OUTLOOK '14: Russia moves towards polymer import substitution

02 January 2014 16:00 Source:ICIS News

By Sergei Blagov

MOSCOW (ICIS)--The Russian market of polymers continues to undergo significant changes with the country expected to discontinue imports of polypropylene (PP) and become a PP exporter in 2014.

Russia had been forecast to discontinue imports of PP and become an exporter in 2013, however, some major import substitution projects were finalised later than previously planned, delaying PP import substitution until 2014.

In February 2013, Russia's Titan group started operation of a new 180,000 tonne/year PP plant. The company, based in Omsk, western Siberia, originally expected the PP plant onstream in 2006, however, the project had been subject to repeated delays.

Nonetheless, the plant was reported to have reached its full designed capacity in mid-2013.

Meanwhile on 15 October 2013, Russian petrochemical firm SIBUR held an official ceremony to start operation of its new 500,000 tonnes/year PP facility in Tobolsk. According to SIBUR, "this construction project has been hailed as the biggest investment project in the Russian petrochemical industry."

The Tobolsk-Polymer complex comprises two units - a 510,000 tonnes/year propane dehydrogenation (PDH) propylene production unit and a 500,000 tonnes/year PP plant. The project was previously expected onsteam by the end of 2012.

The launch of Tobolsk-Polymer was designed to turn Russia from a net importer into a net exporter of basic polypropylene grades. However, the PP plant was reported to operate below its designed capacity.

The launch of the two major PP plants served to boost domestic production volumes. From January to October, Russia's total PP output was 25.2% higher year on year at 686,200 tonnes, according to the government statistics.

Subsequently, PP exports were up while imports moved down.

In the January-October period of 2013, Russia's total PP exports reached 80,000 tonnes, up from around 30,000 tonnes in the same period the year before, according to the customs statistics.

Also from January to October, Russia's total raffia PP imports dropped to around 65,000 tonnes from 120,000 tonnes in the same period a year prior.

However, in 2013 Russia still continued to import basic polypropylene grades, and the task to turn Russia from a net importer into a net exporter was delayed until 2014.

In the meantime, Russia's leading petrochemical producer Nizhnekamskneftekhim (NKNKh) has pledged to build new major polymer facilities in coming years. NKNKh said it still aims to finish construction of its units to produce 600,000 tonnes/year of polyethylene (PE) and 400,000 tonnes/year of PP in 2017.

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.

Meanwhile, the Russian market of polymers also became more open. On 22 August 2012, Russia became the 156th member of the World Trade Organisation (WTO).

According to the country's WTO entry terms, the import tariffs levied on most polymers are due to be decreased from the current 10% down to 6.5% by 2018.

From 1 September 2013, Russia cut the import duty levied on PP from 10% down to 9.1% and further decreases are expected in coming years.

By Sergei Blagov