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.