Russian plastics industry shows stable growth rates, cloudy outlook

Sibur

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.

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 finished plastics products, most local producers have switched their attention to the domestic market. That resulted in the redirection of a significant 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 official 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 significantly 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 official 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-sufficiency in the next five 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 find a full-fledged 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 films are the most popular types of raw materials for recycling, and PET flakes 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 insufficient.

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 landfills 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 significantly 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.

* Source : https://www.plasticsnews.com/news/russian-plastics-industry-shows-stable-growth-rates-cloudy-outlook-2025