Chemical industry in Europe during crisis caused by Russia: the case study of Grupa Azoty

Abstract

The crisis that started in 2022 due to the Russian invasion of Ukraine continued throughout the following year, and as of 2023, the market situation regarding the chemical industry was especially tense. In this case study, we try to portray the present status of Poland’s leading manufacturer of fertilizers, Grupa Azoty S.A., with a comparison to its Norwegian competitor Yara International ASA. We look for an answer to how both have been affected by the crisis and the general trends between February 2022 and March 2023. To answer research objectives and questions, we use secondary research methods with the analysis of existing literature and financial study conducted with the available reports from the companies from the database of LSEG. After analyzing the situation as of 2023 in the chemical industry and a closer inspection of the stock prices and financial results of Grupa Azoty, we can conclude that the crisis caused by the war in Ukraine has had a significant influence on the chemical industry in Europe. Published information about the developments of the war and its consequences influenced investors’ confidence levels and caused the prices on the stock exchange to fluctuate. Furthermore, macroeconomic and political factors influence the financial results of the company. Even though it seemed like the sanctions on Russia created an opportunity to increase the market share by filling the gap created by the lack of imports, the market conditions hindered that process. Especially the rise in energy and raw materials prices played an important role as they are the main expense for manufacturing companies in the chemical industry.