gaps of the value chain that not allowed to include specific measures for their development in the first SPAIID;
3) Priority areas in the value chain development, and indeed in other sectors of processing industry of Kazakhstan, determined not only by using scientifically-based economic methods, but also intuitively that did not allow to develop required value chains within the first SPAIID that are really in high demand in sectors of the national Kazakhstan's economy;
4) SPAIID has been developed prior to the adoption of regulations, governing the issues on the state support of industrial and innovative activity (the RK Law "On State Support of Industrial-Innovative activity"; comprehensive business support programs "Performance 2020", Rehabilitation Program, "Business Road Map 2020") that did not allow to stimulate the development of value chain processes by small and medium-sized businesses;
5) Within the Industrialization Map for 2010-2014, we can trace the raw material orientation of implemented investment projects in the field of MMC. Only 14 projects in the total amount of 54,493 mln. tenge or 8.6% of the total amount of financing for projects realized in the field of MMC are accounted for the output of products with high value-added among the total number of introduced projects. A similar trend is also observed within the second Industrialization Map for 2015 -2019.
6) For foreign investors it is unprofitable to develop a value chain in Kazakhstan, especially in the ferrous metallurgy of the country, due to the adverse conjuncture on the world market for MMC product, and due to the receiving more profits from the sale of ferrous and non-ferrous metals, rather than from the sale of products with high added value.
5. Strengths of the Industry.
Mining and metallurgical industry is one of the most important branches of industry, which determine the economic, social and technological development of the Republic of Kazakhstan on a par with oil and gas industry and energy sector. Long-term forecasting and identifying an innovative potential of technological areas are priority tasks for the successful planning of development of this branch.
Mining and metallurgical industry of Kazakhstan has a number of favorable conditions for the successful development of this branch in the long term, among which are the following:
- transport and geographical location of enterprises and their access to global markets (proximity of Kazakhstan to South-East Asia and Russia, large exporting companies also have a widespread access to the markets of the European Union and USA);
- availability of energy resources and own raw-material base represented by ores of ferrous and non-ferrous metals, coking coals, rare, rare-earth, radioactive and precious metals;
- presence of a strong industrial base and well-developed infrastructure of the enterprises with specialized research centers (factory laboratories);
- foreign investment attractiveness of this branch of industry;
- existing raw-material orientation of the economy in the absence of any process stages.
Table 12. Strengths of the legislation and governmental regulation:
- availability of a sufficiently complete national legislation in different fields; - availability of approved fundamental strategic and program documents;
- availability of a variety of state support measures for business entities engaged in MMC; - availability of the necessary legal framework and infrastructure to develop domestic processing and to manufacture products with high added value in the metallurgy. |
Source: Prepared by AMME.
Table 13. Strengths of the ferrous metallurgy
- strategic role of the ferrous metallurgy in providing GDP; - most of the exported products meet quality requirements of users; - globalization of Kazakhstan's mining and metallurgical industry (ArcelorMittal, Kazakhmys, of ENRC, Kazzinc and others) and its compliance with a high level of industrial culture; - defining role of metallurgy in the economy of Kazakhstan; - high demand for ferrous metals in the long term; - complexity of mineral ores; - complex content of commercial components on the deposits; - considerable demand for metals and metal products in the foreign markets; - development of related national branches of economy that consume metals (mechanic engineering, construction, railway sector, energy sector, etc.); - possibilities to create new production facilities for manufacturing products with high added value based on rare and base metals produced. - availability of own mineral resources base (ores of ferrous, rare, rare-earth and radioactive metals, etc.); - availability of a well-developed industrial infrastructure (mines, large mining and processing works, iron and steel works, including integrated ones, railway transport, and power grids); - availability of sectorial research centers, institutes, national and university engineering-type laboratories, research centers at enterprises; - wide range of produced metals, including rare and rare-earth; - availability of domestic scientific and technological developments to arrange production facilities for deep and complex processing of mineral raw materials; - presence of the leading companies engaged in mining and production of metals with access to the world markets; - availability of competitive technologies to extract metals that are scarce in the global market; - availability of deposits that are potential for development. |
Source: Prepared by AMME
Review on ferrous metallurgy (pins and bars, shapes, wire)
1. Introduction.
Ore mining and smelting industry is the leading industry of Kazakhstan national economics, the share of which is 15.2% in the total volume of commercial production. Many of ore mining and smelting producing units are town-forming, and thus the development of OMSS implies the city development and workplaces for more than 200 thous. people.
Ore mining and smelting sector comprises various life spheres, starting from geologic exploration, through to finished-product output and its internal and external market promotion, and for that reason, we have conducted several summary reviews.
The first part of this review represents the description of ferrous metallurgy structure in Kazakhstan, the domestic market for pins, shapes, wires production etc., prospective sales markets are further described below, we have also identified the stakeholders and their share of the market, existing barriers and constraints, the potentials list for entrepreneurial initiatives has been also provided.
1.1. Industry structure.
The volume of product manufacturing in Kazakhstan metallurgical industry in 2014 in effective prices was 1,915.250 mln. tenge, or 122% of the level of 2010 (1,569.969 mln. tenge).
In the general structure of Kazakhstan industrial production the share of metallurgy as of the end of 2014 was 10,4%, in the structure of processing industry (5,872,834 mln. tenge) was 32.6%.
The volume of ferrous metallurgy production in 2014 in effective prices was 765.441 bln. tenge, or 86.68% as of the level of 2010.
Table 1. The volumes of ferrous metallurgy production in monetary value for 2010-2014 yrs., mln. tenge
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010 |
Ferrous metallurgy |
883,001 |
785,432 |
1,964,416 |
1,752,059 |
765,441 |
86.68 |
Resource: as per data of Committee on Statistics of MNE of the RK
In the general structure of Kazakhstan industrial production, the share of ferrous metallurgy as of the end of 2014 was 4.2%, in the structure of metallurgy industry it was 39.8%.
For the period of 2010-2014, the rate of growth in physical value in the manufacture of ferrous metallurgy production has increased for the following units: pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) for construction – 249.8%; shapes and angles, cold-pressed or bended made of non-alloyed carbon steel– 185.1%.
Table 2. The volumes of ferrous metallurgy production in physical value for 2010-2014 yrs.
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010, % |
|
Pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) for construction, tons |
94,327 |
19,0746 |
120,900 |
60,291 |
235,612 |
249.8 |
Shapes and angles, cold-pressed or bended made of non-alloyed carbon steel, tons |
19,643 |
32,381 |
33,885 |
30,590 |
36,353 |
185.1 |
Resource: as per data of Committee on Statistics of MNE of the RK
As of August 1, 2015, OMSI (ore mining and smelting industry) of Kazakhstan has involved 166 manufacturers with the participation of foreign capital, which includes 8 enterprises for iron ore extraction, 42 – in ferrous metallurgy; 8 – for metal casting.
Table 3. The number of operating OMSS enterprises with the participation of foreign capital as of August 01, 2015, units
|
Total |
Joint enterprises (with foreign participation) |
foreign |
Iron ore extraction (071) |
8 |
4 |
4 |
Iron, steel and ferrous alloy manufacture, pipe, pipeline, shape and steel fitting manufacture, manufacture of other steel articles by means of primary treatment (FERROUS METALLURGY (241,242,243)) |
42 |
20 |
22 |
Metal casting (245) |
8 |
4 |
4 |
Resource: as per data of Committee on Statistics of MNE of the RK
1.2. Domestic market capacity.
The capacity formation of OMSS production market and its growth rate is influenced by both external (the change of world market conjuncture for the products of industry) and internal factors that are determined by the prospect of further development of separate domestic enterprises and the sectors of national economy.
Thus, the analysis has showed that the highest level of ferrous metallurgy products market capacity for 2014 is observed for the following units:
Pins and other bars made of alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) – market capacity is 531,900.6 tons, or has increased by 4.58 times when compared to 2010;
Pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) – market capacity is 410,718.3 tons, or has increased by 5.8% when compared to 2010;
Pins and other bars made of alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) – market capacity is 251,535.1 tons, or has increased by 11.0% when compared to 2010;
Shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel – market capacity is 202,436.4 tons, or has increased by 6.79 when compared to 2010.
The highest growth rate of market capacity for the period of 2010-2014 has been specific to the following units of ferrous production:
Shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel – 679.52%;
Pins and other bars made of alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) – 458%;
Bars (pins) and shapes, cold-drawn made of stainless steel– 350.25%.
Though in 2010-2014 the world economic crisis, decreased business activity in separate metal-consuming sectors of national economy, decline in demand for OMSS products, led to the abrupt shrinkage of market capacity for the following units of ferrous production:
Pins and other bars made of stainless steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) – 41%.
Table 4. Market capacity and consumption of ferrous metallurgy products of the Republic of Kazakhstan for 2010-2014yrs., tons
Pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
388 074,40 |
410 718,30 |
105,83 |
Production |
76 735,00 |
237 814,00 |
309,92 |
Import |
323 119,20 |
306 417,40 |
94,83 |
Consumption |
388 074,40 |
410 718,30 |
105,83 |
Export |
11 779,80 |
133 513,10 |
By 11,33 times |
Pins and other bars made of stainless steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
1 780,80 |
730,00 |
41 |
Production |
1 347,00 |
0 |
0 |
Import |
433,8 |
730 |
168,3 |
Consumption |
1 780,80 |
730,00 |
41 |
Export |
0 |
0 |
0 |
Pins and other bars made of alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
116 012,20 |
531 900,60 |
458,49 |
Production |
12 931,00 |
352 761,00 |
By 27,28 times |
Import |
103 397,70 |
197 092,90 |
190,62 |
Consumption |
116 012,20 |
531 900,60 |
458,49 |
Export |
316,5 |
17 953,30 |
By 56,72 times |
Pins and other bars made of alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
226 514,70 |
251 535,10 |
111 |
Production |
3 689,00 |
5 545,00 |
150,3 |
Import |
230 106,30 |
248 023,10 |
107,8 |
Consumption |
226 514,70 |
251 535,10 |
111 |
Export |
7 280,60 |
2 033,00 |
27,9 |
Bars (pins) and shapes, cold-drawn made of alloyed steel, but for stainless steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
61 073,60 |
59 222,40 |
96,97 |
Production |
55 170,00 |
51 198,00 |
92,80 |
Import |
7 825,90 |
8 681,70 |
110,94 |
Consumption |
61 073,60 |
59 222,40 |
96,97 |
Export |
1 922,30 |
657,3 |
34,19 |
Bars (pins) and shapes, cold-drawn made of stainless steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
1 039,50 |
3 640,80 |
350,25 |
Production |
1 015,00 |
0 |
0 |
Import |
83,9 |
3 640,80 |
by 43,39 times |
Consumption |
1 039,50 |
3 640,80 |
350,25 |
Export |
59,4 |
0 |
|
Shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
29 791,00 |
202 436,40 |
679,52 |
Production |
23 633,00 |
41 216,00 |
174,40 |
Import |
20 536,10 |
171 657,10 |
835,88 |
Consumption |
29 791,00 |
202 436,40 |
679,52 |
Export |
14 378,10 |
10 436,70 |
72,59 |
Wire, cold-drawn and made of non-alloyed (carbon) steel |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
61 888,70 |
104 038,50 |
168,11 |
Production |
5 871,00 |
18 616,00 |
317,08 |
Import |
56 142,30 |
87 049,30 |
155,05 |
Consumption |
61 888,70 |
104 038,50 |
168,11 |
Export |
124,6 |
1 626,80 |
13056 |
Stranded wire, ropes, roots, braided cord and similar items made of ferrous metals, without electrical insulation |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
15 508,60 |
17 625,70 |
113,65 |
Production |
1 211,00 |
3 336,20 |
275,49 |
Import |
15 261,30 |
16 500,00 |
108,12 |
Consumption |
15 508,60 |
17 625,70 |
113,65 |
Export |
963,7 |
2 210,50 |
229,38 |
Barbed wire made of ferrous metals; stranded wire, ropes, roots, braided cord and similar items made of copper or aluminium, without electrical insulation |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
7 875,20 |
9 787,00 |
124,28 |
Production |
5 920,80 |
8 084,70 |
136,55 |
Import |
2 394,00 |
2 221,70 |
92,80 |
Consumption |
7 875,20 |
9 787,00 |
124,28 |
Export |
439,6 |
519,4 |
118,15 |
Cloth, gratings, gauzes and guards made of steel or copper wire; metal gauzes made of ferrous metals or copper |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
11 144,90 |
16 727,50 |
150,09 |
Production |
2 832,20 |
7 637,40 |
269,66 |
Import |
8 459,80 |
11 566,10 |
136,72 |
Consumption |
11 144,90 |
16 727,50 |
150,09 |
Export |
147,1 |
2 476,00 |
16,83р |
Nails, pins, drawing pins, hooks and similar items |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
19 753,20 |
17 736,00 |
89,79 |
Production |
1 721,80 |
712,6 |
41,39 |
Import |
18 042,40 |
17 035,80 |
94,42 |
Consumption |
19 753,20 |
17 736,00 |
89,79 |
Export |
11 |
12,4 |
112,73 |
Chains, but for link chains, and their parts |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
1 802,60 |
1 870,50 |
103,77 |
Production |
0 |
14,4 |
0 |
Import |
1 814,90 |
1 861,60 |
102,57 |
Consumption |
1 802,60 |
1 870,50 |
103,77 |
Export |
12,3 |
5,5 |
44,72 |
Cut thread products made of ferrous metals, not elsewhere classified |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
28 385,80 |
37 426,20 |
131,85 |
Production |
2 399,10 |
1 778,80 |
74,14 |
Import |
26 209,10 |
35 886,10 |
136,92 |
Consumption |
28 385,80 |
37 426,20 |
131,85 |
Export |
222,4 |
238,7 |
107,33 |
Other non-thread fastenings made of ferrous metals |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
2 797,40 |
1 912,70 |
68,37 |
Production |
46,8 |
93,1 |
198,93 |
Import |
2 759,10 |
1 825,30 |
66,16 |
Consumption |
2 797,40 |
1 912,70 |
68,37 |
Export |
8,5 |
5,7 |
67,06 |
Cut thread products, non-thread fastenings made of copper |
|||
|
2010 |
2014 |
2014 to 2010, % |
Market capacity |
309,30 |
610,50 |
197,38 |
Production |
0 |
440 |
0 |
Import |
309,6 |
170,5 |
55,07 |
Consumption |
309,30 |
610,50 |
197,38 |
Export |
0,3 |
0 |
0 |
Resource: as per data of Committee on Statistics of MNE of the RK
1.3. Potential market outlets of ferrous metallurgy products
1. Pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling)
The sale on the Kazakhstan domestic market of pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) in 2014 was 410718,2 tons, increased and amounted to 105.8% when compared to 2010. At the domestic market 75.5% of the given products are consumed by the enterprises of Kazakhstan, 24.5% are directed to export.
Table 5. The sale of pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling)
2010 |
Relative share, % |
2014 |
Relative share, % |
2014/2010, % |
|
Sale on the market of the Republic of Kazakhstan |
388 074,4 |
97,1 |
410 718,3 |
75,5 |
105,8 |
Sale on external markets |
11 779,8 |
2,9 |
133 513,1 |
24,5 |
11,3 times |
Resource: as per data of Committee on Statistics of MNE of the RK
The main market outlets for this product group considering the current global rolled market conditions are to be represented by the following:
1) Bars made of iron or non-alloyed steel, that have depressions, welds, tracks and other deformations manufactured in the process of rolling or twisted after the rolling: it is necessary to expand the operating Central Asian markets and other boundary countries – in Turkmenistan up to 45,000 tons (41,104.0 tons in the amount of 22,885.3 thousand USD has been exported in 2014); in Tajikistan up to 35,000 tons (32,632.8 tons in the amount of 18,279.8 thousand USD has been exported in 2014); in Azerbaijan up to 20,000 tons (18,534.9 tons in the amount of 10,372.0 thousand USD has been exported in 2014); in Uzbekistan up to 6,500 tons (6,096.2 tons in the amount of 5,411.2 thousand USD has been exported in 2014) and in the Kyrgyz Republic up to 4500 tons (4,020.4 tons in the amount of 2,354.1 thousand USD has been exported in 2014).
In other countries across the world: to expand the operating market in Iran up to 20,300 tons (1967.2 tons in the amount of 730.3 thousand USD has been exported in 2014). Develop the new markets in Afghanistan where these products are not supplied;
2) Bars made of iron or non-alloyed steel with rectangular (but for square) cross-section, that contain 0.25 wt. % and more of carbon: to expand the operating market in Iran up to 10 tons (4.5 tons in the amount of 1.0 thousand USD has been exported in 2014). Develop the new markets in Central Asian countries, and also in Afghanistan, where these products are not supplied;
3) Other bars made of iron or non-alloyed steel, that contain less than 0.25 wt. % of carbon of round section, less than 80 mm in diameter: it is possible to expand the operating market in Uzbekistan up to 1,500 tons (1,346.0 tons in the amount of 347.9 thousand USD has been exported in 2014). Develop the new markets in other Central Asian countries and Iran.
4) Other bars made of iron or non-alloyed steel, that contain less than 0.25 wt. % of carbon: it is necessary to expand the operating market in the Kyrgyz Republic up to 3.5 tons per year (1.7 tons in the amount of 2.2 thousand USD has been exported in 2014). Develop the new markets in Tajikistan, Turkmenistan.
Uzbekistan has his own manufacturers that produce the similar products that are supplied to the Kazakhstan market in great volumes.
Market entry conditions for pins and bars made of non-alloyed steel (one of the rolling types) in Tajikistan, Turkmenistan, Azerbaijan, Iran, Afghanistan are specified in paragraphs “3. Non-alloyed steel in ingots or other initial forms and carbon (non-alloyed) steel semi-fabricated products” and “5. Non-alloyed steel flat products, hot-rolled, without further processing, with not less than 600 mm in width”.
2. Shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel
The sale of shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel in Kazakhstan market in 2014 was 202,436 tons, and amounted to 680% when compared to 2010. At the domestic market 95.1% of the given products are consumed by the enterprises of Kazakhstan, 4.9% - are directed to export.
Table 6. The sale of shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel
2010 |
Relative share, % |
2014 |
Relative share, % |
2014/2010, % |
|
Sale on the market of the Republic of Kazakhstan |
29 791,0 |
67,4 |
202 436,4 |
95,1 |
6,8р. |
Sale on external markets |
14 378,1 |
32,6 |
10 436,7 |
4,9 |
72,6 |
Resource: as per data of Committee on Statistics of MNE of the RK
On that basis, one of the potential sales market for shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel can be represented by Kazakhstan domestic market, whose activity at the present moment is focused on the realization of priority guidelines for “State program for infrastructure development “Nurly zhol” for 2015-2019 years” (hereinafter referred to as the Program). “The Program is intended to create the single market in Kazakhstan on the basis of the formation of country macro regions with the definition of Almaty city, Astana city, Aktobe city, Shymkent city and Oskemen city as the hub cities of national and international level”.
“The development of hubs and macro regions will be followed by consolidation of residential infrastructure, modernization of housing and utility sector and the systems of heating, water supply and water disposal. The special emphasis will be placed on the social infrastructure development of macro regions (schools, child day-care centres, higher educational institutions)”.
“The Program is aimed to resolve the most pressing issues in the sphere of education – dangerous school buildings, deficit of child day-care centres, also material and technical base of higher educational institutions”.
“The collateral events shall be performed also as the part of effective program documents – State program for development and integration of transport infrastructure until 2020; State program for industrial and innovative development for 2015-2019 (STIID), State program for regional development until 2020, State program for education development for 2011-2020 and others.
The development of transport communication, energy, social housing and utility spheres as the part of the forenamed Programs will stimulate the demand for building materials, industrial products that will encourage the sale of shapes and angles, cold-pressed, and other OMSS production for its domestic sale in Kazakhstan”.
The potential sale markets for shapes and angles, cold-pressed or bended made of non-alloyed steel can be also represented by external markets for the following products:
1) Angles, formed and special shapes, without further processing, but for cold deformation or cold finish, produced from flat products, others: it is possible to expand the operating market in the Kyrgyz Republic up to 50 tons (41,9 tons in the amount of 18,9 thousand USD has been delivered in 2014, and also to develop the new markets in Central Asian countries, and boundary Afghanistan;
2) Profiled sheeting, cold-deformed or cold-finished, produced from flat products: it is possible to expand the operating market in the Kyrgyz Republic up to 500 tons (480.9 tons in the amount of 752.1 thousand USD has been delivered in 2014); in Tajikistan up to 500 tons (466.1 tons in the amount of 204.9 thousand USD has been delivered in 2014), and also to develop the new markets in Central Asian countries, and boundary Azerbaijan;
3) Other sheeting, cold-deformed or cold-finished, produced from flat products: it is possible to expand the operating market in the Kyrgyz Republic up to 10 tons (4.1 tons in the amount of 6.6 thousand USD has been delivered in 2014); in Tajikistan up to 120 tons (96.2 tons in the amount of 245.6 thousand USD has been delivered in 2014), and also to develop the new markets in Central Asian countries, and boundary Azerbaijan;
4) Angles, formed and special shapes made of iron or non-alloyed steel: it is possible to expand the operating market in Uzbekistan up to 8,500 tons (8,223.2 tons in the amount of 2,161.7 thousand USD has been delivered in 2014); in the Kyrgyz Republic up to 50 tons (39.6 tons in the amount of 37.5 thousand USD has been delivered in 2014); in Turkmenistan up to 800 tons (778.6 tons in the amount of 546.7 thousand USD has been delivered in 2014); and also to tap the new market in Tajikistan.
Entry conditions in external market for shapes and angles, cold-pressed or bended made of non-alloyed steel (one of the rolling types) in Tajikistan, Turkmenistan, Azerbaijan, Iran, Afghanistan are to be favourable and specified in paragraph “5. Non-alloyed steel flat products, hot-rolled, without further processing, with not less than 600 mm in width”.
2. The number of enterprises (stakeholders) in the market
Market capacity with the current number of stakeholders in the market of ferrous metallurgy products
1. Pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) (KPVED 241062 products, which include 5 names with the codes of TNVED 721410,721420, 721430, 721491, 721499).
The market capacity for pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) in Kazakhstan in 2014 was 410718,2 tons, and amounted to 105.8% when compared to 2010. 43.7% of this production is manufactured in Kazakhstan, another part (56.3%) is delivered from other countries. At the domestic market 75.5% of the given products are consumed and processed by the enterprises of Kazakhstan, 24.5% - are directed to export.
The main domestic stakeholders at this market are represented by the following 7 enterprises:
- SSGPO JSC;
- EC Casting LLC;
- Ferrum-Vtor LLP;
- Evraz Caspian Steel LLP;
- ALZ LLP;
- Germes-B.Е. LLP;
- Metal Product LLP.
The main foreign stakeholders are Russia, and also the Kyrgyz Republic, the Republic of Uzbekistan, China.
Table 7. The share of stakeholders in the market of pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling)
|
2014 |
|
tons |
Market share, % |
|
Production |
237 814,00 |
|
Export |
133 513,10 |
|
The share of stakeholders from the Republic of Kazakhstan |
104 300,90 |
25,39 |
SSGPO JSC |
46 935,41 |
45,0 |
EC Casting LLC |
20 338,68 |
19,5 |
Ferrum-Vtor LLP |
10 430,09 |
10,00 |
Evraz Caspian Steel LLP |
12516,11 |
12,00 |
ALZ LLP |
8344,0 |
8,00 |
Germes-B.Е. LLP |
521,50 |
0,50 |
Metal Product LLP |
5 215,05 |
5,00 |
The share of foreign stakeholders |
306 417,40 |
74,61 |
China |
925,7 |
0,23 |
The Kyrgyz Republic |
2450,6 |
0,60 |
The Republic of Uzbekistan |
2112,1 |
0,51 |
Great Britain |
0,1 |
0,00 |
Turkey |
1,4 |
0,00 |
USA |
2 |
0,00 |
Germany |
1,9 |
0,00 |
The Czech Republic |
0,3 |
0,00 |
Iran |
|
- |
Poland |
1,2 |
0,00 |
Germany |
1,9 |
0,00 |
Russia |
300920,2 |
73,27 |
Market capacity |
410 718,30 |
100,00 |
Resource: as per data of Committee on Statistics of MNE of the RK, CCC (Customs Control Committee) of MF (Ministry of Finance) of the RK (the Republic of Kazakhstan) and enterprises
3. Shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel (KPVED 243311 products, which include 3 names with the codes of TNVED 721661, 721699, 721691).
The market capacity for shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel in Kazakhstan in 2014 was 202,436 tons, and amounted to 680% when compared to 2010. 19.4% of this production is manufactured in in the Republic of Kazakhstan, another part (80.6%) is delivered from other countries. At the domestic market 95.1% of the given products are consumed and processed by the enterprises of Kazakhstan, 4.9% - are directed to export.
Table 8. The share of stakeholders in the market of shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel
1 |
Dsk Servis LLP |
24 |
Stroy Komplekt-7 LLP |
2 |
Metall Con. LLP |
25 |
Br. Tsentrsantekhmontazh - Karaganda sanitary ware factory JSC |
3 |
Company Aziya Plast LLP |
26 |
Rannila Kazakhstan LLP |
4 |
Ags Stroyindustriya LLP |
27 |
Elit Stroy Servis-7 LLP |
5 |
Lomir LLP |
28 |
Rk Metiz LLP |
6 |
Br. UPTK (Production and processing equipment agency) Mak Almatygorstroy CJSC |
29 |
Meyirim LLP |
7 |
Universalstroy Temirtau LLP |
30 |
Vad-Prom LLP |
8 |
Knauf Gips Kapshagay Enteprise With the participation of DEG-Deutsche Investitions Und Entwicklungsgesellschaft Mbh LLP |
31 |
Karplaz LLP |
9 |
Arselormittal Temirtau JSC |
32 |
Sultan Progressive Company LLP |
10 |
Alsib LLP |
33 |
Progress-Sm LLP |
11 |
Vtoroe Dykhanie LLP |
34 |
Kurylysmet LLP |
12 |
Polimermetall-T LLP |
35 |
Evrostroy-A LLP |
13 |
Tair-Sv LLP |
36 |
Leka LLP |
14 |
Profil’-M LLP |
37 |
Venteco LLP |
15 |
Prof Land LLP |
38 |
Leka-Karaganda LLP |
16 |
KMK Profil LLP |
39 |
Biv LLP |
17 |
firm Temir LLP |
40 |
Metall-Invest Kz LLP |
18 |
Nur-Tim LLP |
41 |
Plastokonstruktor LLP |
19 |
Temir Ltd LLP |
42 |
Art Klimat LLP |
20 |
Azurit LLP |
43 |
Antei LLP |
41 |
Shatyr-Plus LLP |
44 |
Metprof-М LLP |
22 |
Azok LLP |
45 |
Avtoob”edinenie LLP |
23 |
Br. Stynergy LLP in Temirtau city |
46 |
Branch 91 RSE "Enbek-Karaganda" |
Resource: as per data of Committee on Statistics of MNE of the RK
However, among the domestic stakeholders at this market the leading position is taken by ArselorMittal Temirtau JSC – 12.92%. It is followed by Prof Land LLP 0.76% and Stynergy LLP in Temirtau city – 0.46% of market capacity. Among the foreign countries Russia is dominating – 83.35%.
Table 9. The share of stakeholders in the market of shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel
|
2014 |
|
tons |
Market share, % |
|
Production |
41 216,00 |
|
Export |
10 436,70 |
|
The share of stakeholders from the Republic of Kazakhstan |
30 779,30 |
15,2 |
ArselorMittal Temirtau JSC |
26162,405 |
12,92 |
Prof Land LLP |
1 538,97 |
0,76 |
Br. Stynergy LLP in Temirtau city |
923,38 |
0,46 |
Other |
2154,551 |
1,06 |
The share of foreign stakeholders |
171 657,10 |
84,8 |
Ukraine |
19,1 |
0,01 |
Austria |
33,1 |
0,02 |
Great Britain |
2,8 |
0,00 |
Germany |
33,5 |
0,02 |
Italy |
82,5 |
0,04 |
China |
1 952,80 |
0,96 |
UAE |
4,6 |
0,00 |
USA |
0,3 |
0,00 |
Turkey |
356,6 |
0,18 |
France |
0,5 |
0,00 |
The Czech Republic |
0,5 |
0,00 |
Russia |
168731,7 |
83,35 |
Korea |
157,5 |
0,08 |
Latvia |
2,00 |
0,00 |
The Kyrgyz Republic |
60,9 |
0,03 |
Belgium |
15,6 |
0,01 |
Hungary |
64,9 |
0,03 |
Iran |
42,4 |
0,02 |
Market capacity |
202 436,40 |
100 |
Resource: as per data of Committee on Statistics of MNE of the RK and enterprises
4. Wire, cold-drawn and made of non-alloyed (carbon) steel (KPVED 243411 products, which include 4 names with the codes of TNVED 721710, 721720, 721730, 721790).
The market capacity for wire, cold-drawn and made of non-alloyed (carbon) steel, in Kazakhstan in 2014 was 104,038.5 tons, or 168.1% when compared to 2010. 17.6% of this production is manufactured in the Republic of Kazakhstan, another part (82.4%) is delivered from other countries. At the domestic market 98.5% of the given products are consumed by the enterprises of Kazakhstan. 1.5% - are directed to export.
The main domestic shareholders are represented by Kaz-metiz LLP in Karaganda region (introduced on the basis of Map of Industrial development in October 2013) for the manufacturing of steel wire-rope production with monthly volume of output saleable products of all types amounting to more than 2 thous. tn.; KSP steel LLP and Kazakhstan Chinese metallurgical company LLP in Temirtau city).
The main foreign stakeholders in Kazakhstan market are represented by China and England, and also the minor volume is supplied by Germany, Italy Poland, USA and Turkey.
Table 10. The share of stakeholders in the market of wire, cold-drawn and made of non-alloyed (carbon) steel
|
2014 |
|
tons |
Market share, % |
|
Production |
18 616,00 |
|
Export |
1 626,80 |
|
The share of stakeholders from the Republic of Kazakhstan |
16 989,20 |
16,33 |
KSP Steel LLP |
5946,22 |
5,72 |
Kaz-metiz LLP |
4 247,30 |
4,08 |
Kazakhstan Chinese metallurgical company LLP |
6795,68 |
6,53 |
The share of foreign stakeholders |
87 049,00 |
83,67 |
Germany |
27,8 |
0,03 |
China |
8 812,50 |
8,47 |
Russia |
79705 |
76,61 |
Slovakia |
21 |
0,02 |
Italy |
9,6 |
0,01 |
Other |
59,88 |
0,06 |
Turkey |
98,40 |
0,09 |
Ukraine |
127 |
0,12 |
Other |
59,88 |
0,06 |
Market capacity |
104 038,20 |
100,00 |
Resource: as per data of Committee on Statistics of MNE of the RK, CCC of MF of the RK and enterprises
3. Barriers, restrictions and its elimination guidelines.
The greatest amount of measures in the sphere of metallurgy that are classified as trade barriers, are applicable to the Russian Federation, and after to the Republic of Belarus. The minor number of measures affects the Republic of Kazakhstan.
Under the character of potential trade barriers, we understand antidumping, compensatory and special safeguard investigations performed by the third countries in case if the provisional duty is not imposed for the period of investigation. This category also includes the threat of prohibition and technical barriers introduction by the third countries, and also other non-tariff measures, the imposition question of which is considered by the third countries, and which do not affect yet, in the long term can affect the supplies from the member states of Union to the markets of these countries. At the present moment potential trade barriers include 23 measures.
The limiting measures are represented by the measures that do not have direct negative influence on the export from the member states of Union at the present moment, and also the measures introduced by the third countries in relation to the goods that are supplied to the member states of Union are absent or insignificant at the present time. This category is comprised by 30 measures.
Table 11. Trade barriers that act on the markets of third countries in relation to the metallurgical production of the member states of the Customs Union and the Single Economic Area in 2014
The country of measure operating |
Measure description |
Azerbaijan |
The application of penalty excise rate in relation to the range of goods. |
Argentina |
Since February 1, 2012 the import of any good into Argentina can be performed only after the acquisition of nonautomatic license. The license issue can be linked with the acceptance of liabilities from the exporter on the voluntary volume restriction or export value, economic investment in Argentina and other restrictions. |
Argentina |
Since March 2011, there is an unpublicized rule in Argentina according to which high volume importers are obliged to provide the detailed program compensating the import by export supplies in prime import entry. At the present moment, the companies that are intended to import the end products or its parts are obliged to sign the agreement with the government for compulsory export of Argentinian good at the stated cost. |
USA |
Antidumping measure in relation to the steel reinforcing from the Republic of Belarus. Measure expiration date – 2018. |
Turkmenistan1 |
The application of penalty excise rate in relation to the range of imported goods. |
Turkey |
Antidumping measure in relation to refined copper wire from the Russian Federation. Measure expiration date - 2015. |
Uzbekistan |
The application of penalty excise rate in relation to the wide range of imported goods. |
Resource: The report of UNECE for 2014.
Table 12. Potential trade barriers identified at the markets of third countries in 2014
The country of measure operating |
Measure description |
EU |
The possibility to establish more strict rules for the completion and issuance conditions applied to the documents on imported good that is the supervised imported object in the course of special safeguard investigation, which includes the possibility to establish the reduced validity period of the import documents and outline the terms of its cancellation. |
Ukraine |
The imposition of special sanctions in case of the violation of Ukrainian regulation in the sphere of international economic activity (individual licensing mode, temporary suspension of international economic activity)in accordance with Article 37 of the law of Ukraine “On international economic activity” |
Resource: The report of UNECE for 2014.
Table 13. The limiting measures for metallurgic production in 2014, actual in the market of third countries
The country of measure operating |
Measure description |
India |
Compulsory certification of some kinds of metal production. |
Indonesia |
Special safeguard investigation in relation to angles, shaped and special profiles. |
Columbia |
Special safeguard measure in relation to steel bars. |
Moldova |
Charges for the import of goods that pollute the environment. The list of imported goods includes 180 names of TNVED codes. |
Uzbekistan |
Consumer credit is issued to the organizations that realize only the goods produced in Uzbekistan. |
Uzbekistan |
The permission for money conversion is not issued for the ticket sales on the territory of Uzbekistan in local currency terms. |
Uzbekistan |
The conversion procedure for national currency of FCC is delayed for the period of 3 months and more. |
Uzbekistan |
The stated list of imported goods is to be sold with one year on custom registration. |
Resource: The report of UNECE for 2014.
4. The list of potential opportunities for entrepreneurial initiatives. The structure of added value chain.
The existing gaps in AVC for ferrous metallurgy production
The estimation of limits in Kazakhstan ferrous metallurgy based on the data provided by Committee on Statistics of MNE of the RK «Resources and use of the separate types of production (goods) and raw material in the Republic of Kazakhstan» for the wide range of OMSS, has demonstrated that at its initial limitations (iron and steel production) we can observe the high level of satisfaction for the industries of national economy for this production. Though at the production stage of various types of rolled metal products, regardless the wide range of manufactured goods, we can observe the problems associated with incomplete demand satisfaction for the industries of national economy.
For the share «Manufacture of rolled metal products», we can observe 100% dependency (so-called blank spots) for the following industry production that is entirely delivered from other countries:
Pins and other bars made of stainless steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) (KPVED 241064).
For this group the biggest volume of import was performed for other bars made of corrosion resistant steel (TN VED 7222309709) that has been delivered in the volume of 64.7 tons in the amount of 604,6 thousand USD in 2014;
Bars (pins), cold-drawn stainless steel (KPVED 243130). In this group for all codes of TNVED 722220 we can observe 100% dependency.
The high dependency level from 90 to 99.9% can be observed for the following codes of KPVED of ferrous metallurgy:
1) Pins and other bars made of stainless steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) (KPVED 241071), the dependency of Kazakhstan is 97.8%.
For this group of goods (KPVED 241071) 100% dependency can be observed for the following products:
- channels, beams and broad-flanged beams, without further treatment but for hot rolling, hot drawing or extrusion, less 80 mm in height, made of iron of non-alloyed steel (TNVED 721610), that have been delivered in the volume of 71.2 tons in the amount of 160,2 thousand USD in 2014;
- channels, beams and broad-flanged beams, without further treatment but for hot rolling, hot drawing or extrusion, less 80 mm in height, made of iron of non-alloyed steel (TNVED 721621), that have been delivered in the volume of 285.1 tons in the amount of 628.5 thousand USD in 2014;
- broad-flanged beams, 80 mm in height and above, but no more than 180 mm (TNVED 721633), that have been delivered in the volume of 319.1 tons in the amount of 691.1 thousand USD in 2014;
- angle sections, without further treatment but for hot rolling, hot drawing or extrusion, 80 mm in height and above (TNVED 721640), that have been delivered in the volume of115.2 tons in the amount of 175.7 thousand USD in 2014;
On 80-90% there is a high dependency for the following KPVED codes:
1) Shapes and angles, cold-pressed or bended made of non-alloyed (carbon) steel (KPVED 243311) – the dependency of the RK is 80.6%. For this group there are domestic manufacturers for all codes of TNVED.
2) Wire, cold-drawn and made of non-alloyed (carbon) steel (KPVED 243411) – the dependency of the RK is 82.4%.
For this group 100% dependency can be observed for the following products:
- wire, made of iron or non-alloyed steel, that contains less than 0.25 wt. % of carbon, with maximal section size less than 0.8 mm (TNVED 72171010). This production has been delivered in the volume of 202.7 tons in the amount of 136.0 thousand USD in 2014;
- wire, made of iron or non-alloyed steel without plated coating, that contains less than 0.25 wt. % of carbon, with maximal section size 0,8 mm and above, that has depressions, welds, tracks and other deformations (TNVED 72171031). This production has been delivered in the volume of 0.2 tons in the amount of 2.2 thousand USD in 2014;
- wire, made of iron or non-alloyed steel without plated coating, that contains less than 0.25 wt. % of carbon, with maximal section size 0.8 mm and above (TNVED 72171039). This production has been delivered in the volume of 5,574.6 tons in the amount of 3,527.0 thousand USD in 2014.
For another share production «Manufacture of rolled metal products», we can observe the following dependency level for Kazakhstan:
- Pins and other bars made of alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) (KPVED 241066) – 64.2%;
- Pins and other bars made of non-alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) (KPVED 241062) – 56.3%;
- Pins and other bars made of alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) (KPVED 241066) – 35.8%;
For the share «Manufacture of finished metal products» 100% dependency of Kazakhstan is not observed for any KPVED.
The dependency level from 90 to 99.9% can be observed for the following codes of KPVED:
Nails, pins, drawing pins, hooks and similar items (KPVED 259314) – the 96.0% dependency of the RK. For this group 100% dependency has been observed for the following products:
- drawing pins made of ferrous metals (TNVED 7317001000), that have been delivered in the volume of 14.7 tons in the amount of 16,2 thousand USD in 2014;
- other cold-pressed nails, in stripes or coils, made of wire (TNVED 7317002000), that have been delivered in the volume of 24.2 tons in the amount of 74.0 thousand USD in 2014;
- other cold-pressed nails, made of hard steel, that contains 0.5 wt. % of carbon and more (TNVED 7317004000), that have been delivered in the volume of 146.2 tons in the amount of 105.9 thousand USD in 2014;
- other galvanized nails, pins, drawing pins, riffled nails, hooks and similar items, cold-pressed, made of wire (TNVED 7317006100), that have been delivered in the volume of 76.0 tons in the amount of 139.6 thousand USD in 2014;
- antiskid spikes (TNVED 7317009001), that have been delivered in the volume of 19,7 tons in the amount of 186,7 thousand USD in 2014;
- other nails, pins, drawing pins, riffled nails, hooks (but for the listed in the position 8305) and similar items, made of ferrous metals, with and without heads made of other materials (TNVED 7317009009), that have been delivered in the volume of 463.8 tons in the amount of 817.1 thousand USD in 2014.
Chains, but for link chains, and their parts (KPVED 259317) – the dependency of the RK is 99.2%.
For this group 100% dependency is observed for the following production:
- other link chains, made of ferrous metal (TNVED 731512), that have been delivered in the volume of 39.8 tons in the amount of 469.0 thousand USD in 2014;
- the parts of link chains, made of ferrous metals (TNVED 731519), that have been delivered in the volume of 11.1 tons in the amount of 44.0 thousand USD in 2014;
- non-skid chains, made of ferrous metal (TNVED 731520), that have been delivered in the volume of 458.3 tons in the amount of 3,012.2 thousand USD in 2014;
- other flat-link chains, made of ferrous metals with stud (TNVED 731581), that have been delivered in the volume of 28.9 tons in the amount of 167.2 thousand USD in 2014;
- other chains with welded links, that consist of the elements, the maximal size of cross section is 16 mm and less (TNVED 731582), that have been delivered in the volume of 106.7 tons in the amount of 160.7 thousand USD in 2014;
- other chains with welded links, made of material, with the maximal size of cross section more than 16 mm (TNVED 731582), that have been delivered in the volume of 170.2 tons in the amount of thousand USD in 2014;
- other chain parts, made of ferrous metals (TNVED 731590), that have been delivered in the volume of 22.1 tons in the amount of 460.7 thousand USD in 2014.
3) Cut thread products made of ferrous metals, not elsewhere classified (KPVED 259411) - the dependency of the RK is 95.3%. For this group 100% dependency has been observed for the following products:
- threaded coach screws, made of ferrous metals (TNVED 731811), that have been delivered in the volume of 2,414.1 tons in the amount of 4,316.2 thousand USD in 2014;
- threaded wood screws, made of corrosion resistant steel (TNVED 731812), that have been delivered in the volume of 972.2 tons in the amount of 1,192.1 thousand USD in 2014;
- threaded hooks and rings, made of ferrous metals (TNVED 731813), that have been delivered in the volume of 77.6 tons in the amount of 555.1 thousand USD in 2014;
- threaded cutting screws, made of corrosion resistant steel (TNVED 73181410), that have been delivered in the volume of 2,184.0 tons in the amount of 1,980.9 thousand USD in 2014;
- rare threaded screws, made in the specified areas (TNVED 73181491), that have been delivered in the volume of 171.4 tons in the amount of 243.7 thousand USD in 2014;
- other threaded cutting screws, made of ferrous metals (TNVED 73181499), that have been delivered in the volume of 3,374.5 tons in the amount of 3,606.4 thousand USD in 2014;
- other threaded screws grooved of bars or wire with the depth of screw body not more than 6 mm, made of ferrous metals (TNVED 731815), that have been delivered in the volume of 52.9 tons in the amount of 216.7 thousand USD in 2014;
- attachment screws and bolts for structural elements of railway line (TNVED 73181530), that have been delivered in the volume of 716.0 tons in the amount of 2,908.7 thousand USD in 2014;
- headless screws and bolts, with ultimate tensile strength 800 MPa and above (TNVED 73181549), that have been delivered in the volume of 33.9 tons in the amount of 495.4 thousand USD in 2014;
- other headed cross recessed screws, made of ferrous metals (TNVED 73181559), that have been delivered in the volume of 566.8 tons in the amount of 637.9 thousand USD in 2014;
- other screws, with ultimate tensile strength less than 800 MPa (TNVED 73181581), that have been delivered in the volume of 1200,9 tons in the amount of 1970,5 thousand USD in 2014;
- other bolts, with ultimate tensile strength 800 MPa and above (TNVED 73181589), that have been delivered in the volume of 248,8 tons in the amount of 1577,1 thousand USD in 2014;
- other cut threaded nut screws with internal diameter not more than 12 mm (TNVED 73181691), that have been delivered in the volume of 451,1 tons in the amount of 962,4 thousand USD in 2014;
4) Other non-threaded fastenings, made of ferrous metals (KPVED 259412) - the dependency of the RK is 95,1%. For this group 100% dependency has been observed for the following products:
- other non-threaded products (TNVED 731829), that have been delivered in the volume of 414,3 tons in the amount of 3782,0 thousand USD in 2014;
- other non-threaded keys and key bolts (TNVED 731824), that have been delivered in the volume of 48,1 tons in the amount of 744,3 thousand USD in 2014;
- other non-threaded products, rivets (TNVED 731823), that have been delivered in the volume of 144,8 tons in the amount of 482,3 thousand USD in 2014;
Rolled and link chains, made of ferrous metals (KPVED 281521) - the dependency of the RK is 95,3%. For this group 100% dependency has been observed for the following products:
- rolled chains for bicycles and motorbikes (TNVED 73151110), that have been delivered in the volume of 37,2 tons in the amount of 73,3 thousand USD in 2014.
There is 80-90% dependency of the RK for the following codes of KPVED:
Stranded wire, ropes, roots, braided cord and similar items made of ferrous metals, without electrical insulation (KPVED 259311) - the dependency of the RK is 83,2%. For this group 100% dependency has been observed for the following products:
- other stranded wire, ropes, roots, with the maximal size of cross section not more than 3 mm, with plated coating or other coating with copper-zinc alloys (brass) (TNVED 7312104109), that have been delivered in the volume of 108,2 tons in the amount of 370,02 thousand USD in 2014;
- stranded wire, with the maximal size of cross section not more than 3 mm, zinc plated (TNVED 7312106500), that has been delivered in the volume of 599,6 tons in the amount of 913,2 thousand USD in 2014;
- other stranded wire, with the maximal size of cross section not more than 3 mm, coated (TNVED 7312106909), that has been delivered in the volume of 25,7 tons in the amount of 166,2 thousand USD in 2014;
- other ropes and roots (including locked ropes) with the maximal size of cross section not more than 3 mm but not more than 12 mm, uncoated (TNVED 7312108103), that have been delivered in the volume of 99,5 tons in the amount of 457,1 thousand USD in 2014;
- other ropes and roots (including locked ropes) with the maximal size of cross section not more than 12 mm but not more than 24 mm, uncoated (TNVED 7312108303), that have been delivered in the volume of 577,2 tons in the amount of 861,4 thousand USD in 2014;
- other ropes and roots (including locked ropes) with the maximal size of cross section not more than 24 mm but not more than 48 mm, zinc plated (TNVED 7312108508), that have been delivered in the volume of 573,7 tons in the amount of 2664,1 thousand USD in 2014;
- other ropes and roots (including locked ropes) with the maximal size of cross section not more than 48 mm, uncoated (TNVED 7312108903), that have been delivered in the volume of 78,6 tons in the amount of 273,0 thousand USD in 2014.
For the other production share «Manufacture of finished metal products» we can observe the following dependency level of Kazakhstan:
1) Bridges and bridge elements, made of ferrous metals (KPVED 251121) - 79,1%.
2) Cloth, gratings, gauzes and guards made of steel or copper wire; metal gauzes made of ferrous metals or copper (KPVED 259313) - 60,2%. For this group 100% dependency has been observed for the following products:
- endless belts, made of corrosion resistant steel for cars, made of ferrous metals (TNVED 731412), that have been delivered in the volume of 5,0 tons in the amount of 24,8 thousand USD in 2014;
- other braid fabrics, made of corrosion resistant steel (731414), that have been delivered in the volume of 16,5 tons in the amount of 360,7 thousand USD in 2014;
- other wire gauze, made of ferrous metal (TNVED 731419), that have been delivered in the volume of 143,6 tons in the amount of 304,9 thousand USD in 2014;
- gratings, gauzes and guards, with welded intersections, made of riffled wire, with the maximal size of cross section 3 mm and more, with cells sized 100 sq. cm. and more (TNVED 73142010), that have been delivered in the volume of 27,6 tons in the amount of 95,1 thousand USD in 2014;
- other gratings, gauzes and guards, with welded intersections, made of wire, with the maximal size of cross section 3 mm and more, with cells sized 100 sq. cm. and more (TNVED 73142090), that have been delivered in the volume of 81,7 tons in the amount of 52,2 thousand USD in 2014;
- other zinc plated gratings, gauzes and guards, with welded intersections (TNVED 731410), that have been delivered in the volume of 401 tons in the amount of 1213,7 thousand USD in 2014;
- other gratings, gauzes and guards, with welded intersections (TNVED 731439), that have been delivered in the volume of 453,6 tons in the amount of 2468,3 thousand USD in 2014;
- zinc plated gratings with hexagonal cells (TNVED 73144110), that have been delivered in the volume of 83,0 tons in the amount of 172,1 thousand USD in 2014;
- other zinc plated gratings, gauzes and guards (TNVED 73144190), that have been delivered in the volume of 357,3 tons in the amount of 844,2 thousand USD in 2014.
3) Doors and door sills, windows and metal frames (KPVED 251210) - the dependency of the RK is 34,7%;
4) Barbed wire, made of ferrous metals; stranded wire, ropes, roots, braided cord and similar items made of copper or aluminium, without electrical insulation (KPVED 259312) - 21,6%;
5) Towers and lattice towers, made of ferrous metals (KPVED 251122) -15,7%;
6) Other constructions, parts of constructions, plates, bars, angles, shapes and similar items, made of ferrous metals or aluminium (KPVED 251123) -14,3%.
Table 14. The list of potential opportunities for entrepreneurial initiatives
No. |
Product name |
Estimated market capacity |
|
Tons |
thousand USD |
||
2 |
Pins and other bars made of stainless steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) (KPVED 241064). |
|
|
2.1. |
Bars of corrosion resistant steel (code of TN VED 7222309709) |
64,7
|
604,6
|
3. |
Pins and other bars made of alloyed steel, stamped, hot-rolled, hot-drawn, hot-pressed, but without further processing (including those that are twisted after the rolling) (KPVED 241071) |
|
|
3.1. |
Channels, beams and broad-flanged beams, without further treatment but for hot rolling, hot drawing or extrusion, less 80 mm in height, made of iron of non-alloyed steel (TNVED 721610) |
71,2
|
160,2
|
3.2. |
Channels, beams and broad-flanged beams, without further treatment but for hot rolling, hot drawing or extrusion, less 80 mm in height, made of iron of non-alloyed steel (TNVED 721621) |
285,1
|
628,5
|
3.3. |
Broad-flanged beams, 80 mm in height and above, but no more than 180 mm (TNVED 721633) |
319,1
|
691,1
|
3.4. |
Angle sections, without further treatment but for hot rolling, hot drawing or extrusion, 80 mm in height and above (TNVED 721640) |
115,2 |
175,7 |
9 |
Wire, cold-drawn and made of non-alloyed (carbon) steel (KPVED 243411) |
|
|
9.1 |
Wire, made of steel or non-alloyed steel, that contains less than 0,25 wt. % of carbon, with maximal section size less than 0,8 mm (TNVED 72171010) |
202,7
|
136,0
|
9.2 |
Wire, made of iron or non-alloyed steel without plated coating, that contains less than 0,25 wt. % of carbon, with maximal section size 0,8 mm and above, that has depressions, welds, tracks and other deformations (72171031) |
0,2
|
2,2
|
9.3 |
Wire, made of iron or non-alloyed steel without plated coating, that contains less than 0,25 wt. % of carbon, with maximal section size 0,8 mm and above (72171039). |
5574,6 |
3527,0 |
10. |
Nails, pins, drawing pins, hooks and similar items (KPVED 259314) |
|
|
10.1. |
Drawing pins made of ferrous metals (TNVED 7317001000) |
14,7
|
16,2
|
10.2 |
Other cold-pressed nails, in stripes or coils, made of wire (TNVED 7317002000) |
24,2
|
74,0
|
10.3. |
Other cold-pressed nails, made of hard steel, that contains 0,5 wt. % of carbon and more (TNVED 7317004000) |
146,2
|
105,9
|
10.4 |
Other zinc plated nails, pins, drawing pins, riffled nails, hooks and similar items, cold-pressed, made of wire (TNVED 7317006100) |
76,0
|
139,6
|
10.5 |
antiskid spikes (TNVED 7317009001) |
19,7 |
186,7 |
10.6 |
Other nails, pins, drawing pins, riffled nails, hooks (but for the listed in the position 8305) and similar items, made of ferrous metals, with and without heads made of other materials (TNVED 7317009009). |
463,8 |
817,1 |
11 |
Chains, but for link chains, and their parts (KPVED 259317) |
|
|
11.1 |
Other link chains, made of ferrous metal (TNVED 731512) |
39,8
|
469,0
|
11.2 |
Parts of link chains, made of ferrous metals (TNVED 731519) |
11,1
|
44,0
|
11.3 |
Non-skid chains, made of ferrous metals (TNVED 731520) |
458,3
|
3012,2
|
11.4 |
Other flat-link chains, made of ferrous metals with stud (TNVED 731581); |
28,9
|
167,2
|
11.5 |
Other chains with welded links, that consist of the elements, the maximal size of cross section is 16 mm and less (TNVED 731582) |
106,7
|
160,7
|
11.6 |
Other chains with welded links, made of material, with the maximal size of cross section more than 16 mm (TNVED 731582) |
170,2
|
-*- |
11.7 |
Other chain parts made of ferrous metals (TNVED 731590). |
22,1 |
460,7 |
12 |
Cut thread products made of ferrous metals, not elsewhere classified (KPVED 259411) |
|
|
12.1 |
Threaded coach screws, made of ferrous metals (TNVED 731811) |
2414,1
|
4316,2
|
12.2 |
Threaded wood screws, made of corrosion resistant steel (TNVED 731812) |
972,2
|
1192,1
|
12.3 |
Threaded hooks and rings, made of ferrous metals (TNVED 731813) |
77,6
|
555,1
|
12.4 |
Threaded cutting screws, made of corrosion resistant steel (TNVED 73181410) |
2184,0
|
1980,9
|
12.5 |
Rare threaded screws, made in the specified areas (TNVED 73181491) |
171,4
|
243,7
|
12.6 |
Other threaded cutting screws, made of ferrous metals (TNVED 73181499) |
3374,5
|
3606,4
|
12.7 |
Other threaded screws grooved of bars or wire with the depth of screw body not more than 6 mm, made of ferrous metals (TNVED 731815) |
52,9
|
216,7
|
12.8 |
Attachment screws and bolts for structural elements of railway line (TNVED 73181530) |
716,0
|
2908,7
|
12.9 |
Headless screws and bolts, with ultimate tensile strength 800 MPa and above (TNVED 73181549); |
33,9
|
495,4
|
12.10. |
Other headed cross recessed screws, made of ferrous metal (TNVED 73181559) |
566,8
|
637,9
|
12.11 |
Other screws, with ultimate tensile strength less than 800 MPa (TNVED 73181581) |
1200,9
|
1970,5
|
12.12. |
Other bolts, with ultimate tensile strength 800 MPa and above (TNVED 73181589) |
248,8
|
1577,1
|
12.13 |
Other cut threaded nut screws with internal diameter not more than 12 mm (TNVED 73181691). |
451,1 |
962,4 |
13 |
Other non-threaded fastenings, made of ferrous metals (KPVED 259412) |
|
|
13.1 |
Other non-threaded products (TNVED 731829) |
414,3 |
3782,0 |
13.2 |
Other non-threaded keys and key bolts (TNVED 731824) |
48,1 |
744,3 |
13.3 |
Other non-threaded products, rivets (TNVED 731823). |
144,8 |
482,3 |
14 |
Rolled and link chains, made of ferrous metals (KPVED 281521) |
|
|
14.1 |
Rolled chains for bicycles and motorbikes (TNVED 73151110). |
37,2 |
73,3 |
15. |
Stranded wire, ropes, roots, braided cord and similar items made of ferrous metals, without electrical insulation (KPVED 259311) |
|
|
15.1 |
Other stranded wire, ropes, roots, with the maximal size of cross section not more than 3 mm, with plated coating or other coating with copper-zinc alloys (brass) (TNVED 7312104109) |
108,2
|
370,02
|
15.2 |
Stranded wire, with the maximal size of cross section not more than 3 mm, zinc plated (TNVED 7312106500) |
599,6
|
913,2
|
15.3 |
Other stranded wire, with the maximal size of cross section not more than 3 mm, coated (TNVED 7312106909); |
25,7
|
166,2
|
15.4 |
Other ropes and roots (including locked ropes) with the maximal size of cross section not more than 3 mm but not more than 12 mm, uncoated (TNVED 7312108103) |
99,5
|
457,1
|
15.5 |
Other ropes and roots (including locked ropes) with the maximal size of cross section not more than 12 mm but not more than 24 mm, uncoated (TNVED 7312108303) |
577,2
|
861,4
|
15.6 |
Other ropes and roots (including locked ropes) with the maximal size of cross section not more than 24 mm but not more than 48 mm, zinc plated (TNVED 7312108508) |
573,7
|
2664,1
|
15.7 |
Other ropes and roots (including locked ropes) with the maximal size of cross section not more than 48 mm, uncoated (TNVED 7312108903) |
78,6
|
273,0
|
Resource: compiled by Association of Ore Mining and Smelting Enterprise
5. Industry advantages.
Ore mining and smelting industry belongs to the most important industries of industry on the same basis as oil and gas industry, and energetics that determine social and technological development of the Republic of Kazakhstan. Long-term projection and innovative potential identification for technological directions represent the priority tasks for the successful planning of the industry development.
Ore mining and smelting industry of Kazakhstan has the set of favourable conditions for the successful development of industry, among which we can outline the following:
- transport and geographic location of enterprises and access to world markets (proximity of the Republic to Southeast Asia and Russia, high volume importer enterprises also have multidivisional access to the markets of EU and USA);
- presence of energy sources and own raw materials base, represented by ferrous and non-ferrous metal ores, carbonization coal, rare, rare-earth, radioactive and precious metals;
- availability of extensive industrial base and advanced enterprise infrastructure with special-purpose research and development centres (industrial laboratories);
- external investment potential of industry;
- existing raw material economic orientation in the absence of any limits.
Table 15. Legislation and state regulation advantages:
- presence of sufficiently complete national legislation in various sectors; - presence of confirmed founding strategic and program documents; - presence of diversified measures of government support for business subjects in OMSS; - presence of required legal framework and infrastructure for the development of domestic processing and production of goods with higher value added in metallurgy. |
Resource: compiled by Association of Ore Mining and Smelting Enterprise.
Table 16. Ferrous metallurgy advantages
- strategic role of ferrous metallurgy in the support of GDP volume; - most of the exported production quality meets the consumers’ requirements; - globalization of ore mining and smelting industry of the Republic (ArselorMittal, Kazakhmys, ENRC, Kazzinc et al.) and its correspondence with the level of high industrial culture; - leading role of metallurgy in the Republic economy; - great demand for ferrous and non-ferrous metals in the longer term; - complexity of useful ores; - complex composition of valuable component deposits; - significant demand for metals and metal products on the foreign markets; - development of related national economic sectors that consume metals (engineering, construction industries, railway and energy sectors, etc.); - ability to organize the new enterprises for the manufacture of goods with higher value added based on the produced base and rare metals; - presence of own raw materials base (ferrous, rare, rare-earth and radioactive metal ores and others); - presence of advanced production infrastructure (mines, major mining processing plants, metallurgical enterprises, including full-scale plants, railroad transport, electrical network); - presence of industry research centres, institutes, national and university engineering laboratories, enterprise-based development centres; - wide range of produced metals, including rare and rear-earth metals; - presence of domestic research and development projects for the organization of raw deep and integrated conversion enterprises; - presence of leading companies for metal mining and production with the access to global markets; - presence of competitive technologies for the rare metal extraction in the world market; - presence of potential field development. |
Resource: compiled by Association of Ore Mining and Smelting Enterprise
Review on packing industry
Review on packing industry
1. Description of packing industry
1.1. Industry contribution to economy
Total volume of inner market of packing is within KZT 112-118 bln. per year (the value of 2013-2014). Packing consuming rate per capita in 2014 made KZT 6 746 (USD 37). Total production volume in value terms made KZT 41 bln. per year (the value of 2013-2014).
The percentage of packing market in GDP volume is 0.3%. Packing market volume is one tenth of total domestic food production volume (KZT 1,1 trn.).
Figure 1. Packing market capacity in Kazakhstan, bln. tenge
Market capacity |
Export |
Import |
Production |
Source: RK Committee on Statistics and industrial survey, provided within this research
1.2. Packing industry structure
Some changes were introduced to packing industry after Kazakhstan jointed Custom Union in 2010. Thus, according to the current revision of CU TR 005/2011 «Packing Safety», the packing is divided on the following types:
· Paper and carton
· Polymer
· Glass
· Metal
· Wooden
· Textile
· Ceramic
· Sealing
In Kazakhstan there established the production of paper and carton, polymer, glass, metal and sealing packing.
For the recent 5 years the packing market structure in RK has changed. In 2014 4/5 of the market volume was presented by the following packing types: 32% – hollow glasswork, 27% - plastic packing, 22% - corrugated carton, paper and carton packing. In 2014 these three packing types compose basic market volume, however, their ratio changes, the leading one becomes plastic packing which takes 29% of market volume, and glassware and corrugated carton with paper and carton packing take 25% each.
The analysis shows smooth reduction of hollow glassware market for 7% within 5 years, in contrast, the market of corrugated carton, paper and carton packing grows for 3% from 2010 to 2014. Plastic packing market share takes the leading position in 2011, showing the growths for 6% in 2013, in 2014 its ratio falls for 2% within the total volume of packing market.
Figure 2, 3. Packing market behavior by packing types.
Corks, caps, lids |
Light packing materials |
Metal barrels and analogues |
Hollow Glassware |
Plastic packing |
Corrugated carton, paper and carton |
Wooden |
Packing market behavior by packing types, bln. tenge |
Packing market structure in the RK. |
Wooden |
Corrugated carton, paper and carton |
Hollow Glassware |
Plastic packing |
Metal barrels and analogues |
Light packing materials |
Corks, caps, lids |
Source: RK Committee on Statistics and industrial survey, provided within this research
1/8 market share is taken by corks, caps and lids, its growth is not dramatic but has positive dynamics, except of 2012, when its volume reached the top for the recent 5 years – 9% from gross market volume.
1/20 market share is taken by light materials packing, it had positive dynamic through the 5 recent years up to KZT 6.1 bln. in 2014. Growth reduction was observed in 2013, when market capacity made KZT 4.7 bln. In general, light material packing share in total packing market of RK had grown from 3% in 2010 to 5% in 2014.
Insignificant market share of RK is taken by metal barrels and analogue vessels or wooden packing. The niche of the market of metal barrels and analogue vessels is stable and considered to be 2% of the total packing market.
Wooden packing share is 1-2% of total packing market in RK, and it shows slow growth. Increasing of wooden packing in the total market was observed in 2012 and 2014.
In general it can be said, that Kazakhstan packing market content is changing. Polymer packing usage is increasing and glassware usage is decreasing, while the general ratio of other types remains constant.
1.3. Capacity of packing materials domestic market
As on the end of 2014, domestic manufacturer occupies 36% of total market. The rest of demand is covered by imported packing.
Figure 4. Production and import of packing materials in RK
Production |
Import |
Source: RK Committee on Statistics and industrial survey, provided within this research
According to the data of Customs Control Committee of RK MF, import volume from Russia, China and Kyrgyzstan made 79% (around USD 400 mln) within the total volume of imported packing in 2013 and 81% in 2014. Basic types of imported packing are glassware (36%), plastic issues (33%) and corrugated carton (19%).
Packing import grows not only according to official statistics, smuggling rate of the polyethylene packs and corrugated carton also grows. The absence of custom control points between the Custom Union countries prevents products tracing. The manufacturers are also concerned about the dumping prices for imported packing.
Domestic packing is exported but in small amounts: for 2014 the export of finished packing made less than USD 8 mln. Basic sell markets are: Kyrgyzstan, Uzbekistan and Afghanistan (polyethylene packing) and Russia (paper and carton products, sealing packing).
2. Number of market players
Paper and carton packing
One of the leading and oldest segments of packing industry in Kazakhstan is presented by 23 companies, which are basically located in Pavlodar, Almaty, Aktobe, and Karaganda. Individual production of paper and carton packing is established in Astana, Petropavlovsk and Semey.
Capacity of paper and carton market in the country makes KZT 29 bln., including 50% of domestic production, and over 50% of imported production, presented by the production from Russia (47% of import), Kyrgyzstan (22%) and China (8%).
Domestic companies’ production capacity is KZT 20 bln. Current load of manufacturing capacity makes up to 70%, which is quite good industrial value.
Among 23 companies which produce paper and carton production, there are the following large companies with the total employees number around 1 000:
· JSC «Kazakhstan kagazy»
· JSC «Kazpolygraf»
Production share of the large companies is around 50% of the total production rate of paper and carton packing.
Import from Russia is connected with the traditional development of packing industry from the soviet age, Kyrgyzstan import is primarily active due to the lack of sufficient domestic production rate in active consumer zone (fruits and vegetables packing).
Polymer packing
As of the end of 2014 there are 50 companies which produce polymer packing.
Most of the companies are located in Almaty (13), Astana, Pavlodar, Karaganda with 5 companies in each, Kostanay (4), Aktobe, Petropavlovsk, Shymkent with 3 companies in each. Other cities have 1 or 2 companies.
Among them, the large, with the personnel number over 51 people, are as following:
· LLP «KazPlast»
· LLP «Nephtechim LTD»
· LLP «Polymer»
· LLP «Р.Е.Т.»
Since the total number of the market members is around 50 (including regularly closing and opening companies), the share of any other company is 0,6-1,2%. This signifies the local character and small scale of each business.
Capacity of polymer packing market is KZT 35 bln., among them 46% is covered by domestic production, and around 54% is covered by import production, presented by the production from China (54% of import), Russia (25%) and Kyrgyzstan (11%).
Surprisingly domestic production capacity (KZT 28 bln) can potentially cover 80% of domestic market and ensure optimal production-import balance. However, real load of the enterprises makes only 57% and according to the results of 2015 it is going to be reduced.
Thus, there arises the urgent necessity to reinforce state support of the domestic manufacturers and protect them from grey import and prices dumping.
Imported product mostly covers the market in South Kazakhstan, to struggle it, new production lines for polymer packing can be launched. The other regions are quite independent in terms of packing production.
Polymer packing production structure is composed in such manner as the largest share is taken by:
· Polyethylene sacks
· Plastic containers
· PET-preforms
Basic consumers of this production are the manufacturers of food and chemical products.
Glassware
Glassware segment is the third largest in the packing market of Kazakhstan.
Despite the 25% niche in the total packing industry capacity, the glassware market of Kazakhstan is presented only by two companies in Almaty and Shymkent with the total capacity of 251 mln. of nominal bottles, with the production cost of KZT 4 bln., which is only 13,8% of market capacity. The other 86,2% of market capacity is covered by imported production from Russia (45%), China (30%) and Uzbekistan (15%).
Glassware is currently produced by the plants «SAF» and «Eurocrystall». In addition, since 2013 two bottles production plants «AsiaGlass» an «BN-А» have been built in Almaty Region.
Up to the end of 2014 SAF Company was the largest market member and produced over 80% of all domestic production. However, currently, the plant is considered to be partially or completely stopped. Consequently, the market structure will be changed drastically soon.
Since the glassware capacity makes 1,2 bln. of nominal bottles or the cost of KZT 29 bln., the opening of new plants is quite reasonable. However, new plants are also located in Almaty Region with the designed production capacity of KZT 16-20 bln.
Metal packing
Metal packing in Kazakhstan is produced by 5 companies, which are mostly located in central region and one company is located in Western Kazakhstan.
Table 1. Basic manufacturers of metal packing
Metal packing |
||
LLP «Ast Etalon Plast» |
Astana |
Production of crown cork for brewing and nonalcoholic manufacturers |
LLP «Kubley» |
Uralsk |
Metal can production |
LLP «Magnitka» |
Karaganda |
Production of metal can and lids |
LLP «Tokk Kazakhstan» |
Astana |
Production and selling of aluminum and выпуск и реализация алюминиевых shrinking capsules and other products |
LLP «Ulan» |
Temirtau |
Metal can production |
Source: RK Committee on Statistics and industrial survey, provided within this research
Metal packing market capacity is only KZT 9 bln., which makes only 7% from total packing market in Kazakhstan. The domestic manufacturers of metal packing cover only one third of the customers’ demand, using only 60% of the capacity.
Imported production form Russia (43%), Germany (21%), Turkey (15%) and China (9%) covers 2/3 of Kazakhstan consumers’ demand.
Sealing packing
Sealing packing market capacity is KZT 14 bln., which is 1/8 of total packing market capacity.
There are only 5 companies in Kazakhstan which produce sealing packing, which are basically located in central region and individually in Almaty.
Table 2. Basic producers of sealing packing
Sealing packing |
||
LLP «Berikap Kazakhstan» |
Almaty Region |
Polyethylene and plastic caps |
LLP «Euro Pack» |
Karaganda |
Plastic caps |
LLP «ТОКК Kazakhstan» |
Astana |
Aluminum caps |
LLP «Folty Firm» |
Temirtau |
Aluminum lids |
LLP «Ast Etalon Crown» |
Temirtau |
Crown corks |
Source: RK Committee on Statistics and industrial survey, provided within this research
However, having the production capacity of KZT 4 bln., these companies used only 55% of the load, which is a significant production sell loss under the conditions of unsatisfied demand and weak connection organization between manufacturer and purchaser. With this market segment constitutes 12% of total packing market in Kazakhstan.
Thus, domestic manufacturers can satisfy 14,3% of the domestic consumers’ demand, while the production for the cost of KZT 11 bln. is exported from China (49%) and Russia (42%).
3. Barriers and limitations for the industry development and their elimination methods
Market access (B2C and B2B)
A serious challenge for the development of domestic packing production is associated with joining to World Trade Organization (WTO), which will lead a big number of foreign manufacturers of qualitatively packed finished product to Kazakhstan market and the global packing producers.
Considering the fact, that domestic packing industry is far from being developed, great increasing of the competition will badly deteriorate the potential sell of the produced packing to Kazakhstan consumers.
International market
Domestic packing manufacturers state the fact of the deficit for a number of high-quality materials required for the production. Particularly, there is no domestic polyethylene and polypropylene for the polymer packing production; glassware production lacks saltpetre, acid sodium, feldspar, cobalt and soda ash; corrugated carton production lacks wastepaper; sealing packing production lacks polyethylene and aluminum foil. Since Kazakhstan has no plants for the production of these materials, the manufacturers of packing have to buy the materials abroad. As a result, custom and transport costs increase the self-cost of the domestic production, which reduces its compatibility compared to cheap and high-quality foreign packing.
Transport and logistic infrastructure
Due to the absence of a number of materials, the development of domestic packing industry demands efficient, well-organized, systemized transport and logistics infrastructure. The operation efficiency of logistics scheme generally affects the competitiveness of the produced packing, determines the order production time and its quality in general.
Energetic infrastructure
The obstacle, which prevents the industry development can be a lack of energy in industrial clusters, which is especially typical for south regions of Kazakhstan, particularly Almaty and partially western regions. For the recent years the power energy demand continuously grows. And this growth is uneven at the industry and regional level. The south and east of Kazakhstan are characterized by fast power consumption level (up to 12-14%) compared to the average over the republic.
Industrial infrastructure
Weak points of the industrial infrastructure is the use of old technologies by many enterprises, which prevents the competition with imported production and compliance with international standards.
Human resources, availability of qualified personnel
The real situation is that the significant part of production workers and executives or specialists have no the required special education. Most part of the personnel is trained directly on the production, in best case the executives are provided with the trainings experience exchange meetings abroad. Permanent foreign specialists are individual, and they are mostly invited for the equipment commissioning or single staff training.
One of the key obstacles which retains the development of packing industry is the absence of trained and qualified packing production specialists.
Availability of financial resources.
Kazakhstan comprises all the conditions for attracting financial resources to economy, including packing industry. The industry is credited by second level banks as well, there are leasing package for enterprises, and venture capital investments are also engaged. The obstacle for the development of small and medium business in the country is comparatively high credit interest rates for leasing package.
Technological and innovation potential
Currently, Kazakhstan packing manufacturers’ technology are significantly out of date compared to the standard leading manufacturers from abroad. This is explained by historically formed orientation of domestic manufacturers for the orders of local customers, which basically produce products for domestic market and do not aim to comply with the newest global standards. In general, such orientation narrows the market, demand and potential of the packing industry.
Legislative initiatives
Currently, there are a number of unsolved problems in packing industry, which limit the industry potential and demand legislative regulation:
· The development of target programs for domestic packing market development;
· Implementation of the projects for replacing imported materials for the domestic ones;
· Reduction of custom duties rates for the non-RK materials: in particular for such materials as polyethylene, polypropylene, polyvinylchloride, aluminum foil.
· Implementation of the programs for the export operation development and VAT recovery system changes for export transactions;
· Introduction of “Packing technology and design” specialty to the science and technology section of “Specialties classifier for higher and post graduate education of the Republic of Kazakhstan”.
Specialized services
The specialized services which the manufacturers deal with is recycling.
Recycling is highly important. Current Rules for industrial wastes recycling, accounting and sterilization are developed in compliance with the Environmental Code of the Republic of Kazakhstan, the Code of the Republic of Kazakhstan “On Administrative Violations”, the Law of the Republic of Kazakhstan “On Local State Administration in the Republic of Kazakhstan” and other regulations. The rules determine the procedure of individuals and entities activity in the sphere of production and consumption waste.
However, in reality, there are no used packing collection stations, which provokes the wastes transportation abroad or environment pollution.
Offer-demand mismatching.
The analysis of the problems, faced by the packing manufacturers witnesses the manufacturers’ dissatisfaction and disability to solve the existing problems of high materials prices, taxation, high duties for imported materials and equipment, lack of the qualified personnel, and etc. separately, which leads to packing purchasers’-finished packing producers’ dissatisfaction.
4. The list of the potential opportunities for the entrepreneurship
1. Change of packing design, optimization of its structure and sizes.
2. Reduction of packing weight, minimization of packing materials consumption during manufacturing.
3. Replacement of single-used packing by returnable.
4. Increasing of the use of multilayer polymer materials for the production of soft packing.
5. Packing production, packing and product distribution optimization, the use of modern equipment and management systems.
6. Reduction of human factor impact on the packing process by the finished product manufacturers (packing consumers) due to modernization of the production capacities and production assemblies.
In general, the packing market capacity in Kazakhstan annually grows for 5-7%. With this its content changes. The usage of polymer packing grows and the usage of glassware is decreased, while other packing types ratio remains constant.
There is a trend for searching such packing material, which would meet with the biggest number of requirements: availability, strength, environmental friendly, compactness, reusability and etc. These requirements are mostly met by such materials as polymers, tin, glassware and least by paper which is usually single-used.
5. SWOT-analysis of the industry
Strengths |
Weaknesses |
• Launching of new domestic plants with cutting edge technologies and equipment; • The growth of the number of professional Companies, which work on the market. Elimination of handicraft manufactures; • Appearing of the plants for manufacturing packing for domestic food industry use (guaranteed sell, reduction of the dependence from the importers);
|
• Material dependence of the final manufacturers from importers. • Minimal orientation to export from domestic food manufacturers; • Difficulties with the selection of qualified personnel; • Dependence from the competitors’ prices; • Necessity to find completely new assortment and entering to new external markets without support (investments and state regulation) • Weak technical equipment. • No equipment, which strictly complies with the global standards of technological process; • No essential experience of domestic manufacturers’ demand satisfaction. • Unconformity with modern environmental requirements. |
Opportunities |
Threats |
• Stable demand level and market non-saturation with high-quality packing confirming global standards; • Wide group of potential consumers; • Development priority – exclusive packing; • State level support of cluster and innovation productions. • Large foreign packing manufacturer’s enter to Kazakhstan market, introduction of new technologies in production process and export orientation of an enterprise; • Availability of the domestic material resources/deposits practically for all packing types; • Reduction of human factor impact on the packing process by the finished product manufacturers (packing consumers) due to modernization of the production capacities and production assemblies. • Absence of strict legislation obstacles and limitations for business launching. • General availability and sufficiency of transport and logistics services. |
• Limited capacity of the domestic market; • Increasing of the production quality by foreign competitors; • Establishing of returnable packing usage; • High competition level from Chinese and Russian manufacturers; • Joining to WTO and large foreign packing manufacturer’s enter to Kazakhstan market. Multiple growth of competition; • Increasing of the companies’ activity from the Custom Union countries due to unstable economic situation. Increasing of duty-free import; • Minimal number of the material productions matching the demands of domestic RK packing companies; • No state industrial regulation; • No intensive technological researches for packing production inside RK. • No specialists training system. • No industrial financing. |
Review on ferrous metallurgy (primary and rolled steel products)
1. Introduction.
Ore mining and smelting industry is leading industry of Kazakhstan economy, which accounts for 15,2% of aggregate industrial output. Many ore mining and smelting enterprises are town-forming, that is why OMSS development means cities development, and jobs for more than 200,000 people.
Ore mining and smelting sector covers different activities ranging from geological prospecting to finished-product output and its marketing in home and foreign markets; with this end in view, several reviews have been made.
Kazakhstan Ferrous Metallurgy is described in the first part of this review further home market of steel and rolled products production is analyzed alongside with potential distribution markets, with indication of the market main players and their market shares, as well as existing barriers and restrictions with a list of potential possibilities for business initiatives.
1.1. Industry structure
Kazakhstan metallurgical industry output of products in 2014 made 1915,250 mln. tenge in current prices, or 122% against 2010 (1569,969 mln. tenge).
In Kazakhstan overall industrial output structure, metallurgical industry share was 10%, while in the manufacturing industry structure its share was (5872 834 mln. tenge) - 32.6% as per 2014.
Kazakhstan's metallurgical industry output of products in 2014 made 765,441 mln. tenge in current prices, or 86.68% against 2010.
Table 1. Ferrous metallurgy output of products in value terms for the period 2010-2014 in mln. tenge
|
2010 |
2011 |
2012 |
2013 |
2104 |
2014/2010 |
Ferrous metallurgy |
883001 |
785432 |
1964416 |
1752059 |
765 441 |
86,68 |
Source: as per data of Committee on Statistics of MNE of the RK
In Kazakhstan overall industrial output structure, ferrous metallurgy share was 4.2%, while in the metallurgy industry structure its share was – 39.8% as per 2014.
Corrugated sheets' of non-alloyed (carbon) steel throughput has raised in physical terms - 200% in ferrous metallurgy production for the period 2010-2014.
Growth rates reduced in the following products: crude steel – 93.8%; flat products – 87.9%.
Table 2. Ferrous industry output of products in physical terms for the period 2010-2014
2010 |
2011 |
2012 |
2013 |
2104 |
2014/2010, % |
|
Crude steel, tons |
4255545 |
4807751 |
3775836 |
3476862 |
3992672 |
93,8 |
Flat products, tons |
2886943 |
3092223 |
2402347 |
2276896 |
2537186 |
87,9 |
Corrugated sheets' of non alloyed (carbon) steel, tons |
59817 |
77085 |
106299 |
121670 |
119653 |
200 |
Source: as per data of Committee on Statistics of MNE of the RK
During the year 2014, Ore mining and smelting sector of the RK attracted 566,8 bill. tenge of investments in fixed capital, or 168% against 2010. During the year 2014, enterprises' amount of own funds in fixed capital made 368,4 bill. tenge (or 64.99 % of the entire volume of investments in Ore mining and smelting sector), banks' credits -26,4 bill. tenge (or 4.67%), other investments - 171,9 bill. tenge (or 30.33%).
Metallurgical industry accounted for biggest relative share in the overall volume of investments' in Ore mining and smelting sector of the RK totaling – 52.57% or 299.1 bill. tenge; metal ores' extraction – 47.23% (or 267.68 bill. tenge).
|
Figure 1. Structure of investments attracted in Ore mining and smelting basic capital in 2014, %
Source: as per data of Committee on Statistics of MNE of the RK
In 2014, in metallurgical industry relative share of investments in fixed capital, meant for production of other steel items by way of primary treatment, amounted 0.2% (or 0,681,3 bill. tenge).
Investments in Ore mining and smelting sector industry segments' fixed assets were chiefly used for machinery, equipment, tools and inventory purchasing.
Estimating the dynamics of foreign investments' attraction in Ore mining and smelting sector of the RK, it should be noted, that the state's main aim is creation of a favorable investment climate in the country and further encouragement of foreign investments inflow into Kazakhstan economy. According to data provided by the National Bank of Kazakhstan for the period from 2005 to April 01, 2015 foreign investments' gross inflow in Ore mining and smelting of the RK totaled USD 25 923,6 mln., including metallurgical industry and finished metal products' manufacturing, apart from machinery and equipment – USD 19216,6 mln. (or 74.12%).
|
|
Figure 2. Foreign investments gross inflow for the period from 2005 to April 01, 2015, USD mln.
Source: National Bank of the RK
In the structure of Foreign Direct Investments in Kazakhstan ore mining industry, the following countries took the lead: Netherlands (27.9% of FDI gross revenues to the mining industry), Great Britain (18.8%), USA (17.8%), China (11.6%) and Canada (7.9%).
Taking into consideration the fact, that a significant part of foreign direct investments accounts for metallurgical industry, the largest relative share of investments in manufacturing industry belongs to the Netherlands – USD 5332,1 mln., (or 37.2% of FDI gross revenues to the manufacturing industry); Switzerland – USD 3838,7 mln., (26.8%); Great Britain – 1 405,7 mln. tenge (9.8%); Hong Kong (Siangan) – USD 696,3 mln., (4,9%), Russia – USD 479,9 mln., 3,4%) Other countries accounted for less than 2.0%.
As of August 01, 2015, in Kazakhstan Ore mining and smelting enterprises operated 166 enterprises with participation of foreign capital, including 8 enterprises engaged in iron ore extraction, 42 – in ferrous metallurgy, 8 – in foundry casting work.
Table 3. Number of Ore mining and smelting sector operating enterprises with foreign capital as of August 01, 2015, units
|
Total |
joint ventures (with foreign participation) |
foreign |
Iron ore extraction (071) |
8 |
4 |
4 |
pig iron, steel and ferroalloys, pipes, pipelines, shaped profiles, steel fittings and other steel items primary treatment production (FERROUS METALLURGY (241,242,243)) |
42 |
20 |
22 |
foundry casting work (245) |
8 |
4 |
4 |
Source: as per data of Committee on Statistics of MNE of the RK
Estimating job performance of Ore mining and smelting sector for the period from 2010 to 2014, it should be noted, that for the whole of the industry, personnel number increased from 678,0 thou. people in 2010, to 696,4 thou. people in 2014, or by 2.7%.
Opposite trend was witnessed in Kazakhstan manufacturing industry. The actual personnel reduced from 360,7 thou. in 2010 to 333,7 thou. in 2014, or 92.5%.
Personnel reduction in metallurgical industry had faster rates in comparison with Kazakhstan manufacturing industry in the whole. The staff listing reduced from 129.4 thou. in 2010 to 79.7 thou. in 2014, or 61.9%. The actual personnel also sharply reduced from 125.6 thou. in 2010 to 77.0 thou. in 2014, or 61.3%. The difference between staff listing and actual personnel in 2014 made 2.7 thou. people, which is by 29% lower, in comparison with 2010 (that is, 3.8 thou. vacant jobs).
In 2010-2014, staff listing and actual personnel for the period from 2010 to 2014 grew in production of other primary treatment steel items production.
Metals and items produced from them, reduced in the period from 2011 to 2014 from USD 9.7 bill. in 2011 to USD 6.7 bill. in 2014, or to 70.1%.
In 2014, metals and items made from them, accounted for 11.5%, in the Kazakhstan overall export structure or 8.5%, that is, the industry's relative share fell by 3.0 p.p.
Ratio of export to CIS states and far-abroad countries made in 2011 25,4 and 74,6% respectively; in 2014 – 29,3% and 70,7% respectively, that is, for 2011 – 2014 a trend of growing export to CIS states took shape, while it was reduced to other countries of the world.
Primary products export by Kazakhstan Ore mining and smelting sector to the Customs Union Countries made USD 1260 mln. in 2014, or 49.5% of the entire raw materials' export to the Customs Union Countries.
Primary products export by Kazakhstan Ore mining and smelting sector to the Customs Union Countries made USD 1209 mln. in 2014, or 45.3% of the entire processed goods export of RK to the Customs Union Countries.
The structure of processed goods export included other iron flat products from non alloyed steel having width 600 mm or more, and galvanized by some other method, flat products of iron from non alloyed steel having width 600 mm or more, hot-rolled, unplated, without galvanized or other coating.
Table 4. Processed products export by Kazakhstan Ore mining and smelting sector to the Customs Union Countries in 2014
|
2014* |
||
USD mln. |
in % to processed goods export volume |
2014 in % to 2013 |
|
Processed goods – RK total |
2666,9 |
100,0 |
83,1 |
which includes: |
|
|
|
Other iron flat products from non alloyed steel having width 600 mm or more, and galvanized by some other method |
198,6 |
7,4 |
83,6 |
Iron flat products from non-alloyed steel having width 600 mm or more, hot-rolled, unplated, without galvanized or other coating. |
79,4 |
3,0 |
83,7 |
Source: as per data of Committee on Statistics of MNE of the RK
Metals and items produced from them grew in the period from 2011 to 2014 from USD 3.7 bill. in 2011 to USD 4.3 bill. in 2014, or to 116,3%.
Metals and items produced from them accounted for 10.1% of Kazakhstan import in 2011, in 2014 – 10.5%, that is, the industry relative share grew by 0.4 p.p.
Ratio of imports from CIS countries and far-abroad countries made in 2011 55.6% and 44.4% respectively; in 2014 – 50.7% and 49.3% respectively, that is, during this period a trend of import growth from other countries took shape.
Processed products' import by Kazakhstan Ore mining and smelting sector from the Customs Union Countries did not take place in 2014.
1.2. Home market capacity
Formation of Ore mining and smelting sector products' market capacity was influenced by both, the external (changing of world market juncture for the industry's production), and internal factors, determined by development prospects for some home enterprises and branches of the national economy.
The highest market capacity for ferrous metallurgy products is observed in 2014 for the following items:
For metal items from non-precious (base) metals, not included into other groups, market capacity made 100 043 037,8 tons, that is, it grew against 2010 by 87,67%;
For non alloyed steel in ingots or initial and forms, as well as semi-finished goods from carbon steel (non alloyed) the market capacity totaled 3 710 437 tons, that is, it grew in comparison with 2010 by 5.89%;
For pellets and powder for steel-making pig iron, mirror iron the market capacity totaled 1 174 399,4 tons, that is, it reduced by 2.0 times in 2010.
For hot-rolled, non alloyed steel flat products without further treatment having width at least 600mm, the market capacity totaled 1 002 025,3 tons, that is, it grew by 0.68% in comparison with 2010.
Table 5. Market capacity and ferrous metallurgy products' consumption by RK in the period from 2010 to 2104, tons |
|||
Non alloyed steel in ingots and in initial and other forms and semi-finished goods from carbon steel (non alloyed) |
|||
|
2010 |
2104 |
2014 against 2010, % |
Market capacity |
3504031,50 |
3710437,00 |
105,89 |
Production |
4328464,00 |
4000777,00 |
92,43 |
Import |
5626,90 |
87168,60 |
15.49 times |
Consumption |
3504031,50 |
3710437,00 |
105,89 |
Export |
830059,40 |
377508,60 |
45,48 |
Stainless steel in ingots, initial and other forms and semi-finished goods from stainless steel |
|||
|
2010 |
2104 |
2014 against 2010, % |
Market capacity |
312,80 |
511,70 |
163,59 |
Production |
235 |
443 |
188,51 |
Import |
79,9 |
2375,60 |
29.73 times |
Consumption |
312,80 |
511,70 |
163,59 |
Export |
2,1 |
2306,90 |
1098.52 times |
Alloyed steel in ingots, initial and other forms and semi-finished goods from alloyed steel |
|||
|
2010 |
2104 |
2014 against 2010, % |
Market capacity |
16936,70 |
0 |
0 |
Production |
16148,00 |
13640,00 |
84,47 |
Import |
788,7 |
2032,90 |
257,75 |
Estimate |
0 |
3191,50 |
0 |
Consumption |
16936,70 |
0 |
0 |
Export |
0 |
18864,30 |
0 |
Hot-rolled, non alloyed steel flat products without further treatment having width at least 600mm |
|||
|
2010 |
2104 |
2014 against 2010, % |
Market capacity |
995,304.60 |
1,002,025.30 |
100,68 |
Production |
1,790,179.00 |
1,764,710.00 |
98.58 |
Import |
104,723.20 |
169,519.10 |
161.87 |
Consumption |
995,304.60 |
1,002,025.30 |
100.68 |
Export |
899,597.60 |
932,203.80 |
103.62 |
Cold-rolled, non alloyed steel flat products without further treatment having width at least 600mm |
|||
|
2010 |
2104 |
2014 against 2010, % |
Market capacity |
68,845.00 |
166825,90 |
242.32 |
Production |
838,316.00 |
603,032.00 |
71,93 |
Import |
5,860.00 |
76,945.10 |
13.13 times |
Consumption |
68,845.00 |
166,825.90 |
242.32 |
Export |
775,331.00 |
513,151.20 |
66,18 |
Cold-rolled, non alloyed steel flat products, having width at least 600mm, plated with galvanized or other coating |
|||
|
2010 |
2104 |
2014 against 2010, % |
Market capacity |
0 |
0 |
0 |
Production |
271,313.00 |
164,444.00 |
60.61 |
Import |
87,497.40 |
144,138.50 |
164,73 |
Consumption |
0 |
0 |
0 |
Export |
670,382.30 |
472,247.10 |
70.44 |
Cold-rolled, steel flat products having width at least 600mm uncoated |
|||
|
2010 |
2104 |
2014 against 2010, % |
Market capacity |
3,480.10 |
5,845.80 |
167.98 |
Production |
1,925.00 |
8 |
0.42 |
Import |
3,301.00 |
7,058.40 |
213.83 |
Consumption |
3,480.10 |
5,845.80 |
167.98 |
Export |
1,745.90 |
1,220.60 |
69.91 |
Source: as per data of Committee on Statistics of MNE of the RK
1.3. Potential distribution markets
1. Non alloyed steel in ingots, initial and other forms and semi-finished goods from carbon steel (non alloyed)
"The world market expectations that the recession reached its peak late in July 2015 fell short. The situation even aggravated by the end of August. Possibly, the global economy is now at the threshold of crisis, which could outdo autumn of 2008 by its consequences. With this regard, the option of landslide of prices for all types of mineral resources is not excluded, entailing sharp reductions in production facilities.
The specialists say, it is worsening of economic situation in China that can be regarded as immediate cause of the new recession. Late in the first half of August 2015, the People's Bank of China devalorized yuan against the dollar. Even though devalorizing totaled finally only 3.5%, its consequences occurred to be rather serious. During 2005-2012 yuan was permanently getting stronger, while for the last two years its rate was fluctuating within a very narrow range against American currency, so the policy of the "strong" dollar, which USA has been pursuing from autumn 2014, lead to problems emerging in China as well. The merchandise exports growth, which was the primary and basic source of the Chinese economy booming for a quarter of the century, ceased. In July 2015, the volume of external supplies fell by 8.3% against the same period of 2014.
That is why, devalorizing of the national currency aimed at support of the national manufacturers' marketability on the worlds' markets was deemed as a reasonable strategy. However, the People's Bank of China announced in advance, correction in yuan is a one-time measure. Expectations of Chinese currency further cheapening, provoked dropping of export quotations for Chinese steel and rolled products. Chinese attempt to raise its price made early in August 2015, flopped.
But yuan problems is just a tiny part of destructive processes which spread all over the global economy. The prime cause of the present problems should looked for in the Western countries. US and Europe's consumer markets' extension ceased, which was the main reason the suspension of growth of Chinese goods' export. Emission of trillion dollars injected into the western financial system in the framework of crisis-fighting from the end of 2008, inflated a giant speculative bubble on the security papers' market. It started deflating in the last week of August 2015. The process of quotations' lowering on the stock markets that started in China, spread on to all the western countries. Even a limited recession caused lowering of total market capitalization of companies, operating on the stock exchanges, by hundreds of billions of dollars, which most probably means further reduction in oil demands, steel products and other resources.
However, the majority market players' expectations are still fell short. Preliminary PMI index value for Chinese industry in August 2015 was at the lowest level for the last 77 months, while Industrial Production Index was the lowest for the last 45 months. Thus, local manufacturers expect worsening of the market juncture at the beginning of autumn, reductions in the orders' number and drops in sales. Due to this uncertainty in the home market prospects, Chinese steel makers made concessions eagerly both on home and foreign markets.
Nevertheless, metallurgical companies, as a rule, still prefer to manufacture steel products at a sacrifice, but not reduce their output, fighting for their market share. Besides, the manufacturers are in need of permanent of cash inflow, as well as the state support. Salvage of Ilva metallurgical plant by Italian government authorities may serve as a characteristic example. The plant which was on the verge of bankruptcy and closure due to violations of environmental regulations, received financial resources necessary from the governmental structures and scheduled increase in output for the beginning of autumn. No bankruptcy occurs in Chinese steel companies, though prices for rolled products on the national market had landslided to the level of late 1990-s as early as July 2015"[1].
Thus, the process of balance restoration on the world steel market will be of shock nature. The steel products' prices are likely to drop to the lowest level, which would bring about mass bankruptcies of metallurgical companies, causing stoppage significant production facilities with overall capacity of dozens of mln. tons of steel per year. One can also infer, in many countries the national manufacturers' problems would be solved by way of customs barriers raising, establishing antidamping duties, or just raising tariffs for imported products.
"The first route is confidently taken by the USA, where in August 2015 two major investigations started with regard to cold- and hot rolled coils. The second route was chosen by India, which raised duties for rolled products by 2.5 p.p from August 12, 2015. In the whole, protectionist sentiments are getting stronger on the world market, spreading on to the countries of South-East Asia, North and South Americas. European Union is the next in turn. In the long run, relatively free are only the African and Near East countries (not all of them) where competition between suppliers is getting tougher which results in further reduction in prices.
In the whole, steel makers' expectations for September 2015 can hardly be called optimistic. I the nearest future the world economy would be subject either to crisis with drop in demand and quotations for all types of resources, or to continuation of a slower but more detrimental recession. According to the experts, one should not expect steel products prices be raised."[2].
Majority of metallurgical companies have to sell their steel and rolled products below cost in the present conditions. Many of them have cut the level of production capacities loading. According to World Steel Association (WSA), the global steelmaking was cut by 3.8% in July 2015 against the same last year period. It was the hardest recession since August 2009. At the same time, oversupply is still dominating the market whose removal is, perhaps, possible by stoppage of a number of enterprises, as it was in 2008-2009.
Proceeding from this assumption, merchandising of non alloyed steel on Kazakhstan home market is one of the best strategies in such unfavorable situation which has been influencing the market for the last several years. With this regard, in 2014, on Kazakhstan's home market 3710437,0 tons of non alloyed steel in ingots, initial and other forms and semi-finished goods from carbon steel (non alloyed) was merchandised which constitutes 105,9 % against 2010 at the expense of merchandising cuts on the external markets. 90.8% of non-alloyed steel market capacity was sold on Kazakhstan's home market in 2014. 9,2% - was sold on the external markets.
Table 6. Merchandising of non alloyed steel in ingots, initial and other forms and semi-finished goods from carbon steel (non alloyed) in RK
|
2010 |
Relative share, % |
2104 |
Relative share, % |
2014/2010, % |
Sales on RK market |
3,504,031.5 |
80.8 |
3710437,0 |
90.8 |
105.9 |
Sales on foreign markets |
830,059.4 |
19.2 |
377,508.6 |
9.2 |
45,5 |
Source: as per data of Committee on Statistics of MNE of the RK
Major market outlets for this group of goods can be CIS states and other developing countries of the world:
1) iron ingots and non alloyed steel in ingots and other initial forms (apart from iron of commodity item 7203): among CIS countries, The Republic of Uzbekistan steel market outlet can be expended up to 650 tons, where 600 tons were exported in the amount of USD 180,000.00 in 2014. It should be noted that The Republic of Uzbekistan market is the most receptive market in comparison with other Central Asia countries.
2) Semi-finished goods from rectangular cross-section iron having width less than its double thickness, rolled or continuous casting, having thickness not more than 130 mm, containing less than 0.25 mass.% of carbon: among CIS countries, Azerbaijan markets can be expended up to 71500 tons, (71104 tons were exported in the amount of USD 34806,4 thou. in 2014) and The Republic of Uzbekistan – to 18000 tons (in 2014 17576,2 tons were sold in the amount of USD 8742,5 thou.);
3) Semi-finished goods from iron from non alloyed steel, containing less than 0.25 mass.% of carbon: the market can be expended due to CIS countries, that is, due to Turkmenistan market up to 550 tons (in 2014, 549 tons of these products in the amount of USD 291,0 thou. were exported there); among countries of the world, steel market outlet of Turkey can be expended up to 55000 tons (where 51370.9 tons were exported in the amount of USD 23572,10 in 2014), Iran – to 5000 tons (where 4465,9 tons were exported in the amount of USD 1866,4 thou. in 2014), and also in Pakistan – up to 240 tons.
4) Major CIS potential market outlets for semi-finished goods with rectangular cross-section iron having width less than its double thickness, containing by weight 0.25% of carbon, but less than 0.6%, can be: The Republic of Uzbekistan whose market is expandable to 60 thou. tons per year; from other countries of the world – Iranian market with expansion ability to 148 500 tons (148319,9 tons were sold in the amount of USD 72954,4 thou. in 2014) and Turkey (51370,9 tons were sold in the amount of USD 23572,1 thou. in 2014);
5) Semi-finished goods with rectangular cross-section having width less than its double thickness, rolled or continuous casting, containing by weight 0.25% of carbon or more: The Republic of Uzbekistan market can be expanded to consume 60 tons per year.
No special conditions are required to enter The Republic of Uzbekistan market, as the said products have already been supplied to this market. Besides, The Republic of Uzbekistan is badly in need of raw materials to produce a wide range of products (rebar, metal wheels, square billets, rolled coil, angles, channels, hexagons, steel balls) at The Republic of Uzbekistan metallurgical plant (Uzmetkombinat) and other ferrous metallurgy foundry productions of the country. To ensure sustained development of Uzmetkombinat and other enterprises, "The Republic of Uzbekistan government has set prognostic tasks to Ministries and Departments to collect and deliver scrap metals, wastes of ferrous metals for year 2015. Accordingly, the government has issued a Directive that obliges to collect 733 thou. tons of ferrous metal scrap. The process of scrap metal's delivery is regulated by the Republican committee on control and coordination of collection and delivery for processing of metal scrap and iron-and-steel waste. Nearly 74,5 tons of scrap metal were distributed between 13 enterprises. In 2015 Uzmetkombinat will import into the republic 280 thou. tons of iron-and-steel waste. In this case, Uzmetkombinat is excused from customs duties and from sale of currency earnings when settling accounts with rolled metal products for the raw materials imported".[3].
In case with Iran, there will be no entrance barriers as well. "During the recent years, development Iran's ferrous metallurgy, a potential regional steel leader, is restrained by lowering of revenues from oil and gas sales, dampened growth of construction industry and international sanctions which deter potential investors.
A country with population of 75 mln, possessing all necessary resource for creation of a powerful metallurgy, is still importing as much steel production as it manufactures.
Steel industry products consumption started to grow actively, when oil prices hiked, which enabled to invest into restoration of the ruined infrastructure after the Iran-Iraq war. In this period, due to deficit in the production facilities, import started gathering pace. Many local plants producing rebar, had to import billets. Besides, due to underdevelopment of railway network, enterprises located in the Caspian ports vicinity, found it easier and cheaper to buy imported semi-finished products.
Now, as per consumption volumes, Iran is leading all countries, but Turkey, though, in the future, it will surpass Turkey as well. The country has a great deficit of demand, taking into consideration necessity of industrial development boosting and infrastructure construction. Railway networks, highways, bridges and road junction expansion is underway in Iran now. In particular, 8,5 thou. km railway main line is being constructed now in the east of the country which is to connect Iranian Port of Chabahar with Central Asian countries. Railroads are scheduled for construction to connect Iran with China and The Republic of Armenia. New oil refineries, power stations, power transmission lines, pipelines, ports, dams and water supply facilities are under construction"[4].
There are no barriers to enter Azerbaijani and The Republic of Armenia markets where ferrous metallurgy is not so developed as in Kazakhstan.
2. Alloyed steel in ingots, initial and other forms and semi-finished goods from alloyed steel
Alloyed steel types are widely used in different branches of industry due to necessity of manufacturing parts with especially high mechanical properties or various physical and chemical properties.
Sales of alloyed steel in ingots or initial or other forms, as well as semi-finished products from alloyed steel in Kazakhstan dropped in 2014 against 2010 due to cuts in its production volumes in the country, a larger portion of export to foreign markets, and warehouse stocks of the enterprises.
Table 7. Merchandising of alloyed steel in ingots, initial and other forms and semi-finished goods from alloyed steel
|
2010 |
Relative share, % |
2104 |
Relative share, % |
2014/2010, % |
Sales on RK market |
16,936.7 |
100 |
0.0 |
0 |
0 |
Sales on foreign markets |
0,0 |
00 |
18,864.3 |
100 |
0,0 |
Source: as per data of Committee on Statistics of MNE of the RK
Accordingly, the Republic of Uzbekistan can become a potential market outlet for alloyed steels and its market can be expanded at the expense of the following products' supply:
1) Semi-finished products from other alloyed steels with rectangular cross-section, hot-rolled or continuous casting having width less than its double thickness, other – about 16500 tons (16461.0 tons were sold in the amount of USD 8081.4 thou. in 2014);
2) semi-finished products from other alloyed steels with rectangular cross-section, hot-rolled or continuous casting having width less than its double thickness, other – about 2300 tons (2311.9 tons were sold in the amount of USD 1123.6 thou. in 2014);
3) semi-finished products from other alloyed steels, hot-rolled or continuous casting, other – about 100 tons (91.5 tons were sold in the amount of USD 39.0 thou. in 2014);
Favorable conditions for entering The Republic of Uzbekistan market are described in detail in item "3. Non alloyed steel in ingots, initial and other forms, semi-finished products from carbon (non-alloyed) steel".
3. Hot-rolled, non alloyed steel flat products without further treatment having width at least 600mm
"In the decade of August 2015, quotations for Chinese rolled products dropped to less than $300 per FOB ton, while for the end of this month, it approached $300 per CFR ton at supplies to India or Vietnam. Asian rolled products market had not seen such low prices since summer, 2003. The price of Chinese billets dropped to less than $290 per FOB ton, cheapening of this product to $300 per CFR ton. Turkey, in this respect is a matter of time"[5].
Crude oil cheapening to minimal level from March 2009 deteriorated market opportunities for the rolled products in the Near East countries. In August 2015 even such financially steady countries as Saudi Arabia and UAE experienced a slowdown in the rates of business activities in construction sector, government and private investments in new projects were cut, which caused a drop in demand for rebar and put Turkish rebar exporter in a vulnerable position. For the first time since 2006 its cost dropped to less than $400 per FOB ton, whereas scrap metal price was slowly growing for the better part of August. Due to this trend, a relatively high demand for semi-finished products from Russia and Ukraine preserved in Turkey, but their quotations dropped to the minimal level since March 2009.
In August 2015, Russian manufacturers lowered rolled products prices, though fall in export prices was to some extent compensated for them by weakening of ruble. In the end of August 2015, the hot-rolled products mean quotations level dropped less than $320 per FOB ton, having set another 12-years minimum. As per traders data, in some transactions these products price could be lower than $300 per FOB ton. European market of the rolled products occurred on the threshold of recession as well. Regional consumers insist on inside quotations lowering by at least 10-20 euro per ton, all the more so, as euro rise against the dollar, cheapened the import.
Despite this fact, sales of flat products from non alloyed, hot-rolled steel without further treatment having width not less than 600 mm made 1 002 025.3 tons in 2014, or 100.7% which shows insignificant rise against 2010. 51.8% of the given product volume was sold on the home market, while 48.2% was exported.
Table 8. Merchandising of flat products from hot-rolled, non alloyed steel without further treatment having width at least 600mm
2010 |
Relative share, % |
2104 |
Relative share, % |
2014/2010, % |
|
Sales at RK market |
995304,6 |
52,5 |
1002025,3 |
51,8 |
100,7 |
Sales at foreign markets |
899,597.6 |
47.5 |
932,203.8 |
48,2 |
103,6 |
Source: as per data of Committee on Statistics of MNE of the RK
Taking into consideration the unfolding situation, it is necessary to preserve and expand markets for merchandising this group of goods in the developing countries.
1) Flat products from iron or non alloyed steel, having width 600 mm and more in rolls, without further treatment but hot rolling, with raised pattern: Iran's market should be expanded to 12000 tons (11887,8 tons of these products were exported to the country in the amount USD 6817,4 thou. in 2014);
2) Flat products from iron or non alloyed steel, having width 600 mm and more in rolls, without further treatment but hot rolling, with thickness more than 10 mm: it is suggested that Iran's market should be expanded to 550 tons (515,1 tons of these products were exported to the country in the amount USD 280,4 thou. in 2014);
3) Iron flat products from iron or non alloyed steel having width 600 mm or more, hot-rolled, unclad, without galvanized or other coating, having thickness 4.75 mm or more, but not more than 10 mm: among CIS countries, to expand The Republic of Uzbekistan market up to 2500 tons, (2347.2 tons were exported in the amount of USD 1299,7 thou. in 2014) Azerbaijan market – to 400 tons (353,5 tons were exported in the amount of USD 180,3 thou. in 2014 ); among countries of the world, in Iran – up to 2500 tons (where 2410.7 tons were exported in the amount of USD 1240,7 thou. in 2014); China – to 1000 tons (987,4 tons were sold in the amount of USD 478,1 thou. in 2014);
4) Iron flat products from iron or non alloyed steel having width 600 mm or more, hot-rolled, unclad, without galvanized or other coating: having thickness less than 3 mm: among CIS countries, to expand Kirgizia market up to 21000 tons, (20984 tons were exported in the amount of USD 12742,9 thou. in 2014); in The Republic of Uzbekistan – up to 20000 tons (19474 tons were exported in the amount of USD 11942,8 thou. in 2014); in The Republic of Tajikistan – up to 600 tons (542,8 tons were exported in the amount of USD 322,5 thou. in 2014); in Turkmenistan – up to 420 tons (409,2 tons were exported in the amount of USD 238,8 thou. in 2014);
Market outlets for these products can be expanded at the expense of Iran to 500 thou. tons (489300,3 tons were exported in the amount USD 269334,0 thou. in 2014);
5) Iron flat products from iron or non alloyed steel having width 600 mm or more, hot-rolled, unclad, without coating: not in coils, without further treatment, but hot-rolled, with raised pattern: among CIS countries, it is necessary to expand The Republic of Tajikistan market to 1100 tons, (1065.6 tons were exported in the amount of USD 662,4 thou. in 2014); in The Republic of Uzbekistan – up to 900 tons (854.1 tons were exported in the amount of USD 535,7 thou. in 2014); in Azerbaijan – to 650 tons (635,8 tons were exported in the amount of USD 334,3 thou. in 2014); in The Kyrgyz Republic – to 550 tons (513,6 tons were exported in the amount of USD 313,3 thou. in 2014); in Turkmenistan – up to 60.0 tons (58,8 tons were exported in the amount of USD 35,6 thou. in 2014);
Market outlets for these products can be expanded at the expense of Iran as well to 500 thou. tons (419,7 tons were exported in the amount USD 223,2 thou. in 2014); in Afghanistan – to 65 tons (58,9 tons were exported in the amount of USD 32,1 thou. in 2014); USA);
6) Flat products from iron or non alloyed steel having width 600 mm or more, hot-rolled, unplated, without coating, not in coils, without further treatment having thickness more than 15 mm, other flat products: among CIS countries, the market can be expended in The Republic of Uzbekistan up to 200 tons, (171,1 tons were exported in the amount of USD 81,2 thou. in 2014), and to explore new markets for these products in other CIS countries – The Kyrgyz Republic, Turkmenistan and The Republic of Tajikistan.
Market outlets for these products can be expanded at the expense of Afghanistan (86,0 tons were exported in the amount USD 27,5 thou. in 2014), and Iranian new market exploration.
7) Flat products from iron or non alloyed steel, having width 600 mm and more, not in coils, without further treatment but hot rolling, with thickness more than 10 mm, but not more than 15 mm, having width 2050 mm and more: it is possible to expand the market in Afghanistan up to 10 tons, (8.0 tons were exported in the amount of USD 2,6 thou. in 2014), and to explore new markets for these products in other Central Asian countries.
8) Flat products from iron or non alloyed steel, having width 600 mm and more, not in coils, without further treatment but hot rolling, with thickness more than 10 mm, but not more than 15 mm, having width 2050 mm and more: it is possible to expand the market in The Republic of Uzbekistan up to 500 tons, (475.3 tons were exported in the amount of USD 285,3 thou. in 2014); in The Kyrgyz Republic – up to 500 tons (464,6 tons were exported in the amount of USD 264,7 thou. in 2014); in The Republic of Tajikistan – up to 200 tons (133,7 tons were exported in the amount of USD 79,7 thou. in 2014); in Azerbaijan – to 150 tons (120,3 tons were exported in the amount of USD 62,4 thou. in 2014); in Turkmenistan – up to 75 tons (70,7 tons were exported in the amount of USD 41,8 thou. in 2014);
Among countries of the world, the market outlet can be expended in Iran up to 6000 tons, (5589.5 tons were exported in the amount of USD 3084,5 thou. in 2014), and to explore new market for these products in Afghanistan.
9) Flat products from iron or non alloyed steel not in coils, without further treatment but hot rolling, with thickness more than 4.75 mm, but not more than 10 mm, having width less than 2050 mm: supplies extension is possible to the most receptive market of Central Asia – The Republic of Uzbekistan up to 5500 tons (5014.4 tons were exported in the amount of USD 3022,9 in 2014); and The Kyrgyz Republic markets – up to 3300 tons, (2916 tons were exported in the amount of USD 1695,7 thou. in 2014); in Azerbaijan – to 850 tons (791,9 tons were exported in the amount of USD 426,1 thou. in 2014); in The Republic of Tajikistan – to 800 tons (735,7 tons were exported in the amount of USD 429,4 thou. in 2014); in Turkmenistan – up to 750 tons (672,2 tons were exported in the amount of USD 401,2 thou. in 2014);
In other countries of the world there is a possibility of market outlets expansion; in Iran – up to 25000 tons, (24903.9 tons were exported in the amount of USD 13705,4 thou. in 2014); in Iraq – up to 250.0 tons (231,8 tons were exported in the amount of USD 125,2 thou. in 2014); and to explore new market for these products in Afghanistan;
10) Flat products from iron or non alloyed steel not in coils, without further treatment but hot rolling, with thickness 4 mm and more, but less than 4.75 mm, having width not more than 1250 mm: The Republic of Uzbekistan market expansion deems possible – up to 100 tons (30,0 tons were exported in the amount of USD 6,6 thou. in 2014);
It is necessary to explore new market outlets for the given products in other countries of Central Asia - The Kyrgyz Republic, The Republic of Tajikistan, Turkmenistan.
Among other countries of the world, new market outlets should be explored in Iran and Afghanistan.
11) flat products from iron or non alloyed steel not in coils, without further treatment but hot rolling, with thickness 3 mm and more, but less than 4.75 mm, other flat products: it is possible to expand supplies to The Republic of Uzbekistan market – up to 4500 tons (4312,9 tons were exported in the amount of USD 2634,9 thou. in 2014); in The Kyrgyz Republic – up to 3500 tons (3318,8 tons were exported in the amount of USD 1958,8 thou. in 2014); in The Republic of Tajikistan – up to 650 tons (622,6 tons were exported in the amount of USD 369,2 thou. in 2014); in Turkmenistan – up to 200 tons (181,4 tons were exported in the amount of USD 110,5 thou. in 2014);
In other countries of the world it is suggested that operating markets should be expanded; in Iraq – up to 750 tons, (674.7 tons were exported in the amount of USD 364 thou. in 2014); in Iran – up to 550 tons (500 tons were sold in the amount of USD 186,9 thou. in 2014); in China – up to 120 tons (77,2 tons were sold in the amount of USD 29,1 thou. in 2014); and also to explore a new market outlet for the products given in Afghanistan, where these products are not supplied;
12) Flat products from iron or non alloyed steel having width 600 mm or more, hot-rolled, unclad, without galvanized or other coating, not in coils, without further treatment but hot rolling, with thickness less than 3 mm: it is necessary to expand supplies to the most receptive market of Central Asia – The Republic of Uzbekistan - up to 2600 tons (where 2441.3 tons were exported in the amount of USD 146/8,2 in 2014), in The Kyrgyz Republic – up to 3000 tons (2802,7 tons were exported in the amount of USD 1689,0 thou. in 2014); in The Republic of Tajikistan – up to 1800 tons (1547,5 tons were exported in the amount of USD 950,4 thou. in 2014); in Turkmenistan – up to 500 tons (427,5 tons were exported in the amount of USD 263,4 thou. in 2014);
In other countries of the world it is suggested that operating markets should be expanded; in Iran – up to 6500 tons, (6351.4 tons were exported in the amount of USD 2682,8 thou. in 2014); in China – up to 4800 tons (4682,8 tons were sold in the amount of USD 1664,6 thou. in 2014); and to explore new markets for these products in Iran and Afghanistan.
13) Iron flat products from iron or non alloyed steel having width 600 mm or more, hot-rolled, unclad, without galvanized or other coating: non perforated: The Republic of Tajikistan's market should be expanded up to 25 tons (18,8 tons were exported to the country in the amount USD 5,6 thou. in 2014), as well as unexplored markets for the given products in other countries of Central Asia, especially in the Republic of Uzbekistan and the Republic of Armenia.
In other countries of the world – exploration of near-border markets, and in Afghanistan.
Favorable conditions for entering the Republic of Uzbekistan and Iranian markets of flat products from non alloyed steel, are described in detail in item "3. Non alloyed steel in ingots, initial and other forms, semi-finished products from carbon (non-alloyed) steel".
There are favorable conditions for market entry in The Republic of Armenia as well. Thus, "the share of ferrous metallurgy production in the Republic of The Republic of Armenia industry is insignificant which is due to the absence of its own operating mineral reserve base and small capacity of the ferrous metallurgy market. Possessing no metallurgical base of their own, ferrous metallurgy enterprises use domestic scrap and iron-and-steel waste as raw materials. 17,7 thou. tons of steel castings was made in The Republic of Armenia in 2014. According to data of the National statistical service, The Republic of Armenia imported 127,1 thou. tons of ferrous metals in 2014, which included: 54,4 thou. tons of flat products from iron and carbon steel; 58,5 thou. tons of rods from iron or carbon steel; 29.5 thou. tons of other ferrous metals' products. The Republic of Armenia has following advantages of its ferrous metallurgy: availability of allied industries consuming ferrous metallurgy products (machine-building, construction, railway transport); availability of newly constructed enterprises dedicated to ferrous metals processing and equipped with modern facilities. The following are referred to The Republic of Armenian ferrous metallurgy disadvantages: a limited manufacturing range»[6].
There are no ferrous metallurgy enterprises in The Kyrgyz Republic, The Republic of Tajikistan, and Afghanistan.
For these products, anti-dumping measure with reference to hot-rolled flat products in coils is used in Indonesia towards all Customs Union and Common Economic Space member-countries. The measure expiration date is 2018. Special protective measure with respect to hot-rolled flat products with a definite content of alloyed elements is in effect in Thailand. The measure expiration date is 2016.
4. Cold-rolled unalloyed steel flat products without further processing of a width of not less than 600 mm
Sales of cold-rolled unalloyed steel flat products without further processing of a width of not less than 600 mm stood at 166,825.9 tons, or 242.3% in Kazakhstan in 2014 compared to 2010. 24.5% of these products are consumed within Kazakhstan. 75.5% are exported.
Table 9. Sales of cold-rolled unalloyed steel flat products without further processing of a width of not less than 600 mm
|
2010 |
Relative share,% |
2014 |
Relative share,% |
2014/2010, % |
Sales in the Republic of Kazakhstan |
68,845.0 |
8.2 |
166,825.9 |
24.5 |
242.3 |
External sales |
775,331.0 |
91.8 |
513,151.2 |
75.5 |
66.2 |
Source: as per data of Committee on Statistics of MNE of the RK
Kazakhstan’s internal market will remain the potential market for cold-rolled unalloyed steel flat products, given the high demand for these products, high rates of such product sales growth.
The external market will remain the foremost potential market for cold-rolled unalloyed steel flat products. Thus, potential markets for these products shall be developing countries’ markets, which can be expanded by the following products:
1) Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled, not clad, plated or coated, without further processing, in coils of a thickness of 3 mm: among the CIS countries it is possible to develop new markets in all Central Asian countries; among other countries – expansion of the existing market in Afghanistan to 100.0 tons (in 2014 87.0 tons delivered for US$19.1 thou.), as well as development of new markets in Iran and Iraq;
2) Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled, not clad, plated or coated, in coils, of a thickness exceeding 1 mm but less than 3 mm: among the CIS countries it is possible to expand existing markets in all Central Asian countries, other border states. Thus, it is possible to expand the existing market in Kyrgyzstan to 3,500 tons (in 2014 3,203.7 tons delivered for US$ 2,079.8 thou.); in The Republic of Uzbekistan to 1,200 tons (in 2014 1,004.0 tons delivered for US$ 657.1 thou.); in Ukraine to 1,300 tons (in 2014 1,155.2 tons delivered for US$ 627.3 thou.), in Azerbaijan to 360 tons (in 2014 349.8 tons delivered for US$ 193.6 thou.), in Turkmenistan to 100 tons (in 2014 60.0 tons delivered for US$ 38.2 thou.), as well as development of new markets for these products in The Republic of Tajikistan and The Republic of Armenia.
In all other countries it is possible to expand the existing market in Afghanistan to 600.0 tons (in 2014 425.3 tons delivered for US$ 238.9 thou.); in Iran to 81,500 tons (in 2014 81,305.2 tons delivered for US$ 49,338.4 thou.); in China to 1,800 tons (in 2014 1,635.3 tons delivered for US$ 836.7 thou.);
3) Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled, not clad, plated or coated, in coils, of a thickness of 0.5 mm or more but not exceeding 1 mm, oth.: among the CIS countries it is possible to expand existing markets in Kyrgyzstan to 4,000 tons (in 2014 3,826.0 tons delivered for US$ 2,498.7 thou.); in The Republic of Uzbekistan to 12,000 tons (in 2014 10,679.5 tons delivered for US$ 7,171.9 thou.); in Ukraine to 520 tons (in 2014 489 tons delivered for US$ 284.9 thou.), in Azerbaijan to 350 tons (in 2014 305.7 tons delivered for US$ 170.7 thou.), as well as development of new markets in Turkmenistan, The Republic of Tajikistan and The Republic of Armenia.
In all other countries it is possible to expand existing markets in Afghanistan to 6,000.0 tons (in 2014 5,754.6 tons delivered for US$ 3,166.8 thou.); in Iran to 180,000 tons (in 2014 162,299.4 tons delivered for US$ 95,805.2 thou.); in China to 7,600 tons (in 2014 7,508.0 tons delivered for US$ 3,670.0 thou.);
4) Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled, not clad, plated or coated in coils, of a thickness of 0.35 mm or more but less than 0.5: among the CIS countries it is possible to expand existing markets in Azerbaijan to 2,000 tons (in 2014 1,752.5 tons delivered for US$ 1,085.4 thou.); in The Republic of Uzbekistan to 1,000 tons (in 2014 817.5 tons delivered for US$ 564.4 thou.); in Kyrgyzstan to 50 tons (in 2014 34.2 tons delivered for US$ 24.1 thou.); as well as development of new markets in Turkmenistan, The Republic of Tajikistan and The Republic of Armenia.
In all other countries it is possible to expand existing markets in Afghanistan to 3,000.0 tons (in 2014 2,883.1 tons delivered for US$ 1,598.8 thou.); in Iran to 45,000 tons (in 2014 40,124.8 tons delivered for US$ 24,275.7 thou.); in China to 4,300 tons (in 2014 4,135.8 tons delivered for US$ 2,070.8 thou.); in Iraq to 200 tons (in 2014 175.0 tons delivered for US$ 105.0 thou.); in Pakistan to 70 tons (in 2014 56.4 tons delivered for US$ 31.7 thou.);
5) Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled, not clad, plated or coated, not in coils, of a thickness exceeding 1 mm but less than: among the CIS countries it is possible to expand existing markets in The Republic of Uzbekistan to 6,200 tons (in 2014 6,046.8 tons delivered for US$ 4,093.1 thou. dollars. USA); in Ukraine to 3,000 tons (in 2014 2,779.3 tons delivered for US$ 1,479.1 thou.); in Kyrgyzstan to 2,500 tons (in 2014 2,030.2 tons delivered for US$ 1,369.2 thou.); in The Republic of Tajikistan to 1,200 tons (in 2014 988.6 tons delivered for US$ 668.2 thou.); in Azerbaijan to 400 tons (in 2014 247.8 tons delivered for US$ 140.5 thou.); as well as development of the new market for these products in The Republic of Armenia.
In all other countries it is possible to expand existing markets in Iran to 10,000 tons (in 2014 8,421.9 tons delivered for US$ 4,749.0 thou.), in China to 2,000 tons (in 2014 1,926.7 tons delivered for US$ 2,070.8 thou.); in Afghanistan to 500 tons (in 2014 365.0 tons delivered for US$ 203.0 thou.); in Iraq to 500 tons (in 2014 313.3 tons delivered for US$ 191.4 thou.);
6) Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled, not clad, plated or coated, not in coils, of a thickness of less than 0.5 mm: among the CIS countries it is possible to expand existing markets in The Republic of Uzbekistan to 3,000 tons (in 2014 2,636.4 tons delivered for US$ 1,753.3 thou.); in Kyrgyzstan to 50 tons (in 2014 34.7 tons delivered for US$ 25.2 thou.); in The Republic of Tajikistan to 100 tons (in 2014 63.7 tons delivered for US$ 48.2 thou.); as well as development of new markets for these products in The Republic of Tajikistan, The Republic of Armenia.
In all other countries it is possible to expand existing markets in Iran to 4,300 tons (in 2014 4,070.5 tons delivered for US$ 2,477.1 thou.); in Afghanistan to 1,800 tons (in 2014 1,605.4 tons delivered for US$ 906.4 thou.); in Georgia to 500 tons (in 2014 247.8 tons delivered for US$ 154.6 thou.), as well as development of the new market for these products in Pakistan, Iraq to 500 tons (in 2014 313.3 tons delivered for US$ 191.4 thou.);
7) Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, cold-rolled, not clad, coated, in coils, other: expansion of existing markets in Germany to 3,400 tons (in 2014 3,236.7 tons delivered for US$ 1,530.7 thou.); in China 1,500 tons (in 2014 1,375.1 tons delivered for US$ 550.1 thou.). It is possible to develop new markets for these products in all Central Asian countries, as well as in Azerbaijan, The Republic of Armenia, Iran, Afghanistan.
Conditions for entry of cold-rolled unalloyed steel flat products without further processing into the markets of The Republic of Tajikistan, Turkmenistan, Azerbaijan, Iran, The Republic of Uzbekistan, Afghanistan are favorable and described in clause «5. Hot-rolled unalloyed steel flat products without further processing of a width of not less than 600 mm».
2. Number of enterprises (players) in the market.
Market size with regard to the current number of market players.
1. Non-alloy steel in ingots or other primary forms and semi-finished products of non-alloy steel (products according to Classification of products by economic activity 241021, which includes 6 items under codes according to FEACN 720610; 720690; 720711; 720712; 720719; 720720.
The size of the market for non-alloy steel in ingots or other primary forms and semi-finished products of non-alloy steel in Kazakhstan in 2014 stood at 3,710,437.0 tons, or 105.9 % compared to 2010. 97.9% of these products are manufactured in the Republic of Kazakhstan; the rest of the products (2.1%) is imported from abroad.
Table 10. Major domestic market players in the Republic of Kazakhstan are 15 enterprises:
1 |
SSGPO JSC; |
9 |
Kazintersteel Company LLC |
2 |
Casting EC LLC |
10 |
Zapchast JSC |
3 |
Ksp Steеl EC LLC |
11 |
ALZ LLC |
4 |
Arcelormittal Temirtau JSC |
12 |
Vostokmashzavod JSC |
5 |
Aksu Ferroalloy Plant – Branch of TNK Kazchrome JSC; |
13 |
Hermes-B.E. LLC |
6 |
Module Е-2030 LLC; |
14 |
Kazferrosteel LLC |
7 |
Taraz Steel LLC |
15 |
Vtorprom LLC |
8 |
Kazakhmys Corporation LLC |
16 |
|
Source: as per data of Committee on Statistics of MNE of the RK
Major foreign players are Russia, China, Italy, Czech Republic, Germany, which together exported a small number of these products amounting to 87,236.9 tons to Kazakhstan in 2014.
Table 11. Share of players in the market for non-alloy steel in ingots or other primary forms and semi-finished products of non-alloy steel
|
2014 |
|
tons |
market share, % |
|
Production |
4,000,777.00 |
|
Export |
377,508.60 |
|
Share of players of the Republic of Kazakhstan |
3,623,268.40 |
97.65 |
Kazakhmys Corporation LLC |
362,326.84 |
10 |
Kazintersteel Company LLC |
3,623.2684 |
0.1 |
Zapchast JSC |
36,232.684 |
1 |
ALZ LLC |
108,698.052 |
3 |
Vostokmashzavod JSC |
36,232.684 |
1 |
Hermes-B.E. LLC |
14,493.0736 |
0.4 |
Kazferrosteel LLC |
28,986.1472 |
0.8 |
Vtorprom LLC |
7,246.5368 |
0.2 |
Taraz Steel LLC |
3,623.2684 |
0.1 |
Module Е-2030 LLC; |
3,623.2684 |
0.1 |
Aksu Ferroalloy Plant – Branch of TNK Kazchrome JSC; |
181,163.42 |
5 |
Arcelormittal Temirtau JSC |
1,811,634.2 |
50 |
Ksp Steеl EC LLC |
518,127.3812 |
14.3 |
Casting EC LLC |
289,861.472 |
8 |
SSGPO JSC |
217,396.104 |
6 |
Share of foreign players |
87,236.9 |
2.35 |
Italy |
1 |
0.00 |
Czech Republic |
0.1 |
0.00 |
China |
66.8 |
0.08 |
Germany |
0.4 |
0.00 |
Russia |
87,168.6 |
2.27 |
Market size |
3,710,505.30 |
100 |
Source: as per data of Committee on Statistics of MNE of the RK, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan and enterprises
2. Alloy steel in ingots or other primary forms and semi-finished products of alloy steel (products according to Classification of products by economic activity 241023, which includes 2 items under codes according to FEACN 722410; 722490).
The size of the market for alloy steel in ingots or other primary forms and semi-finished products of alloy steel in Kazakhstan in 2014 compared to 2010 narrowed due to lower production of these products, the volume of export of these products to external markets, which is higher compared to 2010, stock balances of enterprises. 72.3% of these products are manufactured in the Republic of Kazakhstan; the rest of the products (10.8%) is imported from abroad. All these products are exported. In 2014, these products were not used within Kazakhstan.
Major domestic players in this market were 4 enterprises: Arcelormittal Temirtau JSC; Kazakhmys Corporation LLC; Vostokmashzavod JSC; Parkhomenko KMH LLC.
Given that all products, manufactured in 2014, and inventories of enterprises are exported to external markets, the size of Kazakhstan’s internal market was equal to zero. There were import deliveries from China in the amount of 41.9 tons (2.1%) and from Russia in the amount of 1,991.0 tons (97.9%).
Table 12. Share of players in the market for alloy steel in ingots or other primary forms and semi-finished products of alloy steel
Name |
2014 |
|
tons |
market share, % |
|
Production of the Republic of Kazakhstan |
13,640.0 |
100 |
Export |
18,864.3 |
100 |
Share of players of the Republic of Kazakhstan |
0.0 |
0.0 |
Arcelormittal Temirtau JSC |
0 |
0 |
Kazakhmys Corporation LLC |
0 |
0 |
Vostokmashzavod JSC |
0 |
0 |
Parkhomenko KMH LLC |
0 |
0 |
Share of foreign players |
2,032.9 |
100.0 |
Russia |
1,991.0 |
97.9 |
China |
41.9 |
2.1 |
Source: as per data of Committee on Statistics of MNE of the RK, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan and enterprises
3. Flat-rolled products of non-alloy steel, of a width of 600 mm or more, hot-rolled without further processing (products according to Classification of products by economic activity 241031, which includes 14 items under codes according to FEACN 720810, 720825, 720826, 720827, 720836, 720837, 720838, 720839, 720840, 720851, 720852, 720853, 720854, 720890).
The size of the market for flat-rolled products of non-alloy steel, of a width of 600 mm or more, hot-rolled without further processing in Kazakhstan in 2014 stood at 1,002,025.3 tons, or 100.7%, increased slightly compared to 2010. 91.2% of these products are manufactured in the Republic of Kazakhstan; the rest of the products (8.8%) are imported from abroad. In the internal market 51.8% of these products are consumed and processed at enterprises of Kazakhstan, 48.2% are exported.
Major domestic players in this market are Arcelormittal Temirtau JSC, Magnitka LLC.
Russia is a major foreign player.
Table 13. Share of players in the market for flat-rolled products of non-alloy steel, of a width of 600 mm or more, hot-rolled without further processing
|
2014 |
|
tons |
market share, % |
|
Production |
1,764,710.00 |
|
Export |
932,203.80 |
|
Share of players of the Republic of Kazakhstan |
832,506.20 |
83.08 |
Arcelormittal Temirtau JSC |
831,673.70 |
99.90 |
Magnitka LLC |
832.50 |
0.10 |
Share of foreign players |
169,519.10 |
16.92 |
Ukraine |
838.5 |
0.08 |
China |
647.1 |
0.06 |
Great Britain |
266 |
0.03 |
Denmark |
76.9 |
0.01 |
Russia |
167,014.0 |
16.67 |
Turkey |
2.3 |
0.00 |
Belgium |
298.6 |
0.03 |
Germany |
94.8 |
0.01 |
Austria |
89.5 |
0.01 |
Spain |
3.9 |
0.00 |
Italy |
24.3 |
0.00 |
Finland |
18.8 |
0.00 |
France |
63.2 |
0.01 |
Czech Republic |
0.4 |
0.00 |
Netherlands |
77.7 |
0.01 |
Sweden |
1.2 |
0.00 |
South Africa |
0.1 |
0.00 |
India |
0.5 |
0.00 |
Iran |
0.5 |
0.00 |
Poland |
0.3 |
0.00 |
Market size |
1,002,025.30 |
100.00 |
Source: as per data of Committee on Statistics of MNE of the RK, Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan and enterprises
3. Barriers, restrictions and recommendations on their elimination.
Technical barriers. In India, the government decree “On quality control of steel and steel products” No. 2 dated March 12, 2012 introduced the obligatory certification for imported goods of ten positions of the Harmonized Commodity Description and Coding System (hot-rolled steel, sheet steel, electrical steel, steel bars, steel wire, etc.). In case of non-compliance of imported goods with the requirements of the Bureau of Indian Standards, permits are not issued, and the import of such products is prohibited. The packaging of the goods, which passed the assessment, and attestation of conformity procedure, at the beginning of customs clearance shall be marked as such. "
Other measures of trade policy restraining export of steel products. Price constraint on commodity subheading is used. These restrictions consist of the quarterly establishment of minimum (reference) prices under FOB port of export, starting with 255-280 USD per metric ton. When calculating prices for the next periods the US Department of Commerce takes into consideration the growth or fall of the weighted average unit prices of similar products imported from all countries, except for the objects of anti-dumping investigation.
Subsidies are also used in order to limit imports of products. Their effectiveness depends on the method of administration: since import substitution, related subsidies are prohibited by WTO regulations, for the successful use they should match de jure with the requirements of the WTO Agreement on subsidies and countervailing Measures.
An example of the application of this tool is the EU practice of latent subsidies for export and import substitution, which under 2007-2013 programs (as adjusted in 2009) allocated 112 billion Euros, which is approximately equal to the EU budget in 2010.
EU subsidies are allocated for R & D funding, the implementation of environmental programs and region development strategies, the non-specific grant support, and compensate the gaps in the WTO Agreement on subsidies and countervailing measures as well. In addition, environmental grants cover a wide range of costs, including the assessment of conformity to product requirements. Thus, through grants to European producers may be reimbursed with the cost of conformity assessment and registration in the REACH system, which is a violation of a national treatment.
Additionally, before the entry into the WTO, restrictions of political nature, i.e. having no economic reasons, had a negative impact on the export of metals products, both ferrous and non-ferrous. Most of them are connected with a restriction on operation of the most-favored nation (MFN), applied in the EU and the USA.
The USA constantly complicates the procedure of imported goods customs clearance. Among the latest innovations, it should be noted the “rule of 10 plus 2”, introduced in 2009. It obliges carriers no less than 48 hours before loading the goods on board ship to provide the Agency of Customs and Border Guard the detailed information about the goods. The procedure is called the “rule of 10 plus 2” because it expanded the list of the minimum required documents and data for customs clearance and release of goods (10 items) by two elements: the provision of vessel loading plan and container status report. Failure to provide this data will result in carrier’s inability to accept the goods for shipment. The penalty for failure to comply with the “rule of 10 plus 2” amounts to USD 5,000.00. An additional complication is in the form of provision of such data. For example, loading plan is presented not in the scheme form, but as detailed explanatory note. It is generated with use of specialized software, which interface is available only in English and is full of logistics and customs terminology.
The second anti-terrorist US initiative which has a deterrent effect on imports is a hundred percent scanning of maritime containers (radiation and X-ray control), which should be undertaken prior to loading on board ship at the port of departure. Cargos in containers that have not passed the scanning procedure are subject to customs inspection. The US Commission Decision 9/11 was published in 2007, for the period of up to 2012 was purely non-regulatory. In connection with the postponement of the final implementation in 2014, scanning is used only in trial mode, in six foreign ports. Its opponents - some carriers, ports, International Federation of Freight Forwarders Associations (FIATA), and the EU Commission - insist on the redundancy of such a measure, since by sea are usually carried low risk goods in terms of the terrorist threat and, in addition, the goods are subjected to the same type of control on arrival in the USA. Among their arguments, there is a reduction in port capacity, emergence of congestion on the roads leading to the ports, increased costs for temporary storage and the need for warehouses etc.
Depending on their influence on the export from the states-members of the CU and the EEA applied measures can be divided into trade barriers, potential trade barriers, and restrictive measures.
For example, trade barriers exerting in practice a negative impact on exports from the countries - members of the Union involve 75 measures.
These include anti-dumping measures and special safeguard measures (in cases where the imposition of duties affect the delivery of goods from the states - members of the CU and the EEA), prohibitions and restrictions in the framework of the FSB (Financial stability board) and TBT (Technical Barriers to Trade) related measures, discriminatory excise taxes and duties, quantitative restrictions, as well as other administrative measures[7].
The largest number of measures in the field of metallurgy, classified as trade barriers, belongs to the Russian Federation, followed by the Republic of Belarus. The Republic of Kazakhstan is imposed with a small number of measures.
Potential trade barriers are considered as conducted by the third countries antidumping, countervailing and special safeguard investigations in case when investigation does not involve a provisional duty. This category also includes the threat of introduction of prohibitions and technical barriers by the third countries, as well as other non-tariff measures, the introduction of which is considered by the third countries, and which does not affect, but in prospect may affect supplies from the Union states-members to these markets. At present, potential trade barriers include 23 measures.
Restrictive measures include those, which direct negative impact on the export of the Union states-members has not yet been revealed, as well as measures of the third countries against goods, supply of which in these countries from the Union states - members is currently absent or insignificant. This category includes 30 measures.
Table 14. Trade barriers acting on the markets of the third countries for metallurgy products of the states - members of the CU and the EEA in 2014
Country with measure in force |
Measure description |
Azerbaijan |
Application of a rated up rates of excise duty to a range of imported goods. |
Argentina |
Since February 1, 2012 import of any goods in Argentina can be carried out only after receipt of the non-automatic licenses. Issuance of the license can be linked to exporter’s undertaking of voluntary limitation of a volume or a value of exports, investment in Argentina economy and other restrictions. |
Argentina |
Since March 2011, in Argentina there has been introduced an unpublicized rule, under which the major importers are required to submit pre-declaration import detailed program of compensating import with export supplies. At present companies seeking to import finished products or components in the country, are required to enter into an agreement with the government on the obligatory export of Argentine goods of a certain value. |
Brazil |
An anti-dumping measure against magnesium metal from the Russian Federation. Expiry date of the measure comes in 2017. |
The EU |
Requirements for labeling and packaging of nickel-containing products. |
Indonesia |
An anti-dumping measure against hot-rolled flat coils. It applies to all countries - members of the CU and the EEA. Expiry date of the measure comes in 2018. |
China |
An anti-dumping measure against transformer steel from the Russian Federation. Expiry date of the measure comes in 2015. |
Mexico |
An anti-dumping measure against rolled carbon steel sheets from the Russian Federation. Expiry date of the measure comes in 2015. |
Mexico |
An anti-dumping measure against steel sheet coils from the Russian Federation. Expiry date of the measure comes in 2016. |
Mexico |
An anti-dumping measure against cold-rolled steel sheet coils from the Russian Federation. Currently under review due to the expiration of the measure term, the duty remains in effect. |
Mexico |
Anti-dumping measure against hot-rolled steel sheet coils from the Russian Federation. Expiry date of the measure comes in 2015. |
The USA |
The Agreement on suspending of anti-dumping investigation is applied against hot-rolled flat carbon steel products from the Russian Federation. |
The USA |
The Agreement on suspending of anti-dumping investigation is applied against thick-gauge plate from the Russian Federation. |
Thailand |
An anti-dumping measure against hot-rolled flat coils and not in coils from the Russian Federation. Currently under review due to the expiration of the measure term, the duty remains in effect. |
Thailand |
Special protective measure against hot-rolled flat products with certain content of alloy elements. Expiry date of the measure comes in 2016. |
The Republic of Uzbekistan |
Application of a rated up excise duty to a range of imported goods. |
Source: the ECE report for 2014.
Table 15. Potential trade barriers identified in 2014 on the third countries markets
Country with measure in force |
Measure description |
The EU |
An anti-dumping investigation against transformer steel from the Russian Federation. |
The EU |
An anti-dumping investigation against aluminum foil from the Russian Federation. |
The EU |
Ability to establish more hard rules for filling in and conditions of issuance of documents for import of goods being subject to the supervision of imports during a special safeguard investigation, to the extent of the possibility to set a shorter period of import documents validity and determine the conditions of their withdrawal. |
India |
Special safeguard investigation against stainless steel plate. |
Morocco |
Special safeguard investigation against cold-rolled flat coils and sheets. |
Thailand |
Special safeguard investigation against alloyed hot-rolled coils and not in coils. |
Ukraine |
Use of special sanctions in case of violation of Ukrainian legislation regarding foreign economic activity (individual licensing regime, temporary suspension of foreign economic activity) in accordance with the Article 37 of the Law of Ukraine “On foreign economic activity”. |
Source: the ECE report for 2014.
Table 16. Restrictive measures on metallurgy products in 2014 on the third countries markets
Country with measure in force |
Measure description |
India |
Obligatory certification of certain types of steel products. |
Indonesia |
A special safeguard measure in the form of quotas against flat steel galvanized. |
Malaysia |
Special safeguard investigation against hot-rolled flat products of iron or non-alloy steel. |
Moldova |
Fee for import of goods, use of which result in pollution of the environment. List of imported products consists of 180 items of Customs Commodity Codes (FEACN). |
The Republic of Uzbekistan |
Consumer credit is provided to organizations, which sell goods produced in The Republic of Uzbekistan only. |
The Republic of Uzbekistan |
No permission is provided for conversion of funds received from ticket sales in the territory of The Republic of Uzbekistan in the local currency. |
The Republic of Uzbekistan |
The procedure of conversion of the national currency into freely convertible currency is delayed for a period of 3 months or more. |
The Republic of Uzbekistan |
The specific list of imported goods must be sold within one year after customs clearance. |
Source: the ECE report for 2014.
Industry barriers to entry the Russian market
The development of mining and metallurgical complex of Kazakhstan on the Russian market, the most large-scale economy in the EEU, has been affected by industry barriers to entry the country's market. Thus, the Russian iron and steel industry plays a significant role in the world economy having a significant impact on the key sectors of industry and construction. Russia occupies the 5th place in the world steel production (following China, Japan, India and the USA), the 2nd place in production of steel pipes (following China), the 3rd place in metal exports (following China and Japan), the 5th place in production of commercial iron ore (following China, Australia, Brazil, and India).
Ferrous metallurgy has ten large, vertically and horizontally integrated holding companies formed which combine enterprises in the entire processing chain of manufacturing from coal and ores production and processing to infrastructure units, scrap processing, energy, ports and railway transport, which allows to reduce risks both on the domestic and foreign markets, to improve investment policy and to ensure security of own raw materials.
In total holdings’ share accounts for about 90% of rolled ferrous steel products produced in Russia. Companies are actively developing their own service centers in steel processing and trade of finished steel products in the various regions of the country and worldwide, as well as carrying out the construction of electric steel work in Russia regions in order to approach the customer and improve their competitiveness by reducing transportation costs.
The actions taken by the Government of the Russian Federation have contributed to the protection of the domestic market, upgrading (due to the abolition of import duties for the main types of high-tech equipment), and reduction of the number of restrictions which apply to foreign markets against the Russian steel products.
The main competitive advantages of the Russian steel industry are own developed iron ore and energy base; modern facilities for smelting of iron, steel and metal production; formed vertically-integrated structures competitive on foreign markets.
Special steels market. Production of special steels in Russia focused on specialized enterprises of the metallurgical complex (formerly belonging to the association “Spetzstal”), as well as on steel production of individual machine-building enterprises (including the defense industry).
Stainless steel market. A significant part of powerful Russian steel industry for production of stainless steel is concentrated in several companies belonging to the Group “Mechel” and having a technological connection with OJSC “Chelyabinsk Metallurgical Plant”, which is the only enterprise in Russia for production of stainless steel and other high-alloy steels, and alloys, having a full metallurgical cycle. He plant produced about 30% of stainless steel in the country in 2014, being a major producer of hot-rolled sheet of stainless steel (53% of the total Russia-wide production) and cold-rolled sheet of stainless steel (93% of total production).
Another major manufacturer of hot-rolled stainless steel in Russia is CJSC “Volgograd Metallurgical Plant Red October”, the share of which in 2014 accounted for 41.4% of hot-rolled stainless steel sheet and 30.4% of stainless grade. The large manufacturer of stainless steel grade is OJSC “Zlatoust Metallurgical Plant” (30% of the total volume) and OJSC “Electrostal” (22%).
The share of these enterprises in production volume of finished rolled stainless steel amounted to 88.2% in 2014.
4. The list of potential opportunities for entrepreneurial initiatives. Structure of the value chain.
Existing gaps in the value chain of ferrous metallurgy products
Evaluation of value added in the steel industry of Kazakhstan, which was carried out on the basis of the data provided by the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan on “The resources and the use of certain types of products (goods) and raw materials in the Republic of Kazakhstan” on a wide range of Mining and Metallurgical complex products, showed that the initial value added (production of pig iron and steel) had a high degree of satisfaction in domestic industries for these products. However, at the stage of production of various types of steels, despite the wide range of products, there are problems of incomplete satisfaction of the national economy sectors demand.
Steel products, which refer to the value added of “Steel production”, there is a high dependence of Kazakhstan (84.3%) only in 1 product group of Classification of products by economic activity:
Stainless steel in ingots or other primary forms and semi-finished products of stainless steel (CPA 241022). However within this group (CPEA 241022) 100% dependence is observed on the following products:
- other stainless steel square cross-section, rolled or obtained by continuous casting (FEACN 72189911), which in 2014 was imported in the amount of 11.4 thou. tons for USD 9.7 thou.;
- other stainless steel, rolled or obtained by continuous casting (FEACN 72189920), which in 2014 was imported in the amount of 2,150.9 tons for USD 1,259.8 thou..
Another product of value added of “Steel production”, there are large reserves for the following products in Kazakhstan:
- Alloy steel in ingots or other primary forms and semi-finished carbon steel (unalloyed) (CPEA 241021) - coverage of Kazakhstan is 97.9%;
- Steel, alloy in ingots or other primary forms and semi-finished products of alloy steel (CPEA 241023) – 72.3%.
The high level of dependence from 90 to 99.9% is observed in the following CPEA codes of Steel:
Flat-rolled products less than 600 mm wide, cold, uncoated steel (CPEA 243210) - dependence of the Republic of Kazakhstan is 99.9%.
In this group, 100% dependence exists for:
- flat-rolled products of iron or non-alloy steel, width of less than 600mm, not cladded, uncoated: without further processing, except for cold rolling, containing less than 0.25 wt. % of carbon, electrical steel (FEACN 721123), in 2014 9.9 tons were imported for USD 7.7 thou.;
- flat-rolled products of iron or non-alloy steel, width of less than 600 mm, not cladded, uncoated: without further processing, except for cold rolling, containing less than 0.25 wt. % of carbon, not of electric steel, thickness => 0.35 mm (FEACN 721133), in 2014 Kazakhstan imported 32.0 tons for USD 49.8 thou.;
- flat-rolled products of iron or non-alloy steel, width of less than 600 mm, not cladded, plated nor coated, perforated (FEACN 721190), in 2014 2.7 tons imported for USD 10.6 thou.
Table 17 Existing gaps (white spots) in the value chain of steel products
1 stage |
2 stage |
3 stage |
4 stage |
5 stage |
6 stage |
|||||
Ore production |
Enrichment |
Iron manufacturing |
Steel manufacturing |
Rolled steel manufacturing |
Manufacturing of finished steel products |
|||||
Iron ore |
Iron concentrate |
The pellets and pig iron, specular iron, and steel powders (CPEA 241014) |
Alloy steel in ingots or other primary forms and semi-finished carbon steel (unalloyed) (CPEA 241021) |
Rolled steel hot-rolled stainless flat without further processing with a minimum thickness of 600 mm (CPEA 241031) |
Bridges and bridge sections of iron or steel (CPEA 251121) |
|||||
|
|
Pig iron, not alloyed, containing more than 1 wt. % of silicon |
Stainless steel in ingots or other primary forms and semi-finished products of stainless steel (CPEA 241022) |
Rolled steel cold-rolled flat stainless without further processing with a minimum thickness of 600 mm (CPEA 241041) |
Towers and lattice masts made of ferrous metals (CPEA 251122) |
|||||
|
|
Pig unalloyed iron contains more than 0.5 wt % of phosphorus in pigs, blocks and other forms of primary |
Steel, alloy in ingots or other primary forms and semi-finished products of alloy steel (CPEA 241023) |
Flat-rolled products of stainless steel of a width not less than 600 mm, plated or cladded with other coating (CPEA 241051) |
Other construction parts of structures, plates, rods, angles, shapes and similar items of iron or aluminum metal (CPEA 251123) |
|||||
Flat-rolled products of iron or unalloyed steel, width of 600 mm or more, cladded, plated or coated with tin, thickness 0.5 mm or more (FEACN 72101100) |
||||||||||
Flat-rolled products of iron or unalloyed steel, width of 600 mm or more, cladded, plated or coated with tin, thickness less than 0.5 mm, no tinplate (FEACN 72101280) |
||||||||||
Flat-rolled products of iron or unalloyed steel, thickness 600 mm or more, cladded, plated or coated aluminum-zinc alloys (FEACN 72106100) |
||||||||||
Flat-rolled products of iron or unalloyed steel, thickness 600 mm or more, tinplate and products plated or coated with chromium oxides or chromium and chromium oxides, varnished (FEACN 72107010) |
||||||||||
|
Value chain gap, products are not produced, 100% dependence of Kazakhstan |
|
Products are produced, 90-99.9% dependence of Kazakhstan |
|
Products are produced, low dependence of Kazakhstan |
|
||||
Source: compiled by the Association of Mining and Metallurgical Enterprises
Table 18. The list of potential opportunities for entrepreneurial initiatives
№ |
Product name |
Estimated market capacity |
|
tons |
Thou. USD |
||
1 |
Stainless steel in ingots or other primary forms and semi-finished products of stainless steel (CPEA 241022) |
|
|
1.1. |
Other stainless steel square cross-section, rolled or obtained by continuous casting (72189911) |
11.4
|
9.7
|
1.2. |
Other stainless steel rolled or obtained by continuous casting (72189920). |
2,150.9 |
1,259.8 |
7 |
Flat-rolled products with thickness of less than 600 mm, cold-rolled, uncoated steel (CPEA 243210) |
|
|
7.1. |
Flat-rolled products of iron or unalloyed steel with thickness of less than 600mm, not cladded , uncoated: without further processing, but cold-rolled, containing less than 0.25 wt. % of carbon, electrical steel (FEACN 721123) |
9.9
|
7.7
|
7.2. |
flat-rolled products of iron or non-alloy steel, width of less than 600 mm, not cladded, uncoated: without further processing, except for cold rolling, containing less than 0.25 wt. % of carbon, not of electric steel, thickness => 0.35 mm (FEACN 721133) |
32.0
|
49.8
|
7.3. |
flat-rolled products of iron or non-alloy steel, width of less than 600 mm, not cladded, plated nor coated, perforated (FEACN 721190) |
2.7 |
10.6 |
Source: compiled by the Association of Mining and Metallurgical Enterprises
5. The strengths of the industry.
Mining and metallurgical industry is one of the most important industries, which on a par with oil and gas industry and energy determines the economic, social and technological development of the Republic of Kazakhstan. Long-term forecasting and detection of innovative potential of technological areas are the priorities for the successful planning of development of the industry.
Mining and metallurgical industry of Kazakhstan has a number of favorable conditions for successful development of the industry in the long run, among which are the following:
- transport and geographical situation of enterprises and access to global markets (closeness to the Republic to the South-East Asia and Russia, the large exporting companies also have branched access to the EU markets and the USA);
- availability of energy and raw material base, represented by ores of ferrous and non-ferrous metals, coking coal, rare, rare-earth, radioactive and precious metals;
- the availability of a strong industrial base and developed infrastructure of enterprises with specialized research centers (plant laboratories);
- foreign investment attractiveness of the industry;
- existing raw material orientation of the economy in case of the absence of any added value.
Table 19. The strengths of legislation and governmental regulation:
- availability of a sufficiently complete national legislation in various areas; - availability of approved fundamental strategic and program documents; - availability of a variety of measures of state support for businesses of the mining and metallurgical complex; - availability of the necessary legal framework and infrastructure for development of domestic processing and production of products with a high added value in metallurgy. |
Source: done by the Association of Mining and Metallurgical Enterprises.
Table 20. The strengths of ferrous metallurgy
- strategic role of ferrous metallurgy in ensuring of GDP; - quality of the most of exported products meets the requirements of consumers; - globalization of the mining and metallurgical industry of the republic (ArcelorMittal, Kazakhmys, ENRC, Kazzinc etc.) and its compliance with a level of high industrial culture; - crucial role of industry in the national economy; - high demand for ferrous and nonferrous metals in the long term; - multicomponent ore of mineral deposits; - comprehensive content of useful components of deposits; - strong demand for metals and metal products on foreign markets; - development of related domestic industries that consume metal (engineering, construction, railways, energy etc.); - possibility of creation of new industries for production of high added value products based on produced basic and rare metals. - availability of own mineral resource base (ferrous, rare, rare-earth and radioactive metals, and others.); - availability of well-developed industrial infrastructure (mines and large processing plants, smelters, including those with complete cycle, railway transport, power grids); - availability of industrial research centers, institutes, national and university engineering laboratories, research centers, enterprises; - wide range of manufactured metals, including rare and rare-earth; - availability of national research and technology for organization of production plants for deep and complex processing of raw materials; - availability of leading companies in mining and production of metals with access to the world markets; - availability of competitive technologies for extracting of metals difficult-to-obtain on the global market; - availability of deposits for potential development. |
Source: compiled by the Association of Mining and Metallurgical Enterprises
[1] Source: Informational publishing service "Metal supply and merchandising"
[2] Source: Informational publishing service "Metal supply and merchandising"
[4] Sourcehttp://uaprom.info/
[5] Source: Informational publishing service "Metal supply and merchandising"
[7] Source www.eurasiancommission.org/.
Review on sugar industry
1. Introduction.
The agricultural industrial complex of Kazakhstan is a priority for the state. One of the most important factors for the sustainable development of agricultural complex is the orientation on economic efficiency of production and agricultural production processing, that involves rational and integrated use of land, labor, material and raw material resources, a special role is assigned to the rational development in the territorial aspect, promoting more efficient use of basic types of resources.
In the production of food and processing industry accounts for about 1.7% of the GDP of the Republic of Kazakhstan. This industry includes oil and fat and dairy industry, processing of meat, fruit and vegetables, production of confectionery, sugar, cotton fiber and animal feed, and a few short reports are prepared on them.
In this review, the first part is a the description of sub-industry, further considered the domestic market of sugaring, historical information on the development of sub-industry, existing barriers and limitations and provided a list of potential opportunities for entrepreneurial initiatives.
1.1. Description of sub-industry
Due to natural and climatic conditions, sugar beet in Kazakhstan is the only domestic raw material for sugaring, and is of value as a feed crop.
Kazakhstan has potential capacities of revival of sugar beet growing: favorable natural and climatic conditions, lands appropriate for beet, water sources. Experience of cultivation of sugar beet for the past years has shown that in the Republic it is possible to obtain stable yields of not less than 400 hwt/ha on irrigation and 200-250 hwt/ha on bogara.
During the processing of root crops we receive valuable additional products other than sugar:
· Molasses and beet pulp, nutritious cattle feed;
· Molasses - used for the manufacture of alcohol, citric acid, food yeast, etc.
The share of domestic raw materials in the production of white sugar in the RK is not more than 4%, other 96% - imported raw sugar, mainly cane.
Volumes of white sugar consumption in the RK in the period between 2003 and 2007 in average was 460 +/- 25 thous. tons. In 2008 there was 10% growth rate to more than 516 thous. tons, which in turn was caused by, including sharp (by 30% to the previous year) growth of domestic production. In 2009, the consumption volumes have dropped significantly, and until 2014 were 400 +/- 10 thous. tons. The share of domestic production and imports were not constant and varied in a ratio from 85/15% in 2009 to 40/60% in 2012 year.
Table 1. Balance of resources of white sugar in RK 2003-2015, thous. tons
Indicator |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
6 month. 2015 |
Production |
475.5 |
514.6 |
448.1 |
462.2 |
358.5 |
471.1 |
350.8 |
333.6 |
243.6 |
145.2 |
307.4 |
375.6 |
126.2 |
Import |
28.5 |
32.1 |
42.6 |
42.7 |
144.6 |
62.8 |
57.9 |
72.9 |
159.8 |
234.7 |
104.5 |
141.8 |
66.9 |
Export |
61.8 |
63.6 |
60.1 |
43.7 |
27.9 |
17.2 |
2.3 |
13.2 |
6.6 |
2.2 |
13.9 |
2.5 |
0.2 |
Consumptions |
442.2 |
483.1 |
430.6 |
461.2 |
475.2 |
516.6 |
406.3 |
393.3 |
396.8 |
377.8 |
398.0 |
514.9 |
192.9 |
Source: Committee on Statistics of MNE OF THE RK
In 2014 consumption volume again increased significantly (by 30% to the previous year), this time due to the production growth (by 20% to the previous year) and imports (by 35% to the previous year). Data on the amount of domestic consumption are shown in Chart 1. According to long-term average annual data, the volume of the RK market amounts to about 460-480 thousand. tons of white sugar per year. Due to the long period of low consumption (2009-2013), the market tends to decrease in consumption. However, the data of 2014 (a sharp increase by 30%) have to be confirmed by subsequent data (2015 and subsequent years).
From experience, it follows that the basic production volumes (60%) account for the second half of the year, while imports (50-70%) - for the first half of the year. Forecast of consumption volume for 2015, calculated on the basis of these parameters will make about 400 thousand. tons per year, however, the results of the year, can either confirm or deny this preliminary forecast.
According to experts, volumes of domestic consumption of white sugar by 2020 will amount to 460-480 thousand tons. At the same time manufacturing facilities (nominal) of all sugar factories make 958.6 thous. tons of sugar per year, load of existing sugar factories is about 40%, indicating the excess capacity in the market. As most of the enterprises stand idle plant manufacturing facilities exceed production volumes by 3 times.
Sugar beet areas under crops dropped significantly. They decreased from 22 300 hectares in 2004 to 1 200 in 2014, so that area under crops of sugar beet of 2014 amounted to only 5% of the area of 2004.
Table 2. Dynamics of areas under crops of sugar beet, thousand hectares
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
|
The Republic of Kazakhstan |
22.2 |
22.3 |
17.5 |
14.4 |
13.7 |
13.1 |
10.6 |
11.2 |
18.2 |
11.8 |
2.7 |
1.2 |
Almaty |
17.1 |
18.0 |
16.2 |
14.1 |
13.7 |
8.3 |
5.9 |
4.8 |
11.1 |
6.3 |
1.6 |
0.4 |
Zhambyl |
5 |
4.3 |
1.3 |
0.3 |
0.0 |
4.7 |
1.9 |
5.7 |
7.0 |
5.4 |
1.0 |
0.8 |
Kyzylorda |
|
- |
- |
- |
- |
- |
- |
0.0 |
- |
- |
- |
- |
South-Kazakhstan |
0.1 |
- |
- |
- |
0.0 |
0.0 |
2.8 |
0.7 |
0.1 |
0.1 |
0.1 |
0.0 |
East-Kazakhstan |
|
- |
- |
0.0 |
- |
0.1 |
- |
- |
- |
- |
- |
- |
Source: Committee on Statistics of MNE of the RK
The share of Almaty region in the total area of sown with sugar beet for the total period of 2000-2015 in Kazakhstan amounted to 76.19%, Zhambyl - 21.77% and almost 2% of the SKR. Most of the areas under crops in the dynamics were mainly in the Almaty region - from 53% in 2012 to 100% in 2007. In some years, the leader in areas under crops became Zhambyl region, occupying 51% of the total areas under crops in 2010 and 66% in 2014. In turn, Kyzyl-Orda and East Kazakhstan regions demonstrate minuscule areas of sowing of sugar beet and do not exceed 0.1%. The main areas of sugar beet in the Almaty region are Karasay, Aksu, Ile and Talgar districts, in Zhambyl region - Taraz city and Merki district.
Indicators of harvested areas of sugar beet are extremely unstable. It is worth noting the low volume of harvested areas in 2008, amounting to only 47% of the areas under crops, which is associated with a severe drought, which took place in that year and caused losses worth millions of farms in the same year. Volatility of harvested areas in different years is caused by poor seedlings in different years, drought and lack of water.
Table 3. Dynamics of areas of sugar beet, thousand hectares
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
|
Almaty |
14.9 |
13.2 |
15.2 |
15.5 |
16.2 |
14.0 |
13.6 |
12.4 |
5.1 |
6.1 |
3.8 |
4.9 |
5.8 |
1.6 |
0.4 |
Specific weight of harvested areas (%) |
85.6 |
82.0 |
90.5 |
90.6 |
90.0 |
86.4 |
96.5 |
90.5 |
61.4 |
103.4 |
79.2 |
44.1 |
92.1 |
100.0 |
100.0 |
Zhambyl |
2.5 |
3 |
2.6 |
4.5 |
3.8 |
0.7 |
0.2 |
1.1 |
1.4 |
4.4 |
5.6 |
3.1 |
0.7 |
0.5 |
|
Specific weight of harvested areas (%) |
55.6 |
85.7 |
100.0 |
90.0 |
88.4 |
53.8 |
66.7 |
23.4 |
73.7 |
77.2 |
80.0 |
57.4 |
70.0 |
62.5 |
|
Kyzylorda |
0.1 |
0.1 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|||
Specific weight of harvested areas (%) |
100 |
100 |
|||||||||||||
South-Kazakhstan |
0.2 |
0.1 |
0.1 |
0.1 |
- |
- |
- |
2.4 |
0.5 |
0.1 |
0.1 |
0.1 |
|||
Specific weight of harvested areas (%) |
66.7 |
100 |
85.7 |
71.4 |
100 |
100 |
100 |
||||||||
East-Kazakhstan |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||
Specific weight of harvested areas (%) |
|||||||||||||||
Republic of Kazakhstan |
17.6 |
16.4 |
18 |
20.1 |
20.0 |
14.7 |
13.8 |
12.4 |
6.2 |
9.9 |
8.7 |
10.6 |
9.0 |
2.4 |
0.9 |
Specific weight of harvested areas (%) |
79.3 |
82.4 |
92.3 |
90.5 |
89.7 |
84.0 |
95.8 |
90.5 |
47.3 |
93.4 |
77.7 |
58.2 |
76.3 |
88.9 |
75.0 |
Source: Committee on Statistics of MNE of the RK, harvested areas
Relative share of areas in sugar beet harvested area differs from relative share of regions in the areas under crops. The share of harvested areas of Almaty region has reached an average of 86.2% (maximum - 103.4%), Zhambyl, in turn - an average of 70.3% (maximum - 100%).
Less than 60% of the sown beet was harvested in Almaty region in 2008 and 2011; in Zhambyl region in 2000, 2005, 2008 and 2012.
At a rate of sugar beet yield of 25-30 tons (250-300 quintals) from 1 hectare, the yield in Kazakhstan during many years below the norms and averages little more than 20 tons from 1 ha. At the same time the yield is not sustainable, from 2004 to 2007 dynamic growth was observed , and then with the same dynamics, it began to fall and in 2014 showed rapid growth of almost 27 tons per 1 hectare, from 16.8 tons.
Table 4. Yields of areas under crops , hwt/ha
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
|
Republic of Kazakhstan |
197.4 |
209.2 |
240.8 |
248.9 |
204.3 |
182.9 |
174.3 |
188.2 |
168.2 |
267.7 |
240.6 |
Almaty |
198.7 |
211.8 |
243.2 |
249.2 |
232.2 |
199.7 |
218.8 |
182.3 |
191.7 |
273.5 |
204.5 |
Zhambyl |
191.7 |
164.9 |
127.4 |
95.0 |
78.2 |
126.6 |
136.6 |
196.5 |
129.7 |
256.5 |
274.1 |
Kyzylorda |
100.0 |
||||||||||
South-Kazakhstan |
210.0 |
30.0 |
173.0 |
169.1 |
54.3 |
56.8 |
150.0 |
123.9 |
|||
East-Kazakhstan |
350.0 |
Source: Committee on Statistics of MNE of the RK
On average, the highest yield is observed in Almaty region, 218.7 hwt/ha, the lowest in South Kazakhstan region, 161.6 hwt/ha, in Zhambyl region on average collect 120.9 hwt/ha.
1.2. The capacity of internal market (production, consumption, exports and imports by goods).
Average annual volume of production of refined sugar in Kazakhstan over the past 5 years is about 300 thousand. tons. In 2013, sugar factories of the country produced 307,4 thousand. tons of sugar, which is 2.1 times more compared with 2012. Thus the share of domestic raw materials in the production of white sugar is - 4%, other 96% - imported raw sugar, mainly cane.
Total consumption of sugar in the republic is 480 thousand tons per year, with the main share -. 90% is imported. In money terms this is 300 million dollars. Volumes of production of white sugar is unstable, vary considerably from year to year.
Maximum amount of sugar was produced in 2008 white sugar was produced at a rate of 471 061 tons. However, after 2008 to 2013 there was a tendency for sugar issue reduction on factories of the RK. Absolute reduction in production volumes was 325,823 tons, or almost 70% in 2012. In 2013-2014 production volumes have shown an increase of more than two times and reached the level of 375,591 tons.
In the production of white sugar prevails granulated sugar of raw cane sugar, its average share in the total volume of white sugar production is 94.33%, while the share of white sand of the beet raw sugar 3.26%. Accordingly, the average percentage of refined sugar in the total amount of white sugar production is 2.90%. In the production of the refined sugar beet sugar dominates, its relative share in the total volume amounts to 2.13.
Table 5. Structure of the production of white sugar, tons
|
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Granulated sugar of raw cane sugar |
335687 |
451910 |
330554 |
316,173 |
220,191 |
134,600 |
295,146 |
367,215 |
Share |
93,64% |
95,93% |
94,23% |
94,77% |
90,37% |
92,68% |
96,00% |
97,77% |
Granulated sugar of beet sugar |
17,923.0 |
11,117 |
10,945 |
12360 |
17220 |
3,050 |
4,880 |
1,524 |
Share |
5,00% |
2,36% |
3,12% |
3,70% |
7,07% |
2,10% |
1,59% |
0,41% |
Refined sugar of cane sugar |
1,192 |
3,353 |
4,463 |
|||||
Share |
0,33% |
0,71% |
1,27% |
|||||
Refined sugar of beet sugar |
3,671.0 |
4,681 |
4,832 |
5,071 |
6,233 |
7,588 |
7,418 |
6,844 |
Share |
1,02% |
0,99% |
1,38% |
1,52% |
2,56% |
5,22% |
2,41% |
1,82% |
White sugar of beet sugar |
21594 |
15798 |
15777 |
17431 |
23453 |
10638 |
12298 |
11268 |
White sugar of cane sugar |
336879 |
455263 |
335017 |
316173 |
220191 |
134600 |
295146 |
364323 |
White sugar |
358,473 |
471,061 |
350,794 |
333,604 |
243,644 |
145,238 |
307,444 |
375,591 |
Source: Committee on Statistics of MNE of the RK
granulated sugar of raw cane sugar granulated sugar of beet sugar
refined sugar of raw cane sugar
refined sugar of beet sugar |
Figure 1. Structure of the production of white sugar
Diagram of relative share of raw materials between 2007 and 2014 shows that predominantly white sugar is produced from imported raw cane sugar, relative share of sugar produced from raw cane sugar amounts to 95.04%.
White sugar of sugar beet
White sugar of beet sugar
Figure 2. Relative share of raw materials in the production of white sugar,%
Dynamics of import of white sugar is inversely proportional to the dynamics of its production: if we exclude the data of 2014, the correlation coefficient amounts to -0,78 (p <0.05).
Since 2007 to 2009 the decrease in import volumes was observed from 144 579 tons to 57 864 tons. Then, as the decrease in production volumes, the volume of import is growing. Between 2009 and 2012 the absolute growth was 176,823 tons, which makes 305% of 2009 indicator. In 2013, we noted a rapid fall to 104 507 tons, due to an increase of production volumes more than two times.
Table 6. Structure of internal market of white sugar, tons
|
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Export |
27869.2 |
17225.5 |
2338.8 |
13220 |
6636.2 |
2154.7 |
13924.3 |
2465 |
234.5 |
Production |
358473 |
471061 |
350794 |
333604 |
243644 |
145238 |
307444 |
375591 |
126209 |
White sugar import |
144579.7 |
62787.2 |
57864.0 |
72921.0 |
159793.4 |
234687.3 |
104507.3 |
141797.4 |
66892.4 |
% of imports of white sugar of the total dom. cons. |
30.4% |
12.2% |
14.2% |
18.5% |
40.3% |
62.1% |
26.3% |
27.5% |
34.7% |
Total volume of domestic consumption |
475183.6 |
516622.7 |
406319.3 |
393305.0 |
396801.2 |
377770.7 |
398027.1 |
514923.4 |
192866.9 |
Source: Customs Control Committee of MF of the RK and Committee on Statistics of MNE of the RK
In 2014 increased production, and the import of white sugar. At the same time in 2014 in relation to 2013 the total volume of domestic consumption increased by almost 30%, reaching 514 923.4 tons.
Consumption volumes (domestic sales) throughout the years exceed its production. In 2012, volumes of domestic consumption exceed production volumes by 160%, domestic consumption of 2014 139,332 tons more than the volume of production, which is more than the last by 37%.
White sugar production |
White sugar import |
Figure 3. Production and import of white sugar in RK, kilotons
Note: Data correlation coefficient for 2007-2013, amounts to -0,78 (p <0.05)
Source: Committee on Statistics of MNE of the RK
White sugar is imported from many countries. The largest share in the total volume of import of white sugar to Kazakhstan in 2014 had Poland and Belarus, their share amounted to 26% and 24%, respectively. Significant volumes of white sugar import also demonstrate Lithuania, Denmark, Czech Republic, their aggregate volumes make up 36.13%.
AZERBAIJAN
UZBEKISTAN
MOLDOVA
AUSTRIA
BRAZIL
GEORGIA
DENMARK
ITALY
LATVIA
LITHUANIA
POLAND
ROMANIA
CZECH REPUBLIC
CROATIA
BELARUS |
Figure 4. Import of white sugar country-specific, tons
Export of white sugar for the past 7 years has decreased significantly. Absolute fall in exports volumes by 2014 amounted to 25,404 tons, or 91% of 2007 indicator. At the same time there were some increases in 2010 and 2013 to 13 924 tons.
In 2008 sugaring by 98% provided domestic demand for this product. 2008 was a record year for self-sufficiency in sugar, white sugar imports amounted to only 12.2%. This sugar has been produced from imported raw cane sugar. Such data support the fact that RK has manufacturing facilities that can almost fully meet the need for this product.
Import of finished product, white sugar, accounts for 12.2% (2008) to 62.1% (2012) in different years.
Noteworthy is the fact that in 2008 and 2013 sugar in tons was produced more than imported raw cane sugar.
The main buyers of Kazakhstan white sugar in 2014 were Uzbekistan and Afghanistan, their shares make up 56 and 40% in relative terms, and 1383 and 1,000 tons, respectively, in absolute terms.
AFGHANISTAN
UZBEKISTAN
UKRAINE
CHINA
MONGOLIA
RUSSIA
TAJIKISTAN
|
Figure 5. Export of white sugar country-specific, tons
Source: Customs Control Committee of MF of the RK
Capacity of white sugar market in 2014 amounted to 514 923.4 tons. In the structure of white sugar market volumes of consumption (domestic sales), exceed its production in all years.
Table 7. Structure of internal market of white sugar, tons
Indicator |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Production |
358473 |
471061 |
350794 |
333604 |
243644 |
145238 |
307444 |
375591 |
126209 |
Import |
144580 |
62,787 |
57,864 |
72,921 |
159793 |
234687 |
104507 |
141797 |
66892 |
Export |
27,869 |
17,225 |
2,339 |
13,220 |
6,636 |
2,155 |
13,924 |
2,465 |
234 |
Volume of domestic consumption |
475184 |
516,623 |
406319 |
393305 |
396801 |
377771 |
398027 |
514923 |
192867 |
Source: Customs Control Committee of MF of the RK and Committee on Statistics of NEM RK
Raw cane sugar imported mainly from Brazil and Cuba. There has been a small volume import from Russia and Italy for some years, but it was so small, that makes up thousand shares of the total import volume. Relative share of Brazilian raw sugar amounted to 89% in 2014, almost all the rest of raw sugar was brought from Cuba.
Production and export of raw cane sugar are absent due to the fact that this culture due to natural and climatic conditions do not grow in the republic.
Market capacity of raw cane sugar in 2014 amounted to 326 204 tons or 140 830.3 thous. dollars. Domestic consumption is fully ensured by imports due to the lack of domestic production.
In September 2015 the price extremely increased to a record price of 176 000 tenge per ton (exchange price of ETA), an increase for one month was 38%, due to the devaluation of the tenge.
Fluctuations in the rate of tenge activate speculations that law enforcement agencies try to prevent. For example, 05.09.2015, information about investigation of NEM RK appeared in Pavlodar region of price collusion of four wholesale suppliers of sugar.[1]
At the same time, the analysis of prices for sugar for the year shows that the cheapest sugar purchased by industrial enterprises was bought neither in RK, nor even in the CIS countries.
Thus, the difference between sugar purchased by industrial enterprise at Kazakhstan producer and manufacturer of non-CIS countries amounted to 20% of the average cost of sugar of Kazakhstan enterprises. And the price for raw sugar, purchased exclusively outside the CIS fell heavily by the end of the period under review. The absolute fall was 21%.
It is also worth noting the low level of correlation between the purchase price of raw sugar and the price of the finished sugar of manufacturing enterprises (cost price). In 2015 it amounted to 31.5%, and the relationship of prices for raw sugar and the price for sugar for industrial companies accounted for even smaller value - 0.08.
Table 8. Relationship of price for sugar in RK in 2015 (correlation coefficient)
Price type of white granulated sugar |
Raw cane sugar |
The cost price of manufacturing enterprises |
0.315 |
Price for industrial enterprises |
0.080 |
Retail price, tenge/kg |
0.278 |
Correlation of retail prices for white sugar and prices for raw sugar amounts to 0.99. Thus, retail prices for white sugar in RK are completely determined by the prices for raw cane sugar.
Domestic factories can meet the demand only of Almaty, Zhambyl, South Kazakhstan, Kyzylorda and Karaganda regions and competitive in the markets of Central Asia - Kyrgyzstan, Uzbekistan, Tajikistan.
As sugaring process provides steps of thickening the syrup before allocating white sugar crystals, which are produced by evaporation of process water from sugar-containing solution, therefore, sugaring process is critically dependent on price of energy resources, ensuring the evaporation process. For example, the share of costs for ensuring production process by thermal process takes less than one third (30-35%) of the production costs (excluding the cost of raw materials, transport, financing costs, administration and sales). Thus in structure of the total cost price of sugar from raw sugar the share of natural gas costs takes up about 2.5%, while fuel oil costs almost five times more expensive - about 11-12%.
Table 9. Cost structure in the production of beet sugar:
Item No. |
Indicators |
Relative share of costs, % |
||
|
Cost of sugar beet* |
59,79% |
||
|
COSTS |
|
||
1 |
Costs of beet dump on acceptance of sugar beet |
0,69% |
||
2 |
Fuel (fuel oil) |
14,63% |
||
3 |
Limestone |
0,95% |
||
4 |
Fuel oil for calcination of limestone |
1,35% |
||
5 |
Filtration elements |
0,20% |
||
6 |
Other auxiliary materials |
0,58% |
||
7 |
FOL |
0,25% |
||
8 |
Purchase electricity |
0,37% |
||
9 |
Operating costs on equipment work |
0,25% |
||
10 |
External services (verification, examination) |
0,34% |
||
11 |
Wages of key staff |
2,18% |
||
12 |
Deductions from wages |
0,24% |
||
13 |
Reserve of vacation |
0,32% |
||
14 |
Costs of maintenance |
3,06% |
||
15 |
Packing and packaging materials |
0,76% |
||
16 |
Depreciation deductions |
1,47% |
||
17 |
General and administrative expenses |
2,12% |
||
18 |
Distribution costs |
3,76% |
||
|
TOTAL costs of the plant for production and sales |
40,21% |
||
|
Full cost price of beet sugar |
100% |
||
|
*) Note: Cost of beet is accepted excluding subsidies |
|
||
|
Table 10. Cost structure in the production of raw sugar:
Item No. |
Items of expenditure |
Relative share of costs, % |
1 |
Contract price of raw materials |
64,37% |
2 |
Transportation costs |
11,60% |
3 |
Gas for the production |
2,86% |
4 |
Limestone |
0,25% |
5 |
Coal for calcination of limestone |
0,21% |
6 |
Filtration materials |
0,07% |
7 |
Other auxiliary materials |
0,04% |
8 |
Packaging materials |
1,05% |
9 |
Purchase electricity |
0,21% |
10 |
Operating personnel wages |
1,43% |
11 |
Deductions from wages |
0,17% |
12 |
Reserve of vacation |
0,12% |
13 |
Costs of maintenance |
0,15% |
14 |
Costs of maintenance and operation of equipment |
0,55% |
15 |
Amortization costs |
0,48% |
116 |
General and administrative expenses |
1,46% |
17 |
Distribution costs |
2,60% |
18 |
Costs of recompense of banks, exchange rate differences, imbalances |
12,38% |
|
Total full cost price |
100,00% |
Industrial structure in the locations of all processing plants of RK is developed enough for the organization of the process to ensure the production of qualified personnel, the organization of repair and maintenance processes of existing equipment.
1.3. Historical information on the development of the industry.
The beginning of formation of sugar beet industry in Kazakhstan is considered to be 1934 at Merki and Taldykorgan sugar factories (now Zhambyl and Almaty regions). Within a short time, Kazakhstan has become a successfully developing base of sugar beet industry. Yields was 14-29 t/ha. During the Great Patriotic War of 1941-1945 Kazakhstan sugar industry not only provided its population with sugar, but also part of the sugar exported to the republics of Central Asia and Siberia.
Today, regional specialization has not changed, as in Soviet times, the main regions for the production of sugar beet and sugar are two regions: Almaty and Zhambyl. However, areas under crops and gross yield of sugar beet from year to year are significantly reduced. According to the Committee on Statistics of sugar beet areas under crops in 2014 amounted to 2 thous. ha, decreased over the last five years by 17.5 thous. ha, gross yield decreased from 143.6 thous. tons in 2010 to 23.6 thous. tons in 2014. Today, sugar production plants are focused on import of raw sugar and its processing. During the processing of raw a number of process steps is decreasing and sugar exit from it is high.
2. Number of enterprises (players) in the market.
Market of suppliers of sugar beet is extremely fragmented and represented by hundreds of peasant farms with small volumes of production - from 1 to several thousand tons.
Purchase of raw sugar is carried out directly from foreign manufacturing plants from Brazil and Cuba, as well as from wholesale supplier "Asian food company."
In the market of white sugar also except the direct producers here are dozens of suppliers of imported products.
Among the wholesale suppliers and distributors we can identify:
1. LLP "B-Trade" - distributor of Russian products. Company is located in Almaty.
2. Kazproducts. Official distributor of Belarusian sugar. Company is located in Almaty.
3. LLP "Kazagro Group". It is engaged in realization of corn, wheat, grain, sugar from Russia and Belarus.
4. LLP "Astron" - Wholesale supplier of Belarusian sugar, a major supplier of raw materials for food industry. Implements beet and cane granulated sugar in bags of 25 kg, 50 kg on all four plants of Belarus: Skidel Sugar Factory, Gorodeya Sugar Refinery, Zhabinka Sugar Plant, Slutsk Sugar Plant. Enterprise is located in Almaty. At the same time purchase takes place from "Belarusian Agrarian Company", which was established by the decision of the Government of the Republic of Belarus and the Republic of Kazakhstan. The founders of the company are State Concern "Belgospischeprom" and four Belarusian sugar plants.
5. LLP "Chance". It is a major trading enterprise in the republic both by the presence of extensive network, and assortment of goods sold. Specialized in sales of everyday products (food, household products). It is the distributor of sugar plants of Republic of Belarus. In addition to the sugar the company supplies tea, coffee, vegetable and square preservation, pasta, cereals, dairy products. Enterprise is located in the city of Uralsk.
6. LLP "Export Grain", the Russian branch of the company LLC "Export Grain". The company`s principal activity is wholesale of sugar, cereals, oil crops and by-products (cereals, flour, seed cake, oil meal, oil, etc.). The company carries out shipments by wagon loads, in containers, by motor transport on the territory of Russia, CIS countries and far abroad countries. Branch of the company is located in the North-Kazakhstan region, Petropavlovsk city. Sugar is also supplied from Russia, from the Altai Territory.
7. TH Kazpromsnab LLP. Engaged in wholesale of sugar from Moldova. Enterprise is located in Astana.
8. TH Karagandarezinotechnika LLP. The head office is located in Astana. Currently, the structure of the company consists of four subsidiary companies located in the cities of Karaganda (Kazakhstan), Shanghai (China), Moscow (Russia) and Abu Dhabi (United Arab Emirates), which represent the company's interests at the international level. In addition to the implementation of the technology involved in the implementation of sugar from Moldova, from many plants.
Sugar of Republic of Belarus (4 plants) is implemented at once to several distributors and wholesalers through the "Belarusian agrarian company", which is located in Almaty. As a result, four sugar plants of Belarus, "Belarusian agrarian company" and distributors represent interconnected system.
Thus, in the market there are dozens of suppliers of raw and white sugar. The above list is not exhaustive, it shows only the basic major suppliers. Thus, in the suppliers market there is a lot of competition with the dominance of the above companies.
Major manufacturers and suppliers of equipment for sugar industry, described in the "Suppliers" section perform complex realization of orders - construction and implementation of industrial facilities "turn-key". Provide general contract with a guarantee on all works. Also engaged in the implementation of certain investments, including:
· design in all sectors;
· supply of machinery, equipment and complete plants;
· construction and installation works;
· commissioning, training, service;
· packaging materials.
3. Barriers, restrictions and recommendations for their elimination.
Sugar beet cultivation for farmers can be unprofitable. High yields of sugar beet in the partner countries of the Customs Union, cause the collapse of prices. For example, spring 2011 promised rate of purchase of sugar beet in the amount of 12 000 tenge per ton. Farmers are forced to sell the beet at 7 000 tenge per ton, well below the cost of production. [2]
In 2013, the purchase price in Zhambyl region was assumed to be in the amount of 11.9 tenge per kilogram of sweet root, but sugar plants reduced the purchase price of raw materials nearly doubled, to 6 - 6.5 tenge per kilogram. As a result, Zhambyl farmers are not interested in the cultivation of sugar beet, while domestic sugar plants operate on imported sugar cane.[3]
In 2014, for farmers it was not profitable to grow sugar beet despite the fact that the state subsidizes its landing. However, allocated 50 thousand tenge per hectare do not cover the farmers' costs. Addition to all, enterprises processing sugar can pay farmers not with money, but the finished product, giving it at a price above the market value. [4]
Given the above, according to forecasts of Central sugar corporation, by 2019 sugar beet area will be increased to 32 thous. ha. With an average minimum yield of 400 hwt/ha the gross collection of beet will make 1 280 thousand tons. It can be made approximately 163.8 thous. tons of sugar (output of 12.3%) from this volume of sugar beet. At forecasted rate of sugar consumption by 2020 467,2 thous. tons the share of domestic production in domestic consumption will be 35%.
However, it should be noted that bringing sugar beet areas to 32 thousand hectares still do not provide an adequate level of competitiveness of the domestic beet sugar (in terms of volume) against the Russian for the following reasons:
First: in 2013 in the Republic of Kazakhstan areas of lands under sugar beet amounted to 4.9 thousand hectares, whereas in Russia - 1 143 thousand hectares, which is 233 times more. For manufacturers, it creates "economies of scale" - the greater the volume, the lower the costs.
Second: the rate of precipitation in the RF on average makes 400-600 mm (and in the Krasnodar region can reach up to 3250 mm), while in Kazakhstan - up to 400 mm.
Third: average score of yield class in Russia is 55, whereas in the southern regions of Kazakhstan, on average 26.
Fourth: Russia and Kazakhstan market capacity have different sizes. That is, Russian market is more concentrated in the number of consumers in contrast to Kazakhstan. High concentration directly affects the scope and capacity of existing plants.
For processors it also creates "economies of scale" - the greater the volume, the lower the costs.
Considering the above, the domestic beet sugar will be competitive only in the southern regions of Kazakhstan, the Russian beet sugar will prevail in other regions of Kazakhstan.
Sugaring from sugar cane
Period of collection and processing of sugar beet falls on late autumn and is about 3 months. Remaining 9 months the sugar plants will have to operate on sugar cane, as now.
However, in 2019, when the customs duty on the import of sugar cane becomes high and equal to Russia, sugaring from sugar cane in Kazakhstan will become unprofitable. The reason for this is the higher cost of logistics costs than in Russia.
In particular, Russian entrepreneurs bring sugar cane through Novorossiysk port with its subsequent processing, including in the border regions of Kazakhstan: Stavropol (1 plant), Saratov (1 plant) in the Republic of Bashkortostan (4 plants) and in the Altai Territory (2 plants), with further supply of sugar to Russian and Kazakhstan markets with minimal transportation costs.
For example, the distance for the delivery of sugar cane from Novorossiysk port to sugar plant in Stavropol region is 332 km, the subsequent delivery of sugar to Atyrau region - 791 km, total 1123 km, Aktobe - 1248 km, total 1580 km.
Meanwhile, Kazakhstan entrepreneurs carry out the delivery of sugar cane from Novorossiysk port to seaport in Atyrau - 1123 km, then to sugar plants in the Almaty region (3 plants) - 2275 km. Subsequent delivery of sugar from Almaty region to Atyrau - 2275 km, total 4550 km, to Mangystau - 922 km, total 1844 km.
Thus, the distance of delivery of sugar produced from sugar cane, for example, from Almaty region to Atyrau and Mangystau regions of Kazakhstan is more than average by 1728 km.
In this regard the cost of sugar after delivery to Atyrau and Mangystau regions by 5735 tenge/t more expensive than sugar from Stavropol region.
As a result, sugar plant, located in Stavropol region will provide Atyrau and Mangystau regions with sugar, the plant located in the Saratov region of the RF, will provide West Kazakhstan and Aktobe regions with sugar. Bashkiria plants will provide Kostanay, North Kazakhstan and Akmola region, plants located in the Altai Territory - Pavlodar and East Kazakhstan regions.
At the same time domestic plants cover the need only of Almaty, Zhambyl, South Kazakhstan, Kyzylorda and Karaganda regions.
Considering the above, it is advisable to agree with the TC partners that after 2019 the customs duty on the import of sugar cane in Kazakhstan should be lower than the Russian by exactly the difference of transportation to the south of Kazakhstan.
It will create equal and fair conditions for Russian and Kazakhstan entrepreneurs on the initial position - at sugar plants.
The only inevitable disadvantage of this option is that Kazakhstan sugar produced in the south of the country, will be competitive only conditionally to the border of the Northern, Western and Eastern regions, further Russian sugar supplied from their border regions will dominate.
Production capacities (nominal) of all sugar plants comprise 958.6 thousand tons of sugar per year. Workload of existing sugar plants is about 40%.
As it is known, the member countries of the Customs Union are interested in providing their food independence, including such important social product as sugar.
In this regard in 2010 Kazakhstan, Russia and Belarus reached an agreement on the gradual reduction of imports of sugar cane (by raising customs duties) and simultaneous increase in domestic production of sugar beet and subsequent production of sugar from it.
Due to the fact that in our country there is decrease in production of sugar beet (as distinct from Russia and Belarus), Kazakhstan has managed to defend the right of import of sugar cane at a zero rate of customs duty (quota) until 2019. This period is necessary to raise the domestic production of sugar beet.
According to this agreement, after 2019 the customs duty on the import of sugar cane for Kazakhstan will be equalized with Russia and Belarus.
Thus, existing until 2014 support program did not have significant effect, the proposed subsidies were not allowed to fully restore the previous level of areas under crops and gross yield of sugar beet due to the fact that:
· Were established low purchase prices for sugar beet by sugar plants, based on the prices for white sugar in the harvest period. Proposed prices did not pay the costs of beet growers,
Was introduced duty-free import of raw sugar during the period between 2009-2019 years.
This eventually resulted in:
· to decrease of agricultural producers interest in increasing the production of sugar beet.
· to the transition of many sugar producers to raw sugar, using it the cost price of sugaring is lower due to a decrease of many technological stages of production.
· to situations during actual harvest the sugar beet is less than when seeded or inoculated less than planned (see above).
The main reasons for rapid fall of areas of sugar beet are:
· labor intensity of cultivation of sugar beet,
· lack of working capital,
· high degree of deterioration of agricultural machinery and
· lack of capital for the purchase of new one,
· weak culture of farming, agricultural technology and cultivation technology.
· also an important factor limiting areas under crops and accordingly volumes of collection is poor state of irrigation system of the south-east of the republic.
4. List of potential opportunities for entrepreneurial initiatives.
Structure of the value chain.
Market |
Processing |
Manufacturers of sugar beet |
Raw sugar |
SUGAR BEET PLANTS |
Domestic retail and wholesale markets |
REFINERY SECTIONS |
Small firms |
Fertilizers |
Seeds |
Agricultural equipment |
FCM |
Suppliers |
Wholesalers |
Figure 6. Value chain of white sugar production
Potential opportunities for entrepreneurial initiatives
Since 2008, RK has various programs to support sugar producers. However, existing until 2014 support programs did not give significant results, the proposed subsidies did not allow to fully restore the previous level of areas under crops and gross yield of sugar beet.
In many countries of the CIS and EEU there is used beet growers direct subsidies per 1 ha of sugar beet crops, similar to subsidies in the EU countries. In RK from 2014, this indicator is 50 thous. tenge per 1 ha of sown area of sugar beet. This measure allowed to increase the sown area under sugar beet in 2015 to almost 8 times compared to 2014 (from 1.2 thous. ha to 9.4 thous. ha)
1. Cultivation of sugar beet.
Cost of cultivation of sugar beet at yield of 20 tons from 1 ha amounts to 6500 tenge. The most significant costs items are wages with charges, fertilizers, other costs amortization - their combined share in the cost of cultivation is almost 53%.
Table 11. Cost structure for cultivation of sugar beet
Cost name |
Tenge (including VAT) per 1 ha |
Cost structure,% |
Wages with charges |
26,180 |
14,54% |
Seeds |
18,000 |
10,00% |
FOL |
12,410 |
6,89% |
Fertilizers |
23,867 |
13,26% |
Means of protection against pests |
19,082 |
10,60% |
Amortization |
21,500 |
11,94% |
Current repair |
15,127 |
8,40% |
Transportation services |
16,500 |
9,17% |
Water supply |
2,450 |
1,36% |
Electric power |
207 |
0,12% |
Other costs |
24,677 |
13,71% |
TOTAL |
180,000 |
100,00% |
Subsidies |
50,000 |
|
TOTAL excluding subsidies |
130,000 |
|
Average yield, tons |
20 |
|
The cost price of 1 ton excluding subsidies (average) |
6,500 |
|
Source: Master Plan "Development and production of sugar beet"
Indicators of cost price and profitability of production are very changeable, due to a variability of sugar beet yield and price fluctuations for its implementation. Thus, the smallest profitability was in 2010 at low yield of 17.4 tons per 1 ha and price for sugar beet - 9430 tenge, it was 26%. On the contrary, the highest profitability was recorded in 2013 - 125% when the yield was 26.7 tons per ha, and the average price was 10,970 tenge. It should be noted that at increase in yield the cost price will be significantly reduced, at yields more than 20 tons and at subsidies of 50 thous. tenge per 1 ha, even with the establishment of prices by sugar plants in the amount of 6500 tenge, profitability will be positive. Taking into account the establishment of guaranteed price of 13 000 tenge per 1 ton, even at yield of 20 tons from 1 ha profitability will be 100%.
Table 12. The cost price and profitability of production
|
2010 |
2011 |
2012 |
2013 |
2014 |
Yields, tons from 1 ha |
17.4 |
18.8 |
16.8 |
26.7 |
24 |
Wages with charges |
1,505 |
1,393 |
1,558 |
981 |
1,091 |
Seeds |
1,034 |
957 |
1,071 |
674 |
750 |
FOL |
713 |
660 |
739 |
465 |
517 |
Fertilizers |
1,372 |
1,270 |
1,421 |
894 |
994 |
Means of protection against pests |
1,097 |
1,015 |
1,136 |
715 |
795 |
Overhaul and complete recovery |
1,236 |
1,144 |
1,280 |
805 |
896 |
Current repair |
869 |
805 |
900 |
567 |
630 |
Transportation services |
948 |
878 |
982 |
618 |
688 |
Water supply |
141 |
130 |
146 |
92 |
102 |
Electric power |
12 |
11 |
12 |
8 |
9 |
Other costs |
1,418 |
1,313 |
1,469 |
924 |
1,028 |
Subsidies |
2,874 |
2,660 |
2,976 |
1,873 |
2,083 |
TOTAL price cost of 1 ton of sugar beet (excluding subsidies) |
7,471 |
6,915 |
7,738 |
4,869 |
5,417 |
Purchase price of sugar plants |
9430 |
10333 |
10033 |
10970 |
7312 |
Profitability of production,% |
26% |
49% |
30% |
125% |
35% |
Source: calculations based on cost structures for cultivation of sugar beet
2. Processing of sugar beet pulp.
Beet pulp drying technology is simple and involves allocation of moisture by special pulp drying presses, further drying is carried out by evaporation of moisture. Further granulating of dried pulp will allow to reduce costs of transportation to five times. A dry pulp is used directly in feeding by soaking in water at a ratio of 1: 3, or mixed with mixed fodder to 10%. Due to attribution to mixed fodder beet pulp of pleasant sweet taste, its consumption increases. Dry pulp in combination with other feeds can be a replacement in cattle rations to 50% of barley or oats, leading to an increase in their weight and milk yield.
Table 13. Costs for project of sugar beet pulp processing with capacity of 1 ton per hour
Cost item |
Parameter value |
Unit |
Cost of equipment |
12,426 |
thous. tenge |
Need of raw pulp per 1 ton of dry pulp |
20.0 |
t/t |
Cost of raw pulp |
1 |
thous. tenge/tons |
Productivity |
1 |
tons/hour |
Cost of electricity, |
2,9– 21,1 |
tg/kWh*h |
Gas cost |
31.5 |
tg/m3 |
Coefficient of working hours of equipment |
0.85 |
|
Wages per month,. |
500 |
thous. tenge/month |
Lease of premises |
150 |
thous. tenge/month |
Other costs, rbl. per year |
500 |
thous. tenge/month |
The most significant cost items is the cost of raw materials and fuel, together amounting to 90% of cost structure.
Calculations show that the cost of processing of raw pulp into dry granulated accounts for about 30 000 tenge.
Table 14. Cost of production of 1 ton of dry pulp, tenge
Name of items |
Amount, tg |
Raw materials (raw pulp) |
16,800 |
Fuel (gas) |
10,700 |
Wages |
820 |
Other costs |
1,150 |
Amortization |
560 |
Lease |
245 |
Electric power |
610 |
Total production cost |
30,900 |
Transport to the consumer |
10% |
Price of granulated pulp in the RK is about 40-50 thous. tenge per ton in different regions of the country. Thus, processing profitability is from 20 to 50%
3. Processing of molasses (treacle).
Processing process of sugar beet molasses is as follows: for fermentation of molasses one prepares wort from it. Sown protein biomass (yeast) is prepared and supplied to fermenters and fermentation tanks, where the fermentation process of molasses occurs, as a result of which the primary product is decomposed into ethanol and sediment. This is followed by distillation and rectification, resulting in 96.6 percent alcohol and fodder yeast. The fermentation time is from 20 to 30 hours (about one day).
Table 15. Costs for project of molasses processing with capacity of 15 tons per day
Cost item |
Parameter value |
Unit |
Cost of equipment |
46,560 |
thous. tenge |
The need for molasses per 1 ton of finished product* |
15.0 |
t/t |
Cost of molasses |
1 |
thous. tenge/tons |
Performance of equipment |
9.75 |
tons/day |
on alcohol |
3.95 |
tons/day |
on yeast |
5.8 |
tons/day |
Cost of electricity, |
2,9– 21,1 |
tg/kWh*h |
Gas cost |
31.5 |
tg/m3 |
Coefficient of working hours of equipment |
0.85 |
|
Wages per month (begin. workshop and 2 workers)**. |
400 |
thous. tenge/month |
Lease of premise (400 sq.m.) |
1,450 |
thous. tenge/month |
Other costs (equal to wages fund) |
560 |
thous. tenge/month |
*) ton of finished product contains 40.5% of alcohol and 59.5% of fodder yeast. Ethanol density 0.7893 kg/liter
**) without taxes on wages
The most significant cost item is the cost of raw materials constituting about 90% of all costs.
Raw material (molasses) Fuel (gas) Lease Wages Other costs Amortization Electric power
|
Figure 7. Structure of cost price of finished products, %
Calculations show that the cost price of processing into finished products (alcohol and fodder yeast) is up to 125 thous. tenge per ton of finished product.
Table 16. Cost of production of 1 ton of finished product, tenge
Name of items |
Amount, tg |
raw material (molasses) |
107,142.86 |
lease of premise |
5,791.86 |
equipment amortization (5 years) |
3,121.16 |
wages fund (including taxes) |
2,252.39 |
other costs |
2,252.39 |
water |
2,328.00 |
electric power |
776.16 |
fuel (gas) |
77.58 |
Total |
123,742.38 |
5. SWOT-analysis of industry
Table 17. Analysis of strong and weak points of industry
Strengths 1. The presence of favorable natural and climatic conditions for conducting a commodity of agricultural production of sugar beet in Almaty, Zhambyl and South Kazakhstan regions of RK. 2. The presence of industrial base for conducting a commodity of agricultural production of sugar beet in Almaty, Zhambyl and South Kazakhstan regions of RK. 3. The presence of processing base (6 sugar plants) for processing of meat raw materials (sugar beet) and imported raw sugar. |
Opportunities 1. The increase in cultivation areas and volumes of sugar beet collection, switching to medium and large-capacity type of production and the associated cost savings. 2. Zoning of new high-performance varieties of sugar beet resistant to diseases 3. Organization of seed farms 4. Timely and full-size application of mineral fertilizers 5. Application of high-performance agricultural machinery 6. Application of energy-efficient equipment for processing of raw materials 7. The presence of government programs: - co-financing of costs for sowing of sugar beet - co-financing of application of mineral fertilizers; - co-financing of purchase prices of sugar beet; - co-financing of modernization/introduction of technology and training of personnel of processing enterprises (investment grants of JSC "National Development Agency") - co-financing of acquisition/modernization of processing enterprises equipment ("Performance 2020", "Business Road Map 2020" programs |
Weaknesses 1. Fragmentation and small commodity nature of production from the producers of sugar beet and related: - impossibility to apply industrial farming methods - complexity of application of high-performance agricultural machinery - lack of local seed base and dependence on imported seeds - high wear of available or absence of irrigation system in sugar beet regions 2. The absence of cheap energy resources (gas) at Shu, Burundai, Alakol, Koksu Eskeldi sugar plants and the associated high cost price of finished product (sugar). 3. Insufficient energy efficient, heavily worn equipment of sugar plants |
Threats 1. Insufficient development of own raw material base until 2019[5] and related: - displacement of local producers by EEU enterprises working on sugar beet; - displacement of local producers by EEU enterprises, due to the high cost of production of the latter due to undercapacity of enterprises 2. Replacement of granulated sugar in processing chain of food enterprises to glucose-fructose-sucrose (GFS) syrups made from corn, and other crops |
Source: expert review
[1] http://www.zakon.kz/4740721-mnje-rk-provodit-rassledovanie-v.html
[2] http://www.profi-forex.kz/news/entry1519.html 07.11.2011
[3] http://forbes.kz/news/2013/12/19/newsid_47258 19.12. 2013
[4] http://www.31.kz/video/show/id/4828 10.11.14
[5] Introduction of customs duty on the import of raw sugar in the RK
Review on leather and wool production
1. Introduction.
Agro-industrial complex of Kazakhstan is a priority for the state. One of the most important factors for the sustainable development of agriculture is the orientation on the economic efficiency agricultural production and processing, which involves the rational and integrated use of land, labor, material and natural resources, a special role is assigned to the rational development of the territorial aspect, encouraging more efficient use of basic types of resources.
About 1.7% of the GDP of the Republic of Kazakhstan comes to the production of food and processing industry. This sector includes oil and fat and dairy industry, meat processing, fruit and vegetables, production of confectionery, sugar, cotton and animal feed, and a few short reports have been prepared by them.
In this review, the first part deals with the domestic market of leather and wool production, further it shows the historical information on the development of the industry, existing barriers and limitations and provides a list of potential opportunities for entrepreneurial initiatives.
1.1. Capacity of the internal market.
About 1,500 enterprises, which account for about 1.7% of GDP, produce the production of food and agricultural products processing industry in Kazakhstan. Meat processing is developed to a large extent. Companies producing meat products are located along the country relatively uniformly with reference to the resource base.
Leather production is the historical branch in the Republic of Kazakhstan, as it is closely linked to the livestock. One of the oldest industrial sites is Semipalatinsk leather-fur association, formed in 1926.
Raw hides and skins (other than furskins) and leather
At present, the capacities of the leather industry are located in the south in Almaty city, South Kazakhstan and Jambyl regions (total 65%).
Table 1. Capacities of companies producing leather from the hides of cattle, thousand square decimeters.
Region name |
Average annual capacity in 2014 |
Share in total capacity |
Republic of Kazakhstan |
884 460 |
|
Almaty region |
332 629 |
38% |
Jambyl region |
121 750 |
14% |
Kostanay region |
65 318 |
7% |
South Kazakhstan region |
124 443 |
14% |
Pavlodar region |
53 571 |
6% |
North Kazakhstan region |
61 749 |
7% |
East Kazakhstan region |
125 000 |
14% |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
In general, the dynamics of development of the industry of leather production is positive and increased from 2198422 thousand tenge in 2003 to 6995545 thousand tenge in 2014.
Thus, one of the major problems in the industry is the lack of the scope control of cattle slaughtering. For example, an average industrial slaughtering of cattle makes up 2.4 million per year, but the statistics on the hides production demonstrate the production of an average of 60-70% less.
Table 2. Comparison of the data on the slaughter of animals and production of animal skins
Index |
Industrial slaughtering of cattle |
Obtained skins * |
Produced skins according to statistics |
Difference between the data |
Obtained skins * |
Produced skins according to statistics |
Difference between the data |
Unit of measurement |
heads |
tons |
thousands decimeters |
||||
2007 |
2 424 183 |
36 363 |
9 398 |
-74% |
596 |
203 |
-66% |
2008 |
2 536 634 |
38 050 |
10 369 |
-73% |
624 |
287 |
-54% |
2009 |
2 536 073 |
38 041 |
6 718 |
-82% |
624 |
245 |
-61% |
2010 |
2 595 783 |
38 937 |
5 176 |
-87% |
638 |
99 |
-84% |
2011 |
2 500 803 |
37 512 |
6 231 |
-83% |
615 |
64 |
-90% |
2012 |
2 281 501 |
34 223 |
10 613 |
-69% |
561 |
61 |
-89% |
2013 |
2 308 972 |
34 635 |
13 450 |
-61% |
568 |
105 |
-82% |
2014 |
2 381 914 |
35 729 |
8 240 |
-77% |
586 |
213 |
-64% |
* An average of 15 kg of cattle hides is obtained from 1 head of cattle
** Average of 1 kg of cattle hides covers an area of 61 square decimeters.
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Republic of Kazakhstan Agency for Civil Service Affairs and Anti-Corruption evaluated the shadow turnover of raw hides in Kazakhstan for more than 60% by the end of 2013.[1].
In terms of regions the largest share in the production of animal hides, occupy Almaty, East Kazakhstan and South Kazakhstan region (in total about 40% annually).
However, according to statistics, the South Kazakhstan and Jambyl regions are the leader for the production of raw leather.
Table 3 Production of leather, sectional to regions for years 2010-2014, thousands decimeters
2010 |
2011 |
2012 |
2013 |
2014 |
|
Republic of Kazakhstan, total |
99 319,5 |
64 147,6 |
60 681,4 |
104 872,5 |
213 479,0 |
Almaty region |
10 095,00 |
9 237,00 |
36 065,00 |
73 564,00 |
111 366,40 |
Jambyl region |
5 374,00 |
8 294,30 |
13 779,20 |
8 451,20 |
55 774,00 |
Kostanay region |
18 959,10 |
6 573,80 |
- |
- |
5 854,20 |
South Kazakhstan region |
48,2 |
1 266,50 |
3 433,40 |
5 098,50 |
4 279,90 |
Pavlodar region |
22 684,20 |
3 235,40 |
2 083,70 |
- |
- |
North Kazakhstan region |
35 580,00 |
35 221,00 |
- |
14 699,40 |
25 980,00 |
East Kazakhstan region |
6 579,00 |
319,6 |
5 320,10 |
3 059,40 |
10 224,50 |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
At present, the capacities of the leather industry are located in the south of the country in Almaty, South Kazakhstan and Jambyl regions and in total amount to 65%.
Table 4. Capacities of companies producing leather from the hides of cattle, thousands decimeters.
Region name |
Average annual capacity in 2014 |
Share in total capacity |
Republic of Kazakhstan |
884 460 |
|
Almaty region |
332 629 |
38% |
Jambyl region |
121 750 |
14% |
Kostanay region |
65 318 |
7% |
South Kazakhstan region |
124 443 |
14% |
Pavlodar region |
53 571 |
6% |
North Kazakhstan region |
61 749 |
7% |
East Kazakhstan region |
125 000 |
14% |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
The main direction of the leather use - is the export realization. According to the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, in the whole, across the country, the loading of existing capacities for the leather treatment was 11.9% in 2013. %.
Table 5. Export and import of leather
Imports, tons |
Exports, tons |
|
2005 |
1210 |
60400 |
2006 |
789 |
36503 |
2007 |
535 |
35915 |
2008 |
1923 |
28796 |
2009 |
1611 |
19544 |
2010 |
781 |
33390 |
2011 |
1216 |
24562 |
2012 |
449 |
28373 |
2013 |
754 |
39127 |
2014 |
1685 |
23134 |
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Exports, tons Imports, tons
Figure 1: Dynamics of exports and imports of leather
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Thus in 2014, the proportion of treated leather amounted to a significant share in the structure of exports - 80%.
As export destinations, the main countries are China and Kyrgyzstan. In this case, it is clear that exports to Kyrgyzstan is fictitious, since there are no processing facilities in the country and transit raw materials is also sent to China.
Leather is imported mainly from Russia and China.
As for regions, Almaty oblast and Almaty city occupy the largest share in exports: total 56% of the export volumes.
Capacities of external skin markets are international and are associated with the placement of the world's major industrial capacities. International market is associated with an increase in population and purchasing power. In 2010, the world market of hides, raw and treated leather amounted to 2.5 billion Euro.
Table 6. The largest manufacturers of hides, raw and processed leather in 2010
Country |
Production volume, mln. Euro |
Share in the world production |
Brazil |
431 |
17.2% |
USA |
215 |
8.6% |
India |
173 |
6.9% |
Nigeria |
153 |
6.1% |
China |
113 |
4.5% |
Russia |
105 |
4.2% |
Source: Eurostat data
China provides up to 66% of all leather products in the world in the market of finished leather products. India produces 11.2% of the production. The main consumers of leather products are as follows: Switzerland (16.8%), Japan (14.8%) and the USA (14.1%).
Geographically, Kazakhstan is located in close proximity to the major world producer of leather and leather products - China. At the same time, it should be noted that the dynamics of imports of leather footwear indicates stable relations with Russia and Italy.
Table 7. Import of leather footwear in Kazakhstan, thousand dollars
Country |
2012 |
2013 |
2014 |
All countries |
134 326 |
173 690 |
162 961 |
China |
66 420 |
69 460 |
59 607 |
Russia |
24 458 |
36 911 |
44 669 |
Italy |
10 330 |
17 771 |
15 507 |
Turkey |
6 983 |
12 349 |
7 035 |
Vietnam |
3 269 |
5 087 |
6 103 |
Ukraine |
4 457 |
4 139 |
4 004 |
India |
2 229 |
3 554 |
3 913 |
Portugal |
1 346 |
4 256 |
4 302 |
Spain |
2 422 |
2 110 |
2 742 |
Indonesia |
983 |
972 |
998 |
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Production of raw hides has been steadily declining in Russia. During 2010-2014, the volume of production declined by more than 20% in the country, from 27.2 million m2 to 21.7 million m2. The negative dynamics, observed over the past five years, is associated with the raw materials deficiency on the market. According to the experts’ estimates, the need for raw materials in the leather industry is about 200-220 thousands tons per year. However, Russian companies have processed about 130 thousands tons of raw hides in 2013, with productive capacities of less than 60%. Exports of raw materials in the form of raw hides continues to grow.
China's market capacity is very large, but it is not only leather but also the finished products made of leather, so China in 2012 and 2013 imported per 10.4 million pairs of leather shoes.
Italy produces about 5-6% of the total production of leather shoes, which makes, according to expert estimates, 4.5 mln. pairs per year.
Kazakhstan has significant prospects for increasing exports on historically established directions.
Leather produced in Kazakhstan has great potential for export. Currently, the major exporters are China (64.4%) and Kyrgyzstan (18.4%), while exports dynamics also demonstrates the presence of other major exporters, the cooperation with which is possible in the case of increasing the production volume and quality.
Table 8. Leather Exports, tons
Country |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
All countries |
60 400 |
36 503 |
35 915 |
28 796 |
19 544 |
33 390 |
24 562 |
28 373 |
39 127 |
23 134 |
China |
37 954 |
18 240 |
17 554 |
16 900 |
12 218 |
14 477 |
7 113 |
9 826 |
12 367 |
14 900 |
Kyrgyzstan |
8 550 |
3 335 |
2 840 |
4 110 |
2 471 |
4 236 |
8 529 |
14 970 |
23 702 |
4 258 |
Italy |
3 877 |
3 851 |
11 418 |
5 916 |
1 732 |
5 368 |
4 094 |
1 148 |
497 |
1 368 |
Turkey |
3 455 |
1 787 |
928 |
855 |
1 123 |
3 656 |
2 808 |
1 483 |
2 010 |
1 426 |
Belarus |
3 657 |
5 658 |
17 |
0 |
0 |
20 |
20 |
0 |
0 |
0 |
Germany |
757 |
759 |
878 |
139 |
442 |
1 441 |
1 472 |
396 |
351 |
263 |
Russia |
460 |
1 024 |
1 036 |
0 |
14 |
1 318 |
310 |
449 |
7 |
23 |
Iran |
20 |
424 |
499 |
24 |
134 |
20 |
21 |
132 |
339 |
|
India |
276 |
156 |
21 |
672 |
98 |
38 |
0 |
19 |
284 |
|
Ukraine |
204 |
832 |
283 |
108 |
64 |
20 |
20 |
|||
Pakistan |
420 |
305 |
62 |
27 |
351 |
279 |
40 |
0 |
0 |
0 |
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Thus, the potential exporters, interested in leather, produced in Kazakhstan are manufacturers of footwear and leather goods from Italy and Turkey, and besides, in the period 2005-2011, up to 1/3 of the total export volume was exported historically in the given direction. However, the decline in volumes has been observed in recent years.
The markets of Iran, India and Pakistan, where there are significant production capacities for the production of footwear and leather goods, are also promising; moreover, in connection with the embargo removal from Iran, and the outflow of refugees to this country, consumption of all types of raw materials is expected to increase.
Wool
Wool production volumes has had a positive trend of the average annual output growth of 3.3% since 2003. In 2014, the production volumes amounted to 36580 tons.
The main wool producers are concentrated in the Almaty, South Kazakhstan, Jambyl and East Kazakhstan regions. 68 % of the wool produced in the country, on average, falls to the share of these regions.
|
Figure 2: Amount of wool produced in the Republic of Kazakhstan by types of wool, thousand tons
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
|
Figure 3: Balance of production, export, import of wool for the years 2003-2014, and the current processing capacities
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Internal resources cannot potentially cover the existing processing capacities.
Almaty region is a leader in the production of the ovine semi-fine wool, ovine semi-coarse wool and ovine fine wool. Thus, the production of the fine wool in other regions is significantly lower. South Kazakhstan, Jambyl and East Kazakhstan regions produce mainly coarse wool.
Table 9. Balance of wool production and consumption, tons
Indicator name |
Production |
Import |
Export |
Consumption |
2007 |
9 438 |
535 |
35 915 |
-25 941 |
2008 |
10 467 |
1 923 |
28 796 |
-16 406 |
2009 |
6 845 |
1 611 |
19 544 |
-11 087 |
2010 |
5 293 |
781 |
33 390 |
-27 317 |
2011 |
6 231 |
1 216 |
24 562 |
-17 115 |
2012 |
10 816 |
449 |
28 373 |
-17 108 |
2013 |
13 644 |
754 |
39 127 |
-24 729 |
2014 |
8 240 |
1 685 |
23 134 |
-13 209 |
* Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
** Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
The production of coarse wool (50%) is the most common, at the same time, production of the most popular fine wool has been reduced by an average of 2.4% per year, and the total reduction in production has amounted to 25.5% since 2003.
|
|
Figure 4: Coarse wool production by regions in 2014, tons
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
|
|
Figure 5: Semi-coarse and semi-fine wool production by regions in 2014, tons
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
|
|
Figure 6: Fine wool production by regions in 2014, tons
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
The main export directions are represented by China and Russia. Import is carried out from Russia, Mongolia and Uzbekistan.
Exports of raw wool is about 60-70% of the export amount.
Exports, tons Imports, tons
Figure 7: Dynamics of exports and imports of wool
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
The Almaty, South Kazakhstan and Mangystau regions are the leaders in exports. The entire volume of the Almaty region export is directed to China; 74% of the South-Kazakhstan region exports is directed to China, the Mangystau region exports to Russia. Thus, the share of processed wool exports from the Almaty region makes 55%, from the South Kazakhstan region - 85%, and from the Mangystau region - 0%. There is no data regarding the quality of wool (coarse, fine, etc.,) in the customs statistics, at the same time, as the Almaty region produces mainly fine wool, it is obvious that it is fine wool that is exported from the Almaty region, and coarse, semi-coarse and semi-fine wool is exported from the South Kazakhstan region.
|
|
Figure 8: Wool Exports by regions in 2014, tons
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
The production and sale of fine wool for export is the most promising, since its cost is substantially higher than the coarse wool price and its transportation is economically viable. Thus, according to the JSC “KazAgroMarketing”, the coarse wool selling prices in November 2015 amounted to 31 tenge / kg, and the fine selling prices amounted to 250 tenge / kg. Fine wool is used namely for the production of woolen fabrics and clothing.
Nowadays, the main volume of industry's exports go to China and Russia. Thus the most profitable and demanded fine wool is exported from the Almaty region to China, and coarse, semi-coarse and semi-fine wool are exported from the South Kazakhstan region to China. The main exporter to Russia is the Mangystau region.
Australia, New Zealand, Republic of South Africa and England are the world's largest exporters of wool.
The largest importers of wool are China, Turkey, India, that is, the countries that produce large quantities of textile products. In addition, Russia is the historically established Kazakhstan wool importer.
Therefore, it is obvious that the amounts of Russian import are being reduced, but they are growing in China, Turkey and India. These lines may be potentially interesting for the Kazakh wool export.
Given the huge wool import volumes to China (more than 300 thousand tons), even the selling of all wool produced in Kazakhstan for export to China will cover only 10% of its imports. However, the presence of geographically close trading partner in the person of Kazakhstan, with the proviso of acceptable purchase prices, will significantly increase the volume of the Kazakh wool export.
The production and sale of fine wool for export is the most promising, since its cost is substantially higher than the coarse wool price and its transportation is economically viable. There is a significant potential of increasing the share of Kazakhstan in the export to the territory of bordering countries until 2020, namely to China, but only in the case of the resource base development of fine-fleeced breeds of livestock, creating wool collection system and modernization of the primary processing of wool.
1.2. Historical information on the industry development.
Leather production in the Republic of Kazakhstan is the historical industry. One of the oldest industrial sites is Semipalatinsk leather-fur association, formed in 1926.
The formation of the industry leather production and leather products of Kazakhstan is also associated with the evacuation facilities during the period of the Great Patriotic War, during which 53 of the evacuated enterprises of the light and textile industries have been placed in the republic. The capacity the footwear industry has increased by 12 times. The main areas of the relocated factories placement became Almaty, Oral city, Petropavl city, Shymkent, Semipalatinsk, Karaganda and Aktobe.
In 1950, Kazakhstan was one of the largest raw hides producers, the republic had a 1.7% share in the Union production of leather footwear.
In 1990, the leather production amounted to 625 million square decimeters.
However, the raw material base in the regions, where production facilities were located, has been significantly reduced in the period since 1991. Therefore, the preserved facilities are located in regions with the highest concentration of raw materials.
The decline of wool production is directly related to a decrease in livestock.
Figure 8: Wool production volumes in the years 1990-2014, thousand tons
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
2. Number of enterprises (players) in the market
According to the statistics of the main indicators of the leather industry enterprises:
Table 10. Basic indicators of leather industry enterprises
Indicator name |
2010 |
2011 |
2012 |
2013 |
2014 |
Number of operating enterprises of leather and related products |
28 |
27 |
25 |
25 |
22 |
Number of personnel in core activities, thousand persons. |
1.3 |
1.2 |
1.3 |
1.3 |
1.1 |
Profit (loss) before taxation, mln. tenge |
6 |
-191 |
-182 |
-28 |
-1 283 |
Profitability, as a percentage |
0.1 |
-3.4 |
-3.3 |
-0.4 |
-14.9 |
Investments in fixed assets, mln. tenge |
498 |
96 |
24 |
68 |
2 019 |
Source: according to data of the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Thus, the enterprises in the industry activities are unprofitable, as evidenced by a permanent downtime of main production companies in the industry:
· LLP Almaty Tannery + with a production capacity of 12 thousand tons in 2012, announced the suspension of production due to the lack of raw materials;
· LLP Semipalatinsk leather-fur plant with a capacity of 450,000 cattle hides per year worked with a load of up to 20% in 2014.
The industry's key companies are also:
· LLP TarazKozhObuv (Jambyl region), is engaged in the complete production chain in order to produce a finished product - footwear;
· LLP Rudny leather factory (Kostanay region, Rudny) with a capacity of 3 thousand tons per year;
· LLP Petropavlovsk tannery (СКО) with a capacity of 3 thousand tons per year;
· LLP Kazakh leather company (Aktobe region, Alga) with a capacity of 3 thousand tons per year;
· LLP Umalp, LLP Turan-Skin, LLP Kuat-2002 (South Kazakhstan region) a total of about 15 000 tons per year;
· LLP KazEksportKozha (Pavlodar region, Ekibastuz) with a capacity of 300 tons per month.
According to the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, the loading of existing facilities for leather processing in 2013 amounted to 11.9% in the whole country.
A low loading of enterprises is associated with a poor quality of raw materials and a low purchase price. Resellers from China purchase hides from local producers at a reduced cost through a detour, for cash payment and without any paperwork. Leather products manufacturers do not have a procurement centers network, in addition, in view of the registration of all documents, payment of VAT and other factors, the value is usually below. There is an outflow of raw materials abroad, from whence it is returned to Kazakhstan in the form of products with high added value.
In 2005-2011, the use of facilities for the production of wool according to the statistics did not exceed 60%, at the same time, significant processing capacities are excluded from the statistics of the later period from 2012 to 2014.
Table 11. Main enterprises in the industry and their capacities
Name |
Region |
Design capacity, tons |
Fine-wool production |
||
LLP Қuat Ltd. |
Almaty |
7 000 |
LLP Kazruno |
East Kazakhstan region |
9500 (does not operate) |
Coarse wool production |
||
LLP Rose |
East Kazakhstan region |
1 800 |
LLP Ayaz |
West Kazakhstan region |
700 |
Firm ROST |
Pavlodar region |
1500 |
LLP Petropavlovsk winter footwear factory |
North Kazakhstan region |
18000 |
LLP Shymkent-Cashmere |
South Kazakhstan region |
20 000 |
Mixed production |
||
LLP Factory POSH |
Jambyl region |
10 000 |
LLP Shymkent wool primary processing plant |
South Kazakhstan region |
3 700 |
LLP Semtex |
East Kazakhstan region |
10 000 |
Caspiy Lana Atyrau |
Atyrau region |
350 |
Sunkar KH 2005 |
Karaganda region |
400 |
LLP Golden Fleece |
Almaty region |
1 050 |
JSC Қargaly |
Almaty region |
3 000 |
Total in the country |
77 500 |
According to the Committee of Industry of the Ministry of Industry and New Technologies of the Republic of Kazakhstan, the loading of companies makes 70%.[2]. At the same time, a comparison of data production, import and export indicates that about 30 tons of wool remains potentially in the country, however there are a number of information that mainly in private farms wool is burnt and is not transmitted for processing. Thus, the maximum potential loading of existing facilities, based on the total volume of production and a lack of export, will amount to 47.2%.
3. Barriers and limitations
The barriers matrix is outlined in the table below.
Table 12. Problems and barriers matrix for the wool and leather production
Name |
Leather |
Wool |
||
price noncompetitiveness |
lack of raw materials |
v |
v |
|
high tariffs for services |
v |
v |
||
expensive imported packaging |
|
|
||
poor access to financial resources |
refinancing |
v |
v |
|
high percent rate |
v |
v |
||
long-term loans absence |
v |
v |
||
taxation imperfection |
single VAT |
v |
v |
|
Personal income tax |
v |
v |
||
VAT exemption for all |
v |
v |
||
Corporate Income Tax exemption when updating of fixed assets |
v |
v |
||
VAT refund for export |
v |
v |
||
distribution restriction |
on the domestic market |
falsification |
|
|
dumping |
|
|
||
extortions in trade |
|
|
||
absence of logistics infrastructure |
|
|
||
duration of procedures of adoption of the customs and tariff regulation measures |
v |
v |
||
absence of food culture |
v |
v |
||
on the external market |
trade barriers |
|
|
|
absence of logistics infrastructure |
|
|
||
problems of institutional development |
absence of reliable statistical accounting |
v |
v |
|
deficiency of industry professionals in the production |
v |
v |
||
absence of a single authorized agency for processing of all agricultural raw materials and food products manufacturing |
v |
v |
4. The list of potential opportunities for entrepreneurial initiatives.
Raw hides and skins (other than furskins) and crafted leather
One of the major problems in the industry is the lack of the scope control of cattle slaughtering. For example, an average industrial slaughtering of cattle makes up 2.4 million heads of cattle per year and 4 million heads of small cattle, but the statistics on the hides production demonstrate the production of an average of 60-70% less.
Only the processing development on the basis of feedlots network can ensure quality and cheap raw materials. Thus, Kazakhstan is developing a network of feedlots in the framework of the project “Development of export potential of meat cattle”.
Table 13. Planned and introduced feedlots capacities by regions
# |
Regions Names |
Planned feedlots capacities, cattle heads |
Introduced feedlots capacities, cattle heads |
1 |
Akmola region |
12 500 |
19 100 |
2 |
Aktobe region |
10 000 |
12 800 |
3 |
Almaty region |
20 000 |
14 120 |
4 |
East Kazakhstan region |
20 000 |
4 300 |
5 |
Jambyl region |
10 000 |
5 360 |
6 |
West Kazakhstan region |
12 500 |
9 760 |
7 |
Karaganda region |
10 000 |
3 500 |
8 |
Kostanay region |
17 500 |
7 600 |
9 |
Kyzylorda region |
5 000 |
700 |
10 |
Pavlodar region |
10 000 |
4 200 |
11 |
North Kazakhstan region |
10 000 |
9 200 |
12 |
South Kazakhstan region |
12 500 |
6 930 |
TOTAL: |
150 000 |
97 570 |
Source: JSC "Kazagromarketing" as of 26.06.2014
Feedlots with capacity of over 97 thousand cattle heads were put into operation as of June 2014.
Thus, taking into account the average turnover of the herd in feedlots for 6 months, the average slaughter amounts to about 195 thousand heads a year. Development of feedlots is associated with new processing facilities construction.
Table 13. Average annual capacity of companies (specialized) for the processing of meat of cattle, swine, sheep, goats, horses, camels by regions amounts to, tons
Regions Names |
2011 |
2012 |
2013 |
Average for 3 years |
Akmola region |
9606 |
16237 |
13283 |
13042 |
Aktobe region |
7670 |
7830 |
10515 |
8672 |
Almaty region |
788 |
1454 |
1484 |
1242 |
Atyrau region |
96 |
120 |
110 |
109 |
East Kazakhstan region |
27993 |
4743 |
5910 |
12882 |
Jambyl region |
3236 |
3236 |
3193 |
3222 |
West Kazakhstan region |
1365 |
1365 |
1365 |
1365 |
Karaganda region |
9972 |
13298 |
14918 |
12729 |
Kostanay region |
4533 |
5300 |
5328 |
5054 |
Kyzylorda region |
0 |
0 |
0 |
0 |
Pavlodar region |
480 |
480 |
480 |
480 |
North Kazakhstan region |
11190 |
11600 |
9695 |
10828 |
South Kazakhstan region |
5067 |
5682 |
5862 |
5537 |
Almaty city |
2125 |
3030 |
2999 |
2718 |
Astana city |
1008 |
1008 |
1008 |
1008 |
Republic of Kazakhstan |
85129 |
75383 |
76150 |
78887 |
Source: according to data of the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
The processing capacities expansion in relation to the feedlots requires a specialized equipment for processing of carcasses that will create conditions for good quality animal hides at the processing capacities and ensure a high concentration.
Table 14. Hide yield calculation based on feedlots
# |
Regions Names |
Planned indicators for 2010 - 2015, heads |
Estimated slaughter per year, heads |
Leather yield, kg (1 to 15 kg per head) |
1 |
Akmola region |
12 500 |
25 000 |
375 000 |
2 |
Aktobe region |
10 000 |
20 000 |
300 000 |
3 |
Almaty region |
20 000 |
40 000 |
600 000 |
4 |
East Kazakhstan region |
20 000 |
40 000 |
600 000 |
5 |
Jambyl region |
10 000 |
20 000 |
300 000 |
6 |
West Kazakhstan region |
12 500 |
25 000 |
375 000 |
7 |
Karaganda region |
10 000 |
20 000 |
300 000 |
8 |
Kostanay region |
17 500 |
35 000 |
525 000 |
9 |
Kyzylorda region |
5 000 |
10 000 |
150 000 |
10 |
Pavlodar region |
10 000 |
20 000 |
300 000 |
11 |
North Kazakhstan region |
10 000 |
20 000 |
300 000 |
12 |
South Kazakhstan region |
12 500 |
25 000 |
375 000 |
TOTAL: |
150 000 |
300 000 |
4 500 000 |
Source: according to data of the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
In addition, the projects to create universal feedlots and meat processing plants on the production of the meat of cattle, small cattle and horses, providing meat cooling technologies, are planned for financing in the territory of the East Kazakhstan, West Kazakhstan and South Kazakhstan regions, that is, in the centers of the largest concentrations of animal populations with a capacity of 17 thousand tons of meat per year.
Thus, the development of integrated production chains: gathering livestock in feedlots - fattening cattle - meat processing, obtaining leathers at meat processing plants - leather processing is offered at specialized enterprises. An example of such a chain can be the project of creating meat processing plant in East Kazakhstan region, acting on the basis of raw material base of the region, transmitting the prepared hides for processing to the Semipalatinsk leather-fur plant.
Thus, taking into account the existing slaughter of animals in the context of regions, as well as the planned growth of livestock in the implementation of projects in the field of meat processing, there are requirements for the creation of additional capacities for the processing hides in the Akmola, Karaganda, East Kazakhstan and West Kazakhstan regions. The capacity of required productions is defined as the difference between the raw materials and available facilities.
Wool
The existing facilities are not loaded due to the lack of raw materials and their low quality, at the same time, there is no need to build new production facilities of wool primary processing.
Table 15. Potential of wool production increasing
Region |
Processing capacities, tons / year |
Net import / export (raw wool), tons |
Raw material base (tons of wool) |
Underutilized capacities |
Additional necessary capacities |
Republic of Kazakhstan |
77 550 |
-3 573 |
36 578 |
57.4% |
0 |
Kostanay region |
0 |
-611 |
483 |
0.0% |
0 |
Akmola region |
0 |
0 |
906 |
0.0% |
0 |
Aktobe region |
0 |
0 |
2 529 |
0.0% |
0 |
Almaty region |
11 050 |
-1 386 |
8 006 |
40.1% |
0 |
Atyrau region |
350 |
0 |
925 |
0.0% |
0 |
East Kazakhstan region |
11 800 |
0 |
4 934 |
58.2% |
0 |
Jambyl region |
10 000 |
-295 |
5 184 |
51.1% |
0 |
West Kazakhstan region |
750 |
1 |
1 834 |
0.0% |
0 |
Karaganda region |
400 |
0 |
2 108 |
0.0% |
0 |
Kyzylorda region |
0 |
-13 |
672 |
0.0% |
0 |
Mangystau region |
0 |
-1 082 |
615 |
0.0% |
0 |
Pavlodar region |
1 500 |
0 |
961 |
36.0% |
0 |
North Kazakhstan region |
18 000 |
0 |
630 |
96.5% |
0 |
South Kazakhstan region |
23 700 |
-186 |
6 793 |
72.1% |
0 |
Source: according to data of the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Thus, the most promising is the development of the collection and processing of fine wool, since this type of material has a higher price and demand in the textile industry. Therefore, it is advisable to form a potential clusters based on the creation of own raw material base of fine-wool sheep breeds. In general, the further development of wool processing system is impossible without an increase in the raw material base, the development of collection and wool quality control system.
An effective system of wool production and processing in the country should include as follows: an increase in fine-wool livestock breeding; a creation of mobile data of wool collection / purchasing system at the point of its collection; a modernization and renewal of the enterprises equipment of wool primary processing.
Stationary procurement stations that existed in the Soviet times are virtually absent now. The Chinese go around the territory of the Republic of Kazakhstan and collect wool. Therefore, it is proposed to create similar mobile wool collecting points. At present, it is necessary to create conditions for fine wool mobile collection of in the Almaty region with the capacity of up to 5.5 thousand tons per year. Thus, in accordance with the data of the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, the fine wool production on private farms of the Almaty region population amounted to 5089 tons and to 405 tons at the agricultural enterprises in 2014.
The cost of one mobile collection point is 5-7 mln. tenge (machine + equipment for cutting and storing wool). The number of necessary points can be determined after examining the density of sheep population placement.
In addition, it is advisable to develop the resource base through the establishment of farms for the fine-wool sheep breeding direction. In accordance with the master plan for the sheep farming development in the Republic of Kazakhstan until 2020, it is envisaged the creation of 700 farms with a capacity of 600 ewes until 2020, but it does not provide the information on their geographic location. Taking into account the recommendation of the implementation of fine-wool sheep growing production direction, defined in the Order of the Minister of Agriculture of the Republic of Kazakhstan #1-1 / 277 from 05.23.2014, it is necessary to implement a typical farm capacity from 600 ewes in the Almaty, East Kazakhstan, West Kazakhstan and Jambyl regions.
5. Industry SWOT-analysis.
Table 16. SWOT - analysis of the industry of Raw Hides (other than furskins) and Crafted Leather in Kazakhstan
Strong points |
Weak points |
· Availability of demand in export · Availability of raw materials base · Availability of the prospects for expanding the raw material base · Availability of production facilities |
· Low quality of raw materials · Territorial remoteness · Depreciation of equipment
|
Capabilities |
Threats |
· Creation of production facilities with high added value · Development of chains based on feedlots -meat processing |
· Reduced exporters’ demand · Lack of working capital |
Source: Expert assessment
Table 17. SWOT - analysis of the Wool production industry in Kazakhstan
Strong points |
Weak points |
· Availability of extensive pasture areas · Low labor costs, in comparison with the leaders · Availability of own wool washing capacities · Availability of enduring local breeds that are resistant to climate |
· Low productivity · Prevalence of low-quality wool · Bulk of production in private farms · Low demand for coarse wool · Lack of distribution channels to the international market · Undeveloped wool monitoring system · Small fine wool production amounts and its unstable quality · Obsolete equipment and technology · Lack of financial resources |
Capabilities |
Threats |
· High raw material demand from China · Possibility of the stock of sheep increasing · Reconstruction of the infrastructure, set up in the Soviet period · Improving the quality of wool and fleece · Price competitiveness · Prior investments and processing capacities reserves · Domestic demand for wool products |
· Change or removal of subsidies for wool production. Profitability is fully formed through subsidies · Reduced support following WTO accession · High competition from world leaders · Loss of qualified personnel |
[1] http://expertonline.kz/a11571/
[2] http://www.kursiv.kz/news/kompanii/v_regionakh_rk_nado_stroit_pryadilno_trikotazhnye_fabriki/
Review on fruit processing industry
1. Introduction.
Agro-industrial complex of Kazakhstan is a priority for the state. One of the most important factors for the sustainable development of agriculture is the orientation on the economic efficiency agricultural production and processing, which involves the rational and integrated use of land, labor, material and natural resources, a special role is assigned to the rational development of the territorial aspect, encouraging more efficient use of basic types of resources.
About 1.7% of the GDP of the Republic of Kazakhstan comes to the production of food and processing industry. This sector includes oil and fat and dairy industry, meat processing, fruit and vegetables, production of confectionery, sugar, cotton and animal feed, and a few short reports have been prepared by them.
In this review, the first part deals with a description of the contribution of the sector and the structure of the food industry, further it shows the domestic market for juice production, the historical information on the development of the industry, existing barriers and limitations and provides a list of potential opportunities for entrepreneurial initiatives.
1.1. Contribution of food industry to the economy and its structure
About 1,500 enterprises, which account for about 1.7% of GDP, produce the production of food and agricultural products processing industry in Kazakhstan. The main directions in the crop production are the production of cereals, oilseeds, fruit and vegetables and fodder crops. In addition, southern regions produce fruit and vegetables.
The manufacturing industry share amounts to 10% in the gross domestic product of the Republic of Kazakhstan. In 2014, the share of food production accounted for 1.7% of the republican GDP, and 16% in the manufacturing industry.
Table 1. GRP in 2013-2014, mln. tenge
Industry |
mln. tenge |
Share,% |
Gross Domestic Product |
39040 898,9 |
100.0 |
Agriculture, forestry and fishing industry |
1 717 719,1 |
4.4 |
Industry |
10 818 122,2 |
27.6 |
food production |
675 785,5 |
1.7 |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
The gross output of agriculture in the Republic of Kazakhstan amounted to 2.5 trillion tenge in 2014. The values of crop and livestock products are relatively equal. The largest share in the cost of the produced agricultural products occupy as follows: cereals and leguminous plants - 19%, dairy cattle breeding - 15%, cattle breeding - 14%, vegetables - 10%, fodder crops - 9% and breeding of small cattle - 6% and grapes – 0,4%.
Table 2. Agricultural production structure of the Republic of Kazakhstan in 2014
Products |
Production output, mln. tenge |
In % of total |
Total agricultural products |
2 527 890 |
100% |
Crop production products |
1 327 855 |
52.5% |
Growing of cereals and leguminous plants, including seed growing |
478 338 |
18.9% |
Growing of rice |
15 526 |
0.6% |
Growing of oilseeds and their seeds |
85 113 |
3.4% |
Growing of potatoes and planting material |
180 977 |
7.2% |
Growing of vegetables, their seeds and seedlings |
259 695 |
10.3% |
Growing of sugar beet and seeds |
175 |
0.0% |
Growing of cotton |
25 547 |
1.0% |
Growing of fodder crops and seeds |
238 107 |
9.4% |
Growing of grapes |
9 363 |
0.4% |
Growing of pome fruits and stone fruits |
24 047 |
1.0% |
Animal industries production |
1 189 555 |
47.5% |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
In 2014, foreign trade turnover of Kazakhstan amounted to 119 450.6 million. US dollars and, compared to 2013, it decreased by 10.5%, including export - 78 237 800 000 US dollars (7.6% less), and imports - 41 212 800 000 US dollars (15.6% less).
Table 3. Exports and imports structure of the Republic of Kazakhstan on the main commodity groups in 2014
Commodity Classifier for Foreign Economic Activities of the Customs Union code numbers |
Commodity group name |
exports |
imports |
||
million US dollars |
% of total |
million US dollars |
% of total |
||
Total |
79 459.8 |
100.0 |
41 295.5 |
100.0 |
|
01-24 |
Products of animal and vegetable origin, finished food products including |
2 637.7 |
3.3 |
4 335.9 |
10.5 |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
1.2. Domestic market capacity.
Concentrated fruit juice and fruit puree are produced from commercial varieties of apples, unsold fresh or substandard table apples. Table apples are mainly produced by low-intensity obsolete technologies in Kazakhstan. The main apple production is concentrated in the three southern regions, about 90% of harvested areas and the gross harvest of apples falls on Almaty, Jambyl and South Kazakhstan regions. Kazakhstan is considerably inferior to the world's leading producers - China, Germany, and Poland, where the yield is from 30 to 80 tons per 1 hectare, by a key crop yield indicator.
The juice industry in Kazakhstan uses the mostly imported raw materials (concentrates). The production of fruit and vegetable juices by almost 85% is concentrated in the city of Almaty and Almaty region.
Apple juice takes the largest share in the production of juices, which amounted to more than 61 million liters in the territory of the Republic of Kazakhstan in 2014. The share of the apple juice production is 37% in the total production. Vegetable juices have the smallest range. Virtually, tomato juice takes all the share of vegetable juice.
Figure 1. Production of juices by types in 2014, thousand liters
|
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Table 4. Dynamics of production of fruit and vegetable juices in Kazakhstan for 2010 -2014, thousand liters
Products |
2010 |
2011 |
2012 |
2013 |
2014 |
Fruit and vegetable juices, including: |
180087 |
223827 |
188225 |
173502 |
166503 |
Apple juice |
64 133 |
77 665 |
71 100 |
60 086 |
61 454 |
Orange juice |
15 654 |
19 823 |
18 031 |
15 128 |
15 556 |
Tomato juice |
7 791 |
11 300 |
7 042 |
6 718 |
7 914 |
Pineapple juice |
4 105 |
5 673 |
4 291 |
3 313 |
2 818 |
Mixture of fruit juices |
39 886 |
44 787 |
39 902 |
47 177 |
41 277 |
other types of juices |
48 520 |
64 580 |
47 860 |
41 080 |
37 484 |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Consumption of fruit and vegetable juices in Kazakhstan by 79% is ensured by domestic production, and 20% is imported from outside and 1% is exported from the country. However, one should bear in mind that the juice produced from imported concentrate.
Table 5. Balance of fruit and vegetable juice production and consumption for 2010-2014, thousand tons
Indicators |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
180.1 |
223.8 |
188.2 |
173.5 |
166.5 |
Import |
37.7 |
38.6 |
47.7 |
50.0 |
42.7 |
Total resources |
217.8 |
262.4 |
235.9 |
223.5 |
209.2 |
Export |
2.3 |
1.3 |
1.2 |
1.6 |
1.6 |
Domestic consumption |
215.5 |
261.2 |
234.8 |
221.9 |
207.6 |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Apple juice occupies the largest share in the production and consumption of juices, which production amounted to more than 61 million liters in the territory of the Republic of Kazakhstan in 2014.
The share of the apple juice production amounts to (81%), while imported products occupy the remaining 18%. 4 thousand tons of juice out of them are concentrated ones, which domestic producers process into reconstituted apple juice, and the remaining 10 thousand tons are imported in finished form, i.e. as a finished juice. Thus, it is possible to perform the import substitution of apple juice domestic production. The exports volume remains not significant. Its dynamics have not particularly changed since the major production share goes to the domestic consumption of the country.
Table 6. Balance of production and consumption of apple juice for 2010-2014, thousand tons
Indicators |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
64.1 |
77.7 |
71.1 |
60.1 |
61.5 |
Import |
13.5 |
12.7 |
12.9 |
14.4 |
14.2 |
Total resources |
77.7 |
90.3 |
84.0 |
74.4 |
75.6 |
Export |
0.2 |
0.7 |
0.6 |
0.7 |
0.5 |
Domestic consumption |
77.4 |
89.6 |
83.4 |
73.7 |
75.2 |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Russia is very dependent on raw materials imports in the production of apple juices. Most of the finished products is made from apple juice concentrate. The plants for the production of concentrated juice are located in the immediate vicinity of the growth of fruits, but as its own raw materials production is not enough, imported concentrated semi-finished products come to the aid.
In 2014, Russia imported 101.9 thousand tons of apple juice concentrate and 6 thousand tons of apple juice of direct extraction. The largest importing countries of concentrated juices in Russia are China (62% of total imports), Poland (13%) and Ukraine (12%). 13% of total imports belong to Iran, Uzbekistan, Turkey and Belarus.
Table 7. Russian import of apple juices (concentrated and of direct extraction) thousand tons
Country exporter |
Concentrated apple juice |
Apple juice of direct extraction |
Share of concentrated juice,% |
||||||
2012 |
2013 |
2014 |
2012 |
2013 |
2014 |
2012 |
2013 |
2014 |
|
China |
58.2 |
47.3 |
63.2 |
0 |
0 |
0 |
100% |
100% |
100% |
Ukraine |
37.2 |
35.7 |
11.8 |
2.4 |
3.2 |
1.7 |
94% |
92% |
87% |
Poland |
0.2 |
0.4 |
13.2 |
0.9 |
0.8 |
0.7 |
16% |
30% |
95% |
Iran |
2.4 |
3.4 |
5.6 |
0 |
1.0 |
0 |
100% |
77% |
100% |
Uzbekistan |
5.4 |
5.5 |
4.3 |
0.1 |
0.04 |
0.1 |
98% |
99% |
98% |
Turkey |
0 |
0 |
1.8 |
0 |
0 |
0 |
0% |
0% |
100% |
Belarus |
0 |
0.03 |
1.2 |
0.1 |
0.2 |
0.4 |
0% |
15% |
74% |
Other countries |
3.4 |
0.9 |
0.8 |
3.3 |
3.8 |
3.1 |
50% |
20% |
20% |
TOTAL |
106,8 |
93,3 |
101,9 |
6,9 |
9,3 |
6,0 |
94% |
91% |
94% |
Source: UN Comtrade, Federal Customs Service of the Russian Federation
Russia is a large market for the export of Kazakh apples and apple juice.
Russia imports more than 1 million tons of apples and 100 thousand tons of apple juice (preferably concentrated) annually. The largest supplier of apples to the Russian Federation has been Poland in the recent years. In 2014, this country has provided 40% of total imports of apples. It is also worth noting that in 2014, compared with previous years, the share of imports of apples from Poland, Moldova and Ukraine has decreased significantly, and volumes of imports from Belarus and Serbia have increased. The share of Kazakh apples is very low, and is below 1%.
The main supplier of apple juice concentrate to the Russian market is China, whose share was 59% in 2014. The share of production from Kazakhstan is less than 1%.
Table 8. Proportion of countries in the structure of the Russian import of apples and apple juice, thousand tons, %
Product / Country |
2010 |
2011 |
2012 |
2013 |
2014 |
Proportion of countries in 2014 |
Apples |
1 204 |
1 158 |
1 279 |
1 352 |
1 050 |
100% |
Poland |
348 |
289 |
601 |
706 |
419 |
40% |
Belarus |
0 |
0 |
25 |
67 |
175 |
17% |
Serbia |
88 |
94 |
59 |
69 |
124 |
12% |
China |
156 |
138 |
126 |
110 |
86 |
8% |
Moldova |
153 |
184 |
142 |
182 |
33 |
3% |
Italy |
60 |
71 |
55 |
27 |
31 |
3% |
France |
44 |
48 |
38 |
17 |
22 |
2% |
Ukraine |
97 |
35 |
18 |
11 |
19 |
2% |
Kazakhstan |
0,1 |
0,1 |
0,1 |
0,1 |
0,4 |
0,04% |
Other countries |
257 |
298 |
214 |
163 |
139 |
13% |
Apple juice |
118 |
111 |
114 |
103 |
108 |
100% |
China |
66 |
75 |
58 |
48 |
63 |
59% |
Ukraine |
30 |
24 |
40 |
39 |
14 |
13% |
Poland |
1 |
1 |
1 |
1 |
14 |
13% |
Iran |
5 |
3 |
2 |
4 |
6 |
5% |
Uzbekistan |
8 |
3 |
6 |
6 |
4 |
4% |
Turkey |
0 |
0 |
0 |
0 |
2 |
2% |
Moldova |
4 |
1 |
1 |
1 |
0,3 |
0% |
Kazakhstan |
0,03 |
0,3 |
0,1 |
0,3 |
0,1 |
0,1% |
Other countries |
3 |
4 |
6 |
4 |
5 |
5% |
Source: UN Comtrade, Federal Customs Service of the Russian Federation
Today, the Kazakh exports of apples and apple juice is only limited by volumes of its own production in the country. Potentially, the share of Kazakhstan in the Russian market of apples and apple juice can be quite significant. In the context of increasing apple production, Kazakhstan has a high potential for the development of exports of apples and apple juices (concentrated and direct extraction) in the Russian Federation.
The Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan keeps records of the structure of retail volume group only by large food groups. About 1.8 billion tenge or 29% is attributable to food in the retail trade volume. In the structure of food retail trade, most accounts for meat - 16%, a significant share is occupied by dairy products - 10%, fruit and vegetables - 12% and beverages -13.8%. During the period from 2003 to 2014, the volume of food retail trade increased by 4.3 times. It should be noted that the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan does not record the structure of retail trade turnover by region.
Table 9. Structure and Dynamics of retail trade turnover by individual product groups, billion tenge
Commodity |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
1 219 |
1 409 |
1 737 |
2 093 |
2 443 |
2 551 |
3 197 |
3 866 |
4 568 |
5 474 |
6 332 |
Fresh fruits and vegetables |
43 |
53 |
67 |
70 |
69 |
70 |
94 |
107 |
131 |
163 |
222 |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
At present, exports of domestic apples is carried out mainly in the Russian Federation. Russia - one of the largest importers of Kazakh apples. At the same time, as can be seen from the analysis of foreign trade, the exports of apples to Russia was declining steadily until 2014.
Table 10. Exports volumes of apples by countries, tons
Country |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Russia |
21637 |
19271 |
9319 |
2461 |
1954 |
128 |
61 |
64 |
65 |
439 |
Kyrgyzstan |
- |
- |
- |
- |
- |
- |
- |
- |
- |
12 |
Other countries |
53 |
- |
- |
- |
- |
- |
- |
34 |
21 |
7 |
All countries |
21690 |
19271 |
9319 |
2461 |
1954 |
128 |
61 |
98 |
86 |
459 |
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
To date, Kazakhstan has a high potential for increasing export of apples to the Russian Federation in connection with the existing embargo on the direct supply of European and Moldovan fruit on the Russian market.
During the period from 2005 to 2014, the volume of exports of apple juice was reduced from 838 tons to 470 tons. Historically, Russia was the main destination of exports of apple juice in Kazakhstan. In addition, there has been growth in exports to Kyrgyzstan and Turkmenistan in recent years. However, a key foreign market of apple juice export for Kazakhstan is Russia. Russia has been importing more than 100 thousand tons of apple juice concentrate and 10 thousand tons of apple juice of direct extraction per year for the last five years.
Table 11. Exports volumes of apple juice by countries, tons
Country |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Kyrgyzstan |
- |
- |
- |
- |
- |
139 |
194 |
313 |
233 |
267 |
Russia |
473 |
294 |
230 |
0 |
0 |
25 |
308 |
148 |
336 |
75 |
Turkmenistan |
- |
- |
- |
- |
- |
6 |
73 |
145 |
103 |
50 |
Other countries |
365 |
244 |
371 |
579 |
538 |
70 |
140 |
31 |
43 |
78 |
All countries |
838 |
539 |
600 |
579 |
538 |
240 |
716 |
637 |
715 |
470 |
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Potentially, the amount of external market apple juice is very significant, and the export is limited only by the domestic production volumes at the moment.
Kazakhstan has strong production capacity in the form of large (from 2000 tons and more) and medium-sized enterprises (up to 2000 tons). Large companies are players with several plants and storage facilities, logistics centers and their sales points. To date, the domestic juices market is presented by five major companies: LLP Raimbek Bottlers, LLP RG Brands, JSC Gold Product and LLP Rauan.
The main players in the juice market in the Republic of Kazakhstan are large companies, often having several factories. Medium and small-scale producers, which operate mainly in the smaller markets of individual regions and are not able to provide large deliveries throughout the country, also supply their products to the market.
A high concentration of large companies in Almaty and Almaty region is marked on the juice market of Kazakhstan. The share of the juices production in these regions amounts to 84% of total production in Kazakhstan. At the same time, taking into account the availability of a wide network of wholesale and retail network of the main producers of Almaty and Almaty region, their products are represented in all regions of the country.
Figure 2. Share of Kazakhstan regions in the production of juices in 2014, %
|
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
The marketing policy of the major manufacturers of domestic juices is marked at a high level, and in addition to the quality of products, it takes into account the high costs of branding, advertising and other methods of promotion products. This factor indicates a high competition between both domestic and foreign, mainly Russian juices producers, enterprises.
1.3. Historical information on the industry development.
To date, the bulk of apple manufacture falls on Almaty, South Kazakhstan and Jambyl regions (87% of gross collection in the RK for 2014). According to available statistical data of the Kazakh SSR in 1985, 88% of the gross harvest of fruits fell on the above-mentioned regions. Accordingly, the specialization of Kazakhstani regions has not changed since the time of the Kazakh SSR.
2. Main enterprises (players) in the market.
Kazakhstan has strong production capacity in the form of large (from 2000 tons and more) and medium-sized enterprises (up to 2000 tons). Large companies are players with several plants and storage facilities, logistics centers and their sales points. To date, the domestic juices market is presented by five major companies: LLP Raimbek Bottlers, LLP RG Brands, JSC Gold Product and LLP Rauan.
3. Barriers and limitations
The barriers matrix is outlined in the table below.
Table 12. Problems and barriers matrix for the food industry
Name |
Processed fruit and vegetable products |
||
price noncompetitiveness |
lack of raw materials |
v |
|
high tariffs for services |
v |
||
expensive imported packaging |
v |
||
poor access to financial resources |
refinancing |
v |
|
high percent rate |
v |
||
long-term loans absence |
v |
||
taxation imperfection |
single VAT |
v |
|
Personal income tax |
v |
||
VAT exemption for all |
|
||
Corporate Income Tax exemption when updating of fixed assets |
v |
||
VAT refund for export |
v |
||
distribution restriction |
on the domestic market |
falsification |
v |
dumping |
|
||
extortions in trade |
v |
||
absence of logistics infrastructure |
v |
||
duration of procedures of adoption of the customs and tariff regulation measures |
v |
||
absence of food culture |
v |
||
on the external market |
trade barriers |
|
|
absence of logistics infrastructure |
|
||
problems of institutional development |
absence of reliable statistical accounting |
v |
|
deficiency of industry professionals in the production |
v |
||
absence of a single authorized agency for processing of all agricultural raw materials and food products manufacturing |
v |
4. The list of potential opportunities for entrepreneurial initiatives.
The main key areas of industrial infrastructure development are industrial sites and industrial parks. Certain types of the food industry or plant on processing of agricultural raw materials can be developed on their basis. However, it should be noted that from the point of view of AIC (agro-industrial complex) development, industrial sites and industrial parks are less suitable development tools, as often the food or agricultural products processing industries are located near the source of raw materials.
The development of water infrastructure and veterinary infrastructure, as well as an effective system of plant quarantine and protection play the primary role for the AIC (agro-industrial complex) development. It is necessary to increase the irrigated area from 1.4 million hectares to 1.6 - 1.8 million hectares until 2020. 400 thousand hectares of irrigated lands commissioning will allow producing up to an additional 2 million tons of highly profitable crops (maize, soya beans, vegetables, fruits, etc.) per year.
Production of open ground fruits and vegetables is possible in large quantities in irrigated areas in the regions with high solar insolation. In Kazakhstan, these are the southern areas of South Kazakhstan, Jambyl and Almaty regions.
The current state of development of vegetable production in the country ensures its own increase consumption of fresh vegetables, but due to the lack of processing, further increasing of vegetable raw materials production is impossible.
Current initiatives to develop vegetable farming and gardening of JSC NC "Agricultural production cooperative Shymkent", ongoing and planned projects in the South Kazakhstan region are interesting:
· Agro-industrial zone "Greenhouse paradise", which assumes the creation of conditions for conducting greenhouse business and formation of optimum commodity batches (enlargement) with access to the organized markets (retail chains) on favorable terms, and reducing the country's dependence in fresh vegetables supplies during the off-season from Uzbekistan, Kyrgyzstan and China (import substitution);
· Organization of agro-zone for cultivation of intensive apple orchards on the territory of 500 hectares – means a construction of intensive apple orchards complexes on an area of 500 hectares;
· Construction of 15 agro-industrial zones in the South Kazakhstan region.
The participation on the basis of public-private partnership is planned for the implementation of these projects.
Growing and processing of fruits and vegetables are constrained by a number of factors in Kazakhstan, the main of which is the high capital intensity of the industry. Thus, up to 50 thousand of US dollars of investment is required for laying 1 hectare of an intense garden, and the start date of fruiting and receipt of the first revenue is from 2 to 3 years. The total investment in the sector of production and processing of fruits and vegetables may exceed US $ 878 million. Such investments allow providing complete import substitution and start exporting.
5. Industry SWOT-analysis.
Table 13. SWOT - analysis of apple juices of direct extraction
Strong points · Developed network of distribution and retail sales · Environmentally friendly and free from GMO raw materials · Environmentally friendly and GMO free raw materials. |
Weak points · Insufficiently developed food culture, limiting the promotion of direct extraction juices · Higher cost of juices of direct extraction compared to traditional juice reconstituted from imported concentrates. |
Capabilities · Increased production of direct extraction of juices due to the substitution of traditional juices produced from imported concentrates · Deliveries of production for export to the Siberian and Ural regions of Russian Federation · Reducing production costs with the development of intensive gardening. |
Threats · Deficiency of raw material in the case of loss of harvest of apples as a result of late frosts · Reduction in purchasing power due to the unfavorable economic environment · Competition of cheaper juices manufacturers, obtained by concentrated juices reconstitution. |
Source: Expert assessment
Review on vegetable processing industry
1. Introduction.
Agro-industrial complex of Kazakhstan is a priority for the state. One of the most important factors for the sustainable development of agriculture is the orientation on the economic efficiency agricultural production and processing, which involves the rational and integrated use of land, labor, material and natural resources, a special role is assigned to the rational development of the territorial aspect, encouraging more efficient use of basic types of resources.
About 1.7% of the GDP of the Republic of Kazakhstan comes to the production of food and processing industry. This sector includes oil and fat and dairy industry, meat processing, fruit and vegetables, production of confectionery, sugar, cotton and animal feed, and a few short reports have been prepared by them.
In this review, the first part deals with a description of the contribution of the sector and the structure of the food industry, further it shows the domestic market for vegetables processing, the historical information on the development of the industry, existing barriers and limitations and provides a list of potential opportunities for entrepreneurial initiatives.
1.1. Contribution of food industry to the economy and its structure
About 1,500 enterprises, which account for about 1.7% of GDP, produce the production of food and agricultural products processing industry in Kazakhstan. Southern regions are specialized in the production of vegetables and fruits, as well as of industrial crops.
The manufacturing industry share amounts to 10% in the gross domestic product of the Republic of Kazakhstan. In 2014, the share of food production accounted for 1.7% of the republican GDP, and 16% in the manufacturing industry.
Table 1. GRP in 2013-2014, mln. tenge
Industry |
mln. tenge |
Share,% |
Gross Domestic Product |
39040 898,9 |
100.0 |
Agriculture, forestry and fishing industry |
1 717 719,1 |
4.4 |
Industry |
10 818 122,2 |
27.6 |
food production |
675 785,5 |
1.7 |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
The gross output of agriculture in the Republic of Kazakhstan amounted to 2.5 trillion tenge in 2014. The values of crop and livestock products are relatively equal. The largest share in the cost of the produced agricultural products occupy as follows: cereals and leguminous plants - 19%, dairy cattle breeding - 15%, cattle breeding - 14%, vegetables - 10%, fodder crops - 9% and breeding of small cattle - 6%.
Table 2. Structure of the agricultural production of the Republic of Kazakhstan in 2014
Products |
Production output, mln. tenge |
In % of total |
Total agricultural products |
2 527 890 |
100% |
Crop production products |
1 327 855 |
52.5% |
Growing of cereals and leguminous plants, including seed growing |
478 338 |
18.9% |
Growing of rice |
15 526 |
0.6% |
Growing of oilseeds and their seeds |
85 113 |
3.4% |
Growing of potatoes and planting material |
180 977 |
7.2% |
Growing of vegetables, their seeds and seedlings |
259 695 |
10.3% |
Growing of sugar beet and seeds |
175 |
0.0% |
Growing of cotton |
25 547 |
1.0% |
Growing of fodder crops and seeds |
238 107 |
9.4% |
Growing of grapes |
9 363 |
0.4% |
Growing of pome fruits and stone fruits |
24 047 |
1.0% |
Animal industries production |
1 189 555 |
47.5% |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
In 2014, foreign trade turnover of Kazakhstan amounted to 119 450.6 million US dollars, and, compared to 2013, it decreased by 10.5%, including export - 78 237.8 million US dollars (7.6% less), import - 41 212.8 million US dollars (15.6% less).
Table 3. Exports and imports structure of the Republic of Kazakhstan on the main commodity groups in 2014
Commodity Classifier for Foreign Economic Activities of the Customs Union code numbers |
Commodity group name |
exports |
imports |
||
million US dollars |
% of total |
million US dollars |
% of total |
||
Total |
79 459.8 |
100.0 |
41 295.5 |
100.0 |
|
01-24 |
Products of animal and vegetable origin, finished food products including |
2 637.7 |
3.3 |
4 335.9 |
10.5 |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
1.2. Domestic market capacity.
Production of canned tomato, including tomato paste is concentrated in the Almaty city, where most of the processing enterprises are located; the South Kazakhstan region has also a significant share in it. This production structure can be attributed to the primary sources location of: own production, imported from the southern republics and China. The production volume of canned tomatoes, including tomato paste has increased by 19% for the period from 2005 to 2014. In 2014, the production volume of canned tomato made 11.9 thousand tons, including 8.3 thousand tons of tomato paste.
Table 4. Dynamics of tomato processing production in Kazakhstan in 2005-2014, thousand tons
Type of product of processing |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production of canned tomatoes, thousand tons |
10.0 |
12.6 |
12.3 |
8.4 |
12.3 |
12.8 |
10.4 |
10.4 |
10.3 |
11.9 |
including tomato paste * thousand tons |
7.0 |
8.8 |
8.6 |
5.9 |
8.6 |
8.9 |
7.3 |
7.3 |
7.2 |
8.3 |
* based on the assumption of experts on the tomato paste proportion in canned tomato ~ 70%
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Unlike tomatoes, tomato paste statistics reflects a different picture. Most (60-70%) of tomato paste consumption is met through imports. The leading importer in this market is China. Since a large volume of imports is present on the domestic market, there are difficulties in marketing the finished domestic products, which affects the working capital replenishment of the processing enterprises. Despite this fact, the production volume has been stable for the last 10 years. As a whole, the production growth by 1.3 thousand tons of tomato paste was marked for 2005-2014.
The Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan keeps records of the structure of retail volume group only by large food groups. About 1.8 billion tenge or 29% is attributable to food in the retail trade volume. In the structure of food retail trade, most accounts for meat - 16%, a significant share is occupied by dairy products - 10%, fruit and vegetables - 12% and beverages -13.8%. During the period from 2003 to 2014, the volume of food retail trade increased by 4.3 times. It should be noted that the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan does not record the structure of retail trade turnover by region.
Table 5. Structure and Dynamics of retail trade turnover by individual product groups, billion tenge
Commodity |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
1219 |
1409 |
1737 |
2093 |
2443 |
2551 |
3197 |
3866 |
4568 |
5474 |
6332 |
Fresh fruits and vegetables |
43 |
53 |
67 |
70 |
69 |
70 |
94 |
107 |
131 |
163 |
222 |
of which potatoes |
12 |
15 |
17 |
18 |
22 |
21 |
25 |
27 |
36 |
35 |
55 |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
The normative climatic conditions for the tomatoes cultivation are the sum of positive temperatures above 10 ° C 2200-2700 ° C, and more, sandy and loamy soils on mechanical structure. These standards apply to most vegetable crops, in connection with which, historically, the bulk of vegetable production has accounted, as it is now, for the Almaty, Jambyl and South Kazakhstan regions.
According to the current regulatory and technical documentation, the range of fruit and vegetable products consists of more than 1000 items. Not more than 150 items is currently produced in Kazakhstan. Jams, marmalades, compotes, lunch dishes, etc. are produced in insignificant amounts.
Canned tomatoes, processed into tomato paste, which in its turn is the basis for the production of ketchups, sauces, juices, canned meat and fish, condiments and other products make up the major share of fruit and vegetable products. The organization of raw materials production, their processing and tomato paste production in Kazakhstan will give a significant effect in the industry's development. Given the optimal climatic and economic factors of tomato cultivation in Almaty city, Almaty, Jambyl and South Kazakhstan regions, major large-scale enterprises for the tomato paste production are based in these regions.
The bulk of the production of greenhouse vegetables is represented in South Kazakhstan and Almaty regions, and 71% and 13% respectively of total gross harvest in the RK in 2014.
The analysis of production trends in Kazakhstan regions shows that the leading position for the production of vegetables in the structure of agricultural production is noted in Almaty, Atyrau, Jambyl, Kyzylorda, Mangystau, Pavlodar and South Kazakhstan regions.
At the same time, based on the table below, it is clear that the share of Atyrau, Kyzylorda, Mangystau, and Pavlodar regions accounts for about 9% of vegetable production in the republic. The reason for the leading positions in the vegetable production areas of these regions is the a narrow specialization of these regions for animal husbandry industry (rice cultivation - in Kyzylorda region) due to agro-climatic constraints, and the standards of cultivation of vegetables do not have high demands, unlike other plant products, and can be grown in closed ground conditions.
Table 6. Production of vegetables and tomatoes in the Republic of Kazakhstan, 2014
Region |
Vegetables, thousand tons |
Region production share in the total production in the RK |
Tomatoes, thousand tons |
Region production share in the total production in the RK |
Akmola region |
63.9 |
2% |
12.3 |
2% |
Aktobe region |
63.3 |
2% |
12.5 |
2% |
Almaty region |
932.4 |
27% |
180.5 |
23% |
Atyrau region |
61.8 |
2% |
12.7 |
2% |
East Kazakhstan region |
242.8 |
7% |
47.0 |
6% |
Jambyl region |
616.3 |
18% |
108.3 |
14% |
West Kazakhstan region |
57.4 |
2% |
12.9 |
2% |
Karaganda region |
90.7 |
3% |
19.4 |
3% |
Kostanay region |
71.1 |
2% |
19.0 |
2% |
Kyzylorda region |
70.2 |
2% |
17.3 |
2% |
Mangystau region |
5.1 |
0% |
1.7 |
0% |
Pavlodar region |
183.7 |
5% |
18.0 |
2% |
North Kazakhstan region |
191.9 |
6% |
45.1 |
6% |
South Kazakhstan region |
812.9 |
23% |
267.5 |
34% |
Almaty city |
2.5 |
0% |
0.7 |
0% |
Astana city |
3.9 |
0% |
1.7 |
0% |
TOTAL |
3 469.9 |
100% |
776.7 |
100% |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Almaty, Jambyl and South Kazakhstan regions are the leading regions with regard to the tomatoes and tomato paste production.
During the period from 2010 to 2014, the share of imports in domestic tomato paste consumption takes up the major part and makes 68%.
Table 7. Production and consumption of tomato paste for 2010-2014, tons
Indicators |
2010 |
2011 |
2012 |
2013 |
2014 |
Average for five years |
Share of consumption, % |
Production |
8 943 |
7 275 |
7 270 |
7 197 |
8 303 |
7 797 |
35% |
Import |
9 694 |
13 084 |
19 948 |
20 007 |
13 301 |
15 207 |
68% |
Export |
592 |
875 |
1 035 |
20 |
36 |
511 |
2% |
Domestic consumption |
18 045 |
19 484 |
26 183 |
27 184 |
21 569 |
22 493 |
100% |
Per capita consumption, kg / year |
1.11 |
1.18 |
1.56 |
1.60 |
1.25 |
1.34 |
- |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
The average annual consumption of tomato paste per capita over the past five years is about 1.34 kg per year. Fluctuations are small, therefore, it should not expect a significant increase in per capita consumption. The forecast of consumption will be based on the expected population growth.
Table 8. Forecast of tomato paste consumption in the country until 2020
Denomination |
2014 (actual) |
2020 (forecast) |
Population of the Republic of Kazakhstan, thousand persons |
17 289 |
18 662* |
Domestic tomato paste consumption, tons |
21 569 |
24 951 |
* official population size forecast
Based on the forecast of consumption and import substitution plans, it is possible to organize the tomato paste production.
It follows from the plan, that for the self-satisfaction of the domestic demand for tomato paste in 2020, it is necessary to increase the current annual production by 3 times, from 8 303 to 24 950 tons.
To achieve the above in terms of growth of tomato paste production in the amount of 16.5 thousand tons / year (a ratio of 5.8 to 1), it requires additional tomatoes production in the amount of not less than 95 thousand tons / year, that makes 14% of the total collecting data for the Republic of Kazakhstan and 20% of the tomato collection in the areas with the largest crop (Almaty, Jambyland South Kazakhstan regions).
The introduction of intensive tomato cultivation technologies will increase the harvest to the level required for the tomato paste import, without a significant increase in available cultivated areas. It is necessary to focus on the development of the processing on the basis of intensive industrial raw materials production at a competitive cost with the cost of the Chinese manufacturers, in the first place.
The tomato paste export is insignificant and amounted to only 36 tons in 2014.
Table 9. Balance of tomato paste production and consumption for 2005-2014, tons
Indicators |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
6980 |
8821 |
8576 |
5896 |
8602 |
8943 |
7275 |
7270 |
7197 |
8303 |
Import |
7348 |
12694 |
10750 |
15768 |
13385 |
9694 |
13084 |
19948 |
20007 |
13301 |
Total resources |
14327 |
21515 |
19326 |
21664 |
21986 |
18637 |
20359 |
27218 |
27204 |
21604 |
Export |
662 |
55 |
239 |
1 |
9 |
592 |
875 |
1 035 |
20 |
36 |
Domestic consumption |
13666 |
21460 |
19086 |
21664 |
21977 |
18045 |
19484 |
26183 |
27184 |
21569 |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
In 2014, exports of tomatoes and tomato paste of domestic production amounted to 147 and 36 tons respectively. Despite the unstable nature of these products export, there was a significant reduction in it for the period of 2005 - 2014. Thus, tomatoes exports fell from 38.2 thousand tons in 2005 to 147 tons in 2014, and tomato paste exports - from 662 tons in 2005 to 36 tons in 2014.
Table 10. Exports of fresh tomatoes and tomato paste for 2005 - 2014, tons
Products |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Tomato paste |
662 |
55 |
239 |
1 |
9 |
592 |
875 |
1 035 |
20 |
36 |
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
Dynamics of fresh tomatoes imports is increasing annually, amounting to 50.3 thousand tons in 2014, or by 280 times higher than the indicator in 2005. The major tomato suppliers are China and Uzbekistan. The aforementioned countries import the largest volumes of production on the territory of Kazakhstan in the off-season.
Table 11. Imports of fresh tomatoes for 2005 - 2014, tons
Country |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
China |
67 |
12 |
13 |
4432 |
6506 |
8607 |
9967 |
18290 |
20915 |
25943 |
Uzbekistan |
32 |
16 |
1555 |
5 |
153 |
10258 |
30454 |
9454 |
12519 |
18327 |
Other countries |
81 |
137 |
194 |
326 |
436 |
1 774 |
3 241 |
8 588 |
3 978 |
6 004 |
All countries |
179 |
165 |
1763 |
4763 |
7095 |
20640 |
43662 |
36332 |
37413 |
50274 |
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
In accordance with the main raw material for the tomato paste production - tomatoes, tomato paste import volumes increased by 7.5 thousand tons for the period of 2005 – 2014, amounting to 13.3 thousand tons in 2014.
Table 12. Imports of tomato paste for 2005 - 2014, tons
Country |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
China |
4042 |
8646 |
8545 |
12742 |
11150 |
8271 |
12180 |
18708 |
18634 |
11579 |
Russia |
709 |
722 |
572 |
773 |
609 |
355 |
185 |
521 |
553 |
636 |
Other countries |
2597 |
3326 |
1633 |
2253 |
1626 |
1069 |
719 |
719 |
820 |
1086 |
All countries |
7348 |
12694 |
10750 |
15768 |
13385 |
9694 |
13084 |
19948 |
20007 |
13301 |
Source: State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan
The main share of vegetable products, namely tomatoes, is imported from the southern regions of Kazakhstan during the summer period and the neighboring countries, such as China, Uzbekistan, both in the off-season and throughout the year.
Based on the data on the average annual per capita consumption and production of tomato paste, Kazakhstan has made a net calculation of import / export net by regions. Based on the calculation, all regions of the country, except for the Almaty city, are net importers of tomato paste.
Table 13. Net imports (-) / export (+) of tomato paste for 2014 by regions, tons
Region |
Average annual population size, persons. |
Consumption |
Production |
Net imports (-) / exports (+) |
Akmola region |
736 086 |
918 |
0 |
-918 |
Aktobe region |
815 727 |
1 018 |
0 |
-1 018 |
Almaty region |
1 904 898 |
2 376 |
2 061 |
-316 |
Atyrau region |
574 667 |
717 |
0 |
-717 |
East Kazakhstan region |
1 394 671 |
1 740 |
0 |
-1 740 |
Jambyl region |
1 091 611 |
1 362 |
28 |
-1 334 |
West Kazakhstan region |
626 964 |
782 |
0 |
-782 |
Karaganda region |
1 373 982 |
1 714 |
0 |
-1 714 |
Kostanay region |
881 116 |
1 099 |
0 |
-1 099 |
Kyzylorda region |
746 462 |
931 |
0 |
-931 |
Mangystau region |
597 156 |
745 |
0 |
-745 |
Pavlodar region |
754 286 |
941 |
0 |
-941 |
North Kazakhstan region |
573 762 |
716 |
0 |
-716 |
South Kazakhstan region |
2 760 842 |
3 444 |
496 |
-2 949 |
Almaty city |
833 658 |
1 040 |
0 |
-1 040 |
Astana city |
1 623 336 |
2 025 |
5 719 |
3 694 |
Republic of Kazakhstan |
17 289 224 |
21 569 |
8 303 |
-13 265 |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, expert calculation
In connection with the dependence on imports, the industry of tomato paste and raw materials - tomatoes production, it is not appropriate to consider foreign markets. The primary objective of the industry is import substitution of the above products, due to the growth of its own production of tomatoes.
In connection with the dependence on imports, the industry of tomato paste and raw materials - tomatoes production, it is not appropriate to consider foreign markets. The primary objective of the industry is import substitution of the above products, due to the growth of its own production of tomatoes.
1.3. Historical information on the industry development.
3.9% of the USSR vegetables production (1.085 million tons) accounted for the Kazakh SSR).
Table 14. Production of basic agricultural products in the Kazakh Soviet Socialist Republic, and their share in the total production of the USSR in 1985.
Products |
Production volume in the Kazakh SSR, thousand tons |
Production volume in the USSR, thousand tons |
Share of the Kazakh SSR in the total production of the USSR, % |
Crop production |
|||
Cereals, incl.: |
24 164 |
191 674 |
12.6% |
Wheat |
15 108 |
78 078 |
19.3% |
Potatoes |
2 197 |
73 009 |
3.0% |
Sugar beet |
1 901 |
82 392 |
2.3% |
Vegetables |
1 085 |
28 050 |
3.9% |
Raw cotton |
305 |
8 755 |
3.5% |
Fruits and berries |
231 |
10 539 |
2.2% |
Grapes |
152 |
5 751 |
2.6% |
Sunflower |
93 |
5 260 |
1.8% |
Source: statistical publication "Agriculture of the USSR", 1988.
The bulk production of greenhouse vegetables is represented by the South Kazakhstan and Almaty regions, and 71% and 13% of total gross harvest of the RK in 2014, respectively.
Table 15. Share of vegetable production by regions of the total production in the country in 2014 and in 1986 - 1990, thousand tons
Region |
2014 |
Regions of the Kazakh SSR |
1986 - 1990, average per year |
|||
Akmola region |
63.9 |
2% |
Tselinograd |
59 |
5% |
|
Turgay |
13 |
1% |
||||
Kokshetau |
29 |
2% |
||||
Aktobe region |
63.3 |
2% |
Aktobe |
31 |
3% |
|
Almaty region |
932.4 |
27% |
Alma-Ata |
153 |
13% |
|
Taldy Kurgan |
108 |
9% |
||||
Atyrau region |
61.8 |
2% |
Guryev |
27 |
2% |
|
East Kazakhstan region |
242.8 |
7% |
Semipalatinsk region |
37 |
3% |
|
East Kazakhstan region |
53 |
4% |
||||
Jambyl region |
616.3 |
18% |
Jambyl region |
159 |
13% |
|
West Kazakhstan region |
57.4 |
2% |
Ural region |
28 |
2% |
|
Karaganda region |
90.7 |
3% |
Zhezkazgan region |
19 |
2% |
|
Karaganda region |
76 |
6% |
||||
Kostanay region |
71.1 |
2% |
Kostanay region |
64 |
5% |
|
Turan region |
13 |
1% |
||||
Kyzylorda region |
70.2 |
2% |
Kyzylorda region |
14 |
1% |
|
Mangystau region |
5.1 |
0% |
Mangyshlak region |
2 |
0% |
|
Pavlodar region |
183.7 |
5% |
Pavlodar region |
60 |
5% |
|
North Kazakhstan region |
191.9 |
6% |
Kokshetau region |
29 |
2% |
|
North Kazakhstan region |
26 |
2% |
||||
South Kazakhstan region |
812.9 |
23% |
Chimkent region |
217 |
18% |
|
Astana city |
2.5 |
0% |
- |
- |
- |
|
Almaty city |
3.9 |
0% |
- |
- |
- |
|
TOTAL |
3 469.9 |
100% |
TOTAL |
1 214 |
100% |
Source: According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
The current specialization of the Almaty, Jambyl and South Kazakhstan regions for the production of vegetables, including tomatoes, compared with the Soviet period has not changed. The share of vegetable production in the Almaty region of the total share of the country in 2014 and the average for the period 1986 – 1990 amounted to 27% and 22% respectively.
The share of vegetable production in the Jambyl region of the total share of the country in 2014 and the average for the period 1986 – 1990 amounted to 18% and 13% respectively. And the share of vegetable production in the South Kazakhstan region of the total share of the country in 2014 and the average for the period 1986 – 1990 amounted to 23% and 18% respectively.
2. Main enterprises (players) in the market.
Two plants for the production of tomato paste: JSC Gold Product and a branch of LLP Issyk fruit canning factory are located on the territory of the Almaty region.
Issyk fruit canning factory is one of the largest companies in Kazakhstan, which profile activity consists in the processing of agricultural products and the production of tomato concentrate and apple puree in the Republic of Kazakhstan.
The factory is located in the village of Kaynar, Enbekshikazakh district, Almaty region and put into operation in September 2010. The main raw material volume for the plant is supplied by the farm "Aidarbayev". Fruit and vegetable products are grown with the use of Israeli drip irrigation technology.
The plant's capacity is 600 tons of tomato and 300 tons of other fruit and vegetable raw materials per day. 717 million tenge was invested in the plant. The company is equipped with Italian technology.
The plant JSC Gold Product is located in the village of Turgen. Canning production at the industrial complex Turgen was founded in 1999. At the moment, the modern high-tech accessories lines of conservation and modern equipment allow to produce more than 3 million сans of various products per season. The bulk of processed vegetables is grown on the company's own fields. LLP "Agroprodukt", a unit dealing directly with agricultural activities: viticulture, horticulture and gardening, is engaged in the vegetables cultivation.
LLP Ching-Kaz and a branch of LLP MASLO-DEL are located in Almaty city.
LLP MASLO-DEL produces tomato paste under the brand “Tomatny Rai”. The volume of production is 34 tons per day.
Today LLP Ching-Kaz is a leader in the production and sale of tomato products and canned vegetables in Kazakhstan. The company was established in 1998. So far, the company ranks first in tomato products with a share of about 40% of the total market capacity. The production of Qing Kaz is sold not only in the regions of Kazakhstan, but it is also distributed on the markets in other Central Asian countries.
The plant LLP Concern Asia Kazakhstan is located on the territory of. In 2014, the Concern LLP Asia Kazakhstan produced about 40 million liters of fruit and vegetable, and fruit and berry production. These are canned cucumbers, tomatoes, eggplants, tomato paste, as well as fruits and berries in glass jars of different capacities. Furthermore, the lines of Tetra Pak packages have been installed for the production of juices.
The South Kazakhstan region is represented by medium and small enterprises for the tomato paste production. Previously, Ak Dala factory for the production of tomato paste has operated in Arys and produced 3.5 thousand tons. Ak Dala factory for the production of tomato paste was built a few years ago. Due to lack of funding in 2015, despite the availability of modern tomato processing equipment, the production was closed. To date, the plant processes apples.
3. Barriers and limitations.
The barriers matrix is outlined in the table below.
Table 16. Problems and barriers matrix for the food industry
Name |
Processed fruit and vegetable products |
||
price noncompetitiveness |
lack of raw materials |
v |
|
high tariffs for services |
v |
||
expensive imported packaging |
v |
||
poor access to financial resources |
refinancing |
v |
|
high percent rate |
v |
||
long-term loans absence |
v |
||
taxation imperfection |
single VAT |
v |
|
Personal income tax |
v |
||
VAT exemption for all |
|
||
Corporate Income Tax exemption when updating of fixed assets |
v |
||
VAT refund for export |
v |
||
distribution restriction |
on the domestic market |
falsification |
v |
dumping |
|
||
extortions in trade |
v |
||
absence of logistics infrastructure |
v |
||
duration of procedures of adoption of the customs and tariff regulation measures |
v |
||
absence of food culture |
v |
||
on the external market |
trade barriers |
|
|
absence of logistics infrastructure |
|
||
problems of institutional development |
absence of reliable statistical accounting |
v |
|
deficiency of industry professionals in the production |
v |
||
absence of a single authorized agency for processing of all agricultural raw materials and food products manufacturing |
v |
4. The list of potential opportunities for entrepreneurial initiatives. The value chain structure.
Production of open ground fruits and vegetables is possible in large quantities in irrigated areas in the regions with high solar insolation. In Kazakhstan, these are the southern areas of South Kazakhstan, Jambyl and Almaty regions.
The current state of development of vegetable production in the country ensures its own increase consumption of fresh vegetables, but due to the lack of processing, further increasing of vegetable raw materials production is impossible.
Current initiatives to develop vegetable farming and gardening of JSC NC "Agricultural production cooperative Shymkent", ongoing and planned projects in the South Kazakhstan region are interesting:
· Agro-industrial zone "Greenhouse paradise", which assumes the creation of conditions for conducting greenhouse business and formation of optimum commodity batches (enlargement) with access to the organized markets (retail chains) on favorable terms, and reducing the country's dependence in fresh vegetables supplies during the off-season from Uzbekistan, Kyrgyzstan and China (import substitution);
· Organization of agro-zone for cultivation of intensive apple orchards on the territory of 500 hectares – means a construction of intensive apple orchards complexes on an area of 500 hectares;
· Construction of 15 agro-industrial zones in the South Kazakhstan region.
The participation on the basis of public-private partnership is planned for the implementation of these projects.
The problem of providing the population of the Republic of Kazakhstan with fresh vegetables should also be noted, because the climatic conditions of Kazakhstan exclude the possibility of year-round production of vegetables in the open field, and vegetables are not subject to long-term storage in a fresh kind. The production of vegetables is seasonal and to a greater extent is ensured for by imports in the offseason. Thus, according to the State Revenue Committee of the Ministry of Finance the Republic of Kazakhstan, in November-May 2014/2015, the imports of tomatoes and cucumbers only from China and Uzbekistan amounted to about 46 thousand tons.
According to the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan, the production volume of greenhouse vegetables in 2014 amounted to 153 thousand tons. Over the past five years, there has been a significant increase in greenhouse vegetables production and their area, by 8.5 times and by 5 times, respectively. However, about 85% of this production comes from "greenhouse farming", the harvest of which is only possible in spring and autumn in the southern regions and during the summer period in the northern regions.
Today, the population's demand for vegetable crops (tomatoes, cucumbers, greens) in the off-season, from November until May inclusive, is around 90 thousand tons. By 2020, taking into account the population growth, the need for vegetable production will be about 106 thousand tons in the off-season.
Table 17. Forecast of vegetables consumption in the off-season (November - May) 2020, thousand tons.
Regions names |
Forecast of the population size for 2020, thousand persons* |
Need for early vegetables, thousand tons (7 months) |
|||
including ** |
Total, thousand tons |
||||
tomatoes (national rate 8.9 kg / person), thousand tons |
cucumbers (national rate 6.6 kg / person), thousand tons |
greens (national rate 2 kg / person), thousand tons |
|||
Akmola region |
360.4 |
1.9 |
1.4 |
0.4 |
3.7 |
Aktobe region |
528.1 |
2.7 |
2.0 |
0.6 |
5.4 |
Almaty region |
501.1 |
2.6 |
1.9 |
0.6 |
5.1 |
Atyrau region |
323.3 |
1.7 |
1.2 |
0.4 |
3.3 |
East Kazakhstan region |
347.3 |
1.8 |
1.3 |
0.4 |
3.5 |
Jambyl region |
464.1 |
2.4 |
1.8 |
0.5 |
4.7 |
West Kazakhstan region |
1 094.5 |
5.7 |
4.2 |
1.3 |
11.2 |
Karaganda region |
481.5 |
2.5 |
1.9 |
0.6 |
4.9 |
Kostanay region |
364.5 |
1.9 |
1.4 |
0.4 |
3.7 |
Kyzylorda region |
329.3 |
1.7 |
1.3 |
0.4 |
3.4 |
Mangystau region |
1 212.3 |
6.3 |
4.7 |
1.4 |
12.4 |
Pavlodar region |
540.0 |
2.8 |
2.1 |
0.6 |
5.5 |
North Kazakhstan region |
243.1 |
1.3 |
0.9 |
0.3 |
2.5 |
South Kazakhstan region |
836.4 |
4.3 |
3.2 |
1.0 |
8.5 |
Astana city |
1 047.4 |
5.4 |
4.0 |
1.2 |
10.7 |
Almaty city |
1 676.4 |
8.7 |
6.5 |
2.0 |
17.1 |
Republic of Kazakhstan |
10 349.4 |
53.7 |
39.8 |
12.1 |
105.7 |
Source: *Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan;
** National rate of food consumption, developed by the Kazakh Academy of Nutrition.
"Industrial greenhouses" are used to provide vegetables in the off-season. According to the Kazakhstan Association of greenhouses, today, the production volume of industrial greenhouses is about 25 thousand tons; the used area of the specified greenhouses is about 47 hectares. Additional area of industrial greenhouses, planned for commissioning, amounts to 21 hectares. Thus to ensure the needs of the population in fresh vegetables in the off-season in 2020, an additional 81 thousand tons or 400 tons / hectare yield and 2 year crop rotation on about 101 ha of industrial greenhouses will be required. Accordingly, taking into account 21 hectares of already approved and funded greenhouse complexes of JSC National Managing Holding "KazAgro" in the Almaty, South Kazakhstan, Aktobe and Karaganda regions, the need for additional industrial greenhouses for the production of vegetables accounts for 80 ha, or 64 thousand tons of vegetables.
Table 18. Calculation of potential production of greenhouse vegetables and the need for industrial greenhouses until 2020.
Indicators |
Data calculation |
Data |
Forecast of vegetable consumption in the off-season up to 2020 |
1 |
105.7 |
Gross harvest of vegetables for industrial greenhouses in 2014, thousand tons |
2 |
25.0 |
Need for additional vegetable production in the off-season up to 2020, thousand tons |
3 (1-2) |
80.7 |
Need for additional industrial greenhouses up to 2020 (at the rate of 400 t / ha and 2 crop rotations per year), hectares |
4 (3/400 tons / 2 crop rotations per year) |
100.8 |
Planned for commissioning industrial greenhouses up to 2020, hectares |
5 |
20.6 |
Additional necessary industrial greenhouses up to 2020, hectares |
6 (4-5) |
80.2 |
Source: Association of greenhouses of Kazakhstan, own calculations
5. Industry SWOT-analysis.
Strong points of tomato production include the presence of favorable soil and climatic conditions for growing tomatoes in the south-east of the country, as well as the geographical proximity of raw material sources and processors.
Weak points of the industry include the non-compliance with agricultural technologies, the lack of funds from the producers for the purchase of protective equipment and fertilizers, without which it is impossible to carry out intensive management of production and, as a consequence, a low productivity and a high cost of tomatoes.
Weak points of tomato paste production in the country include the geographical proximity to raw material sources, infrastructure in the areas of location processors and the availability of a stable demand from the population on tomato paste.
Weak points of tomato paste production in the country include high prices for local raw materials, the selling price of tomatoes in the wholesale batches almost close to the cost of agricultural producers and, at the same time, not allowing processing companies to produce competitive products in the price scale required for import substitution. Most of the tomato products are manufactured from the concentrate, imported from China.
The possibility of a significant increase in yield of up to three times through the use of intensive technology in the cultivation of tomatoes and, respectively, a decrease of tomatoes costs by increasing the total yield, should be referred to the possibility of the development of tomato production in the country. World experience shows that the potential yield of tomatoes on the open field, with efficient production, reach 600-1200 kg / ha.
The competition from China in the production of tomatoes should be referred to the potential threats. The risks of increased cost of production due to currency fluctuations and, as a result, the growth in energy, fuel, fertilizers prices, etc.
The depreciation of the cost of tomato paste production by increasing its own raw materials production for processing should be referred to the tomato paste capabilities.
5. Industry SWOT-analysis.
Table 19. SWOT - analysis of tomato paste production
Strong points · Availability of production facilities; · Geographical proximity of raw materials sources and processors; · Well-developed infrastructure in the areas of location processors; · Availability of stable demand from the population |
Weak points · Higher prices of local raw materials; · Lack of working capital; · Customs regulations protect the processors poorly; · Dependence on imported raw materials - concentrate tomato paste |
Capabilities · Reduction in costs by increasing its own production of raw materials for processing; · Ensuring complete occupancy of plants for the tomato paste production; · Complete replacement of tomato paste imports |
Threats · High competition from Chinese producers; · Significant share of imports; · Increase of customs duties on processing equipment and spare parts
|
Source: Expert assessment
Review on meat processing industry
1. Introduction.
Agricultural sector of Kazakhstan is a priority for the state. Focus on economic efficiency of production and reprocessing of agricultural products is one of the most important factors providing sustainable development of agribusiness, which entails rational and integrated use of land, labour, material and raw material resources. rational development in a territorial aspect contributing to more efficient use of the basic types of resources is paid special attention.
Products of food and manufacturing industry account for around 1.7% of GDP of the Republic of Kazakhstan. This branch includes oil-and-fat industry, milk industry, processing of meat, fruits and vegetables, confectionery, production of sugar, cotton fibre, and fodder. several short surveys were prepared on these industries.
The first section of this review describes the industry contribution and gives the structure of food industry; further sections consider the domestic market on meat processing, give a historical background on the industry development, examine existing barriers and limitations, as well as a list of potential possibilities for entrepreneurship initiatives.
1.1. Contribution of food industry into economy and the industry structure
About 1,500 enterprises in Kazakhstan which account for almost 1.7% of GDP of the country produce food and process agricultural products. Meat processing is a rather developed branch. The enterprises which manufacture meat products are located in the country quite uniformly within easy reach of the raw material base.
A share of processing industry makes 10% in gross domestic product of the Republic of Kazakhstan. In 2014 the share of food production was 1.7% of the republic GDP and made 16% in manufacturing industry.
Table 1. Gross Regional Product in 2013-2014, mln. tenge
Industry |
mln. tenge |
Share, % |
Gross domestic product |
39,040,898.9 |
100.0 |
Agriculture, forest and fishing industries |
1,717,719.1 |
4.4 |
Industry |
10,818,122.2 |
27.6 |
Food production |
675,785.5 |
1.7 |
Source: data released by the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Gross output of agricultural production in the Republic of Kazakhstan was 2.5 trillion tenge in 2014. In value terms crop farming and livestock farming are relatively equal. The following sectors occupy the largest share in the cost of produced agricultural goods: cereal and grain legume crops – 19%, dairy cattle breeding – 15%, cattle breeding –14%, vegetables – 10%, feeding crops –9% and small ruminants breeding– 6%.
Table 2. The structure of agricultural production of the Republic of Kazakhstan in 2014
Products |
Production output, mln. tenge |
% to the total |
Agricultural production in total |
2,527,890 |
100% |
Crop farming products |
1,327,855 |
52.5% |
Livestock farming products |
1,189,555 |
47.5% |
Milk cattle breeding |
377,158 |
14.9% |
Breeding of other livestock and buffaloes |
355,319 |
14.1% |
Breeding of horses and other hoofed animals |
111,081 |
4.4% |
Camels breeding |
11,089 |
0.4% |
Sheep and goat breeding |
155,722 |
6.2% |
Pig breeding |
58,954 |
2.3% |
Poultry farming |
112,345 |
4.4% |
Breeding of other animals |
7,888 |
0.3% |
Source: Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Import of meat (beef, mutton, horse meat, and pork) in the period from 2005 to 2014 increased 4 times from 7.4 to 29.8 thou. tons. Import of beef increased 3 times, of pork – 4.9 times, muttons – 1.7 times, of horse meat – 31 times.
Table 3. Import of meat (beef, pork, mutton, horse meat) to the Republic of Kazakhstan in the period from 2005 to 2014, tons
Product |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Beef |
5,485 |
13,284 |
18,843 |
11,689 |
6,032 |
10,404 |
12,703 |
22,236 |
23,904 |
16,830 |
Pork |
1,614 |
2,907 |
4,262 |
9,074 |
8,176 |
7,466 |
8,861 |
13,739 |
11,277 |
7,928 |
Mutton |
171 |
112 |
35 |
277 |
131 |
63 |
71 |
634 |
757 |
287 |
Horse meat |
154 |
274 |
0 |
2,016 |
2,755 |
2,597 |
3,680 |
5,981 |
4,758 |
4,729 |
Total |
7,425 |
16,578 |
23,139 |
23,056 |
17,093 |
20,530 |
25,316 |
42,591 |
40,697 |
29,774 |
Source: STATE REVENUE COMMITTEE OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF KAZAKHSTAN (SRC MF RK)
Export of meat within the researched period (2005-2014) increased 15.7 times from 224 tons up to 3.5 thou. tons, including beef 2.4 times, pork – 10 times. There was not export of mutton and horse meat in 2015.
Table 4. Export of meat (beef, pork, mutton, horse meat) from the Republic of Kazakhstan in the period from 2005 to 2014, tons
Product |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Beef |
115.8 |
21.0 |
- |
399.9 |
22.0 |
- |
18.9 |
- |
265.7 |
2383.4 |
Pork |
108.3 |
75.0 |
- |
- |
22.0 |
- |
260.8 |
144.2 |
59.8 |
1107.9 |
Mutton |
- |
- |
- |
- |
15.9 |
324.5 |
369.4 |
- |
15.5 |
24.8 |
Horse meat |
- |
- |
- |
- |
- |
- |
- |
- |
0.9 |
0.5 |
Total |
224.1 |
96.0 |
- |
399.9 |
59.9 |
324.5 |
649.1 |
144.2 |
342.0 |
3,516.6 |
Source: SRC MF RK
Import of sausage products in 2005-2014 increased 2.3 times from 14.3 to 33.5 thou. tons. There was an increase in import of meat and meat and cereal canned food for the same period which made 137%. Increase in import of finished meat products can be explained by the growth in deliveries from Russia and Belarus.
Table 5. Import of finished meat products to the Republic of Kazakhstan in the period from 2005 to 2014, thousand tons
Product |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Meat and meat and cereal canned food |
4.1 |
3.7 |
4.7 |
5.3 |
4.0 |
3.9 |
4.8 |
5.8 |
5.3 |
5.6 |
Sausage goods |
14.3 |
19.2 |
22.5 |
28.4 |
25.4 |
25.6 |
31.6 |
34.8 |
36.0 |
33.5 |
Source: SRC MF RK
Export of sausage goods increased 631 times from 0.5 to 321 tons in the period from 2005 to 2014. Export of finished meat products and canned meat products increased 9 times from 170 to 1560 tons in the same period.
Table 6. Export of finished meat products to the Republic of Kazakhstan in the period from 2005 to 2014, tons
Product |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Finished meat products and canned meat products |
170 |
61 |
25 |
53 |
132 |
518 |
646 |
1,152 |
1,773 |
1,560 |
Sausage goods |
0.5 |
1.9 |
0.02 |
12.8 |
1.5 |
0.8 |
0.1 |
14.7 |
34.8 |
321.3 |
Source: SRC MF RK
1.2. Domestic market capacity
At present meat is produced in all regions of the country. The smallest volume of meat production is observed in Mangystau, Kyzylorda and Atyrau regions. Their total share of production does not exceed 6% of the volume of meat production in Kazakhstan. The following regions have the biggest volumes of beef production: Almaty – 16%, East Kazakhstan – 15%, South Kazakhstan –12%, Aktobe – 9%, of mutton production: South Kazakhstan – 22%, Almaty – 16%, East Kazakhstan – 16%, Jambyl – 11% and Karaganda – 7%; horse meat production: Almaty – 15%, East Kazakhstan – 13%, Karaganda – 10%, South Kazakhstan – 10% and Pavlodar – 8%; production of pork: Northern Kazakhstan –18%, Kostanay – 18%, Almaty – 12% and Akmola – 11%.
Production of mutton in the Republic of Kazakhstan increased from 96 thou. tons in 2003 up to 161.9 thou. tons in 2014. Annual average rate of growth made 5%.
Production of beef in the Republic of Kazakhstan increased from 311.9 thou. tons in 2003 up to 405.5 thou. tons in 2014. Annual average rate of growth made 2%.
Production of horse meat in the Republic of Kazakhstan increased from 57 thou. tons in 2003 up to 92.4 thou. tons in 2014. Annual average rate of growth made 4%.
In the period from 2003 to 2014 there bee a decrease in production of pork in the Republic of Kazakhstan from 184.9 thou. tons to 99.8 thou. tons. Annual average rate of decrease made 5%.
Table 7. Dynamics of meat production in the Republic of Kazakhstan in 2003-2014, thou. tons
Type of meat |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Mutton |
96.0 |
101.6 |
106.6 |
114.9 |
123.7 |
130.8 |
134.9 |
142.9 |
149.5 |
153.8 |
156.4 |
161.9 |
Beef |
311.9 |
329.7 |
348.3 |
366.5 |
385.9 |
400.1 |
396.1 |
406.8 |
392.8 |
373.5 |
383.5 |
405.5 |
Horse meat |
57.0 |
60.8 |
59.8 |
63.9 |
65.3 |
66.3 |
71.4 |
73.1 |
75.6 |
85.1 |
89.4 |
92.4 |
Pork |
184.9 |
198.6 |
196.5 |
193.4 |
193.9 |
206.2 |
208.9 |
206.0 |
213.6 |
192.7 |
99.9 |
99.8 |
Total |
649.8 |
690.7 |
711.2 |
738.7 |
768.8 |
803.4 |
811.3 |
828.9 |
831.6 |
805.1 |
729.1 |
759.6 |
Source: CS MNE RK
In the period from 2003 to 2014 there been an increase in production of fresh, cooled or frozen meat and by-products in the Republic of Kazakhstan from 52.5 thou. tons to 132.8 thou. tons. Annual average rate of growth made 9%.
Production of sausage goods in the Republic of Kazakhstan increased from 62.9 thou. tons in 2003 up to 131.5 thou. tons in 2014. Annual average rate of growth made 7%.
Production of meat and meat and cereal canned food in the Republic of Kazakhstan increased from 13.2 thou. tons in 2003 up to 25 thou. tons in 2014. Annual average rate of growth made 6%.
Table 8. Dynamics of meat and meat and cereal canned food production in the Republic of Kazakhstan in 2003-2014, thou. tons
A type of processed product |
2003 |
2005 |
2006 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Cooled and frozen meat and by-products |
52.5 |
49.3 |
45.6 |
57.3 |
64.7 |
89.5 |
116.5 |
106.6 |
124.8 |
132.8 |
Sausage goods |
62.9 |
71.8 |
76.0 |
92.6 |
103.6 |
102.1 |
118.2 |
120.4 |
131.9 |
131.5 |
Meat and meat and cereal canned food |
13.2 |
12.5 |
15.3 |
14.2 |
0.0 |
0.0 |
0.0 |
25.8 |
25.4 |
25.0 |
Source: CS MNE RK
Analysis of the balance of resources – use of meat and edible by-products shows that in the period from 2003 to 2014 consumption of meat and edible by-products increased by 375 thou. tons. Volume of output increased by 178 thou. tons during this period. Missing volume of production comes from neighbouring countries, the import volume increased from 61 to 219 thou. tons. Export of production did not exceed 3 thou. tons for the whole period.
Table 9. Balance of resources and use of meat and edible by-products in the Republic of Kazakhstan in 2003-2014, thou. tons
Indicator |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
Resources |
761 |
847 |
899 |
784 |
807 |
867 |
1,046 |
1,115 |
1,153 |
1,115 |
1,117 |
Opening stocks |
6.5 |
24.7 |
18.4 |
23.3 |
9.0 |
34.3 |
23.0 |
27.0 |
27.0 |
20.1 |
27.3 |
Production |
693 |
737 |
762 |
744 |
774 |
809 |
896 |
937 |
939 |
845 |
871 |
Import |
61.4 |
85.6 |
118.3 |
17.0 |
23.7 |
23.7 |
126.7 |
150.9 |
186.9 |
249.8 |
218.9 |
Use |
742 |
822 |
871 |
775 |
773 |
867 |
1,046 |
1,115 |
1,153 |
1,115 |
1,117 |
Consumption in the domestic market |
741 |
821 |
871 |
775 |
773 |
844 |
1,019 |
1,087 |
1,132 |
1,086 |
1,061 |
Export |
0.62 |
0.26 |
0.37 |
0.10 |
- |
0.40 |
0.11 |
1.77 |
0.66 |
1.57 |
3.02 |
Closing stocks |
19.3 |
25.7 |
27.9 |
9.0 |
34.3 |
23.0 |
27.0 |
27.0 |
20.1 |
27.3 |
52.8 |
Source: CS MNE RK
Production of beef increased by 57 thou. tons or 16.4% in the period from 2015 to 2014. At the same time consumption of beef increased from 354 to 420 thou. tons. Import of beef increased by 11 thou. tons from 5.5 to 16.8 thou. tons. Export of beef increased by 2.3 thou. tons from 0.12 thou. tons in 2005.
Table 10. Balance of resources and use of beef in the Republic of Kazakhstan in 2005-2014, thou. tons
Indicator |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
348.3 |
366.5 |
385.9 |
400.1 |
396.1 |
406.8 |
392.8 |
373.5 |
383.5 |
405.5 |
Import |
5.49 |
13.28 |
18.84 |
11.69 |
6.03 |
10.40 |
12.70 |
22.24 |
23.90 |
16.83 |
Export |
0.12 |
0.02 |
0.00 |
0.40 |
0.02 |
0.00 |
0.02 |
0.00 |
0.27 |
2.38 |
Consumption |
353.7 |
379.8 |
404.7 |
411.4 |
402.1 |
417.2 |
405.5 |
395.8 |
407.1 |
419.9 |
Source: CS MNE RK, SRC MF RK
Within the period 2005-2014 production and consumption of mutton in Kazakhstan have increased by 55 thou. tons, import of mutton varied from 30 to 300 tons per year, export did not exceed 370 tons per year.
Table 11. Balance of resources and use of mytton in the Republic of Kazakhstan in 2005-2014, thou. tons
Indicator |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
106.6 |
114.9 |
123.7 |
130.8 |
134.9 |
142.9 |
149.5 |
153.8 |
156.4 |
161.9 |
Import |
0.17 |
0.11 |
0.03 |
0.28 |
0.13 |
0.06 |
0.07 |
0.63 |
0.76 |
0.29 |
Export |
0.00 |
0.00 |
0.00 |
0.00 |
0.02 |
0.32 |
0.37 |
0.00 |
0.02 |
0.02 |
Consumption |
106.8 |
115.0 |
123.7 |
131.1 |
135.0 |
142.7 |
149.2 |
154.4 |
157.1 |
162.2 |
Source: CS MNE RK, SRC MF RK
Consumption of pork in Kazakhstan reduced in the period from 2005 to 2014 by 91 thou. tons from 198 to 107 thou. tons. At the same time production of pork reduced in this period by 97 thou. tons and import of pork increased by 6.3 thou. tons. Export of pork did not exceed 1.1 thou. tons.
Table 12. Balance of resources and use of pork in the Republic of Kazakhstan in 2005-2014, thou. tons
Indicator |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
196.5 |
193.4 |
193.9 |
206.2 |
208.9 |
206.0 |
213.6 |
192.7 |
99.9 |
99.8 |
Import |
1.61 |
2.91 |
4.26 |
9.07 |
8.18 |
7.47 |
8.86 |
13.74 |
11.28 |
7.93 |
Export |
0.11 |
0.08 |
0.00 |
0.00 |
0.02 |
0.00 |
0.26 |
0.14 |
0.06 |
1.11 |
Consumption |
198.0 |
196.2 |
198.2 |
215.3 |
217.1 |
213.4 |
222.2 |
206.3 |
111.1 |
106.6 |
Source: CS MNE RK, SRC MF RK
Within ten years consumption of horse meat increased by 37 thou. tons from 60 thou. tons in 2005 up to 97 thou. tons in 2014. Production of horse meat increased in this period by 33 thou. tons up to 92.4 thou. tons in 2014. Import of horse meat increased from 0.15 thou. tons up to 4.73 thou. tons. The volumes of horse meat export are insignificant.
Table 13. Balance of resources and use of horse meat in the Republic of Kazakhstan in 2005-2014, thou. tons
Indicator |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
59.8 |
63.9 |
65.3 |
66.3 |
71.4 |
73.1 |
75.6 |
85.1 |
89.4 |
92.4 |
Import |
0.15 |
0.27 |
0.00 |
2.02 |
2.75 |
2.60 |
3.68 |
5.98 |
4.76 |
4.73 |
Export |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Consumption |
60.0 |
64.2 |
65.3 |
68.3 |
74.1 |
75.7 |
79.3 |
91.1 |
94.1 |
97.1 |
Source: CS MNE RK, SRC MF RK
Production of sausage products in Kazakhstan increased in the period from 2003 to 2014 by 19 thou. tons from 23 to 42 thou. tons. Meanwhile consumption of sausages increased by 43 thou. tons during this period. Lack of resources was compensated at the expense of growth of import of sausage products to the domestic market of Kazakhstan. During 2003-2014 import of sausage products increased by 25 thou. tons to 34 thou. tons in 2014.
Table 14. Balance of resources and use of sausage products in the Republic of Kazakhstan in 2003-2014, thou. tons
Indicator |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Resources |
32.5 |
33.9 |
40.1 |
50.5 |
61.8 |
69.3 |
68.6 |
62.2 |
68.9 |
78.0 |
80.4 |
77.6 |
Opening stocks |
0.76 |
0.87 |
0.69 |
0.55 |
1.17 |
0.88 |
1.02 |
1.29 |
1.69 |
3.66 |
2.36 |
1.90 |
Production |
22.7 |
23.1 |
25.1 |
30.8 |
38.2 |
40.0 |
42.2 |
35.3 |
35.6 |
39.6 |
41.9 |
42.0 |
Import |
8.7 |
9.1 |
14.3 |
19.2 |
22.5 |
28.4 |
25.4 |
25.6 |
31.6 |
34.8 |
36.1 |
33.8 |
Use |
31.8 |
32.9 |
39.5 |
49.4 |
61.0 |
69.3 |
68.6 |
62.2 |
68.9 |
78.0 |
80.4 |
77.6 |
Consumption in the domestic market |
31.8 |
32.1 |
39.5 |
49.4 |
61.0 |
68.2 |
67.3 |
60.5 |
65.2 |
75.6 |
78.4 |
75.1 |
Export |
- |
0.83 |
0.00 |
0.00 |
- |
0.01 |
0.00 |
0.00 |
0.00 |
0.01 |
0.04 |
0.32 |
Closing stocks |
0.74 |
0.94 |
0.55 |
1.17 |
0.88 |
1.02 |
1.29 |
1.69 |
3.66 |
2.36 |
1.90 |
2.26 |
Source: CS MNE RK
Consumption of finished and canned meat products and meat by-products increased in the period from 2006 to 2014 by 38 thou. tons, production increased by 23 thou. tons. Lack of resources was compensated at the expense of increase of imports from 23 thou. tons in 2006 to 39 thou. tons in 2014. At the same time the volumes of export of finished and canned meat and meat by-products increased from 0.06 thou. tons up to 1.88 thou. tons.
Table 15. Balance of resources and use of finished and canned products from meat, meat by-products, or blood in the Republic of Kazakhstan in 2006-2014, thou. tons
Indicator |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Resources |
68.5 |
82.2 |
92.2 |
82.8 |
80.2 |
94.6 |
106.4 |
110.3 |
113.5 |
Opening stocks |
0.15 |
0.18 |
0.21 |
1.25 |
1.29 |
5.92 |
5.42 |
4.22 |
5.68 |
Production |
45.4 |
54.9 |
58.2 |
52.1 |
49.3 |
52.2 |
60.5 |
64.6 |
68.4 |
Import |
23.0 |
27.2 |
33.7 |
29.4 |
29.6 |
36.4 |
40.5 |
41.5 |
39.4 |
Use |
68.3 |
82.0 |
92.2 |
82.8 |
80.2 |
94.6 |
106.4 |
110.3 |
113.5 |
Consumption in the domestic market |
68.3 |
82.0 |
91.9 |
81.3 |
73.8 |
88.5 |
101.1 |
103.8 |
106.2 |
Export |
0.06 |
0.02 |
0.07 |
0.13 |
0.52 |
0.65 |
1.17 |
0.82 |
1.88 |
Closing stocks |
0.18 |
0.21 |
0.20 |
1.29 |
5.92 |
5.42 |
4.22 |
5.68 |
5.42 |
Source: CS MNE RK
The poultry meat market in Kazakhstan is one of the most dynamically developing meat markets. During 2003-2014 the volume of production of poultry meat increased 3.3 times in the republic from 40.4 thou. tons in 2003 to 134.2 thou. tons in 2014.
According to the balance of production and consumption of poultry meat in Kazakhstan, the share of domestic production in total consumption increased only by 5.2 percentage points from 41.4% in 2003 to 46.6% in 2014 in the period of 2003-2014. Price pressure of import delivery of poultry meat is one of the limiting factors of the industry development. In 2013 an average price of import delivery was 1.1 US dollars/kg, while the delivery from the USA was estimated at 0.8 US dollars before customs clearance. After customs clearance, in other words, with consideration for customs duties, estimated value of frozen poultry meat delivered from America comes out to be below a cost price of poultry meat produced in Kazakhstan.
Table 16. Balance of production and consumption of poultry meat in Kazakhstan in 2003 – 2014, thou. tons
Indicators |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
production |
40 |
39 |
47 |
65 |
65 |
58 |
78 |
103 |
102 |
123 |
136 |
134 |
import |
57 |
81 |
110 |
152 |
147 |
133 |
109 |
129 |
159 |
204 |
175 |
159 |
export |
0.08 |
0.04 |
0.15 |
0.05 |
2.94 |
2.50 |
0.05 |
1.44 |
0.01 |
1.43 |
2.64 |
5.43 |
sale in the domestic market |
98 |
120 |
157 |
217 |
209 |
188 |
187 |
230 |
262 |
325 |
308 |
288 |
resources |
98 |
120 |
157 |
217 |
212 |
190 |
187 |
232 |
262 |
327 |
311 |
294 |
per capita consumption, kg |
6.6 |
8.0 |
10.3 |
14.2 |
13.5 |
12.0 |
11.6 |
14.1 |
15.8 |
19.4 |
18.1 |
16.7 |
Source: data released by the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
In 2014 poultry meat consumption in the country made 288 thou. tons. Consumption per capita was 16.7 kg/year.
In accordance with minimum norms of consumption of basic food developed by the Ministry of Labour and Social Security of Kazakhstan the recommended norm of consumption of poultry meat per capita is 5 kg/year. Therefore, population of Kazakhstan consumes a sufficient amount of poultry meat.
It should be noted that in the period from 2003 to 2014 this indicator had a variable growth trend from 6.6 kg/year to 16.7 kg/year. At the same time there was a significant increase in welfare of population in the republic.
The major facilities of meat-processing plants for production of fresh, cooled meat and meat by-products are located in the Karaganda, Aktobe, Northern Kazakhstan and Akmola regions. Average capacity utilization rate was 44% in 2014. A map of distribution of specialized facilities for production of fresh and cooled meat and meat by-products by regions is presented below.
Figure 1. Location of specialized facilities for production of fresh, cooled meat (beef, pork, horse meat, mutton) and meat by-products in 2014
The major facilities for production of sausage products are located in Astana-city – 26%, East Kazakhstan region – 18%, Pavlodar region – 10%, and Karaganda region – 7% of total productive capacity of specialized enterprises for production of sausage products in Kazakhstan. Average capacity utilization rate was 31% in 2014. A map of distribution of specialized facilities for production of sausage products by regions is presented below.
Figure 2. Location of specialized facilities for production of sausage products in 2014
The main facilities for production of finished and canned meat and meat by-products are located in Western Kazakhstan region – 52%, East Kazakhstan region – 16%, Kostanay region – in 9% and Pavlodar region – 9% of total production capacity of specialized enterprises for production of finished and canned meat and meat by-products in Kazakhstan. Average capacity utilization rate was 58% in 2014. A map of distribution of specialized facilities for production of finished and canned meat and meat by-products by regions is presented below.
Figure 3. Location of specialized facilities for production of finished and canned meat and meat by-products in 2014
The Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan keeps account of the volume structure of a retail group only for large food groups. Food in retail volume accounts for around 1,8 trillion tenge or 29%. In retail structure of food meat accounts for the largest volume – 16%, while dairy products occupy a considerable share as well –10%, fruit and the vegetables have 12%, beverages – 13,8%. Within the period from 2003 to 2014 the retail volume for food increased 4.3 times. It should be noted that CS MNE RK does not keep account of the structure of retail volume by regions.
Table 17. Structure and dynamics of retail volume by separate commodity groups, bln. tenge
Goods |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
1219 |
1409 |
1737 |
2093 |
2443 |
2551 |
3197 |
3866 |
4568 |
5474 |
6332 |
Trade in food products, where |
419 |
490 |
592 |
689 |
820 |
930 |
1,050 |
1,226 |
1,418 |
1,610 |
1,821 |
Meat, including poultry meat and meat products (together with sausage products) |
74 |
85 |
113 |
131 |
135 |
156 |
181 |
221 |
255 |
276 |
299 |
including: |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
meat, including poultry meat and meat products |
62 |
72 |
99 |
108 |
114 |
132 |
149 |
179 |
205 |
220 |
237 |
sausage goods |
12 |
13 |
14 |
23 |
21 |
25 |
32 |
42 |
50 |
56 |
62 |
Source: CS MNE RK
Import of sausage products in 2005-2014 increased 2.3 times from 14.3 to 33.5 thou. tons. There was an increase in import of meat and meat and cereal canned food for the same period which made 137%. Increase in import of finished meat products can be explained by the growth in deliveries from Russia and Belarus.
Table 18. Import of finished meat products to the Republic of Kazakhstan in the period from 2005 to 2014, thou. tons
Product |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Meat and meat and cereal canned food |
4.1 |
3.7 |
4.7 |
5.3 |
4.0 |
3.9 |
4.8 |
5.8 |
5.3 |
5.6 |
Sausage goods |
14.3 |
19.2 |
22.5 |
28.4 |
25.4 |
25.6 |
31.6 |
34.8 |
36.0 |
33.5 |
Source: SRC MF RK
Export of sausage goods increased 631 times from 0.5 to 321 tons in the period from 2005 to 2014. Export of finished meat products and canned meat products increased 9 times from 170 to 1560 tons in the same period.
Table 19. Export of finished meat products to the Republic of Kazakhstan in the period from 2005 to 2014, tons
Product |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Finished meat products and canned meat products |
170 |
61 |
25 |
53 |
132 |
518 |
646 |
1,152 |
1,773 |
1,560 |
Sausage goods |
0.5 |
1.9 |
0.02 |
12.8 |
1.5 |
0.8 |
0.1 |
14.7 |
34.8 |
321.3 |
Source: SRC MF RK
The main consumers of Kazakhstan meat and meat products are: Russia, Kyrgyzstan, Tajikistan, Ukraine, Iran, Iraq. China and member countries of the Eurasian Union can be potential importers of Kazakhstan beef, while countries of the Middle East, including, Saudi Arabia and the United Arab Emirates can be potential importers of mutton.
In 2014 Russia imported more than 1 mln. tons of meat of all kinds, excluding poultry meat, for more than 4.3 bln. dollars. Russia is the largest importer of beef in the world. Import of fresh and cooled beef to RF is more than 100 thou. tons, frozen beef accounts for more than 500 thou. tons of import. At present Kazakhstan has vast opportunities for increase of beef export to Russia, taking into consideration restrictions on import of agricultural products from the European countries introduced by Russia. It also relates to other products of meat production and processing industry.
Annual import of pork to Russia is about 600 thou. tons, in 2014 import reduced to 370 thou. tons.
Within the last 5 years China has increased import of beef from 23 thou. tons to 298 thou. tons. Growth of demand for beef can be observed, which is related to the change of consumer preferences of Chinese population. According to the forecasts, consumption of beef in China can increase by 70% by 2030.
The market of the Russian Federation is the main direction for cattle meat export from Kazakhstan. 2.3 thou. tons of beef were exported to Russia in 2014. In addition, Uzbekistan and Belarus has started to import beef since 2014. At the same time export mainly includes cooled cattle meat, while the volumes of export of frozen beef make 25%.
Table 20. Volume of export of cattle meat in 2003-2014 by countries, tons
Country |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Russia |
- |
- |
115.8 |
21.0 |
- |
399.9 |
22.0 |
- |
18.9 |
- |
265.7 |
2,342.6 |
Uzbekistan |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
30.1 |
Belarus |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
10.8 |
All countries |
24.7 |
- |
115.8 |
21.0 |
- |
399.9 |
22.0 |
- |
18.9 |
- |
265.7 |
2,383.4 |
Source: SRC MF RK
Pork is also traditionally exported to Russia. On average for 12 years the volume of annual export made around 200 tons. In 2014 export of pork to the Russian Federation increased to 1 thou. tons. Also 84 tons of pork were imported to Kyrgyzstan in 2014.
Table 21. Volume of pork export in 2003-2014 by countries, tons
Country |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Russia |
372.6 |
219.0 |
108.3 |
75.0 |
- |
- |
22.0 |
- |
260.8 |
144.2 |
59.8 |
1023.9 |
Kyrgyzstan |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
84.0 |
All countries |
372.6 |
219.0 |
108.3 |
75.0 |
- |
- |
22.0 |
- |
260.8 |
144.2 |
59.8 |
1107.9 |
Source: SRC MF RK
Export of mutton from Kazakhstan is insignificant. In 2010-2011 there were some deliveries of mutton to the markets of Iran and Iraq in the volume of 0.3 thou. tons, but subsequently the export of mutton to these countries was stopped.
Table 22. Volume of mutton export in 2003-2014 by countries, tons
Country |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Russia |
- |
- |
- |
- |
- |
- |
15.9 |
- |
- |
- |
15.5 |
13.8 |
Qatar |
- |
- |
- |
- |
- |
- |
- |
4.9 |
- |
- |
- |
11.0 |
Iraq |
- |
- |
- |
- |
- |
- |
- |
8.6 |
16.0 |
- |
- |
- |
Iran |
- |
- |
- |
- |
- |
- |
- |
311.0 |
353.4 |
- |
- |
- |
All countries |
- |
- |
- |
- |
- |
- |
15.9 |
324.5 |
369.4 |
- |
15.5 |
24.8 |
Source: SRC MF RK
Horse meat is a local product. There was no export of horse meat from Kazakhstan till 2012. In 2013-2014 horse meat was exported to Russia, but the volumes of export are insignificant.
Table 23. Volume of horse meat export in 2003-2014 by countries, tons
Country |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Russia |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
0.9 |
0.5 |
All countries |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
0.9 |
0.5 |
Source: SRC MF RK
Russia is the key importer of Kazakhstan sausage products. In 2014 export of sausage products to Russia was 321 tons.
Table 24. Volume of export of sausage products in 2005-2014 by countries, tons
Country |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Russia |
0.5 |
- |
- |
5.8 |
0.9 |
- |
0.1 |
14.7 |
34.8 |
321.3 |
Kyrgyzstan |
- |
1.9 |
0.0 |
7.0 |
- |
- |
- |
- |
- |
- |
Tajikistan |
- |
- |
- |
- |
0.6 |
0.8 |
- |
- |
- |
- |
All countries |
0.5 |
1.9 |
0.0 |
12.8 |
1.5 |
0.8 |
0.1 |
14.7 |
34.8 |
321.3 |
Source: SRC MF RK
Russia, Turkmenistan, Kyrgyzstan and Tajikistan are the major importers of finished and canned meat and meat by-products. In recent 5 years volume of export of these products has increased from 0.5 tons up to 1.5 thou. tons, with a large part of export going to Russia.
Table 25. Volume of export of finished and canned meat and meat by-products in 2005-2014 by countries, tons
Country |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Russia |
30.9 |
15.2 |
- |
9.3 |
7.3 |
1.9 |
334.4 |
1,006.0 |
1,100.0 |
540.3 |
Turkmenistan |
- |
- |
- |
- |
- |
196.7 |
9.6 |
51.4 |
253.0 |
440.1 |
Kyrgyzstan |
- |
- |
- |
- |
- |
266.3 |
254.7 |
50.4 |
366.7 |
431.7 |
Tajikistan |
- |
25.3 |
24.4 |
1.0 |
5.3 |
53.2 |
47.7 |
44.4 |
53.1 |
104.0 |
Ukraine |
- |
- |
- |
- |
- |
- |
- |
- |
- |
43.2 |
Germany |
- |
- |
- |
- |
- |
- |
- |
- |
- |
0.4 |
Kyrgyzstan |
17.7 |
20.9 |
0.2 |
9.3 |
102.9 |
- |
- |
- |
- |
- |
Lithuania |
121.1 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Georgia |
- |
- |
- |
33.8 |
- |
- |
- |
- |
- |
- |
Turkmenistan |
- |
- |
- |
- |
16.8 |
- |
- |
- |
- |
- |
All countries |
169.7 |
61.4 |
24.6 |
53.3 |
132.3 |
518.1 |
646.4 |
1,152.1 |
1,772.7 |
1,559.7 |
Source: SRC MF RK
Because of a great dependence of the domestic poultry meat market on import, it is not worth considering the foreign markets. The main task of the poultry meat industry today is to increase in-house production in the structure of consumption of the country.
The markets of the Middle East countries can be the potential markets for Kazakhstan mutton. In 2010-2011 export of mutton to the markets of Iran and Iraq made 300 tons. In the average Iran imports about 50-70 thou. tons of mutton, 7-13 thou. tons of refrigerated lamb. Saudi Arabia and the United Arab Emirates annually import about 50 thou. tons of mutton. Development of production of mutton certified as Halal product, creation of capacities for production of refrigerated lamb will allow to carry out delivery of Kazakhstan products to these markets.
Table 26. Capacities of the key foreign markets of beef, pork, mutton and horse meat, thou. tons/mln. dollars.
Import |
2010 |
2011 |
2012 |
2013 |
2014 |
|||||
thou. tons |
mln. dollars |
thou. tons |
mln. dollars |
thou. tons |
mln. dollars |
thou. tons |
mln. dollars |
thou. tons |
mln. dollars |
|
Russia |
||||||||||
Fresh and refrigerated beef |
19.7 |
98.0 |
33.6 |
188.8 |
59.9 |
311.6 |
87.2 |
421.6 |
101.5 |
472.7 |
Frozen beef |
607 |
2,072 |
571 |
2,235 |
598 |
2,645 |
571 |
2,453 |
532 |
2,249 |
Pork |
642 |
1,907 |
666 |
2,138 |
735 |
2,461 |
620 |
2,135 |
372 |
1,502 |
Mutton |
9.1 |
42.6 |
9.6 |
46.8 |
9.7 |
51.9 |
10.1 |
56.8 |
9.8 |
62.8 |
Horse meat |
28.6 |
74.0 |
25.6 |
77.5 |
27.0 |
98.4 |
16.0 |
56.4 |
18.5 |
62.3 |
Republic of Belarus |
||||||||||
Fresh and refrigerated beef |
0.0 |
0.2 |
0.1 |
0.7 |
0.4 |
2.2 |
0.4 |
1.9 |
0.9 |
3.5 |
Frozen beef |
0.4 |
1.3 |
1.7 |
6.7 |
1.4 |
6.2 |
3.2 |
14.1 |
6.1 |
25.7 |
Pork |
66.2 |
149.3 |
89.6 |
251.9 |
115.4 |
353.1 |
74.2 |
250.2 |
33.1 |
148.1 |
China |
||||||||||
Fresh and refrigerated beef |
0.4 |
6.8 |
0.4 |
9.1 |
0.9 |
11.4 |
11.3 |
67.3 |
2.9 |
20.9 |
Frozen beef |
23 |
77 |
20 |
86 |
61 |
243 |
283 |
1,203 |
295 |
1,269 |
Iran |
||||||||||
Mutton |
7.9 |
52.4 |
11.1 |
77.9 |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
including, refrigerated lamb |
1.0 |
7.0 |
1.8 |
13.4 |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
UAE |
||||||||||
Mutton |
54.5 |
265.6 |
51.9 |
300.5 |
n/a |
n/a |
n/a |
n/a |
57.4 |
334.0 |
Saudi Arabia |
||||||||||
Mutton |
60.9 |
266.9 |
52.6 |
269.9 |
52.8 |
259.4 |
51.3 |
246.6 |
n/a |
n/a |
including, refrigerated lamb |
9.0 |
49.5 |
8.5 |
46.8 |
7.9 |
45.4 |
6.9 |
41.0 |
n/a |
n/a |
Source: UNComtrade
Russia annually imports about 50 thou. tons of sausage products, where Kazakhstan accounts for less than 1%. In 2014 import of finished and canned goods to Russia was 58,5 thou. tons for the total cost of 155 mln dollars. Kazakhstan exported to Russia 540 tons in 2014 and has chances to increase export in the future.
Kyrgyzstan and Ukraine are also potential importers of Kazakhstan meat processed products, but the markets of these countries are not significant. Kyrgyzstan imports about 1.5 thou. tons of sausage products and about 0.6 thou. tons of finished and canned meat products. Ukraine – 3-9 thou. tons of canned meat products.
Table 27. Capacities of the key foreign markets of sausage products, thou. tons/mln. dollars.
Import |
2010 |
2011 |
2012 |
2013 |
2014 |
|||||
thou. tons |
mln. dollars |
thou. tons |
mln. dollars |
thou. tons |
mln. dollars |
thou. tons |
mln. dollars |
thou. tons |
mln. dollars |
|
Russia |
||||||||||
Sausage goods |
7.2 |
26.7 |
14.3 |
51.5 |
35.6 |
127.1 |
51.7 |
193.0 |
50.5 |
173.7 |
Finished meat products and canned meat products |
26.8 |
112.4 |
34.8 |
164.0 |
44.3 |
207.5 |
36.0 |
172.0 |
58.5 |
154.7 |
Kyrgyzstan |
||||||||||
Sausage goods |
0.6 |
0.4 |
1.4 |
1.0 |
2.9 |
3.3 |
1.5 |
3.0 |
n/a |
n/a |
Finished meat products and canned meat products |
0.9 |
2.5 |
0.7 |
1.7 |
0.4 |
1.3 |
0.6 |
1.7 |
0.0 |
0.0 |
Ukraine |
||||||||||
Finished meat products and canned meat products |
5.5 |
14.5 |
7.3 |
18.7 |
10.7 |
26.3 |
9.2 |
25.5 |
3.1 |
14.6 |
Source: UNComtrade
Because of a great dependence of the domestic poultry meat market on import, it is not worth considering the foreign markets. The main task of the poultry meat industry today is to increase in-house production in the structure of consumption of the country.
The market of Russia annually imports about 600 thou. tons of beef. According to UNCOMTRADE in 2014 Russia imported about 600 tons of beef from Kazakhstan, which is less than 0.1% of total import. By 2020 Kazakhstan plans to increase the volumes of beef export to the Russian market for more than 60 thou. tons, thus having increased a share of Kazakhstan in Russian import up to 10 %.
A share of Kazakhstan in pork import to Russia is less than 0.05%. Export of pork is not listed among priorities of Kazakhstan for the time being.
It is planned to increase volumes of mutton export to the countries of the Middle East. At present a share of Kazakhstan export of mutton in Qatar import is less than 0.1%. According to forecasts, master plans developed by the Ministry of agriculture foresee to increase export of mutton by 2020 up to 45 thou. tons.
Russia is the major importer of processed meat products from Kazakhstan. In 2014 RF imported 0.28 thou. tons of sausage products, and 0.4 thou. tons of finished and canned meat products, which is less than 1% of total import of these products to Russia. For the next 5 years it is planned to substitute the import of processed meat to the country with domestic production.
Table 28. The share of Kazakhstan in import of meat and processed meat products, thou. tons
Country - importer |
Exporter |
thou. tons |
Share |
mln. dollars |
Share |
Beef |
|||||
Russia |
All countries |
633.2 |
100% |
2,722 |
100% |
Kazakhstan |
0.6 |
0.10% |
2.7 |
0.10% |
|
Pork |
|||||
Russia |
All countries |
372.3 |
100% |
1,502 |
100% |
Kazakhstan |
0.2 |
0.05% |
0.4 |
0.02% |
|
Mutton |
|||||
Russia |
All countries |
9.76 |
100% |
62.8 |
100% |
Kazakhstan |
0.002 |
0.02% |
0.01 |
0.01% |
|
Qatar |
All countries |
20.8 |
100% |
123.5 |
100% |
Kazakhstan |
0.01 |
0.07% |
0.1 |
0.05% |
|
Sausage goods |
|||||
Russia |
All countries |
50.5 |
100% |
173.7 |
100% |
Kazakhstan |
0.28 |
0.55% |
1.1 |
0.65% |
|
Finished meat products and canned meat products |
|||||
Russia |
All countries |
58.7 |
100% |
155.3 |
100% |
Kazakhstan |
0.4 |
0.75% |
1.3 |
0.81% |
Source: UNсomtrade
Because of a great dependence of the domestic poultry meat market on import, it is not worth considering the foreign markets. The main task of the poultry meat industry today is to increase in-house production in the structure of consumption of the country.
1.3. Historical reference on the industry development
Within the period from 1991 the structure of GDP of the Republic of Kazakhstan has radically changed, it particularly affects a share of agriculture which decreased 7 times in a relation to 1991 from 30 % to 4.5% in 2013 and 2014. The sharpest decline in agricultural output happened in the first half of 1990s, with this period of drop influencing all sectors of the economy.
Production of meat historically developed in all regions of the Republic of Kazakhstan. In particular, large-scaled production development was in the northern, central and east regions of the country.
At present meat is produced in all regions of the country. The smallest volume of meat production is observed in Mangystau, Kyzylorda and Atyrau regions. Their total share of production does not exceed 6% of the volume of meat production in Kazakhstan. The following regions have the biggest volumes of beef production: Almaty – 16%, East Kazakhstan – 15%, South Kazakhstan –12%, Aktobe – 9%, of mutton production: South Kazakhstan – 22%, Almaty – 16%, East Kazakhstan – 16%, Jambyl – 11% and Karaganda – 7%; horse meat production: Almaty – 15%, East Kazakhstan – 13%, Karaganda – 10%, South Kazakhstan – 10% and Pavlodar – 8%; production of pork: Northern Kazakhstan –18%, Kostanay – 18%, Almaty – 12% and Akmola – 11%.
According to the conducted comparative analysis of poultry meat production in KazSSR with the current production, the specialization of regions has not change, except for Zhambyl region.
2. The number of enterprises (participants) in the market: large, medium and small ones.
Meat processing capacities increased by 80% from 2003 to 2014. Annual average capacities for meat and meat by-products production increased from 46 thou. tons up to 75 thou. tons, production of sausage products – from 47 thou. tons up to 97 thou. tons, meat and meat and cereal canned food – from 12 thou. tons to 15 thou. tons.
Primary capacities for meat processing are concentrated in the north and west of the country, mainly in large cities. Capacity of meat-processing plants for production of cooled and frozen cattle meat, mutton, horse meat and pork, as well as meat by-products in 2014 made 76 thou. tons, where 20% fall on Karaganda region, 17% – Aktobe region, 15% – Northern Kazakhstan, 12% – Akmola region.
"Semipalatinsk Meat Preserving Factory" LLP, "Pavlodarskiy Smak" LLP, "Kublei" LLP, "Rubikom" LLP, "Astana Agroproduct" LLP, "Becker and Co." LLP are the largest enterprises in meat processing. The existing capacities of the major meat-processing plants of Kazakhstan allow to process up to 190 thou. tons of meat per year, which allows to manufacture about 72 thou. tons of fresh and cooled meat, 97 thou. tons of sausage products, and 15 thou. tons of meat and meat and cereal canned food. At the same time almost all the enterprises operate not at full productive capacity because of low availability and high price of raw materials.
In poultry farming 18 enterprises of Kazakhstan deal with production of poultry meat. The largest producers of poultry meat are concentrated in the Almaty region which gives more than 50% of domestic product. At the same time 95% of internal production are concentrated in agricultural enterprises. The role of private farm households, unlike production of other types of meat, is small in production of poultry meat.
3. Barriers and restrictions
Below in the table you will find a barrier matrix.
Table 29. Matrix of problems and barriers in food industry
Title |
Meat and meat products |
||
non-competitive price |
shortage of raw materials |
v |
|
high tariffs on services |
v |
||
expensive import packing materials |
|
||
weak accessibility to financial resources |
high debt ratio |
v |
|
high % rates |
v |
||
absence of long-term crediting |
v |
||
imperfection of taxation |
"1" VAT |
v |
|
PERSONAL INCOME TAX |
v |
||
VAT relief to everyone |
|
||
Corporate income tax relief at the update of fixed assets |
v |
||
VAT return at export |
v |
||
limited distribution |
in the domestic market |
adulteration |
v |
dumping |
v |
||
duties in trade |
v |
||
absence of logistics infrastructure |
v |
||
duration of procedures, measures on customs-tariff regulation |
v |
||
poor dietary practices |
v |
||
on the foreign market |
trade barriers |
|
|
absence of logistics infrastructure |
v |
||
problems of institutional development |
Absence of veracious statistics for PEI |
v |
|
shortage of industry specialists at the plant |
v |
||
absence of a separate authorized body for processing of all agricultural raw materials and food production |
v |
4. A list of potential possibilities for entrepreneurship initiatives Structure of value chain.
Kazakhstan has a high potential for production and export of meat, in particular of cattle meat. In accordance with the programme on enhancement of export potential of cattle meat, Kazakhstan plans to export cattle meat to the Russian Federation for the volume exceeding 60 thou. tons. Feeding stations have been built to implement this plan in various regions of Kazakhstan with the total capacity of more than 100 thou. animal units of simultaneous breeding, which allows to produce more than 40 thou. tons of beef per year.
Current meat processing factories do not have enough capacity to make the delivery of meat to the export markets according to the plan of realizations of export potential. It would be necessary to create additional capacities by the total volume up to 27 thou. tons of meat per year. In the table below you will find the information on the available capacities, export potential and necessary additional capacities to implement the export potential of the RK.
In addition, we must point out that at present the facilities of processing enterprises for production of fresh and cooled meat are loaded by 44%. Utilization of capacities for 100% will give additionally more than 40 thou. tons of meat. At present the existing feeding stations have not reached their full productive capacity which entailed low workload for meat processing factories.
Table 30. Potential of expansion of cooled meat production, tons
Region |
Market (consumption) |
Production on specialized and non-specialized facilities |
Annual average capacity of specialized enterprises |
Use of annual average capacity |
Net import (+)/export(-) |
Raw material base (beef, mutton, horse meat, pork) |
Underutilised capacity |
Capacities planned for commissioning |
Export of meat planned by 2020 |
Recommended additional capacity, tons |
Akmola |
2,887 |
3,499 |
9,094 |
20% |
-612 |
41,961 |
7,276 |
6,000 |
|
|
Aktobe |
13,078 |
14,038 |
12,697 |
94% |
-960 |
60,726 |
733 |
4,000 |
2,000 |
|
Almaty |
709 |
664 |
1,384 |
26% |
45 |
115,333 |
1,031 |
8,000 |
7,000 |
|
Atyrau |
104 |
95 |
110 |
86% |
9 |
23,216 |
15 |
0 |
|
|
East Kazakhstan |
1,836 |
1,836 |
4,935 |
30% |
0 |
103,720 |
3,458 |
17,000 |
15,000 |
10,000 |
Jambyl |
3,304 |
3,304 |
3,170 |
84% |
0 |
54,639 |
515 |
4,000 |
4,000 |
|
West Kazakhstan |
731 |
1,035 |
1,365 |
31% |
-304 |
36,271 |
938 |
12,000 |
10,000 |
|
Karaganda |
6,538 |
6,538 |
15,337 |
38% |
0 |
60,287 |
9,450 |
4,000 |
|
|
Kostanay |
7,066 |
7,317 |
5,089 |
65% |
-251 |
51,395 |
1,800 |
7,000 |
5,000 |
|
Kyzylorda |
175 |
175 |
0 |
0% |
0 |
15 882 |
0 |
2,000 |
2,000 |
|
Mangystau |
84 |
4 |
5 |
80% |
80 |
4,678 |
1 |
0 |
|
|
Pavlodar |
3,548 |
3,539 |
0 |
0% |
9 |
44,046 |
0 |
4,000 |
4,000 |
|
North Kazakhstan |
5,112 |
5,432 |
9,272 |
26% |
-320 |
51,615 |
6,879 |
4,000 |
|
|
South Kazakhstan |
1,840 |
1,862 |
6,242 |
11% |
-22 |
94,643 |
5,586 |
15,000 |
10,000 |
|
Almaty city |
362 |
361 |
1,008 |
0% |
1 |
127 |
1,008 |
0 |
|
|
Astana city |
2,301 |
2,252 |
2,454 |
18% |
49 |
1,042 |
2,016 |
0 |
|
|
Kazakhstan |
49,675 |
51,951 |
72,162 |
44% |
-2,276 |
759,580 |
40,706 |
17,000 |
85,000 |
54,000 |
Kazakhstan annually consumes about 70 thou. tons of sausage products, where over 50% are imported from neighbouring states. At the same time existing capacity for production of sausage products can completely satisfy the deman in the domestic market. High competition with import suppliers, low price competitiveness of Kazakhstan producers, weak promotion of domestic products in the market are the key reasons for low workload of production facilities. A high cost price of production is connected with high price of raw materials, high cost of debt on working capital financing. A part of existing production facilities requires modernization and an update of equipment. It is recommended to commission new production facilities in the region of Almaty and South Kazakhstan as there is lack of production facilities in these regions.
The market of meat and meat and cereal canned food in the Republic of Kazakhstan is about 19 thou. tons, where 4 thou. tons are imported from other states. The production capacities of Kazakhstan enterprises allow to manufacture 16.7 thou. tons of finished meat products, at the same time utilization of specialized facilities is slightly less than 60%. It is recommended to commission new additional capacities in Almaty, Zhambyl, Karaganda, South Kazakhstan regions, and Astana-city with the total capacity of up to 6 thou. tons to satisfy the demand for finished meat products in Kazakhstan at the expense of domestic production.
5. SWOT analysis of the industry.
Availability of vast pasture lands and land resources for development of feeding crops production are the main strengths of beef breeding industry, thus it is possible to provide beef cattle industry with quality and affordable feeding crops. With 180 thou. ha of available pastures, only 60 thou. ha are used, and about 90 thou. ha being reserve lands and not used in livestock farming. The development of distant pastures will allow to increase volumes of livestock products in Kazakhstan.
Thanks to public policy on development of cattle meat processing industry, nuclear stock was formed within he period of 2010-2015 on the basis of imported pedigree cattle, which gave breed transformation of livestock available in the country and improvement of productivity of livestock in the future.
The cost of land resources in Kazakhstan is one of the lowest in the world, which allows to lower a cost price of both crop farming and livestock farming, while competing against countries – exporters of livestock products.
In addition, low cost of labor resources is also one of the strengths of the industry, which also allows to lower a cost price of finished products. At the same time weaknesses include shortage of skilled work force, which is a limit to the industry development.
Availability of the large domestic market which is going to grow due to increase of the size of population and change of consumer preferences concerning consumption of beef is one of the strengths of the industry.
Formation of a single market space in the territory of the countries participating in Eurasian Union allows to expand markets of cattle meat sale, in particular, to the market of the Russian Federation where they annually import more than 600 thou. tons of cattle meat.
State support of the industry within the framework of the project on development of export potential of cattle meat attracts significant volumes of investments to the industry, which allows to create additional capacities for cattle meat production in the RK.
Absence of infrastructure of water supply for pastures is one of the weaknesses of the industry, as it does not allow to use the available potential at the expense of unused pasture resources. Low productivity of livestock seriously affects economic indicators of livestock farming and is one of the factors limiting stable sale of production.
Underdevelopment of social infrastructure of a village and absence of comfortable conditions for agricultural workers lead to outflow of people from villages to cities and little interest of specialists and employees in agriculture.
Remoteness of sales markets and low quality or absence of road infrastructure are also a limiting factor to the development of beef cattle farming and production sales.
The long payback periods of projects on beef cattle farming (about 6-8 years) scare off potential investors.
For mutton production strengths and weaknesses are very similar to the characteristics of the beef production industry. We include here availability of vast pasture lands which are not used in farming industry, low cost of land and labour resources, state support of the industry, steady demand for mutton in the domestic market of Kazakhstan. In addition, climatic conditions of southern regions of Kazakhstan allow to have low cost year-round pasture management for sheep.
Weaknesses for the growth of mutton production industry include: low productivity of animals, small volume of production, and predominance of private farm households, absence of infrastructure of water supply for pastures and distant-pasture sheep farming, low efficiency of use of pasture resources leading to agricultural land degradation.
Strengths of pork production industry include: demand for pork in the domestic market of Kazakhstan, especially, in northern regions of the country, as well as in the markets of bordering regions of Russia, low cost of labor resources and availability of forage resources.
Weaknesses of hog bredding inlcude: high cost price of production, inefficient industrial engineering, high cost of forage, low productivity of animals, a large share of production of pork on private farm households, and a small share of industrial production of pork.
Availability of steady demand for horse meat from the population of Kazakhstan which traditionally consumes horse meat, low cost breeding of horses at the expense of all-year-round grazing and absence of need to construct facilities for animals keeping, availability of vast pasture lands not used in agriculture, high profitability of horse breeding are the strengths of horse meat production in the RK.
Weaknesses include a small share of pedigree horses in the total number, small volume of production, bad accessibility of remote pastures and absence of infrastructure for distant-pasture cattle tending (no wells for animals, cattle-driving routes, communication, roads, emergency services, etc.), inefficient use of pasture resources.
Strengths of meat processing industry include: availability of a stable sales market in Kazakhstan, recognizable trade marks in the market which are in demand, availability of underloaded production facilities allowing to increase volumes of output. Shortage and high price of raw materials, which is the cause of underutilization of capacities, high cost of debt on working capital financing, obsolete equipment and technical structures, shortage of qualified personnel make the weaknesses of the industry.
High potential of beef export to the Russian Federation, as well as a possibility of its export to China in connection with growth of demand for beef in the market of China and increase of beef prices make the major possibilities for beef production industry. Availability of significant areas of unused pastures gives opportunities for development of distant-pasture cattle tending through creation of infrastructure of water supply to the pastures. There are possibilities of increase of beef production at the expense of increase of animals productivity in case selection and pedigree work in beef cattle farming is introduced together with breed transformation in the industry.
High competition with beef producers from Argentina, Brazil, Australia and New Zealand is the major threat to development of beef cattle farming, as they export frozen meat at low prices. A possibility of unfavorable epizootic situation and outbreaks of animals diseases is another factor threatening the development of the beef production industry. Outflow of manpower from countryside is also one of the threats for the development of agriculture sectors in Kazakhstan.
The volumes of small ruminants meat production allow to export Kazakh mutton to the foreign markets. But Kazakhstan is not able top compete with New Zealand and Australia in the export of frozen mutton as those countries have more favourable climatic conditions in their territory, which allows to lower costs of production. Cooled lamb manufactured in Kazakhstan can be potentially demanded as the premium-product in the markets of the Middle East countries such as Iran, Saudi Arabia, Qatar, UAE. But great distance and absence of straight transport corridors make export of refrigerated mutton and lamb meat to these countries more difficult. Therefore in this industry we must focus primarily on the domestic market.
The development of mutton production industry is threatened by possibilities of outbreaks of animals diseases, outflow of manpower to cities, and shortage of personnel, threat of dilution of pedigree material because of unskilled disposal of genetic potential of pedigree individuals imported to Kazakhstan.
There are possibilities to increase production of pork for export to Russia and provision of domestic consumption in Kazakhstan due to high demand. In the internal market of Kazakhstan there is a possibility of replacing of other types of meat, in case of reduction of their production volumes.
High competition on the side of cheaper import frozen products can be a threat to the pork production industry. However, frozen import meat, as a rule, is used for processing, which allows to load the meat processing facilities.
There are possibilities for increase of the pedigree number of horses with help of progressive technologies in livestock husbandry and increase of productive qualities of the animals. There is a potential for increase of production of horse meat due to the use of free pasture lands. Epizootic threats and deficit of personnel make the threats to the development of horse breeding industry.
Meat processing and finished goods production industry has the opportunity for increase of production and import substitution. It is necessary to provide the existing capacities of meat processing plants with raw materials, modernize the capacities and construct modern factories to manufacture cooled meat, provide long-term storage and respective quality of meat for export.
High competition on the part of large producers of Russia and Belarus implementing aggressive marketing policy in the territory of Kazakhstan is the threat to development of the meat processing industry.
Table 31. SWOT analysis of meat processing products
Strengths |
Weaknesses |
· Availability of stable sales markets in large cities of Kazakhstan; · Brand awareness for sausage products which belong to large-scale enterprises oriented towards the quality and provision of a large assortment of production. |
· Shortage of raw materials, which leads to underutilized capacity; · High procurement prices for domestic raw materials lead to the need of use import raw materials, · High cost of debt on working capital financing, · Shortage of qualified personnel. · Obsolete equipment and technical structures of meat processing factories. |
Opportunities |
Threats |
· Growth of domestic production, import substitution; · Growth of enterprises; · Increase of an assortment of products – production of delicacies. |
· Competition with Russia on sausage products and canned meat; · Shortage of raw materials for production of sausage products and canned meat.
|
Source: Expert estimate
Review on fodder production
1. Introduction.
Agro-industrial complex of Kazakhstan is a priority for the state. One of the most important factors, providing sustainable development of agriculture, is the orientation on production efficiency and agricultural products processing, which involves reasonable and integrated use of land, labor, material and primary resources, a special role is assigned to sustainable development of the territorial aspect, contributing to more efficient use of basic kinds of resources.
The production of food and processing industry accounts for about 1.7% of GDP in the Republic of Kazakhstan. This sector includes oil and fat, and milk industry, meat, fruit and vegetables processing, production of confectionery, sugar, cotton fiber and fodder, and all of them are briefly described.
The first part of this review is a description of the contribution of the sector and its structure, then the domestic fodder production market is examined and the list of potential opportunities for entrepreneurial initiatives is given.
1.1. Industry contribution to the economy and its structure
The production of food and agricultural products processing industry in Kazakhstan is manufactured approximately by 1500 companies, which account for about 1.7% of GDP of the country. The meat processing is developed to a large extent. Manufacturers of meat products are evenly located around the country with reference to the raw material base. Development of fodder production industry aims to meet the growing needs of the livestock industry.
The gross output of agricultural products in the Republic of Kazakhstan amounted to 2.5 trillion tenge in 2014. In terms of value the manufacture of crop and livestock products is relatively equal. The largest share in the cost of produced agricultural products involves: cereals and legume crops - 19%, dairy breeding - 15%, cattle breeding - 14%, vegetables - 10%, fodder crops - 9% and breeding of small cattle - 6%.
Table 1. Structure of agricultural production in the Republic of Kazakhstan in 2014
Production |
Output of products, mln. tenge |
In % of total |
Total agricultural products |
2 527 890 |
100% |
Crop products |
1 327 855 |
52.5% |
Cultivation of cereals and legume crops, including seeds growing |
478 338 |
18.9% |
Rice cultivation |
15 526 |
0.6% |
Cultivation of oil plants and its seeds |
85 113 |
3.4% |
Cultivation of potatoes and planting material |
180 977 |
7.2% |
Production of vegetables and their seeds and plants |
259 695 |
10.3% |
Cultivation of sugar beet and seeds |
175 |
0.0% |
Production of cotton |
25 547 |
1.0% |
Growing of fodder and seeds |
238 107 |
9.4% |
Grape cultivation |
9 363 |
0.4% |
Growing of large fruits |
24 047 |
1.0% |
Source: Statistics Committee of the MNE of RK
The feed stuff consists of cereal crops, such as barley, wheat, oats, corn, up to 70%. To increase the nutritive value of feed it is added mineral and vitamin mixtures, sunflower, vegetable oils and animal fats, and etc.
The biological value of the feed stuff is achieved by balanced nutrient content. The fodder is prepared in proteins, amino acids, vitamins and other substances, regarding different age groups. More often the fodder is presented in pellets with a diameter from 3 mm to 10 mm.
The basic components of the feed stuff, produced in the country, are the following products: wheat, barley, oats, corn, soybean meal, sunflower meal. These are cereals and meal of oil-bearing crops, which are produced on the territory of Kazakhstan in a significant amount.
According to the RK Statistical Agency the cereal crop in the Republic of Kazakhstan in average accounts for about 17 million tons annually, including grain maize - about 450 thousand tons. Additionally it is processed into oil and produces about 60 thousand tons of oilseed residues.
The main production of spring wheat, oats, barley and other cereals is carried out in the north of the Republic of Kazakhstan.
The balance of production and consumption of grain in Kazakhstan shows the complete supply of domestic market with its own production. Moreover there is a great potential to expand exports. Kazakhstan is one of the leaders of grain production in the world.
Table 2. The balance of grain in the Republic of Kazakhstan over 2003-2014
Balance item |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Stocks at the beginning of the year |
14.1 |
11.9 |
10.8 |
10.2 |
11.2 |
13.2 |
10.7 |
16.5 |
9.3 |
20.7 |
13.7 |
13.7 |
Production |
14.8 |
12.4 |
13.8 |
16.5 |
20.1 |
15.6 |
20.8 |
12.2 |
27.0 |
12.9 |
18.2 |
17.2 |
Import |
0.0 |
0.0 |
0.0 |
0.1 |
0.1 |
0.1 |
0.2 |
0.1 |
0.1 |
0.1 |
0.1 |
0.1 |
Import of services |
28.9 |
24.3 |
24.7 |
26.8 |
31.5 |
28.9 |
31.7 |
28.7 |
36.4 |
33.7 |
32.0 |
31.0 |
For fodder |
3.0 |
3.2 |
3.3 |
3.4 |
3.5 |
3.6 |
3.4 |
3.9 |
3.1 |
3.1 |
3.3 |
3.4 |
Other industrial use |
0.4 |
0.4 |
0.4 |
0.5 |
0.5 |
0.4 |
0.4 |
1.0 |
0.7 |
0.8 |
1.0 |
1.1 |
Losses |
0.5 |
0.8 |
0.6 |
0.6 |
0.4 |
0.8 |
0.4 |
0.7 |
0.6 |
0.4 |
0.7 |
0.5 |
Export |
5.8 |
2.9 |
2.0 |
3.7 |
6.8 |
5.7 |
3.6 |
5.6 |
3.5 |
7.8 |
5.4 |
5.0 |
Industrial consumption |
5.4 |
5.6 |
5.8 |
5.9 |
6.2 |
6.5 |
6.0 |
6.8 |
5.7 |
5.7 |
5.8 |
5.8 |
For seeds |
2.3 |
2.4 |
2.6 |
2.5 |
2.6 |
2.9 |
2.6 |
2.9 |
2.5 |
2.5 |
2.5 |
2.4 |
Processed for industrial use |
3.8 |
3.4 |
4.3 |
4.4 |
4.1 |
4.5 |
4.5 |
5.0 |
4.9 |
5.0 |
5.0 |
5.0 |
Personal consumption |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
Statistical difference |
0.9 |
0.8 |
1.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Stocks at the end of the year |
11.9 |
10.8 |
10.2 |
11.2 |
13.2 |
10.7 |
16.5 |
9.3 |
20.7 |
13.7 |
13.7 |
13.2 |
Source: Statistics Committee of the MNE of RK
1.2. Domestic market capacity.
According to the Statistics Committee of the MNE of RK 36% of finished fodder for farm animals is produced in North Kazakhstan region. 267 thousand tons of finished fodder was produced in this region in 2014. Almaty region produces 144 thousand tons or 20% of the total production volume of finished fodder in the country, Karaganda region - 15% and Akmola region - 10%.
Table 3. Production of finished fodder for farm animals in 2014, thous. tons
Region |
Production volume, thous. tons |
Share in the republic, % |
Akmola |
74.0 |
10% |
Almaty |
144 |
20% |
Atyrau |
0.0 |
0% |
East Kazakhstan |
44.9 |
6% |
Jambyl |
4.2 |
1% |
West Kazakhstan |
20.1 |
3% |
Karaganda |
108 |
15% |
Kostanay |
10.6 |
1% |
Kyzylorda |
2.1 |
0% |
Pavlodar |
29.7 |
4% |
North Kazakhstan |
267 |
36% |
South Kazakhstan |
11.3 |
2% |
Astana city |
17.4 |
2% |
Almaty city |
0.0 |
0% |
Republic of Kazakhstan |
733 |
100% |
Source: according to the Statistics Committee of the MNE of RK
The main specialized capacities of finished fodder production for farm animals are located in North-Kazakhstan region - 23%, East Kazakhstan region - 18%, Karaganda region - 12%, Almaty region - 11% and Pavlodar region - 10%. The average level of capacity utilization is 33%.
Table 4. Capacities and its utilization in finished fodder production for farm animals in 2014
Region |
Annual average capacity of specialized enterprises, thous. tons |
Product output of specialized enterprises, thous. tons |
Capacity utilization, % |
Akmola |
171 |
67 |
39 |
Almaty |
204 |
101 |
49 |
Atyrau |
0 |
0 |
|
West Kazakhstan |
129 |
16 |
13 |
Jambyl |
61 |
0 |
0 |
Karaganda |
227 |
97 |
43 |
Kostanay |
16 |
10 |
62 |
South Kazakhstan |
16 |
11 |
70 |
Pavlodar |
183 |
30 |
16 |
North Kazakhstan |
433 |
216 |
50 |
East Kazakhstan |
332 |
42 |
13 |
Astana city |
73 |
17 |
24 |
Republic of Kazakhstan |
1 847 |
608 |
33 |
Source: according to the Statistics Committee of the MNE of RK
Over the period from 2003 to 2014 the finished fodder production for farm animals increased 2 times and amounted to 733 thous. tons in 2014. The average annual growth rate was 6.5%. The main share of production comes from North-Kazakhstan region - 36%, Almaty region - 20%, Karaganda region - 15%.
Table 5. Dynamics of finished fodder production for farm animals over 2003-2014, thous.tons
Region |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Akmola |
23.7 |
12.7 |
23.3 |
16.8 |
9.3 |
6.8 |
3.1 |
33.2 |
37.2 |
52.3 |
57.2 |
74.0 |
Almaty |
108 |
110 |
106 |
116 |
114 |
64.9 |
18.7 |
58.8 |
87.7 |
83.8 |
118 |
144 |
Atyrau |
0.0 |
0.0 |
3.3 |
3.4 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
East Kazakhstan |
18.3 |
30.4 |
33.9 |
37.2 |
65.8 |
44.2 |
49.6 |
51.5 |
38.6 |
43.4 |
46.3 |
44.9 |
Jambyl |
4.3 |
11.7 |
24.0 |
66.7 |
47.4 |
37.9 |
5.7 |
4.7 |
4.5 |
4.9 |
4.7 |
4.2 |
West Kazakhstan |
2.4 |
6.0 |
11.2 |
12.6 |
14.4 |
14.8 |
14.9 |
18.3 |
19.5 |
19.6 |
20.1 |
20.1 |
Karaganda |
30.5 |
29.8 |
32.5 |
37.6 |
68.0 |
52.3 |
71.6 |
79.0 |
89.9 |
88.9 |
88.4 |
108 |
Kostanay |
0.0 |
0.0 |
0.0 |
0.7 |
0.2 |
0.2 |
0.3 |
0.4 |
0.7 |
0.8 |
7.5 |
10.6 |
Kyzylorda |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.1 |
0.2 |
0.2 |
0.1 |
2.1 |
Pavlodar |
23.4 |
8.3 |
13.0 |
21.4 |
26.7 |
15.4 |
11.5 |
23.7 |
14.7 |
11.0 |
25.3 |
29.7 |
North Kazakhstan |
103 |
90.8 |
69.8 |
79.4 |
84.5 |
96.1 |
114 |
118 |
125 |
202 |
275 |
267 |
South Kazakhstan |
41.4 |
43.0 |
2.6 |
1.7 |
0.0 |
0.0 |
0.0 |
0.0 |
14.7 |
16.1 |
8.6 |
11.3 |
Astana city |
7.9 |
24.9 |
32.5 |
26.9 |
25.8 |
19.8 |
14.4 |
10.2 |
13.4 |
13.1 |
12.5 |
17.4 |
Almaty city |
3.6 |
5.9 |
1.5 |
0.7 |
3.4 |
0.3 |
0.2 |
0.3 |
0.0 |
0.0 |
0.0 |
0.0 |
Republic of Kazakhstan |
366 |
373 |
354 |
421 |
459 |
353 |
304 |
398 |
445 |
536 |
664 |
733 |
Source: according to the Statistics Committee of the MNE of RK
Over the period from 2003 to 2014 the finished fodder production in Kazakhstan increased 2 times from 366 thous. tons to 733 thous. tons. The volume of fodder consumption also increased by 100%. In 2003 the volume of fodder consumption in the country amounted to 367 thous. tons, while in 2014 - 740 thous. tons.
The main specialized capacities of finished fodder production for farm animals are located in North-Kazakhstan region - 23%, East Kazakhstan region - 18%, Karaganda region - 12%, Almaty region - 11% and Pavlodar region - 10%. The average level of capacity utilization is 33%.
Table 6. Capacities and its utilization in finished fodder production for farm animals in 2014
Region |
Annual average capacity of specialized enterprises, thous. tons |
Product output of specialized enterprises, thous. tons |
Capacity utilization, % |
Akmola |
171 |
67 |
39 |
Almaty |
204 |
101 |
49 |
Atyrau |
0 |
0 |
|
West Kazakhstan |
129 |
16 |
13 |
Jambyl |
61 |
0 |
0 |
Karaganda |
227 |
97 |
43 |
Kostanay |
16 |
10 |
62 |
South Kazakhstan |
16 |
11 |
70 |
Pavlodar |
183 |
30 |
16 |
North Kazakhstan |
433 |
216 |
50 |
East Kazakhstan |
332 |
42 |
13 |
Astana city |
73 |
17 |
24 |
Republic of Kazakhstan |
1 847 |
608 |
33 |
Source: according to the Statistics Committee of the MNE of RK
The volume of fodder export and import also increased. Import increased during this period from 1.2 in 2003 to 18.9 thous. tons in 2014, export increased from 0.2 thous. tons to 11.8 thous. tons respectively.
Table 7. The balance of production and consumption of finished fodder for farm animals in Kazakhstan during the period from 2003 to 2014, thous. tons
Balance item |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
366 |
373 |
354 |
421 |
459 |
353 |
304 |
398 |
445 |
536 |
664 |
733 |
Import |
1.2 |
2.5 |
2.4 |
2.2 |
3.3 |
3.7 |
4.8 |
5.7 |
9.1 |
13.3 |
16.7 |
18.9 |
Export |
0.2 |
0.7 |
1.5 |
0.8 |
2.9 |
2.2 |
8.5 |
13.9 |
14.6 |
14.7 |
8.8 |
11.8 |
Consumption |
367 |
375 |
355 |
423 |
460 |
354 |
300 |
390 |
440 |
535 |
672 |
740 |
Source: according to the Statistics Committee of the MNE of RK, the State Revenue Committee of the MF of RK
Import of finished fodder for farm animals during the period from 2003 to 2014 increased 16 times from 1.2 thous. tons to 18.9 thous. tons respectively. The key fodder supplier in Kazakhstan is Russia and its exports volume to Kazakhstan constituted 13 thous. tons in 2014.
Export of finished fodder for farm animals during the analyzed period increased from 0.23 thous. tons in 2003 to 11.8 thous. tons in 2014. Average annual rate of export growth during this period was 43%. The main sales market for Kazakhstan production is Iran, which imported 11.3 thous. tons of finished fodder for farm animals from Kazakhstan in 2014.
Table 8. Import and export of finished fodder for farm animals to the Republic of Kazakhstan during the period from 2003 to 2014, tons
Trade direction |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Import |
1.21 |
2.55 |
2.42 |
2.23 |
3.26 |
3.66 |
4.85 |
5.72 |
9.11 |
13.27 |
16.70 |
18.92 |
Export |
0.23 |
0.68 |
1.54 |
0.76 |
2.86 |
2.24 |
8.47 |
13.85 |
14.64 |
14.69 |
8.85 |
11.81 |
Source: the State Revenue Committee of the MF of RK
According to the latest statistics of UNCOMTRADE world trade the imports of finished fodder to Iran are 32 - 39 thousand tons per year in the amount of 36-41 million US dollars. In 2010-2011 the key fodder supplier to the Iranian market was the Netherlands. The proportion of its supplies in the total imports of Iranian production was 34%. The UAE were at the second place according to the volume of fodder supply to the Iranian market, its exports volume constituted 5 thous. tons in 2011. Belgium exported 4 thousand tons of fodder, France - 3.7 thousand ton, Germany - 2.8 thousand tons.
Table 9. Import of finished fodder for farm animals to Iran during 2010-2011, tons
Exporting country |
2010 |
2011 |
Holland |
21 075 |
10 645 |
UAE |
322 |
5 196 |
Belgium |
2 832 |
3 992 |
France |
4 324 |
3 693 |
Germany |
3 641 |
2 794 |
Malaysia |
347 |
864 |
China |
755 |
850 |
Others |
5 |
4 |
The whole world |
38 584 |
31 567 |
Source: UNCOMTRADE
Annually Russia imports on average 340 thousand tons of finished fodder for farm animals for a total amount of more than 500 million US dollars. The fodder supplies are carried out mainly from European countries. In 2014 Holland exported 54 thousand tons to Russia or 16% of imports of finished fodder for farm animals. France exported 45 thousand tons or 13%. Germany exported 37 thousand tons or 11%. Besides that since 2012 Belorussia has begun its supplies of fodder. In 2014 the Republic of Belarus imported 24 thousand tons of fodder.
Table 10. Import of finished fodder for farm animals to Russia during 2010-2014, tons
Exporting country |
2010 |
2011 |
2012 |
2013 |
2014 |
Holland |
91.44 |
88.02 |
87.68 |
63.60 |
53.63 |
France |
28.58 |
28.49 |
40.88 |
42.04 |
44.63 |
Germany |
42.63 |
40.34 |
46.33 |
45.16 |
36.52 |
Byelorussia |
- |
- |
8.83 |
15.42 |
24.30 |
Denmark |
9.47 |
10.95 |
15.63 |
25.30 |
20.76 |
Belgium |
34.46 |
37.70 |
39.20 |
23.24 |
19.99 |
Finland |
16.86 |
15.84 |
18.47 |
16.68 |
18.90 |
Norway |
4.27 |
8.33 |
20.18 |
20.10 |
18.10 |
Hungary |
8.97 |
10.74 |
9.53 |
12.14 |
16.82 |
China |
6.74 |
11.02 |
11.71 |
13.67 |
15.71 |
Others |
90.36 |
88.83 |
66.65 |
66.63 |
62.32 |
The whole world |
333.77 |
340.26 |
365.10 |
343.97 |
331.66 |
Source: UNCOMTRADE
The key importer of Kazakhstan fodder for farm animals is Iran. In 2014 the volume of finished fodder imports to Iran from Kazakhstan amounted to 11.3 thous. tons or 95% of the total exports of these products from Kazakhstan. The remaining 5% comes from Russia. Besides that over the last 11 years the products of Kazakhstan fodder manufactures were imported by Kyrgyzstan, Tajikistan, Moldova, Georgia and other countries.
Table 11. Export of finished fodder for farm animals in the context of importing countries during the period from 2003-2014, thous. tons
Importing country |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Iran |
- |
- |
- |
- |
- |
- |
8.22 |
12.88 |
13.45 |
13.75 |
8.70 |
11.26 |
Russia |
- |
0.09 |
- |
- |
- |
- |
- |
- |
0.04 |
0.04 |
0.12 |
0.53 |
Kyrgyzstan |
0.01 |
- |
0.05 |
0.71 |
- |
0.04 |
- |
- |
0.02 |
0.32 |
0.02 |
0.01 |
Tajikistan |
0.15 |
0.59 |
1.49 |
- |
2.64 |
1.78 |
0.19 |
0.96 |
0.93 |
0.58 |
- |
- |
Moldova |
- |
- |
- |
- |
- |
0.42 |
- |
- |
- |
- |
- |
- |
Georgia |
- |
- |
- |
0.06 |
0.17 |
- |
- |
- |
0.19 |
- |
- |
- |
Other countries |
0.07 |
0.00 |
- |
- |
0.06 |
- |
0.06 |
- |
- |
- |
- |
- |
All countries |
0.23 |
0.68 |
1.54 |
0.76 |
2.86 |
2.24 |
8.47 |
13.85 |
14.64 |
14.69 |
8.85 |
11.81 |
Source: the State Revenue Committee of the MF of RK
The main suppliers of finished fodder to Russian and European markets are the countries of Europe, supplying qualitative and high-tech fodder additives. In this regard Kazakhstan fodder production cannot compete with the products of European countries. Kazakhstan may act as a supplier of ingredients for the production of fodder additives for farm animals.
2. Number of enterprises (players) in the market.
During the period from 2005 to 2014 the capacities of finished fodder production for farm animals increased by 44% from 1.2 mln. tons to 1.8 mln. tons. The main volume of production capacities is concentrated in North-Kazakhstan region - 443 thousand tons, East Kazakhstan region - 332 thousand tons, Karaganda region - 227 thousand tons, and Almaty region - 204 thousand tons.
The largest combine fodder factories are “Sarybulak Company” Llp, “Combikorm” Llp, “Rubiroz Agricol” Llp, “New Aldzhansky flour mill” Llp, “Izhevsk” PC, “Tsesna-Astyk” Concern” Llp, “Ordabasy Kus” Llp.
3. The list of potential opportunities for entrepreneurial initiatives.
Development of fodder production industry aims to meet the growing needs of the livestock industry. In this regard the export of fodder production is not mentioned as the target for the state. At that it is worth noting that there are no significant restrictions on the supply of Kazakh products to the key foreign markets.
Taking into account the high importance of the livestock industry development in the regions the development of fodder production industry should be included as the leading direction in all regions of the Republic of Kazakhstan. At that it should be taken into account the regions specialization by types of livestock production.
The development of fodder industry is required in the regions with intensive stock farming: poultry industry, pig farming and dairy breeding. Pig farming is a key area of development in Akmola, Almaty, Karaganda, Kostanay, Pavlodar and North-Kazakhstan regions. poultry industry - in Akmola, Almaty, Karaganda regions. dairy breeding - in Akmola, Aktobe, Almaty, East Kazakhstan, Jambyl, West Kazakhstan, Karaganda, Kostanay, Pavlodar, North Kazakhstan and South Kazakhstan regions.
In 2014 the volume of grain production amounted to 17.2 mln.tons. Among them about 5 mln. tons were exported, 2.4 mln. tons were used as seed grains, 3.4 mln. tons of grain were used as a fodder for farm animals. The average annual capacity of enterprises specialized in the production of finished fodder for farm animals is 1.8 mln. tons.
The available resources provide full utilization of capacities in production of finished fodder for farm animals. At that the increase in production of corn and soybeans is required for the development of dairy breeding and poultry industry.
Table 12. Sufficiency of raw materials for specialized capacities in production of finished fodder for farm animals. thous. tons
Region |
Capacity of specialized enterprises |
Production of cereals |
Sufficiency in raw materials |
Production of corn |
Production of soybeans |
Akmola |
171 |
4 503 |
26.4 |
- |
0.8 |
Almaty |
204 |
1 000 |
4.9 |
414.5 |
210.1 |
East Kazakhstan |
332 |
713 |
2.1 |
5.0 |
4.4 |
Jambyl |
61 |
289 |
4.7 |
87.0 |
0.8 |
West Kazakhstan |
129 |
224 |
1.7 |
|
|
Karaganda |
227 |
599 |
2.6 |
|
0.9 |
Kostanay |
16 |
3 988 |
245.1 |
0.1 |
0.8 |
Pavlodar |
183 |
364 |
2.0 |
|
0.1 |
North Kazakhstan |
433 |
4 547 |
10.5 |
|
0.1 |
South Kazakhstan |
16 |
407 |
25.4 |
155.3 |
0.0 |
Republic of Kazakhstan |
1 773 |
16 785 |
9.4 |
664.0 |
217.9 |
Source: the Statistics Committee of the MNE of RK
4. SWOT-analysis of the industry.
The main strengths of the fodder industry in Kazakhstan are steady demand for fodder on the part of livestock industry and significant resource base of main fodder components. The state policy in the livestock industry aims at consolidation of livestock farms, cooperation and consolidation. The development of the livestock industry, especially in organized farms, creates a constant high demand for animal fodder.
The basic components for the feed stuff production in the country are wheat, barley, oats, corn, soybean meal, sunflower meal. These are cereals and meal of oil-bearing crops, which are produced on the territory of Kazakhstan in a significant amount. The cereal crop in the Republic of Kazakhstan in average accounts for about 17 million tons annually, including grain maize - about 450 thousand tons. Additionally about 60 thousand tons of oilseed residues are produced.
The fodder industry has considerable potential for development. The potential demand for the feed stuff on the part of livestock industry greatly exceeds the current level of production capacity. Even full utilization of current capacity in the long term will be insufficient to ensure that poultry factories, feedlots and commercial dairy farms.
The weaknesses of the industry include a number of interrelated factors, which together lead to low development of the industry. Nowadays the households, which contain about 70% of farm animals, have no demand for feed stuff due to high prices. Besides that the quality of feed stuff, produced in the country, remains low that also leads to the decrease in demand for fodder production. It is stipulated by the fact that the feed milling establishments, built in 1970 -1980, often cannot provide consumers with high-quality fodder at reasonable prices. The equipment in these feed milling establishments is outdated and worn-out technologically and physically.
Current capacities of fodder production enterprises are underutilized due to low demand and quality, presence of own plants for fodder production in many agricultural enterprises (poultry factories, pig farms, commercial dairy farms), as well as the lack of consulting services for farmers about animal feeding regimes.
The most significant opportunity for the fodder industry is the increase in demand for feed stuff, associated with the growth of livestock in large agricultural enterprises. The increased demand for feed stuff will attract investments for development of the industry, improvement of feed stuff quality and reduction of their cost.
Also it is possible to develop the industry through expansion of the raw material base of fodder crops due to increase of cultivated areas for fodder crop by dry-farming and irrigation.
The threat of the fodder industry development is the high level of competition on the part of neighboring countries, in particular EEU countries and under conditions of Kazakhstan accession to the WTO. Also there is a threat of increase in the cost of components for production of the feed stuff, premixes and other additives, and minerals, not produced in Kazakhstan, that may lead to the increase in the cost of final products.
Besides that there is a threat of bringing of quarantine and highly dangerous diseases to grains and oilseeds that can lead to the destruction of crops and consequently to poor quality and lack of raw materials.
Table 13. SWOT-analysis of the fodder production industry
Strengths · availability of constant demand for fodder; · availability of productive potential; · availability of significant resource base of the basic feed stuff components. |
Weaknesses · low consumer demand for the products on the part of small nonindustrial enterprises, which account for more than 70% of cattle. · low utilization of current capacities of fodder enterprises; · poor quality of the produced feed stuff · technological gap · use of technologically and physically outdated equipment
|
Opportunities · increase in demand for feed stuff due to the growth of livestock in large farms; · expansion of cultivated areas for fodder crop by dry-farming and irrigation
|
Threats · increase in the cost of imported components for the feed stuff production · phytosanitary threats |
Source: expert’s review
Review on confectionery and chocolate
1. Introduction.
Agricultural sector of Kazakhstan is a priority for the state. Focus on economic efficiency of production and reprocessing of agricultural products is one of the most important factors providing sustainable development of agribusiness, which entails rational and integrated use of land, labour, material and raw material resources. Rational development in a territorial aspect contributing to more efficient use of the basic types of resources is paid special attention.
Products of food and manufacturing industry account for around 1.7% of GDP of the Republic of Kazakhstan. This branch includes oil-and-fat industry, milk industry, processing of meat, fruits and vegetables, confectionery, production of sugar, cotton fibre, and fodder. Several short surveys were prepared on these industries.
This review looks at the domestic market of confectionery and chocolate production, gives a historical background on the industry development, describes existing barriers and limitations and provides a list of potential possibilities for entrepreneurship initiatives.
1.1. Domestic market capacity
Primary production operational industry capacities are concentrated in Almaty – “RAKHAT” JSC (more than 50 thou. tons of production in 2014) – and Kostanay – the "Bayan Sulu" JSC (more than 30 thou. tons of production in 2014).
Table 1. Output indices movement, tons
Name of the region |
2005 |
2006 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
The Republic of Kazakhstan |
69,525 |
74,350 |
76,425 |
89,233 |
93,268 |
102,213 |
95,656 |
91,988 |
99,769 |
Akmola |
15 |
16 |
4 |
||||||
Aktobe |
1,837 |
559 |
109 |
1,033 |
1,451 |
3,306 |
4,149 |
776 |
|
Almaty |
430 |
569 |
202 |
2,035 |
3,619 |
4,874 |
5,832 |
7,046 |
7,776 |
West Kazakhstan Region |
815 |
342 |
273 |
3,640 |
3,231 |
2,303 |
218 |
68 |
2 |
Jambyl |
252 |
62 |
50 |
4 |
6 |
2 |
|||
Karaganda |
9,303 |
8,183 |
6,751 |
6,978 |
5,126 |
4,972 |
4,900 |
2,737 |
3,167 |
Kostanay |
17,747 |
18,702 |
21,533 |
27,079 |
30,206 |
28,352 |
25,256 |
29,446 |
30,989 |
Mangystau |
21 |
27 |
47 |
39 |
44 |
48 |
14 |
4 |
|
South Kazakhstan region |
830 |
995 |
1,747 |
2,701 |
3,072 |
3,363 |
2,384 |
2,568 |
3,620 |
Pavlodar |
65 |
143 |
348 |
304 |
337 |
404 |
338 |
324 |
214 |
North Kazakhstan region |
48 |
65 |
70 |
70 |
81 |
60 |
57 |
||
East Kazakhstan region |
388 |
664 |
182 |
345 |
68 |
8 |
5 |
5 |
3 |
Astana city |
24 |
1 |
|||||||
Almaty city |
38,089 |
44,193 |
44,949 |
44,944 |
45,999 |
54,513 |
52,439 |
48,918 |
53,936 |
Source: The Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Thus the production enterprises do not compete geographically. Since both productions have extensive finished goods sales networks, there is a significant competition as well. At the same time it must be taken into consideration that about 40% of the goods produced by "Bayan Sulu" JSC and 10% of the goods produced by “RAKHAT” JSC are exported. Competition is related to the use of modern manufacturing equipment, technology and quality of production, and release of products at prices affordable for consumers.
Figure 1. Production of chocolate and confectionery by regions in 2014, tons
Source: data released by the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Almaty city
Kostanay
Almaty
South Kazakhstan
Karaganda
Other regions
Home-made chocolate and confectionery account for about 50-60% in consumption for the whole period that is examined.
Table 2. Balance of production and consumption, tons
Year |
Production* |
Import** |
Export** |
Consumption |
A share of the in-house production in consumption |
2005 |
69,525 |
52,300 |
2,711 |
119,114 |
58% |
2006 |
74,350 |
65,650 |
3,029 |
136,971 |
54% |
2007 |
81,310 |
3,450 |
0% |
||
2008 |
76,425 |
80,182 |
3,737 |
152,870 |
50% |
2009 |
89,233 |
67,888 |
7,475 |
149,645 |
60% |
2010 |
93,268 |
75,689 |
16,118 |
152,838 |
61% |
2011 |
102,213 |
80,916 |
21,319 |
161,810 |
63% |
2012 |
95,656 |
91,343 |
22,428 |
164,570 |
58% |
2013 |
91,988 |
100,315 |
25,490 |
166,813 |
55% |
2014 |
99,769 |
91,660 |
29,487 |
161,942 |
62% |
* Source: The Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan (CS MNE RK)
** Source: State Revenue Committee of the Ministry of Finance of The Republic of Kazakhstan (SRC MF RK)
Considering that each confectionery factory produces a wide assortment of goods with unique recipes, it would be difficult to assess the demand for raw materials in volume terms. At the same time in 2014 “RAKHAT” JSC acquired raw materials for 23,5 bln. tenge in value terms, while "Bayan Sulu" JSC - for 12,6 bln. tenge.
There is a need for development of local production both of fresh raw materials, and semi-finished products.
Sugar, glucose and syrup, honey, fats, milk and dairy products, eggs and egg products, cocoa beans, nuts, fruity-berry semi-finished products, flour, starch, taste and aromatic substances, baking powders etc. make raw materials for confectioneries.
Table 3. Production and import of basic raw materials for confectioneries
Raw materials |
2014 |
A share of import in the amount of production and import |
2013 |
A share of import in the amount of production and import |
||
Production |
Import |
Production |
Import |
|||
Fruit and nuts processed and preserved, tons |
1,137 |
145,540 |
99% |
2,545 |
159,023 |
98% |
Vegetable oils, tons |
329,480 |
115,812 |
26% |
280,811 |
116,756 |
29% |
Sunflower oil, tons |
234,929 |
67,748 |
22% |
206,040 |
61,094 |
23% |
Margarine and similar products, tons |
57,949 |
29,414 |
34% |
56,681 |
27,959 |
33% |
Solid milk, tons |
2,987 |
27,070 |
90% |
2,402 |
20,340 |
89% |
Butter, tons |
15,702 |
10,359 |
40% |
14,069 |
8,822 |
39% |
Sugar, tons |
375,591 |
160,406 |
30% |
332,269 |
107,788 |
24% |
Baker's yeast; active yeast, tons |
5,685 |
3,653 |
39% |
5,567 |
3,456 |
38% |
Cocoa beans, oil, powder, paste, tons |
0 |
10,152 |
100% |
0 |
8,983 |
100% |
Glucose and syrup, tons |
n/a |
14,597 |
n/a |
11,291 |
Source: data released by the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Thus, "AsiaAgroFood" JSC operates in syrup production in the Almaty region, making confectionery syrup from corn grain. At present the production plant capacities allow to manufacture up to 200 tons of high-quality syrup per day and process up to 70 thousand tons of corn per year[1].
The enterprise experienced difficulties in the recent years in connection with ruble exchange rate drop. According to the data of the Association of Confectioners of Kazakhstan, the cost of corn grain in Kazakhstan was 50 thou. tenge/ton VAT excluding, while in Russia it was 7,200 rubles/ton, which now is equal to approximately 21,600 tenge at the rate of 3 tenge to 1 ruble. Thus, for a Kazakhstan company the costs of production per 1 ton of starch syrup was 100 thou. tenge, while for the Russian competitors it was17 thou. rubles or 51 thou. tenge at the rate of 3 tenge to 1 ruble. In such a way the Kazakh confectioners are forced to buy import starch syrup because the difference in a price is very significant.
Also "Zharkent Starch Plant" LLP started its operation on December 20, 2013 in Panfilov district of the Almaty region, the town of Zharkent, with the capacity for corn grain processing of 60,000 tons per, with planned further increase of the volume of processed corn up to 300 thou. tons per year[2]. Planned standard production of syrup is 12,000 tons per year, and starch - 24,000 tons per year.
The Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan keeps account of the volume structure of a retail group only for large food groups. Food in retail volume accounts for around 1,8 trillion tenge or 29%. In retail structure of food meat accounts for the largest volume – 16%, while dairy products occupy a considerable share as well –10%, fruit and the vegetables have 12%, beverages – 13,8%. A share of chocolate is not significant.
Table 4. Dynamics of retail volume on confectioneries and chocolate, bln. tenge
Goods |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
1,219 |
1,409 |
1,737 |
2,093 |
2,443 |
2,551 |
3,197 |
3,866 |
4,568 |
5,474 |
6,332 |
Chocolate, confectioneries made of chocolate and sugar |
20 |
26 |
28 |
32 |
38 |
46 |
59 |
69 |
86 |
99 |
110 |
Source: CS MNE RK
Submitted data testify to the financial stability of the major goods manufacturing companies in the country.
However, the majority in the stock of shares (79.83%) of the largest producer “RAKHAT” JSC was acquired by LotteConfectionery Company, from the Republic of Korea, which can entail changes in a financial and marketing strategy of the company.
In total capacity utilization for the country makes 67%, which provides high capacity utilization for the largest producers - “RAKHAT” JSC and "Bayan Sulu" JSC.
Information about utilization of available capacity testifies to availability of problematic enterprises in terms of production output, in particular "KONFETY KARAGANDY" JSC (Karaganda) which has 14.5% in the industry volume, but it produced only 3% of the volume, which is related to obsolete equipment (the level of wear was 86% in accordance with data of the audited financial statements for 2014), and technology of production.
Table 5. Key indicators of the financial-economic activity of “RAKHAT” JSC and "Bayan Sulu" JSC, mln. tenge
Indicator |
“RAKHAT” JSC |
"Bayan Sulu" JSC |
||||
2014 |
2013 |
2014 |
2013 |
|
||
Sales proceeds |
36,178 |
31,214 |
19,546 |
17,460 |
|
|
including for export |
3,717 (10%) |
2,376 (8%) |
7,851 (40%) |
6,780 (39%) |
|
|
Cost of production |
28,278 |
25,319 |
16,168 |
15,263 |
|
|
Gross income |
7,900 |
5,895 |
3,378 |
2,197 |
|
|
Gross margin |
21.8% |
18.9% |
17.3% |
12.6% |
|
|
Net profit |
1,921 |
1,326 |
470 |
408 |
|
|
Current assets |
8,306 |
7,348 |
10,441 |
9,651 |
|
|
Current liabilities |
1,535 |
1,565 |
2,971 |
2,383 |
|
|
Equity capital |
19,286 |
17,365 |
13,408 |
13,345 |
|
|
Total balance |
21,665 |
19,825 |
19,356 |
17,835 |
|
|
Return on Assets (ROA) |
8.9% |
6.7% |
2.4% |
2.3% |
|
|
Return on equity (ROE) |
10.0% |
7.6% |
3.5% |
3.1% |
|
|
Equity to Total Assets |
0.89 |
0.88 |
0.69 |
0.75 |
|
|
Working capital ratio |
5.41 |
4.70 |
3.51 |
4.05 |
|
|
Source: audited financial statements of “RAKHAT” JSC and "Bayan Sulu" JSC for 2014
Thus the key reasons of capacity idleness in some regions of the country are physical depreciation and obsolescence.
Table 6. Used industry capacity in 2014, tons
|
Annual average capacity which operated in the accounting year |
Production output or the amount of processed raw material |
Use of annual average capacity in the accounting year, % |
The Republic of Kazakhstan |
146,741 |
99,706 |
67.9 |
Akmola |
|||
Aktobe |
7,705 |
||
Almaty |
9,414 |
7,776 |
82.6 |
Atyrau |
|||
East Kazakhstan |
1,428 |
3 |
0.2 |
Jambyl |
|||
West Kazakhstan |
2,012 |
2 |
0.1 |
Karaganda |
21,343 |
3,167 |
14.8 |
Kostanay |
34,330 |
30,989 |
90.3 |
Kyzylorda |
|||
Mangystau |
47 |
4 |
8.5 |
Pavlodar |
1,229 |
214 |
17.4 |
North Kazakhstan |
|||
South Kazakhstan |
8,417 |
3,620 |
43.0 |
Astana city |
|||
Almaty city |
60,816 |
53,931 |
88.7 |
Source: data released by the Committee of Statistics of the Ministry of National Economy of the Republic of Kazakhstan
Development of production of fresh raw materials together with semi-finished products for the industry in the regions where the primary industry capacities are located would be the most practicable solution: Almaty, South Kazakhstan, Kostanay regions.
In 2014 import made 56.6% of domestic consumption, and export – 29%. Russia is the major importer and exporter of the industry, it accounts for 75% of import and 66% of export. 26% of produced goods are exported to the countries of Central Asia.
Table 7. Export and import indicators
Import, tons |
Export, tons |
Import, thou. dollars |
Export, thou. dollars |
|
2005 |
52,300 |
2,711 |
85,159 |
3,671 |
2006 |
65,650 |
3,029 |
128,086 |
4,075 |
2007 |
81,310 |
3,450 |
196,058 |
5,588 |
2008 |
80,182 |
3,737 |
233,732 |
7,678 |
2009 |
67,888 |
7,475 |
181,260 |
14,810 |
2010 |
75,689 |
16,118 |
236,027 |
30,673 |
2011 |
80,916 |
21,319 |
270,287 |
49,237 |
2012 |
91,343 |
22,428 |
312,913 |
57,940 |
2013 |
100,315 |
25,490 |
345,695 |
66,626 |
2014 |
91,660 |
29,487 |
290,837 |
71,496 |
Source: SRC MF RK
According to the data of the Association of Confectioners of Kazakhstan, import of products from former Soviet republics at dumping prices still remains one of the problems topical for the confectionery industry[3].
Export market for chocolate and confectionery goods is characterized by a great number of competitors. At the same time a unique formula of manufactured products and geographical location make the competitive advantage. An expert review of the confectionery markets of the countries of Central Asia, Caucasus and Russia gives the figure of 4 mln tons of goods per year. It should be noted, that the countries of Central Asia do not have their own confectionery factories. According to the experts' estimates, potential for growth of Kazakhstan export is up to 300 thou. tons of confectionery goods[4].
At the same time foreign competitors are the principal problem for Kazakh producers. Russia is the major importer, being represented in the market of Kazakhstan by the following producers: "Altai" (the city of Barnaul), the Novosibirsk Chocolate Factory, NESTLE, "Samara", "Yuzhuralkonditer" (the city of Chelyabinsk), "Sladko" (the city of Yekaterinburg), as well as by other large Russian producers: "UNICONF" Holding Company, "Slavyanka", "Yaskino", "Ozerskiy Souvenir", "Korkunov". Ukraine also accounts for a large share of import, being represented by the following companies: "Kiev-Konti", "AVK", Roshen", "Biscuit" (the city of Kharkov).
Russia is the main competitor in the region. In Russia over 1 thousand factories produce confectioneries, with their total volume of production exceeding 3 mln. tons per year. More than 30% of production capacities belong to 25 largest confectionery factories, 50% of all capacities are concentrated in the Central region and North-Western region (14% of them – in Moscow), 15% – in Povolzhye, 13% – in Northern Caucasus, while other regions account for 2 - 7% of total capacity.
Sugar, glucose and syrup, honey, fats, milk and dairy products, eggs and egg products, cocoa beans, nuts, fruity-berry semi-finished products, flour, starch, taste and aromatic substances, baking powders etc. make raw materials for confectioneries.
Export of confectionery products from Kazakhstan to the countries of Central Asia (Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Azerbaijan) has become traditional. However, the recent years have seen the increase in the volumes of export to Russia. On the whole, the volume of export has increased 10 times since 2005.
Table 8. Export of confectionery products, tons
Country |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
All countries |
2,711 |
3,029 |
3,450 |
3,737 |
7,475 |
16,118 |
21,319 |
22,428 |
25,490 |
29,487 |
Russia |
92 |
56 |
40 |
48 |
2,081 |
7,330 |
13,067 |
12,795 |
14,699 |
19,455 |
Kyrgyzstan |
1,351 |
1,795 |
2,190 |
2,541 |
3,624 |
4,589 |
4,167 |
5,042 |
4,744 |
4,335 |
Tajikistan |
1,015 |
855 |
596 |
601 |
694 |
1,236 |
1,411 |
1,633 |
1,002 |
874 |
Uzbekistan |
2 |
22 |
211 |
80 |
0 |
696 |
911 |
725 |
1,555 |
1,534 |
Germany |
182 |
207 |
383 |
358 |
395 |
625 |
415 |
488 |
411 |
419 |
Turkmenistan |
48 |
32 |
3 |
0 |
525 |
1,273 |
451 |
506 |
725 |
827 |
Azerbaijan |
0 |
0 |
0 |
16 |
29 |
0 |
339 |
342 |
1,093 |
1,021 |
China |
0 |
0 |
0 |
9 |
0 |
70 |
178 |
294 |
860 |
712 |
Source: SRC MF RK
Thus expansion of export volumes to the historically developed directions looks promising.
There are no significant barriers on accessibility to the foreign markets.
1.2. Historical reference on the industry development
Traditionally three major confectionery factories produced chocolate and confectioneries in Kazakhstan.
“RAKHAT” JSC started its activity in 1924 on the basis of evacuated equipment to supply the front, hospitals, medical institutions, orphanages.
"KONFETY KARAGANDY" JSC. The main building of the factory was launched in 1956 and the enterprise got official status of the Karaganda Confectionery Factory.
"Bayan Sulu" JSC. The factory was founded in December 1974.
At present it has kept its specialization.
Export of confectionery products from Kazakhstan to the countries of Central Asia (Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Azerbaijan) has become traditional. Expansion of export volumes to the historically developed directions looks promising.
3. Barriers and restrictions
Below in the table you will find a barrier matrix.
Table 9. Matrix of problems and barriers in food industry
Title |
Confectioneries |
||
Non-competitive price |
Shortage of raw materials |
|
|
High tariffs on services |
v |
||
Expensive import packing materials |
v |
||
Weak accessibility to financial resources |
High debt ratio |
v |
|
High % rates |
v |
||
Absence of long-term crediting |
v |
||
Imperfection of taxation |
"1" VAT |
|
|
Personal income tax |
|
||
VAT relief to everyone |
v |
||
Corporate income tax relief at the update of fixed assets |
v |
||
VAT return at export |
v |
||
Limited distribution |
On the domestic market |
Adulteration |
v |
Dumping |
v |
||
Duties in trade |
|
||
absence of logistics infrastructure |
|
||
Duration of procedures, measures on customs-tariff regulation |
v |
||
Poor dietary practices |
v |
||
On the foreign market |
Trade barriers |
v |
|
Absence of logistics infrastructure |
|
||
Problems of institutional development |
Absence of veracious statistics for PEI |
v |
|
Shortage of industry specialists at the plant |
v |
||
Absence of a separate authorized body for processing of all agricultural raw materials and food production |
v |
4. A list of potential possibilities for entrepreneurship initiatives
Development of raw material base and production of semi-finished products to produce chocolate and confectioneries is seen to be practicable. Analysis and proposals on the development of raw materials production (sugar produced from sugar beet, fruit and nuts, corn syrup) are presented in the respective sections of this report.
The following projects are being currently implemented in this area:
"Bayan Sulu" JSC is implementing several investment projects:
· Construction of an automated warehousing terminal for storage and shipment of confectioneries – 294 mln. tenge;
· Acquisition of equipment to produce sugarplums – 500 mln. tenge;
· Acquisition of equipment to produce caramel – 965 mln. tenge.
At its plant in Shymkent “RAKHAT” JSC plans acquisition of 12 new production lines for confectioneries with the capacity of 9 thou. tons.
Production of chocolate and sugar confectioneries tends to be located in large cities, such as Almaty, Karaganda, Kostanay. “RAKHAT” JSC plans to open a large confectionery factory in Shymkent as well.
Table 10. Potential for expansion of production of confectioneries
Region |
Market (consumption), tons per year |
Production, tons per year |
Net import/export, tons |
Underutilised capacity |
The Republic of Kazakhstan |
163,305 |
101,139 |
62,166 |
46,371 |
Akmola |
2,488 |
711 |
1,777 |
|
Aktobe |
984 |
984 |
7,705 |
|
Almaty |
10,301 |
7,773 |
2,528 |
1,641 |
Atyrau |
432 |
432 |
0 |
|
East Kazakhstan |
2,436 |
3 |
2,433 |
1,425 |
Jambyl |
785 |
785 |
0 |
|
West Kazakhstan |
7 |
2 |
5 |
2,010 |
Karaganda |
15,865 |
3,167 |
12,698 |
18,176 |
Kostanay |
19,286 |
30,989 |
-11,703 |
3,341 |
Kyzylorda |
398 |
398 |
0 |
|
Mangystau |
524 |
4 |
520 |
43 |
Pavlodar |
3,041 |
843 |
2,198 |
386 |
North Kazakhstan |
616 |
57 |
559 |
|
South Kazakhstan |
9,336 |
3,653 |
5,683 |
4,764 |
Astana city |
2,858 |
1 |
2,857 |
|
Almaty city |
93,947 |
53,936 |
40,011 |
6,880 |
Thus development of the industry is related to development of domestic raw material base and modernization of existing facilities.
5. SWOT analysis of the industry.
Table 11. SWOT of chocolate and confectioneries
Strengths |
Weaknesses |
·Demand in export ·Modernization of the major producers |
·A large share of import of raw materials ·Depreciation of equipment |
Opportunities |
Threats |
·Increase of export to the countries of Central Asia, Caucasus, Russia ·Modernization of obsolete plants ·Development of production of raw materials and semi-finished products |
·Reduction of exporters' demand ·Increase of competition in the domestic market, including, on the part of importers |
Source: Expert estimate
[1]asiaagro.kz
[2]http://krahmalopatoka.kz/jk/about.php
[3]http://forbes.kz/finances/markets/pochemu_konditerskaya_otrasl_stala_padcheritsey_ekonomiki
[4]http://inform.kz/rus/article/2823933
Review on milk industry
1. Introduction.
Agro-industrial complex of Kazakhstan is state priority. One of major factors providing sustainable development of agro-industrial complex is focus on cost efficiency of production and conversion of agricultural production that assumes rational and complex use of land, work, material and raw material resources, special part is given to rational development in territorial aspect promoting more effective use of main types of resources.
About 1,7% of GDP of the Republic of Kazakhstan is spent on food and processing industry which include oil and fat production and dairy industry, meat processing, fruit and vegetables, production of confectionery, sugar, cotton fiber and feed, and there have been prepared several short reviews.
In the first part of this overview there is a description of contribution of industry and structure of food industry, review of domestic market of dairy industry, historical information on development of industry, existing barriers and restrictions and the list of capabilities for entrepreneurial initiatives.
1.1. Contribution of food industry to economy and its structure
About 1500 enterprises in Kazakhstan turn out food and agricultural products industry which accounts for 1,7% of GDP of the state. In animal industry which accounts for 48% of gross output of agricultural industry the major lines are meat and dairy cattle breeding.
Annual production of dairy products in Kazakhstan amounts about 3 million tons in a dairy equivalent. Regions leading the production of dairy products: Akmola, Almaty, East Kazakhstan, Karaganda, Kostanay, Pavlodar, North Kazakhstan regions, and also in Almaty city. Cumulative production capacities of the largest enterprises on milk processing in Kazakhstan are capable to process over 6 million tons of raw materials per year and turn out up to 1,5 tons of end products.
In GDP of the Republic of Kazakhstan the share of processing industry makes 10%. The share of food production in 2014 made 1,7% of all-republican GDP, and 16% in processing industry.
Table 1. GRP in 2013-2014, mln. tenge
Industry |
mln. tenge |
Share, % |
Gross domestic product |
39040 898,9 |
100,0 |
Agriculture, forestry and fishing industry |
1 717 719,1 |
4,4 |
Sector of industry |
10 818 122,2 |
27,6 |
Food industry |
675 785,5 |
1,7 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Gross output of agricultural industry in the Republic of Kazakhstan in 2014 made 2,5 trillion tenge. Production of plant cultivation and animal husbandry are rather equal in value terms. The greatest share in the cost of manufactured agricultural production: grain and leguminous crops – 19%, dairy cattle breeding – 15%, cattle breeding – 14%, vegetables – 10%, feeding crops – 9% and small cattle breeding– 6% (see the table below).
Table 2. The structure of agricultural production of the Republic of Kazakhstan in 2014
Production |
Product output, mln. tenge |
In total, % |
Agricultural products in total |
2 527 890 |
100% |
Plant products |
1 327 855 |
52,5% |
Animal products |
1 189 555 |
47,5% |
Ranching of dairy breed |
377 158 |
14,9% |
Breeding of other cattle and buffalos |
355 319 |
14,1% |
Horse and hoof breeding |
111 081 |
4,4% |
Camel breeding |
11 089 |
0,4% |
Sheep and goat breeding |
155 722 |
6,2% |
Pig breeding |
58 954 |
2,3% |
Poultry breeding |
112 345 |
4,4% |
Breeding |
7 888 |
0,3% |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
In 2014 foreign trade turnover of the Republic of Kazakhstan made 119 450,6 million US dollars and decreased by 10,5 % in comparison with 2013 including export – 78 237,8 million US dollars (reduction by 7,6%), import – 41 212,8 million US dollars 5% (reduction by 15,6%).
Table 3. The Structure of export and import of the Republic of Kazakhstan according to major commodity lines
Code Of Customs Union Commodity Classification of Foreign Economic Activity |
Name of commodity line |
Export |
Import |
||
mln. US dollars |
In total, % |
mln. US dollars. |
In total, % |
||
In total |
79 459,8 |
100,0 |
41 295,5 |
100,0 |
|
01-24 |
Animal and plant products, including finished food products |
2 637,7 |
3,3 |
4 335,9 |
10,5 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Export to the Russian Federation in 2014 made 5 178,1 million US dollars (reduction by 11,9%) - in comparison with 2013) import – 13 730,3 million US dollars (reduction by 23,6%). Import of agricultural and food products (dairy products, flour confectionery, tobacco and other) made 1612 mln. dollars.
Export to the Republic of Belarus in 2014 made 29,2 million US dollars (reduction by 49,9% in 2013) import made 727,6 million US dollars (increase of 4,2%). The share of agricultural and food products made 18,3% (more than 40% refer to dairy products).
Export to China in 2014 made 9815 million US dollars, import – 7367 million US dollars.
Export to Kyrgyzstan in 2014 made 705 million US dollars, import – 351 million US dollars. In export agrofood products have leading positions, their share makes 39% (grain, tobacco and tobacco products). Textile products are mostly imported (clothes) – 27%, agrofood products (dairy products, vegetables and fruit).
Export to Uzbekistan in 2014 made 1083 million US dollars, import – 1018 million US dollars. The main export volume occupy is occupied by agrofood products - 45,8% (flour, grain). Agrofood products are mostly imported (vegetables and fruit) – 42%.
1.2. Capacity of domestic market.
In the period of time since 2003 to 2014 annual production of cow's milk in Kazakhstan increased for 17% - from 4 278 to 5 020 thousand tons, dairy cattle number has increased by 23% - from 3 398 to 4 176 thousand heads (see the table below). For considered period of time dairy animal husbandry demonstrated annual strong growth. The exception is 2011 and 2012 when there was decrease in livestock and production of milk connected with refining of statistics on results of carried-out census of livestock.
Table 4. Index numbers of dairy husbandry in 2003-2014.
Years |
Production of cow’s milk, thousand tones |
Livestock of dairy cattle, thousand tones |
Cows, thousand heads |
Average yield per cow, ton/year |
2003 |
4 278 |
3 398 |
1 571 |
2,72 |
2004 |
4 518 |
3 630 |
1 679 |
2,69 |
2005 |
4 715 |
3 807 |
1 761 |
2,68 |
2006 |
4 892 |
3 948 |
1 826 |
2,68 |
2007 |
5 038 |
4 074 |
1 884 |
2,67 |
2008 |
5 163 |
4 179 |
1 933 |
2,67 |
2009 |
5 269 |
4 252 |
1 966 |
2,68 |
2010 |
5 348 |
4 308 |
1 992 |
2,68 |
2011 |
5 198 |
3 978 |
1 840 |
2,83 |
2012 |
4 816 |
3 938 |
1 778 |
2,71 |
2013 |
4 891 |
4 144 |
1 933 |
2,53 |
2014 |
5 020 |
4 176 |
1 962 |
2,56 |
Note: data on livestock of the period of time since 2003 to 2011 received by calculation.
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan.
Since 2003 to 2014 there increased industrial production of main types of dairy products in the Republic of Kazakhstan: milk and cream – from 148 to 472 thousand tons, milk in solid form – from 2 to 3 thousand tons, butter – from 11 to 19 thousand tons, cheeses and cottage cheese – from 11 to 22 thousand tons, yogurts and sour-milk production – from 47 to 179 thousand tons.
Table 5. Production of major types of dairy products in 2003-2014, thousand tones
Years |
Processed milk, liquid milk and cream |
Milk in solid form |
Sweet butter |
Cheese and cottage cheese |
Yogurt, milk and sour cream |
2003 |
148,0 |
2,1 |
10,6 |
11,2 |
46,8 |
2004 |
154,4 |
2,6 |
13,0 |
13,0 |
53,4 |
2005 |
179,7 |
4,3 |
19,7 |
15,0 |
60,9 |
2006 |
225,8 |
4,4 |
18,6 |
17,0 |
69,4 |
2007 |
261,1 |
3,8 |
19,7 |
17,2 |
79,1 |
2008 |
265,5 |
3,4 |
16,6 |
15,5 |
90,2 |
2009 |
250,7 |
3,1 |
15,3 |
15,6 |
102,8 |
2010 |
295,0 |
2,6 |
14,0 |
16,3 |
117,5 |
2011 |
338,5 |
2,9 |
14,6 |
17,6 |
134,8 |
2012 |
372,5 |
1,8 |
12,2 |
19,2 |
156,3 |
2013 |
440,3 |
2,4 |
14,1 |
22,1 |
180,2 |
2014 |
472,9 |
3,1 |
18,8 |
22,2 |
179,0 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan.
Analysis of resource balance and use of dairy products in 2003-2014 showed the tend of growth of general production of milk. The decrease in production fixed in 2012 has been connected with refining of statistics after carrying out census of cattle livestock within a country. During the period of time from 2003 to 2008 there observed growth of import and consumption per capita with economic growth and subsequent reducing in 2009-2010 in case of delay of growth rates of economy. From 2011 to 2014 there observed strong growth of consumption and import of dairy products. Export of dairy products is insignificant and does not exceed 1 percent from the output of produced milk. At the same time the share of import makes up to 20 percent from internal consumption of dairy products within country (see the table below).
Table 6. Resource balance and usage of milk in 2003-2014, thousand tones
Index |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Stocks for the beginning of year |
521,7 |
449,0 |
714,4 |
630,9 |
699,3 |
1216,1 |
609,1 |
619,9 |
619,5 |
620,0 |
584,8 |
511,1 |
Production |
4316,7 |
4556,8 |
4749,2 |
4926,0 |
5073,2 |
5198,0 |
5303,9 |
5381,2 |
5232,5 |
4851,6 |
4930,3 |
5067,9 |
Import |
398,3 |
449,9 |
431,9 |
472,6 |
764,2 |
860,1 |
544,0 |
452,5 |
606,7 |
620,1 |
645,7 |
684,6 |
Resources in total |
5236,7 |
5455,7 |
5895,5 |
6029,5 |
6536,7 |
7274,2 |
6457,0 |
6453,6 |
6458,7 |
6091,7 |
6160,8 |
6263,6 |
Feeding |
569,6 |
579,8 |
587,5 |
596,9 |
601,5 |
644,2 |
1621,5 |
1645,1 |
1599,7 |
1483,2 |
1507,3 |
1576,1 |
Other industrial use |
0,5 |
0,5 |
0,6 |
0,6 |
0,6 |
0,7 |
0,6 |
0,6 |
0,6 |
0,6 |
0,6 |
0,6 |
Losses |
26,3 |
27,3 |
29,5 |
30,1 |
30,4 |
36,4 |
32,3 |
32,3 |
32,3 |
30,5 |
30,8 |
31,3 |
Export |
59,2 |
41,7 |
62,0 |
36,0 |
40,2 |
23,0 |
14,4 |
6,8 |
8,5 |
11,2 |
33,3 |
40,0 |
Private consumption |
4132,6 |
4092,0 |
4585,1 |
4666,6 |
4647,8 |
4806,9 |
4168,3 |
4149,2 |
4197,6 |
3981,4 |
4077,7 |
4084,2 |
Per head consumption, kg/year |
277,2 |
272,6 |
302,7 |
304,8 |
300,2 |
306,7 |
259,0 |
254,2 |
253,5 |
237,1 |
239,4 |
236,2 |
Stocks for the end of the year |
449,0 |
714,4 |
630,9 |
699,3 |
1216,1 |
1763,0 |
619,9 |
619,5 |
620,0 |
584,8 |
511,1 |
531,4 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan.
From 2003 for 2014 Kazakhstan is a net importer of dairy products.
Table 7. Production and consumption of dairy products in the Republic of Kazakhstan in 2003-2014, in a dairy equivalent, thousand tons
Years |
Production |
Consumption |
Net import |
2003 |
1 128 |
3 439 |
-2 311 |
2004 |
1 232 |
3 467 |
-2 235 |
2005 |
1 534 |
3 500 |
-1 967 |
2006 |
1 779 |
3 541 |
-1 762 |
2007 |
1 989 |
3 581 |
-1 592 |
2008 |
1 932 |
3 676 |
-1 744 |
2009 |
1 825 |
3 727 |
-1 902 |
2010 |
2 040 |
3 781 |
-1 741 |
2011 |
2 300 |
3 835 |
-1 535 |
2012 |
2 442 |
3 889 |
-1 447 |
2013 |
2 876 |
3 947 |
-1 071 |
2014 |
3 153 |
4 006 |
-853 |
Note: data on consumption received by calculation.
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Committee of statistics of the Ministry of national economy of the Republic of Kazakhstan maintains records of the volume of retail group only in large food groups. Food products make about 1,8 trillion tenge or 29% in volume of retail trade. 16% in retail trade refer to meat, dairy products – 10%, fruit and vegetables – 12% and drinks -13,8%. From 2003 for 2014 the output of food products in retail trade increased 4,3 times. It should be noted that Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan does not maintain records of the structure of the volume of retail trade by regions.
Table 8. Structure and dynamics of the volume of retail trade on separate commodity groups, one billion tenge
Products |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
In total |
1 219 |
1 409 |
1 737 |
2 093 |
2 443 |
2 551 |
3 197 |
3 866 |
4 568 |
5 474 |
6 332 |
Sale of food products |
419 |
490 |
592 |
689 |
820 |
930 |
1 050 |
1 226 |
1 418 |
1 610 |
1 821 |
Dairy products and eggs |
36 |
45 |
50 |
64 |
83 |
103 |
116 |
135 |
158 |
185 |
182 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
At this stage of development dairy industry of Kazakhstan is focused on satisfaction of internal demand and substitution of import of dairy products (a quarter of domestic market). The current export volumes of dairy products are insignificant and do not exceed 2-3% of production.
Amounts of necessary raw materials for a full load of production capacities of dairy products exceed volume of actual import in Akmola, Almaty, Kostanay and North Kazakhstan regions. It means that nowadays these areas completely provide themselves with dairy products and deliver it to other regions. In Aktobe, East Kazakhstan, Pavlodar regions, and also in Almaty city increase in refining capacity utilization by expansion of production of high-quality raw materials allows to replace import. In Zhambyl, West Kazakhstan, Karaganda, South Kazakhstan regions, and also in Astana city import substitution requires increase in both refinery capacities, and production of high-quality milk.
Table 9. Necessary raw materials for plants of dairy conversion and import of dairy products in 2014, in milk equivalent, thousand tons
№ |
Region/city |
Necessary raw material |
Import of dairy products |
1 |
Akmola region |
536 |
0 |
2 |
Aktobe region |
173 |
140 |
3 |
Almaty region |
692 |
0 |
4 |
East Kazakhstan region |
233 |
197 |
5 |
Zhambyl region |
99 |
234 |
6 |
West Kazakhstan region |
60 |
144 |
7 |
Karaganda region |
161 |
210 |
8 |
Kostanay region |
80 |
0 |
9 |
Pavlodar region |
149 |
34 |
10 |
North Kazakhstan region |
692 |
0 |
11 |
South Kazkahstan region |
296 |
566 |
12 |
Almaty city |
588 |
34 |
13 |
Astana city |
21 |
181 |
1.3. Historical background on industry development.
Since 1991 the structure of GDP of the Republic of Kazakhstan has changed cardinally, especially as for the share of agricultural industry which has decreased by 7 times in relation to 1991 from 30% to 4,5% in 2013 and 2014. The sharpest slowdown in production of agricultural industry took place in the first half of the nineties in all the sectors of economy.
During Soviet times for maintaining dairy breeding 124 of 160 districts of regions of Kazakhstan were recommended. For today according to the Order of the Minister of Agriculture No. 1-1/277 as of 2014.05.23 "On approval of recommended scheme of specialization of regions in optimal utilization of agricultural lands for production of specific types of agricultural production" there were recommended 119 of 160 districts of the regions of Kazakhstan for carrying out dairy husbandry. The regions from the drawing presented below were excluded from the current specialization:
Drawing 1. Kazakhstan Regions recommended for dairy breeding during USSR times
Source: business reference book
At this stage of development dairy industry of Kazakhstan is focused on satisfaction of domestic demand and import substitution of dairy products which makes about a quarter of domestic market. Current export volumes of dairy products are insignificant and do not exceed 2-3% of production.
2. The number of enterprises (players) in the market
Annual production of dairy products in Kazakhstan makes about 3 million tons in a dairy equivalent. Leading regions in production of dairy products are: Akmola, Almaty, East Kazakhstan, Karaganda, Kostanay, Pavlodar, North Kazakhstan regions, and also Almaty city. Aggregate capacities of the largest enterprises on milk processing in Kazakhstan are capable to process over 6 million tons of raw materials a year and to produce up to 1,5 tons of finished goods.
Competition level in dairy industry is rather high. The largest processing companies are concentrated in regions with the best agroclimatic conditions for production of raw materials in Akmola, Almaty, Kostanay, Pavlodar and North Kazakhstan regions. The products manufactured in these regions are available in all other regions of Kazakhstan. The largest processors are: «Agrarian and Industrial Complex Adal» JSC, Fudmaster Company JSC, Sut JSC, «Zenchenko and K» CT, «Maslo-Del» LLP, «Eco milk» LLP, «Emile Company» LLP, «Agrofirma Rodin» LLP, «Bereke LLP, «DEP» LLP, «Fudmaster-Shymkent Company» LLP, «Lider-2010» LLP, «Milkh» LLP, «Moloko Sinegorye» LLP, «Solnechniy Milk Recombining Plant» LLP, «Rayymbek Agro» LLP, «Shin-Lyne» LLP, «EMIL» LLP, «Maslo-Del Petropavlovsk» LLP, «Milk prozhekt» LLP, «Molprodukt» LLP.
Today processing companies incur deficit of high-quality raw materials, production of dairy and commodity farms is popular and make full use. Owing to specifics of industry production of raw materials is diversified by small and average producers of Kazakhstan regions. There are no "mega-farms" focused on production of raw materials with livestock of 3-5 thousand heads by the example of east regions of Germany or Belarus. In each region of Kazakhstan with favorable agroclimatic conditions for dairy cattle breeding there are from 2 to 5 large-scale dairy and commodity farms with a livestock over 300-500 heads, and also a large number of small farms with a smaller livestock.
3. Barriers and Restrictions
Barrier matrix is presented below
Table 10. Matrix of barriers and problems in food industry
Name |
Milk and milk products |
||
Uncompetitiveness at the price |
Lack of raw materials |
v |
|
high service tariffs |
v |
||
expensive import containers |
v |
||
Low access to financial resources |
re-crediting |
v |
|
high percentage rate |
v |
||
lack of long-term crediting |
v |
||
Underdevelopment of taxation |
"1" VAT |
v |
|
PIT |
v |
||
VAT Privilege |
|
||
CIT privilege at updating of permanent assets |
v |
||
Return of VAT for export |
|
||
Restrictive regulation of sales |
At the domestic market |
falsification |
v |
dumping |
v |
||
exaction in trade |
v |
||
lack of logistic infrastructure |
v |
||
duration of procedures of customs and tariff regulation |
v |
||
absence of food culture |
v |
||
At the external market |
trade barriers |
|
|
lack of logistic infrastructure |
|
||
Challenges of institutional development |
lack of a reliable PES statistic records |
v |
|
deficit of industry specialists in production works |
v |
||
absence of separate authorized body on conversion of all agricultural raw materials and manufacturing of food products |
v |
4. List of potential opportunities for entrepreneurial initiatives.
Proceeding from capacity of possible markets of agricultural production and processing products there is a high potential on development of production and processing of dairy products.
Annual consumption of all types of dairy products in Kazakhstan amounts to about 4 million tons in dairy equivalent and consumption per capita is up to 230 kg. Most of all dairy products is consumed in the most inhabited regions of Kazakhstan: Almaty, East Kazakhstan, Zhambyl, Karaganda and South
The most part of processed dairy products are concentrated in regions, with developed dairy animal husbandry providing source of raw materials: Akmola, Almaty, East Kazakhstan, Karaganda, Kostanay, Pavlodar, North Kazakhstan regions, and also in Almaty city.
According to the data of republican chamber on dairy cattle breeding as on 1/1/2015 in the regions of Kazakhstan there are 55 large-scale dairy and commodity farms with a livestock over 500 heads and 112 milk farms with a livestock from 100 to 500 heads. General livestock of large-scale and average farms amounts to 64 thousand heads.
In all regions of Kazakhstan, except for Kostanay and Mangystau regions, the utilization of capacity on milk processing does not exceed 50%. Basic reasons of incomplete utilization are considered lack of high-quality raw materials and lack of current assets.
The total amount of import of dairy products to Kazakhstan makes about 1 million tons in a dairy equivalent. In all regions, except for Akmola, Almaty, Kostanay and North Kazakhstan regions the consumption of dairy products exceeds production and the regions are becoming net importers.
Import substitution of dairy products requires additional production over 1 million tons of milk. Proceeding from requirements of "transport leg", the maximum remoteness of dairy and commercial farm from the plant on milk processing cannot exceed 100 km. The majority of operating processing plants are located in densely populated areas with lack of free lands for placement of large and dairy and commercial farms. Besides, experience of implementation of successful projects has shown feasibility of development of vertically integrated farms: large CDF (Сommercial dairy farm) and milk-processing plant with its own brand (agrofarm "Homeland", "Zenchenko" and others).
In regions having plant which buys milk from farmers at undercharge prices (for example, in Merken district of Zhambyl region local plant buys milk at the price of 40 tenge/kg with payment delays). In regions with competition between milk plants 6 plants make the purchase at the price of 80 tenge/kg in Talgarskiy district, Almaty region. Taking into account high level of depreciation of operating plants and above mentioned factors there is a necessity of development of clusters in production and processing of milk, including in the models Arla and Frontera according to the National modernization plan (step 61). In some cases it is necessary to consider CDF projects, focused on operating production.
Replacement of 1 million tons of import of dairy products requires opening about 120 large CDF and about 200 family dairy farms.
The projects of large and commodity CDF recommended for implementation are focused at feeding of livestock of 1000 heads with young growth cattle. The smaller livestock limits opportunities for management of herd for ensuring year-round rhythmical supply of milk for processing. Each farm will demand at least 1000 Hectares of irrigation or 2000 Hectares rainfed lands for feed providing. The estimated cost of each farm makes about 10-12 million US dollars. The cost of projects of "family" farms for implementation of "dairy clusters" with up to 200 heads makes about 2,5-3 million US dollars. Each family farm requires allocation of at least 200 Hectares of irrigation or 400 Hectares of rainfed lands for feed providing.
Processing of milk of large CDF requires construction of 17 big plants with capacity more than 50 thousand tons. The cost of everyone constitutes about 7-10 million US dollars depending on the range of manufactured production. Servicing of family farms as a part of "dairy clusters" requires construction of 17 average plants capacity from 20 thousand tons. The cost of average plant is about 5 million US dollars
Agroclimatic restrictions for profitable production of milk include: annual rainfall level, not lower than 200 mm, the bonitet point of the lands providing food supply shall be not lower than 15. In the territory of Kazakhstan districts of the following regions meet these requirements: Akmola, Aktobe, Almaty, East Kazakhstan, Zhambyl, West Kazakhstan, Karaganda, Kostanay, Pavlodar, North Kazakhstan and South Kazakhstan.
When choosing the area of placement of milk processing plant it is necessary to consider that the remoteness from large-scale dairy farms should be no more than 100 km. Therefore, milk processing plants shall be also located in the above-stated areas.
For implementation of potential of development of dairy cattle breeding it is necessary to create conditions for organization and effective activities of large-scale commercial dairy farms and cooperation of small family farms, and also the solution of above-mentioned problems with feed (first of all irrigated lands for succulent food), veterinary, breeding base, financing. Inflow of investments in milk production of about 1,8 bln. US dollars and in milk processing – about 250 mln. US dollars that will allow to produce and process in addition up to 1 million tons of milk annually. Development of commodity productions will allow to make chain of industrial processing of animal products: meat processing plants provided with deliveries of cattle, processing of skins removed in industrial conditions, wool, giblets.
5. SWOT analysis of industry.
· Strengths of dairy breeding:
· Large areas of lands of agricultural appointment suitable for pasturable animal husbandry and rainfed cultivation of feed crops.
· Big livestock of dairy cattle.
· Historically developed successful experience of animal husbandry.
· Weaknesses of dairy husbandry:
· Small production output. About 80% of milk is produced in personal household farms with a small livestock in separately taken estation.
· Low milk yield. Average milk yield in Kazakhstan makes about 2,5 thousand liters a year. While in EU countries similar indicator reaches over 7 thousand liters a year, in the Russian Federation – over 3 thousand liters a year, in Belarus – over 5 thousand liters a year.
· Low product quality. Milk in personal household farms is often produced without sufficient veterinary control and hygienic requirements and that is why produced milk contains bacteria and it is unsuitable for processing. Lack of feed additives and premixes does not provide high content of proteins and fats necessary for processing companies.
· Low share of breeding livestock does not provide genetic improvement of livestock.
· Deficit of succulent food and feed conveyors necessary for dairy husbandry. Reducing of acreage of feeding crops for cereal crops resulted in lack of feed for dairy husbandry.
· Shortage of qualified personnel: cattle breeders, veterinarians and livestock specialists.
· Strengths of an industry of dairy conversion:
· The low prices of raw materials providing low cost value and price competitiveness of finished goods.
· The product demand growing at high rates giving opportunities for expansion of deliveries.
· High profitability of production.
· Weaknesses of milk processing industry:
· Lack of high-quality raw materials because of low quality considerable parts of milk made in personal household farms.
· Rare deliveries of raw materials. Personal household farms owing to small scale of separate farms cannot provide effective management of herd and as a result the most part of milk is produced in a warm season while in winter and off-season of supply of milk decrease.
· Lack of current assets. The majority of overworking entities have low load of production at the level of about 50% because of lack of working capital for purchase of raw materials and current payments;
· Low production utilization - about 50% due to lack of raw materials and current assets.
· Insufficiently developed infrastructure on procurement of raw materials. Producers of milk scatter a great distance away from processors and have no transport for deliveries of raw materials. Formerly available structure of purchasing points of milk is lost.
· Physical and intellectual wear of production assets. Many milk processing companies work on the production equipment brought into operation more than 30 years ago. At the same time annually there appears more effective and modern equipment.
· High dependence on imported desiccated milk. About 20% of dairy products of Kazakhstan are made on the basis of imported desiccated milk, mostly produced in Belarus.
Capabilities of dairy husbandry:
· Increase of milk yields and quality of issued milk due to improvement of conditions of cattle feeding and livestock breeding.
· Decrease in transactional expenses in production and sales of products by means of creation of new large and dairy commercial farms and cooperation of agricultural producers and milk processors.
· Increase of frequency of milk processing delivery by means of cattle herds control in large and commodity productions;
· Main threats of industry of dairy husbandry:
· Further reduction of acreage of feeding crops for cereal crops.
• Reduction of area of pastures and feeding crops due to aridization. Reduction of moistening of territories as a result of climate warming in the conditions of sharp and continental climate of Kazakhstan will lead to critical decrease in level of precipitation and shallowing of rivers that will change agroclimatic conditions and make them unsuitable for cultivation of feeding crops and pasture management.
• Epizootic flashes can be followed by a mass loss of cattle and decline in quality of production.
• Sales slowdown in production of processing companies.
Capabilities of milk-processing industry:
· Expansion of production due to additional charge of not used capacities;
· Increase in deliveries of raw materials to processing companies by means of development of network of purchasing centers;
· Expansion of deliveries due to import substitution;
· Increase of economic profitability of production due to intensification of milk processing –cheese, milk production in solid form (desiccated milk).
Threats of industry of dairy conversion:
· Competitive pressure of producers from EAEU countries.
· Interruptions in deliveries of imported raw materials – powdered milk from EAEU countries.
· Growth retardation which is often followed by decrease in effective demand for dairy products.
Table 11. SWOT – analysis of milk processing industry in Kazakhstan
Strengths · Low prices on raw materials · Growing demand for production · High profitability of production of dairy output
|
Weaknesses · Lack of high-quality raw materials · Rare deliveries of raw materials · Lack of current assets · Low loading of production · Insufficiently developed infrastructure on procurement of raw materials · Physical and intellectual wear of production equipment · High dependence on imported raw materials – desiccated milk |
Capabilities · Expansion of production due to additional charge of not used capacities · Expansion in deliveries of raw materials · Expansion of deliveries of finished goods due to import substitution · Increase of profitability due to intensification of processing |
Threats · Interruptions in deliveries of imported raw materials – desiccated milk · Slow down of economic growth |
Source: Expert review
Review on metallurgical industry
1. Description of the sector.
Ore mining and metallurgical industry is the leading sector of the national economy, which accounts for 15.2% of total industrial output. Many mining and metallurgical enterprises are town-forming, and therefore the development of the mining and metallurgical complex stands for the development of cities, and jobs for more than 200 thousand people.
Mining and metallurgical complex encompasses various activities, ranging from exploration to production of finished goods and its promotion, both on domestic and on foreign markets, that is why, some brief reviews have been prepared.
The first part of this review represents a description of the structure of non-ferrous metallurgy in Kazakhstan, then the domestic market for the production of non-ferrous metal products are considered, the key players and their market shares, barriers and limitations are outlined, and it also provides a list of potential opportunities for entrepreneurial initiatives.
1.1. The structure of non-ferrous metallurgy
The volume of production of metallurgical industry in Kazakhstan in 2014 amounted to 1.915.250.000 tenge in current prices or 122% as compared to 2010 (1.569.969.000 tenge).
In the overall structure of industrial production in Kazakhstan, the share of industry at the end of 2014 was 10.4% in the structure of the manufacturing industry (5.872.834.000 tenge.) – 32.6%.
Assessing the dynamics of production volumes of non-ferrous metallurgy in terms of value, one should note the positive dynamics – growth rate for 2010-2014 amounted to 129.4%.
Table 1. The production volume of nonferrous metallurgy in Kazakhstan in 2010-2014, mln. tenge.
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010 |
Manufacture of basic precious and non-ferrous metals |
883001 |
1156016 |
1243957 |
1107458 |
1141898 |
129,4 |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
In the overall structure of industrial production in the Republic of Kazakhstan, the share of non-ferrous metallurgy at the end of 2014 accounted for 6.2% in the structure of the metallurgy – 59.62%.
In the production of non-ferrous metals for 2010-2014, in volume terms, growth rate increased for the following products: coarse silver – 178.2%, refined silver – 178.2%, coarse gold – 164.3%, refined gold – 200.4%, refined coarse lead – 121.5%, coarse zinc – 101.9%.
The rate of growth reduced for the following products: coarse aluminum – 87.2%, refined copper – 90.9%, other non-ferrous metals and articles thereof – 56.1%. Production volumes of non-ferrous metal products for 2010-2014, in volume terms, are given in Table 6.
Table 2. The production volume of nonferrous metal products in volume terms in 2010-2014.
|
2010 |
2011 |
2012 |
2013 |
2014 |
2014/2010,% |
Coarse or semiraw silver, or in the form of powder, kg, including: |
550735 |
644676 |
963179 |
963580 |
981882 |
178,2 |
Refined silver, kg |
547665 |
640664 |
958493 |
958204 |
976434 |
178,2 |
Coarse or semiraw gold, or in the form of powder, kg, including: |
29941 |
36670 |
39911 |
42390 |
49207 |
164,3 |
Refined gold, kg |
13313 |
16632 |
21134 |
23219 |
26680 |
200,4 |
Coarse aluminum; alumina, tones |
1866962 |
1918766 |
1760412 |
1840563 |
1627430 |
87,2 |
Refined coarse lead, except for powders and flakes, tons |
103110 |
111249 |
88099 |
90750 |
125289 |
121,5 |
Coarse zinc, tons |
318800 |
319752 |
319847 |
319897 |
324754 |
101,9 |
Refined copper in the form of billets, except for sintered items subjected to rolling, extruding, and forging, tons |
323428 |
338346 |
367160 |
350837 |
293948 |
90,9 |
Non-ferrous metals, etc, and products thereof, tons |
35532 |
49113 |
51449 |
26969 |
19932 |
56,1 |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
In 2014, the largest share of investment in fixed assets in metallurgy accounted for the production of basic precious and non-ferrous metals – 49.8% (or 149.9 billion tenge).
In 2010 – 2014, one traced the same trend in the formation of sources of investments in fixed capital in industries of the mining and metallurgical complex. Thus, the own funds of enterprises have the largest share in the total investment in fixed assets. However, during this period, the share of enterprises' own funds decreased due to the growth in the share of other borrowed funds, including foreign investment.
As of August 1, 2015, 166 companies with foreign capital operated in the mining and metallurgical complex of Kazakhstan, including 23 operating in the production of principle precious and non-ferrous metals.
Table 3. Number of operating companies of the mining and metallurgical complex with foreign capital, as of 1 August 2015, units
|
Total |
Joint ventures (with foreign participation) |
Foreign |
Iron ore mining (071) |
8 |
4 |
4 |
Ore mining of non-ferrous metals (072) |
85 |
43 |
42 |
Production of pig iron, steel and ferroalloys, manufacturing of tubes, pipes, profiles, fittings made of steel, production of other steel products through first processing (FERROUS METALLURGY (241,242,243)) |
42 |
20 |
22 |
Production of basic precious and non-ferrous metals (244) |
23 |
10 |
13 |
Casting of metals (245) |
8 |
4 |
4 |
TOTAL |
166 |
81 |
85 |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
In the steel industry, reduction of the number of personnel occurred at a higher rate as compared to the manufacturing industry of Kazakhstan as a whole. Thus, the payroll number of personnel decreased from 129.4 thousand people in 2010 to 79.7 thousand people in 2014, or by 61.9%. The actual number decreased also sharply from 125.6 thousand people in 2010 to 77.0 thousand people in 2014, or by 61.3%. The difference between the payroll and the actual number of personnel in 2014 amounted to 2.7 thousand people, which is 29% less as compared to 2010 (i.e. 3.8 thousand vacancies).
The highest rates of reduction of the number of personnel were typical for casting metals, where the payroll and the actual number in 2010-2014 declined by more than 4 times. A similar trend was observed in the production of iron, steel and ferroalloys, basic precious and non-ferrous metals, where the payroll and the actual number in 2010-2014 decreased by one third.
Kazakhstani export of processed products of the mining and metallurgical complex in the Customs Union countries in 2014 amounted to 1.209 million of US dollars, or 45.3% of the total processed exports of Kazakhstan in the Customs Union countries.
The structure of the export of processed products includes as follows: aluminum oxide, other than artificial corundum; coarse aluminum.
Table 4. Structure of Kazakhstani export of processed products of the mining and metallurgical complex in the Customs Union countries, in 2014
|
2014* |
||
mln of US dollars |
in % to the export volume of processed goods |
2014 in % as compared to 2013 |
|
Processed products – the Republic of Kazakhstan, total |
2 666,9 |
100,0 |
83,1 |
including: |
|
|
|
Aluminum oxide, other than artificial corundum |
290,3 |
10,9 |
94,9 |
Natural uranium and its compounds |
217,3 |
8,1 |
66,6 |
Coarse aluminum |
202,7 |
7,6 |
74,1 |
Other flat-rolled products of iron or non-alloy steel with width of 600 mm or more, galvanized by other means |
198,6 |
7,4 |
83,6 |
Ferrosilicon manganese |
94,1 |
3,5 |
99,7 |
Flat-rolled products of iron or non-alloy steel with width of 600 mm or more, hot-rolled, unclad, without galvanized or other coating |
79,4 |
3,0 |
83,7 |
Electricity |
76,3 |
2,9 |
69,2 |
Ferrosilicon chrome |
68,4 |
2,6 |
131,7 |
Other casing, pumping and compressor, and drill pipes for oil or gas drilling, made of ferrous metals |
58,1 |
2,2 |
76,5 |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
Kazakhstani import of processed goods of the mining and metallurgical complex from the Customs Union countries was not carried out in 2014.
Imports from other countries of the world include small amounts of waste and scrap of tantalum, copper and aluminum.
1.3. Capacity of the internal market.
The formation of the market capacity of products from the mining and metallurgical complex and its growth rates were influenced by both external (changes in the world market for the products of the industry), and internal factors, determined by the prospect of the development of individual domestic enterprises and domestic industries.
Ø The highest level of market capacity in non-ferrous metallurgy in Kazakhstan in 2014 was observed regarding the following products:
Ø Jewelry articles made of precious metals and parts thereof – market capacity was 8048777.7 tons, or increased by 1.24 time as compared to 2010;
Ø Unrefined copper (including blister copper); copper anodes for electrolytic refining, except for copper for plating, anodes for electrolytic coating – market capacity was 214 826.9 tons, as compared to 2010 – 68.63%;
Ø Other constructions, parts of constructions, plates, rods, angles, shapes and similar articles of ferrous metals or aluminum – capacity market was 168,167.2 tons, as compared to 2010 – 85.98%.
The highest rates of market capacity growth in non-ferrous metallurgy in 2010-2014 were typical for the following products:
Ø Coarse and semiraw gold, or in the form of powder – 188.3%;
Ø Bars, rods and profiles of aluminum – 172.55%;
Ø Coarse lead – 152.83%;
Ø Coarse and semiraw silver, or in the form of powder – 150.5%;
Ø Cloth, grills, netting and fencing made of steel or copper wire; metal nets made of ferrous metals or copper – 150.09%;
Ø Aluminum wire – 149.22%.
The sharp contraction of the market capacity in non-ferrous metallurgy took place as for the following products:
Ø Copper matte; cementation copper, except for powders (0% as compared to 2010), due to stop of businesses, the lack of import of these products from outside of Kazakhstan, export realization of a significant amount of stocks in warehouses of enterprises;
Ø Pipes of large and small diameters, pipe fittings of aluminum – 46.07%;
Ø Plates, sheets and strip of copper and copper alloys with thickness exceeding 0.15 mm, but dinking extensible sheet and electrically insulated strip – 52.33%;
Ø Coarse tin – 60.88%;
Ø Unrefined copper (including blister copper); copper anodes for electrolytic refining, except for copper for plating, anodes for electrolytic coating – 68.63%.
Table 5. Market capacity and product consumption of nonferrous metallurgy of Kazakhstan in 2010-2014, tons
Powders and aluminum flakes, except for powders and flakes determined for the use as dyes and paints |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
1601,2 |
1395,3 |
87,14 |
|
||
Production |
0 |
3 |
0 |
|
||
Import |
1 601,20 |
1 392,30 |
86,95 |
|
||
Consumption |
1 601,20 |
1 395,3 |
87,14 |
|
||
Export |
0 |
0 |
0 |
|
||
Bars, rods and profiles of aluminum |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
9155,9 |
15484,5 |
172,55 |
|
||
Production |
1 823,00 |
6 501,00 |
356,61 |
|
||
Import |
7 613,40 |
9 781,60 |
128,48 |
|
||
Consumption |
9155,9 |
15484,5 |
172,55 |
|
||
Export |
280,5 |
798,1 |
284,53 |
|
||
Aluminum wire |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|||
Market capacity |
9 257,00 |
13 813,70 |
149,22 |
|||
Production |
861 |
16 047,00 |
1 863,76 |
|||
Import |
8 415,00 |
2 088,50 |
24,82 |
|||
Consumption |
9 257,00 |
13 813,70 |
149,22 |
|||
Export |
19 |
4 321,80 |
22 746,32 |
|||
Pipes of large and small diameters, fittings for pipes made of aluminum |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|||
Market capacity |
343,40 |
158,20 |
46,07 |
|||
Production |
2 |
0 |
0,0 |
|||
Import |
342,2 |
159 |
46,46 |
|||
Consumption |
343,40 |
158,20 |
46,07 |
|||
Export |
0,8 |
0,8 |
100,00 |
|||
Copper matte; cementation copper, except for powders |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|||
Market capacity |
14 626,00 |
0 |
0 |
|||
Production |
22 546,00 |
0 |
0,0 |
|||
Import |
0 |
0 |
0,0 |
|||
Consumption |
14 626,00 |
-0 |
0 |
|||
Export |
7 920,00 |
4 115,00 |
51,96 |
|||
Unrefined copper (including blister copper); copper anodes for electrolytic refining, except for plating copper and anodes for electrolytic coating |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|||
Market capacity |
313 003,30 |
214 826,90 |
68,63 |
|||
Production |
318 769,00 |
214 830,00 |
67,39 |
|||
Import |
0 |
0,9 |
0,0 |
|||
Consumption |
313 003,30 |
214 826,90 |
68,63 |
|||
Export |
5 765,70 |
4 |
0,07 |
|||
Refined copper and copper alloys, unprocessed; copper-based master alloys |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|||
Market capacity |
46 459,50 |
39 203,20 |
84,38 |
|||
Production |
324 882,00 |
298 323,00 |
91,83 |
|||
Import |
1 387,30 |
998,2 |
71,95 |
|||
Consumption |
46 459,50 |
39 203,20 |
84,38 |
|||
Export |
279 809,80 |
260 118,00 |
92,96 |
|||
Rods, tubes and profiles of copper, except for rods and bars obtained by casting or sintering of blanks for the production of wire |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|||
Market capacity |
453,40 |
572,80 |
126,33 |
|||
Production |
57 |
17 |
29,82 |
|||
Import |
415,1 |
573,8 |
138,23 |
|||
Consumption |
453,40 |
572,80 |
126,33 |
|||
Export |
18,7 |
18 |
96,26 |
|||
Copper wire |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|||
Market capacity |
13 146,50 |
9 419,80 |
71,65 |
|||
Production |
35 358,00 |
12 829,00 |
36,28 |
|||
Import |
441,4 |
482,4 |
109,29 |
|||
Consumption |
13 146,50 |
9 419,80 |
71,65 |
|||
Export |
22 652,90 |
3 891,60 |
17,18 |
|||
Plates, sheets, bars and strips of copper and copper alloys, with the thickness exceeding 0.15 mm, except for dinking extensible sheets and electrically insulated strips |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
975,70 |
510,60 |
52,33 |
|
||
Production |
2 413,00 |
493 |
20,43 |
|
||
Import |
673,6 |
729,1 |
108,24 |
|
||
Consumption |
975,70 |
510,60 |
52,33 |
|
||
Export |
2 110,90 |
711,5 |
33,71 |
|
||
Other non-ferrous metals and articles thereof; cermets, ash and residues, containing metals or metal compounds |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
18 851,00 |
13 601,50 |
72,15 |
|
||
Production |
35 788,00 |
20 609,00 |
57,59 |
|
||
Import |
837,7 |
5 277,70 |
630,02 |
|
||
Consumption |
18 851,00 |
13 601,50 |
72,15 |
|
||
Export |
17 774,70 |
12 285,20 |
69,12 |
|
||
Other constructions, parts of constructions, plates, rods, angles, shapes and similar articles of ferrous metals or aluminum |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
195 585,10 |
168 167,20 |
85,98 |
|
||
Production |
184 130,00 |
144 788,00 |
78,63 |
|
||
Import |
14 020,20 |
24 213,10 |
172,70 |
|
||
Consumption |
195 585,10 |
168 167,20 |
85,98 |
|
||
Export |
2 565,10 |
833,9 |
32,51 |
|
||
Doors and door thresholds, windows and their frames, made of metal |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
24 610,00 |
42 086,10 |
171,01 |
|
||
Production |
13 571,00 |
27 524,00 |
202,81 |
|
||
Import |
11 039,20 |
14 606,50 |
132,31 |
|
||
Consumption |
24 610,00 |
42 086,10 |
171,01 |
|
||
Export |
0,2 |
44,4 |
22 200,00 |
|
||
Stranded wire, ropes, cables, cords, braided cords and similar products made of ferrous metals without electrical isolation |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
15 508,60 |
17 625,70 |
113,65 |
|
||
Production |
1 211,00 |
3 336,20 |
275,49 |
|
||
Import |
15 261,30 |
16 500,00 |
108,12 |
|
||
Consumption |
15 508,60 |
17 625,70 |
113,65 |
|
||
Export |
963,7 |
2 210,50 |
229,38 |
|
||
Barbed wire of ferrous metals, stranded wire, ropes, cables, braided cords and similar products made of copper or aluminum, without electrical isolation |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
7 875,20 |
9 787,00 |
124,28 |
|
||
Production |
5 920,80 |
8 084,70 |
136,55 |
|
||
Import |
2 394,00 |
2 221,70 |
92,80 |
|
||
Consumption |
7 875,20 |
9 787,00 |
124,28 |
|
||
Export |
439,6 |
519,4 |
118,15 |
|
||
Cloth, grills, netting and fencing made of steel or copper wire; metal nets made of ferrous metals or copper |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
11 144,90 |
16 727,50 |
150,09 |
|
||
Production |
2 832,20 |
7 637,40 |
269,66 |
|
||
Import |
8 459,80 |
11 566,10 |
136,72 |
|
||
Consumption |
11 144,90 |
16 727,50 |
150,09 |
|
||
Export |
147,1 |
2 476,00 |
в16,83р |
|
||
Jewelry articles made of precious metals and parts thereof |
|
|||||
|
2010 |
2014 |
2014 as comp. to 2010, % |
|
||
Market capacity |
6 489 315,10 |
8 048 777,80 |
124,03 |
|
||
Production |
116 167,00 |
144 444,00 |
124,34 |
|
||
Import |
6 626 827,90 |
11 422 637,50 |
172,37 |
|
||
Consumption |
6 489 315,10 |
8 048 777,80 |
124,03 |
|
||
Export |
253 679,80 |
3 518 303,70 |
в13,87 |
|
||
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
Potential market outlets for ferrous metallurgy products
1. Aluminum wire
Kazakhstani market outlets of aluminum wires in 2014 amounted to 13,813.7 tons, or 149.2% as compared to 2010. In the domestic market, the consumption of these products amounted to 76.2% of the capacity of the market, and 23.8% - in the foreign market.
Table 6. Outlets of aluminum wire
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sales in the Kazakhstani market |
9 257,0 |
99,8 |
13 813,7 |
76,2 |
149,2 |
Sales to foreign markets |
19,0 |
0,2 |
4 321,8 |
23,8 |
227,5р. |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
From this perspective, Kazakhstan's domestic market remains the potential market of aluminum wire in its vast amount, given the high rate of the market capacity growth and distribution of these products, which is associated with the active development of all sectors of the national economy.
On the foreign markets, active markets should become the potential markets for aluminum wire. Taken into account the forgoing, it is proposed to expand the volume market of Uzbekistan up to 2000 tons (1733.3 tons were delivered in 2014, amounting to 4000.8 thousand US dollars); Ukraine – up to 350 tons (310.4 tons were delivered in 2014, amounting to 723.8 thousand US dollars); Kyrgyzstan – up to 70 tons (60 tons were delivered in 2014, amounting to 152.1 thousand US dollars); as well as new markets for these products in Turkmenistan, Azerbaijan, Iran, and Afghanistan.
There are no barriers for selling of Kazakhstani aluminum wire on the markets of Uzbekistan, Ukraine, Turkmenistan, Kyrgyzstan, Azerbaijan, Iran, and Afghanistan, because these countries are the main consumers of these products for a long time, and there is no production of these products there due to limited raw materials.
2. Unrefined copper (including blister copper); copper anodes for electrolytic refining, except for plating copper, anodes for electrolytic coating.
Kazakhstani market outlets of unrefined copper (including blister copper), copper anodes for electrolytic refining, except for plating copper, anodes for electrolytic coating, amounted to 214,826.9 tons in 2014, or 68.6% as compared to 2010.
In the domestic market, the consumption of these products in 2014 amounted to 100% of the capacity of the market.
Table 7. Outlets of unrefined copper
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sales in the Kazakhstani market |
313 003,3 |
98,2 |
214 826,9 |
100,0 |
68,6 |
Sales to foreign markets |
5 765,7 |
1,8 |
4,0 |
0,0 |
0,1 |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
From this perspective, the main potential market of these products remains the domestic market of Kazakhstan, where the main consumers of copper are producers of copper wire rod, cable and wire products and alloys:
- Kazakhmys Sales Limited;
- Trading house "Olympus";
- Cheriton Finance Limited;
- "Processing plant of non-ferrous metals" JSC;
- "Ulba Metallurgical Plant" JSC;
- Company «UnitedMetalsTradingLimited»;
- "Kazzinc" LLP;
- "KazEnergoKabel" JSC;
- "KWANZAA" LLC.
3. Refined copper and copper alloys, unprocessed; copper-based master alloys
Kazakhstani market outlets of refined copper and copper alloys, unprocessed, copper-based master alloys amounted to 39,203.3 tons in 2014, or 93.0% as compared to 2010. In the domestic market, the consumption of these products in 2014 amounted to 13.1% of the market capacity, and 86.9% - on the foreign markets.
Table 8. Outlets of refined copper and copper alloys, unprocessed; copper-based master alloys
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sales in the Kazakhstani market |
46 459,5 |
14,2 |
39 203,3 |
13,1 |
84,4 |
Sales to foreign markets |
279 809,8 |
85,8 |
260 118,0 |
86,9 |
93,0 |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
From this perspective, the domestic market of Kazakhstan remains the main potential market for copper, refined copper and copper alloys.
According to preliminary data of International Copper Study Group (ICSG), the world copper market in May 2015 recorded a deficit for the second straight month. Nevertheless, the lack of metal reduced to 62 thousand tons as compared to 94 thousand tons in April 2015. Release of refined copper in May 2015 amounted to 1.915 million tons, while consumption was 1.977 million tons. In April of 2015, these figures were 1.83 million tons and 1.924 million tons, respectively, according to update data.
In January-May 2015, metal oversupply in the world was about 4 thousand tons, as compared with a deficit of 537 thousand tons in the same period of 2014.
Refined copper production increased by 2.9% in 2015 and reached 9.264 million tons as compared to 9.003 million tons in January-May, 2014. The main engine of growth was China (5%), followed by the Philippines and Indonesia. Democratic Republic of Congo increased metal production by 12%. At the same time, Chile and Japan reduced their rate by approximately 3%, being the second and third places in the world for the production of copper, while in the US the reduction was by 6%.
In January-May 2015, demand for copper in the world amounted to 9.26 million tons against 9.54 million tons in 2014. (2.9% decrease). This primarily was due to the reduction of the index in China by 3%. Excluding People's Republic of China, metal consumption reduced also by around 3%, and it was mainly due to Russia, where the rate fell by 45%. In Japan, the consumption decreased by 8% and in the European Union – by 6%.
The average price of copper on the London Metal Exchange (LME) fell to $ 5456.91 per ton in July 2015, as compared to $ 5833.61 per ton a month earlier. The average price of the metal since the beginning of 2015 is $ 5854.91 per ton, which is 15% lower, than the average rate for all of last year ($ 6862 per ton).[1]
Given the mentioned above, it is necessary to expand the existing market outlets of refined copper and copper alloys for the following products:
1) Cathodes and sections of cathodes of coarse refined copper: it is proposed to expand the market outlets in China up to 180 thousand tons (173,517.9 tons were supplied in 2014, amounting to $ 1136198.5 thousand US dollars), the UK – up to 10 thousand tons (9.9 tons were supplied in 2014, amounting to 67,807.4 thousand US dollars), Turkey – up to 1200 tons (1004.7 tons were supplied in 2014, amounting to 6463.0 thousand US dollars), Germany – up to 200 tons (140.0 tons were supplied in 2014, amounting to 924.0 thousand US dollars), Egypt – up to 400 tons (326.1 tons were supplied in 2014, amounting to 2199.7 thousand US dollars), Italy – up to 550 tons (438.8 tons were supplied in 2014, amounting to 2951.0 thousand US dollars), Lithuania – up to 300 tons (280.0 tons were supplied in 2014, amounting to 1966.0 thousand US dollars), and the Netherlands – up to 200 tons (118.2 tons were supplied in 2014, amounting to 805.2 thousand US dollars);
2) Other coarse refined copper: it is necessary to expand the existing market outlets at the capacious markets in Turkey – up to 60 thousand tons (53,839.4 tons were supplied in 2014, amounting to 363,661.6 thousand US dollars), in Germany – up to 100 tons (62.1 tons were supplied in 2014, amounting to 398.7 thousand US dollars), and Lithuania – up to260.0 tons (248.6 tons were supplied in 2014, amounting to 1605.9 thousand US dollars);
3) Coarse alloys of copper and tin (bronze): it is necessary to expand the current market in Germany up to 2100 tons (2034.0 were supplied in 2014, amounting to 13102.4 thousand US dollars);
4) Other coarse copper alloys (except for master alloys of heading 7405): it is necessary to expand the current markets in India up to 100 tons (84.9 tons were supplied in 2014, amounting to 512.3 thousand US dollars), in Cyprus – up to 50 tons (43.7 tons were supplied in 2014, amounting to 63.5 thousand US dollars) and in China – up to 60 tons (53.0 tons were supplied in 2014, amounting to 1020.3 thousand US dollars).
In addition, Estonia, Latvia and Cyprus may become potential markets for the entire production, and these countries are also among the main buyer countries of refined copper and alloys in the world.
Given the current situation on the global market for coarse refined copper and copper alloys, there are no barriers for selling of Kazakhstani products on the markets of the UK, Turkey, Germany, Egypt, Italy, Lithuania, the Netherlands, and India, because these countries are the main consumers of these products for a long time.
However, one of the main consumers of the products of Kazakhmys Corporation is China. Import levy on the import of Kazakhstani copper rod is 4% established in 2014 by the Government of the PRC, and it a significant barrier to its exports.
4. Copper wire
Kazakhstani market outlets of copper wire amounted to 8419.8 tons in 2014, or 71.7%, as compared to 2010. In the domestic market, the consumption of these products in 2014 amounted to 70.8% of the market capacity, and 29.2% were exported. Market outlets of copper wire are presented in the Table 41.
Table 9. Kazakhstani market outlets of copper wire
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sales in the Kazakhstani market |
13146,6 |
36,7 |
9419,8 |
70,8 |
71,7 |
Sales to foreign markets |
22652,9 |
63,3 |
3891,6 |
29,2 |
17,2 |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
Taking this into account, the domestic market of Kazakhstan should remain the main potential market for copper wire, where it is necessary to use measures of state support for the priority procurement of domestic products, as similar products of the same FEACN code (740811 and 740819) are imported from other countries: Uzbekistan, China, Turkey, the UK, Belgium and Lithuania.
Regarding the foreign markets, it is necessary to expand the market in Kyrgyzstan up to 6.0 tons (4.0 tons were supplied in 2014, amounting to 31.6 thousand US dollars), as well as in Lithuania – up to 150 tons (139.6 tons were supplied in 2014, amounting to 984.9 thousand US dollars), Germany – up to 150 tons (140.7 tons were supplied in 2014, amounting to 1014.1 thousand US dollars).
There are no yet barriers to entry to these markets in Germany and Lithuania, despite the fact that there are similar productions.
5. Plates, sheets, bars and strips of copper and copper alloys, with the thickness exceeding 0.15 mm, except for dinking extensible sheets and electrically insulated strips
Kazakhstani market outlets of plates, sheets, bars and strips of copper and copper alloys, with the thickness exceeding 0.15 mm, except for dinking extensible sheets and electrically insulated strips, amounted to 510.6 tons in 2014, or 52.3% as compared to 2010. These products are manufactured in the Republic of Kazakhstan in the amount of 40.3% of the market capacity, 59.7% is imported from outside the country. In the domestic market, the consumption of these products amounted to 41.8% of the market capacity. Market outlets of plates, sheets, bars and strips of copper and copper alloys, with the thickness exceeding 0.15 mm, except for dinking extensible sheets and electrically insulated strips, are presented in the Table 42.
Table 10. Outlets of plates, sheets, bars and strips of copper and copper alloys, with the thickness exceeding 0.15 mm, except for dinking extensible sheets and electrically insulated strips
|
2010 |
Share, % |
2014 |
Share, % |
2014/2010, % |
Sales in the Kazakhstani market |
975,7 |
31,9 |
510,6 |
41,8 |
52,3 |
Sales to foreign markets |
2 110,9 |
68,4 |
711,5 |
58,2 |
33,7 |
Source: According to the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan.
Taking this into account, the domestic market of Kazakhstan should remain the main potential market for plates, sheets, bars and strips of copper and alloys, where it is necessary to use measures of state support for the priority procurement of domestic products, as similar products of the same FEACN code (740921) are imported from other countries: Vietnam and China.
Regarding the foreign markets, market in Kyrgyzstan shall remain potential market outlet, which needs to be expanded up to 250 tons of plates, sheets, bars and strips of copper-zinc alloys (brass) (233.7 tons were supplied in 2014, amounting to 1445.5 thousand US dollars). Tajikistan, Turkmenistan, Azerbaijan, and Iran may also become potential markets, where there are no similar productions and taken this into account, there are no barriers to their sales in these countries.
2. The number of enterprises (players) in the market.
The largest enterprises in the field of non-ferrous metals are as follows: “Corporation Kazakhmys” LLP, “Kazzinc” LLP, “Kazakhstan Aluminum” JSC, “Kazakhstan Electrolysis Plant” JSC, “Ust-Kamenogorsk Titanium Magnesium Plant” JSC, “Kazakhaltyn MMC” JSC, “Varvarinskoye” JSC (“Polymetal” JSC), and “AK Altynalmaz” JSC.
Corporation Kazakhmys LLP. In October 2014, it changed the name of a public company on the KAZ Minerals PLC. It is a fully integrated company, whose business covers all stages from mining to production of finished metal. The company's main activity is the production and sale of copper. Its mining copper division produces also significant volumes of other metals as by-products, such as zinc, silver and gold;
“Kazzinc” LLP is a large integrated zinc producer with a high degree of such by-products, as copper, precious metals and lead.
“Kazakhstan Aluminum” JSC is the second largest producer of alumina by volume in the CIS. The company consists of the Pavlodar Aluminum Plant, and Torgai and Krasnooktyabrskiy Bauxite Mine Groups, a limestone mine, and Kegertas and Pavlodar TPPs.
Produced finished products are alumina, metal gallium, and aluminum sulphate.
“Kazakhstan Electrolysis Plant” JSC (JSC KEP) is the Kazakhstani first electrolysis plant for the production of aluminum. Construction of the plant began in December 2007, and in the second quarter of 2008, the plant reached the planned capacity of the first phase of 125 000 tons per year. In May 2010, it launched the second phase of production, at which the plant reached its full capacity of 250 000 tons per year.
“AK Altynalmaz” JSC is a gold producer and it conducts operations on subsoil use on a number of gold sites in Kazakhstan. These are the fields in Akbakay district of Zhambyl region, as well as the field Pustynnoe and the site Karernyy in Karaganda region.
“Kazakhaltyn MMC” JSC is one of the oldest enterprises of gold mining industry of Kazakhstan. The assets of KazakhGold Group include developed deposits Aksu, Bestobe and Zholymbet, South Karaultube and Kyzylsorskoe in Northern Kazakhstan, as well as deposits in the Eastern Kazakhstan prepared for the development – Akzhal and Kaskabulakskoe.
“Varvarinskoye” JSC (“Polymetal” JSC) bought Varvarinskoye deposit in 2009. Varvarinskoye has a modern gold mining and separation factory with capacity of 4.2 million tons of ore per year. Gold and copper float concentrate and dore gold are finished products for “Varvarinskoye” JSC. Polymetal International Plc is the sole shareholder of the largest producer of primary silver in Russia – “Polymetal” JSC.
“Casting” LLP has three metallurgical productions – a steel plant in Pavlodar, as well as a copper smelter and a plant for processing of non-ferrous metals, located in Almaty. It produces a wide range of products of ferrous and non-ferrous metals: steel billets, grinding balls and rods, reinforcing bars, cathode copper and copper ware, bronze, brass, aluminum and lead alloys.
1. Pipes of large and small diameters, fittings for pipes made of aluminum (CPEA 244226 products, which include 3 items under FEACN codes 760810, 760820, 760920).
Market capacity of pipes of large and small diameters, fittings for pipes made of aluminum in Kazakhstan in 2014 amounted to 158.2 tons, or 46.1%, as compared to 2010. These products are not manufactured in the Republic of Kazakhstan, and 100% is imported from outside the country. In the domestic market, the consumption of these products amounts to 99.5% of the market capacity.
Domestic players do not participate in this market. The main foreign players in the market of Kazakhstan are Russia, China, Germany, and Korea. Other players have less than 1% in this market of Kazakhstan.
Table 11. Share of players in the market of pipes of large and small diameters, pipe fittings made of aluminum
Name |
2014 |
|
tons |
Market share, % |
|
Production in the Republic of Kazakhstan |
0,0 |
|
Export |
0,8 |
|
Share of Kazakhstani players |
-0,8 |
0,0 |
Share of foreign players |
159 |
100,00 |
China |
20,9 |
13,21 |
Germany |
6,0 |
3,79 |
Korea |
4,6 |
2,91 |
Others |
23,1 |
14,58 |
Russia |
104,4 |
65,99 |
Market capacity |
158,2 |
100 |
Source: Calculated on the basis of the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan, the Ministry of Finances of the Republic of Kazakhstan and enterprises.
2. Copper matte; cementation copper, except for powders (CPEA 244411 products, which include 1 item under FEACN code 740100).
The market capacity of the copper matte and cementation copper, except for powders, reduced in Kazakhstan in 2014 as compared with 2010, due to stop of production of these products, the accumulated volume of production at the company warehouse, and a large volume of exports to foreign markets. These products were not manufactured in the Republic of Kazakhstan in 2014, nor imported from outside the country, as well as not consumed on the domestic market.
The main domestic player of this market is “GRK Belogorstroy” LLP, which activities are currently suspended because of abuses in the payment of taxes, pursuant to the criminal case. There were no foreign players in the market of Kazakhstan in 2014.
3. Unrefined copper (including blister copper); copper anodes for electrolytic refining, except for plating copper and anodes for electrolytic coating (CPEA 244412 products, which include 1 item under FEACN code 740200).
Kazakhstani market capacity of unrefined copper (including blister copper); copper anodes for electrolytic refining, except for plating copper and anodes for electrolytic coating, amounted to 214,826.9 tons, or 68.6% in 2014, as compared to 2010. These products are manufactured in the Republic of Kazakhstan in the amount of 100% of the market capacity, 0% is imported from outside the country. In the domestic market, the consumption of these products totals to 100% of the capacity of the market.
The major domestic players in this market are “Kazakhmys Corporation” LLP, “Kazzinc” JSC and “KazMinerals” LLP. Regarding the foreign players, only Russia participates with a minor amount of export to Kazakhstan.
Table 12. Share of players in the market of unrefined copper
Name |
2014 |
|
tons |
Market share, % |
|
Production in the Republic of Kazakhstan |
214 830,00 |
|
Export |
4 |
|
Share of Kazakhstani players |
214 826,0 |
100,00 |
“Kazakhmys Corporation” LLP |
155321 |
72,3 |
“Kazzinc” JSC |
42105 |
19,6 |
“KazMinerals” LLP |
17400 |
8,1 |
Share of foreign players |
0,9 |
0,00 |
Russia |
0,9 |
0,0 |
Market capacity |
214 826,9 |
100,00 |
Source: Calculated on the basis of the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan, the Ministry of Finances of the Republic of Kazakhstan and enterprises.
4. Refined copper and copper alloys, unprocessed; copper-based master alloys (CPEA 244413 products, which include 8 items under FEACN code (740311, 740312, 740313, 740319, 740321, 740322, 740329, and 740500).
Kazakhstani market capacity of refined copper and copper alloys, unprocessed; copper-based master alloys amounted to 39,203.3 tons, or 93.0% in 2014, as compared to 2010. These products are manufactured in the Republic of Kazakhstan in the amount of 99.7% of the market capacity, 0.3% is imported from outside the country. In the domestic market, the consumption of these products totals to 13.1% of the capacity of the market.
The major national players in the domestic market of Kazakhstan are as follows: “Kazakhmys Corporation” LLP and “Kazzinc” JSC. Major foreign players are Russia, Germany, and France.
Table 13. Share of players in the market of refined copper and copper alloys, unprocessed; copper-based master alloys
Name |
2014 |
|
tons |
Market share, % |
|
Production in the Republic of Kazakhstan |
298 323,00 |
|
Export |
260 118,00 |
|
Share of Kazakhstani players |
38 205,0 |
97,45 |
“Kazakhmys Corporation” LLP |
22 923,00 |
58,47 |
“Kazzinc” JSC |
15 282,00 |
38,98 |
Share of foreign players |
998,2 |
2,55 |
Germany |
2,5 |
0,01 |
France |
1,0 |
0,00 |
Brazil |
0,1 |
0,00 |
China |
0,0 |
0,0 |
Russia |
994,6 |
2,54 |
Market capacity |
39 203,2 |
100,00 |
Source: Calculated on the basis of the data of the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan, the Customs Control Committee of the Ministry of Finances of the Republic of Kazakhstan and enterprises.
3. Barriers, limitations and recommendations for their elimination.
International legal framework for application of specific duties is as follows: the Agreement on Implementation of Article VI of the GATT (Antidumping Code), the Agreement on Subsidies and Countervailing Measures and the Agreement on Safeguard Measures, included in Annex 1A to be observed by all members of the WTO. Unfortunately, these agreements contain a lot of legal gaps, ambiguity rules and the ability to bypass by the Member States in their trade policy. That is why, due to the conditions of related tariffs, preventing quantitative restrictions, the obligation of RHB and national regime provision, many members of the WTO apply them as a means of trade discrimination or a response to discriminatory practices of trading partners, which effectively turns them into a modern tool to conduct the customs war.
Fr instance, China is one of the main consumers of the products of “Kazakhmys Corporation” LLP. Import duty on the import of Kazakhstani copper rod is 4%, as established in 2014 by the Government of People's Republic of China, and it is a significant barrier to exports, which can not but affect the competitiveness of the products of this enterprise in the market of that state. Import duty on copper exists also in the South Korean market and it amounts to 3%, which makes it uncompetitive.
In accordance with the Report of the Eurasian Economic Commission, 128 action measures had been identified as of December 2014, which had or might have an adverse effect on the conditions of access of goods of states-members of the Customs Union and the Common Economic Space (hereinafter referred to as the CU and the CES) to the markets of third countries.
61% of them (78 measures) are measures of market protection as follows: anti-dumping, countervailing or special protective measures, including the relevant ongoing investigations.
Among other measures, acting on the markets of third countries, it is possible to allocate higher excise taxes than those applied to domestic goods, import prohibitions (threats to introduce prohibitions), quota restrictions on imports, including tariff quotas, fees, SPS and TBT measures, and other non-tariff administrative measures.
The largest number of measures used in the field of metallurgy and classified as trade barriers belongs to the Russian Federation, followed by the Republic of Belarus. A small number of measures accounts for the Republic of Kazakhstan.
Limiting measures include measures, which direct negative impact on the export of the states-members of the Union has not yet been revealed, as well as measures of third countries in respect of the products, the supply of which in these countries from the states-members of the Union is currently absent or insignificant. This category includes 30 measures.
Table 14. Trade barriers, acting on the markets of third countries in respect of metallurgy products f the member-states of the CU and SES in 2014
The country, in whose territory the measure exists |
Measure description |
Azerbaijan |
Application of increased excise rates for a number of imported goods. |
Argentina |
Since February 1, 2012, the importation of any goods to Argentina can be carried out only after obtaining the non-automatic licenses. Issuance of the licenses can be linked to the receipt of a commitment from an exporter of voluntary limitation of the scope or value of exports, investing in the Argentine economy, and other restrictions. |
Argentina |
Since March 2011, there has been an unwritten rule, operating in Argentina, under which the major importers are required to submit import pre-declarations with a detailed program of compensating the import with export shipments. At the moment, companies that want to import finished products or components in this country are required to sign an agreement with the Government on the mandatory export of Argentine goods to a certain amount. |
EU |
Requirements for labeling and packaging of nickel-containing products. |
Turkmenistan1 |
Application of increased excise rates for a number of imported goods. |
Turkey |
Anti-dumping measure in respect of refined copper wire from the Russian Federation. Expiration date of the measures is 2015. |
Uzbekistan |
Application of increased excise rates to a wide range of imported goods. |
Source: Report of the Eurasian Economic Commission for 2014.
Table 15. Potential trade barriers identified on the markets of third countries in 2014
The country, in whose territory the measure exists |
Measure description |
EU |
Anti-dumping investigation in respect of aluminum foil from the Russian Federation. |
EU |
Capability to set more stringent rules for filling in and conditions of issuance of the documents for import of products subject to the imports supervision during the special safeguard investigation, including the possibility to set a shorter period of action of import documents and to determine the conditions of their withdrawal. |
Ukraine |
Application of special sanctions in case of violation of Ukrainian legislation in the sphere of foreign economic activity (individual licensing regime and temporary suspension of foreign economic activity) in accordance with Article 37 of the Law of Ukraine On Foreign Economic Activity. |
Source: Report of the Eurasian Economic Commission for 2014.
Industry barriers in the access to the Russian market
Non-Ferrous metallurgy of Russia is one of the Russian branches of specialization in the modern international division of labor. Russia ranks 2nd place in the world (after China) in the production of aluminum and nickel, and 1st place – in the export of these metals. Russia ranks also 2nd place in the world in the production (shipments) of titanium mill products.
The competitive advantage of the Russian non-ferrous metallurgy is a developed raw material base for the main non-ferrous metals (nickel, copper, zinc, platinum group metals), which allows minimizing the risks for the supply of raw materials.
The production of aluminum, copper, nickel, titanium and precious metals is characterized by relatively high levels of investment.
Most companies have accepted and implement long-term investment program of development for the medium and long periods.
In recent years, enterprises of non-ferrous metallurgy introduced a number of innovative technologies.
The metallurgical industry of Russia has sufficiently high scientific and technical potential, it is presented by more than 50 scientific-technical and design organizations with a total number of more than 10 thousand persons. Three research organizations have the status of state research centers (SRC) and perform the functions of the leading institutions on the most important development areas of science, technology and engineering. Academic and university science makes also certain contribution to the development of technologies for the extraction and enrichment of ore and to the production of non-ferrous metals.
4. List of potential opportunities for entrepreneurial initiatives. Structure of the value chain.
Existing gaps in the value chain of non-ferrous metallurgy production.
Evaluation of redistribution stages in the non-ferrous metallurgy of Kazakhstan, which has been carried out on the basis of the information provided by the Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan “The resources and the use of certain types of products (goods) and raw materials in the Republic of Kazakhstan” on a wide range of products of the mining and metallurgic complex, showed that the its initial process stages (production of metals) also demonstrated a high degree of satisfaction of domestic industries in these products. However, at the stage of production of various types of rolled metal products, problems of incomplete spectrum of produced and required products are observed.
For instance, regarding non-ferrous metallurgy products, which refer to the redistribution “Metal production”, there is a high level of provision of Kazakhstan as for a large range of products:
- Coarse and semiraw silver or in the form of powder (CPEA 244110), the level of economic security of the internal market of Kazakhstan – 95.5%;
- Coarse aluminum (CPEA 244 211) – 98.9%;
- Coarse lead (CPEA 244311) – 99.6%;
- Coarse zinc (CPEA 244,312) – 99.6%;
- Unrefined copper (including blister copper); copper anodes for electrolytic refining, except for plating copper and anodes for electrolytic coating (CPEA 244 412) – 100%.
- Refined copper and copper alloys, unprocessed; copper-based master alloys (CPEA 244413), the level of economic security of the internal market of Kazakhstan – 99.7%.
However, the level of economic security of the internal market of Kazakhstan regarding gold and tin is characterized by the following indicators:
1) Coarse and semiraw gold or in the form of powder (CPEA 244120) – 42.3%.
2) Coarse tin (CPEA 244313) – 6.3%. 100% dependence is observed in this group with the following products:
- Coarse non-alloy tin (FEACN 800110), 431.0 tons were imported in 2014, amounting to 9,631.3 thousand US dollars;
- Coarse tin alloys (FEACN 800120), 0.3 tons were imported in 2014, amounting to 1.2 thousand US dollars.
As for the redistribution “Production of rolled metal products”, 100% dependence (so-called white spots) is observed in the group “Pipes of large and small diameters, fittings for aluminum pipes” (CPEA 244226), which are fully imported from abroad the country. 100% dependence of this group is observed with the following products:
- pipes and tubes of unalloyed aluminum, others (FEACN 760810), 1.8 ton was imported in 2014, amounting to 23.3 thousand US dollars;
- pipes and tubes of other aluminum alloys, others (FEACN 7608208907), 46.4 tons were imported in 2014, amounting to 548.3 thousand US dollars;
High dependence of the Republic of Kazakhstan, about 90-99,9%, is observed for the following products:
Aluminum powders and flakes, except for powders and flakes designated for the usage as dyes and paints (CPEA 244221) – dependence of the Republic of Kazakhstan is 99.8%. This group has 100% dependence with the following products:
- aluminum powder of non-layered structure (FEACN 730610), 101.1 tons were imported in 2014, amounting to 358.2 thousand US dollars;
- powder of layered structure; aluminum flakes (FEACN 730620), 0.1 ton was imported in 2014, amounting to 0.2 thousand US dollars;
Bars, rods and profiles of copper, except for bars and rods obtained through casting or sintering of blanks for the production of wire (CPEA 244422) – Kazakhstani dependence is 97.1%. This group has 100% dependence with the following products:
- bars and profiles of refined copper (FEACN 740710), 99.4 tons were imported in 2014, amounting to 902.4 thousand US dollars;
- profiles of copper- and zinc-based alloys (FEACN 74072190), 1.5 ton was imported in 2014, amounting to 67.8 thousand US dollars;
- bars and profiles of copper- and nickel-based alloys (FEACN 74072900), 13.1 tons were imported in 2014, amounting to 329.6 thousand US dollars.
The dependence of Kazakhstan at the level of 70-90% is not observed for any of the products.
The dependence of Kazakhstan at the level of 50-70% is observed in the following products:
Bars, rods and profiles of aluminum (CPEA 244222) - 60.1%; There are companies that produce these products under all FEACN codes, but the domestic market of Kazakhstan is replaced by imported products.
As for other products, Kazakhstani dependence was less than 50%.
Rolled metal products are not produced of zinc, lead, and tin.
As for the zinc, 100% dependence is observed on the following products:
- bars, profiles and wire of zinc (FEACN 790400), 0.3 ton were imported in 2014, amounting to 0.8 thousand US dollars;
- plates, sheets, bars or strips and foil made of zinc (FEACN 790500), 14.3 tons were imported in 2014, amounting to 89.8 thousand US dollars;
- tubes, pipes and fittings for pipes and tubes (for example, couplings, pipe bends, flanges), made of zinc (FEACN 790700), 1.0 ton was imported in 2014, amounting to 12.9 thousand US dollars;
- other articles of zinc, other (FEACN 790700), 28.0 tons were imported in 2014, amounting to 268.1 thousand US dollars.
As for lead, 100% dependence is observed with the following products:
- sheets, sheets, bars or strips and foil made of lead with a thickness (excluding any backing) not exceeding 0.2 mm (FEACN 780411), 0.1 ton was imported in 2014, amounting to 6.6 thousand US dollars;
- plates, sheets, bars or strips and foil made of lead, other (FEACN 780419), 0.1 ton was imported in 2014, amounting to 17.4 thousand US dollars;
- bars, profiles and wire; tubes, pipes and fittings for pipes and tubes (for example, couplings, pipe bents, flanges), made of lead, and other (FEACN 780600), 4.2 tons were imported in 2014, amounting to 65.7 thousand US dollars;
- other articles of lead, other (FEACN 7806008009), 288.9 were imported in 2014, amounting to 932.5 thousand US dollars.
As for tin, 100% dependence is observed with the following products:
- Bars, profiles and wire made of tin (FEACN 800300), 3.9 tons were imported in 2014, amounting to 42.3 thousand US dollars;
- plates, sheets and strips of tin with a thickness exceeding 0,2 mm, other (FEACN 80070010), 0.12 ton was imported in 2014, amounting to 2.2 thousand US dollars;
- other products made of tin, other (FEACN 80070080), 0.2 ton was imported in 2014, amounting to 4.7 thousand US dollars.
As for aluminum, 100% dependence is observed with the following products:
- plates, sheets, bars and strips made of unalloyed aluminum with a thickness exceeding 0,2 mm, rectangular, painted, varnished or coated with plastics (FEACN 76061110), 799.5 tons were imported in 2014, amounting to 2305.6 thousand US dollars;
- other rectangular plates, sheets bars and strips made of unalloyed aluminum with a thickness less than 3 mm (FEACN 76061190), 627.9 tons were imported in 2014, amounting to 3,285.9 thousand US dollars;
- other rectangular plates, sheets bars and strips made of unalloyed aluminum with a thickness not less than 3 mm, but less than 6 mm (FEACN 76061193), 1025.4 tons were imported in 2014, amounting to 1,191.4 thousand US dollars;
- other rectangular plates, sheets bars and strips made of unalloyed aluminum with a thickness not less than 6 mm (FEACN 76061199), 57.3 tons were imported in 2014, amounting to 254.7 thousand US dollars;
- other sandwich panels, rectangular (including square), made of aluminum alloys, painted, varnished or coated with plastics (FEACN 7606122002), 358.6 tons were imported in 2014, amounting to 726.6 thousand US dollars;
- other plates, sheets, bars and strips with a thickness exceeding 0,2 mm, rectangular (including square), made of aluminum alloys, painted, varnished or coated with plastics (FEACN 76061220), 677.6 tons were imported in 2014, amounting to 3698.0 thousand US dollars;
- plates, sheets, bars and strips with a thickness exceeding 0,2 mm, rectangular (including square), made of aluminum alloys, others, with a thickness less than 3 mm, other (FEACN 76061292), 162.5 tons were imported in 2014, amounting to 536.0 thousand US dollars;
- rectangular plates, sheets, bars and strip of aluminum alloys with a thickness not less than 3 mm, but less than 6 mm, other (FEACN 7606129309), 101.8 tons were imported in 2014, amounting to 353.4 thousand US dollars;
- plates, sheets, bars and strip of not-alloyed aluminum with a thickness exceeding 0,2 mm, other (FEACN 7606910000), 63.2 tons were imported in 2014, amounting to 560.0 thousand US dollars;
- rolled aluminum foil, but without further processing, with a thickness less than 0.0046 mm, other (FEACN 7607111901), 64.9 tons were imported in 2014, amounting to 306.3 thousand US dollars;
- rolled aluminum foil, but without further processing, with a thickness not less than 0.0046 mm, but less than 0.021 mm, other (FEACN 7607111909), 60.2 tons were imported in 2014, amounting to 127.1 thousand US dollars;
- rolled aluminum foil without a base and without further processing, with a thickness greater than 0.021 mm and not more than 0.2 mm (FEACN 76071190), 39.2 tons were imported in 2014, amounting to 192.8 thousand US dollars;
- other aluminum foil without a base with a thickness of less than 0.021 mm (FEACN 76071910), 122.6 tons were imported in 2014, amounting to 866.6 thousand US dollars;
- aluminum foil with a base and a thickness (excluding the base) of less than 0.021 mm (FEACN 76072010), 544.5 tons were imported in 2014, amounting to 2671.2 thousand US dollars;
As for coarse and semiraw gold or in the form of powder (CPEA 244120), 100% dependence is observed with the following products:
- gold in other semi-raw forms – rods, wires and profiles; plates, sheets and strips of thickness more than 0.15 mm, not including any base (FEACN 71081310), 369,3g were imported in 2014, amounting to 23.2 thousand US dollars.
As for the redistribution “Production of fabricated metal products”, 100% dependence of Kazakhstan is not observed on any CPEA code.
The dependence on the level of 90-99,9% is observed in the following CPEA groups:
1) jewelry articles made of precious metals and their parts (CPEA 321 213) – 98.8%. There are own domestic companies in this group of products in all CPEA codes.
2) metals products of non-precious metals (base metals), not included in other groups (CPEA 259 929); the dependence of Kazakhstan amounted to 74.2%.
The dependence of Kazakhstan for products with a thread cut and uncut thread fasteners made of copper (CPEA 259,413) is 27.9 %.
In addition, finished products are not produced, taking into account remaining metals (zinc, lead, tin) in this redistribution.
Table 16. Existing gaps (white spots) in the value chain of non-ferrous metallurgy production
1 stage |
2 stage |
3 stage |
4 stage |
5 stage |
6 stage |
||||
Ore production |
Concentration/ Floatation |
Founding |
Refining |
Manufacture of rolled metal products |
Manufacture of finished metal products |
||||
Lead ore |
Lead concentrate |
Coarse and semi-raw silver and in the form of powder (CPEA 244110) |
Refined silver (CPEA 244120) |
|
Jewelry articles made of precious metals and their parts (CPEA 321213) – 98,8% |
||||
Gold ore |
Gold concentrate |
Coarse and semi-raw gold and in the form of powder (CPEA 244120) |
Refined gold (CPEA 244120) |
|
|||||
Aluminum ore
|
Aluminum concentrate
|
Coarse aluminum (CPEA 244211) |
|
“pipes of large and small diameter, fittings for pipes made of aluminum” (CPEA 244226) - 100% dependence |
Products of aluminum |
||||
other tubes and pipes of not-alloyed aluminum (CPEA 760810) |
|||||||||
other tubes and pipes of other aluminum alloys (CPEA 7608208907) |
|||||||||
aluminum powders and flakes, except for powders and flakes designated for the usage as dyes and paints (CPEA 244221) – 99,8%. |
|||||||||
aluminum powder of non-layered structure (730610) - 100% dependence |
|||||||||
powder of layered structure; aluminum flakes (730620) - 100% dependence |
|||||||||
bars, rods and profiles of aluminum (CPEA 244222) - 60,1% |
|||||||||
aluminum foil – 100% dependence |
|||||||||
Lead ore |
Lead concentrate |
Coarse lead (CPEA 244311) |
Refined lead |
Lead alloys; Bars; Profiles; Wire; Plates, sheets, bars, and strips. Foil; Pipes and tubes |
Products of lead |
||||
Zinc ore |
Zinc concentrate |
Coarse zinc (CPEA 244312) |
Refined zinc |
Zinc alloys; Bars; Profiles; Wire; Plates, sheets, bars, and strips. Foil; Pipes and tubes |
Products of zinc |
||||
Copper ore |
Copper concentrate |
Unrefined copper (including blister copper); copper anodes for electrolytic refining, except for plating copper and anodes for electrolytic coating (CPEA 244412) |
Refined copper and copper alloys, unprocessed; copper-based master alloys (CPEA 244413) |
Bars, rods and profiles of copper, except for bars and rods obtained by casting or sintering of blanks for the production of wire (CPEA 244422) – 97,1% dependence |
Products with a thread cut and uncut thread fasteners made of copper (CPEA 259413) |
||||
Plates, sheets bars and strip of copper and copper alloys. |
Other articles of copper. |
||||||||
Tin ore |
Tin concentrate |
Coarse tin (CPEA 244313) |
Refined tin |
Tin alloys; Bars; Profiles; Wire; Plates, sheets, bars, and strips. Foil; Pipes and tubes |
Articles made of tin |
||||
Coarse unalloyed tin (FEACN 800110) |
|||||||||
Coarse tin alloys (FEACN 800120) |
|||||||||
|
The gap of the value chain, the products are not produced, 100% dependence of the Republic of Kazakhstan |
|
Products are manufactured, 90-99,9% dependence of the Republic of Kazakhstan |
|
Products are manufactured, low dependence of the Republic of Kazakhstan |
|
|||
Source: compiled by the Association of Mining and Metallurgical Enterprises
Table 17. List of potential opportunities for entrepreneurial initiatives
No. |
Production name |
Estimated market capacity |
|
Tons |
Thousand US dollars |
||
17. |
Coarse tin (CPEA 244313) |
|
|
17.1 |
Coarse unalloyed tin (FEACN 800110) |
431,0 |
9631,3 |
17.2 |
Coarse tin alloys (FEACN 800120). |
0,3 |
1,2 |
18. |
Pipes of large and small diameters, fittings for pipes made of aluminum (CPEA 244226) |
|
|
18.1 |
Pipes and tubes made of not-alloyed aluminum, other (FEACN 760810) |
1,8
|
23,3
|
18.2 |
Pipes and tubes made of other aluminum alloys, other (FEACN 7608208907) |
46,4 |
548,3 |
19 |
Aluminum powders and flakes, except for powders and flakes designated for the usage as dyes and paints (CPEA 244221) |
|
|
19.1 |
Aluminum powder of non-layered structure (730610) |
101,1 |
358,2 |
19.2 |
Powder of layered structure; aluminum flakes (730620). |
0,1 |
0,2 |
20 |
Bars, rods and profiles of copper, except for bars and rods obtained by casting or sintering of blanks for the production of wire (CPEA 244422) |
|
|
21.1 |
Bars and profiles made of refined copper (740710) |
99,4 |
902,4 |
21.2 |
Profiles of copper- and zinc-based alloys (74072190); |
1,5 |
67,8 |
21.3 |
Bars and profiles of copper- and nickel-based alloys (74072900) |
13,1 |
329,6 |
22 |
Bras, profiles and wire made of zinc |
|
|
22.1 |
Bras, profiles and wire made of zinc (FEACN 790400) |
0,3 |
0,8 |
22.2 |
Plates, sheets, bars or strips and foil made of zinc (FEACN 790500) |
14,3
|
89,8
|
22.3 |
Tubes, pipes and fittings for pipes and tubes (for example, couplings, pipe bents, flanges), made of zinc (FEACN 790700) |
1,0
|
12,9
|
22.4 |
Other articles of zinc, other (FEACN 790700). |
28,0 |
268,1 |
23 |
Sheets, bars or strips and foil made of lead |
|
|
23.1 |
Sheets, bars or strips and foil made of lead with a thickness (excluding any base) not exceeding 0.2 mm (FEACN 780411) |
0,1
|
6,6
|
23.2 |
Other plates, sheets, bars or strips and foil made of lead (FEACN 780419) |
0,1 |
17,4 |
23.3 |
Bars, profiles and wire; tubes, pipes and fittings for pipes and tubes (for example, couplings, pipe bents, flanges), made of lead, other (FEACN 780600) |
4,2
|
65,7
|
23.4 |
Other articles made of lead, other (FEACN 7806008009). |
288,9 |
932,5 |
24. |
Bars, profiles and wire made of tin |
|
|
24.1 |
Bars, profiles and wire made of tin (FEACN 800300) |
3,9 |
42,3 |
24.2 |
Plates, sheets and strips of tin with a thickness exceeding 0,2 mm, other (FEACN 80070010) |
0,12 |
2,2 |
24.3 |
Other articles of tin, other (FEACN 80070080). |
0,2 |
4,7 |
25 |
Plates, sheets, bars or strips made of aluminum |
|
|
25.1 |
Plates, sheets, bars or strips made of not-alloyed aluminum with a thickness exceeding 0,2 mm, rectangular, painted, varnished or coated with plastics (FEACN 76061110) |
799,5
|
2305,6
|
25.2 |
Other rectangular plates, sheets bars and strips made of not-alloyed aluminum with a thickness of less than 3 mm (FEACN 76061190) |
627,9
|
3285,9
|
25.3 |
Other rectangular plates, sheets bars and strips made of not-alloyed aluminum with a thickness exceeding 3 mm, but less than 6 mm (FEACN 76061193) |
1025,4
|
1191,4
|
25.4 |
Other rectangular plates, sheets bars and strips made of not-alloyed aluminum with a thickness exceeding 6 mm (FEACN 76061199) |
57,3
|
254,7
|
25.5 |
Other rectangular (including square) sandwich panels made of aluminum alloys, painted, varnished or coated with plastics (FEACN 7606122002) |
358,6
|
726,6
|
25.6 |
Other rectangular (including square) plates, sheets bars and strips with a thickness exceeding 0,2 mm, made of aluminum alloys, painted, varnished or coated with plastics (FEACN 76061220) |
677,6
|
3698,0
|
25.7 |
Rectangular (including square) plates, sheets bars and strips made of aluminum alloys with a thickness exceeding 0,2 mm, other with a thickness less than 3 mm, other (FEACN 76061292) |
162,5
|
536,03
|
25.8 |
Rectangular plates, sheets bars or strips made of aluminum alloys with a thickness not less than 3 mm, but less than 6 mm, other (FEACN 7606129309) |
101,8
|
53,4
|
25.9 |
Plates, sheets bars or strips made of unalloyed aluminum with a thickness exceeding 0.2 mm, other (FEACN 7606910000) |
63,2
|
560,0
|
25.10 |
Rolled aluminum foil, but without further processing, with a thickness less than 0.0046 mm, other (FEACN 7607111901) |
64,9
|
306,3
|
25.11 |
Rolled aluminum foil, without further processing, with a thickness not less than 0.0046 mm, but not exceeding 0.021 mm, other (FEACN 7607111909) |
60,2
|
127,1
|
25.12 |
Rolled aluminum foil, without a base and further processing, with a thickness exceeding 0.021 mm, but not more than 0.2 mm, other (FEACN 76071190); |
39,2
|
192,8
|
25.13 |
Other aluminum foil without a base and with a thickness less than 0.021 mm (FEACN 76071910) |
122,6
|
866,6
|
25.14 |
Aluminum foil with a base and a thickness (excluding any base) not exceeding 0.021 mm (FEACN 76072010), tons, amounting to thousand US dollars; |
544,5 |
2671,2 |
26 |
Coarse and semi-raw gold or in the form of powder (CPEA 24412) |
|
|
26.1 |
Gold in other semi-raw forms – rods, wires and profiles; plates, sheets and strips with a thickness exceeding 0.15 mm, excluding any base (FEACN 71081310). |
369,3g |
23,2 |
Source: compiled by the Association of Mining and Metallurgical Enterprises
5. Strong points of the industry.
Table 18. Strong points of the non-ferrous metallurgy
- The strategic role of ferrous and nonferrous metallurgy in ensuring the GDP; - Most of the exported products meets in terms of their quality the requirements of consumers; - Steel mills and non-ferrous metallurgy plants are located near the sources of raw materials and provided with them for a long period; - Globalization of the mining and metallurgical industry of the republic (ArcelorMittal, Kazakhmys, ENRC, Kazzinc and others.) and its compliance with a high level of the industrial culture; - Defining role of the metallurgy in the national economy; - High demand for ferrous and nonferrous metals in the long term perspective; - Complexity of components of ore minerals; - Comprehensive content of useful components of deposits; - Strong demand for metals and metal products in foreign markets; - Development of related domestic industries that consume metals (engineering, construction, railways, energy, etc.); - Possibilities of creating new industries for the production of products with high added value based on produced basic and rare metals. - Presence of its own mineral and resource base (ores of ferrous, non-ferrous, precious, rare, rare earth and radioactive metals, and others.); - A well-developed industrial infrastructure (mines and large mining and processing plants, smelters, including the complete cycle smelters, railways, power mains); - Availability of industrial research centers, institutes, national and university engineering laboratories, and research centers of enterprises; - A wide range of manufactured metals, including rare and rare-earth ones; - Availability of national scientific and technological developments for the organization of production on deep and complex processing of raw materials; - Presence of the leading companies in mining and production of metals with access to the world markets; - Availability of competitive technologies for extracting scarce metals in the global market; - Availability of potential deposits for development. |
Source: compiled by the Association of Mining and Metallurgical Enterprises
Table 19. Strong points of metallurgy of rare metals and rare earth elements
- Economic attractiveness of rare and rare earth metals, both in the form of raw materials and in the form of commercial products; - Required level of competence in obtaining rare refractory metals of high purity (tantalum, niobium, molybdenum, tungsten, and rhenium); - Availability of production facilities for the production beryllium and tantalum, belonging to Ulba Metallurgical Plant; - Prognostic resources of molybdenum in Kazakhstan is estimated at 5 million tons (3rd place in the world), the presence of prospected deposits. |
Source: compiled by the Association of Mining and Metallurgical Enterprises
[1] Source: http://www.finmarket.ru/database/news/4090641
Review on engineering industry
LIST OF CAPABILITIES FOR ENTERPRENEURS
DESCRIPTION
Engineering takes one of leading positions in employment of the latest innovative technologies: waterjet cutting, external laser scanners, thermal treatment, laser technologies, precision casting, oil electroerosion, 3-D printing, robotics, integrated electronics and others. The considerable part of engineering production includes intermediate goods for production in other industries.
In developed countries machinery production represents 10%-50% of total amount of industrial products output, for example, in China – 35%, in the USA – 14%, in Germany – 11%, in Japan – 10%. In 2014 in Kazakhstan the share of engineering in the total amount of industrial production made 4,7%.
CONTRIBUTION INTO ECONOMY
In Kazakhstan the share of engineering in the total amount of industrial production is much less than the share of engineering in developed countries. So, the share of engineering in 2014 of the total amount of industrial production made only 4,7%.
Within processing industry the share of engineering grew considerably and made 14,8% in 2014. In the first six months of 2015 it decreased by 3,1 pp in comparison with the similar period of last year and made 11,1%. Production output decreased considerably due to devaluation in 2014 and price non-competitiveness of many goods followed by significant fall in the exchange rate of Russian ruble.
Drawing 1 – The share of machinery engineering in the amount of processing industry of the Republic of Kazakhstan, %
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Positive dynamics of increase in share of engineering in processing industry in the period of time since 2010 to 2014 was connected with dynamic increase in production of motor vehicle, trailers and semitrailers, repair and installation of machines and equipment, production of machines and equipment, not included in other categories, and electric equipment.
At the same time over the past few months there was a slowdown in the rate of increase of industry growth because of contraction of demand in key segments of mechanical engineering.
Production output of engineering in 2014 in comparison with 2008 increased in money terms by 2,9 times (from 301,4 billion tenge to 869,9 billion tenge), and real growth made 177,3%.
Production output of engineering in 2014 in comparison with 2013 increased in money terms from 859,2 billion tenge to 869,9 billion tenge, the volume index made 99,5%.
For the last five years main growth driver of engineering was provided with production of vehicles, trailers and semitrailers and railway mechanical engineering. Also, there increased output of production of electric equipment, oil and gas and agricultural mechanical engineering.
Following the results of 2014 the volume of investment into fixed capital of machine-building industry made 51,6 billion tenge that is 3,7 times more than in the similar period of time in 2008.
Drawing 2 – The amount of investments into fixed capital in 2008-2014, billion tenge
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
The volume of investment into fixed capital for 2014 in comparison with 2013 increased by 4,1 billion tenge – from 47,5 to 51,6 billion tenge. In the sector of production of vehicles, trailers and semitrailers there was the greatest inflow of investments for 2014 in comparison with 2013 – from 9,7 to 14,4 billion tenge (by 1,5 times), sector of production of machines and equipment not included in other categories increased from 9,3 to 14 billion tenge.
The fall of level of investments has been caused by low level of investment activity, owing to reducing demand in sectors of engineering and deterioration of overall economic situation
Drawing 3 – The amount of investments into fixed capital, million tenge
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Direct foreign investments into machine-building industry constitute 16% of all gross inflow of foreign direct investments in processing industry . In 2014 gross inflow of foreign direct investments in engineering made 211,8 mln. US dollars that is 30,6% more in comparison with 2008.
There is gross inflow of foreign direct investments in production of computers, electronic and optical production (34 mln. US dollars), production of machines and equipment included in other categories (20,9 mln. dollars of the USA) and also repair and installation of machines and equipment (167 mln. US dollars) for the first half of 2015.
Drawing 4 - Foreign direct investments, million US dollars
Source: National bank of the Republic of Kazakhstan
INDUSTRY STRUCTURE
The structure of industry of engineering includes the following largest segments: electronics, electric equipment, oil and gas mechanical engineering, agricultural mechanical engineering, automotive industry, railway mechanical engineering, repair and services of mechanical engineering.
For the period of the first half of 2015 in the structure of engineering the greatest share refers to repair and installation of machines and equipment – 50%, and 16 % on production of vehicles, trailers and semitrailers.
Production of other vehicles, machines and equipment which is not included in other categories makes 14% (oil and gas, agricultural mechanical engineering). production of electric equipment makes 9%. Production of other vehicles occupies 6% (railway mechanical engineering). Production of computers, electronic and optical production makes 5%.
Motor vehicle industry
For the first half of 2015 the output of production of automotive industry made 45 billion tenge, a reduction of 45,8% in comparison with last year. The share of production of motor cars decreased by 55,4% (7 901 units) due to price price non-competitiveness of Kazakhstani cars in comparison with Russian cars (as a result of crash of Russian ruble). Cancellation of VAT and excise for the cars imported by physical persons through Russian-Kazakhstan border also led to contraction of demand for domestic cars. Following the results of the first quarter of 2015 there were imported more than 100 new and second-hand thousand cars and second-hand cars make 70%.
The production of buses increased by 19,3% (167 units), cargo cars - by 62,1% (726 units) and special cars - by 44,0% (36 units) due to increase of procurement by state and quasi-public organizations.
Railway mechanical engineering
For the first half of 2015 production output of railway techniques made 12,8 billion tenge, the reduction was by 58,9%. Considerable reduction in this rate occurs due to stoppage in production of locomotives and passenger cars and decrease in production of goods wagons by 83,4% (50 units).
The main consumer of railway equipment is Kazakhstan Temir Zholy National Company JSC. Since 2010 the fall-off in cargo transportation has negative impact on railway mechanical engineering. Nevertheless, promoting local content with the view of export can have positive influence on production of locomotives and cars.
Production of electric equipment
For the end of the first half of 2015 production of electric equipment made 26,3 billion tenge. Production of coppers increased by 17,6%, radiators - by 17%, electric devices - by 63,8%, and lighting equipment - by 177,1%. At the same time, production of electric transformers has decreased by 25,4%, high-voltage equipment - for 55,1%, accumulators - for 38,2%, condensers - for 10,3%, cables fiber-optical - for 67%, wires - for 13,7%.
There is reduction in production due to decrease in potential demand at the major market and difficult economic situation in the Russian Federation, and also decrease in price competitiveness of Kazakhstani production of electric equipment owing to fall in exchange rate of Russian ruble.
Production of agricultural equipment
In the six months of 2015 production output made 8,1 billion tenge that is on 8,2% lower than in the similar period of last year. Production of tractors has increased by 19,1% and harvesters - by 0,8%, and production of combine harvesters has decreased by 12,2%.
Oil and gas engineering
Production volume following the results of the first half of 2015 made 8,1 billion tenge, and index of actual volume – 83,3%.
There is still a low rate of production of machines and equipment for oil-processing and oil-extracting industry in gross volume of processing industry (about 0,5%). This indicator made 3,2% in 2013 and 2,6 % - in 2008.
Total amount of market of oil and gas equipment of the Republic of Kazakhstan in 2012 made 2 bln. US dollars. At the same time internal production made 7,1% of total market. Reductions of oil prices, and also delay in the commencement of commercial operation of Kashagan field deposit for the time being can negatively impact production of machines and equipment in the oil-and-gas sector.
Engineering for MMC
Production output of machines and equipment for mining industry in six months of 2015 made 16,5 billion tenge, representing a decrease of 0,2%. Decrease of 74,7% in production output is observed in production of metallurgical machines and equipment, and mining equipment, underground mining equipment and construction – by 34,9%.
Strategic companies has purchased products for the amount of 38,2 billion tenge, and share of domestic production made 3,1% (1,2 billion tenge).
Market capacity
For the first half of 2015 production volume made 281,6 billion tenge, and the volume index over the specified period made 69,3%.
Drawing 5 – Production output and Volume index of mechanical engineering, billion tenge
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
For the period of time from January to June, 2015 there was increase in production of computers, electronic and optical production, volume index made 111,5% (13,9 billion tenge).
Negative trend is observed in other sectors. In production of vehicles, trailers and semitrailers volume index of physical amount made 54,2% (45,1 billion tenge), in production of electric equipment - 99,8% (26,4 billion tenge), in production of machines and equipment, not included in other categories - 70,3% (39,9 billion tenge), production of other vehicles - 45,6% (17 billion tenge), repair and installations of machines and equipment - 74,6% (139,3 billion tenge).
PRINCIPAL PARTICIPANTS
Table 1 – Primary manufacturers of engineering products of the Republic of Kazakhstan and nomenclature of output products
Sector |
Company name |
Location |
Output products |
ELECTRIC EQUIPMENT |
«Kentau transformer works» JSC |
Kentau city, South Kazakhstan region |
Transformers, instrument transformers, transforming substations |
«Kaynar-AKB» JSC |
Taldykorgan city |
Accumulators, dry accumulators, semaphore batteries |
|
«Almaty electromechanic factory» LLP |
Almaty city |
Complete distribution gears, complete trafo stations, switchboard panels |
|
«Kazenergokabel» JSC |
Pavlodar city |
High-power, control, instrumentation, block-signaling cables. Not insulated, insulated, aeral line, setting, interconnecting, special purpose cords |
|
«Kelet» JSC |
Almaty city |
Electric motors, generators, stabilizers, electric equipment, compressor equipment |
|
«Oskemen condensing factory» JSC |
Oskemen city |
Cosine and electrothermal condensers, coupling condensers and dividers, condenser low-voltage installations, condenser blocks |
|
«Almaty ventilator factory» LLP |
Koyankus village, Almaty region |
Ventilators, fireproof ventilation equipment, central conditioners |
|
«Kaztsentrelektropro- vod» LLP |
Saran city, Karagandy region |
Telecommunication, energetic, wiring products |
|
«Korporatsiya Saiman» LLP |
Almaty city |
Single-phase meters, Three-phase meters, current transformers, control and protection stations |
|
«ZHERSU POWER» LLP |
Taldykorgan city |
Production of automobile lead-acid storage batteries |
|
Producti-on of agricultu-ral engineer-ing |
Kostanay branch of «Agromashholding» JSC |
Kostanay city |
Combine harvester threshers: «Yenisei-1200», «Yesil-740», «Yesil-760»; planters SKP-2.1 |
«Agrotechmash» LLP |
Kostanay city |
Truck K-744Р1; LDG-15; harrow «Taifun» |
|
«West Kazakhstan engineering company» JSC |
Oral city |
Tilthers |
|
«Don Mar» LLP |
Lisakovsk, Kostanay region |
cutters «Don Mar 2009»; Don Mar 2009DB |
|
«SemAZ» LLP |
Semipalatinsk city |
Wheel trucks МТZ-80,1 |
|
«KaratalAgroTech» LLP |
Almaty region |
Trucks: «Arlan 200», «Arlan», «Arlan 404»; rigging: plough IL435, hay harvester 9GB2.1, roll pick-up press MRB0850, brush equipment RSS160, tractor shavel ТH 165. |
|
«Kamaz Engineering» JV |
Kokshetau city |
Load vehicle «KAMAZ» |
|
«Avangard Agro» NGO LLP |
Petropavlovsk, North Kazakhstan region |
Trailer sprayer OPSHU-25 |
|
«KazBelAgromash» JV LLP |
North Kazakhstan region |
Joint production at the premises of «Orbita К» JSC and «Lidagromash» OJSC combine harvester thresher «Kyzylzhar-1300» |
|
Selikanov К., PE |
Pavlodar city |
1. Combined universal mounting KUN-0,8; lift height Н-4,2 meters; mould V-0,8 cubic ,meters, dropping and silage forks; hay and ensilage forks (push block and hydrovalve), wind burn of roll hay; 2. Three-position distichous breast |
|
«Uralskagrogremash» JSC |
Oral city |
Drop irrigation system |
|
«Tsentr induastrialno-innovatsionnogo razvitiya Astany» |
Astana city |
Seed planters SZS |
|
«ZIKSTO» JSC |
Petropavlovsk city |
Till-plows LDG, grasp 5, 10, 15 и 20 m, plowing combined aggregate APK-F-20 |
|
«YuKMZ» JSC |
South Kazakhstan region |
ploughs PN-4, PN-3А, chisel rooter CHG-000002G, rearers KPN-2, KP-2,КР-3, КP-5 |
|
«KazAgroInnovatsiya» JSC Tselinniy Scientific-Research Institute of mechanization and Electrification of Agriculture |
Kostanay city |
Harrow for pre-emergence general purpose tillage tool, multifunction tool, combined tillage machine КMS-3, combined tools ОКТ-4,2М, lift-up soil disrupturer RSN-3,0 |
|
«Tynys» JSC |
Kokshetau city, Akmola region |
Moving mounted sprayer PSO-2000 |
|
«Technologic lines» LLP |
Pavlodar city |
Grain cleaning and processing machinery |
|
«ARMZ» LLP |
Atbasar city |
Spare parts for agricultural equipment: |
|
«KRMZ» LLP |
Akkol city |
Spare parts for agricultural vehicles, seed planters |
|
«Agricultural vehicles factory» LLP |
Petropavl city |
Production of pull type rotary windrower |
|
(«Astana-agropromtechnika») Tselinselmash LLP |
Astana city |
Production of agricultural equipment |
|
«Kazakhstan Agro Innovation Corporation» LLP |
Kokshetau city |
Production of agricultural vehicles |
|
«AzovAralAgromash» JV LLP |
Kyzylorda city, Kyzylorda region |
Assembly of agricultural vehicles (cutters assembly). |
|
«Kazakh Scientific and Research Institute of Mechanization and Electrification of Agriculture» LLP |
Almaty city |
Assembly of agricultural vehicles |
|
Production of mining machines and equipment |
«KazBelAz» JV LLP |
Karaganda city, Karaganda region
|
Mining and assisting technique for moving mined rock |
Karaganda Casting and Engineering Plant |
Karaganda city, Karaganda region |
Mining equipment |
|
«Parkhomenko КМZ» LLP |
Karaganda city, Karaganda region |
Mining and mineral-processing equipment |
|
«KarGorMash» LLP |
Karaganda city, Karaganda region |
Mining equipment and spare parts |
|
«Rudservis К» LLP |
Karaganda city, Karaganda region |
Compressor package for mining equipment |
|
«KIAMZ Geomash» LLP |
Karaganda city, Karaganda region |
Metal Structures |
|
«Kurylysmet» LLP |
Karaganda city, Karaganda region |
Mining Equipment |
|
«Kazakhstan Excavator Plant» LLP |
Karaganda city, Karaganda region |
Excavators-bulldozers, Excavators-loaders |
|
«KazZincMash» LLP |
Ridder city, East Kazakhstan region |
Equipment and spare parts for miner and processor, iron and steel company. |
|
«MashZavod № 1» LLP |
Oskemen city, East Kazakhstan Region |
Vehicles and equipment for underground and mine works |
|
«Excavators» JSC |
Kentau city |
Excavators |
|
«Belkamit» JV JSC |
Almaty city |
Tanks and vessels, floatation equipment |
|
Production of oil refining and oil mining machines and equipment
|
«Petropavl heavy machine shop» JSC |
Petropavl city |
Mobile drilling machines, hoist units, specialty vehicles for support services |
«Almaty heavy machine plant» JSC |
Almaty city |
Mechanical assembly production, fabrication, casthouse production, forgings |
|
«West Kazakhstan Engineering Company» JSC |
Uralsk city |
Engineering, production and service maintenance for compressor stations and as-turbine station |
|
«Munaimash» JSC |
Petropavlovsk city |
Downhole oil-well pumps; instrument workover, wireline operations; spare parts for oil and gas equipment
|
|
«Aktobe Oil Equipment Plant» |
Aktobe city |
Pump rods and muff, oil-well pumps, pumps producing string and muffs, gas-sand anchors |
|
АО «Kazneftegasmash» |
Petropavl city |
Well-head equipment, pipe fittings |
|
«Kirov Factory» JSC |
Petropavl city |
Electric motors safety control, program control device, oil pumper control means, power supply station |
|
"ZhigerMunaiServis" JSC |
Atyrau city |
Servicing, repair and service maintenance of directed drilling with application of telemetry system |
|
«Belkamit» LLP |
Almaty city |
Shell-and-tube heat exchangers, gas-oil separators, gas separators, tanks for propane and butane liquid gas, knock-out drums, gas scrubbers, liquid screen filters, reactors of different purpose |
|
Production railway engineering |
«Lokomotiv Kurastyru Zauytty» JSC |
Astana city, Akmola region |
Locomotives |
«Elektrovoz Kurastyru Zauytty» JSC |
Astana city, Akmola region |
Electromotives |
|
«Tulpar Talgo» LLP |
Astana city, Akmola region |
Passenger stock |
|
«KBK» LLP |
Ekibastuz city, Pavlodar region |
High-sided wagons |
|
«ZIKSTO» JSC |
Petropavl city, North Kazakhstan region |
Wagons |
|
«Prommashkomplekt» LLP |
Ekibastuz city, Pavlodar region |
All-rolled wheels, track switching equipment |
|
«Format Mach Company» LLP |
Pavlodar city, Pavlodar region |
Axle box, automatic coupling, cushioning device, draw clumps, chocks and other car casting |
Source: ALE “Union of Machine-Builders of Kazakhstan”
DEVELOPMENT FACTORS
In general it is possible to allocate several considerable factors which have negative impact on development of domestic engineering industry:
- general economic market situation;
- fall in exchange rate of Russian ruble;
- decrease in volume of cargo transportation on the railroads;
- reduction of consumer capability of consumers of machine-building production due to sequester of republican and local budgets, business plans of quasi-public sector and large users of mineral sources of the Republic of Kazakhstan;
- complication of procedures of receipt of credit domestic currency loans in regulated banks of the Republic of Kazakhstan.
Main world tendencies of development of engineering industry:
1) Transition from local production to international production cooperation. Owing to development of innovative technologies, possibilities of international production cooperation will increase in the future;
2) Transition from product sale to product lifecycle sale. Global service systems will make 50% of the price of product lifecycle, and the main field service will be on sale at the beginning of product lifecycle for the purpose of increase of primary price of the contract with subsequent prolongation of technical support services in the later stages;
3) Increase in number of lifecycles of machines and details. For the purpose of implementation of policy on reduction of waste and resource-saving developed countries come up with bills on use of 50% of details reworked after utilization of machines in engineering, and also for approval of lists of product groups with two obligatory lifecycles;
4) New contraction forms: sale of productivity of equipment. At the world market there are new forms of contraction based not on the sale of units of equipment, but on achievable indicators after its installation. This type of contract provides pricing on construction depending on unit of power of future object and optimal fixed term of facility commissioning from the point of view of risks and costs for customers since the contractor bears financial responsibility for excess/economy of estimated cost of the project;
5) Narrowing of technology gap between manufacturersof developed and developing countries. Large-scale updating of machines of low quality and performance of machines of "middle weight". It will allow developing countries not only to increase production volumes, but also to expand export;
6) "Green" engineering. Global concept of transition to sustainable development and "green economy" leads to shift of demand towards more eco-friendly production and machines;
7) Miniaturization of machines. Evolutionary development of machines with transition to new types of technical systems and their components lead to considerable reduction of overall dimensions and weight in case of simultaneous increase of their reliability and extent of automation of designing and production processes;
8) Enhancement of role of industrial design. The importance of industrial design in engineering is gradually grasped by manufacturers- today more than 50% of foreign producer companies intended for B2B sectors invest in industrial design.
9) Transition of engineering production into high technologies
10) Use of 3d - printers
BARRIERS AND RESTRICTIONS
1. Access to the market:
- Undeveloped ecosystem of suppliers, which restricts the potential of production localization and creation of added value;
- low technological and innovative capacity of Kazakhstan companies which does not allow to compete according to quality and technological effectiveness and leads to lack of engineering service in the country;
- shortage of available financing for development of companies that leads to delay of growth of key industries;
- lack of qualified personnel for growth of existing and creation of new companies, and lack of effective management of companies;
- low competence in preparation of tender documentation.
2. Accession to CFMZ:
- high cost of raw materials and tariffs;
- small demand;
- unskilled personnel;
- high transportation expenses.
3. Access to international market (Europe, China):
- improvement of competition on the part of engineering production of China, Russia and Belarus;
- accession to WTO will limit possibilities of state support of domestic producers;
- lack of qualified specialists and vocational and technical personnel for requirements of lines of industry;
- widening of gap in existing technologies between the companies of the Republic of Kazakhstan and other countries;
- nonconformity of Kazakhstan production to international technical regulations (harmonization of standards is necessary);
- advancing growth of costs for raw materials and electric power reducing price advantage of Kazakhstan producers;
- low level of marketing and advertizing agencies.
4. Public procurements and meeting the demands of defense:
- it is necessary to improve the legislation in the sphere of public procurements, purchases of quasi-public sector regarding determination of criteria of innovation of purchased goods, works and services;
- it is required to develop the mechanism of conclusion of long-term agreements on delivery of products implemented on the basis of technological memorandums;
- when purchasing quasi-public sector and subsoil users it is necessary to set the requirements of national or non-governmental standards in technical specification, in case of their availability;
- it is necessary to adopt the Law of the Republic of Kazakhstan on offset agreements for increase of foreign investments in processing industry of Kazakhstan.
5.Infrastructure and logistics:
- High transportation costs;
- Low quality of road surface;
- Underdevelopment of energetic infrastructure;
- High tariffs on natural monopolies services at low quality of the services of natural monopoly entities.
6. Human Resources:
- demand for qualified personnel resources of top-ranking and middle-ranking and middle ranking officials.
- low level of training in domestic higher and secondary educational institutions (gap between theory and practice in skills of workers, necessity of additional training of hired specialists).
7. Availability of financial resources:
- high interest rates
- high requirements to mortgage security;
- long terms of documents review;
- lack of information on grants, private and foreign investments.
8. Ecosystem of suppliers: ecosystem of suppliers both in engineering industry, and in the industry in general is not developed.
LIST OF CAPABILITIES FOR ENTERPRENEURS
1. Full-revolving machines
Amount of investments: 114,5 mln. dollars of which 73,6 million USD (64,3%) are aimed for purchase of equipment
Production output: Mid-size caterpillar full-revolving excavators with back hoe, 20-40 tons - 380 pieces a year
Markets: Demand of Kazakhstan for GE and 13 neighboring countries have positive dynamics.
Import output of the Republic of Kazakhstan in 2014: 34,4 mln. dollars, 830 units, 7 000 tons
Macroregion import output in 2014: 291,1 mln. dollars, 5 303 units, 737 thousand tons, including:
Russian Federation: 222,9 mln. dollars, 3 504 pieces.
Georgia: 11,1 mln. dollars, 662 pieces.
Potential location of project: Karaganda city, Karaganda region
2. Front loader
Amount of investment: 200 mln. dollars.
Production output: 20 000 units per year
Markets: Kazakhstan, CFMZ countries
Import output of Kazakhstan: 20,4 mln. dollars, 793 pieces.
Macroregion import output: 141,1 mln. dollars; 32 thousand pieces, including:
From China – 75 mln. dollars.
From the USA – 16 mln. dollars.
From Great Britain – 8,6 mln. dollars.
From Australia - 7,8 mln. dollars.
From Thailand – 7,0 mln. dollars.
Potential location of the project: Almaty city or Almaty region
3. Road rollers
Amount of investment: 15 mln. dollars.
Production output: 1500 units per year
Markets: Kazakhstan, CFMZ countries
Import output of Kazakhstan: 20,4 mln. dollars, 793 pieces.
Macroregion import volume: 163,6 mln. dollars, 3 955 units, including:
Russian Federation: 118,8 mln. dollars, 2 475 pieces.
Belarus: 2,9 mln. dollars, 62 pieces.
Kyrgyzstan: 2,4 mln. dollars, 69 pieces.
Potential location of the project: Karaganda city, Karaganda region
4. Floatation machines (crushing and grinding machines)
Amount of investments: 10-15 mln. dollars.
Production output: 1 000 – 3 000 units/year
Markets: Kazakhstan, EEU, Iran, TsA, Caucasus
Import output of Kazakhstan: 272,1 mln. dollars.
Macroregion import output: 791,4 mln. dollars.
Potential location of the project: Karaganda city, Karaganda region
5. Refrigeration and freezing equipment (ice generators, dispensers, chillers, coolers, etc.)
Amount of investment: 15 mln. dollars.
Production output: 3000 tons/year
Markets: Food industry and agricultural enterprises, and also service sectors serve as the main users of refrigeration and freezing equipment. Therefore, there is direct link between increase in the population and production of refrigeration equipment. Such cities as Almaty, Astana, Atyrau will be the major markets.
Import output of Kazakhstan: 33,5 mln. dollars; 2238 tons
Macroregion import output: 361,4 mln. dollars, including:
Russian Federation: 216,9 mln. dollars.
Iran: 39,3 mln. dollars (2010)
Belarus: 30,1mln. dollars.
Potential location of the project: Astana city, Almaty city
6. Isolation valves (ball valve)
Amount of investments: 7-10 mln. dollars.
Production output: 10 000 tons/year
Markets: Kazakhstan, EAEU, Iran, Central Asia, Caucasus
Import output of Kazakhstan: 469,3 mln. dollars.
Macroregion import output: 6 702,1 mln. dollars.
Potential location of the project: Aktobe region, Almaty region
7. Equipment for filtering or purification of gases
Amount of investments: 6-7 mln. dollars.
Production output: 1500 units per year
Markets: Kazakhstan, Russian Federation
Import output of Kazakhstan: 51,3 mln. dollars, 845,6 thousand pieces.
Macroregion output volume: Russian Federation: 210,3 mln. dollars, 2,2 million pieces.
Potential location of the project: West Kazakhstan region, East Kazakhstan region, Karaganda region
SWOT-ANALYSIS
Analysis of strengths and weaknesses of higher priority sectors of engineering industry:
Engineering |
|
Strengths |
Weaknesses |
§ Availability of competences of car assembly production; § Rather high work performance; § Low level of depreciation of equipment; § Availability of state support programs. |
§ Lack of high-volume output of cars; § Low level of localization and added value; § Lack of infrastructure in the field of technical regulation; § Lack of complex system of utilization; § Lack of available financial resources; § Poor development of Research and Development |
Capabilities |
Threats |
§ Growing domestic demand; § Transfer of technologies due to involvement of foreign companies; § Increase of dues on imported cars; § Building-up of export of automobile production at the markets of macroregion and Custom Union countries; § Creation of own autocomponent base; § Integration into global distribution channels
|
§ Accession of Kazakhstan to the WTO; § Improvement of competition from car assembly productions of China and Russia; § Decrease in consumer capability of the population; § Increase of transit tariffs on delivery of vehicles in the territory of the Republic of Kazakhstan; § Availability of technical and other non-tariff barriers when exporting Kazakhstan production at the market of EEU countries, dependence on technical test base of Russian Federation in the field of technical regulation |
Electric equipment |
|
Strengths |
Weaknesses |
§ Availability of competitive enterprises at the domestic market; § Availability of state support programs for manufacturersof electric equipment
|
§ Small volume of domestic market in product section; § Low production rate in electric equipment sector; § Underdevelopment of ecosystem of suppliers; § Lack of qualified personnel |
Capabilities |
Threats |
§ Further development of export at the market of EAEU countries; § Start-up; § Development of new types of production, further diversification of output products; § Transfer of technologies due to involvement of foreign companies |
§ Improvement of competition from manufacturersfrom China, Russia and Belarus; § Accession to the WTO which sidelines possibilities of state support of domestic manufacturersof electric equipment |
Agricultural equipment |
|
Strengths |
Weaknesses |
§ Priority development of agricultural plant of the country; § Industrialization of all industries of agro-industrial plant; § Available potential production and corresponding infrastructure; § Protection of EAEU market against import equipment at the expense of customs duties; § Soft financing of buyers |
§ § Low purchasing power on agricultural section and its volatility in connection with climatic changes; § Lack of accessories output, including, special grades of steel necessary for production of actuating member and bearing frames of agricultural machines; § Backwardness of system of technical regulation; § Insufficient development of mechanism of subsidizing of manufacturersof agricultural machinery; § Lack of skilled workers and engineers |
Capabilities |
Threats |
§ Implementation of state support of demand for agrotechnology; § Development of agrotechnology supplies on the territory of Customs Union countries; § Localization of production and development of Kazakhstani suppliers of units and accessories for agrotechnology; § Creation of joint ventures; § Integration into global chains of value creation, development and provision of fiscal and other preferences for investors. § Implementation of new technologies in agrarian and industrial complex |
§ Accession to the WTO that can lead to weakening of state support of enterprises and to decrease of import customs duties on production of agricultural mechanical engineering; § Localization of production of leading foreign manufacturersof agrotechnology in Russia can improve competition a the markets of EAEU countries; § Growth of costs for raw materials and electric power can also influence price competition of domestic enterprises
|
Railway engineering |
|
Strengths |
Weaknesses |
§ Potential production and corresponding infrastructure; § Availability of collaboration in the institute represented by «Kazakhstan Temir Zholy National Company» JSC; § Availability of modern plants in cooperation with global manufacturers; § Moderate risks and low level of competition
|
§ Undeveloped system of technical regulation; § Lack of test centers and/or laboratories for performance of certified testing within Customs Union; § Need of harmonization of standards of railway engineering taking into account the international requirements; § Underdevelopment of suppliers of key accessories; § Lack of production of separate types of high-technology products for railway vehicles; § Insufficient coordination of engineering and technological bureaus of machine-building enterprises for the purpose of providing single technological policy of production of railway industry; § Lack of proper competitive technologies in the world market, developments and dependence on import; § Lack of skilled workers and engineers; § Difficulty in getting guaranteed order by domestic enterprises which plan to set up or have already set up new production of outputs, mastered or planning to master production of new production, including at a stage of development of production (conclusion of long-term agreements with large consumers of machine-building production without application of competitive procedures of selection) |
Capabilities |
Threats |
§ Creation of advantageous business climate. § Further sector development (development of Kazakhstani suppliers of units and accessories); § Availability of domestic demand specifies considerable potential for creation of competitive productions of accessories in the market of macroregion. § Creation of favorable business climate. |
§ Introduction of single technical regulation of EAEU; § Accession to the WTO neutralizes the level of state support for enterprises; localization of production by leading foreign companies in the Russian Federation, § Growth of costs for raw materials and electric power will influence the price of production of domestic enterprises.
|
Machines and Equipment for MMC |
|
Strengths |
Weaknesses |
§ Availability of state support programs (liability of subsoil users in Kazakhstan); § Existing competences in production of separate accessories and machines.
|
§ Technological backwardness of production works, growth of share of spare parts made in conditions of single-piece and low production, high resource intensity of production, lack of qualified personnel, depreciation of fixed assets, lack of available financial resources for development of enterprises, low level of capacity utilization of many existing enterprises, low competitiveness of products in comparison with similar products world over: according to the price - in comparison with China and the Russian Federation, according to quality and performance - with similar European and American products. |
Capabilities |
Threats |
§ Demand of Kazakhstani mining companies for carrying out repair work of import equipment; § Production of accessories and spare parts by existing enterprises; § Increasing demand owing to planned upgrade of existing MMC enterprises and commissioning of new fields; § Use of tools of Civil offset through creation of joint ventures on high-technology production, technology transfer, repair and service of delivered equipment, and also training of local staff |
§ Accession to the WTO which can weaken state support for domestic enterprises. In case of expansion from foreign producers, including, through available assembly operations in the territory of Russia (full-revolving machine) and China, domestic enterprises will consider as noncompetitive; § Advancing growth of costs for raw materials, electric power; § Underdevelopment of system of technical regulation can lower price benefit of Kazakhstani producers
|
Oil and gas engineering |
|
Strengths |
Weaknesses |
§ Availability of competences on production of separate machines, equipment and accessories; § State support programs (requirement for Kazakhstan); § Benefits of transport leg (considerable expenses when transporting large non-standard, over-size loads) |
§ Low production of work in comparison with average values over ОECD countries (by 5,6 times); § Lack of ecosystem of suppliers; § Inefficient system of local monitoring; § Low availability of financial resources; § Underdevelopment of engineering and Research and Development; § Non-competitiveness of Kazakhstan enterprises at the price in view of exempt from deduction of VAT and import duties for imported goods by separate foreign oil and gas companies |
Capabilities |
Threats |
§ Capacity of domestic market and market of countries of macroregion in average and long term perspective; § Expansion of operating oil and gas deposits and development of new deposits; § Potential demand on production of oil and gas engineering in the amount of more than 20 bln. US dollars; § Integration into global chains of creation of value by creation of joint ventures |
§ High barriers for market entry, the largest oilfield services companies possess huge competences in engineering and R&D; § Accession of Kazakhstan into the WTO can limit possibilities of state support of domestic manufacturers; § Underdevelopment of technical regulation; lack of qualified personnel; § Lack of modern technologies; § Narrow range of products; § Low added value; § Lack of human resources; § Insufficient investment appeal |
Review on oil-and-fat industry
1. Introduction.
Agro-industrial complex of Kazakhstan is a priority for the state. One of the major factors providing sustainable development of agro-industrial complex is focusing on cost efficiency of production and processing of agricultural production that assumes rational and complex use of land, labor, material and raw material resources, the special part is assigned to rational territorial development promoting more effective use of main types of resources.
Production of food and processing industry make up about 1,7% of GDP of the Republic of Kazakhstan. It includes oil and fat and dairy industry, conversion of meat, fruit and vegetables, production of confectionery, sugar, cotton fiber and food, and there are several short reviews on them.
In the first part of overview there is a description of contribution of industry and structure of food industry, domestic market of oil and fat industry, historical information on development of industry, existing barriers and restrictions and the list of potential opportunities for entrepreneurial initiatives is considered further.
1.1. Contribution of food industry to economy
About 1500 enterprises in Kazakhstan turn out food and agricultural products industry which accounts for 1,7% of GDP of the state.
Northern regions of the country produce grain legumes and oil-bearing crop. Processing of oil-bearing crop is concentrated in northern and east Kazakhstan, and also in Almaty region.
Processing industry makes 10% in gross domestic product of the Republic of Kazakhstan. Production of food in 2014 made 1,7% of all-republican GDP, and 16% in processing industry.
Table 1. GRP in 2013-2014, mln. Tenge
Industry |
mln. tenge |
Share, % |
Gross domestic product |
39040 898,9 |
100,0 |
Agriculture, forestry and fishing industry |
1 717 719,1 |
4,4 |
Sector of industry |
10 818 122,2 |
27,6 |
Food industry |
675 785,5 |
1,7 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Gross output of agricultural industry in the Republic of Kazakhstan in 2014 made 2,5 trillion tenge. Production of plant cultivation and animal husbandry are rather equal in value terms. The greatest share in the cost of manufactured agricultural production: cereal and leguminous crops – 19%, dairy cattle breeding – 15%, cattle breeding – 14%, vegetables – 10%, feeding crops – 9% and small cattle breeding – 6%, Pancake oil crop – 3,4%.
Table 2. The structure of agricultural production of the Republic of Kazakhstan in 2014
Production |
Output of products, mln. tenge |
In total, % |
Agriculture production |
2 527 890 |
100% |
Crop production |
1 327 855 |
52,5% |
Cereal and leguminous crops production, including seed breeding |
478 338 |
18,9% |
Rice cultivation |
15 526 |
0,6% |
Cultivation of oil-bearing crop and its seeds |
85 113 |
3,4% |
Cultivation of potatoes and planting material |
180 977 |
7,2% |
Cultivation of vegetables, its seeds and plants |
259 695 |
10,3% |
Cultivation of sugar beet and its seeds |
175 |
0,0% |
Cultivation of cotton plants |
25 547 |
1,0% |
Cultivation of feed crops and its seeds |
238 107 |
9,4% |
Cultivation of grapes |
9 363 |
0,4% |
Cultivation of pome fruits and large fruits |
24 047 |
1,0% |
Animal production |
1 189 555 |
47,5% |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
In 2014 foreign trade turnover of the Republic of Kazakhstan made 119 450,6 million US dollars and in comparison with 2013 decreased by 10,5% including export – 78 237,8 million US dollars (7,6% less), import – 41 212,8 million US dollars (15,6% less).
Table 3. The structure of export and import of the Republic of Kazakhstan according to major trade lines in 2014
Code Of Customs Union Commodity Classification of Foreign Economic Activity |
Name of commodity line |
Export |
Import |
||
mln. US dollars |
In total, % |
mln. US dollars. |
In total, % |
||
In total |
79 459,8 |
100,0 |
41 295,5 |
100,0 |
|
01-24 |
Animal and plant products, including finished food products |
2 637,7 |
3,3 |
4 335,9 |
10,5 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
1.2. Capacity of domestic market.
At the moment the main regions of production of oil-bearing crops are six areas of the country: Akmola, Almaty, East Kazakhstan, Kostanay, Pavlodar and North Kazakhstan regions. These regions accounts for 2 million hectares of planting acreage of oil-bearing crops out of 2,3 million hectares within a country, that makes 87% of production. In comparison with the Soviet period, Kazakhstan has considerably increased production of oil-bearing crops from 266 thousand hectares in 1990, to current 2,3 million hectares of oil-bearing crops. Among all oil-bearing crops 98% are the share of 5 main cultures: sunflower, flax, colza, carthamus, soy. It should be noted that northern and east regions of the country more specialize in production of sunflower, flax and colza, and southern region - on soy and carthamus. In the USSR in the territory of Kazakhstan there prevailed sunflower production. The increase in production of oil-bearing crops is connected first of all with high profitability of oil-bearing crops, availability of constantly growing market and state policy in the sphere of agrarian and industrial complex directed to diversification of plant growing, departure from monoculture and considerable subsidizing of production of oil-bearing crops.
With increasing production of oil-bearing crops there was also development of processing industry. Only for the last five years production volume of vegetable oil increased by 50% from 222,5 thousand tons in 2010 to 329,4 in 2014. The main production capacities refer generally to regions with raw materials resources, however there are also exceptions. 95% of production of vegetable oil in the country refer to Aktobe, Almaty, East Kazakhstan, Kostanay, North Kazakhstan and Southern Kazakhstan regions. It is possible to notice, that Aktobe and Southern Kazakhstan regions hold leading positions without having considerable planting acreage of oil-bearing crop. The enterprises of Aktobe region utilize imported raw materials, including from neighboring regions of Russia. The enterprises of Southern Kazakhstan region utilize raw materials, produced not only in the region, but also in neighboring region of Southern Kazakhstan. It should be noted that considering low gross collection of oil-bearing crops in Soviet period (a little more than 200 thousand tons), there were no large processing plants in Kazakhstan. Among large enterprises of the Soviet period it is Almaty margarine factory making 6,3 thousand tons of finished goods. Nowadays Eurasian Foods works on its basis.
Domestic enterprises consume oil and fat production by 80%. At the same time it should be noted that according to national norm 8,8 kg per capita a year, demand for vegetable oil within a country makes about 150 thousand. tons, but actual consumption of oil in Kazakhstan exceeds 20 kg.
Table 4. Balance of resources and utilization of vegetable oil and oil products, mln. tones
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
|
Production |
137,7 |
159,0 |
167,5 |
211,5 |
237,3 |
188,9 |
203,5 |
222,9 |
235,0 |
292,6 |
280,8 |
329,4 |
Import |
84,4 |
59,6 |
77,7 |
67,8 |
101,6 |
159,0 |
144,0 |
81,1 |
164,4 |
101,5 |
97,6 |
106,1 |
Inventories for the beginning of year |
28,4 |
59,6 |
87,3 |
85,9 |
106,8 |
85,7 |
53,1 |
41,5 |
28,8 |
81,2 |
89,3 |
93,0 |
Resources in total |
250,5 |
278,2 |
332,5 |
365,2 |
445,6 |
433,6 |
400,6 |
345,5 |
428,2 |
475,3 |
467,7 |
528,5 |
Export |
10,5 |
9,7 |
7,2 |
14,8 |
21,2 |
13,3 |
31,7 |
36,4 |
21,8 |
35,0 |
29,5 |
40,2 |
Stocks for the end of the year |
59,6 |
87,3 |
85,9 |
106,8 |
85,7 |
53,1 |
41,5 |
28,8 |
81,2 |
89,3 |
93,0 |
128,3 |
Personal consumption |
180,4 |
181,2 |
239,4 |
243,6 |
338,7 |
367,2 |
327,4 |
280,3 |
325,2 |
351,0 |
345,2 |
360,0 |
Consumption per capita , kg |
12,0 |
12,1 |
15,8 |
15,9 |
21,9 |
23,4 |
20,3 |
17,2 |
19,6 |
20,9 |
20,3 |
20,8 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan.
Production output of vegetable oil in the period of time since 2003 to 2014 increased by 2,3 times and amounted to 329 thousand tons last year. Only 8% of oil consumption within a country is imported.
Table 5. Balance of production of oil and oil products in the country, mln. tons.
Thousand tones |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
137,7 |
159,0 |
167,5 |
211,5 |
237,3 |
188,9 |
203,5 |
222,9 |
235,0 |
292,6 |
280,8 |
329,4 |
Import |
84,4 |
59,6 |
77,7 |
67,8 |
101,6 |
159,0 |
144,0 |
81,1 |
164,4 |
101,5 |
97,6 |
106,1 |
Inventories for the beginning of year |
28,4 |
59,6 |
87,3 |
85,9 |
106,8 |
85,7 |
53,1 |
41,5 |
28,8 |
81,2 |
89,3 |
93,0 |
Resources in total |
250,5 |
278,2 |
332,5 |
365,2 |
445,6 |
433,6 |
400,6 |
345,5 |
428,2 |
475,3 |
467,7 |
528,5 |
Export |
10,5 |
9,7 |
7,2 |
14,8 |
21,2 |
13,3 |
31,7 |
36,4 |
21,8 |
35,0 |
29,5 |
40,2 |
Stocks for the end of the year |
59,6 |
87,3 |
85,9 |
106,8 |
85,7 |
53,1 |
41,5 |
28,8 |
81,2 |
89,3 |
93,0 |
128,3 |
Personal consumption |
180,4 |
181,2 |
239,4 |
243,6 |
338,7 |
367,2 |
327,4 |
280,3 |
325,2 |
351,0 |
345,2 |
360,0 |
Consumption per capita , kg |
12,0 |
12,1 |
15,8 |
15,9 |
21,9 |
23,4 |
20,3 |
17,2 |
19,6 |
20,9 |
20,3 |
20,8 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Table 6. Balance of production of oil and oil products in the country, thousand tons
Thousand tons |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Production |
137,7 |
159,0 |
167,5 |
211,5 |
237,3 |
188,9 |
203,5 |
222,9 |
235,0 |
292,6 |
280,8 |
329,4 |
Import |
84,4 |
59,6 |
77,7 |
67,8 |
101,6 |
159,0 |
144,0 |
81,1 |
164,4 |
101,5 |
97,6 |
106,1 |
Inventories for the beginning of year |
28,4 |
59,6 |
87,3 |
85,9 |
106,8 |
85,7 |
53,1 |
41,5 |
28,8 |
81,2 |
89,3 |
93,0 |
Resources in total |
250,5 |
278,2 |
332,5 |
365,2 |
445,6 |
433,6 |
400,6 |
345,5 |
428,2 |
475,3 |
467,7 |
528,5 |
Export |
10,5 |
9,7 |
7,2 |
14,8 |
21,2 |
13,3 |
31,7 |
36,4 |
21,8 |
35,0 |
29,5 |
40,2 |
Stocks for the end of the year |
59,6 |
87,3 |
85,9 |
106,8 |
85,7 |
53,1 |
41,5 |
28,8 |
81,2 |
89,3 |
93,0 |
128,3 |
Personal consumption |
180,4 |
181,2 |
239,4 |
243,6 |
338,7 |
367,2 |
327,4 |
280,3 |
325,2 |
351,0 |
345,2 |
360,0 |
Consumption per capita , kg |
12,0 |
12,1 |
15,8 |
15,9 |
21,9 |
23,4 |
20,3 |
17,2 |
19,6 |
20,9 |
20,3 |
20,8 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan
Export of oil and oil products from Kazakhstan increased by 5 times in the last ten years and reached 40 thousand tons.
According to Committee of government receipts of the Ministry of Finance of the Republic of Kazakhstan, during the period of time from 2005 to 2014, annually from 374 tons to 10,8 thousand tons of sunflower oil were exported from Kazakhstan. The main importer of Kazakhstani sunflower oil is Uzbekistan.
Table 7. Volume of export of vegetable oil across countries, tons
Countries |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Uzbekistan |
59 |
428 |
60 |
1 323 |
4 104 |
3 753 |
9 527 |
1 057 |
2 382 |
|
Kyrgyzstan |
243 |
190 |
1 028 |
425 |
460 |
1 742 |
680 |
840 |
361 |
1 786 |
Iran |
0 |
0 |
0 |
0 |
1 000 |
|||||
China |
418 |
0 |
0 |
96 |
948 |
|||||
Tajikistan |
72 |
120 |
70 |
2 |
23 |
68 |
482 |
|||
Other countries |
0 |
0 |
40 |
0 |
0 |
0 |
16 |
493 |
444 |
774 |
All countries |
374 |
190 |
2 034 |
485 |
1 853 |
5 849 |
4 449 |
10 884 |
2 026 |
7 373 |
Source: Committee of government receipts of the Ministry of Finance of the Republic of Kazakhstan
Export volume of soy oil from Kazakhstan in the period of time from 2003 to 2014 increased from 189 tons to 5,1 thousand tons. The main and almost the only one importer of Kazakhstan soy oil is Uzbekistan.
Table 8. Volume of export of soy oil across the countries, tons
Countries |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Uzbekistan |
1 207 |
2 997 |
363 |
1 072 |
1 596 |
5 145 |
5 128 |
2 770 |
||
Tajikistan |
189 |
60 |
1 769 |
|||||||
Latvia |
600 |
|||||||||
Russia |
369 |
177 |
||||||||
Other countries |
0 |
0 |
131 |
26 |
0 |
0 |
0 |
0 |
0 |
0 |
All countries |
189 |
1 207 |
3 128 |
26 |
363 |
1 072 |
1 965 |
5 382 |
5 128 |
5 139 |
Source: Committee of government receipts of the Ministry of Finance of the Republic of Kazakhstan
The volume of export of rape oil from Kazakhstan in the period of time from 2006 for 2013 has increased from 702 tons to 6,8 thousand tons. In Kazakhstan the small share of produced rape oil is exported.
Table 9. Volume of export of rape oil across the countries, tons
Countries |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
China |
6 839 |
|||||||||
Kyrgyzstan |
|
62 |
195 |
120 |
|
|
63 |
778 |
360 |
2 |
Russia |
|
|
|
|
|
|
|
|
1 991 |
|
Iran |
834 |
|||||||||
Tajikistan |
492 |
|||||||||
Other countries |
148 |
0 |
0 |
22 |
63 |
0 |
0 |
|||
All countries |
702 |
195 |
120 |
918 |
841 |
2 352 |
6 841 |
Source: Committee of government receipts of the Ministry of Finance of the Republic of Kazakhstan
The volumes of export of linseed oil from Kazakhstan to other countries are small.
Table 10. Volume of export of linseed oil across the countries, tons
Countries |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
China |
60 |
|||||||||
Afghanistan |
|
|
|
|
|
|
|
|
|
55 |
Germany |
|
|
|
|
|
|
21 |
|
0 |
|
Other countries |
2 |
0 |
0 |
0 |
0 |
1 |
3 |
3 |
||
All countries |
2 |
0 |
21 |
1 |
3 |
118 |
Source: Committee of government receipts of the Ministry of Finance of the Republic of Kazakhstan
The main consumers of oil-bearing crops are neighboring countries: China, Russia, Uzbekistan, Kyrgyzstan, and also countries of European Union (Belgium, Germany, Latvia), and also Iran and Turkey.
Vegetable oil from Kazakhstan generally goes for export to Uzbekistan, Tajikistan, Kyrgyzstan and China.
EAEU countries and Azerbaijan which import oily and vegetable oil to domestic markets can be also considered as potential markets for oily and vegetable oil.
In 2014 China imported more than 77 million tons of oil-bearing crops and more than 8 million tons of egetable oil. These indicators were practically doubled for the last five years.
Over the last 5 years Russia has doubled import of oil-bearing crops and today it amounts to more than 2 million tons. The volume of import of vegetable oil in 2014 amounted to 860 thousand tons.
The statistics of import of oil-bearing crops and vegetable oils to Iran is rather limited. However according to UNComtrade import of oil-bearing crops in 2011 made more than 0,5 million tons and 1,6 million tons. Import of Kyrgyzstan and Azerbaijan is much lower than in China, Iran and Russia, and these markets are of smaller interest.
Stable demand is observed from Germany, Belgium and Latvia. Volume of export to Belgium in 2014 made 71 thousand tons, export to Germany - 42 thousand tons, export to Latvia - 37 thousand tons. At the same time Germany imports annually more than 170 thousand tons of flax, Belgium imports about 0,5 million tons of flax. In general, EU imports up to 3,3 million of rape a year.
Thus it is possible to draw a conclusion that the volume of outer market of oil-bearing crops and vegetable oil is considered as large and export is limited only by production volumes within the country.
Table 11. Capacities of key outer markets of oil-bearing crop and vegetable oil, thousand tons/ million tons.
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
|||||||
Import |
tons |
thousand dollars. |
tons |
Thousand dollars. |
tons |
Thousand dollars. |
tons |
Thousand dollars. |
tons |
Thousand dollars. |
tons |
Thousand dollars. |
China |
||||||||||||
Oil-bearing crop |
46360 |
20683 |
57062 |
26541 |
54651 |
31371 |
62300 |
37742 |
67867 |
41438 |
77553 |
44520 |
Vegetable oil |
10287 |
7255 |
9222 |
8229 |
8504 |
10258 |
10522 |
11992 |
10200 |
9924 |
8685 |
8068 |
Russia |
||||||||||||
Oil-bearing crop |
1071 |
674 |
12111 |
763 |
1055 |
863 |
833 |
833 |
1298 |
1114 |
2200 |
1598 |
Vegetable oil |
754 |
753 |
965 |
1086 |
872 |
1128 |
809 |
1026 |
909 |
964 |
860 |
938 |
Iran |
||||||||||||
Oil-bearing crop |
n/a |
n/a |
949 |
458 |
931 |
547 |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
Vegetable oil |
n/a |
n/a |
1193 |
1 097 |
329 |
1658 |
n/a |
n/a |
n/a |
n/a |
n/a |
n/a |
Kyrgyzstan |
||||||||||||
Oil-bearing crop |
5 |
2 |
2 |
0 |
6 |
2 |
10 |
2 |
13 |
2 |
0 |
0 |
Vegetable oil |
34 |
35 |
40 |
48 |
37 |
58 |
43 |
60 |
49 |
68 |
0 |
0 |
Azerbaijan |
||||||||||||
Oil-bearing crop |
20 |
7 |
23 |
8 |
24 |
9 |
22 |
9 |
29 |
12 |
26 |
10 |
Vegetable oil |
80 |
66 |
101 |
84 |
94 |
78 |
124 |
96 |
107 |
69 |
115 |
71 |
Source: UNContrade
Export of vegetable oil in 2014 amounted to 40 thousand tons that makes only 12% of production. Potentially by the year 2020 this indicator can increase by times, in case of creation of oily clusters in North Kazakhstan and Almaty regions. Potential of foreign markets surely allows to develop production of oily-bearing crops.
In general, considering the market of buttered cultures and oil and fat industry it should be noted that in April overview 2015 Department of Agriculture of the United States has estimated world production of main oil-bearing crops at 537 million tons, it is assessment of a season 2014-2015. World export will make 137 million tons according to the forecasts in a season 2014/2015, processing will make 432 tons, carry-over will constitute 103 million tons. Since 2011 dynamics of oil-bearing crops production steadily grows at 27-28 million tons and throughout 5 years this growth amounts to 14%.
Table 12. The share of Kazakhstan in export of products
Resources of utilization of vegetable oil, thousand tons
Import country |
Exporter |
tons |
Share, % |
Thousand dollars |
Share, % |
Oil-bearing crop |
|||||
China |
In total |
77 552 926 |
100 |
44 519 591 |
100 |
Kazakhstan |
77 325 |
0,1 |
30 750 |
0,1 |
|
Germany |
In total |
9 042 194 |
100 |
5 056 375 |
100 |
Kazakhstan |
91 378 |
1,0 |
55 951 |
1,1 |
|
Belgium |
In total |
3 692 267 |
100 |
1 979 807 |
100 |
Kazakhstan |
177 109 |
4,8 |
108 223 |
5,5 |
|
Russian Federation |
In total |
2 199 503 |
100 |
1 598 072 |
100 |
Kazakhstan |
7 000 |
0,3 |
2 707 |
0,2 |
|
Latvia |
In total |
96 375 |
100 |
56 629 |
100 |
Kazakhstan |
34 037 |
35,3 |
17 195 |
30,4 |
|
Belarus |
In total |
27 426 |
100 |
38 298 |
100 |
Kazakhstan |
360 |
1,3 |
241 |
0,6 |
|
Azerbaijan |
In total |
25 591 |
100 |
10 261 |
100 |
Kazakhstan |
440 |
1,7 |
58 |
0,6 |
|
Uzbekistan* |
Kazakhstan |
83 445 |
30 962 |
||
Tadzhikistan* |
Kazakhstan |
10 126 |
2 971 |
||
Kyrgyzstan* |
Kazakhstan |
7 422 |
683 |
||
Vegetable oil |
|||||
China |
In total |
8 684 957 |
100 |
8 068 044 |
100 |
Kazakhstan |
7 437 |
0,1 |
6 556 |
0,1 |
|
Russian Federation |
In total |
860 123 |
100 |
938 373 |
100 |
Kazakhstan |
516 |
0,1 |
510 |
0,1 |
|
Uzbekistan* |
Kazakhstan |
16 943 |
18 146 |
||
Tadzhikistan* |
Kazakhstan |
10 623 |
10 640 |
||
Kyrgyzstan* |
Kazakhstan |
8 773 |
10 489 |
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, Committee of government receipts of the Ministry of Finance of the Republic of Kazakhstan, UNComtrade
*-according to Kazakhstan data
1.3. Historical information on development of industry.
With increasing production of oil-bearing crops there was also development of processing. Only for the last five years the production volume of vegetable oil increased by 50% from 222,5 thousand tons in 2010 to 329,4 in 2014. The main production capacities refer to regions with raw materials resources, however there are some exceptions. 95% of production of vegetable oil refer to Aktobe, Almaty, East Kazakhstan, Kostanay, North Kazakhstan and Southern Kazakhstan region. It is possible to notice, that there are no large planting acreages of oil-bearing crops but these regions still hold leading positions. The enterprises of Aktobe region utilize imported raw materials, including from neighboring regions of Russia. The enterprises of Southern Kazakhstan region utilize raw materials, produced not only in the region, but also in neighboring region of Southern Kazakhstan. It should be noted that considering low gross collection of oil-bearing crops in Soviet period (a little more than 200 thousand tons), there were no large processing plants in Kazakhstan. Among large enterprises of the Soviet period it is Almaty margarine factory making 6,3 thousand tons of finished goods. Nowadays Eurasian Foods works on its basis.
From 1991 the structure of GDP of the Republic of Kazakhstan has cardinally changed, especially it the share of agricultural industry which decreased by 7 times in relation to 1991 from 30% to 4,5% in 2013 and 2014. The sharpest recession in production of agricultural industry took place in the first half of the 90th, this period fall covered all sectors of economy.
2. Number of enterprises (players) in the market
There is less competition in production of oil-bearing crops. It is connected with the fact that oil-bearing crops as a rule are not cultivated singly, but in rotation with other cultures. In the north oil-bearing crops grow in rotation with cereal and feeding crops, in the south soy grow in rotation with sugar beet and corn, carthamus grows in rotation with cereal crops. Thus, there is a huge number of farms which produce oil-bearing crops and, as a result, concentration level of producers is low.
Concentration of producers of oil and fat industry is rather high. In 7 regions of the country there are 97% of refinery capacity, namely West Kazakhstan, South Kazakhstan, Kostanay, Pavlodar and Almaty (including Almaty city).
The largest enterprises of Kazakhstan oil and fat industry on sunflower processing are considered leading manufacturers in their regions: «Shymkent Mai» JSC, «Arai» LLP – in the South, «Maslo-Del» LLP – in the North, «Mai» JSC – in the East and «Savola Foods CIS» LLP – in the West of Kazakhstan. All companies work on the basis of large Kazakhstan plants. Existing capacities of main oil and fat enterprises of Kazakhstan on production of sunflower oil allow to process up to 740 thousand tons of sunflower seeds a year, at the same time it is possible to produce up to 300 thousand tons of vegetable oil. But practically all enterprises work in full production, due to the lack of necessary amount of oily raw materials.
Table 13. Production capacities of enterprises on sunflower processing and capacity utilization
Location/ Enterprise name
|
Annual capacity, tons |
Production of sun oil, tons |
Utilization of production capacities, % |
The share of capacity of enterprises in overall regional output, % |
|
Raw materi-al |
Finished products (sun oil) |
||||
Aktobe oblast |
|||||
«Savola foods cis» LLP |
69300 |
32 000 |
21 496 |
67% |
95% |
East Kazakhstan region |
|||||
«Mai» JSC |
90000 |
42 000 |
35 863 |
85% |
28% |
«Vostokselkhozprodukt» LLP |
44000 |
19 200 |
15 506 |
81% |
12% |
«Ust-Kamenogorsk maslozavod» LLP |
30000 |
12 500 |
9 821 |
79% |
8% |
«Triumf-Agro» APK |
16526 |
7 256 |
7 256 |
100% |
6% |
West Kazakhstan region |
|||||
«Terekti mai kombinaty» LLP |
24500 |
7 400 |
963 |
13% |
100% |
Kostanay region |
|||||
«K-OIL» LLP |
49500 |
19 800 |
1 325 |
7% |
43% |
"Karzhau" farm |
7200 |
2 160 |
824 |
38% |
27% |
«Maslozavod Kostanaya» LLP |
7200 |
2 735 |
310 |
11% |
10% |
"Bezbabny V. I" farm |
5500 |
1 800 |
584 |
32% |
19% |
«Toisai» LLP |
110 |
35 |
5 |
14% |
0% |
Pavlodar region |
|||||
"Shcherbak" farming |
4 500 |
1 500 |
1 000 |
67% |
41% |
"REGTAIM" farming |
159 |
48 |
4 |
8% |
0% |
North Kazakhstan oblast |
|||||
«Maslo-Del» LLP |
108000 |
38 900 |
5 087 |
13% |
100% |
South Kazakhstan oblast |
|||||
«Shymkentmai» JSC |
177000 |
70 800 |
1 746 |
2% |
19% |
«Arai» LLP |
56300 |
20 000 |
6 744 |
34% |
75% |
Almaty city |
|||||
«MS» LLP |
50000 |
19 800 |
0 |
0% |
0% |
The Republic of Kazakhstan |
|||||
Enterprises by the list |
739795 |
297 934 |
108 534 |
36% |
53% |
Source: Ministry of Agriculture of the Republic of Kazakhstan, Department of Regional Agriculture, Polling data of enterprises on processing of oil-bearing crop
The main capacities on soy processing are concentrated in the south of Kazakhstan. Annual production capacity of soy processing companies in the Republic of Kazakhstan in 2013 made 541 thousand tons for raw materials, 132 thousand tons for soy oil. The largest producer of soy oil is «Sara-bulak Company» LLP which produced 44% of soy oil of the total amount - 12 741 tons.
Table 14. Production capacities of enterprises on soy processing and capacity utilization
Location/ Enterprise name
|
Annual capacity, tons |
Production of soy oil, tons |
Utilization of production capacities, % |
The share of capacity of enterprises in overall regional output, % |
|
Raw materials |
Finished products (soy oil) |
||||
Almaty oblast |
|||||
"Sary Bulak Company" LLP |
225 000 |
75 000 |
5 570 |
7% |
89% |
North Kazakhstan region |
|||||
Maslo-Del LLP |
1 000 |
180 |
119 |
66% |
99% |
South Kazakhstan region |
|||||
Shymkentmai JSC |
165 200 |
29 736 |
2 151 |
7% |
100% |
Almaty city |
|||||
"MS" LLP |
110 000 |
19 800 |
2 596 |
13% |
47% |
"Uyz Mai Indastri" LLP |
40 000 |
7 360 |
2 305 |
31% |
42% |
Republic of Kazakhstan |
|||||
Enterprises by the list |
541 200 |
132 076 |
12 741 |
10% |
79% |
Source: Ministry of Agriculture of the Republic of Kazakhstan, Department of Regional Agriculture, Polling data of enterprises on processing of oil-bearing crop
Large enterprises of fat-and-oil products of Kazakhstan specializing in colza processing are «K-Oil» LLP and «Maslo-Del» LLP, their cumulative annual capacity on raw materials in 2013 made 198 thousand tons, on finished goods - 79 thousand tons.
Table 15. Production capacities of enterprises on rape processing and capacity utilization.
Location/ Enterprise name
|
Annual capacity, tons |
Production of rape oil, tons |
Utilization of production capacities, % |
The share of capacity of enterprises in overall regional output, % |
|
Raw material |
Finished products (rape oil) |
||||
Kostanay region |
|||||
«K-Oil» LLP |
66000 |
29000 |
7290 |
25 |
97 |
North Kazakhstan region |
|||||
«Maslo-Del» LLP |
132000 |
50000 |
17085 |
34 |
93 |
Enterprises by the list |
198000 |
79000 |
24375 |
31 |
66 |
Source: Ministry of Agriculture of the Republic of Kazakhstan, Department of Regional Agriculture, Polling data of enterprises on processing of oil-bearing crop
According to obtained data on oil flax processing in Kazakhstan «Maslo-Del» LLP with 88% share in overall output of the country. In 2013 annual capacity of this enterprise on raw materials made 3 thousand tons and on production of linseed oil - 1 thousand tons. In total when loading «Maslo-del» LLP plant for 32% there were produced 323 tons of oil.
Table 16. Production capacities of enterprises on rape processing and capacity utilization.
Location/ Enterprise name
|
Annual capacity, tons |
Production of oil flax, tons |
Utilization of production capacities, % |
The share of capacity of enterprises in overall regional output, % |
|
Raw material |
Finished products (oil flax) |
||||
North Kazakhstan region |
|||||
«Maslo-Del» LLP |
3 000 |
1 000 |
323 |
32% |
88% |
Source: Ministry of Agriculture of the Republic of Kazakhstan, Department of Regional Agriculture, Polling data of enterprises on processing of oil-bearing crop
3. Barriers and Restrictions
Table 17. Matrix of problems and barriers in oil and fat production
Name |
Oil and fat products |
||
Uncompetitiveness at the price |
Lack of raw materials |
v |
|
high service tariffs |
v |
||
expensive import containers |
v |
||
Low access to financial resources |
re-crediting |
v |
|
high percentage rate |
v |
||
lack of long-term crediting |
v |
||
Underdevelopment of taxation |
"1" VAT |
v |
|
PIT |
v |
||
VAT Privilege |
|
||
CIT privilege at updating of permanent assets |
v |
||
Return of VAT for export |
|
||
Restricti- ve regulation of sales |
At the domestic market |
falsification |
v |
dumping |
v |
||
exaction in trade |
v |
||
lack of logistic infrastructure |
v |
||
duration of procedures of customs and tariff regulation |
v |
||
absence of food culture |
v |
||
At the external market |
trade barriers |
|
|
lack of logistic infrastructure |
|
||
Challenges of institutional development |
lack of a reliable PES statistic records |
v |
|
deficit of industry specialists in production works |
v |
||
absence of separate authorized body on conversion of all agricultural raw materials and manufacturing of food products |
v |
4. List of potential opportunities for entrepreneurial initiatives. Structure of the chain of added value.
Production and processing of oil-bearing crops in the country continue to advance. So, only flax production for ten years has increased almost from zero to 430 thousand tons, rape production increased by three times from 63 thousand tons to 241 thousand tons, sunflower production increased by two times to five thousand tons. At the same time one third of all harvest of oil-bearing crops is exported, two thirds remain for processing within the country. Due to domestic production there is almost 80 % of consumption of vegetable oil. Therefore development of industry of production and processing of oil-bearing crops has considerable export potential. Today operating capacity utilization makes 25-30%. First of all it is connected with shortage of raw materials and lack of current assets. However in case of export concerning production of vegetable oil it is reasonable to create 1-2 large plants taking into account scale economy, quality of produced oil and as a result competitive cost value of finished goods.
Table 18. Vegetable oil production increase
Region |
Consumer Market |
Production (vegetable oil) |
Net import/export |
Raw materials base** |
Incomple-tely utilized capacity* |
Lunching capacities* |
Additional required capacities |
Republic of Kazakhstan |
360,0 |
329,4 |
-30,6 |
1 547,0 |
786,0 |
340,0 |
|
Akmola |
15,3 |
7,4 |
-7,9 |
143 |
40,0 |
|
|
Aktobe |
17,0 |
23,1 |
6,1 |
6 |
48,0 |
|
|
Almaty |
39,7 |
5,1 |
-34,6 |
259 |
90,0 |
140,0*** |
|
Atyrau |
12,0 |
0,0 |
-12,0 |
0 |
0,0 |
|
|
East Kazakhstan |
29,0 |
148,2 |
119,1 |
301 |
82,0 |
|
|
Zhambyl |
22,7 |
1,7 |
-21,0 |
46 |
13,5 |
|
|
West Kazakhstan |
13,1 |
0,3 |
-12,7 |
11 |
0,0 |
|
|
Karaganda |
28,6 |
0,1 |
-28,5 |
12 |
0,5 |
|
|
Kostanay |
18,3 |
11,2 |
-7,2 |
230 |
6,0 |
|
|
Kyzylorda |
15,5 |
0,0 |
-15,5 |
1 |
0,0 |
|
|
Mangystau |
12,4 |
0,0 |
-12,4 |
0 |
0,0 |
|
|
Pavlodar |
15,7 |
0,4 |
-15,3 |
42 |
27,0 |
|
|
North Kazakhstan |
11,9 |
39,6 |
27,6 |
435 |
50,0 |
200,0*** |
|
South Kazakhstan |
57,5 |
31,0 |
-26,4 |
61 |
203,0 |
|
|
Astana city |
17,4 |
0,0 |
-17,4 |
0 |
0,0 |
|
|
Almaty city |
33,8 |
61,4 |
27,6 |
0 |
226,0 |
|
Source: Committee on Statistics of the Ministry of National Economics of the Republic of Kazakhstan, expert judgment
* judgment: appropriate additional amount of output on operating capacities in case of total load of enterprises;
** Nearly 600 thousand tons of oil-bearing crop are sent for export in the form of raw materials.
*** There planned creation of one plant on processing oil-bearing crops in vegetable oil in this region.
5. SWOT analysis of industry.
The strengths of production of oil-bearing crops are low production costs and as a result competitive price both in domestic and in the outer market. As benefits include high quality of seeds of oil-bearing crops which conform to world standards. Kazakhstani oil-bearing crops are free of GMO, contain minimum allowed quantity of remedies of plants, do not contain other chemical affinities.
The weaknesses include mass use of low-quality seed material, non-compliance with agrotechnologies of cultivation, as a result low crop yield of an in comparison with standards. It is also lack of qualified specialists, lack or depreciation of specialized equipment applied in case of cultivation of oil-bearing crops and lack of systemic product promotion at the market and logistics for export.
The analysis of strengths of oil and fat industry shows that in the country there is a raw materials base for production of various types of oil (sunflower, soy, rape, cotton and so on), this base of raw materials has considerable potential of expansion. Kazakhstan raw materials are not considered as GMO, at the same time there is high profitability of production of vegetable oil. Quality of Kazakhstan vegetable oil is very high that allows to compete in the foreign markets. Strong demand on vegetable oil, especially on sunflower oil makes 80% due to domestic production.
Weaknesses of raw materials include lack of raw materials for complete utilization of capacities, lack of current assets at processing plants for purchase of raw materials. Lack of developed infrastructure on storage of raw materials (oil-bearing crops).
It is necessary to refer availability of stable demand from EU countries to opportunities of development of production of oil-bearing crops, and also opening of new markets with development of logistics in the west and the southwest of the country, to such countries as Iran, Turkmenistan, etc. It is possible to refer development of domestic brand of vegetable oil and its system promotion to these opportunities. There is considerable potential on increase in productivity of oil-bearing crops in case of observance of agrotechnologies and application of intensive technologies of cultivation of oil-bearing crops. Within diversification of plant growing it is possible to expand planting acreage of oil-bearing crops due to cultivation of other crops, mostly cereal ones.
Competition from Russia, Ukraine of Belarus in production of oil-bearing crops and foreign sales can be referred to possible threats. It is also possible to note land conversion, frequent violation of agrotechnologies in a pursuit of opportunity to make oil-bearing crops without paying attention to rotation that is characteristic both for sunflower, and for flax and leads to depletion of top soil and irrational use of arable land. Possible growth of cost value due to currency fluctuations and growth of cost of energy carriers, chemicals and plant protection.
It is necessary to refer availability of export potential in the countries of Central Asia and Iran, potential of considerable expansion of raw materials base to opportunities of oil and fat industry as due to observance of agrotechnologies and through diversification in plant growing. There is development of animal husbandry showing stable demand for products remaining after production of vegetable oil i.e. for meal and cake and the potential of creation of vertical cluster in oil and fat industry with probable decrease in cost value of finished goods due to self-produced increase in raw materials for processing works.
It is possible to refer to threats the reduction of potential of export of vegetable oil in connection with increase of production by our partners from EEAS and CIS countries. There is a probability of logistic restrictions in case of significant increase in export of vegetable oil (shortage of tanks, etc.).
Table 19. SWOT – analysis of oil and fat products in Kazakhstan
Strengths · Availability of Kazakhstan raw materials for production of various types of oil (sunflower, soy, rape, cotton, and so on); · • Kazakhstan raw materials (soybeans, colza, flax, sunflower, carthamus) are not considered as GMO; · High profitability of production of vegetable oil; · Quality of Kazakhstan vegetable oil is competitive in the world market as it corresponds to standards. · Great demand on sunflower oil within the country and security of demand for vegetable oils for 80% due to domestic production. |
Weaknesses · Lack of raw materials and as a result under-utilization of capacities on processing works; · Lack of qualified personnel for increase of production of raw materials; · Lock of current assets at overworking plants for purchase of raw materials; · Lack of developed infrastructure on storage of raw materials; · Many operating plants are non-technological and inefficient |
Capabilities · Availability of export potential from the countries of Central Asia, new markets of vegetable oil (Iran, other countries) · Increase in Kazakhstan source of raw materials due to observance of agrotechnologies and diversification in plant growing; · Potential of export of soy and rape oil to Russia and Europe to plants on biodiesel production; · Increasing demand at the domestic market from animal husbandry and poultry farming; · Reduction of cost value due to increase of own production in processing raw materials. |
Threats • Problems in transportation of raw materials and finished goods in case of a sharp growth in volumes of production for export; • High competition from Russia, Ukraine and China, as a result reduction of potential of export; • Risks of currency fluctuations. |
Source: Expert judgment
We will be glad to help you. If you have any questions — please contact us!
feedback form
regional chambers of business
Astana
Astana
Kazhymukana str., 8a
Т: +7 (7172) 91 90 80
E-mail: astana@palata.kz
|
Almaty
Almaty
Gogol str., 111
Т: +7 (7272) 25 18 30
E-mail: almaty@palata.kz
|
Akmola region
Kokshetau
Abay str., 96
Т: +7 (7162) 72 25 48
E-mail: kokshetau@palata.kz
|
Aktobe region
Aktobe
Sankibay ave., 22 / A, BC "Kazyna"
Т: +7 (7132) 74 46 07
E-mail: aktobe@palata.kz
|
Alma-Ata`s region
Taldykorgan
Abay str., 254 "A"
Т: +7 (7278) 40 14 99, 40 14 98
E-mail: zhetysu@palata.kz
|
Atyrau region
Atyrau
Satpayev str., 78
Т: +7 (7122) 76 36 55, 77 76 06
E-mail: atyrau@palata.kz
|
East Kazakhstan region
Ust-Kamenogorsk
Victory ave., 6
Т: +7 (7232) 25 12 87
E-mail: oskemen@palata.kz
|
Jambyl Region
Taraz
Aitiev str. 5A
Т: +7 (7262) 55 59 00
E-mail: zhambyl@palata.kz
|
West-Kazakhstan region
Uralsk
T. Masina str., 67
Т: +7 (7112) 50 05 84
E-mail: uralsk@palata.kz
|
Karaganda region
Karaganda
Buhar zhyrau ave., 49, 8th floor
Т: +7 (7212) 50 40 55
E-mail: karaganda@palata.kz
|
Kostanay region
Kostanay
Al-Farabi str., 116
Т: +7 (7142) 59 79 60, 39 42 08
E-mail: kostanay@palata.kz
|
Kyzylorda region
Kyzylorda
Aiteke str., 28
Т: +7 (7242) 40 08 91
E-mail: kyzylorda@palata.kz
|
Mangistau region
Aktau
35 microdistrict, building of the Chamber of Entrepreneurs of Defense
Т: +7 (7292) 30 37 68, 30 29 25
E-mail: aktau@palata.kz
|
Pavlodar region
Pavlodar
Lomov str., 21
Т: +7 (7182) 67 62 21, 66 03 11
E-mail: pavlodar@palata.kz
|
North-Kazakhstan region
Petropavlovsk
Abay str., 29
Т: +7 (7152) 50 36 15
E-mail: petropavl@palata.kz
|
South-Kazakhstan region
Shymkent
Kunaev Boulevard, 21, Business Center "Altyn Orda", 3rd floor
Т: +7 (7252) 99 55 00
E-mail: shymkent@palata.kz
|