In recent years, the polypropylene market in Russia has intensified: from 2015 to 2017, the volume of PP exports from Russia increased by almost 60%, and domestic consumption increased by 20%. In the global market, polypropylene occupies a confident second position after polyethylene. This polymer accounts for approximately 24% of global thermoplastic production volumes. Let's consider current trends in Russia and in the world.

Key global trends in polypropylene production

• Global production of polypropylene has a pronounced upward trend; as of 2017, the annual increase averaged 5.6%, and the total global production of PP reached 70 million tons.
• The dominant position in the global PR market is occupied by manufacturing companies from the USA, China and Russia. Northeast Asian production (including Russia) accounts for about 30% of world production, North American enterprises account for an average of 22%.
• The leaders in global production are Basell (about 11% of global output) and BP (about 6% of the market share). Russian companies are not included in the TOP 10 world leaders in market control.
• Consumption of polypropylene on a global scale is growing by an average of 4 - 5% per year, almost matching the growth rate with production. It should be noted that PP is a polymer that is gradually displacing polyethylene and PVC from various areas, so the share of its consumption is growing.
• The most common vector for using raw materials is injection molding, which accounts for up to 40% of the volume of raw materials. The next position is occupied by the production of films and sheets, which account for up to 22%. In third position are fibers, which account for up to 16%.
• RR prices are heterogeneous on world markets: these raw materials are most expensive in the USA, and cheapest in China. The European market follows the Asian and American trends, demonstrating average prices. Prices are strictly tied to oil prices, so since 2015 there has been a prolonged decline in the price level: from the level of 1300 - 1500 dollars. USA in the summer of 2015, prices dropped to the level of 1000 - 1100 dollars. USA in 2017. Copolymers are traditionally 10% - 15% more expensive than homopolymers.

The dominant position in the production structure of the Russian Federation is occupied by propylene homopolymer, which is mainly produced at the Tobolsk-Polymer and Polyom sites. These two companies account for over 40% of the market share.

The growth rate of PP in Russia is the most dynamic compared to other polymers. Thus, from 2013 to 2017, the volume of PP production increased by 65%, while the volume of PVC increased by 29%, and the volume of polystyrene generally decreased by 5%. At the same time, both exports and domestic consumption are actively increasing. We can say that in the domestic market, PP is actively displacing PE, annually taking up to 0.9% of the market share.

In conclusion, we note that Russia is currently actively increasing its PP production volumes, including the launch of new production sites. Therefore, we can predict a further increase in the market share of this polymer in the Russian Federation.

Provided by the organizing company.

Capacity utilization for the production of basic plastics is approaching the limit, and the active growth in the supply of Russian raw materials will cease. Processors point to the narrow range of brands and are concerned about the high cost of domestic polymers. Manufacturers are conveying their desire to support the domestic market by continuing to price their products in accordance with global parity.

Fourteenth International Conference "Polyethylene. Polypropylene 2017", organized by INVENTRA, took place on March 21 in Moscow. The event was held with the support of the Ministry of Industry and Trade of Russia and the Polyplastic Group. The partners were the companies Centropolymer, OMIPA, Milliken Europe, Communications, and the magazine Polymer Materials became the information sponsor.

“The cross-cutting issues of the polyethylene and polypropylene markets pushed us to unite the main players of these segments on one site,” noted the Managing Director of the CREON Group in his welcoming speech Sergey Stolyarov. He recalled the development by the Ministry of Industry and Trade of a road map for the development of plastics processing until 2025 and called for active participation in the creation of one of the main documents of the sub-industry. “We have already started working and are ready to convey our opinions to the regulatory authorities,” he emphasized.

The event was opened by an overview report on the state and main trends of the Russian polypropylene and polyethylene market, which was traditionally presented by the director of the INVENTRA Analytics Department Lola Ogrel. The total potential for the production of two basic polymers (PP and PE) in Russia is 3 million 300 thousand tons, while the number of manufacturers is limited to ten enterprises, only four of which produce both polymers.

In 2016, polypropylene production increased by 7.5% and amounted to 1 million 380 thousand tons. The PP market has been actively developing over the past four years thanks to the implementation of two new projects - Sibur-Tobolsk (500 thousand tons) and Poliom (210 thousand . T). Today, growth limits have been exhausted, capacity utilization has reached 97% and is very close to the critical level. In these conditions, domestic enterprises turned their attention to high-margin products. At the end of 2016, copolymer production in Russia reached a record 280 thousand tons, an increase of 12% compared to last year. If in 2010 copolymers accounted for 9% of the total PP production, then in 2016 it was already 20.3%.

Polyethylene production added 7% to last year's result and reached 1 million 716 thousand tons, with capacity utilization at 91%. The production of low-density polyethylene in 2016 increased by 10%, exceeding 1 million tons, but still did not reach the level of 2013. Last year, NKNK launched a modernized production of alpha-olefins. As a result, the amount of linear PE increased by 1.6 times and reached 73.5 thousand tons. However, despite the positive dynamics, the linear polyethylene segment remains the most import-dependent. Production of high-density polyethylene practically remained at the level of the previous year, decreasing by only 6 thousand tons.

Despite the increase in product output in 2016, the PE market is stagnating in terms of launching new capacities. Thus, over the past decade, not a single new enterprise has been put into operation; modernization of existing production facilities has helped. Therefore, force majeure at any of the operating plants can throw the market out of balance and lead to a sharp price jump, which is what we observed in April last year in the LDPE market.

Recently, domestic producers of base polymers have felt much more confident than consumers. One of the main reasons is the existing pricing policy in the field of sales of PP and PE. Prices on the domestic market were kept in accordance with import parity, despite the fall in oil prices and the decline in the cost of raw materials (ethylene and propylene). So, in 2010-2014. the difference between the cost of polymers and raw materials for their production was in the range of 20-30 thousand rubles, and in 2016 the spreads increased to 47 thousand rubles for polypropylene and 55 thousand rubles for polyethylene.

Prices for raw materials and polymers, consumption growth rates

In addition, the development of Russian processing was hampered by high loan rates and the complex process of obtaining them, a narrow brand range of domestic raw materials, including additives and fillers, as well as the lack of a targeted government program to stimulate processing.

Under the current conditions, the PE and PP processing markets have developed differently. The demand for polypropylene has been increasing and has grown by 50% over the past 7 years. Polyethylene processing expanded until 2013 at the expense of the pipe segment and declined along with the demand for PE pipes. The turning point for the polyethylene market (but not pipes) was 2016, which showed, albeit a small, but an increase of 70 thousand tons. This became possible due to the displacement of final imported polymer products due to the high dollar exchange rate.

Speaking about the domestic polymer pipe market, Director of the Pipeline Systems Department of the Polyplastic Group Kirill Trusov added that since the peak of production in 2013, the market has shrunk by 32%, but towards the end of 2017 it will slowly begin to revive. By 2021, the market is more likely to go up again and reach the 2013 level of 400 thousand tons. He also added that for successful development the segment needs PE100 grades with increased resistance to crack propagation and flow resistance, PERT, as well as block copolymer PP for non-pressure applications.

Senior technology manager at Lukoil Oksana Borisova reported that in March 2018, Stavrolen plans to begin production of PE 100. Most likely, it will be natural rather than carbon black-filled polyethylene. Regarding polypropylene, most Russian manufacturers have the technological capabilities to produce block copolymers and static copolymers, but this is often not financially profitable due to the high costs of production and the use of exclusively imported additives.

In the segment of both infrastructure corrugated pipes and in the segment of pressure pipes for water supply and heating systems, the Pro Aqua company ended 2016 with growth. According to the Marketing Director Mikhail Bondarenko, the number of consumers has increased, the plant has increased its capacity after re-equipment. In addition, import substitution and export directions helped. This year, the plant is also resuming production of HDPE pipes up to diameter 63.

Shares of polyethylene types (%) in the total volume of commercial products of NKNKH

(data from Nizhnekamskneftekhim PJSC)

Global producers of linear polyethylene are also not standing still. A number of projects have been announced in America (including ExxonMobil with a capacity of 1.3 million tons), in the Middle East, and China, said the head of the ChemOrbis representative office in Russia and the CIS Maria Smirnova. In addition, in the spring of 2017, two large plants in Iran with a capacity of 300 thousand tons each will be launched: Mahabad Petrochem (HDPE and linear PE) and Kordestan Petrochem (LDPE). Over 5 years, the capacity of Iranian PE production plants will increase by 3.5 million tons, provided that all investment projects are launched. Iran will add an additional 600 thousand tons of polypropylene by 2019. The growth of capacity and production of polyolefins on the world market directly affects pricing in Russia, but this is not the only factor. According to Ms. Smirnova, effective decision-making in conditions of price volatility should be based on timely analysis of commodity markets (oil, gas, naphtha, monomers), which makes it possible to predict the actions of polymer producers by margin. In addition, through trading and analytical tools, spot transactions should be monitored daily, which will increasingly appear on contract markets due to the redistribution of volumes between regions.

According to the general director of the Samara "Plant of Packaged Products" Hamlet Oganesyan, the price for domestic polyethylene is overestimated by manufacturers, and consumers do not have the opportunity to influence the current situation. Today, there is a favorable trend for processors in reducing the cost of PE, but this trend is unlikely to be long-lasting. Against the backdrop of a revival of the economic situation, an increase in consumption is expected, and, most likely, it will be accompanied by rising prices.

According to the general director of the Centropolymer company Alexey Zavyalov, The existing trend of lowering the cost of raw materials against the backdrop of growing competition will develop. After the launch of new production capacities and an increase in production, prices for raw materials will go down.

Kazanorgsintez, as a producer of base polymers, “monitors Iranian projects.” Head of Analysis and Planning Department Alexander Leontyev noted that the company undoubtedly monitors imported materials and their price spreads. According to him, pricing in Russia today is dictated by the market; for Kazanorgsintez, the priority is to saturate domestic demand, and not export directions, which may have high margins due to the difference in exchange rates.

General Director of Sprint-Plast Evgeniy Bronshtein noticed that, for example, in Europe the price of film HDPE for a local consumer is approximately 83 rubles, while in Russia it is 95 rubles. Perhaps the abolition of import duties could stimulate a reduction in prices on the domestic market, he believes.

Conference participants shared their opinion on how much the cost of base polymers influences the growth of processing in the Russian Federation during an interactive survey.

The issue of customs clearance also turned out to be very relevant for market participants. Head of the Analytical Department of the Federal Customs Service of Russia Alexander Guskov I tried to clarify the situation. Thus, according to him, in order to simplify customs administration, the Decision of the Board of the Eurasian Economic Commission No. 139 came into force in December 2015, which allows, subject to certain conditions, not to assign an additional check of customs value. In particular, if the accuracy of the indicated prices has been proven once for previously imported identical goods under one contract, additional checks for all subsequent shipments are canceled. In this case, registration must take place at one customs post and the declarant is obliged to independently report the existence of a precedent. It is interesting that only 10% of foreign trade participants importing the 39th group of goods declared their right to simplified import.

The FCS representative also noted that the agency is extremely interested in having up-to-date price information, and the volatility of indicative prices is within 20%. The Federal Customs Service does not certify data sources, so participants in foreign trade activities are free to choose materials to prove the customs value of goods.

Improving the legislative framework and government regulation should find practical application in uniform standards that will be followed by all customs clearance points. Today there is a problem when in real life the process of customs clearance of goods under the same contracts at different posts takes place in accordance with different requirements, he noted Mr. Zavyalov. In particular, the untimely return of funds frozen as a result of additional checks on the cost of goods, which companies cannot receive for up to 8-9 months, is painful for business. In addition, the General Director of Centropolymer drew attention to the problem of imports within the Customs Union. According to him, supplies through Belarus and Kazakhstan are carried out on more preferential terms. The above facts not only disrupt the competitive environment, but also stimulate domestic companies to change the geography of supplies, which leads to losses in the Russian budget.

Discussing the container and packaging segment, chief development technologist of the World of Packaging company Olga Kovalenko noted that the Russian Federation already has good random, homo and block copolymers, now it is worth moving further towards brands that increase productivity. “A sufficient selection of high-quality brands of PP appeared largely thanks to the hard work of NKNK specialists, who really work a lot with consumers. But the range of domestic polyethylenes is very small, especially for blown extrusion. We are really looking forward to new brands with improved properties from manufacturers,” the expert emphasized.

Head of production of the company "Control package" Mikhail Shulyakov does not see a rosy picture in the cling film market for the next two years and laments the inability to influence the cost of raw materials. According to him, “recently the quality of Waterfall Pro, Biaxplen, and Euromet films has noticeably decreased.” Waterfall Pro misses delivery deadlines. Polyethylene raw materials are not always available in terms of volume and cost, because manufacturers are focused on foreign markets, and the price of raw materials is determined according to the notorious import parity. At the same time, the cost of raw materials for export is approximately 15-20% lower than domestic.”

Head of Product and Technological Development, Directorate of Basic Polymers, Sibur Konstantin Vernigorov noted that Biaxplen has set a course for portfolio diversification and is actively working to introduce new types of film products to the market and improve the quality of product solutions.

The current polypropylene production capacity of four Sibur plants (including joint ventures) is 970 thousand tons, Mr. Vernigorov continued. In 2016, the reconstruction of HDPE production at Tomskneftekhim was completed, and in January 2017, a new brand of special grades of polypropylene Sibekh was introduced. The line offers products for thermoforming, injection molding, raffia, bopp and cast films, for the production of polypropylene hot and cold water pipes, non-woven fiber.

Director of Science and Development "Polyplastic" Mikhail Katsevman reported that the domestic market of composite materials based on polyolefins in 2016 reached 250 thousand tons, showing 3-5% growth compared to last year. In the total consumption of polypropylene and polyethylene, composites occupied approximately 10% and 15%, respectively, which is associated with the active use of polyethylene coatings for main pipelines made by compounding. For 2017, the expert does not predict significant growth, but rather it is worth talking about stabilization of production and consumption volumes, although an increase in car production may change this picture for the better.

More than half of polypropylene-based composite materials (51%) are used in the automotive industry, and, despite the decline in the automotive market, the percentage continues to grow as the amount of these materials in the car increases, approaching the average European level. Thus, with a 10% reduction in auto production in 2016, the consumption of polymer materials fell by only 5%. At the same time, the share of use of domestic materials has increased significantly.

The speaker drew the audience's attention to the fact that a noticeable increase in the production of composite materials in the next few years can only be expected in the context of an intensive export program, which can only be carried out with the support of government agencies.

The trend of import substitution of PP and PE by automakers was confirmed Guzel Kirsankina, engineer for localization of raw materials and materials of the product development department of Ford Sollers Holding. Today, the overall level of component localization is more than 50%. In 2016, 86% of localized polypropylene parts were produced using Russian polypropylene. This year, the company plans to use entirely domestic raw materials for parts produced at Russian sites. At the same time, foamed polypropylene is supplied exclusively for import. The share of domestic copolymers in Russian-made components was at 26%, but should increase to 24% during the year. Consumption of domestic HDPE for locally produced parts is 81%. The expert also noted the need to develop the production of domestic copolymers, foamed polypropylene, modifiers and fillers.

Managing Director of OMIPA Fabio Cazzani spoke about the cellular polypropylene market, which in Russia today is in its infancy. In Europe, the annual production of cellular PP exceeds 150 thousand tons, while in Russia it barely reaches 10 thousand tons. Potentially, the Russian market can increase in volume by 3-4 times, becoming a driver for the development of the rigid packaging segment. Technological solutions in the production of honeycomb sheets, in particular from polyethylene and polypropylene, are offered by OMIPA.

Dariusz Lukaszewski, regional manager for Central and Eastern Europe at Milliken, presented clearing and nucleation technology for the production of ultra-transparent polypropylene. Packaging made from this material is plastic, lightweight and low-density, recyclable, resistant to damage and various temperatures. This technology allows the widespread use of polypropylene to replace other materials.

3M Dynamar TM spoke about the technology for creating new grades of polyolefins with improved consumer properties using fluoropolymer additives Roman Vasiliev, leading technical expert at ZM Russia. In particular, additives can be used to improve base grades of polymers, since they are not consumed during the extrusion process, showing their positive effects both at the stage of production of polyolefin granules and improving the processing process for the end user. In addition, 3M Dynamar TM reduces the pressure on the filter, reduces torque and current loads, prevents polymer degradation, which allows increasing the productivity of granulators, and also improves the quality of mixing the polymer with pigments, eliminates carbon formation, helps eliminate defects on the surface, and reduces film thickness from end consumers.

Development trends in global propylene production highlighted Boris Gaevsky, head of the information and analytical department of the magazine “Eurasian Chemical Market”. He emphasized the reduction in the share of steam cracking and FCC processes against the backdrop of an increase in targeted technologies for propylene production. In addition, he noted the emergence and expansion of the specific share of new types of raw materials for propylene production: propane for the PDH process, coal and methanol for MTO/MTP processes, ethylene and butylene for metathesis.

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Capacity utilization for the production of basic plastics is approaching the limit, and the active growth in the supply of Russian raw materials will cease. Processors point to the narrow range of brands and are concerned about the high cost of domestic polymers. Manufacturers are conveying their desire to support the domestic market by continuing to price their products in accordance with global parity.

Fourteenth International Conference "Polyethylene. Polypropylene 2017", organized by INVENTRA, took place on March 21 in Moscow. The event was held with the support of the Ministry of Industry and Trade of Russia and the Polyplastic Group. The partners were the companies Centropolymer, OMIPA, Milliken Europe, Communications, and the magazine Polymer Materials became the information sponsor.

“The cross-cutting issues of the polyethylene and polypropylene markets pushed us to unite the main players of these segments on one site,” noted the Managing Director of the CREON Group in his welcoming speech Sergey Stolyarov. He recalled the development by the Ministry of Industry and Trade of a road map for the development of plastics processing until 2025 and called for active participation in the creation of one of the main documents of the sub-industry. “We have already started working and are ready to convey our opinions to the regulatory authorities,” he emphasized.

The event was opened by an overview report on the state and main trends of the Russian polypropylene and polyethylene market, which was traditionally presented by the director of the INVENTRA Analytics Department Lola Ogrel. The total potential for the production of two basic polymers (PP and PE) in Russia is 3 million 300 thousand tons, while the number of manufacturers is limited to ten enterprises, only four of which produce both polymers.

In 2016, polypropylene production increased by 7.5% and amounted to 1 million 380 thousand tons. The PP market has been actively developing over the past four years thanks to the implementation of two new projects - Sibur-Tobolsk (500 thousand tons) and Poliom (210 thousand . T). Today, growth limits have been exhausted, capacity utilization has reached 97% and is very close to the critical level. In these conditions, domestic enterprises turned their attention to high-margin products. At the end of 2016, copolymer production in Russia reached a record 280 thousand tons, an increase of 12% compared to last year. If in 2010 copolymers accounted for 9% of the total PP production, then in 2016 it was already 20.3%.

Polyethylene production added 7% to last year's result and reached 1 million 716 thousand tons, with capacity utilization at 91%. The production of low-density polyethylene in 2016 increased by 10%, exceeding 1 million tons, but still did not reach the level of 2013. Last year, NKNK launched a modernized production of alpha-olefins. As a result, the amount of linear PE increased by 1.6 times and reached 73.5 thousand tons. However, despite the positive dynamics, the linear polyethylene segment remains the most import-dependent. Production of high-density polyethylene practically remained at the level of the previous year, decreasing by only 6 thousand tons.

Despite the increase in product output in 2016, the PE market is stagnating in terms of launching new capacities. Thus, over the past decade, not a single new enterprise has been put into operation; modernization of existing production facilities has helped. Therefore, force majeure at any of the operating plants can throw the market out of balance and lead to a sharp price jump, which is what we observed in April last year in the LDPE market.

Recently, domestic producers of base polymers have felt much more confident than consumers. One of the main reasons is the existing pricing policy in the field of sales of PP and PE. Prices on the domestic market were kept in accordance with import parity, despite the fall in oil prices and the decline in the cost of raw materials (ethylene and propylene). So, in 2010-2014. the difference between the cost of polymers and raw materials for their production was in the range of 20-30 thousand rubles, and in 2016 the spreads increased to 47 thousand rubles for polypropylene and 55 thousand rubles for polyethylene.

Prices for raw materials and polymers, consumption growth rates

In addition, the development of Russian processing was hampered by high loan rates and the complex process of obtaining them, a narrow brand range of domestic raw materials, including additives and fillers, as well as the lack of a targeted government program to stimulate processing.

Under the current conditions, the PE and PP processing markets have developed differently. The demand for polypropylene has been increasing and has grown by 50% over the past 7 years. Polyethylene processing expanded until 2013 at the expense of the pipe segment and declined along with the demand for PE pipes. The turning point for the polyethylene market (but not pipes) was 2016, which showed, albeit a small, but an increase of 70 thousand tons. This became possible due to the displacement of final imported polymer products due to the high dollar exchange rate.

Speaking about the domestic polymer pipe market, Director of the Pipeline Systems Department of the Polyplastic Group Kirill Trusov added that since the peak of production in 2013, the market has shrunk by 32%, but towards the end of 2017 it will slowly begin to revive. By 2021, the market is more likely to go up again and reach the 2013 level of 400 thousand tons. He also added that for successful development the segment needs PE100 grades with increased resistance to crack propagation and flow resistance, PERT, as well as block copolymer PP for non-pressure applications.

As part of the CREON Group

Capacity utilization for the production of basic plastics is approaching the limit, and the active growth in the supply of Russian raw materials will cease. Processors point to the narrow range of brands and are concerned about the high cost of domestic polymers. Manufacturers are conveying their desire to support the domestic market by continuing to price their products in accordance with global parity.

Fourteenth international conference “Polyethylene. Polypropylene 2017”, organized by INVENTRA, took place on March 21 in Moscow. The event was held with the support of the Ministry of Industry and Trade of Russia and the Polyplastic Group. The partners were the companies Centropolymer, OMIPA, Milliken Europe, Communications, and the magazine Polymer Materials became the information sponsor.

“The cross-cutting issues of the polyethylene and polypropylene markets pushed us to unite the main players of these segments on one site,” said Sergei Stolyarov, Managing Director of the CREON Group, in his welcoming speech. He recalled the development by the Ministry of Industry and Trade of a road map for the development of plastics processing until 2025 and called for active participation in the creation of one of the main documents of the sub-industry. “We have already started working and are ready to convey our opinions to the regulatory authorities,” he emphasized.

The event was opened by an overview report on the state and main trends of the Russian polypropylene and polyethylene market, which was traditionally presented by Lola Ogrel, director of the INVENTRA Analytics Department. The total potential for the production of two basic polymers (PP and PE) in Russia is 3 million 300 thousand tons, while the number of manufacturers is limited to ten enterprises, only four of which produce both polymers.

In 2016, polypropylene production increased by 7.5% and amounted to 1 million 380 thousand tons. The PP market has been actively developing over the past four years thanks to the implementation of two new projects - Sibur-Tobolsk (500 thousand tons) and Poliom (210 thousand . T). Today, growth limits have been exhausted, capacity utilization has reached 97% and is very close to the critical level. In these conditions, domestic enterprises turned their attention to high-margin products. At the end of 2016, copolymer production in Russia reached a record 280 thousand tons, an increase of 12% compared to last year. If in 2010 copolymers accounted for 9% of the total PP production, then in 2016 it was already 20.3%.

Polyethylene production added 7% to last year's result and reached 1 million 716 thousand tons, with capacity utilization at 91%. The production of low-density polyethylene in 2016 increased by 10%, exceeding 1 million tons, but still did not reach the level of 2013. Last year, NKNK launched a modernized production of alpha-olefins. As a result, the amount of linear PE increased by 1.6 times and reached 73.5 thousand tons. However, despite the positive dynamics, the linear polyethylene segment remains the most import-dependent. Production of high-density polyethylene practically remained at the level of the previous year, decreasing by only 6 thousand tons.

Despite the increase in product output in 2016, the PE market is stagnating in terms of launching new capacities. Thus, over the past decade, not a single new enterprise has been put into operation; modernization of existing production facilities has helped. Therefore, force majeure at any of the operating plants can throw the market out of balance and lead to a sharp price jump, which is what we observed in April last year in the LDPE market.

Recently, domestic producers of base polymers have felt much more confident than consumers. One of the main reasons is the existing pricing policy in the field of sales of PP and PE. Prices on the domestic market were kept in accordance with import parity, despite the fall in oil prices and the decline in the cost of raw materials (ethylene and propylene). So, in 2010-2014. the difference between the cost of polymers and raw materials for their production was in the range of 20-30 thousand rubles, and in 2016 the spreads increased to 47 thousand rubles for polypropylene and 55 thousand rubles for polyethylene.

Prices for raw materials and polymers, consumption growth rates

Shares of polyethylene types (%) in the total volume of commercial products of NKNKH(data from PJSC Nizhnekamskneftekhim)

Global producers of linear polyethylene are also not standing still. A number of projects have been announced in America (including ExxonMobil with a capacity of 1.3 million tons), in the Middle East, and China, said Maria Smirnova, head of the ChemOrbis representative office in Russia and the CIS. In addition, in the spring of 2017, two large plants in Iran with a capacity of 300 thousand tons each will be launched: Mahabad Petrochem (HDPE and linear PE) and Kordestan Petrochem (LDPE). Over 5 years, the capacity of Iranian PE production plants will increase by 3.5 million tons, provided that all investment projects are launched. Iran will add an additional 600 thousand tons of polypropylene by 2019. The growth of capacity and production of polyolefins on the world market directly affects pricing in Russia, but this is not the only factor. According to Ms. Smirnova, effective decision-making in conditions of price volatility should be based on timely analysis of commodity markets (oil, gas, naphtha, monomers), which makes it possible to predict the actions of polymer producers by margin. In addition, through trading and analytical tools, spot transactions should be monitored daily, which will increasingly appear on contract markets due to the redistribution of volumes between regions.

According to the general director of the Samara Packaged Products Plant, Hamlet Oganesyan, the price of domestic polyethylene is overestimated by manufacturers, and consumers do not have the opportunity to influence the current situation. Today, there is a favorable trend for processors in reducing the cost of PE, but this trend is unlikely to be long-lasting. Against the backdrop of a revival of the economic situation, an increase in consumption is expected, and, most likely, it will be accompanied by rising prices.

According to the general director of the Centropolymer company, Alexey Zavyalov, the existing trend of reducing the cost of raw materials against the backdrop of growing competition will develop. After the launch of new production capacities and an increase in production, prices for raw materials will go down.

Kazanorgsintez, as a producer of base polymers, “monitors Iranian projects.” Head of the analysis and planning department Alexander Leontiev noted that, of course, the company monitors imported materials and their price spreads. According to him, pricing in Russia today is dictated by the market; for Kazanorgsintez, the priority is to saturate domestic demand, and not export directions, which may have high margins due to the difference in exchange rates.

General Director of Sprint-Plast Evgeny Bronstein noted that, for example, in Europe the price of film HDPE for a local consumer is approximately 83 rubles, while in Russia it is 95 rubles. Perhaps the abolition of import duties could stimulate a reduction in prices on the domestic market, he believes.

Conference participants shared their opinion on how much the cost of base polymers influences the growth of processing in the Russian Federation during an interactive survey.


The issue of customs clearance also turned out to be very relevant for market participants. The head of the Analytical Department of the Federal Customs Service of Russia, Alexander Guskov, tried to clarify the situation. Thus, according to him, in order to simplify customs administration, the Decision of the Board of the Eurasian Economic Commission No. 139 came into force in December 2015, which allows, subject to certain conditions, not to assign an additional check of customs value. In particular, if the accuracy of the indicated prices has been proven once for previously imported identical goods under one contract, additional checks for all subsequent shipments are canceled. In this case, registration must take place at one customs post and the declarant is obliged to independently report the existence of a precedent. It is interesting that only 10% of foreign trade participants importing the 39th group of goods declared their right to simplified import.

The FCS representative also noted that the agency is extremely interested in having up-to-date price information, and the volatility of indicative prices is within 20%. The Federal Customs Service does not certify data sources, so participants in foreign trade activities are free to choose materials to prove the customs value of goods.

Improving the legislative framework and government regulation should find practical application in uniform standards that will be followed by all customs clearance points. Today there is a problem when in real life the process of customs clearance of goods under the same contracts at different posts takes place in accordance with different requirements, Mr. Zavyalov noted. In particular, the untimely return of funds frozen as a result of additional checks on the cost of goods, which companies cannot receive for up to 8-9 months, is painful for business. In addition, the General Director of Centropolymer drew attention to the problem of imports within the Customs Union. According to him, supplies through Belarus and Kazakhstan are carried out on more preferential terms. The above facts not only disrupt the competitive environment, but also stimulate domestic companies to change the geography of supplies, which leads to losses in the Russian budget.

Discussing the container and packaging segment, Olga Kovalenko, chief development technologist for the World of Packaging company, noted that the Russian Federation already has good random, homo and block copolymers, now it is worth moving further towards brands that increase productivity. “A sufficient selection of high-quality brands of PP appeared largely thanks to the hard work of NKNK specialists, who really work a lot with consumers. But the range of domestic polyethylenes is very small, especially for blown extrusion. We are really looking forward to new brands with improved properties from manufacturers,” the expert emphasized.

The head of production at the Control Package company, Mikhail Shulyakov, does not see a rosy picture on the food film market for the next two years and complains about the inability to influence the cost of raw materials. According to him, “recently the quality of Waterfall Pro, Biaxplen, and Euromet films has noticeably decreased.” Waterfall Pro misses delivery deadlines. Polyethylene raw materials are not always available in terms of volume and cost, because manufacturers are focused on foreign markets, and the price of raw materials is determined according to the notorious import parity. At the same time, the cost of raw materials for export is approximately 15-20% lower than domestic.”

Konstantin Vernigorov, head of product and technological development of the Sibur Directorate of Basic Polymers, noted that Biaxplen has set a course for portfolio diversification and is actively working to introduce new types of film products to the market and improve the quality of product solutions.

The current polypropylene production capacity of four Sibur plants (including joint ventures) is 970 thousand tons, Mr. Vernigorov continued. In 2016, the reconstruction of HDPE production at Tomskneftekhim was completed, and in January 2017, a new brand of special grades of polypropylene Sibekh was introduced. The line offers products for thermoforming, injection molding, raffia, bopp and cast films, for the production of polypropylene hot and cold water pipes, non-woven fiber.

Director of Science and Development at Polyplastic, Mikhail Katsevman, said that the domestic market of composite materials based on polyolefins in 2016 reached 250 thousand tons, showing 3-5% growth compared to last year. In the total consumption of polypropylene and polyethylene, composites occupied approximately 10% and 15%, respectively, which is associated with the active use of polyethylene coatings for main pipelines made by compounding. For 2017, the expert does not predict significant growth, but rather it is worth talking about stabilization of production and consumption volumes, although an increase in car production may change this picture for the better.

More than half of polypropylene-based composite materials (51%) are used in the automotive industry, and, despite the decline in the automotive market, the percentage continues to grow as the amount of these materials in the car increases, approaching the average European level. Thus, with a 10% reduction in auto production in 2016, the consumption of polymer materials fell by only 5%. At the same time, the share of use of domestic materials has increased significantly. The speaker drew the audience's attention to the fact that a noticeable increase in the production of composite materials in the next few years can only be expected in the context of an intensive export program, which can only be carried out with the support of government agencies.

The trend of import substitution of PP and PE by automakers was confirmed by Guzel Kirsankina, engineer for localization of raw materials and materials of the product development department of Ford Sollers Holding. Today, the overall level of component localization is more than 50%. In 2016, 86% of localized polypropylene parts were produced using Russian polypropylene. This year, the company plans to use entirely domestic raw materials for parts produced at Russian sites. At the same time, foamed polypropylene is supplied exclusively for import. The share of domestic copolymers in Russian-made components was at 26%, but should increase to 24% during the year. Consumption of domestic HDPE for locally produced parts is 81%. The expert also noted the need to develop the production of domestic copolymers, foamed polypropylene, modifiers and fillers.

OMIPA Managing Director Fabio Cazzani spoke about the cellular polypropylene market, which in Russia today is in its infancy. In Europe, the annual production of cellular PP exceeds 150 thousand tons, while in Russia it barely reaches 10 thousand tons. Potentially, the Russian market can increase in volume by 3-4 times, becoming a driver for the development of the rigid packaging segment. Technological solutions in the production of honeycomb sheets, in particular from polyethylene and polypropylene, are offered by OMIPA.

Dariusz Łukaszewski, regional manager for Central and Eastern Europe at Milliken, presented clearing and nucleation technology for the production of ultra-transparent polypropylene. Packaging made from this material is plastic, lightweight and low-density, recyclable, resistant to damage and various temperatures. This technology allows the widespread use of polypropylene to replace other materials.

Roman Vasiliev, leading technical expert at ZM Russia, spoke about the technology for creating new grades of polyolefins with improved consumer properties using 3M Dynamar TM fluoropolymer additives. In particular, additives can be used to improve base grades of polymers, since they are not consumed during the extrusion process, showing their positive effects both at the stage of production of polyolefin granules and improving the processing process for the end user. In addition, 3M Dynamar TM reduces the pressure on the filter, reduces torque and current loads, prevents polymer degradation, which allows increasing the productivity of granulators, and also improves the quality of mixing the polymer with pigments, eliminates carbon formation, helps eliminate defects on the surface, and reduces film thickness from end consumers.

Development trends in global propylene production were highlighted by Boris Gaevsky, head of the information and analytical department of the Eurasian Chemical Market magazine. He emphasized the reduction in the share of steam cracking and FCC processes against the backdrop of an increase in targeted technologies for propylene production. In addition, he noted the emergence and expansion of the specific share of new types of raw materials for propylene production: propane for the PDH process, coal and methanol for MTO/MTP processes, ethylene and butylene for metathesis.

Since polypropylene is a product of universal demand, there is no main area of ​​application on which the state of the entire market would depend. For example, if it is PVC, then windows, if PET - bottles, PU and PS - auto parts and foam boards, and so on. Thanks to the structure of polypropylene, the product can withstand any crisis, because there is always a demand for it. Today in the CIS there are 20 consumption segments, as well as more than 50 groups of PP brands.

Story

If we note the main trends of this product on the Russian market, then among them it is necessary to highlight the increase in the share of imports and rising prices. In addition, Russia still plans to increase the number of production facilities and capacities of domestic enterprises. Thanks to this, manufacturers will increase export and production growth. Our polypropylene market is the field of activity of half a dozen companies and several suppliers from the former USSR.

For example, in 2011, the total production volume of the product was up to 682 Kt, which is 9 percent more than last year. Polypropylene production doubled from 2007 to 2011. Consumption increased by 1.7 times, and the share reached as much as 75 percent. Then came the crisis back in 2009, so growth fell from 20% to 10%. But this did not prevent the market from still being in deficit.

In 2013, prices for the product increased from 500 to 2000 rubles per ton. And all this happened against the backdrop of high demand and limited supply. Due to the fact that there was high demand for the product in the country, as well as limited supply from some companies, the cost of polypropylene increased.

This was also facilitated by a drop in imports. Import supplies of the product were significantly reduced in the summer. But a month before that, supplies were reduced to 13 thousand tons. In April, this figure was 22.5 thousand tons.

Market promotion

Every year a conference is held in Russia where the issue of polypropylene is discussed. This year it has already taken place. Of course, important issues are discussed at it, such as: market capacity, world markets, pricing policy, and so on. Today, Russian producers, through their joint efforts, were able to overcome the million-ton mark. They were able to show double-digit growth rates, despite the general decline in industry.

The devaluation of the ruble and new capacities were able to increase product output, as well as remove import supplies and increase exports. It’s just too early to talk about relative prosperity in the segment. After all, only the market for PP homopolymers has become surplus, but the production of copolymers still cannot cover consumption.

What will Russian factories do by 2017?

The main stumbling block between processors and product manufacturers will be the volatility of prices on the domestic market. Thanks to the surplus in production, we have access to domestic material. But as for exports, they will remain attractive only due to the falling exchange rate of our currency; they have no right to push local prices up.

In terms of supplying the industry with raw materials, small successes run into the barrier of weak domestic demand. We cannot see much growth in the packaging, automotive and pipes segments. PP processors will see the need to compete for the market in the face of falling demand, as well as still looking for new niches in which to apply the material.

It is also worth noting that during this period since winter, the total volume of polyethylene to Ukraine from Russia increased by 36 percent. But in 2015 the figure was 38.9 thousand tons. As you can see, import volumes are growing, so you definitely don’t have to worry about next year.