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Eugene Gerden

Expert Opinion

27th March 2018, Moscow

Russia to double technical fibres production by 2020

The Russian Ministry of Industry and Trade has announced plans to double the country’s technical fibres production by 2020. To implement these plans, Russia will expand the use of its large reserves of oil and other resources, including timber and other raw materials for the production of synthetics.

Currently, the domestic production of technical fibres can meet only 30% of Russia’s annual demand, however, as part of the government plans, this might change. “Thanks to Russia’s well-developed oil and chemical industries and the presence of large-scale technical textiles consumers domestically, the industry has good chances for a rapid growth during the next several years,” commented Russia’s Deputy Minister of Industry and Trade Viktor Yevtukhov.

Russia’s Deputy Minister of Industry and Trade Viktor Yevtukhov. © Eugene Gerden

“We are planning to use the experience of some foreign countries in this field, one of which is UAE, which in recent years has mobilised its fuel and energy resources for the needs of the domestic technical textiles market.” The country brought its synthetic fibres supplies to the world market to US$1.3 billion over the last ten years. Currently, Russia occupies more than 13% of the world oil production market, however, the volume of its synthetic textile materials exports is eight times less than in the UAE.

Prior to 2014, the dependence on imports in Russia varied in the range of 80-90%. However, the beginning of the financial crisis in Russia in 2014, ruble has made further imports of technical textiles unprofitable. As a result, many importers began to consider the prospects of localising the production.

According to the Vice-President of the Russian Union of Chemists Sergei Golubkov, currently, chemical industry accounts for about 1.8% in the Russian GDP, which is significantly lower than the average rate of 10-14% for developed countries. Golubkov also said that reaching the EU levels would contribute to the growth of the Russian technical textiles industry.

Denis Mantrov, the spokesman of the Russian Ministry of Industry and Trade, also noted that low taxes and customs duties, as well as the proximity of Russia to both European and Asian markets, provides additional advantages to the domestic industry.

In addition, most workers, employed in the Russian technical textiles industry, receive salaries that are generally lower than those in the countries of Asia Pacific. For example, salaries of Chinese factory workers have almost tripled over the last decade and now stand at US$ 700, which is significantly higher than in Russia.

Holofiber, a synthetic insulation for outerwear. © Eugene Gerden

In Russia, there are currently a number of companies ready to fight for the domestic technical textiles market through the launch of new investment projects. One of them is BTK Group, which recently invested US$ 45 million in a new plant in the Russian Rostov region for the production of high-tech fabrics, with capacity of 12 million metres per year.

Another leading Russian producer Energokontrakt has recently invested US$ 35 million in the aramid fabrics production in the Moscow region. Finally, Thermopol, which is a producer of Holofiber, a synthetic insulation for outerwear, plans to significantly increase its production and to launch a range of innovative products very soon.

The Russian government established a special Industrial Development Fund to provide support for the implementation of projects like these. To date, the Expert Council of the Fund has already selected almost 35 projects that will receive cheap loans with interest rates no more 5% per annum for a period of seven years. Total amount of allocated loans is estimated at about US$ 1,5 billion.

Thus, the government plans to solve the problem of a shortage of long term funds, which in recent years has become one of the most pressing problems for domestic producers.

The majority of these project will be implemented within the Ivanovo region, a centre of Russian technical textiles production, where a cluster for the production of polyester fibre is currently being established.

The new cluster will include a new synthetic fibre plant, as well as a number of other enterprises. One of these is a local company Protex, which recently received a loan of 300 million rubles for the production of fleece fibre.

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