Business news from Ukraine

Ukrainian government voices 5 steps to unblock Ukrainian-Polish border

Ukraine is ready to fix the level of exports of eggs, chicken meat and sugar to Poland at the level of 2022-2023, Prime Minister Denis Shmygal said.

“We have already introduced a verification and control mechanism for four groups of cereals on September 16. We are also ready to go in terms of setting the export level for eggs, chicken meat and sugar at the level of 2022-2023. These are quite large volumes. We are ready to fix them and move within these boundaries,” Shmygal said at the forum “Ukraine. Year 2024” on Sunday.

Prime Minister also said that representatives of the Ukrainian government were at the Ukrainian-Polish border on Friday and talked to Ukrainian carriers who were returning by grain carriers from Europe.

Commenting on the protests of Polish farmers on the Ukrainian-Polish border, the Prime Minister reminded that they were taking place against the background of Russia’s hybrid warfare in Europe. “This should not be forgotten. There is support for radical and pro-Russian political forces throughout the European Union, particularly in Poland. This leads to terrible things that we see when they pour out grain and act illegally,” he emphasized.

Shmygal noted that the Polish government and the police react to these violations adequately, and appropriate cases are initiated. The first violators have already been brought to court, they face up to five years in prison.

According to the prime minister, the Ukrainian government announced five steps to unblock the Ukrainian-Polish border, and also notified the European Commission about Ukraine’s proposed “plan of mutual understanding” with Poland. Now Ukraine will start implementing them jointly with the European Commission.

As reported, Ukraine on February 23 on the Ukrainian-Polish border announced five steps for the de-blockade of the border. In particular, Ukraine agreed to limit the entry of poultry meat, eggs and sugar to Poland and will export them to the EU without quotas and duties in volumes no more than the average in 2022 and 2023. In addition, Ukraine is ready to continue the mechanism of verification of exports of grain, corn, sunflower and rapeseed, which means that these four groups of goods will not enter the Polish market without Polish authorization.

The second step will be Ukraine’s appeal to the European Commission with a proposal to conduct urgent screening of clusters 4 and 5, which include agrarian policy and transportation.

The third step is a proposal to the Polish government to adopt a joint appeal to the European Commission to stop Russian agricultural exports to the EU.

The fourth step was the creation of a “Trilateral Headquarters: Ukraine, Poland, European Commission” co-chaired by the agrarian ministers of Ukraine, Poland and a representative of the European Commission.

The fifth step is to expand free passage across the border not only for ammunition and humanitarian aid, but also for Ukraine’s critically needed fuel.

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EU Council agrees on position to extend for another year privileges for Ukrainian exports

The EU Council announced on Wednesday that the Committee of Permanent Representatives (Coreper) of the European Union has agreed on the Council’s negotiating mandate to extend for another year the suspension of import duties and quotas on Ukrainian and Moldovan exports to the EU.

“By agreeing to renew these measures, we demonstrate our continued support for Ukraine and Moldova, while protecting the internal market from excessive increases in imports of certain sensitive agricultural products,” commented Aja Labib, Foreign Minister of Belgium, which holds the EU Council presidency, on the agreement of the Permanent Representatives.

The Council communiqué explains that the two legislative proposals that member states will discuss with the European Parliament are aimed at extending the suspension of import duties and quotas for another year: from June 6, 2024 to June 5, 2025 for Ukraine and from July 25, 2024 to July 24, 2025 for Moldova – provided that “the protection of sensitive agricultural products is simultaneously enhanced by strengthening safeguards” already included in the relevant existing regulations.

Brussels explains that “by renewing these measures, the EU will continue to support and stimulate trade flows from Ukraine to the EU and the rest of the world, and will contribute to creating conditions for the expansion of economic and trade relations leading to the gradual integration of Ukraine into the EU’s internal structure.”

As for Moldova, these measures are intended to “help preserve the conditions necessary to enable Moldova to continue its trade relations with the EU and with the rest of the world through the EU,” the EU Council said.

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Ukraine reduced exports of titanium ores by 2.4 times

In January of this year, Ukraine reduced exports of titanium ores and concentrate in physical terms by 2.4 times compared to the same period last year – to 865 tons from 2,066 thousand tons.

According to statistics released by the State Customs Service on Friday, exports of titanium ore and concentrate decreased by 57.3% to $1.414 million in monetary terms.

The main exports were to Turkey (67.26% of supplies in monetary terms), the UAE (14.50%) and the Czech Republic (5.16%).

Ukraine did not import these products in the period under review.

As reported, in 2023, Ukraine reduced exports of titanium ores in physical terms by 96.4% compared to 2022, to 11,648 thousand tons, and revenue by 85.1%, to $19.426 million. At the same time, the main exports were to Turkey (38.21% of supplies in monetary terms), Japan (16.53%) and India (6.12%).

During this period, Ukraine imported 1 ton of such ore from the Netherlands for $2 thousand.

In 2022, Ukraine decreased exports of titanium ore by 41.8% year-on-year to 322.143 thousand tons, and by 19.6% in monetary terms to $130.144 million. The main exports were made to the Czech Republic (47.91% of supplies in monetary terms), the United States (11.94%) and Romania (9.75%).

In 2022, Ukraine imported 196 tons of similar products from Senegal (70.41%) and Turkey (29.59%) for $115 thousand.

In Ukraine, titanium ores are currently mined mainly by the United Mining and Chemical Company (UMCC), which manages Vilnohirsk Mining and Metallurgical Plant (VGMK, Dnipro region) and Irshansk Mining and Metallurgical Plant (Irshansk, Dnipro region). ) and Irshansk Mining and Processing Plant (IGOK, Zhytomyr region), as well as Mezhirichinsky GOK and Valky Ilmenite (both based in Irshansk, Zhytomyr region). In addition, Velta (Dnipro) has built a mining and processing plant at Birzulivske deposit with a capacity of 240 thousand tons of ilmenite concentrate per year.

In addition, Velta, a Dnipro-based industrial and commercial company, has built a mining and processing plant at the Birzulivske deposit with an annual capacity of 240 thousand tons of ilmenite concentrate.

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Exports via the Ukrainian sea corridor reached 22 mln tons

Since August 2023, the sea corridor created by the Ukrainian Navy has exported almost 22 million tons of products, and the volume can be increased by another quarter, said Oleksandr Kubrakov, Vice Prime Minister for Reconstruction of Ukraine, following his visits to the Black Sea ports.

“More than 22 million tons of cargo of various types have been exported since the start of the temporary corridor through the Black Sea, which is known worldwide as the Ukrainian Corridor. More than 700 vessels have used it since August,” Kubrakov wrote on Facebook on Saturday.

The deputy prime minister noted that transshipment is carried out from three ports of Greater Odesa – Chornomorsk, Odesa and Pivdennyi. On Saturday night, they were once again attacked by Russian drones. “Unfortunately, we have damaged the transshipment infrastructure and destroyed grain,” Kubrakov said.

According to him, since July 18 (the last day of the grain corridor), Russian attacks on Ukrainian seaports have damaged almost 200 port infrastructure facilities and injured more than 26 civilians.

“At the same time, port workers are recovering quite quickly. Today I saw it with my own eyes. Moreover, they are increasing transshipment volumes every day. This, as well as the prospects for their operation, were discussed at meetings in three key ports of Ukraine,” the Vice Prime Minister said.

He noted that more than 22 million tons in six months is not the limit. Modernization of both the ports themselves and the accompanying infrastructure, such as the road and rail networks, with proper security, will increase the volume by at least a quarter, Kubrakov assured. He announced on February 3 that exports via the new sea corridor had reached almost 20 million tons. According to him, 661 vessels left the ports then.

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“Metinvest” increased metal exports to Poland by 16% in 2023

Metinvest Mining and Metallurgical Group increased its exports of steel products to Poland by about 16% year-on-year in 2023 to over 800 thousand tons from about 700 thousand tons in 2022.

According to Yulia Mezentseva, Head of Logistics at Metinvest Polska, in an interview with the leading Polish publication Puls Biznesu, the increase in cargo traffic is facilitated by the unblocking of routes, but transshipment in ports and border crossings remain bottlenecks.

It is also noted that despite the war, Metinvest is expanding its operations in the Polish market.

“2023 was slightly better for us than the previous year. There were no more congestion and queues on the Polish railway network, which contributed to an increase in transportation efficiency. Compared to the previous year, we recorded a 16% increase in tonnage. We transported a total of 1.9 million tons through Polish ports and railways, of which about 1.3 million were steel products, 378 thousand were iron ore and 237 thousand were coking coal,” Mezentseva stated.

Out of the total volume of products delivered from Ukraine to Poland, 939 thousand tons were exported to other countries through Polish ports.

“The coal needed for our steel plants in Ukraine was also transshipped in Polish ports,” the manager said.

Some of the goods brought from Ukraine to Poland were delivered by rail or truck to Germany, the Czech Republic, Italy, Slovakia, and other countries.

Mezentseva clarifies that iron ore used to dominate the structure of supplies from Ukraine, but now it is mainly steel products that are imported. According to the country’s Metallurgical Chamber of Commerce and Industry, Ukraine is the largest non-EU steel supplier to Poland.

The head of logistics at Metinvest Polska predicts that in 2024, Metinvest will at least maintain and perhaps even slightly increase the volume of supplies of some goods to the Polish market. It assumes that their structure will change, especially the volume of steel imported from Ukraine.

For their part, local producers fear that if demand in Poland starts to grow, Ukrainian steel will flood our market. Przemyslaw Sztuchkowski, president of Cognor, even suggests introducing limits on the supply of steel products from Ukraine to the EU. The idea is to allow free transit through Poland to other countries and to ensure that the volume of imports on the Polish market does not threaten the stable operation of Polish producers.

At the same time, Mezentseva states. “In 2021, 1.2 million tons of our steel products were sold directly to the Polish market, 0.7 million tons in the previous year, and 0.8 million tons in 2023. Due to the war, we have limited opportunities to grow production and supplies,” she notes.

In addition, she draws attention to the problems with the transportation of goods across the Polish-Ukrainian border and transshipment in ports, which impede supplies to our market and transit by sea.

“The Polish-Ukrainian agreement stipulates that six trains a day with steel and ore should pass through the wide gauge at the Medyka border crossing. In practice, three or four are allowed through, as the Polish border and railroad administrations give priority to other transport. Therefore, we often have to wait for a long time at the border, which increases our costs. For every hour of downtime, we have to pay CHF 1.9 per commercial wagon,” says Mezentseva.

She suggests that one of the reasons for the long queues at the border could be the recent protests by Polish carriers and farmers.

“The queue on the Ukrainian side sometimes reached 70 kilometers. In the case of delicate goods that needed to be delivered quickly to customers, we sometimes decided to change modes of transportation and transfer goods from cars to trains to avoid standing in a very long line,” says the manager.

She hopes that the suspension of the protests will facilitate uninterrupted transportation by road and rail. She emphasizes that after crossing the border, transportation through Poland is quite efficient.

“In 2022, we often had to wait on the access roads, but now PKP PLK has significantly improved the capacity of the roads leading to the ports,” says Mezentseva, adding that access to the terminals is almost hassle-free, but there are difficulties with transshipment.

“Bulk cargo, such as iron ore and coal, is transshipped much faster than steel products. Transshipment in Polish ports is four times slower than at Black Sea terminals,” Mezentseva said.

According to her, one of the reasons for this may be the lack of staff at the terminals.

The Metinvest representative also points out that Polish customs regulations do not take into account changes in the weight of bulk cargo during transit. However, they can occur, for example, due to weather conditions. Therefore, employees of transportation and transshipment companies have to spend a lot of time during inspections explaining that coal or ore may weigh a little more in rainy weather. There may also be so-called natural losses during transportation.

“Railroad rules allow a certain percentage of deterioration for different groups of goods. Customs rules, on the other hand, do not allow any losses that are subject to individual inspection by the service. For us, this means significant losses,” emphasizes Mezentseva.

Metinvest Group notes that it is interested in building long-term business relations in the Polish market.

“We are talking about challenges, but we are ready to work out solutions together with the Polish side. We want to simplify procedures and transportation,” adds the Head of Logistics at Metinvest Polska.

“Metinvest is a vertically integrated group of steel and mining companies. The group’s enterprises are located mainly in Donetsk, Luhansk, Zaporizhzhia and Dnipro regions.

The main shareholders of the holding are SCM Group (71.24%) and Smart Holding (23.76%), which jointly manage it. Metinvest Holding LLC is the management company of Metinvest Group.

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Exports from Ukraine to JYSK distribution centers increased by 60%

Exports from Ukraine to JYSK’s distribution centers increased by 60% in 2023, Iryna Romanchuk, Purchasing Manager of the chain, told Interfax-Ukraine.

“Over the past 12 months, exports from Ukraine to JYSK distribution centers have increased by 60% compared to the same period. However, this figure could have been higher if the borders had not been blocked at the end of 2023, which extended the delivery time from a week to a month, sometimes up to two, which had a very negative impact on all Ukrainian exporters,” Romanchuk said.

The expert clarified that due to the high cost of transportation to European countries, upholstered furniture made in Ukraine is losing its competitiveness, so now mostly cabinet furniture is exported. In addition, JYSK also buys blankets, pillows and household goods in Ukraine.

“At the beginning of 2022, some manufacturers located in the east of the country were unable to resume operations quickly due to a disruption in the supply chain of both components and finished goods. Therefore, we were forced to stop working with these companies. Today, our main suppliers are located in the central and western parts of the country,” said Romanchuk.

As an example of increasing the network’s work with Ukrainian manufacturers, she cited the furniture manufacturer Akord-Import (Khmelnytsky), with whom JYSK expanded cooperation in 2023 both by transferring the production of some furniture series from Europe to Ukraine and by expanding the range with new items. In total, this manufacturer shipped more than 1200 truckloads of finished furniture to JYSK’s European distribution centers in 2023.

JYSK is a part of the family-owned Lars Larsen Group with more than 3.2 thousand stores in 48 countries. Currently, there is an online store jysk.ua and 91 classic format stores in Ukraine, and in 2024 their number will reach 100. JYSK has more than 800 employees in the country.

JYSK’s revenue in the financial year 2022/23 amounted to EUR 5.2 billion.

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