In the last several years, Russia has demonstrated a trend to declining production of polyethylene films and sheets. It can be explained by the following factors: the market of polyethylene films and sheets has been already shaped up; the production volumes in Russia are rather high; and, some new and more advanced types of films have become available (free of disadvantages typical for polyethylene films). In 2006, the output of polyethylene films and sheets vs. 2005 increased in physical terms by 9.6% and in 2007 the growth rate achieved 17.3%. In 2008, the production volume reduced by 4.9%. From 2005 – 2008, the average annual rate of production volume increment was about 7.4%.
In 2008, the overall output of polyethylene films and sheets in the territory of the Russian Federation was 125,571 tons.
Data on the production of polyethylene films and sheets require additional comments:
2. There is a lack of accounting of produced polyethylene films in view of the following factors:
• as a rule, official statistics keep records of activities of large- and medium-size companies;
• inadequate reporting system of some companies-manufacturers of polymer films;
• as a rule, reports of newly established companies are included in official statistics 1-2 years after their submission;
There is a rather uneven distribution of produced polyethylene films and sheets (125,571 tons in 2008) over the Russian regions. Two Federal Districts – Central and Volga – produce 78.7% of the total Russian output.
Structure of production of polyethylene films and sheets by Federal District, 2008
Calculations made by: Research Company Abercade
Within each of the Federal Districts, the production is concentrated in certain regions. As regards the Central Federal District, in 2008, 59.8% of the produced volume of polyethylene films and sheets fell on Smolensk Oblast, 8.4% - Yaroslavl Oblast and 7.9% - Moscow Oblast.
In the Volga Federal District the leading position (56.7%) in the production of polyethylene films and sheets in 2008 was held by Nizhegorod Oblast. Tatarstan ran second (20.8%) and Bashkortostan – third (17.4%).
As concerns the volume of film production in the Siberian Federal District, the top position was held by Kemerovo Oblast (45.8%), second – the Irkutsk Oblast (26.1%) and third – by the Tomsk Obalst (11.4%).
In the Urals Federal District, the Sverdlovsk Oblast was a leader in the production of polyethylene films (83.5%) in 2008. The Chelyabinsk Oblast held the second position (10.1%) and the Tyumen Oblast was on third position (1.4%).
In the Southern Federal District 43.2% of film production in 2008 was concentrated in Krasnodar Krai, 26.9% - Stavropol Krai and 18.8% - Volgograd Oblast.
In the North-Western Federal District, all production capacities were located in Leningrad Oblast.
According to reports of the Russian Rosstat, it is possible to identify eight major regions (with output exceeding 5 thousand tons) within the regional structure of the overall Russian production of polyethylene films. The aggregate share of these regions in 2008 made up approximately 75.4% of all manufactured polyethylene films and sheets.
In 2008, the production of polyethylene films and sheets changed in all federal districts. Increment of production was noted in 2008 only in the Central Federal District (5.5%) and the Southern Federal District (2%). In the North-Western Federal District the production of polyethylene films and sheets reduced by 52%. In addition, the outputs declined in the Urals (-37.3%), Siberain (-7.7%) and Volga (-0.9%) Federal Districts. Such considerable decline in the North-Western Federal District was caused by the termination of polyethylene film and sheet production at the Kaliningrad Tare Plant and by the significant reduction of production volumes at “NTL Upakovka,” LLC. In the Urals Federal District the decline occurred due to the reduction of production at the largest Urals facility JSC “Uralplastik” (where the output from 14.3 thousand tons of films in 2007 decreased to 8 thousand tons in 2008). The situation at “Uralplastik” in 2008 was really challenging: the sales volumes reduced; the scheduled facility relocation to Ekaterinburg was delayed for an uncertain time period; the facility experienced difficulties with payment of salaries; personnel advanced training programs are missing; and the turnover of staff increased dramatically. In addition, production activities reduced dramatically at the package factory “Polymir” (Chelyabinsk).
In the Siberian Federal District, the decline in production has taken place almost at all facilities making polyethylene films and sheets which, in turn, has resulted in the reduction of the overall production volume throughout the District.
Several major regional players (with the annual output over 10 thousand tons) can be identified in the Central and Volga Federal Districts. In addition, there are numerous small-size production businesses.
Polyethylene films and sheets are sold at the market place at the prices ranging from RUR 80-85K to RUR 110-115K per ton. Such price dispersion depends on the type of films; the type of utilized raw materials; film thickness; sleeve width; color, etc. Films made of processed polymers are 2-3 times less expensive than films manufactured from primary granulate. However, films made of secondary polymers, have lower quality and, thus, the range of their applications is rather limited.
Such fluctuations of prices on raw materials are caused mainly by the variance in oil prices (oil components are used in the production of polymer source materials), and in October-November 2008 the price on oil was 1.5 times lower than in June.
Export of Polyethylene Films and Sheets
In 2008 vs. 2007, the volume of export of polyethylene films and sheets in physical terms reduced by 26.8% and in monetary terms increased by 3.6%.
Export share in the overall Russian production of polyethylene films and sheets is low – about 2%. Nevertheless, the economic crisis has affected export considerably. It is important to note a big difference in the modification of export dynamics in physical and monetary terms: in value terms export increased vs. 2007 and in physical terms - reduced. The reason is that, as a rule, foreign economic supplies are made with delay in payment and the drop of export in physical terms occurred at the end of the year. The negative trends enhanced mostly in December 2008.
The following three companies contributed the largest portion to the Russian export in 2008: Politar LLC., Close Joint Stock Company Danaflex and Uralplastik LLC. Their aggregate share in export volume made up approximately 44.7%.
Kazakhstan and Tajikistan are the key buyers of the Russian films: in 2008 their aggregate share achieved 80.4% of the overall import volume. Other major buyers are Ukraine and Mongolia whose joint share in 2008 was 11.8%. The total share of the top four countries in 2008 reached 92.2% or 2.8 thousand tons.
Import of Polyethylene Films and Sheets
In 2008 vs. 2007, the volume of import of polyethylene films and sheets in physical terms increased by 3.4% and in monetary terms increased by 16%. It is worth noting that the RF Federal Customs Service is not taking into account supplies from the Republic of Belarus.
In 2008, the growth of import of polyethylene films and sheets in physical terms slowed down vs. 2007. Anyway, for a comprehensive review of the processes occurring in the area of imports of polyethylene films and sheets it is necessary to perform an in-depth analysis and determine trends of the year.
The economic crisis so far has not affected dynamics of the Russian export of polyethylene films and sheets considered by month. However, it should be noted that in physical terms the growth of import in 2008 was less than in the previous years.
Poland is the main importer of polyethylene films and sheets into Russia. In the last four years, its share increased from 9% in 2005 to 13.2% in 2008. It has happened mainly because many petrochemical companies have moved their production facilities to Poland from the Western Europe. The same factor influences export from Lithuania, whose share increased from 4.6% in 2005 to 12.6% in 2008. The share of German and Finnish films is remains stable (7.3% - 14.2%).
It should be noted that the share of polyethylene films and sheets from China is increasing gradually in the overall import volume (7.8% in 2008). The reason is that petrochemical industry has been evolving strongly in China. In mid 2000-s the government of People’s Republic of China made a decision as to consider petrochemical industry as a strategic target in the near-term future. The share of the Chinese polyethylene films and sheets increased from 2.8% in 2005 to 7.8% in 2008.
The aggregate share of the top five countries made up 54.5%.
Based on the review of indicators, characterizing export, import and production of polyethylene films and sheets in the Russian Federation, it can be stated with confidence that the Russian market of polyethylene films and sheets to a large extent depends on the overall situation in the Russian economics. All events occurring in Russian economics immediately impact dynamics of the development of the overall market of polymer films and sheets as well as the market of each of the individual types of films and sheets. The reason behind this is that films and sheets are now used almost in all industries as packaging materials, raw materials, in production processes, etc.