PRODUCTION OF CPP FILMS
Even with consideration of impressive import volume in 2014 (about 8.8 thousand tons) domestic production of CPP films in Russia provided about 83% of total market volume.
Impressive growth of production volume of CPP films in 2010–2012 was related to the coming of new players to the market, they came in 2007–2011 and worked hard to boost sales. In 2009 increase of production volume slowed down a little but in 2010–2012 increased demand allowed further growth of production volume. Decline of production volume was registered in 2013, for the first time during the review period. In 2014 demand of key consumers for CPP films reduced, so production volume declined by 8.2%. In Q1 2015 production of CPP films saw about 8-10% year-to-year decline in volume.
It should be mentioned that more than half of CPP films produced in Russia is used for production of multilayer films, however, part of CPP films are consumed as they are.
In 2014 13 companies were producing CPP film in Russia: “Biaxplen NK” LLC (Samara Region),“Grand Master” LLC (Moscow), “IPK “Besedy (Conversations)” LLC (Moscow Region), “Kompaniya “Evrofilm” (Company “Eurofilm”)” LLC (Moscow Region), “Korolevskaya Upakovka (Royal Packaging) OJSC (Moscow Region), “Kvils” LLC (Saint Petersburg), “Multiflex” CJSC (Moscow Region), “NTL Upakovka (Packaging)” LLC (Saint Petersburg), “Planeta-Center” LLC (Omsk), “Poly Pack” LLC (Yaroslavl Region), “Promresurs” CJSC (Saint Petersburg), “Propak Plus” LLC (Kazan) and Company “Tarra” (Moscow)*. “Multiflex” is the largest manufacturer of CPP films.
Current economic slowdown and decline of demand for CPP films put many manufacturers into a very tight corner. For instance, on February 4, 2015 the company “Korolevskaya Upakovka” announced its bankruptcy.
Besides Russian manufacturers active operators of Russian market of CPP films are Byelorussian companies “Kashin Plastic”, “Belservissnab” and “Rotir”; together they supply to Russia about 1000 tons of CPP films annually. However, devaluation of ruble made Byelorussian companies less interested in Russian market.
IMPORT OF CPP FILMS
Import of CPP film to Russia is quite impressive in volume; as it has been already mentioned, in 2014 Russia imported over 8.8 thousand tons. In Q1 2015 this index constituted about 2.3 thousand tons and by the end of 2015 import volume can exceed 9 thousand tons.
In 2011–2013 import of CPP films to Russia saw increase which certainly was related to increased demand for CPP films and inability of Russian manufacturers to satisfy the growing demand. In 2014 import declined for the first time during the review period. However, according to preliminary estimations of import performance in Q1 2015, import can increase again this year.
In value terms dynamics of import of CPP film differs from dynamics in volume terms. Decline of supplies in volume constituted about 1.4% in 2014 while in value term import saw 14.5% increase during the same period. This evidences for increasing cost of CPP films imported to Russia.
In 2014 CPP films were supplied to Russia mainly by Poland (36% in import volume), Latvia (10.8%) and China (11.3%). Other important suppliers of CPP films were Germany, Lithuania and South Korea with cumulative 20.7% of import volume in 2014. Shares of other supplying countries were less than 5% each.
In Q1 2015 split of CPP films import by supplying countries saw no serious changes. Shares of Poland and Latvia constituted respectively 44.5 and 11.8% in import volume. Germany went up to the third line with 11.3%.
In terms of companies the largest suppliers of CPP films to Russia are “Amcor” (Poland), “Polipaks” (Latvia) and “Tin Than Packaging” (Vietnam). In 2014 the named companies controlled respectively 32.1, 10.6 and 4.3%. In Q1 2015 shares of “Amcor” and “Polipaks” constituted respectively 39.6 and 10.4% of import volume.
Other large suppliers of CPP films to Russia in 2014 were companies “Profol Kun-Stsoffe” and “Kantego GmbH” (Germany) respectively with 3.5 and 2.8% of import volume. Shares of other companies did not exceeded 2% each.
Major destinations of CPP films import in Russia are: Moscow Region (the largest importers “Frito Lay Manufacturing” LLC, “Odintsovo” PO CJSC, “Belaya Dacha (White Dacha) Trading)” CJSC), Moscow (“SLS-Plast” LLC, “Evropeiskaya Industrialnaya Postavka (European Industrial Supply)” LLC, “Esselte” LLC) and Maritime Territory (“Transtrade” LLC, “Laysan” LLC, “Polymersan” LLC). Shares of these regions in total volume of CPP films import in 2014 constituted respectively 42.2, 12.3 and 11.3%. Leadership of the named regions is related to more strict requirements to packaging exterior including flexible packaging; besides, these regions are located close to the countries exporting CPP films.
In Q1 2015 import of CPP films in terms of distribution of volume between destination regions remained almost the same. However, it should be mentioned that Pskov Region went up to the third line with 10.4%; the largest importer of CPP films in Pskov Region during the said period was “Globo” LLC.
TRENDS OF THE MARKET OF CPP FILM
In 2014 estimated volume of Russian market of CPP films constituted about 44.3 thousand tons, by 7% less than in 2013 and by 27% more than in 2010.
Dynamics of Russian CPP films market is close to dynamics of domestic production and import; share of export is insignificant. Domestic production of CPP films in Russia started to dominate the market. In 2012 volume of domestic production reached its maximum within the review period. This happened because the plants making CPP films started to reach their maximum production capacity several years ago, besides, new manufacturers entered the market.
Stagnation of Russian economy in 2015 is one of negative factors influencing the market of CPP films. Besides, in the end of February 2014 serious industrial disaster happened at “Stavrolen” LLC (Stavropol Territory), large manufacturer of polypropylene granules with production capacity of 120 thousand tons annually. This resulted in insufficient supply of polypropylene granules. The company was recovering and reconstructing its production facilities almost all year round in 2014. Facilities specializing in production of ethylene and propylene were started after reconstruction in October 2014.
Considering the named macroeconomic factors and estimated future performance in short term perspective it can be assumed that in 2015 Russian market of CPP films stabilizes or declines by 1-3%.
PRODUCTION OF BOPP FILM
The first company which started production of BOPP films in Russia in 1989 was “Polymercontainer” OJSC (Tula Region). Since then this market was growing mainly thank to the coming of foreign tobacco manufacturers to Russia. However, till 2005 major part of demand was satisfied by import. In 2004 share of domestic production constituted just 2% of market volume, another 8% of market volume was controlled by Byelorussia (“MZIV (Mogilev Plant of Synthetic Fibers)” OJSC).
The review market saw real breakthrough in 2003 when several Russian companies started to develop production of BOPP films. For instance, “NovaTEK” OJSC started construction of plant with designed production capacity of 24 thousand tons annually in Novokuibyshevsk Samara Region, “EvroMet” LLC started construction of plant in Kashira Moscow Region (production capacity 24 thousand tons annually), corporation “GriNN” – in Kursk (17 thousand tons). Besides, Moscow investor “Mosimpeks Service Ltd.” CJSC started construction of a plant with annual capacity of 17 thousand tons in Balakhna Nizhny Novgorod Region; the company ”Biaxplen” was established for this project.
It turned out that Russian BOPP films are by 20-30% cheaper against imported product; cutting-edge technologies and equipment used by Russian manufacturers guarantee high quality of domestic product, comparable to the quality of imported film. So, when new plants were opened in 2005 Russian BOPP films won 40% of the market and in 2006 this index went up to 64%.
Russian market of BOPP films saw another turning point of its performance in 2007 when “Biaxplen” started to acquire other manufacturers. In December 2007 Kursk facility of corporation “GriNN” was acquired. In September 2008 – plant of “RosEvroPlast” LLC in Zheleznodorozhny Moscow Region. This along with extension of production facilities allowed almost 5 times increase of production volume to reach 87 thousand tons annually which made “Biaxplen” clear leader of the review market.
Challenges faced by Russian economy in 2009 had almost no negative impact upon manufacturers of BOPP films. Even during the worst year of that recession period, 2009, production volume continued to grow. This impressive performance was related to numerous advantages of BOPP films over other polymer films.
In 2011 some of BOPP films manufacturers switched to domestic raw materials which worsened product quality, so some consumers ceased to use BOPP films as packaging material.
However, “Biaxplen” did not cancel its investment projects. In November 2013 the company started 2.4 billion ruble plant for BOPP films production with annual capacity of 38 thousand tons on facility of “Tomskneftekhim”. The new plant was named “Biaxplen T”. In May 2014 “Biaxplen” started a new BOPP films plant with annual capacity of 30.5 thousand tons in Novokuibyshevsk, so total production capacity of Novokuibyshevsk branch of “Biaxplen” increased to reach 55.5 thousand tons annually.
In 2011 production of BOPP films in Russia declined by 5.9% down to 110.5 thousand tons. In 2012 Russia produced 129.7 thousand tons of BOPP films. In 2013 production volume remained almost the same as in 2012 with insignificant 0.3% decline, 129.4 thousand tons. In 2014 start of new production facilities boosted production volume by 17.8%, so it reached its maximum within the review period – 152.4 thousand tons.
In 2014 “WaterFall Pro” LLC scheduled opening of a new plant for BOPP films production in Rostov Region, however this project was put off due to problems with financing. In the beginning of 2015 the company announced re-start of this project. According to preliminary information, first line of this plant will be started in September 2015, the second – in Q3 2016.
After acquisition of “Green Plastic” LLC, “RosEvroPlast” LLC and “Novatek Polymer” LLC by “Biaxplen” we can say that there are two main manufacturers of BOPP films in Russia, “Biaxplen” and “Evrometfilms” LLC.
Worsening of economic situation in Russia in H2 2014 – beginning of 2015 forced BOPP films manufacturers extend product range, so in May 2015 “Biaxplen” started production of a new kind of heat shrink BOPP wrap for tobacco industry.
Still, production volume in Q1 2015 inspires quite little optimism, in comparison to the same period of 2014 production volume of BOPP films in Russia declined by 5-8%.
Basing on expert estimations we can say that despite wide diversity of applications for BOPP films key consumers of this product are manufacturers of snacks and confectionery. Besides, significant part of BOPP films is used for packaging of dry goods and tobacco, and also for production of adhesive tapes.
BOPP FILM EXPORT
Though domestic production of BOPP films in Russia was started quite recently export of this product already reached significant volume. In 2014 Russia exported about 27.9 thousand tons or about 18.3% of total volume of domestic production.
In 2014 export of BOPP film increased by 10.1 thousand tons (+56.6%) over 2013.
Start of new production facilities making BOPP films in Tomsk, Novokuibyshevsk and Rostov Region in 2015 plus devaluation of ruble create favorable environment to boost export of BOPP films from Russia. In Q1 2015 export of BOPP films constituted about 12 thousand tons; if the trend continues total export volume in 2015 might reach 48 thousand tons.
Export of BOPP film from Russia in 2014 was dominated by “Biaxplen”. Second large exporter in 2014 was “Isratek S” LLC (Moscow Region). Together these two companies provided 99.7% of export volume or 27.9 thousand tons. In Q1 2015 situation did not change.
Distribution of export by destination markets remains practically unchanged. The largest buyer of Russian BOPP film is Ukraine; in 2014 this country received more than 31% of export volume or 8.7 thousand tons. Another large buyer was Poland with 19.7% of export volume or 5.5 thousand tons in 2014.
In 2011 Poland ceased to buy Russian BOPP films in large quantities because local manufacturers reached the maximum of their production capacities and thus forced Russian suppliers off Poland. In 2012–2014 export of BOPP films from Russia to Poland increased again but total volume was less than in 2009.
In 2014 export of Russian BOPP films to Ukraine declined on the background of rocketed export volumes to other countries. Besides political reasons the said decline was related to the fact that since April 2014 “Biaxplen” set 100% prepayment as an obligatory term for export to Ukraine.
In Q1 2015 the largest destination market for export of BOPP films was Poland with 32.1% in volume; second large buyer was Germany with 20.3%, Ukraine was the third with 16.1% of export volume.
IMPORT OF BOPP FILM
In 2014 Russia imported 22.2 thousand tons of BOPP films. In comparison to 2012 import volume of the review category declined by 13.7 thousand tons (-38.3%). Growth of domestic production forced import to decline. In 2011–2013 demand for quality BOPP films was not completely satisfied by domestic production and this deficit was covered by import. Considering the plans of “Biaxplen” to increase production volume import is very likely to set to declining trend in short term perspective.
In Q1 2015 Russia imported 4.6 thousand tons of BOPP films; if this trend continues import volume in 12 months of 2015 is to constitute a little more than 18 thousand tons or by 17.1% less than in 2014.
It should be mentioned that reports of Russian Federal Customs Service do not include import statistics on Byelorussia and Kazakhstan. However, Byelorussian manufacturer of BOPP films, “MZIK (Mogilev Plant of Synthetic Fibers)”, actively promotes its product in Russia.
In 2014 main suppliers of BOPP films to Russia were Belgium, Poland and India; together these countries controlled 45.9% of import volume (10.2 thousand tons). Other large suppliers of BOPP films to Russia were Germany and Italy with aggregate share of 15.4% of import volume (3.4 thousand tons). Top five supplying countries together controlled 61.3% of import volume or 13.6 thousand tons in 2014.
In Q1 2015 Belgium remained the leader of import with 21.2% in volume. However, Ukraine went up to the second place with 14.1%; Italy was the third with 12.5%.
In terms of companies main suppliers of BOPP films to Russia are “Innovia Films” (Germany, Great Britain, Poland, Belgium) with 20.3% of import volume, “Amcor Flexibles” (Poland) with 9.1%, “Treofan” (Germany) with 6.1%, “Dizaina Un Poligrafijas Nams” (Latvia) with 5.9% and “Jindal Films” (Belgium) with 5.3%. Cumulative share of top five suppliers constituted 46.4% of import volume (10.3 thousand tons). Shares of other foreign companies supplying BOPP films to Russia were less than 4.6% each.
FUTURE PERFORMANCE OF RUSSIAN MARKET OF BOPP FILMS
Today the largest manufacturer of BOPP films in Russia is “Biaxplen”, in 2014 the company provided more than 88.2% of domestic production. Thus, development of Russian market of BOPP films is directly related to development plans of “Biaxplen”.
In 2008 the company “Sibur” became main supplier of “Biaxplen” and in 2009 “Sibur” acquired 50% of “Biaxplen”, so joint efforts of these companies to win and keep the leadership on the market got even more efficient. In 2011 “Biaxplen” started new production facilities specializing in polyethylene, CPP films and stretch wraps which demonstrates intention of the company to win leadership in other segments of the market of polymer films. Another advantage of this company is a good geographic location of its production facilities specializing in BOPP films.
In 2013-2014 “Biaxplen” went on with its extension project for BOPP film production. However, main distribution markets for extra production volume of BOPP films are foreign countries. In 2014 export already increased by 1.5 times while import declined by more than one third. Growth of BOPP films consumption in Russia is hampered by worsening economic environment. However, according to experts, in 2016 volume of Russian market of BOPP films is forecasted to increase and reach 155-160 thousand tons. Optimism of this forecast is backed by relatively low per capita consumption rate of BOPP films in Russia today which is by more than 2 times lower than in West Europe.
* Companies are listed in alphabetical order.