Page 44 - Plastics News August 2022

ANALYSIS

The Impact Of The Russia-Ukraine Crisis On The Packaging Industry

ive months ago (24 February) there in the medium term” and resuming is said to be considering its options in
FRussia launched a military invasion operations was not possible with no Russia. The company owns a paper mill
of Ukraine, affecting many livelihoods, given date. in Syktyvkar, Komi Republic which
businesses and sectors across the world. “We are aware of the impact this step operates an integrated power plant

The conflict in the Black Sea region saw will have on our employees in Ukraine and is legally bound by the Russian
a surge in energy and commodity prices, – but we see no alternative at the government to supply energy to around
forcing the price of grain and oilseeds moment,” explains CEO Johann Reiter 60,000 people.
to skyrocket to 21st-century highs, of Vetropack Holding Ltd. “The damage In a statement dated 10 March, the
but what does this mean for the global to our plant caused by military action company said: “Syktyvkar is currently
packaging industry? is significant, although not irreparable. operating, but the mill is starting to see

How has the conflict affected the Nevertheless, in our estimation, it will a number of operational constraints,
packaging industry so far? not be possible to immediately resume including the importing of process
our production in Gostomel – even if chemicals, spare parts and other critical
In the fifth edition of the report, the war ends, which is currently not supplies. While difficult to assess the
information recorded that as of 3 May, foreseeable.” ramifications in what remains a fast-
5.6 million people had fled Ukraine since moving situation, this may significantly
the conflict began. The war has caused “The requirements for resuming impact the operation of the mill.”
an exodus of over 300 major western production will not be met in the near
companies, including the widespread future,” emphasises Reiter. “In the A sharp rise was also seen in aluminium
closures of packaging and production interest of our entire corporate group, and paper as noted by Trading economics.
facilities in both Ukraine and Russia. we have to act accordingly.” The price of aluminium, which was as
low as US$2,885 per tonne, just before
Uncertainty over when it will end has In early April, Irish paper packaging the conflict started (early February),
also led to some companies initially company Smurfit Kappa, one of Russia’s skyrocketed to US$3,825.2 per tonne by
reluctant to suspend activities, either largest corrugated paper companies 4 March. Rising aluminium prices and
scaling or shutting down operations. and Finnish food packaging provider disrupted exports from Russia helped
The declaration of martial law in Ukraine Huhtamäki, a company active in Russia Chinese smelters scale production to
on 25 February forced many facilities for over 30 years, joined the growing list record levels, seeing the price drop once
such as Karpatneftekhim, Ukraine’s of businesses exiting Russia. activities had resumed. The kraft pulp
largest petrochemical (PET) plant to The ongoing conflict is causing industry hasn’t fared as well. The end of
shut down operations. companies operating in the area with January saw the price of kraft pulp stand
Swiss glass packaging providers strong financial ties to the region to at US$5,911.7 per tonne before seeing
Vetropack, owners of Ukraine’s largest consider the long-term effect it will an increase of US$1,000 per tonne in
glass factory also made the move to have on business. Ball Corp, Coca early March as a result of the conflict. As
send all employees home on full pay Cola, Nestlé, Carlsberg, ABInbev, and of 11 May, the price of kraft paper stood
on 24 February. Situated in Gostomel, ArcelorMittal are among the other at US$7,256.6 per tonne.
Kyiv, the facility suffered severe damage companies closing Russian operations. “If you look at oil and gas prices, in the
due to military conflict in March. On Paper and packaging specialist Mondi, last few months, you’ll see that it was
18 May the company stated that “only the parent company of Mondi Syktyvkar, actually starting to drop off towards the
clean-up work, as well as the protection has already suspended operations in its end of last year, and then it’s actually
and preservation of assets, were possible paper bag plant in Lviv, Ukraine and gone right back up again. Packaging

44 PLASTICS NEWS August 2022