4. Foreign trade

In 2001, the following factors defined the foreign trade for chemical and petrochemical industries:

• a relatively high reliance of exports at large-capacity chemical and petrochemical operations, despite the declining export sales of some of the products;
• lower world prices for some of the products (mineral fertilizers, ammonia and some plastics);
• higher imports due to stable national currency, and changes in the customs tariff regulation.

The factors ensured higher foreign trade turnover in chemical products due to increased import (by 10%); exports, in turn, did not change much (Table 4.1). Export preserved its surplus but at a lower level by more than 10%.

Table 4.1
oreign trade turnover at chemical and petrochemical industries
in Russia in 1999-2001, USD mln.

Fig. 4.1
Commodity structure of chemical
and petrochemical exports of Russia in 2001, %

Export

In the past decade, the commodity composition of exports has finally shaped up: it is dominated now by mineral fertilizers and products of organic synthesis. Export is big for some value-added products such as plastics and rubber. In 2001, mineral fertilizers accounted for over a third of the Russian chemical exports, and another 25 percent came from the exports of petrochemical semi-products (cyclic hydrocarbon, styrene, methanol, etc.). Synthetic rubbers and plastics (including plastic goods, which did not account for much export) had 6.4% and 11.7%, respectively (Fig. 4.1).

In the 2001 rating of top one hundred exporters, according to Expert RA, there are numerous chemical and petrochemical companies. The top few of them are SIBUR, Evrokhim, Fosagro Apatit Group, and Agrochemical corporation Azot.

Table 4.2
Chemical and petrochemical enterprises among top one hundred Russian exporters in 2000-2001

The industry has a broad foreign trade geography. Traditionally, key exports go to Western Europe and Asia. For instance, China accounted for 18% of the 2001 foreign trade turnover. The second place by export volume went to Finland (11%). While China buys a wide range of chemical products from Russia, including mineral fertilizers (in 2001 they accounted for 36.3% of the export value), plastics and synthetic resins, rubbers, etc., Finland concentrates primarily on products of organic synthesis (about 70% of the export total). Note that Finland as well as Baltic countries often buy Russian chemicals for re-sale to European markets. The third largest importer of Russian chemicals, lagging significantly behind the leaders, is the US that buys big shipments of synthetic ammonia and mineral fertilizers from local producers. As a result of the lower prices for ammonia, although export volumes increased 13%, their value declined by 11%. The aggregate exports to the CIS and Baltic countries in 2001 accounted for 22.2% of the value of total exports (Table 4.3). The list of CIS countries trading with Russia is led by Kazakhstan and Ukraine that in 2001 accounted for US$261.2 and US$296.1 mln, respectively. In 2001, exports to Belarus almost doubled to US$184.0 mln.

Table 4.3
Geographic structure of chemical and petrochemical exports in 2000 - 2001

In 2000, a downward trend in Russian chemical and petrochemical exports reversed to a considerable growth in export sales. While in 1998-1999, exports dropped to 79.2%- 76.4% of the 1997 levels, in 2000 the difference narrowed to only 4.2% (Fig. 4.2). As for 2001, while the export trend was still positive, the rates of growth slowed down as elsewhere in the sector.

Fig. 4.2
Chemical and petrochemical exports from Russia in 1998 - 2001, in % of 1997

An important decelerating factor for Russian chemical and petrochemical exports was introduction of export restrictions in a number of countries protecting local producers and domestic markets. The main method of regulation in this case is introduction of export quotas and special antidumping duties reflecting on the price for Russian chemicals. Restrictions now are more often targeting mineral fertilizers, and plastics and plastic goods. For instance, various sanctions for ammonium nitrate have been introduced in the US, Hungary, Poland, Lithuania and Australia; for carbamide, in the US and Mexico; for methylene chloride and acetone, in India. Three times in the past half of the year antidumping investigations were initiated by the Chinese Trade Ministry targeting caprolactam, polyvinylchloride and synthetic rubber. After sanctions, the aggregate import duty applicable to Russian rubber could be as high as 21%. In April 2002, US producers of mineral fertilizers demanded a 300% import duty on carbamide and ammonium nitrate, the measure that may fully close the US market to Russian exports (ca. US$ 50 mln).

Import

Chemical imports to Russia in 2001 amounted to $3.4 bln., which is almost 10% more than in the previous year. Chemical imports account for 13.5% of the import total. Among the key chemical imports to Russia are plastics and plastic goods, petrochemical products not produced locally, and paints and varnishes (Fig. 4.3).

Fig. 4.3. Structure of chemical and petrochemical imports to Russia in 2001, %

The main suppliers of chemicals to the Russian market are still Germany, France and Finland. Germany sells over 19% of all imports, mostly various plastic goods (31%), plastics and synthetic resins, paints and varnishes. Finland has been traditionally selling paints and varnishes, and plastic goods to Russia. Lower imports from the Baltic countries are balanced by higher imports from East European countries, which is mostly due to fast rates of growth in Polish exports. Of CIS countries, Belarus and Ukraine are gaining on in their imports: they are the main suppliers of tyres to the Russian market.

Table 4.4
Geographic structure of chemical and petrochemical imports in 2000-2001

Ruble devaluation led to significant appreciation of chemical and petrochemical imports and undermined their competitiveness on the Russian market. In 1998 - 1999, chemical imports to Russia dropped considerably, and continued to do so throughout 1999 when they declined 37.6% of the 1997 level (Fig. 4.4). In 2000, the domestic markets started to stabilize and increase its imports. In 2001 the trend continued; and as prices for some local products rose, import chemicals became competitive again.

Fig. 4.4
Chemical and petrochemical imports to Russia in 1998-2001, in % of 1997