The growth of the Russian plastics market is a good thing for additives giant Chemtura Corp.
``Most polymer applications are growing 25-35 percent a year,'' said Paul Stott, Russian business development director for Middlebury, Conn.-based Chemtura. ``Petrochemical units are flush with cash.''
That type of growth translates into a lot of opportunities for Chemtura to sell products such as antioxidants for polyolefins and styrenics, and heat stabilizers and flame retardants for PVC. The Russian market currently is undersupplied for most plastic additives, with the exception of plasticizers used in flexible PVC, Stott said. He spoke at TEMPI 08, hosted by Houston-based Townsend Polymer Service & Information, June 9-10 in Las Vegas.
Additives especially will be needed in light of the massive amounts of resin capacity being added in the region in the next several years: About 25 billion pounds of resin capacity are expected to be built by 2013. That amount includes 7.5 billion pounds of high density PE and 6.5 billion pounds of polypropylene. State-owned Gazprom's Sibur LLC of Moscow will account for almost 10 billion pounds of total resin growth, with KazMunayGaz the national oil company of neighboring Kazakhstan adding another 2.6 billion.
``Right behind the Middle East's 10,000 tons of resin comes Russia's 10,000 tons,'' Stott said. Chemtura supplies the Russian market from polymer additives plants in the U.S., Canada and Western Europe.
Russian economic growth has averaged 7 percent during the past 10 years, and the positive movement is carrying over to plastics processors, Stott added.
HDPE pipe which accounts for 72 percent of the Russian market is growing at a rate of 34 percent a year, largely from an increased need for water and gas delivery pipe in the country's burgeoning construction market. The Russian plastic pipe market currently includes about 100 companies.
Unlike other regions, PVC accounts for only about 10 percent of Russian pipe demand. Stott said he believes this is only a regional preference with no basis in any business conditions.
Russian film manufacturers also are wrapped up in growth, with plans to add more than 200 million pounds of capacity during 2007 and 2008. The market includes about 500 firms, about half of their output based on PE. Many Russian food processors also operate their own film lines.
Rigid PVC processing is lining up for a growth boom of its own, since 64 percent of all plastics machinery bought in Russia during the past five years has gone into that sector, Stott said. The market currently churns out about a billion pounds of rigid PVC products per year, including profiles and panels for construction. Siding is the fastest-growing segment for rigid PVC in the country.
In compounding, LyondellBasell Industries AF SCA of Rotterdam, Netherlands, will open a 45 million-pound PP compounding unit in Russia in 2011 aimed at the automotive market.
Gazprom company Sibur also is in the process of starting up its own compounding operation. PVC compounder Polymer-Chemie of Bad Sobernheim, Germany, will open a plant making as much as 110 million pounds of product near Moscow later this year.
Russia's economic comeback has been all the more impressive, Stott said, when you consider that the fall of Communism created an extended depression period from 1991-98. The comeback could go even higher, since most progress to date was made when oil was priced under $30 per barrel. With large oil and gas reserves, recent prices above $100 per barrel should create an even greater windfall.
The U.S. also could play a greater role in Russian plastics in the near future, Stott said.
``U.S. firms have been successful in Russia, and the Russian government has a strong desire to attract U.S. firms,'' he added.
Chemtura posted sales of $3.7 billion in 2007, an increase of about 9 percent from the prior year.