Russia’s war against Ukraine impacts European glass manufacturing industry

Russia’s war against Ukraine impacts European glass manufacturing industry

Euronews reports that in Europe glass has now become a big problem because there are bottlenecks in the ordering system, in the whole supply chain, and in the value of the product, which is affected by the cost of energy.

Impact in Europe

Growing uncertainties regarding energy supplies (gas and electricity) are impacting the entire glass industry, as it requires melting sand, soda ash and limestone, and in Europe the energy to create the needed temperatures has largely come from Russian gas. The French glass manufacturer Duralex International is joining a growing array of European firms that are reducing and halting production because of soaring energy costs provoked by Russia’s war in Ukraine.

European businesses such as car makers, bottle manufacturers and skyscraper builders are already preparing for a possible glass shortage. German car giant Volkswagen AG, whose brands include Audi and Porsche, increase its inventory of components that use glass, such as windows and windshields, and expands supplier network outside Europe.

Impact in Ukraine

Constant Russian shellings, soaring energy costs, severed trade links makes it hard for Ukraine to renew glass manufacturing volumes to the pre-war level. The higher production costs, the increased demand, logistical bottlenecks put pressure on the price of glass that has doubled or even tripled what it used to, according to glass suppliers estimates.

According to KSE estimates, some 132,000 residential buildings, dozens of shopping centers, enterprises, offices and other real estate have been destroyed or damaged.

According to the Ministry for Communities and Territories Development of Ukraine, 60% of damaged buildings require major repairs and only 25% have suffered minor damage.

According to the Association of Window and Facade Market Participants (AWFMP), there are 50-60 manufacturers of double-glazed windows and 300-350 manufacturers of windows at the Ukrainian market, and already in April more than 80% of plants resumed production. Ukrainian plants produce almost all components for window manufacturing: window profile manufacturers provide 65-70% of market needs, window fitting manufacturers cover 50% of needs.

However, double-glazed windows require high-quality float glass, which is made by casting in a bath of melted iron. Such glass was produced in Ukraine only by the PJSC Lysychansky Glass Factory Proletary, which ceased its activities in 2015. Therefore, domestic manufacturers of double-glazed windows and windows work on imported glass. At the same time, there are more than enough sand reserves in Ukraine. According to the data portal of the mining industry of Ukraine, there are 42 such deposits in Ukraine. The largest explored reserves – almost 40% of the total volumes – are located in the Kharkiv region. Due to sanctions on Russian glass, the production in Ukraine is quite attractive with the prospect of entering foreign markets.

Given that some of the world’s leading glass-producing companies have stopped investments (Japanese glass manufacturer AGC Inc.) or left the Russian market (American glass manufacturer Guardian Industries), there are prospects that such foreign investors will come to Ukraine. The construction of a modern glass manufacturing plant could cover the needs of the domestic market and reduce the cost of glass due to simpler logistics. The construction of such plant requires 80-100 million dollars of investment. Therefore, when the war ends the significant demand for glass production in Ukraine will prevail.

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