Russian polyurethanes market is exceptionally interesting one, but it`s being developed by efforts of foreign companies primarily. Domestic investment projects still at the phase of talks
On Monday 30 January in Moscow at Ritz-Carlton hotel the International Creon Conference "Polyurethanes 2012" was held. Cannon and Quest International Trading were the partners of the event. The previous conference devoted to polyurethanes was organized by Creon before the crisis. Recent years have changed the market; it`s being quite rapidly developing again and is worth to be analyzed by present and potential market players. Polyurethanes industry has specific features; it`s very integrated both in Russia and abroad. At the same time stable connection of the chain of feedstock components is necessary for an effective work of the industry. However, severe deficit of domestic feedstock is a main obstacle for the development of polyurethanes industry in Russia and efforts of key players of the industry are now headed for solution of the problem. Creon CEO Sandjar Turgunov has told about it in his welcome address to the audience.
Technical director of Carbamat Company Gleb Gladkovskiy reported about general conditions of Russian polyurethanes` market. According to provided data, in 2011 from 280 to 350 thousands tons of polyurethane feedstock were processed in Russia, including the manufacture of around 100 thousand tons of block foam. Taking into account that nearly 14 mln tons of polyurethanes being consumed globally, per capita consumption in Russia corresponds to the world average but by 10 times lower than in Western Europe and US. It creates a great potential for the market growth, specifically the demand for polyurethane-based paints and coatings is growing by 12% annually. The market of polyurethanes and polyurethane feedstock is interesting not only for Russian companies but for EU and US manufacturers too. For example, in Antwerp the new polypropylene oxide plant (feedstock for polyols, one of polyerethanes` components) has been working for already two years. As the reporter mentioned, such investment prove that the attitude to polyurethane business in Western Europe differs greatly from an attitude to mass petrochemicals which are gradually "washing away" from the Old World.
In Russia there is a both qualitative and quantitative lack of polyurethane feedstock. Mr Gladkovsky have noted the manufacture of propylene oxide and simple polyethers in NKNH but specified that these products are almost entirely headed to foam rubber manufacturers. There is an urgent need in propylene oxide manufacture with peroxide technology, but German Evonik Company that previously proposed the creation of the facility in Russia now builds the plant in China with an installed capacity of 300 thousand tons. In Soviet times small manufacturers of complex polyethers were operational in Roshal, Rubezhnoye and Kazan, but none of these plants industrially produces these products now. Domestic production of adipic acid, butanediols and acryl polyols is absent too. Impacts from the outside are necessary to develop these areas of petrochemical business, according to the reporter.
Isocyanates production in Soviet years existed in Novomoskovsk (TDI), Dzerzhinsk and Dneprodzerzhinsk (polyisocyanates) but it ceased out. At the same time more than 40 thousand tons of TDI being imported in the country annually. The installed capacity of new modern facility of isocyantes manufacture should be around 100 thousand tons, but it requires the recreation of entire technological chain (toluene extraction, nitration, etc). The presently absent domestic production of oligomers of isocyantes for paints and coating is needed. German Bayer now builds large plant of installed capacity of 700 thousand tons for global market. The demand for polyisocyanates in Russia is estimated at 80 thousand tons, but it would be wise to install capacities of 150-200 thousand tons to meet the needs of all sectors of polyurethane market. However, the maintenance of whole feedstock chain from nitrobenzene and aniline is essentially important for the effective operation of future facilities. In a few words Russia needs "isocyanate Skolkovo", Mr Gladkovsky concluded.
The reporter has told with regret that polyurethane business in Russia being developed with efforts of Western companies primarily. Domestic market players ("Vladimir chemical plant", "Blockform", "Adhesive", "Korund", etc) survive with experienced specialists and an ability of free choice of cheap feedstock. China acts more and more often as a supplier of the latter. The industry receives no state aid or assistance as systems of import duties has mainly fiscal functions and doesn`t protect the market or domestic manufacturers. At the same time billions of dollars of investment and years of hard work are necessary for the development of polyurethane industry in the country.
Huntsman Russia Commercial Manager for polyurethane foam thermo insulation Mikhail Serebryakov and Commercial Manager for automotive and furniture markets Dmitry Morozov have told about main trends of respective polyurethane markets in Russia. The demand for MDI was growing by 20% annually before the crisis, but now consumption volumes recovered to the level of just 90-95% of pre-crisis sales. The demand is boosted by revival in construction industry, by substitution of other materials. The demand for pipelines` insulation recovers slowly as the sector is highly sensible for state financial support. In the construction industry firm polyurethane foam blocks compete with blocks of mineral wool but fire safety restrictions impairs the complete phasing out of the latter. The size of this segment of CIS market was estimated by reporters as 100 thousand tons; the audience however have dubbed these estimates as lowered ones and supposed that the actual size of the market must be 20-30 thousand tons larger. The consumption of polyisocyanurate (PIR) materials is expanding rapidly. The revival of the market of assembly foams and sputtering materials is very weak yet, the demand recovers slowly.
But overall potential of the country for demand growth, while in Western countries annual per capita consumption of polyurethanes is 10-20 kg, in Russia the figure is ten times lower. The localization of the manufacture could increase the demand for polyurethanes in automotive industry too, as now it uses around 24 thousand tons of material annually. At the same time per car consumption of polyurethanes is decreasing gradually due to technological advance of the industry, now it`s estimated to be just 12 kg per car. There are new applications of polyurethanes in the manufacture of car seats, suspension details, etc. Coordinator of the Volkswagen Group Rus Laboratory Oleg Zaykin has confirmed that the Company purchases seats for locally-assembled cars in Russia but they made of imported materials.
Regional representative of Cannon Alessandro Menzago and Sales Engineer of Cannon Eurasia Alexander Kuznetsov told about polyurethane processing equipment of the Company. They told in details about polyurethane mix heads. According to presentation, it`s most effective in pipe insulation and manufacture of driving wheels as mix heads allow to change colorants quickly. Cannon technologies are also implied for manufacture of car interior panels. There are around 4000 units of equipment of the company working in Russia and annual sales are accounted for 15 mln euro. The reporters have agreed that Russian market of polyurethane system is far from saturation. Independent market expert Veniamin Alpern has told the audience about new foaming agents for polyurethanes. He reminded that due to environmental safety regulations manufacturers now abandon the use of CFC foaming agents in favor of pentanes but it increases the risk of fire emergencies. Solvay Company offers ozone-friendly and non-flammable agents of new generation; the report was devoted to its presentation. The new plant with installed capacity of 100 thousand tons of new foaming agents is running in France to meet the global demand.
Chief technologist of Syzran Plastic Company Marat Seyfetdinov has presented an overview of polyurethane foams for automotive industry. According to him, now the company supplies the production mostly to AvtoVAZ due to small number of presently working contractors of foreign car manufacturers in Russia. Mr Seyfetdinov has called polyurethane business "difficult matter" with no one to deal with it. Polymer MDI accounts for around 80% of all feedstock of the company. Foam polyurethane bumpers are the key products of the plant but its consumption get lower due to competition with PP copolymers` bumpers. This trend goes on despite better technical properties of polyurethanes with just one but essential fault - an extreme difficulty of the recycling. Per unit consumption of polyurethanes in Russian-designed cars have nearly halved for last twenty years, dropping from 37 to 22 kg. But the reporter was confident that polyurethanes will be still needed in the future for manufacture of car seats, driving wheels and suspension components.
During the round-table discussion conference participants have shared their visions of the market perspectives and possibilities of creation domestic feedstock manufacture in Russia and related problems. For example, polyurethanes for refrigerators` insulation being actively imported in Russia as large companies find it easier to purchase it this way. The creation of small-scale production for domestic market needs only is economically unattractive for Western companies. The head of corporate project "Special chemicals and polymers" of Sibur Valery Andosov have confirmed that the holding has an interest to polyurethane industry and has negotiations with German Evonik. According to his words, the company has focused on the research of own technology of propylene oxide production in the division of organic syntheses. In the past the test production line of propylene oxide synthesis operated in Russian Dzerzhinsk, now the Company cooperates with Linde to turn the technology into full-scale industrial manufacture. The holding is going to enter polyurethane business with this very technology but it`s obvious that it`s very hard to create in Russia Dow-like facility with installed capacity of 500 thousand tons. Veniamin Alpern noted that it`s necessary to start the realization of investment projects right now to achieve test production within at least five years, not to rely on state support. And overall it`s clear that the rapid pre-crisis growth of the demand for polyurethanes in Russia will not be experienced ever more. Makromer Company Project Manager Mikhail Zayats objected that separate production of propylene oxide and polyols in Russia is senseless without polether manufacture. The latter being produced by NKNH exclusively but the holding is not interested in the progress of this business segment. The head of "Polyurethane feedstock" division of Russian Bayer representative Sergey Abalakov have doubted the idea that the situation on the market of raw materials for polyurethane production in Russia will change dramatically even after accession into WTO. After the speech of Sibur`s representative, Sales Director "Polymer insulation" division of TechnoNikol-Building Systems Corporation Alexey Kasimov have made a conclusion that there are no chances of emergence of domestic polyurethane feedstock in Russia. At the same time in the US the share of polyurethane materials in termo-insulstion of flat roofs is estimated as 90%. The potential of the Russian market of this material has been estimated by him as 40 thousand tons with booming growth in upcoming years. The head of Homa Group Research Complex Sergey Chernov asked participants to look at polyurethane dispersion use in the manufacture of paints and coatings. He reminded that polyurethanes have perfect adhesion properties but was sorry for the fact that the company had to purchase all feedstock abroad. In his opinion, it`s necessary that someone of foreign players shared their technologies to create the Russian production.
Executive director of Association of producers and users of industrially polymer-insulated pipelines Sergey Kurpyakov have told about the stance of the named sector of polyurethane production use. According to provided data, the modern stance of municipal networks of Russia is far from ideal as it responsible for leaks of 15-20% of water and 30-50% of heat. The actual life without repairs of pipelines is just 3 to 5 years instead of declared and required quarter of a century. Permanently around 30% of pipelines are needed to be repaired urgently. However, Russia is a world leader of overall length of all heating pipelines and it creates great potential of the demand growth for pipeline insulation materials. The market of this production have been existed in Russia for just 15 years, it has distinct season-dependency as works being performed in the start of the summer during maintenance period. The one third of all production capacities is located in Central Russia, Volga region has larger amount of installations among other territories. Polymer pipes could be thermo-insulated as well as steel ones. The share of polyurethane foam in the cost of finished pipe is 11 to 19%. The reporter has noted that Russia has not yet a single PIR-insulation production that is increasingly popular in Europe. Overall the market has not yet recovered after the crisis as it`s very sensible to budget financing.
Scientific Advisor of "Glues. Sealants. Technologies" Journal Alexander Yeselev has reported about polyurethane-based paints and coatings. According to provided data, in the US around 28% of all paints and coating are made of polyurethane base. They are elastic, wear-resistant, have excellent adhesive properties. They often are used in combination with other components like acryl. Acryl-urethane coatings have perfect weather-resistance. The manufacture of materials of such kind in Russia was started in 1950s but now it`s out of good condition. AkzoNobel, Bayer and other foreign companies act on the market freely. According to Mr Yeselev, strong disintegration in the industry and difficulties with demand consolidation severely impair the realization of any new projects. Domestic researches in polyurethane industry is almost out of demand, it looks like everyone is satisfied with present situation.