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Demand for polyethylene in Russia is growing due to the production of plastic pipes, films and packaging 

The main reason for the reduction, according to Analytical Center TEK, was the growth of polyethylene processing in the Russian Federation and the resulting partial reorientation of export flows to the domestic market. The production of polyethylene (the main product is high–density polyethylene) in Russia in 2023 increased by 1% compared to the previous year from 3.19 million to 3.23 million tons. At the same time, its processing increased by almost 18% to 2.9 million tons. Imports remained at the level of 2022, amounting to 410,000 tons.

The volume of polyethylene production in Russia is at the level of 3.2 million tons due to the planned capacity of the Sibur Zapsibneftekhim plant in 2020. The volume of output exceeds the volume of consumption of the product in the country, and Russia is a net exporter of polyethylene. Despite the surplus of capacities, Russian processors import some grades of polyethylene, which are not produced in Russia or are produced in insufficient volume. At the same time, the share of imports in the consumption of polyethylene in Russia in 2023, according to the AC Fuel and Energy Complex, decreased to 14.2% from 18.7% a year earlier. The main supplier of this polymer to Russia in 2022-2023 was South Korea.

The main place in the export of polyethylene is occupied by high-density polyethylene. Linear low-density polyethylene is in second place in terms of exports. The share of low-density polyethylene is less than that of the first two product groups, but has remained stable over recent years.

A record volume of polyethylene exports from Russia was recorded in 2021 – 1.2 million tons. In 2022, exports decreased by 5% due to restrictions on polymer supplies to unfriendly countries. In 2023, due to anti-Russian sanctions, the export of polyethylene to the EU countries was completely stopped, but the main reason for the drop in supplies abroad was an increase in demand in the domestic market, according to the materials of the AC Fuel and Energy Complex. Against the background of a partial reorientation of supplies to the Russian market, the supply of polyethylene to China decreased by 38%. At the same time, exports to the CIS countries and Turkey showed a slight increase – by 6.4 and 5.2%, respectively.

The growth of polyethylene processing in Russia is explained by an increase in the production of plastic pipes, films and packaging, explained Lola Ogrel, director of the AC TEK project, to Vedomosti. According to her, the production of polyethylene pipes in Russia has been growing for the fifth year in a row, in 2023 it increased by more than 20%. The production of consumer goods is increasing against the background of import substitution, she adds.

According to Rosstat, the production of plastic pipes (made of polyethylene, polypropylene, polyvinyl chloride and other polymers) in Russia in 2023 increased by 8% to 1.2 million tons by 2022, films and polymer sheets made of various polymers – by 8.1% to 1.7 million tons.

Nina Adamova, an analyst at Gazprombank's Center for Economic Forecasting, also draws attention to the increase in the production of polymer bags in the country by 12% and plastic bottles by 18% in 2023.

Now Russian manufacturers are working with high capacity utilization, AC TEK experts write. According to their estimates, the production potential of domestic companies is about 3.4 million tons of polyethylene per year. But this year, taking into account planned repairs, production is likely to remain at the level of 2023, Ogrel predicts.

Further increase in production, according to AC TEK, is possible after the launch of the Amur gas chemical complex Sibura with a design capacity of 2.3 million tons of polyethylene per year and the Irkutsk Polymer Plant for 650,000 tons per year, which is being built by the Irkutsk Oil Company.

More than 80% of polyethylene production is now accounted for by Sibur enterprises – Zapsibneftekhim, Kazanorgsintez, Tomskneftekhim, Nizhnekamskneftekhim. Stavrolen (part of Lukoil), Gazprom Neftekhim Salavat and Rosneft enterprises Ufaorgsintez and Angarsk Polymer Plant are also major producers.

A representative of Sibur told Vedomosti that in 2023 the company "maintained its focus on the domestic market" and increased the supply of products to it to 75% of total production. According to him, the company produced a total of 2.7 million tons (approximately at the level of 2022) of polyethylene, while exports decreased by 18%.

Alexander Kotov, head of NefaResearch consulting, explains the growth of polyethylene processing in Russia by the recovery of the country's economy in 2023. According to Rosstat, Russia's GDP grew by 3.6% last year after a 2.1% decline in 2022. Economic growth, according to Kotov, is particularly evident in the packaging and packaging sector, where consumption increased by 21%, and in construction, where demand for polyethylene pipes increased by more than 20%.

According to Adamova, the processing of polyethylene is increasing due to the replacement of imported plastic products and the increased use of plastic materials. Sergey Grishanin, Managing Director of the  National Rating Agency, notes an increase in the consumption of polyethylene materials in construction and the online retail sector. Maxim Khudalov, the chief strategist of the Vector X investment company, points to the same industries.

According to Kotov's estimates, polyethylene production in Russia this year may increase by about 100,000 tons due to the additional loading of Kazanorgsintez, Nizhnekamskneftekhim and Stavrolen, i.e. about 3%, imports will grow by "at least 10-15%". The NRA predicts an increase in polyethylene production in Russia by 2-4%. Khudalov is more conservative – he believes that production growth will not exceed 1-2%.

The press service of the Ministry of Energy told Vedomosti that the polyethylene production capacity in Russia is now 95-96% loaded. In 2024, according to the Ministry of Energy, production will remain at the level of last year. At the same time, Russia has the potential to increase its share in the global polymer market, including polyethylene, the ministry added.

Alexander Kotov, head of NefaResearch consulting, explains the growth of polyethylene processing in Russia by the recovery of the country's economy in 2023. According to Rosstat, Russia's GDP grew by 3.6% last year after a 2.1% decline in 2022. Economic growth, according to Kotov, is particularly evident in the packaging and packaging sector, where consumption increased by 21%, and in construction, where demand for polyethylene pipes increased by more than 20%.

According to Adamova, the processing of polyethylene is increasing due to the replacement of imported plastic products and the increased use of plastic materials. Sergey Grishanin, Managing Director of the NRA rating service, notes an increase in the consumption of polyethylene materials in construction and the online retail sector. Maxim Khudalov, the chief strategist of the Vector X investment company, points to the same industries.

Source: https://www.vedomosti.ru/business/articles/2024/05/28/1039836-rossiya-v-2023-godu-snizila-eksport-polietilena?utm_campaign=newspaper_28_5_2024&utm_medium=email&utm_source=vedomosti