Moscow — Participants at the Polyurethanex exhibition here on the 17th and 18th of February 2016 were fairly downbeat about the prospects for the Russian polyurethane industry this year.
Miodrag Konstantinovic, managing director of Hennecke in the CIS and Russia, said that the industry has had to deal with considerable currency fluctuations
In the past two yrard the the exchange rate varying between 40 Roubles to the Euro two years ago “to almost 100 Roubles to the Euro and now is in the range of 70 to 90 Roubles. At the same time inflation in Russia is running at approximately 15%,” he said.
Part of the reason for this change in exchange rates has been the dramatic drop in the price of oil over this time frame. The pressure on the Rouble has increased as a result of trade sanctions imposed by the European Union on Russia.
There was a feeling amongst western exhibitors at the events that Russia had become too dependent on oil exports, at the expense of manufacturing, and now was trying to re-dress the balance.
Several exhibitors suggested that the Russians would prefer to pay now for equipment to be delivered in future months, as a hedge against potential currency depreciation. Traditionally, final payment is made after equipment is tested and commissioned.
Konstantinovic said that 2015 had been good for his company and was better earlier years with slabstock and sandwich machinery being sold in the territory. “This is very positive,” he said
Also at the exhibition Alberto Mariani, sales area manager at OMS said that the European Union’s trade embargo had made it as difficult to buy small machines as large machines for Russians, and that it was difficult and expensive to buy a high or low pressure machine.
Massimo Monchiero, general manager at PU machinery firm TEC-Mac, said: “We had a positive signals last quarter of 2015 and we hope to will finalise discussions and some of them may come to agreements during the event.” He added that his firm has customers in a number of Russian cities including Moscow, Ekaterinburg and St Petersburg.
“There’s a lots of competition in Russia,” he added. This seems to vary depending on the location of Russian customers who may prefer, he said to buy machinery from “Turkey or China”.
A further hurdle to Russian polyurethane products manufacturers is that “interest rates vary between 15 to 23% for business loans in Russia which makes it hard to buy equipment,” Monchiero said
Reinforcing the point made yesterday that there is a greater level of self-formulation in Russia, following the country’s economic crisis, H&S Anlagentechnik’s sales and product manager Lyudmila Skokova said her firm had sold three blending lines to Russian companies in 2015. This includes one to TechnoNICOL in Ryazan, where the firm has an expanded polystyrene insulation factory. The firm is a large building products company that is getting into the spray foam business.
Skokova added that in 2016 we “also have expectations that it will be good.” She said that larger Russian processors are looking to self-formulate, rather than buy systems and process these as a way of maintaining profitability in difficult times.
“Business is not so bad,” she said, with interest coming from flexible and rigid foam. However, she estimated that some processing companies which had made investments before or just after the crash may be operating at around half capacity. “These firms invested expecting business growth but that didn’t happen,” she said.
Polyurethanex runs from 17-19 February 2016 at the Crocus Expo.