How the Ukrainian chemical industry overcomes wartime challenges: structural dimensions

The aim of the article is to measure and analyze the structural shifts in Ukraine’s chemical industry under wartime conditions and to identify the structural prerequisites for its post-war transformations. The article presents the results of a comprehensive study of structural changes in Ukraine’s chemical industry during the first two years of the war and identifies the main trends in sectoral transformations. It is found that after the initial shocks and the declining response to large-scale military actions in 2022, the industry was able to adapt to some extent and stabilize its operations in 2023. The dynamics of sectoral indicators are driven by the growing demand for chemical products from the defense, agricultural, construction, and related sectors, the relocation of some small and medium enterprises, a certain revival of investment processes due to donor support, and the relative stability of territorial and security components. According to the results of measuring the structure of the chemical industry based on several criteria, a conclusion has been drawn about the deepening of two general structural trends that had formed long before the onset of the ongoing full-scale war. The first includes a decrease in the share of basic chemistry, diversification of production, an increase in the share of high value-added chemicals, and a ramp-up in the production of consumer and military demand goods. The second trend involves the cessation of the structural dominance of large enterprises and the institutional strengthening of the positions of small and medium-sized enterprises. These processes indicate the destruction of the outdated Soviet industry model, exacerbated by the loss of assets in occupied territories, their physical damage, the shutdown of production in frontline regions, a shortage of personnel, and the disappearance of super-profits from the application of oligarchic schemes. Along with this, the authors substantiate the thesis that the uncontrolled deepening of current trends causes reverse imbalances and risks for the systemic development of the chemical industry in the long term. Among the biggest threats are a decrease in the potential for sustainable functioning of full value chains due to the reduction of large manufacturers of basic chemicals, further growth of import dependence of the industry, complication of logistics, reduction of sectoral educational and scientific spheres, as well as the loss of Ukraine’s position in the global chemical market. Long-term recovery plans should be preceded by strategizing the development of the industry, determining its priorities, and designing key segments, product chains, and clusters. Further research will be aimed at substantiating such priorities and determining the framework conditions for the future model of development of the Ukrainian chemical industry.