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5/2017


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DRINKS
Review of the Russian Beer Market
Research by the Company Euromonitor International

TEA & COFFEE
Review of the Russian Tea Market
Research by Company Step by Step

CONFECTIONERY
Review of the Russian Market of Chocolate Products
Research by the Company NeoAnalytics

Review of Foreign Trade Cookie Supplies in Russia
Research by Information-Analytical Company VVS

MEAT
Review of the Russian Turkey Market
Research by the Company Global Reach Consulting

DAIRY PRODUCTS
Review of the Russian Dairy Market
Research by the Company Market Analitika

Features of Branding in the Russian Cheese Market
Research by the Branding Company Labelmen

FAST FOOD
Review of the Russian Market of Snack Bars
Research by the Company Euromonitor International

CANNED/PRESERVED FOOD
Review of the Russian Market of Canned Meat
Research of the Company Step by Step

EQUIPMENT & MACHINERY
Russian Imports of Confectionery Equipment
Research by the Company ID-Marketing

PACKAGE
Review of the Russian Market of Shrink Films
Research by the Company Abercade

TRADE SHOWS
21st International Fair for Packaging Machinery, Packaging, Confectionery Machinery Interpack-2017


22nd International Specialized Exhibition of Materials and Technologies, Machinery and Equipment for Manufacturing of Packages RosUpak-2017


FINANCE & LOANS
The Russian Leasing Market
Research by the Rating Agency RAEX (Expert RA)

Review of the Russian Market of Polyethylene Films

Study by the Company Abercade

PRODUCTION
In 20122016 the volume of polyethylene film production in Russia was growing. Growth in demand for plastic film packaging was contributed to by processes taking place in the markets of substitute goods such as corrugated packaging.
In 2012 production of polyethylene films increased by 11.5%, and in 2013 it grew by 5.1%. In 2014-2015 the growth rate of polyethylene film production decreased to 2-4%, which was caused by the majority of manufacturers having reached the maximum of their production capacity, growth in popularity of other types of films, and decreased growth rates of the Russian economy. In 2016 the volume of polyethylene film production increased by 11.9%, reaching 454.9 thousand tons*.
Production of polyethylene films is, for the most part, concentrated in the Central and Volga Federal Districts.
The highest production growth in physical terms in 2016 occurred in the Central Federal District (+6.7%, or 15 thousand tons). The Siberian Federal District was second (+44.4%, or 12.2 thousand tons), and the Volga Federal District was third (+12.7%, or 10.4 thousand tons). The overall share of these three regions amounted to 72.4% of the total Russian polyethylene production volume.

EXPORTS
In 2016, 3.4 thousand tons of polyethylene films valued at $ 8.3 million were exported from Russia. Compared to 2015, the volumes of exports decreased by 0.2 thousand tons (-6.7%) in physical terms and by $ 0.1 million (-1.2%) in monetary terms.
The share of exports compared to overall Russian polyethylene film production is low and is approximately 1.2%, and thus fluctuations in exports have virtually no effect on total market volumes.
A significant part of Russian exports in 2016 was accounted for by two companies: Rani Plast Kaluga LLC and Polimer LLC. Their total share in exports was around 43.7%.
Large volumes of polyethylene films in 2016 were also exported by Procter and Gamble Novomoskovsk LLC and Spektr (Spectrum) LLC, the shares of which equaled 3.8 and 2.9% respectively in the total export volume.

IMPORTS
The total volume of polyethylene films imported into Russia in 2016 was 72.2 thousand tons.
In 2016, compared to 2015, volumes of imports of polyethylene films declined by 0.7 thousand tons (-0.9%) in volume terms and increased by $ 16.9 million (+9.6%) in value terms**.
The main exporter of polyethylene films into the Russian Federation in 2016 was Germany. Its share in the overall import volume reached 20.1%.
The shares of Polish and Chinese films amounted to 14.5 and 12% of imports respectively. Lithuania and Finland were also among major exporters, their shares in 2016 equaling 9.1 and 6.6% of supplies respectively.
It should be noted that in 20142016 the share of Ukrainian films in Russian imports dropped significantly. Compared to 2013, imports of polyethylene film from this country plummeted by 21 thousand tons, or by 89.7%.
The total share of the top seven importing countries of polyethylene films amounted to 69.8%, or 50.4 thousand tons.
Since 2012, Ukrainian company Sirius Extrusion had been one of the largest polyethylene film exporters into Russia. However, in 2016 the companys share in the overall volume of polyethylene film imports into the Russian market dropped by 92.7% to 2012, amounting to 1.6 thousand tons.
The largest importer of polyethylene films into Russia in 2016 was the transnational company Manuli Stretsh (7.2 thousand tons, or 10% of the overall volume of imports), which was supplying the Russian market with films from Germany, Lithuania and Poland.
Significant volumes of films supplied to the Russian Federation were also produced by RKW and Amerplast 6.4 and 4.2% of imports respectively.

MARKET DEVELOPMENT FORECAST
Having analyzed the figures of exports, imports and production, it is safe to conclude that the Russian market is very closely linked with the state of the Russian economy as a whole. All the events taking place in the Russian economy have an impact on the dynamics of development of the market of polymer films as a whole and individual markets of various film varieties in particular. This is due to the fact that films are currently used in virtually all branches of the economy, as a packaging material or raw material, in production processes et cetera.
Before the economic crisis in 2014, the market of plastic films was actively developing. Production volumes were growing, and so were the volumes of imports. Low export volumes indicate that the market was developing due to growth in domestic consumption.
The attractiveness of Russian polyethylene films led to companies aiming to increase their production capacity, and was attracting new investments in the industry. For instance, in February 2011 Biaxplen NK LLC launched new production lines for CPP films and blown polyethylene films; on June 22, 2010, Poliprom-Bryansk LLC, a new enterprise in production of various types of polyethylene films, was registered; in November 2013, BaltEnergoSistemy LLC launched a new polyethylene film production line. However, in 20142015 the market faced problems within deteriorating economic conditions. In addition to the negative impact of the macroeconomic situation, mutual economic sanctions with a number of countries had affected the market as well. This had an effect on the geographical structure of polyethylene film imports. Ukraines share in Russian imports decreased significantly.
Falling prices for oil had a serious impact on the Russian petrochemical industry. Even though prices for petrochemical products did not decrease as much as for oil, it still led to changes in profitability of companies producing polyethylene films, and, in a number of cases, resulted in growth in production volumes.
2016 was a successful year for the Russian market of polyethylene films. Raw material manufacturers maintained their orientation towards the domestic processor; at the same time the volume of polyethylene granule production increased, and plants broadened their brand variety. However, the problem of sharp price fluctuations on raw materials remains for film manufacturers. Nevertheless, production of films and packaging increased large enterprises invested in production modernization and production line development.
However, despite the relatively successful year 2016, the forecast for market growth in 2017 is not very optimistic. The unfavorable macroeconomic situation as well as mutual sanctions with major foreign trade partners will undoubtedly have an impact on the market of polyethylene films. A market reduction of 1-3% is expected this year.

* Part of the companies manufactures polyethylene goods from self-produced films, and therefore production of said films is not always reflected in statistical data. Underestimation of polyethylene film production may occur for the following reasons: official statistics mainly registers results of large and medium-sized companies; incorrect reporting by certain companies producing plastic films; reporting by newly established companies is usually included in official statistics after 1-2 years.

** The Federal Customs Service of Russia does not take supplies from Belarus and Kazakhstan into account.

Vladimir Manulenko,
Analyst
Research Company Abercade





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