Restrictions on the supply of Russian synthetic rubbers were included in the tenth package of EU sanctions. On the one hand, their production in Russia is export-oriented. On the other hand. Russia began to lose the European market in 2022. Even then, domestic manufacturers began to restructure their strategies.
In the past year, the decline in exports to the EU countries and turbulence in the tire market led to a decrease in the volume of rubber production. However, the supply limit introduced in 2023, which will be in effect for more than a year, allows Russian companies to continue reorienting sales of these elastomers from the EU to Asia.
On February 25, the European Union approved another package of sanctions against Russia. The EU has classified synthetic rubbers as goods that bring Russia significant revenues. The decision introduces additional restrictions on the import of rubbers, but they should come into force only on June 30, 2024. Until that time, the European Union had established temporary import quotas of 563 thousand tons. The global production of synthetic rubbers by the end of 2021 is estimated at 29.3 million tons. Of these, Europe consumes about 1.6 million tons. More than half of this volume is imported (0.9 million tons).
Russia is one of the largest producers and exporters of rubber. The country accounts for approximately 9% of the total global output of synthetic rubbers. Historically, 60-70% of synthetic rubbers produced in the Russian Federation were exported, which amounted to about 1 million tons of finished products. Almost half of the exports were to European countries. At the same time, in 2022, the supply of synthetic rubbers from Russia to the European Union began to decline. In 2021, exports to Europe amounted to 0.48 million tons.
That is, the ceiling in effect until mid-2024 is significantly higher than the volume of supplies, even in pre-sanctions conditions. This decision only limits the possibilities for a large-scale increase in exports, but not current supplies. However, the year 2022 was not easy for the Russian production of synthetic rubbers. According to Rosstat, rubber production in Russia fell by 12% to 1.5 million tons. The rate of decline was higher than in the chemical industry as a whole.
The tire market has been in a fever all year. In March 2022, in response to the military actions of the Russian Federation in Ukraine, a number of tire manufacturers announced the suspension of their production facilities localized in Russia. This was officially notified by Continental, Bridgestone, Pirelli, Yokohama.
In early April, the EU imposed sanctions on the export of Russian tires to European countries. And on June 3, Russian tire manufacturers were included in the sanctions lists. During the summer, localized production partially resumed its work. However, at the same time, international companies began to declare their withdrawal from the Russian Federation.
Turbulence in the market was also added by a drop in sales of new cars in Russia, which led to a drop in tire sales. However, the collapse of the tire market was only the first, but not the only challenge for manufacturers of synthetic rubbers.
Processors of synthetic rubbers in Europe, even before the formal sanctions, sought to reduce the risks associated with Russian components. They began to try to replace them with the products of their own neighbors. The idea of blocking the export of synthetic rubbers from the Russian Federation is attributed to Poland.
In addition to Poland, Germany, Belgium and France are major exporters of synthetic rubber in Europe. The total annual export volume of these four countries exceeds 2 million tons. Therefore, part of the exports can be directed to meet the domestic demand of European countries.
Faced with problems in the European market back in 2022, Russian manufacturers began to prepare for its possible loss in advance. They are interested in the market of the Asia-Pacific region, which consumes more than half of the total global volume of synthetic rubbers of various types.
The two largest importers are China and India. Recently, these countries imported 250-300 thousand tons of rubbers per year from the Russian Federation. At the same time, the total imports exceed 1.6 million tons.
However, for rubber producers, reorientation to Asian markets will be associated with logistical problems. The capacity of Russian railways and Russian Far Eastern ports does not allow us to quickly reorient all supplies to Asia. But in many ways, enterprises have already established work in new areas.
Experts hope for a partial restoration of Russian tire production. The expected restart in 2023 of tire enterprises that have passed into the hands of domestic manufacturers should have a positive impact on rubber production.
