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News Release from: Applied Market Information
Edited by the Manufacturingtalk Editorial
Team on 26 April 2007
Russian thermoplastics market grew 15%,
2006 In spite of the Russian market growing by 15% to nearly 3.3 million tonnes in 2006, the market is still hugely underdeveloped compared with the rest of Europe.
Demand for thermoplastics in Russia reached nearly 3.3 million tonnes in 2006 according to the recently published AMI's 2007 Russian and CIS plastics industry report The market last year grew by over 15% compared with 2005 and since 2000 demand for thermoplastics has more than doubled
This article was originally published on Manufacturingtalk on 15 Sep 2008 at 8.00am (UK)
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Despite these impressive growth figures the market is still hugely underdeveloped compared with the rest of Europe.
Per capita consumption is just 23kg compared with over 80kg for the EU 25 and the manufacture of rubber and plastic products is still only about two-thirds of 1991 production levels.
Since the financial crisis of 1998 however, greater political and economic stability has led to increased investment in plastics processing which has resulted in some spectacular growth for certain sectors.
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Building and infrastructure and food packaging have been particularly strong growth areas.
Over 97% of demand is accounted for by commodity polymers, of which PVC and EPS have shown the largest volume increases since 2000, driven mainly by growth in demand for building products.
Russia is experiencing not only tremendous growth in new build for housing, office space, warehousing and factories but also in renovations of existing housing stock.
It is estimated that nearly two-thirds of the housing stock is more than 30 years old of which roughly 60% requires renovation.
Demand for new housing is likely to be spurred on further by the 'Affordable Housing' project implemented in 2006, by the mortgage boom accelerating as interest rates go down and by the emerging Russian middle class.
The demand for plastic building products is also being driven by improving standards.
This together with rising fuel costs is encouraging higher standards of insulation and greater use of PVC door and window profiles.
The other major segment driving polymer demand is packaging where investments in food processing and growth in supermarket shopping is leading to ever higher standards for packaging performance and appearance .
This has led to massive investments in capacity for the production of BOPP film, PET preforms and bottles and polyethylene stretch films.
Between them packaging and building applications account for two-thirds of thermoplastics demand in Russia.
Of the other CIS markets only the Ukraine has a polymer demand of any substantial volume Most others have only very small and under-developed plastics processing industries, although states such as Azerbaijan and Kazakhstan, with their large oil and gas reserves have the potential to develop substantial petrochemical and polymer production facilities.
Current capacity within the CIS for commodity thermoplastics is put at just over 4 million tonnes by AMI of which nearly three-quarters is located in Russia.
Although much of this is old and in need of updating, utilisation rates have generally been high in recent years because of the strong recovery in demand since 2000.
This is especially the case for Russian plants.
However the range and standard of polymer grades produced are often below international standards and the region lacks local production of higher performance materials.
For example, Russia only gained capacity for linear resins in 2005.
There are many plans in the pipeline for new plants, particularly in Russia where a further 3 million tonnes of new capacity could be added by 2010.
To date Russia has attracted little foreign investment and a large proportion of polymer production remains in state ownership through the operations of Gazprom/Sibur.
Foreign investment is also limited within Russia's plastics processing industry, confined mainly to building products (particularly window profiles) and packaging (particularly PET preforms and packaging sheet).
However the current strong growth in the Russian economy allied with Russia's huge oil and gas reserves offering the possibility of cheap energy is leading to increased investment interest.
Opportunities are likely to arise in sectors such as telecommunications equipment, where Russia is upgrading its outdated equipment and infrastructure; automotive components, where assembly of foreign models is growing very strongly; packaging, to meet the growing demand of the food and beverage industries; medical devices, serving Russia's aging population subsidised by the government's stabilisation fund fuelled by its oil revenues; and construction to update Russia's crumbling infrastructure.
Russian thermoplastics usage is as follows.
* Flexible packaging 14.4%.
* Rigid packaging 33.1%.
* Household 3.0%.
* Electrical appliances 3.2%.
* Wire and cable 5.6%.
* Fibre 4.5%.
* Others 13.7%.
* Automotive 3.1%.
* Building 19.4%.
* Source - Applied Market Information, 2007.
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