Boston, MA -- (SBWIRE) -- 02/12/2013 -- Our Russia petrochemicals report examines the short-term trends in the Russian market and discusses how domestic producers are responding to changing demand dynamics. This report also considers the way in which Russian petrochemicals producers are diversifying and building capacity to compete in a global market, while at the same time supplying a growing industrial base, particularly in the domestic automotive and construction sectors. Segments of the Russian market will remain import-dependent over the medium-term, although the country will continue to produce an exportable surplus of fertiliser. The government's drive to address market deficits with the establishment of world-scale, integrated production hubs should lead to greater self-sufficiency. Nevertheless, energy feedstock price liberalisation, particularly in the gas sector, could undermine price competitiveness of Russian petrochemicals production.

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A structural change in the economy towards domestic demand-led growth should benefit the petrochemicals industry, which is expected to see polymers capacity exceed 10mn tonnes per annum (tpa) by 2017, a three-fold increase over 2008. Domestically driven growth should ensure that expansion does not lead to an imbalance between supply and demand, although in some segments there is the prospect of exports.

- A number of projects are set for completion in 2013 that should help Russia achieve its mediumterm goals. Many of these are in the plastics and rubbers sector, including 60,000tpa of acrylonitrile-butadiene-styrene (ABS), 500,000tpa PP and 330,000tpa PVC.
- Over the next five years, polyethylene (PE) will lead polymer capacity growth, accounting for a total of 62% of the increase with roughly equal contributions from different segments. Polypropylene (PP) with contribute a further 22%, polyvinyl chloride (PVC) 11%, polyethylene terephthalate (PET) 4% and polystyrene (PS) 1%. BMI believes the growth mix is highly suited to the nature of the Russian petrochemicals market over the medium-term, which should boost consumption of consumer plastics.
- In 2017, we expect ethylene capacity to total 7.7mn tpa. However, some segments will see little or no movement, notably styrenics and some intermediates such as EO/EG and ethylbenzene. There is plenty of potential naphtha and ethane feedstock availability due to the expansion of refineries and the opportunities presented by a growing gas sector.
- With a petrochemicals rating of 65.1 points, Russia's commanding position in our petrochemicals risk/reward ratings (RRRs) for Central and Eastern Europe (CEE) has been recovering as its risks decline and capacity increases. Its score has increased 1.4 points in the past quarter as a result of ongoing expansion of petrochemicals capacities, which could double over the next five years.

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