Russia’s polymer industry enters prolonged stagnation – intelligence

The decline began in 2022, and production indicators have continued to deteriorate since, Ukrinform reports, referring to the Foreign Intelligence Service’s website.

Output has dropped in 18 out of 30 subsectors of plastics and rubber. From January to July, production fell by 6.3% compared to the same period last year. In July alone, output in categories such as pipes, plates, sheets, and films declined by 11–14% year-on-year. The worst-performing segment was polyvinyl chloride (PVC), which saw a 13% drop.

The industry is facing multiple structural challenges, including a shortage of domestic equipment, a disconnect between scientific research and engineering, a lack of skilled labor, and low productivity.

The market is rapidly losing participants: 874 companies shut down in the first half of this year.

“Demand is falling, while a weak ruble, high key interest rates, and expensive credit are suppressing investment in capacity upgrades — last year, such investments dropped by nearly 30%,” the intelligence report states.

Additional pressure is coming from a proposal by Russia’s Ministry of Natural Resources and Environment to increase the environmental levy fivefold and raise the recycling requirement from 25% to 50%. For polymer packaging producers, this would mean a sharp rise in costs and an inevitable increase in product prices.

As previously reported by Ukrinform, Russia is facing a significant budget deficit, leading to salary cuts and delays, as well as higher utility payments.

Photo credit: szru.gov.ua