Russia is ramping up domestic production of plastics thanks to recovering local demand and a significant drop of imports as the result of Western restrictions.
The unprecedented sanctions on Russia's plastics sector have not resulted in its collapse. Instead, after several months of decline — generally higher than in other segments of Russian economy — the industry has resumed its gradual growth.
That's mainly due to government support and the launch of new production facilities by some leading local players.
According to a recent report, "Analysis of the supply of plastics to the Russian market," published by experts at the Russian Higher School of Economics, the demand for plastics in the country will grow in years to come. While the industry has generally good prospects, much will depend on support that could be provided by the state.
The imposed Western sanctions led to serious turmoil in the Russian plastics market. In general, the cessation of polymer trade with countries that joined the sanctions against Russia cost the country's economy 0.5 percent of GDP.
Most of these sanctions came into force on July 10, 2022, as part of the eighth package of sanctions against Russia, when the European Union banned the import of primary polymers and products made from them: plates, sheet, film, tape, pipe, hose and other products, starting in 2023..
According to HSE experts, those so-called unfriendly countries accounted for about half of Russian plastic imports (1.4 million tons) and a third of Russian exports (830,000 tons). However the situation has radically changed, as sanctions affected most market segments.
In the case of large-tonnage polymers, linear low density polyethylene, PVC and ABS are considered the most import-dependent, where the share of foreign products is close to 70 percent. In contrast, Russia provides 80-90 percent of its own polypropylene, expanded polystyrene and PET.
The most complex situation is in small- and medium-tonnage chemistry, traditionally heavily dependent on imports. While in recent months the situation has generally stabilized, the share of imports remains high.
Still, most of Russian analysts believe the domestic plastics market has been generally able to adapt to the current realities. The biggest growth in plastics demand in the next five years will be in construction, automotive and packaging, which traditionally consume up to 70 percent of produced plastics in Russia. Analysts expect growth in those markets to exceed 40 percent by 2028.