Russian Chemical Industry

An Expert's View about Major Industries in Russia

Posted on: 22 Mar 2010

Industrial production in Russia fell by 10.8% in 2009 against 2008, with the first quarter of the year experiencing the worst performance of the twelve months period.  Considerable ground was made up in the latter part of the year, and in December 2009 industrial production rose by 2.7% compared to December 2008 and by 5% compared to November 2009.  The volume of oil and gas condensate production in 2009 rose by 1.2% to 494 million tons, whilst gas production declined by 12.1% to 584 billion cubic metres.  The volume of coal production fell by 9.2% to 298 million tons.  The production of market pulp decreased by 11.9% to 2 million tons.    Production of passenger cars for 2009 fell by 59.4% to 597,000, trucks by 64.3% to 91,400 units, and buses 46.6% to 35,500.  The big decline in this sector was one of the main factors behind the decline in plastics and rubber consumption.    Russian Railways shipped 15% less freight in 2009 against 2008, totalling 1.108 billion tons.  A total of 39.143 million tons of fertilisers were shipped, 7% down on the previous year, whilst chemicals totalled 24.940 million tons which was down by 19.3%.  Methanol was one of the chemical products where shipments were down, although volumes tended to recover in the second half of the year following the introduction of rail discounts.  Freight in fertilisers and chemicals rose 54.2% and 30% respectively in December 2009 against December 2008, indicating that a recovery is underway.

Russian chemical production showed stability in the second half of 2009, although volumes for most products were lower over the full year than in 2008.  Increases were seen in polyolefins and butanols production, whilst the largest fall was seen in methanol.  Synthetic rubber production achieved close to normal levels in the last two quarters of 2009, despite the problems in the car and tyre industries.   The IMF has forecast a growth rate for the Russian economy of 3.6% for 2010.  Although this appears modest by the standards of the period 1999-2007, it does indicate a more stable economic environment than in Q4 2008 and most of last year.

Russia’s exports of chemical and polymers to China fell back in the fourth quarter against the first three quarters of 2009, but overall volumes were 118% up on 2008 and 60% up on 2007.  Export of organic chemicals and polymers totalled 851,770 tons, helping many Russian plants to continue operating at reasonable levels of utilisation.   The largest product increases for 2009 included HDPE, LDPE, phthalic anhydride, polycarbonate, polyamide, polypropylene and xylene isomers.  Polymer exports totalled 363,000 tons, showing a major increase over the previous two years.    Domestic consumption in Russia is expected to be higher this year allowing producers greater volumes of sales on the home market, but some products will continue to be targeted on export activity.

HDPE export capability, for example, will be boosted by the forthcoming start-up of the new plant at Salavatnefteorgsintez, whilst polypropylene supply will be aided towards the end of the year by the start-up of the new Omsk plant.  LDPE exports are expected to be lower this year with more consumption in the Russian market.  Polycarbonate shipments from Kazanorgsintez are expected to increase as the plant achieves full operating rates.  On the other hand, bisphenol A exports to China have almost halved against last year due to the focus on polycarbonate.


Posted: 22 March 2010

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