After exhausting crisis Russian industry of polymer fibers is searching for path to the future. It`s more probable that the way out is production of hi-tech niche products
On Friday October 21 at Baltschug Kempinski Moscow hotel International Creon conference "Polymer Fibers and Yarns 2011" was held. The event was first in a number of years as the industry has just roughly recovered of crisis and has started to discuss development prospects. The market of polymer fibers and yarns in Russia is negligibly small now, much smaller then potential volumes which are expected by manufacturers who compare Russia to other European countries. The situation in the industry is sad but market players are ready to do everything possible to fulfill the market potential of the sector and the latter inspires greatly. Creon CEO Sandjar Turgunov told about this in his welcome note to the audience.
The review report about current stance of polymer fibers production in Russia and other CIS countries was presented by well-known expert and fiber industry`s propagator member of Creon Expert Counsil Emil Eisenstein. According to him, Russian situation looks quite gloomy on the global trends` background. In 2010 53.8 mln tons of polymer fibers were manufactured in the world, 12% more then year before. Synthetic fibers accounted for 90% of the output. Soviet Union until 1990s was one of the leading polymer fibers manufacturers in the world, produced more then 1 mln tons annually (9% of global output). According to Soviet plans, it was expected to reach 3 mln tons of output by 2000, but political and economical history had another decision. Today all of FSU countries manufacture just 1% of global polymer fibers` output. Russia produces around 150 thousands tpa, Belorussia has 250 thousands tpa. Technological development of the industry, according to Mr Eisenstein, goes on in Belorussia exclusively, but due to recent financial difficulties in the country Belorussian plants have experienced problems too. In particular, the last viscose fibers manufacture in CIS has been stopped, while the production of this type of fibers increases globally, especially in China and India. Mogilev fibers` plant decided to develop production of PET of bottle grades instead of fiber`s one. In Ukraine the only plant of polyamide 6,6 in Chernigov is nearly ceased the production. The output of polyester tyre cord on "Sibur-Volzhsky" plant, according to the reporter, has stopped before the production could start. Acrylic fibers` plant in Saratov is at the edge of existence too.
Polypropylene fibers production was called the only sector of polymer fibers` industry that have increased the output in 2010 as they used widely for different technical applications. The plenty of cheap feedstock (polypropylene) in the country contributes to the growth too. Polyamide fibers one day were the core of USSR`s polymer fibers and yarn`s production as the country had its own technology of its manufacture. But today it`s clear that despite all efforts of "Kuybyshevazot" this market will see no large-scale development in Russia anymore. Speaking about polyester fibers, it`s estimated that present demand on them is around 80 thousand tpa. However, the potential need of textile industry in this fibers is estimated by President of Russian union of textile industry Boris Fomin as 160 thousands tpa while the need in all polymer fibers is expected to reach 250 thousands tpa. Only in the latter case it`s economically reasonable to create domestic production of fibers` grades PET of modern capacity (200 thousands tpa and more).
Manager of marketing agency "Nuzhnye lyudi" Sergey Delimov told in details about foreign trade of chemical fibers with counties which do not belong to Customs Union. The export of fibers from Russia is stable but overall extremely small while import volumes are determined by the demand as imported fibers have more market sensitive areas of use. Although acetate fibers for cigarette filters are imported actively, the core of the import is formed by synthetic fibers, polyamide and polyester ones. South Korea, China and Turkey are key suppliers among non-Union countries. The export of fibers is performed in sizable scales by Kursk and Tschekino plants only; their production is needed in Italy, Turkey and Ukraine.
The Advisor of the section of organization of textile industry of Ministry of Industry and Trade of Russia Anna Orozova reported about state support initiatives for polymer fibers` use by textile industry. Textile production makes around 20% of all non-food consumer goods` sales in Russia; it`s an important segment of the market. Nowadays the market is import-dominated but in the past the share of textile industry of Russia`s GDP was significant, some industry`s plants, according to the reporter, still form company towns. Today the share of polymer fibers` in total fibers` consumption have dramatically increased to 68% due to recent phasing out of extremely expensive cotton, which price have reached 6000 dollars per ton. The share of wool has decreased too from 3% to 1% while linen share is stable and accounts for 7% of consumption. It`s expected, that by 2020 the industry will use 450 thousand tpa of polymer fibers and yarns, mainly polyester ones. Now around 170 thousands tons of synthetic fibers are imported in the country as well as 40 thousand tons of artificial ones. The latter figure has large share of acetate fibers for cigarettes. The strategy of development of domestic textile industry exists, but not proposes any kind of direct state financing or grants from the budget. The project of creation of large production of fibers`s grades PET and polyester fibers in Ivanovo region with the planned investment of 8 bln rubles was accepted by country`s Prime-minister, but can not find any investors yet. The authorities have cancelled duties on equipment import and ready to provide low-interest loan to possible participants of "textile cluster". The construction of the plant is expected to be started in 2013 but there is no accepted project yet. The head of sales department of Kurkskhimvolokno Dmitry Alexeyev have noticed that even so loyal to domestic goods customer like Russian Ministry of Defense prefers to buy foreign-made uniform to save funds although has obligations to use Russian-made production.
Sergey Kravtsov, deputy head of marketing department of Mogilevkhimvolokno, told about present stance of the plant and perspectives of its development. According to provided statistics, around 68% of factory`s production is exported and of these volumes more then 60% has customers in Russia. Large volumes of polymer fibers are also delivered to customers in Europe. The company is going to increase the production of modern polyester fibers which could match polyamide ones with mechanical properties. Investment program of the plant intends to use 200 mln dollars for upgrade of the production. It`s planned to expand staple fibers` production for 60 thousands tpa by 2015 and a number of other investment decisions. Mr Kravtsov called the lack of affordable feedstock as a main problem which impairs the activity of the company. The primary source of trouble is TPA as the plant plans to switch to this feedstock instead of presently used DMT and relies on appearance of new suppliers of this product in Europe and CIS countries. Emil Eisenstein commented that Mogilev plant had no serious upgrades since its launch in 1968. Almost entire production of the company except textile yarns is unprofitable and state-sponsored. The factory urgently needs the investment.
Director General of EATP Frederic van Haute told about European market of polypropylene fibers and yarns. European PP market is estimated to be around 9 mln tpa according to data provided. The total market size changed slightly in recent years despite 6% growth in 2010. The market development is mainly goes on in terms of quality rather than quantity. Total size of European market of PP fibers is estimated at 2.5 mln tons of 4 bln euro, but could be much larger really as the figures account only for 200 companies. PP fibers and yarns consume roughly 25% of European PP making the industry second largest PP consumer after molding details. On the other hand, PP fibers accounts for 40% of European polymer fibers and yarns market. Their advantages are easiness and environmental friendliness of processing, affordable feedstock, lightness and chemical resistance. The main problem is PP fibers` hydrophobic features which make their dyeing extremely difficult.
More then 26% of PP fibers in Europe are used for medical and hygienic purposes, 22% - for carpets and other covers, agro-textiles` share is significant too. The market of staple PP fibers is extremely narrow; they are used primary for some technical applications. The use of products made of narrow PP tapes like geo-textiles, nets, packaging materials, carpets is increasing steadily. Non-woven spanbonds production increases too, especially in Eastern Europe. The market in general is quite saturated, highly competitive one, involved in intense international trade, primary with Asia, and that`s why it could not provide large margin. The primary factor of the success is customer relations and no longer price exclusively. Innovative development of the industry is related closely with fibers` features modification, first of all, the easiness of dyeing. Russian PP fibers market according to van Haute opinion has a great potential of growth mainly due to increasing activity in construction and substitution of traditional materials. The production of non-woven materials, hygienic goods and geo-textiles is already well developed in Russia.
Vice-President of Uhde Inventa-Fischer Stephan Bartz presented technological solutions of the company for production of PET and polyamide. The main issue of Mr Bartz`s report was finding a correct answer to the question about whether it`s possible to create modern production of fibers` PET. Around 39 mln tons of polyester fibers were used globally in 2010, Asia and especially India and China accounts for roughly 90% of the output. The market grows by 9% annually, which by far exceeds growth rates for other products. According to the reporter`s point of view, Russia could be an active player of global fibers and yarns` market. Uhde Inventa-Fischer has vast experience of work in Russia and other Eastern European countries. With company`s technologies PET facilities in Mogilev, Solnechnogorsk, Kaliningrad, polyamide plant of KuybyshevAzot. According to Mr Bartz, integrated complexes with capacities of more than 600 thousands tpa of polyester fibers are created in Asia. These plants produce both fiber grades and bottle grades of PET. In Russia insufficient market size and lack of feedstock severely interfere the creation of such complexes, even with minimal economically effective capacity of 200 thousands tpa. Feedstock problems could be solved with a launch of 600 thousand tpa of TPA facility in Poland. But the textile industry development is possible with the assistance of federal and regional officials only which could support the customers of polyester fibers. However, Mr Bartz confirmed that there is no developed country in the world where textile industry survived the depression to revive in recent shape. It exists only as a manufacture of niche products, primary for technical use.
Sales manager of Komitex Maxim Nadutkin told about the Company`s activity and perspectives of business development. The plant that was used as a base for fibers` production was founded in 1979 and manufactures non-woven materials for linoleum, geo-textiles, automotive industry. In the middle of 2000s the capacities of firstly PP and then polyester fibers were launched at the site. Polyester fibers` production has created the local market for mass recycling of PET bottles with around 1 bln pieces being used annually. Since 2011 the company is realizing the project of fibers` production expansion to 25 thousands tpa.
CEO of SPC Uvicom Mark Kazakov told about the stance of carbon fibers production in CIS countries. According to him, in late-Soviet period there were plans to create three plants of carbon fibers based on acryl and viscose fibers with capacity of 1000 tons each in Balakovo, Svetlogorsk and Kustanay. The most part of these capacities was lost, viscose-based carbon fibers are manufactured in Svetlogorsk only (150 thousand tpa) and local plant, according to Mr Kazakov opinion, has the best equipment and technology in the world. Holding Composite produces acrylic-based fibers in Balakovo and sells the production for military use. Absence of large-scale domestic production severely slows the development of Russian market of carbon fibers which are used widely not only in military applications but also for production of super-condensers and bandaging materials. Uvicom imports feedstock since the shut down of the last viscose plant in Belorussia. At the same time Russia itself has no either operational viscose plants or viscose-quality wood pulp production. Russian air manufacturers have recently started to buy US-made carbon fibers.
During the open discussion conference participants estimated the industry stance as extremely serious one but not the hopeless. According to Dmitry Alexeyev, no one in the industry still wear "pink glasses" and the only future of the industry is related with new technologies. It should be taken into account that in Russia there are no other sources of fibers for textile industry but wood pulp and chemicals as imported cotton is too expensive while linen production dramatically decreased in recent decades. The industry, as he determined it lies in "ruins with centers of resistance". Nonetheless the market continues to develop but urgently in need of state support at least through the system of government orders for military and other purposes. Stephan Bartz noticed that even in China government presence in the industry is just strategic one but the Russia saw none. The Development Advisor of CEO of "Sibur-Volzhsky" plant Gennadiy Shpakovsky confirmed that the project of polyester tyre cord production will be realized this year despite unstable financing and absolute foreignness of this business to Sibur. It`s very difficult to compete with Asian manufacturers, as he said, because they have a plenty of raw materials and enormous capacities. The domestic production of fibers` grades of PET could save the situation but there are no brave investors yet. CEO of Polymersnab Andrey Minkov noticed that in Russia in recent years not the supply generates demand but otherwise and provide the spanbond industry as an example. This material was rarely used in Russia until now. The launch of the production of fibers` grades of PET as well as any investment exceeding 100 mln dollars in Russia requires state support. Dmitry Alexeyev objected that only viable industries needs government support while in Ivanovo region sinning plants died out in practice with only weaving and sewing remained.
Deputy Head of department of wood and textile industry of Ministry of Industry and Trade of Russia Oleg Katscheyev called market players to take a sober view of things and to avoid extreme alarmism as well. According to his opinion, the situation in textile industry not the most complicated one and looks much better then in some other industries. The output of non-woven materials keeps growing, small-scale facilities for polymer fibers` production being created, even as a side business of textile companies. There are competitive companies in Vladimir region, "Zavidovo textile" in Tver region. Speaking about Ivanovo region, the officials are just looking for investors but have no intention to finance anything from the budget. The things that used to be in Soviet times should be forgotten forever, there will be no more mega-complexes. Small amounts of diverse production are needed on the market and presently this demand satisfied by imports. It`s possible that successful future of the industry lies in substitution of this import by mini-factories.