Russia’s Jan-to-May imports of HDPE for extrusion coating declined by 14% from their previous-year level, with May deliveries shrinking to 3.2 thousand tonnes from 5.3 thousand tonnes in April. The customs duty on the imports of this type of polyethylene, currently set at 9.1%, has been suspended in a relatively recent decision, so we may yet see the imports rising in the months ahead.

Pipe-grade HDPE imports declined by 27% y/y in the first 5 months of the year, reaching 24.1 thousand tonnes. The already mentioned idling of Stavrolen caused an April-to-May import increase in this product category as well, from 5.8 to 8.1 thousand tonnes.

Imports of HDPE for injection molding, on the contrary, grew by 2% in Jan-May relative to the same-period mark in 2013, reaching 19.9 thousand tonnes. In May, deliveries declined to 4 thousand tonnes from 5.1 thousand tonnes in April.

Cross-border deliveries of blow-mold grade HDPE amounted to 14.5 thousand tonnes in Jan-May, marking a 12% decline from the same period of 2013. May deliveries of this type of HDPE reached 3.4 thousand tonnes, while in April they amounted to 4.6 thousand tonnes.

Imports of film-grade HDPE to the Russian market dropped by 65% y/y, reaching 8.5 thousand tonnes. In May, deliveries totaled 2.4 thousand tonnes, in April, 1.3 thousand tonnes.

It bears reminding that the total output of Russian HDPE producers shrunk by 13% to 373 thousand tonnes in the period spanning from January through May. Only two companies, Kazanorgsintez and Gazprom Neftekhim Salavat, managed to increase their production.

Около 50% объема химической индустрии (в России и в мире) приходится на полимеры. Уровень потребления этих материалов в значительной мере определяет развитие индустрии в целом. По уровню потребления полимеров на душу населения Россия отстает от развитых стран в 2-3 раза. 
Это отставание является искусственным, предопределяется непринятием на протяжении многих лет международных стандартов потребления, «принуждающих к развитию». Необходимо единовременно на уровне нескольких субъектов РФ масштабировать опыт некоторых областей и утвердить регламенты, обязывающие применять прогрессивные полимерные материалы при строительстве дорог и для транспортировки воды в секторе ЖКХ. 
Одновременно ставится вопрос о скорейшем запуске производств инженерных и специальных пластиков, которые сегодня в значительном, а иногда в полном объеме импортируются. 
Полигоном применения новых технологий и новых регламентов может стать Приволжский федеральный округ, являющийся центром производства и переработки полимерных материалов.
Перед руководителями Субъектов Федерации стоит задача определить условия благоприятствования, при которых предприятия способны в короткие сроки наладить выпуск и заместить импорт по названной номенклатуре специальных пластиков. 
В случае непринятия предложенных мер производство химической продукции к 2030 г. по сравнению с 2012 г. упадет в 2 раза. В случае реализации перечисленных мер ожидается увеличение производства базовой химической продукции и полимеров в 3 раза.

Создание новой отрасли промышленности по добыче, переработке и транспорта нетрадиционной нефти и газа в США и других регионах мира может привести к снижению мировых цен на нефть и природный газ  в ближайшие годы. Через секторальные санкции США и ЕС намерены ограничить экспорт в РФ новейших технологий добычи  нефти и газа. 

“Tatarstan’s import substitution potential is most prominent in two fields, the machine building and the chemical industry. The region’s machinery imports currently amount to over $4 bn per year, chemical and petrochemical imports, to some $450 mn per year,” said the Republic’s Trade and Industry Minister Ravil Zaripov.  He pointed out that efforts are underway to locate firms able to become substitute makers of 300 chemical and petrochemical products currently imported from abroad. “We’ve combed through some 300 product names in a list that contains over a thousand. We’ve sent the results of our review to our leading universities in order to organize domestic manufacture of these products,” said he. In his words, Tatneft will be able to substitute 108 products out of the 300, TAIF Group, 127, and NEFIS Group, about 49.

There are pressing issues precluding the use of domestically produced plastics in the machine-building field. By year-end, the ministry intends to devise a scheme allowing the Fold Sollers plants to use polymers and ABS plastics produced at Nizhnekamskneftekhim (NKNH) and Kazanorgsintez instead of those that the company currently imports from Turkey and Europe. “As of today, NKNH and Ford Sollers have completed the certification process, and a shipment of 480 tires is already on its way to Ford, substituting the previously used Michelin tires,” reported Mr. Zaripov.

Representatives of the Republic’s companies have in their turn voiced their complaints before the President, pointing at a lack of funds for modernization and the absence of protective import barriers. To cite one example, Nur Shakirov, General Director of the Kazan Medical Instruments Plant, said that its facilities make products worth RUB 400 mn each year, while the plant’s capacities allow for the tripling of the volume. The domestic market’s import substitution demand includes the need for disposable medical instruments, and these should be competitive, said he, but in order to achieve that, “sterilization is necessary, and the cost of a sterilization center, including the cost of the rooms to house it, amounts to EUR 10 thousand”.

“One big problem at hand is the cluttered state of the market. Anyone having money can order any item from China and have it delivered in a month’s time,” said he. Answering to the president’s question regarding the quality of such items, he said that “they put lives in danger”. “They are extremely dangerous, that’s why barriers are necessary. We should turn to the federal government and ask that strict steps be taken,” replied Mr. Minnikhanov.

The President stated his intent to appeal before the country’s leaders for the provision of financial help to newly-launched plants. “It is my hope that the federal government today turns to face these issues. We cannot be competitive without modernization. We should formulate our requests and substantiate their necessity,” said the head of the Republic.

The mines currently under construction, one located at the Verkhnekamskoe deposit in the Perm Krai, the other at the Gremyachinskoe deposit in the Volgograd Oblast, are being built in two stages to yield an annual combined output of 8.3 mn tonnes of potash.

“Our project boasts a lower cost of construction per tonne of potash capacity than is needed to get a return on investment,” said Mr. Bailey. “Considering the fact that we have a port terminal on the Black Sea, we believe that VolgaKaliy, (the subsidiary) that develops the Gremyachinskoe, will be able to offer the product at a very competitive price.” In his words, the subsidiary is well-positioned to send its potash to Europe and Latin America. “Uralkali may have to partially shift its strategy and reconsider its market positions,” said Mr. Bailey.

“At this stage, we’ve completed pre-project planning, selected a site located near the port of Vostochny, and are ready to commence the actual construction effort in the next few months,” said Mr. Sabitov, according to the records of the meeting.

The first stage of the complex will be able to produce 1 mn tonnes of commercial-grade ammonia, 2 mn tonnes of urea and 1 mn tonnes of methanol per year. It will consume 3.2 bn cubic meters of natural gas per year. Commercial-grade output is planned to commence in January 2018, with full commissioning expected to take place in March 2019. Should market conditions be favorable and sources of requisite amounts of feedstock gas be found following the start of first-stage construction, the company leaves open the possibility of launching the construction of a second stage, similar in product mix and capacity.

The cost of construction of the first stage of the complex, including external infrastructure objects, is RUB 240 bn. Seeking to procure state funding to help it build the external infrastructure objects, the company has applied for the allocation of RUB 17 bn from the country’s budget.

There was a significant growth of production figures in July, and this affected the bottom-line value. While amounting to 8.6% when calculated for H1, y/y increase in production reaches as high as 9.6% when assessed for the first 7 months of the year.

In January through June, a total of 302.6 thousand tonnes of pipes, hoses and fittings were produced, marking a 10.3% increase y/y. In the month of July the output of these items increased to 56 thousand tonnes from the June mark of 48.7 thousand tonnes, due to a seasonal growth in demand.

The output of non-reinforced and single-layer films in the period under report amounted to 611.7 thousand tonnes, marking a y/y increase of 26.2%. Film production hit 112 thousand tonnes last month, which translates into a 12.4% increase over June.

Production of slabs and sheets increased by 3.6% y/y in Jan-Jun and reached 125.5 thousand tonnes. In July, output of these products tipped the scales at 19.3 thousand tonnes compared with 19 thousand tonnes in June.

Only in the plastic windows, casements and sills segment did the output decline. Production of these totaled 13.5 mn square meters in the period under report, which is 6.8% less than in the same period a year earlier. 2.9 mn square meters were produced in July versus 2.1 mn square meters in June.

In the current situation, the weakening of the ruble against the US dollar is making foreign products more expensive. With this fact in mind, Russian producers have grounds to expect the lowering of demand for foreign-made competitively-priced feedstock in the second half of the year. To cite one example, in July the country’s cross-border intake of PET already declined by 26% relative to June, reaching some 15 thousand tonnes. The demand is negatively affected by the facts that PET perform sales are down and companies have accumulated stockpiles of PET granules.

According to a decree issued by the Government, subsidies will be paid to chemical companies that have taken loans to fund investment projects. Under the state support scheme, companies with investment projects’ costs falling in the range of RUB 1.5 bn to 5 bn will be entitled to partial compensation of their interest payments. The requisite funds will be sourced from Russian lending institutions or from Vnesheconombank.

The approved subsidy volume for 2014 is RUB 70.2 mn. In 2015, spending to the same end will reach RUB 168.5 mn, and as much as RUB 179.9 mn in 2016. At the same time, the subsidy paid in each case will be limited by the amount calculated based on two-thirds of the refinancing rate of the Central Bank of the Russian Federation, as effective on the date of interest payment.