Over the first four months of this year, Ukraine lost $0.5 billion in exports of ferrous metals. Export sales in monetary terms thinned out by 15% A cut in prices is not the only reason for this situation. In actual fact, the market situation is worse than a year before. Prices for flat products in January–April fell by an average of 6–7% y-o-y, rebar — by 10%, semi-finished products — by 10–12%. But there is also a decrease in physical volumes of 300 thousand tons, or 5.4%. Here we see an interesting trend: exports of semi-finished products grew by about 7.5%, while exports of rolled products declined by almost 16%. This is one of the consequences of the growing global protectionism.
The use of various protectionism measures sharply increased in 2018–2019. At the same time, developed economies set trends in this area. The very word ‘protectionism’ is abusive among economists, although these tools are being used more and more intensively every year. And this is not a passing ‘fashion’, where some things are suitable today, and tomorrow brings something totally different. We are talking about evolutionary development of these ideas that have been maturing for many years.
The development of protectionism is a logical consequence of global processes in society and in economy:
That is why in the coming years we should not expect the abolition or mitigation of protectionist measures. On the contrary, their enhancement is more likely.
What does this mean for Ukraine? If we analyze the structure of Ukraine’s metals exports, we can see that any changes that have occurred in the past five years are caused only by the introduction of various restrictive measures against domestic products. 36 such measures were imposed in 13 countries. To put things simply, we were just driven away from the CIS. Then they forced us out from the U.S. and the EU to the MENA countries. Now our presence in the MENA region is at stake. We have nowhere to run anymore.
This is how it looks in figures:
The whole world bristled and closed. And the economic crisis due to COVID-19 only strengthens protectionist sentiment:
The rules have changed. Protectionism is a new norm. You may deny or ignore it. Or proudly raise your nose and claim it’s ‘no good’. You can poke your finger at our trading partners, trying to prove to someone that is unfair. Though, this will change nothing. You need to adapt, learn to live with it, neutralize the consequences, if possible benefit, since this phenomenon will not disappear in the near future.
Initially published on Liga
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