Russian government in talks with big five isocyanate producers over subsidised capacity

Moscow – The Russian government is planning to subsidise isocyanate production to reduce supply problems and has contacted leading producers said trade minister, Denis Manturov.

Russian polyurethane producers say that it is unprofitable to make isocyanate in the country, but that state subsidies may change the situation.

According to state plans, state subsidies and the companies’ own funds could enable the establishment of 400 kT/year of production of isocyanates in Russia.

In addition to domestic producers, the production of raw materials could be established by polyurethanes majors, operating in Russia, as the government has already started talks with them.

The exact value of subsidies will be announced later this year. The Russian Minister of Industry and Trade Denis Manturov, said the talks are currently underway with Covestro, BASF, Huntsman, Dow Izolan, and Yantai Wanhua.

Manturov, however, has also added these companies are not interested in investing in plants below 300 kT/year. This would be larger than Russian demand for all polyurethanes in 2016.

A few years ago, Sibur, a leading Russian petrochemical producer, declared its intention to establish isocyanate production if the domestic consumption of polyurethanes in Russia reached 600 kT/year.

Production of polyurethanes in Russia has risen from 180 kT/year in 2004 to around 275 kT/year at that moment and the leaders in the consumption of polyurethanes - construction, furniture industry, pipe insulation, automotive industry, are in crisis.

Local producers and analysists contacted by UTECH-polyurethane.com confirmed that currently a shortage of raw materials is the most pressing problem for the Russian industry.

Dovid Aronovich, Deputy Head of the polymer adhesives department of the Russian Polymer Research Institute, one of Russia’s leading research institutions in the field of plastics and polyurethanes, said: ‘At present Russia experiences a shortage of domestic isocyanates’ production, almost 100% of which is imported from abroad.

Aronovich continued: ‘The collapse of the USSR in 1991 resulted in the suspension of production of polyurethanes in Russia and the loss of the needed production technologies. As a result, we do not have modern technologies for obtaining isocyanate, which is in great demand among local polyurethane producers.’