Boston, MA -- (ReleaseWire) -- 04/11/2014 -- Russia may be moving towards self-sufficiency in polymer production, but BMI's latest Russia Petrochemicals Report warns of slow market growth in 2014 as key consuming industries exhibit low or negative output at the same time as the domestic market is opening up to imports. However, there should be sufficient demand in the market to avoid an imbalance and Russia should be able to ramp up exports, although margins could be low in the face of competition on the global market from the Middle East and the US.
Russia's total production of polymer products increased by 7.3% in 2013. The Russian polymers market will undergo a structural change in 2014 as the country achieves complete self-sufficiency in polypropylene (PP) and becomes an exporter. The 500,000tpa Tobolsk-Polymer PP plant should reach full operational capacity in 2014, effectively ending basic PP imports.
At the same time as Russia is moving towards full import substitution, it is also opening its market up under its WTO agreements, with import tariffs levied on most polymers due to be decreased from 10% down to 6.5% by 2018. From September 1 2013, Russia cut the import duty levied on PP from 10% down to 9.1% and further decreases are expected in coming years.
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Russian producers of polyvinyl chloride (PVC) managed to increase production volumes in 2013, despite a complete shutdown of SIBUR-Neftekhim and scheduled maintenance works at Khimprom (Volgograd).
Russian producers of unmixed PVC managed to increase output 0.3% y-o-y to 617,200 tonnes in 2013. The complete shutdown of SIBUR-Neftekhim's production, as well as a long and unscheduled shutdown at Khimprom, Volgograd, were compensated for by growth from other PVC producers. Annual capacity production at RusVinyl, based in Nizhny Novgorod region, will be 330,000tpa and will produce suspension and emulsion PVC. The plant is expected to be launched in July 2014.
- In the medium-term, Russia's PP self-sufficiency looks set to be sustained with output to be boosted in 2017 with Nizhnekamskneftekhim's (NKNKh) plans to open a 400,000tpa PP unit as well as facilities producing 600,000tpa of PE. Russia's PP and other polymer projects are changing the country's market situation. However, some of these projects tend to lag behind original schedules, thus delaying import substitution.
- The performance of the Russian petrochemicals market will be lacklustre in 2014 due to poor rates of growth in key consuming industries. We continue to forecast a slowdown in Russian economic growth. Specifically in relation to construction-related polymers, particularly PVC, we have considerably revised down our construction industry forecast for Russia to 1.5% growth in 2014. Meanwhile, a major consumer of engineering plastics, the automotive industry, is set to see a 2.8% decline in 2014.
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