Plastics News - Show Daily - October 15, 2024 - 4

FAKUMA 2024
4 * Plastics News, October 15, 2024
Russia's Sibur says it has
been successful in building
a domestic polymer industry
to replace companies that
pulled out of the country
following the invasion of
Ukraine. Sibur photo
Russian plastics industry
shows stable growth
rates, cloudy outlook
By Eugene Gerden
Special to Plastics News
The Russian plastics industry
shows stable growth rates
for 2024 despite pressure of ongoing
sanctions and a generally
complex business environment
following the Russian invasion of
Ukraine in 2022.
With the closure of the largest
sale markets for both Russian
polymers and fi nished plastics
products, most local producers
have switched their attention to
the domestic market. That resulted
in the redirection of a signifi -
cant part of their export supplies
to local customers.
In general, in 2022, the market
dropped less than the initial expectations,
while its recovery
has began in 2023. This year the
growth continues.
According to offi cial statistics,
in 2023, Russian manufacturers
supplied 10.7 million metric tons
of basic polymers to the market,
3.7 percent more than in 2022. It
is expected that the growth of the
market will be higher this year and
exceed 5-6 percent, while exports
may decline by 15-20 percent.
According to local producers
and analysts, the current situation
in the Russian plastics and
polymeric sector is signifi cantly
better to those in the European
Union, which has seen a serious
stagnation and the largest drop in
demand in the last 10 years. According
to offi cial statistics, for
example, in Germany, the production
of polymers this year fell by
15.3 percent year-on-year basis,
while the industry's sales fell by
21.9 percent. The same dynamic
is observed in the country's
plastics sector, while among the
main reasons of this are high production
costs, the use of dumping
policy by Chinese suppliers and
strict environmental legislation.
As for Russia, this year the industry
continues to show positive
dynamics although prospects for
2025 are cloudy, as the economic
recession, caused by Western sanctions,
is deepening in all spheres of
the country's economics, including
the segment of plastics.
Still, Mikhail Katsevman, president
of the Russian Union of
Plastics Processors, believes the
current situation in the industry
remains at generally good level.
" The Russian plastics production
and processing industry has
withstood all the tests of sanctions
pressure. In recent months,
local enterprises have returned to
their development path in virtually
all segments of the market. We
are growing, even ahead of the national
GDP growth rate and even
higher than any other segment
of the Russian industrial production, "
Katsevman said.
He added that currently Russia
still heavily depends on imports
of raw materials, but state and
industry players have set a goal
to achieve technological self-suffi -
ciency in the next fi ve to 10 years.
Despite the attempts made by
many of Russian plastic producers
to diversify their markets, it
has not been possible for most
of them to fi nd a full-fl edged replacement
for Western markets.
An exception is Turkey, which has
become the major plastics hub in
Europe, thanks to huge supplies
of basic polymers from Russia.
Still for the period of 2025-26,
most Russian producers plan to
focus on the domestic market,
which still has a big potential for
further growth. This is due to the
generally low per capita polymeric
consumption in Russia, which
does not exceed 30 kilograms,
compared with China's 52 kg and
Turkey's 42 kg.
According to RUPP forecasts,
in the long term, Russian plastic
processing volumes may increase
by additional 1.6 million tonnes,
while in the next four years the
growth will be in the range of
200,000 to 600,000 tonnes. Most
of Russia's polymer capacity is
traditionally in the Tatarstan Republic
and the Nizhny Novgorod
Region, which were also centers
of polymer production during the
Soviet era.
Leading local producers believe
that, despite the current tough
business environment in Russia,
the demand for plastics products
will remain high.
As Pavel Lyakhovich, board
member and executive director
of Russian Sibur, import substitution
in the domestic polymer industry
has been successful, while
the biggest demand for plastics
products is in agriculture, automotive,
housing and packaging.
In an interview with the Russian
TASS newswire, Lyakhovich said
the greatest potential is in the automotive
sector, as with the exodus
of most of global automakers
and closure of their plants, the
industry is currently being rebuilt
from the scratch, which contributes
to a high demand for auto
parts made from plastics.
In addition, the plastic pipe
sector will provide another major
impetus for growth, which should
reach 1 million tonnes this year.
Successes in
plastic recycling
There have been some serious
progress in the Russian plastic recycling
sector, where, according
to statistics of RUPP, more than
2,000 enterprises were established
in Russia during the period
of 2023-24. Currently Russia has
more than 10,000 plastics recyclers
with total annual capacity of
6.5 million tonnes.
Konstantin Rzayev, managing
partner of the EcoPartners group
of companies, one of Russia's major
plastics recyclers, says that
recycled plastic in Russia already
accounts for approximately 5-15
percent of the total consumption
of polymers in the country.
" Today, [PET] is the most recycled
type of plastics in Russia
along with such polyethylenes
as HDPE [high density polyethylene]
and LDPE [low density PE].
Accordingly, PET bottles, HDPE
canisters, LDPE fi lms are the most
popular types of raw materials
for recycling, and PET fl akes and
various types of PE granules are
the most common recycled products, "
Rzayev said.
Rzayev added that there is currently
a shortage of plastic waste
that could be used as a raw material,
as the volumes and depth and
sorting of solid municipal waste in
Russia is currently insuffi cient.
According to the Russian Rossyiskay
Gazeta business paper, the
shortage of plastic waste in Russia
is so acute that local recycling
plants buy mixed dirty
plastic
waste from landfi lls and use it in
their operations.
Exodus of
global players
In the meantime, the Russian
plastics market has always been
within the sphere of global players.
However, after Feb. 24, 2022,
many of companies decided to
signifi cantly cut their local presence
or leave the market.
Still, most of them have no
plans to sell local operations
for big discounts, so tough talks
with the Russian government are
ongoing. One such companies
is Dow Inc., which at the end of
last year received permission to
sell a polymer dispersions plant
near Moscow, which is known as
Finndisp LLC. The plant supplies
architectural and industrial coatings,
as well as binders used in
water-based adhesives.
Earlier this year, Russian media
reported about the plans of the local
S8 Capital investment holding
to acquire the Russian business
of Huntsman for about 3 billion
rubles ($31 million) including its
plant in the city of Obninsk in the
Kaluga region.
For the company, the Russian
business once was among the
priority in Europe, and Jon Huntsman
Jr. was the U.S. ambassador
to Russia from 2017-19.
Plastics News - Show Daily - October 15, 2024

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