Summed up the results of 2024 with the head of the Association of Ukrainian Pulp and Paper Industry Enterprises.
— How was the year for the industry? What were the achievements? What were the losses?
— First of all, I want to remind you what the pulp and paper industry of Ukraine represents. There are 27 enterprises in Ukraine equipped with machines for paper and cardboard production. Of these, 19 are operational, while 8 enterprises are currently not functioning.
These enterprises were halted due to various objective and subjective reasons even before 2014.
Last year brought many challenges, resulting in significant losses of human resources and production capacities.
However, by the end of 2024, our enterprises managed to overcome this downturn and recover from the shock caused by Russia’s sudden attack on Ukraine. In 2024, enterprises resumed operating in a more or less stable mode. A total of 604 thousand tons of paper and cardboard, as well as 590 million square meters of corrugated packaging, were produced.
Compared to the pre-war year of 2021, in 2024, paper and cardboard production declined by 15–37%. However, when comparing 2024 to 2023, paper production increased by almost 100%, and cardboard production rose by 20.5%.
I would like to highlight, first and foremost, the Kokhavynska Paper Factory, which has commissioned an additional paper machine under modern conditions, as well as the Kyiv Cardboard and Paper Mill, which has continued production throughout this entire time.
The list also includes Poninkivska Cardboard and Paper Factory, Malyn Paper Factory, Izmail and Lviv Cardboard and Paper Companies, among others.
Among the challenges our enterprises faced in 2024, I would highlight five of the most significant ones, which concern not only our industry but also the overall economic potential. The biggest risk remains the war, which affects all aspects of life, including the loss of people, territories, and production capacities.
The next issue is the deepening of migration processes. In 2022–2023, a large number of people left Ukraine. This caused a shortage of highly qualified personnel with the necessary training and experience working with technological equipment for the production of paper and cardboard. The issue of staffing remains critical.
It is also worth noting the low rate of attracting investments, which are crucial for restoring and expanding production. The shortage of financial resources arose due to disruptions in the supply chains of raw materials and products, leading to a loss of foreign exchange earnings from exports. Border blockages by neighboring countries further increased production costs and weakened the competitiveness of Ukrainian products.
Another significant risk is the high uncertainty in the security sector, the shortage of energy resources, and currency exchange rate fluctuations.
Despite all these negative factors, our enterprises continue to operate. We have only lost three enterprises that were shut down due to the war, including the Rubizhne Cardboard Mill.
The product range remains quite diverse: packaging, boxes, cardboard containers, wrapping paper, sanitary and hygienic products, including toilet paper, napkins, and paper towels.
The Association continuously monitors the cardboard and paper product market and addresses the current issues faced by our enterprises. In 2025, it plans to continue its work in this direction.
In summary, the year was challenging and intense. Comparing the performance of our enterprises in 2024 to 2023, paper production increased by 18%, while corrugated packaging production grew by 12.3%.
The enterprises continue to operate thanks to the dedicated efforts of our workforce and shareholders, which is reflected in the positive performance indicators of their work.
— How many members does the UkrPapir Association currently have? Who joined last year? Tell us about the dynamics.
— The Association was established in 2003. Last year, we celebrated its 21st anniversary. Initially, it brought together 14 enterprises. Currently, the Association comprises 34 enterprises.
Last year, new companies joined the Association, and we have already received applications for membership from new members, which will be considered at the presidium. The Association is open to communication and cooperation with interested organizations.
The Association unites not only producers of cardboard, paper, and products made from cardboard and paper but also companies that import products and operate in the cardboard and paper product market in Ukraine.
Imports mainly consist of products that are not manufactured in Ukraine by our enterprises. These include pure cellulose, writing paper, offset printing paper, paper for office equipment, coated paper, paper with a finish, and laminated paper. Overall, according to the Ukrainian classification of goods (UKTZED), this includes 23 product categories.
One of the main tasks of the Association is the development of a strategic program for the industry’s growth by 2025.
The main task was to ensure that our enterprises are supplied with primary fibers and semi-finished products, such as cellulose. Most of our enterprises operate using waste paper. Last year, 600 thousand tons of waste paper were utilized, of which 150 thousand tons were secondary raw materials imported from outside Ukraine. At the same time, only 60 thousand tons of cellulose were consumed.
Currently, only four enterprises use cellulose: the Kyiv Cardboard and Paper Mill, the Kokhavynska Paper Factory, the Malyn Paper Factory, and the Lviv Cardboard and Paper Company. Other enterprises operate using waste paper.
One of the Association’s tasks was to establish cellulose production in Ukraine. The possibility of producing cellulose from straw of annual plants was considered. A feasibility study and a pilot project were developed in the Kyiv region. Negotiations were held with a company that owns environmentally friendly technology for producing cellulose from straw. The funding requirement amounted to 90 million euros. The Association did not have these funds, so the search for investors was conducted. However, the events that unfolded since 2014 made it impossible to attract such investments.
Currently, cooperation with agricultural producers continues in the direction of utilizing straw from annual plants and industrial hemp. So far, straw in Ukraine is not used for the production of primary fibers, but we have studied similar production facilities in China, Italy, Spain, and Finland. Before the war, straw was sent to Finland for testing on Finnish company equipment, and the results were positive.
— What percentage of production is contributed by the association members and other enterprises?
— The members of the Association produce approximately 70% of the total paper and cardboard production in Ukraine. The remaining 30% is contributed by other enterprises.
The raw material base in Ukraine includes 543 thousand tons of waste paper collected domestically and 160 thousand tons imported.
— Which countries did the imports come from?
— The main supplier countries are Poland, Slovakia, Germany, and Romania. We have no issues with waste paper imports.
Significant progress has been made in the processes of separate waste collection, which has positively influenced waste paper procurement.
The prices of waste paper fluctuate constantly. For example, in January 2024, waste paper cost 7,000 UAH per ton, while in January 2025, the price dropped to 6,400 UAH per ton. This reduction is reflected in the cost of finished products, which has also decreased.
I would also like to note that the import duty on waste paper is zero. For all our products, there is no duty applied.
This dates back to when Ukraine entered the free market. Certain requirements were established for all industries. Agreements had been signed previously, and after Ukraine signed the declaration for free relations with other markets, duty rates were set at zero percent. Now, our products are only subject to VAT at a rate of 20% upon import.
— Eduard Leonidovych, what is the percentage of recycled paper raw materials in Ukraine?
— Last year, the production amounted to 630 thousand tons of paper and cardboard. It consumed 702 thousand tons of waste paper and 62 thousand tons of primary fiber. The total fiber consumption was 764 thousand tons. Therefore, 1.24 tons of waste paper are used to produce one ton of paper or cardboard. For cellulose, it is a one-to-one ratio.
In fact, 90% of paper and cardboard is made from recycled fiber, and 10% from primary fiber. Abroad, this ratio is slightly lower because pure cellulose is hardly produced in our country.
— Is 10% of primary fiber sufficient in the production chain to maintain fiber quality?
— You see, there are specific technological requirements for using secondary fiber. For example, the Kyiv Cardboard and Paper Mill produces cardboard from waste paper, which is then turned into corrugated packaging used by retail networks for product delivery. After use, these cardboard boxes are returned to production for reuse. Such recycling cycles can occur a maximum of six to seven times. Beyond that, the fiber loses its physical and mechanical properties, hydroxyl groups are destroyed, and it can no longer be used.
The solution to this issue is the import of secondary fiber into Ukraine, which is produced from primary cellulose. This helps maintain the quality of the fiber.
— We are seeing actual growth in the production of paper, corrugated packaging, and cardboard, and this production has largely remained within the country. But how was this achieved? The economy is stagnating, migration policies have worsened, the investment climate has not improved, and the war continues. How did significant growth become possible?
— When compared to 2021, the decline was minor—around 15–20%. However, the demand for our products remained stable. Enterprises are operating based on specific consumer orders rather than producing for storage. The product range is expanding, and the quality of products is improving. For example, the Kyiv Cardboard and Paper Mill mastered the production of commercial cardboard with lower weight per square meter. This allowed for increased production and helped meet demand.
— Eduard Leonidovych, you mentioned that 100 thousand tons of cellulose and wood pulp were imported into Ukraine. How much production was exported from Ukraine?
— Exports account for 22% of paper and cardboard. In absolute terms, this is 140 thousand tons of finished products.
— We cannot overlook the staffing issue, particularly the matter of mobilization. How are enterprises managing to retain qualified male employees, and does the state provide quotas for reserving men in the paper industry?
— You see, one of the most critical issues last year was the shortage of labor resources in the job market. There is a specific process for reserving specialists from our enterprises who are recognized as essential to the state’s economy. Our enterprises hold such status. Accordingly, quotas for military service conscription have been established. You are familiar with our enterprise. You have visited our facilities and seen that the equipment is quite complex. Automated lines require skilled professionals with experience operating such equipment. The shortage of these specialists is significant, and they cannot be trained in a month. The lack of working personnel is also evident, so enterprises organize qualification improvement courses and training. Women are now increasingly being engaged to work with electrical equipment. All possible solutions must be explored.
The conscription quota from an enterprise does not exceed 50% of men of conscription age. On the Kyiv Cardboard and Paper Mill’s website, there are always job vacancy announcements.
The enterprises continue to operate. You can see from the metrics of the same Kyiv Cardboard and Paper Mill, an enterprise owned by an Austrian company. The enterprise operates in many areas: social, economic, and ecological, and it has a significant number of programs.
— Has the situation with issuing loans to manufacturers in Ukraine improved? Last year there were issues with this.
— Enterprises operate using their own funds, profits from production activities, and bank loans. Previously, domestic banks offered loans with high interest rates, so enterprises turned to credits from foreign financial institutions. For example, the Kokhavynska Paper Factory uses its own funds and foreign bank loans for construction.
Such loans are a positive alternative as we have options from foreign banks.
Enterprises need to remain competitive for banks to provide these loans. Banks analyze the situation and risks associated with loan repayment. Enterprises have established themselves as reliable partners.
— Eduard Leonidovych, would you like to summarize?
— Yes, I would like to emphasize that the industry continues to operate despite the truly challenging situation: every night and every day, we hear the sound of sirens. Measures must be taken to protect enterprise personnel and preserve equipment. We hope that 2025 will be better than 2024.
— Yes, thank you, indeed.
— I am grateful to you for the publications on your website. The information is quite interesting, especially regarding the dynamics of price changes for Ukrainian products. The monthly indices are insightful. I look at these metrics and find them useful. Thank you for your cooperation.
— Eduard Leonidovych, thank you for the interview!
corruga.expert
