The Russian economy has grown with annual growth rates of over six percent since the fi nancial crisis of 1998. In 2004, the rate according to the International Monetary Fund (IMF) was 7.1 percent, in the previous year 7.3 percent. The country still depends on its oil and gas exports to a large extent, but the growth stimulates investment activities in other industries as well. Russian manufacturers are gradually extending their production
capacities and are investing in the modernisation of their plants. Primarily the plastics industry gains from the economic boom. On one hand, the consumption per capita of plastic materials in Russia is still clearly lower than it is in Western Europe, on the other hand domestic demand has risen considerably since the end of the nineties and can not entirely be satisfied by the local production, especially for high-tech materials.
The rising demand for synthetic materials is determined by the changing usage of materials. In many industries, light weight plastics replace more traditional materials, such as steel, paper and cardboard, step by step. For instance, municipal services are increasingly substituting steel pipes, which have been used for the installation of pipeline networks in the past, with synthetic products. In 2004, according to experts‘ estimates the use of plastic pipes rose by 45 percent in comparison with 2003. An industry report claims that the market volume for plastic pipes in St. Petersburg alone reached 50 million US dollars in 2004. The demand for plastics is very high in Russia, due to the poor condition of the pipeline networks. Approximately 40 percent of municipal pipelines need to be replaced or refurbished in the near future. Given a total network length of 16 million kilometres, about 6.4 million kilometres of water, waste water and gas supply lines will have to be refurbished.
Engine on Full Speed: Car Manufacturers Stimulate Demand for Plastics
A special boost for the plastics industry stems from current developments in the Russian car industry. Industry growth of about 11.8 percent makes the Russian automobile market an interesting playground for foreign manufacturers. Roland Berger Strategy Consultants expect the annual growth rate for new car sales to be seven percent until 2010. Altogether, there is a tendency in the car market towards high-quality vehicles. BMW, Ford, GM, KIA, and Renault already have production plants in place in Russia, and VW and DaimlerChrysler are raring to go as well. Along with the car manufacturers the automobile supply industry will be coming in, which itself has a huge demand for plastics products. According to Roland Berger, 43 percent of supply delivery companies which are not present in Russia as yet, plan to establish themselves on location in the coming three years. Well Packed Up: Consumer Goods Industry Shows No Signs of Weakness
The fastest growing sales market in the plastics industry, though, is the packaging industry. But with the rising number of products in the consumer goods sector, the demands of customers have grown as well. Not only product design and quality are deci-
sive factors for selling a product. The packaging itself has become an important marketing instrument. Therefore, the requirements for quality and visual design of the packaging have risen. That is why plastic packaging becomes more and more popular.
Local Production on the Up
Unlike in the past, when most of the plastic packaging came from abroad, production in local sites has become more important. The Australian com-
pany Amcor Rentsch will open a new factory for the production of flexible packaging in Nowgorod this year. The plant is to reach a capacity of 120 million sqm. per year in 2007 at the latest. The investment volume is 25 million Euro. According to company information, customers of the packaging plant will be international food producers which are active on the Russian market.
The Plastics Industry in Russia
Plastics Advancing:Growth in All Segments
Industry experts see a growth across all segments in the plastics market: The consumption of polyethylene in 2004 reached almost 980,000 tons. By 2010, the demand could rise to approximately 1.5 million tons annually.
According to industry experts, the consumption of polyvinyl chloride (PVC) will rise about two thirds by 2007 in comparison to 2003. An estimated 390,000 tons have been used in 2004, and in 2007 it could be as much as 570,000 tons. Until today the consumption per capita is 2.7 kg, which is very low compared with other countries. Western economies use between 17 and 22 kg per capita. Experts anticipate that in the next few years particularly the booming construction industry will drive the PVC production to a large extent.
Expectations are that the relatively high imports of 75,000 to 80,000 tons will peak off, as some of the Russian manufacturers have put new plants into operation and increased their capacities. For example, the international chemical and pharmaceutical company
Solvay plans a joint venture with the Nikos Group for the production of PVC. The first production site with an annual capacity of 200,000 tons is planning to start operations in the year 2008.
In addition, a huge rise in demand for polypropylene can be expected in the coming years. The booming consumer goods industry triggers a constantly growing demand for plastic packaging and plastic foils. Industry experts expect the domestic demand for polypropylene by 2010 to double the current figure of 600,000 tons, with local production covering 700,000 tons of the new total. Up to now, excellent chances have been granted also to manufacturers of PET performs in Russia. The market is still growing by about eight percent annually, according to industry sources. However, the existing local production capacities in this area are being extended gradually so that the competition is expected to intensify considerably in the coming years.
Excursus: The Russian Market for Injection Moulding Machines 2,000 Russian companies are currently engaged in plastics processing. The existing stock of injection moul2003,
German exports of machines to the Russian market were worth 19.4 billion Euro. In comparison to 2003, exports increased by 62.8 percent in 2004. Second most important exporter to the Russian market of injection moulding machines is Italy. In 2003, Russian companies bought Italian machines worth 3.7 million Euro. In 2004, the import volume reached 9.9 million Euro (+167.2 percent).
Production of Synthetic Resins and Plastics (in 1,000 tons)ding machines is currently estimated at approximately 10,000 units. These are mostly outdated; more than 80 percent of these machines would have to be replaced. As the Russian companies lack the necessary production opportunities and the required know-how, the bulk of these machines are imported – tendency rising.
The Statistisches Bundesamt
(Federal Statistical Office) in Germany calculates the total value of exports of injection moulding machines to Russia to have been 61.3 million Euro in 2004. This is a rise of 45.6 percent, compared with the equivalent figure for the previous year (42.1 million Euro). The majority of the machines comes from Western Europe. The most important country of origin is Germany.
Boasting an export volume of 31.6 million Euro, the world champion in exporting injection moulding machines is responsible for about 51 percent
of all Russian imports. In the year Of the Asian countries, South Korea
and China are the most important source countries, with export volumes reaching 4.7 million Euro and 4.2 million Euro respectively. Altogether, the Asian countries (China, South Korea, Japan, and Taiwan) have a market share of 20 percent. In comparison with 2003 (market share in Russia: 31 percent), though, Asian suppliers had to concede losses.
INTERPLASTICA 2004 2003 industry will offer excellent rewards for years to come. Russian consumption is still far below that of Western Europe, and modern plastics are used more and more in areas, where other materials have been dominant up to now.
New production capacities for the countries‘ industry are being planned and extended – a big chance for the machine building and plant engineering industries worldwide. The Russian companies are intensifying their investments in modern machinery, and to an increasing extent they have the necessary financial standing for such measures.
Whoever wants to be successful in this dynamic growth market needs to take one thing to heart: Local presence is a must in Russia. People who know the country well, keep pointing out, that in comparison with other countries the continuing and, more impor Source: VDMA Fachverband Kunststoff- und Gummimaschinenon the fairground Krasnaja Presnja in Moscow for the ninth time in 2005. The organiser Messe Düsseldorf presents
this international trade fair, due to the close technical and topical connections, again simultaneously with the UPAKOVKA / UPAK ITALIA. The latter is supplemented this year by the special show UPAKPHARM, as the developments in the Russian pharmaceutical industry are quite promising.
The INTERPLASTICA offers the opportunity for market and competition analyses for the plastics industry companies, plus a forum for making important contacts and winning customers.
The focal points on the manufacturers‘side are machines and equipment for the plastics and rubber industries, raw and auxiliary materials, plastics and rubber products, logistics, warehouse technologies and services for the plastics and rubber industries.
The target groups of the INTERPLASTICA are international visitors
from the plastics processing and chemical industries, company representatives from the packaging, construction and automobile industries, from food producers and the printing trade, as well as experts from research institutes. tantly, personal contact with existing and potential customers and industry agents has a high significance.
Having been an established forum for the international plastics industry for years, the INTERPLASTICA is held Export of Injection Moulding Machines to Russia Sources
