What is the condition on the Russian market of translucent structures?
Natural lighting in a modern building changes significantly due to the materials that partly or fully turn roofs into translucent structures. Alongside a common regulation of the light flux and heat saving functions, these structures give additional opportunities for the creation of both an architectural image of a building and visual communications between the interior and exterior spaces.
The market behind the glass
Analytical researches of the market of translucent structures are mainly connected with window-related products. Facilities that utilise such products can include hovels, hot houses, facades, winter gardens, roofings, terraces and balconies, etc.
The Russian market of translucent structures looked very strong before the crisis and occupied the third place in the world as far as the production volume was concerned, after the USA and China. Presently, it is in the top-10 with the same technological level.
The crisis of 2008 brought the contraction and even cancellation of some programs related to construction and housing capital repair. At the same time state purchases, including translucent structures for government-funded organisations, were financed. Specialists have remarked, though it was positive in general, that the priority of the price in tenders led to a decline in production quality.
In 2009, the Federal Law, “On energy saving and energy efficiency increase”, was adopted. The translucent structures’ production was adapted to its requirements, which resulted in an increase of their cost, but neither private nor public customers were prepared for this.
Insufficient use of energy saving units is still characteristic of the sector. Analysts explain this by three factors. The first is the advisory, non-obligatory, character of the law and its subordinate acts. Secondly, window producers have no opportunity to interact with the design process and make proposals for optimal heat saving variants of the designed objects. As such, again, the price is considered as the key criterion for both private and public customers.
Experts of the Russian Architectural and Construction Academy carried out research comparing the prices of a modern energy-saving double-glazed unit and common structures which the majority of customers use. The production of structures in four cities in different regions of Russia were analysed, and the production of the structures did not require the purchase of any additional equipment. The difference turned out to be within 7.93% (calculated as the cost of 1m2 of a unit) and 7.94% (calculated as the cost of a window).
On the whole, 2008—2010 were the declining years. Later, the number of companies decreased due to their consolidation. During the years of stagnation, 2011—2013, their number reached 5500—6000. The production capacity of the plants manufacturing windows was 55%. The adoption of a new federal law, “On the contract system in the sphere of state and municipal procurement”, in 2014, did not raise the efficiency of state procurement.
The decrease of the customer demand in 2015 in Russia reached 20%. This result is not surprising because a quarter of all produced windows was to be used in newbuilt houses, and the fall of the window market is closely connected with the decrease in construction volumes. Before 2014, according to information by the Russian Federal State Statistics Service, the construction volumes’ growth was registered (84.2 m sq. m compared with 70.5 m sq. m in 2013), but in 2015 the decrease reached 30%—40% when compared with the previous year. In turn, household income decreased by 1.4% (in 2014 — by 0.8%). And, additionally, the price range for PVC primary materials in 2012—2015 reached 178.6%, with the windows’ price fluctuations being within 15.6%.
Bringing to a common standard
As far as the market structure is concerned, 80% of it is occupied by PVC windows (they started to dominate immediately after their appearance in the 1990s), 15% are aluminum and wooden ones (aluminum windows were most popular before 2008, and later their share decreased), while combined and other types are at 5%. The cost of PVC windows is twice as low.
One of the main peculiarities of this sector is its high competitiveness, stimulating companies to look for various discounts and additional services. Simultaneously, unconscientious companies sometimes appear on the market.
The market seems to be oversaturated with window structures. This is explained by the low-level assets at the start of entering the business and a rather high demand which actually fluctuates greatly.
There are many businessmen on the market acting according to the principle, “windows will always be needed” in spite of regular downfalls in the market. And in spite of the hesitations of customer demand and the increased prices for the components and primary materials, the demand for these products gives those involved with the market an opportunity to remain active.
2016 and 2017 have become the years of further serious changes. The WINKHAUS company’s experts think that the Russian market of translucent structures has divided sharply into companies both expanding or declining. Those who slump lose their quality level and fall to a low point difficult to rise from. The market is thought to be “badly cleaned” as companies are not forced to go bankrupt. At the same time the economic situation does not change, and many companies have lost their safety buffer. Accordingly, major changes are expected to take place this year.
IndexBox Russia analysts remark that the main consumer of the PVC – window structures sector in 2017 might break even, which is good following the 9%-fall for translucent structures last year. The PVC market is presently considering the production prospects of PVC films for plastic cards and medical facilities.
The XIII international forum (STiS–2017, Riva-del-Garda, Italy) of translucent structures producers included the condition of the Russian window production sector in its agenda. It was remarked there that the condition of the Russian market is a natural stage of the market development.
Member of Board of SP Glass holding (with the ROSNANO JSC being its co-founder), the STiS company’s founder, Dmitry Suslin, taking the floor at the forum, said that the process of consolidation is inevitable and takes 20—25 years depending on the condition of the economy, the degree of the state regulation and personal ambitions of the market participants. The Russian window production market appeared in 2000—2001 (this should not be confused with the appearance of the first PVC window). The consolidation level on it is 5%, with there being about 1500 participants. The expert supposes that its concentration will scale 7% by the end of 2017, and in 5—8 years the share of the top-three will be 30—40%».
Dmitry Sulin thinks that the future turnover of the three future leaders of the market (presently unknown, of course) of window production in 2022—2025 will make 25, 15 and 10 bln roubles if the market remains as it presently is (145 bln roubles ($2.5 bln ).