Kurum International, the producer of steel and energy (through 4 HPPs), is the largest exporter in the country. In 2021, the company recovered rapidly after the pandemic and almost doubled its revenue. According to preliminary data, the expected annual turnover for 2021 is 42-42.5 billion ALL (about 340 million euros), from 23.6 billion ALL in the pandemic year 2020. Revenue growth was affected by both expanding sales and rising prices. iron.

The production of steel rods reached approximately 420 thousand tons and sales (company production + import iron) are expected to reach a record of 480-485 thousand tons of iron. The activity of four hydropower plants was also positive, as a good energy year, reaching about 390 thousand megawatts.

But 2022 is not expected to be so auspicious. Arif Shkalla, economic director of Kurum, says the energy crisis has brought difficulties and uncertainty. "With stock prices of 350-400 euros per megawatt, the steel factory can not work because it has a huge impact on costs and makes us uncompetitive."

All steel mills in Europe are feeling the crisis, which has slowed down their activity. "If prices do not fall, then it will be very difficult," predicts Shkalla. "While Russia and Turkey are still with low energy prices and competing in regional iron markets by lowering prices."

As a result, expectations for iron in 2022 are not good, there is uncertainty and fear of crisis. "Because of course the demand for iron is being stopped as a result of high prices." Estimates are that iron exports mark a decrease of 5-10% compared to the previous year.

Kurum expects to offset some of the steel activity from good performance in the energy segment, at least for the period January-May 2020.

The company, which a few years ago declared bankruptcy for the effect of restructuring, is proceeding normally with the repayment of loans, which are expected to close within two years. The problem continues to be the VAT refund, which the company has been complaining about for years.

In conclusion, Shkalla says that “Anyway 2021 remains a very good year, but the expectation for 2022 is not so good. The energy crisis and the general rise in prices in each sector will have a slowdown in the economy and a decline in demand.

BANKERS PETROLEUM TO INVEST IN OPENING WELLS FOR THE FIRST TIME AFTER THE PANDEMIC

Bankers Petroleum, which operates the Patos-Marinza oil field on concession and is the largest exporter in the country, expects production to increase slightly this year by about 5-10% compared to 2021, when it was at the level of about 600 thousand tons.

In conditions when the main domestic refinery has not yet started operating crude oil will continue to be exported, mainly through the main buyer in Spain. High prices on international stock exchanges, which at the beginning of 2022 were $ 82 per barrel, constituted an advantage for the second largest exporter in the country.

The positive news for the company is that for the first time since the start of the pandemic, the company will invest in the opening of new wells, which had been discontinued since April 2020. At that time, Bankers was forced to cease operations more than a month, for the first time in history, as oil dropped to $ 20 a barrel, global consumption fell and partner refinery activity was reduced to a minimum.

As a result, Bankers' ambitious plans to intensify hydrocarbon activity were halted during this period, negatively affecting plans to open new wells. In 2020, the company's revenues were halved, to ALL 15 billion, while they recovered somewhat in 2021.

GARMENT AND FOOTWEAR PRODUCTION INDUSTRY EXPECTS DOUBLE DIGITAL GROWTH AMONG CHALLENGES

Despite the difficulties that are coming from the increase of raw material prices, the increase of transportation costs of electricity and the lack of employees, the fason industry expects double-digit expansion in 2022, as a result of the increased demand from serious partners, who are aim to bring production closer to Europe.

Florian Zekja, from the Association of Clothing Manufacturers, said that despite the challenges posed by the pandemic, the tailoring sector in 2021 has increased, exceeding the parameters of 2019. Mr. Zekja mentioned that the demand for confection in Albania will high life even in 2022, especially from serious partners and well-known brands that offer high prices and secure payments. Proximity to Europe has made the Balkans attractive and Albania remains a country with good experience in this regard.

Eva Laro, who owns the ProDyn shoe factory, is also optimistic about the demand for the sector. Shoe production, which also suffered the biggest blow from the pandemic crisis, managed to recover last year.

"During 2021, there was a decline in demand for medical aprons, a segment that helped us in 2020 to recover the decline in shoe production, but we had an increase in shoe production and now the business is about 60% of it in the production segment with closed cycle. Therefore, we consider it improving and we expect that the optimal results and benefits will be fully obtained during 2022 ", said Laro.

The challenge with the price wave

The fason industry, in 2022, will face the challenge of high prices. Zekja said that the prices of cotton coming to Turkey have increased by 40%, as well as the prices of transport, accessories, machinery and all raw materials that the industry needs.

By mid-year, most fason companies will be forced to enter the liberalized energy market. Most factories will hit the market at a time when stock market prices have quadrupled in one year. But if some advantages are used, this can be turned into an advantage, said Zekja. Fason factories will come together in a unique offer to choose a long-term supplier at affordable prices.

Rising prices will erode profits in industry businesses as customers are aiming to keep prices under control.

Factories need another 15,000 employees

During 2022, the fason sector will face the challenge of staff shortages. Demand has been on the rise, but many factories have declined orders due to a lack of employees. Zekja said that currently, the whole industry needs 15 thousand additional employees, who are aiming to be replaced by Asians, or with employees from Bangladesh.

The Prodyn shoe factory is facing an unusual demand from European customers, which is not being met due to lack of manpower. Eva Laro, its accessory and administrator, said that the demand for shoes has exceeded the level of the normal year 2019, but the available workforce is lower than that of 2019.

The pandemic had a direct impact on all sectors, because as a result of infections and prolonged quarantines, employees lost contact with jobs. But with the return to normalcy, the whole globe is facing an unusual demand for goods, while many employees have refused to return to work after the pandemic.

Ms. Laro says that the biggest challenges are the employees, where there is a constant decline of young people interested in work. To meet the need for employees, Prodyn is undertaking an important project, which is to increase the quality / accuracy of the list of persons who are unemployed, but who really want to work and are able to work (although without technical skills specific, as they can be trained in factory training centers.

Attempts to take advantage of demand

Albania is in a good moment to increase the demand from serious companies and well-known European clothing and footwear brands. The pandemic has severed supply chains from Asia, but Laro says it remains to be seen how sustained this trend will be.

Zekja from the Fason Association says that Albanian factories are targeting customers with quality demands and high prices.

To meet the demand in the absence of workers, according to him, many factories are trying to automate, which requires a package of assistance from the government, not less than 10 million euros.

DEEPENING CRISIS IN URBAN TRANSPORT WILL CONTINUE

Urban transport in Tirana, even for 2022, will continue to have a decrease in the number of passengers. The main operators of urban lines in the capital claim that the main cause of the deepening of their financial crisis is immigration, mainly of young people and the non-fulfillment of fiscal requirements for this sector.

"The number of passengers for December 2021 was 55-60% less than the same period of 2019. The reason for their decline is emigration, mainly of young people. "In these conditions, we are operating with only 70% of the bus fleet. We do not expect the number of passengers to increase by 2022, as those who use more urban lines are the young people who are just emigrating ", underlines Kostandin Foni, director of the urban line Kombinat-Kinostudio-Tufinë, of the company" Shega Trans ".

Despite the increase in revenues from the cessation of informality for the sale of season tickets on the black market at prices from 500 to 600 ALL, from 1,200 ALL, market operators claim that they are still in financial difficulties due to the decline in the number of passengers.

In mid-October 2021, urban transport in Tirana, Kamza and Vora reduced service by 50% due to the inability to cope with the high costs of the COVID-19 crisis and the rise in oil prices. Operators in Tirana requested ticket price indexation and monthly subscription.

The price of the urban transport ticket in Tirana is 40 Lekë, that of the line subscription 1,200 Lekë and the general subscription 1,600 Lekë, the reduction of VAT, as well as the removal of the excise tax on oil used by the transport sector, otherwise it will to suspend 80% of the service from 1 November. The financial requests of the sector were not approved, but in support of the Tirana operators, the government approved the distribution of the subsidy fund, worth 2 million euros.

By 2022, freight rates are expected to rise. Andi Shijaku, from the company "Shega Trans", says that for the next 6 months, the increasing trend of international tariffs will continue due to increased administrative costs due to the lack of truck drivers.

Prices of imported goods by truck from European countries to Albania in 2021 were 10 to 20% more expensive than pre-crisis levels. For the transport of goods by truck to Greece, the tariff was increased from 700 euros to 800 euros. In Italy, from 900 euros to 950 euros, per truck.

"Many European countries are having a hard time finding truck drivers. Their absence has affected the operation of 50-60% of the fleet of vehicles. The phenomenon is also present in Albania. Many truck drivers have emigrated to countries like Germany, Italy or England.

"The lack of drivers has increased the administrative costs for companies, as salaries for available drivers have increased." Container transport tariffs with China, which for years totaled $ 17,000, from $ 2,000 to $ 3,000 before the pandemic, are not expected to rise further by 2022.

"PESIMIST" AUTOMOTIVE INDUSTRY, DUE TO LACK OF RAW MATERIALS

The automotive industry is part of the group of sectors that do not expect an optimistic year in 2022. The reason for this is the lack of raw materials. The expectation is such at the highest levels of automobile manufacturers and is evenly distributed throughout the chain with which this industry is linked.

In Albania there are a number of companies that produce wires, cables, tires or simple parts for international companies such as Mercedes Benz, KIA, Hyundai, Peugot, Renault, Fiat Group, Sumitomo Electric Industries, which claim that the current year will be full with challenges.

The situation in 2021

Despite the start of a good year in 2021, its last quarter resulted in a new shock in the automotive industry. The alarm went off first for the lack of microchips in the market, then for a series of raw materials that had high market demand and low availability. Magnesium was the last to be added to the shortlist with shortages and was interpreted as a signal for further increase in production costs.

Ertjan Çabiri, Managing Director of Delmon Group in Albania, says that in general, the year 2021 stabilized the demand for automobiles. But the supply failed to be guaranteed because the large vehicle manufacturing companies did not find enough microchips on the market to guarantee production as planned.

"Consequently, car manufacturing companies reduced demand for hundreds of other parts needed for a finished car. This happened to all supply chain companies, including Delmon Group, where the fourth quarter was the most difficult, with a 50% drop in production "- claims Mr. Çabiri.

Representatives of automotive industry companies in our country unanimously underline the increase in transport costs on international channels, but also within the country, related to the price of fuel. According to Forschner's representative, the cost of importing raw materials from the Asian area has increased by more than 50%, due to reduced flights, or reduced water transport.

The forecast for the current year remains pessimistic

Mario Scarfalloto, from Sews Cabind Albania, claims that for sustainability in the automotive industry, but also beyond, we will be able to talk only in 2023.

"I think that until the whole supply chain is not stabilized, the situation will continue as it is now, and in the near future. Of course, the reduction of consumption of raw materials (necessary due to their lack) will go believe after 4-5 months towards stabilization. This means that the second half of 2022 will bring market stabilization and a normal resumption of the production cycle. Therefore, my prediction is that 2022 will be a difficult year, and 2023, a stable year "- he emphasizes.

Another problem for businesses in Albania seems to have appeared on the horizon recently, which has to do with the entry into the free market of 7358 businesses. The Electricity Distribution Operator has announced that businesses connected to the 20, 10 and 6 kv will have to supply only energy from January 2022, taking them out of the regulated market. This means that businesses will have to face stratospheric prices that in some particular months even reach three times the value at which they buy energy in the free market.

"As in most industries, the rise in prices of raw materials has its impact on the cost structure. But, while so far the increase of raw material costs has been faced at group levels, the uncertainty with the price of electricity in 2022 remains worrying for our branch in Albania. It is not yet clear to us how the market liberalization will happen in practical terms and what awaits us in terms of prices "- says Ertjan Çabiri, Managing Director of Delmon Group in Albania. According to him, regarding the general performance of this year, the forecast is to return to normal only after the second quarter.

"Given the high uncertainty in the short term, the positive scenario for our industry is to return to normal at the end of the second quarter of this year. This is in terms of guaranteeing supply chain products for car manufacturers, which translates into steady demand for products traded by Delmon Group Albania. "Risks related to raw material prices will remain high and the hope is that they will stabilize by the end of the year," he said.

Other operators with similar activity in the market have focused their attention this year on investment plans that the pandemic had somewhat faded, also due to the uncertainty it brought with it.

Forschner Albania, which has been operating in the Albanian market for 6 years, was forced not to move to a larger factory, as was the plan, due to the pandemic situation and the effects caused on the markets.

"Although in Albania, our company is growing in capacity from year to year, the global problems of the supply chain of raw materials has led to a slowdown in the expansion plan 2020-2021, which the company had planned" - said Ercan Yagmur, administrator of Forschner Albania. He stressed that, due to flexibility in production, the company has managed to provide

orders from important customers for next year as well, but the situation for the automotive industry as a whole remains difficult due to rising costs. Expanding with a larger plant, Forschner will have it this year.

"Our optimism that 2022 will also be successful comes from the confirmation of growing demand for the products we produce. This has prompted the decision of the parent company, based in Germany, to invest in Albania, in order to expand the area of the factory where the production is located "- claims Mr. Yagmur.

(Source: Monitor)