MOSCOW—The polyurethane industry in Russia is on the verge of big changes as the economy recovers from its crisis, domestic demand grows and companies restart investment.
For example, the FomLine Group of Companies, one of Russia's largest polyurethane producers, will launch a flexible polyurethane foam plant in Kuznetsk by the end of the year. The new plant will have the capacity to produce 80,000 metric tons per year, and will be located within Kuznetsk Technopark, one of the largest industrial zones in Central Russia. The plant will supply the local furniture cluster located nearby.
Initially, implementation of the project was planned for the summer of 2016, however, the Russian polyurethane industry was quiet in 2016 and the launch was suspended until the end of 2017.
At the same time, Vega is building a facility to make polyurethane foam for mattresses and upholstered furniture in the Krasnodar region. It is expected that this will be commissioned in the middle of 2018.
Analysts of the Russian Ministry of Industry and Trade believe polyurethane industry projects have restarted due to state, which has significantly increased in recent years.
According to Ministry data, in 2016 the government provided subsidies of $40 million to leading Russian producers and that figure will be matched by the end of the 2017.
Alexander Orlov, head of the Department of the Chemical and Technological Complex of Russia's Ministry of Industry and Trade, said the funds subsidized research and development, compensation for interest payable on investments and the promotion of domestic producers in the international arena.
The support was provided within the existing state strategy, known as "For the development chemical and petrochemical complex in Russia for the period until 2030."
The financial crisis in Russia, caused by Western sanctions, has resulted in the redistribution of polyurethanes' consumption in the country.
A spokesman for Denis Manturov, Russian minister of industry and trade said the crisis resulted in the decline of polyurethane consumption in the automotive, furniture and construction segments, which prior to 2013 were the biggest consumers of polyurethane in the country.
However, the consumption in agriculture and refrigeration equipment, has increased, because of the devaluation of the ruble. This made imports expensive and spurred production of domestic equivalents of imported products.
Alexander Dmitriev, president of the Russian National Association Manufacturers of panels from polyurethane foam, said the consumption of polyurethane in Russia will continue to grow. This is being driven by higher energy efficiency of buildings under construction which will need more polyurethane foam panels.
Currently, the Russian market of polyurethanes is equivalent to 275,000 tons per year with consumption of rigid and flexible foam each accounting for 38 percent of that total.