What is the condition of the modern Russian market of polymeric tubes?
Large-scale construction projects, such as the Vostochny cosmodrome, the objects for the 2018 Football World Championship, and the renovation of five-storey residential buildings presently being actively discussed, demand the laying of new utility systems and renewal of the old ones. The traditional materials that have been used in Russia for decades are steel, cast iron, concrete and fossil flax. The application of polymeric tubes has increased during recent years. Despite the number of undeniable advantages of polymeric tubes, the market is suffering some difficulties. There are both optimistic and very reserved forecasts of its further development.
The demand has fallen
According to the information voiced at the “Polymeric tubes and fittings - 2017” XI international conference, disturbing information started coming from polymeric tube producers in 2014. It was then that the fall of the demand began, and the market volume shrunk. Unfortunately, even the demand of the utilities’ sphere, one of the largest customers, decreased. The deficit of regional budgets does not allow the allocation of money for the replacement of worn lines (more than 40% need renovation) either.
There is also a problem with the prices for primary materials. Small companies are struggling to survive by producing cheap, low quality and counterfeit goods, which then discredits the idea of the polymeric tubes’ output. Nevertheless, everybody is looking forward to the situation being improved and hopes that the programs of renovation and other federal and regional drivers will stimulate the demand. Transfers from the budget might help the utilities sector, and this will become real support for the producers of polymeric tubes.
Polyethylene, polypropylene, polyvinylchloride: the sine of the market
What is the state of play with the consumption of polymeric tubes in Russia? Comparing the shares of metal and polymers on the Russian market of tubes, the first one reaches about 60%, and the other only about 35% (including 21% of polyethylene tubes (PE-tubes), 9% of polypropylene ones (PP-tubes) and polyvinylchloride (PVC-) tubes — 4%).
According to Viacheslav Guschin, the INVENTRA company’s analyst, the consumption of polymeric tubes in 2016 remained at the same level as 2015 and totaled 425,000 tons. The consumption of polypropylene tubes grew by 9%, but the polyethylene tubes sector continued the negative dynamics. This is connected with the fact that up to 70% of PE-tubes are used for water-supply systems in the utilities sphere, which is an area of great concern.
In general, mains systems are made of PE-tubes, whilst interior and local ones are from PVC and PP tubes.
The PVC-tube sector is also tapering off. It has been impacted by the fall on the real estate market, plus the construction of trade and amusement centres has been frozen and regional investments in the utilities sphere have deceased. Additionally, the political aspects and oil prices influence the general economic condition.
Despite all the enumerated difficulties, PE-tubes are the most commonly used. In 2016 году they occupied 62% of the market. As far as PVC-tubes are concerned, about 30 Russian plants produce them. Last year, a total decrease of the production by 14% was observed, excluding some companies, and the export of PVC-tubes fell almost by a third.
It should be noted that the equipment for the production of plastic tubes is not actually produced in Russia, which is why this sector depends on import so much. Additionally, since 2014 the decrease of producers’ investments in the renovation of the equipment has been observed. In 2016, the importing of equipment fell by 23% when compared with 2015, and only 93 extrusion lines for about $10m were delivered. Up to 70% of such lines are shipped by China (on average for $70,000 a line, whereas extruders from Western Europe cost five times as much).
Where positive results are concerned, in 2016 Russia imported about 11,000 tons of PVC-tubes. Half of them were used for the production of irrigation hoses, 21% — for sewerage, 10% — for ventilation, 7% — for water supply systems, 4% — for pipe drainage systems, 3% were used in agriculture, 2% — for industrial pipelines, and only 1% — for heating systems.
— In 2016 the Russian producers of primary materials increased the output of pipe trademarks of PP to 75,500 tons, which is by 50% more than in 2015. Accordingly, the consumption of imported primary materials decreased crucially. The production of PP-tubes grew by 21%, and their export increased two-fold, — the expert resumed.
If the situation stays on favourable, by the beginning of the 2020s the output volume of PE-tubes is forecast to grow to 400,000 tons in Russia.
Fake and counterfeit
This phenomenon prevents all the positive tendencies from developing. The lack of professionally certified laboratories, research centres and certification authorities has resulted in difficulties in the struggle against fake materials. Primary materials account for up to 80% of a polymeric tube’s cost, so unprincipled producers try to save this way.
Such tubes are of low quality, and they are mainly manufactured by small, semi-shady producers avoiding honest competition and the paying of taxes.
— At least, the share of counterfeits on the Russian market of polymeric tubes (PE, in particular) totals about 20%—30%, which is about 9 bln roubles ($158m), — Vladislav Tkachenko, Head of the Association of pipeline systems’ producers, said.
How are they going to struggle against counterfeits? One of the methods is in creating a “Black and white” list of unfair and conscientious market players which is then published on websites where one may also find lists of suppliers, laboratories and the organisations issuing certificates.
— The producers are ready to help study suspect samples at their laboratories (especially when the tubes are too cheap). They can then write letters to various surveillance and control organisations, plus educate customers and buyers, and regional authorities responsible for the realisation of different programs in the utilities and construction spheres, — the expert concluded.
For more successful work and the solution of other tasks, the Association of pipeline systems’ producers has recently been created. And its main and very ambitious target is to clear the market and make it civilised.