paint and resin industry in Russia

With more than two decades of presence in the global trade arena, and with full knowledge of the characteristics of the Russian market and the Eurasian regions, as well as knowledge of the distribution networks in this country and comprehensive and complete knowledge of international trade and investment laws, Fardad Group of Companies has provided a suitable platform and background for the entry of Iranian products into the booming Russian market.

The paint market in Russia is currently known as one of the largest paint and coating markets in the region.

According to published reports, the paint market in Russia was worth $1,791 million in 2020, and forecasts show that this market will reach $2,445 million by 2025 with an average annual growth rate of 5.9%.

Russia is one of the largest markets in the region in the paint industry, with a high demand and production volume, and well-known brands such as Tikkurila, PPG, Sherwin-Williams, AkzoNobel, BASF, and Henkel are present in this large market.

With the increasing construction in Russia, the market for paints and protective coatings is also expanding. This market is affected by several factors such as economic growth, increased production, technological development, and changes in consumer tastes.

For example, in recent years, the consumption of white and gray paints in Russian interior decoration has increased sharply.

According to 2020 statistics, the import volume of acrylic paints in Russia was more than $400 million. On the other hand, the export volume of acrylic paints from Russia in the same year was about $150 million. This shows that Russia is a large market for importing acrylic paints and, at the same time, has the ability to export this product.

Overall, the outlook for the acrylic paint industry in the Russian market looks optimistic as it attracts domestic consumers looking for quality products as well as international markets looking to capitalize on this booming sector. The following sections address specific aspects of this dynamic market.

Industrial Paints and Resins

The development of the automotive market in Russia creates the view that the need for industrial paints, especially in the automotive industry, is expanding. RUPEC quoted AvtoVAZ as saying that there are problems with the shortage of automotive paints in Russia. The company has turned to imports due to a lack of supply in the domestic market, as well as the loss of qualifications of domestic companies in order to ensure the necessary quality. Despite the shift to importing Chinese products, the market is still looking for a high-quality product.

In 2022, Russian manufacturers of paints for the automotive industry were forced to develop their products. In 2023, the market is still in crisis due to low production volumes and the presence of Chinese goods of unexpected quality.

Automotive Paint Market in Russia: Boom and Challenges

The automotive paint market is one of the vital sectors of the automotive industry, which has a direct impact on the attractiveness and value of cars.

Market Boom:

The automotive industry in Russia is one of the largest industries in the country, and the new car market is the second largest car market in Europe. This boom in the automotive industry has a direct impact on the automotive paint market. With the increase in car sales, the demand for automotive paints also increases.

Diversity and Development:

Due to the boom in the automotive industry in Russia, the diversity of automotive paints has also increased. Large companies such as PPG, BASF and Axalta are present in this market and offer various types of automotive paints. This diversity and development of the market has provided new opportunities for paint companies as well as automotive suppliers.

Challenges:

However, the automotive paint market also faces challenges. One of these challenges is the provision of raw materials for paint production. Also, fierce competition in the market, technological innovations in paint production, as well as changes in consumer demand and tastes are other challenges for this market.

Opportunities:

However, the automotive paint market in Russia still has many opportunities for growth and development. This includes opportunities for the development of coating paints, new (production) car paints, as well as other related products. Also, the boom in the automotive industry and the growth of the electric vehicle market have also created new opportunities for the production and supply of automotive paints.

Therefore, the automotive paint market in Russia is a very attractive and thriving market, which, given the booming automotive industry and the growing demand for cars, still has many opportunities for growth and development. However, companies must also be familiar with the challenges of this market and be able to compete in a dynamic and competitive market.

Until mid-2022, the main supplier of industrial paints was the Tolyatti company PPG. However, due to the sanctions imposed, this company has left the Russian market, and automakers are looking for new suppliers to completely replace the previous sources. This issue is being pursued with the support of the Russian Ministry of Industry and Trade.

For further consideration, let’s take a closer look at how the market situation in the automotive paint and coatings industry has changed in recent years:

By 2022, there were more than one hundred and fifty manufacturers of paints and resins in Russia. However, both segments of automotive paints: production paints and car repair paints were dependent on imports. Valery Abramov estimates the share of imports in this market in the Russian Federation to be between 60 and 70 percent by 2022, with a total domestic consumption of 20,000 tons. In addition, the share of domestic manufacturers in the automotive repair paints segment was higher. But in the production paints segment, which is precisely necessary for the production of new cars, the situation is much worse. About 80 percent of the paint and resin materials needed by the market were supplied through imports or through the production of foreign companies that had production plants in Russia. Russian companies initially tried to increase their share of the paint and resin market, but because they did not receive a proper response from the market, they stopped production. In this regard, Gennady Uryanov, Director of the Centerlock Association, Vice President of the Russian Union of Chemists, says: “A suitable opportunity has been created for the Russian Ministry of Industry and Trade.” In fact, the Yaroslavl Russian Paint Plant is the largest domestic manufacturer that has managed to capture a share of the paint and resin market for the production of passenger cars. The company supplies paints to Renault, Volkswagen, GAZ, KAMAZ, etc. However, the company itself estimates its share in the Russian automotive paint market to be less than 20% by 2022.

Paints for cars are also produced at the Tver Paint and Resin Plant. However, the company’s products are intended only for commercial vehicles such as trucks, buses, agricultural machinery, etc. (There is no information about the volume of production and the main consumers for this company.

The situation of the Russian paint and resin market in 2022

Until the spring of 2022, the situation was satisfactory for market participants, given the announcement of sanctions packages in April of the same year banning the import of a wide range of paints and resins, as well as materials for their production into the Russian Federation

Thus, at first three of their main suppliers – PPG, Basf and AkzoNobel – left the Russian market, then other European companies also began to leave the country, but at that time nothing was known about the problems with paints for factories and production centers, Russia had sufficient stocks of paints and resins that were previously produced and supplied in the country. But in January 2023, a shortage crisis in paints and resins became apparent, so that the General Director of the Russian Paints Company Valery Abramov estimated the decrease in market volumes last year at more than 50%.

Despite the market decline, domestic manufacturers of the paint and Despite the difficulties in obtaining raw materials, the resins have intensified their activities in the hope of filling the empty niches and becoming a good alternative to imports in the market. According to Valery Abramov, “Some products had to be re-made from scratch according to the standards of European goods, and this took time.” However, this did not meet the expectations of the Russian paint management.

Since the development and standardization process in industrial paints is a time-consuming process, and the consumer is inclined to replace consumables with new ones, according to Rhein, the supplier must be able to produce and supply goods with the requested specifications. Gennady Uryanov says: “It must be said that the set and composition of the instructions of each car manufacturer is unique.

It is precisely because of these unique features of the set and composition of the instructions that manufacturing companies do not consider domestically produced products. Diana Kudryashova, R&D Director at NIITEKHIM (Scientific Research Institute of Technical and Economic Research in the Chemical Complex), in turn, believes that the reason for this may be the complex technological process with a long assimilation. She believes that manufacturers will not be able to take the risk of products with new and untested characteristics.

In general, the automotive paint market in Russia has many opportunities for development and growth, which also serve as attractive opportunities for domestic manufacturers and importers.

Ranking of the largest manufacturers of paints and resins in the Russian Federation (by revenue at the end of 2019)

Russia’s Paint and Resin Trade Status

The following is an examination of Russia’s import and export volume and trade balance in the paint and resin industry.

Conclusion

According to the research conducted and the information and chart above, it can be said that the majority of the growing market demand for industrial paints and resins is being met through imports, and with the withdrawal of European countries from Russia in 2022 (as is clearly evident in the chart above), a very suitable business environment has been provided for Iranian manufacturers to have a significant share of this growing market.

Key and important factors for the presence of Iranian manufacturers in the Russian market

According to the initial research conducted on the paint industry in the large Russian market and considering the key factors:

High and consistent quality of products manufactured in Iran
Preferential tariffs on import duties of Iranian goods to Russia
Low export costs of Iranian products to Russia compared to Western goods
The proximity and proximity of Iran and Russia as a logistical advantage and the possibility of exporting Iranian goods to Russia by various methods such as land, rail and sea transportation in the shortest time and at low shipping prices
The absence of a large part of the market from famous Western brands
The possibility of rapid expansion of market share and access to the competitive and trade space in Russia

It can be said that there is a high economic justification for entering the large Russian-Eurasian market, and the Fardad Group of Companies is proud to establish effective and successful joint cooperation in this direction.