Plastic processors want to increase imports of raw materials to Russia
Source：Kommersant
From：Taiwan Trade Center, Moscow
Update Time：2024/03/31
Russian consumers of polymer raw materials in 2024 may increase their purchases abroad due to high prices on the domestic market and the lack of separate brands. According to market participants, imports have already increased by 12% in 2023. But, as experts explain, such indicators are associated with a low base in 2022. They doubt the active growth of purchases abroad, taking into account the gradual import substitution.
Western sanctions have dealt a blow to the supply of certain types of raw materials: for example, special grades of polyethylene and polyamide or ethylene vinyl alcohol (EVOH) copolymer used for the production of barrier packaging are not produced in Russia, and their import from Europe has become impossible.
A number of plastic processors decided to reduce purchases of Russian raw materials in 2024, the Union of Plastic Processors (SPP) told Kommersant. "The pricing policy based on import parity is fundamentally not satisfied with Russian processors, who, because of this, lose their competitive advantages and reduce investments in production modernization or carry them out by increasing credit funds",— noted the general director of the union, Pyotr Bazunov.
According to Plastinfo, in January, the cost of low-density polyethylene in Russia was $1,570 per ton against $1,247 per ton in China and $1,213 per ton in the United States. In Western Europe, the price was at the level of $1,747 per ton. Polypropylene cost $1,604 per ton in Russia and $1,688 per ton in Europe, while in China it cost $1,115 and in the United States it cost $1,378.
High prices for raw materials in the country compared to world prices do not allow Russian processors to be competitive not only in foreign markets, but even in their domestic market.
The raw material problem in the industry is much broader and systemic in nature. The share of raw materials in the cost of a plastic product ranges from 50 to 90%, or on average 70%. "With such an indicator, any fluctuation in raw material prices leads to a sharp change in the level of profitability of the company. And none of the companies in our sector can sell their products with a margin of 100% and easily absorb fluctuations in cost, at such a price, no one will buy their goods.
During the year, the cost of low density polyethylene (LDPE) grade 158 for thin film extrusion and high density for casting increased by more than 10% to 140 thousand rubles per ton and 142 thousand rubles per ton, respectively. The price of polypropylene (casting) increased by 30% (up to 141 thousand rubles per ton), polystyrene (UPS brand) — by 15%.
In addition, says Peter Bazunov, there is a problem with the quality of Russian polymers due to the transition to catalysts from Asian manufacturers against the background of sanctions. He noted that the RSPP intends to apply to the government with a proposal to reset import tariffs for all basic polymers. With this in mind, he believes, imports of raw materials for processing will continue to grow in 2024. The general director of the manufacturer of polymer films "Grand Master" Anzor Uzdenov notes that the lack of necessary brands of raw materials in Russia forces processors to switch to foreign raw materials.
As Mikhail Katsevman, chairman of the Union of the Plastic Processors, reported at the Rusplastika exhibition, by the end of 2023, polymer imports increased by 28%, while exports of raw materials fell by 28%.
According to him, the total consumption of polymer materials, including engineering plastics, amounted to 7 million tons (an increase of 11.5%), of which 1 million tons were imported from abroad. The share of imported raw materials grew in the sector of high-pressure polyethylene and polypropylene, while it decreased for polystyrene, PET and PVC-C.
SIBUR, the largest Russian producer of large-tonnage polymers, told Kommersant that "despite the fact that the capacities of Russian polymer manufacturers are sufficient to meet demand from processors, the market is competitive and historically large players from the CIS countries are represented on it." Also, the company explained, certain types of special brands are not produced in Russia, the demand for which is quite low. About 25% of the demand for special brands is provided by imports in the amount of several tens of thousands of tons, SIBUR clarified. They reported that in 2023, the company implemented 330 programs together with customers, which allowed for import substitution of about 170 thousand tons of products. "In the next three to five years, thanks to the implementation of new projects, we will be able to close part of the need for special brands and replace imported analogues," the manufacturer said. They also recalled that in 2023 SIBUR continued to switch to new catalysts and chemicals, which is why it could not always supply customers with familiar brands.
According to Dmitry Semyagin, head of Rupec, polymer exports from Russia have been declining in recent years in parallel with a decrease in the share of imports in domestic consumption. According to him,2022 was a very atypical year for the market, as demand for some polymers decreased sharply and the surplus was exported, but in 2023 the situation returned to normal. At the same time, Mr. Semyagin says, imports in 2023 decreased relative to 2021 in absolute terms for all polymers with the exception of polycarbonate.
Source: https://www.kommersant.ru/doc/6479683?from=top_main_3