Global Plastics Issue: To Russia with love

A growing industry copes with domestic shortages of resin, machines, and goods via imports.

The more than 7 million tonnes of plastics that Russia converted in 2012, was 12% higher than it consumed in 2011, and it accounted for 8% of all European primary plastics used, according to BricPartner. That double-digit growth could accelerate, however, given that the average per capita consumption of plastic within Russia is roughly half that of Western Europe's.

As consumption expands, conversion grows, and machine orders follow. Some estimates placed the value of injection molding machine imports into Russia at Euro 120.3 million in 2011, as the country's molders look to turn over a deteriorating fleet. BricPartner estimates that there are about 2400 Russian companies currently engaged in plastic processing, with more than 50% of the country's injection molding machines requiring replacement within the next 2 to 3 years.

"As Russian companies lack the knowledge and know how to be able to manufacture modern plastic machinery," the BricPartner report stated, "then it means that the majority of the technology will need to be imported. So there are still huge opportunities for companies to fulfill this demand in Russia."

Packaging increasingly a domestic affair

In terms of production of plastic packaging, Russia lags behind Western Europe. Plastic bottles and vials used primarily for non-alcoholic beverages constitute 65-70% of the market, while 10-12% is used
 for oil packaging.
The remaining
 18-25% is used
 for other products such as beer, household chemicals and cosmetics.

BricPartner notes that in the past, most packaging in Russia was imported, but today the majority of domestic consumption is fed by domestic production. "There has been a boom in the amount of international food manufacturers who now manufacture locally in Russia," the report stated, "and they require modern packaging."

Medical displays symptoms of growth

In terms of health expenditure per capita, Russia at $549 was second amongst the BRICS (Brazil, Russia, India, China, South Africa) behind only Brazil. Russia was also second in medical device spending, investing $5.1 billion, compared to China's $7.8 billion. By 2016, Russia is expected to join its fellow BRICs in the top 10 life science markets globally.

Auto market to overtake Germany

Russia's total production of all motor vehicles fell 3.5% year on year to just over 1 million in the first half of 2013, according to ASM Holding. Sales of all vehicles fell 9.7% year on year to 1.4 million units over the first 6 months of 2013. Boston Consulting Group forecasts that Russia's automotive market, however, will grow by an average annual rate of 6% through 2020, reaching annual sales of 4.4 million, compared to 2.9 million in 2012. If it does so, it will overtake Germany and become the fifth largest market globally.