Experts assessed the possible losses of Russia due to sanctions on the import of plastics

From the termination of the supply of plastics due to sanctions in RUSSIA, industries that manufacture products worth $ 250 billion a year may suffer, the HSE estimated. But 90% of imported raw materials were replaced,

In the absence of “clear actions” on import substitution in the production of plastics or their “failure”, industries that produce products equivalent to 14% of Russian GDP in 2021 may be affected. In monetary terms, this corresponds to $251–257.2 billion per year, or 18–18.4 trillion rubles. This is stated in a study on the provision of the Russian market with polymer (plastic) products, conducted by a team of employees of the Nizhny Novgorod branch of the Higher School of Economics (HSE) and the HSE Department of Applied Economics (available from RBC). The authors of the report consider the lack of production of these products as hypothetically possible losses from the cessation of foreign trade in plastics with unfriendly countries.

“The indicated estimate is the total output of all sectors of the Russian economy that use plastics and products made from them as a resource, which may not be supplied to Russia due to Western sanctions,” explained Professor RBC, Leading Fellow of the Institute for Analysis of Enterprises and Markets of the Faculty of Economic Sciences HSE Svetlana Golovanova. “This assessment assumes that there will be no supply of plastics through third countries, similar products from other countries or own production in the domestic market - no efforts to solve the problem.” She made a reservation that it is difficult to estimate the actual losses, because the restructuring of production and logistics ties is already underway. “Losses can be realized in different forms, not only in the form of a reduction in the volume of products: higher prices, worse quality,

Researchers estimate direct losses from the cessation of the supply of plastics at much lower amounts. In physical terms, about half of Russian imports and a third of Russian exports of plastics in 2021 came from countries that have imposed sanctions against Russia. In the hypothetical case of a complete cessation of foreign trade in plastics with these countries, the total volume of plastic products that will need to be replaced either through domestic production or through supplies from other countries as of 2021 is estimated at 1466.3 tons ($ 5.3 billion), calculated by HSE experts. The reduction in the EXPORT of Russian plastic products in this case is estimated at 830.2 tons ($1.4 billion), the report says.

Back in September 2022, the HEAD of Sibur, the largest polymer manufacturer in Russia, Mikhail Karisalov stated that the company had already replaced 90% of the chemical products that it previously imported from Europe, the rest would take another two to three years. “The petrochemical industry, like others, faced the biggest challenges last year. Thanks to the joint efforts of producers and processors of polymers, their consequences were leveled as much as possible, thereby avoiding possible negative losses at the end of the year. Largely due to import substitution projects and the development of internal processing of polymers, ”the press service of Sibur told RBC.

The demand for large-tonnage polymers from manufacturers of finished polymer products has been fully satisfied, according to the press service of the Ministry of Energy. According to forecasts, the production of polyethylene by 2030 will increase by 2.1 times relative to the volumes of 2022, polypropylene - by 1.8 times, and polystyrene - by 1.4 times, they added.

Why there are problems with chemical products in Russia

The production of plastics in Russia over the past five years has shown steady growth (from 5.5 to 17.2%), exceeding the pace of manufacturing in general (from 0.5 to 4.5%), which did not stop even during the covid pandemic -19 . But the sanctions imposed by the European Union and other Western countries in 2022 on the import of raw materials and components for polymer products to Russia, as well as its export to the West, led to a reduction in Russian plastic production, according to a study by the Higher School of Economics. So, at the end of 2022, the production of plastics decreased by 6.8%. The production of polyamides (by 16%), polyurethane resins and polyvinyl chlorides (by 11%) and polypropylene (by 8%) decreased most significantly.

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At the end of 2021, 75% of the needs of the Russian market for plastic products were met through domestic production, and 25% of the total plastic output was exported. But the aggregated data “masks” the fact that plastics of even one type are highly differentiated goods: their ubiquitous use is largely due to the addition of various additives, the authors of the report point out. In this case, the development of formulations for plastics for the production of each specific type of product is of key importance, they emphasize.

Dependence on imports

According to the Union of Plastic Processors, in Russia in 2022 the production of base polymers, which are used as raw materials in mechanical engineering, the textile industry, agriculture, medicine, aviation, shipbuilding and automotive, decreased by 3.3%, to 7.7 million tons. Imports decreased by 17.2%, to 925 thousand tons, exports - by 10.7%, to 3.09 million tons, domestic consumption - by 1.6%, to 5.54 million tons. , the share of imported raw materials in the Russian market decreased from 19.9% ​​to 16.7%. Imports of plastic products fell much more strongly - by 40%, to 950 thousand tons.

Until now, a significant part of these additives has been imported from Europe. But in the first ten months of 2022, the supply of plastics from the EU to Russia decreased in all positions by 19–77%, depending on their type. Imports were also falling from other countries, which may indicate problems with logistics, the authors of the study note.. “In the context of sanctions pressure on Russia in 2022, many international production and logistics chains were disrupted. International supplies of plastics and products made from them, used both for final consumption and as resources or components in the production of other types of products, turned out to be at risk, the report says. “The reduction in imports of plastics and products made from them has a negative impact on the production of consumer industries for these products.”

Due to the current geopolitical situation, manufacturers of polymer packaging materials have encountered breaks in supply chains, including disruptions in the supply of raw materials, the press service of the Ministry of Industry and Trade confirms.

What are the authorities and companies doing to solve the problem

Karisalov told the Tyumen Industrial and Energy Forum in September 2022 that about 700 European component suppliers refused to work with Sibur “in a self-sanction regime”, although they did not have a direct ban on deliveries to Russia. “These are small volumes - special chemicals, but at the same time the most important catalysts, suppliers of technology licenses, spare parts,” he recalled. “The situation was difficult - we spent March, April, May to replace about 500 items of European products.” But now, according to him, 90% of these chemical raw materials have been replaced, mainly at the expense of friendly countries.

HSE experts also note a "significant increase" in imports of some components, primarily from Turkey and China . For example, according to the Union of Plastic Processors, imports of polymers from China grew by 22% over the first nine months of 2022, to 0.3 million tons. Sibur successfully coped with the challenges and was able to promptly support domestic processors and, in terms of import substitution, to the market seven new grades of polymers have been launched, and in terms of providing “dropped out” components. Sibur also processed more than 1,000 requests from customers for the selection of analogues of special chemicals and imported raw materials, 90% of the successful selection of solutions,” the company’s press service adds.

But “while the field of special chemistry, masterbatches (superconcentrates - dyes and additives to polymers.), Catalysts in Russia is not developed, we need two to three years,” warned Karisalov. The tasks of import substitution of plastic products include, to a large extent, not only and not so much the expansion of the production of primary polymers, but the development of formulations and the development of the production of specialized additives, that is, the development of small-tonnage chemistry, HSE experts also point out.

Russian companies, together with the Ministry of Industry and Trade, organized work on import substitution of polymers, follows from the commentary of the press service of the department. The Ministry is also discussing with representatives of the business community and relevant associations the possibility and consequences of the transition to the use of alternative products in various segments of disposable products and packaging. The relevance of alternatives, the presence of production facilities in Russia and other factors are assessed, including the willingness of businesses to invest in the re-equipment of technological lines that produce both packaging and final consumer goods, the press service concluded.

“The development of the plastics processing industry over the past 30 years has shown the impossibility of achieving Russian technological sovereignty and technological leadership within the framework of a market economy paradigm without active regulation of technical policy by the state,” said the Chairman of the Board of the Union of Plastic Processors, DIRECTOR for Science and Development of Polyplastics . Mikhail Katsevman, speaking at the conference at the specialized exhibition of plastics and rubbers Ruplastica 2023 at the end of January. “The policy and practice of import substitution requires serious analysis, prioritization based on the realities of domestic raw materials, equipment and tooling in order to prevent the waste of financial and human resources without achieving goals intensive development of the industry,” he added.

Growth by 10% per year

The global production of plastics (polymers) has shown steady growth over the past ten years, interrupted only during the covid-19 pandemic. In 2021, the volume of global plastics production is estimated at 390.7 million tons. According to expert forecasts, by the end of 2022, the volume of the global plastics market may grow by 11% compared to 2021 (from $889 billion to $986.6 billion), and by In 2026, the market size could reach $1.43 trillion, which corresponds to an average annual growth rate of 9.7%, according to a study by the HSE.