Ukrainian glassworks are being shut down due to the transport blockade of Crimea

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Glass producing companies of Ukraine are on the verge of being shut down due to the shortage of one of the types of raw materials, specifically sodium carbonate. Its supplies from the Crimean Soda Plant have been blocked by UkrZaliznytsya. Meanwhile, it will rather difficult to compensate the shortage with import supplies.

Everybody freeze!

Executive Director of Glass of Ukraine Association Volodymyr Tsvetov informed Capital that as of January 1 Merefa Glass Factory in Kharkiv Oblast and Zaporizhzhya Glass Flux Plant have suspended their operation. «The only in Ukraine manufacturer of medical glass — Maryanivskiy Glass-House (Zhytomyr Oblast) and also Malinowski Glass Factory (Kharkiv Oblast) are also preparing to suspend production of glass articles,» he said. The majority of companies of the association are preparing to suspend their operation, since they only have enough soda supply to last them a week, he added.

Glass producers have faced the situation after Ukrzaliznytsya introduced a ban on movement of cargoes between mainland Ukraine and Crimea on December 26, 2014. As a result, the glass blowers were left without the sodium carbonate of Crimean Soda Plant as the supplies have been suspended.

Tsvetov says that the glass factories are the key buyers of sodium carbonate from the CSP. The industry has an annual demand for over 200,000 t of soda and CSP covered 90% of this demand, according to his assessments. «Crimean Soda Plant has the production capacities of 600,000 t. The glass manufacturers did not even have to think about importing sodium carbonate until the Crimea was annexed,» says Tsvetov.

Leak of consumers

The glass makers association is vying for cancellation of the limitations for movement of cargo from Crimea in the government offices and even in the National Security and Defense Council, because otherwise glass factories will stop their operation. In that case, consumers of glassware will resort to purchases of imported goods, primarily in Russia, representatives of the association fear.

Manufacturers of alcoholic beverages interviewed by Capital have not pointed to shortage of glassware. They, however, are concerned with increase of prices for it and reluctance of the glass producers to fix the price of the bottle in the contract. «At the moment our company has no problems with glassware supplies and the glass factories continuously supply us with the required volumes. However, we are very concerned with the issue of fixing the prices for a glass bottle. We are also concerned with fast dynamics of continuous growth of the price-forming factors for the glassware. As a result of that the suppliers are not ready to fix the price for the whole period of the contract,» representative of press service of Carlsberg Ukraine told Capital.

According to the data of Glass of Ukraine Association, our country annually consumes around 2.5 bn glassware units. Bottles account for the lion’s share of that as well as glassware for canning and for the needs of perfume and medical industries.

Hopes on the European raw materials

The hardships with soda supplies are primarily linked to the fact that the world’s key sodium carbonate — USA and China — will not be able to quickly eliminate soda shortage in Ukraine. It will take nearly two months to deliver the product from these countries and the prices are rather high, says Tsvetov. It is rather problematic to purchase soda in Russia as well. From logistics and expenses point of view, there is only one favorable market left for the Ukrainian glass makers — the European one, specifically Poland, Romania, Bulgaria and also Turkey.

As Capital wrote previously, the supplies from these countries are charged with import duty and the glassmakers are actively vying for its cancellation.

Metallurgists left without limestone

Metallurgists are also experiencing difficulties with raw material supplies due to the ban on the movement of cargoes between the mainland Ukraine and Crimea. The peninsula has not only sodium carbonate, but also the much required by metallurgists limestone, says Deputy General Director of ArcelorMittal Kriviy Rih Volodymyr Tkachenko. Besides Crimea limestone is also mined in the Donetsk Oblast, but two deposits are located on the territory that is not controlled by the Ukrainian government and the third one is located not far from the line of conflict and the work on it can be suspended at any given moment due to the absence of permission for the blasting work. «Therefore, suspension of supplies from Crimea is very painful for us, because we are forced to import the raw materials from Romania, Poland, Slovakia. Increase of import in the share of raw materials required by the Ukrainian manufacturers is a rather unbeneficial option for the state and the manufacturers,» said Tkachenko.