1 The Russian Composites Market JEC International Composites Summit Paris, March 30th, 2011.
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Transcript of 1 The Russian Composites Market JEC International Composites Summit Paris, March 30th, 2011.
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1
The Russian Composites Market
JEC International Composites Summit
Paris, March 30th, 2011
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2
Background on Bautex
• German-Russian Production Company
• 25.000 tons annual glassfiber consumption
• HQ in Moscow, branch office in Wladimir
• Plant in Gus-Khroustalnij, Russia
– > 40.000 m2 production area
• Plant in Pabianice, Poland
• Plant/ distribution center in Germany, Thuringia
• 500 employees
• Annual growth > 50%
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3
Background on Bautex
• Glassfiber Fabrics
– roofing fabrics– fassade cladding meshes– grinding wheel meshes– wall covering– roving fabrics– asphalt reinforcement meshes
• Moulding Compounds
– bulk– sheet
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4
Background on Bautex
• BauTex is working without corruption
• Further growth esp. in the field of composite materials
• BauTex as a docking station/ platform for partner companies in similar or downstream applications
• Provider of infrastructure, production base, Russia Know-How
• Looking at joint venture potentials
• www.bautex.ru
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5
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
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6
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
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7
Brief profile of Russia
• Largest country in the world/ long distances/ 9 time zones
• Strong academic, technological and industrial legacy
• Enormous natural resources – gas, oil, minerals, world biggest oil producer
• Population of 142 mln offers large potential markets e.g. automobiles
• Large construction programs with government encouragement
• Harsh climatic conditions present opportunities for composites
• Strong metal tradition and industry base, steel is key (russ. stal)
• Composites so far relatively underdeveloped especially local resin production
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8
Sustained Russian growth:running at 7% p.a. up to 2008
Russian GDP, Annual Growth
7,3
7,2
6,4
7,7 8,1
5,6
4,0
-7,9
-10,0
-8,0
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
10,0
2003 2004 2005 2006 2007 2008 2009 2010in %
• After the crisis of 2000, the Russian economy had many years of good growth averaging around 7% until the financial crisis of 2008/ 09
• This growth was helped by the growing funds that Russia was receiving in payment for oil and gas
• The recession of 2009 was brutal with a GDP reduction of 8% but the economy recovered in 2010 to show a 4% growth
• Forecasters are estimating that the Russian economy will grow in the 4 % range for the coming years
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Foreign Currency Reserves &Trade Balance recovering
Russian Foreign Currency Reserves
Russian Imports and Exports
• Russia has become the world’s biggest oil producer.
• The oil price expected to hit $ 200/ bbl this year
• Russia has enjoyed a positive and growing trade balance over recent years which is growing again after the 2009 drop
Source : Deutsche Bank
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10
FDI into Russia needs to recover
• FDI inflows to Russia spiked in 2008 at just over $70 bln and then plummeted in 2009, in 2010 down to 40 or $ 14 bln ?
• Some recovery took place in 2010 but the government expects levels of $60 - 80bln in the next years
• this would bring FDI close to the Chinese levels
• Russia is attracting slightly more FDI inflow than India and Brazil
FDI Inflows to BRIC countries
Source : IIF reported by Deutsche Bank, Feb 2011
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11
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
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12
Key Russian industry sectors
• Automotive Industry
• Pipe Industry
• Aerospace Industry
• Railway Industry
• National Projects– Olympic Winter Games Sochi 2014– World Football Cup 2018
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13
The Russian Automotive Industry
New light vehicle sales - in Russia and Germany
0
1.000
2.000
3.000
4.000
'000
un
its
RussiaGermany
ACGR +24% ‘0
5 - ‘08
• New light vehicle sales grew in Russia at an ACGR of 24% from 2005 to 2008
• In 2008, before the crisis, there was talk that Russian light vehicle sales would supersede Germany’s by 2010 ( Germany being the largest country car market in Europe)
• However the market saw a drop of some 50% in 2009 but recovered by over 30% in 2010 and sales prospects remain good for the future
• 2012 sales to be 2,9 mio units
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14
The Russian Automotive Industry
• Continous growth of localization is a prerequisite for reduced customs duties on import parts !!!
• Foreign carmakers have stepped up efforts for J/Vs with Russian firms
• 300.000 units p.a. make companies eligible for a range of incentives
• The Sollers/ Ford J/V was announced in Feb 2011. The goal is to reach a target of at least 300.000 vehicles p.a.
• Volkswagen and GAZ plan a joint venture to produce 300.000 cars p.a.180.000 at Kaluga VW plant, 120.000 in N.Novgorod at GAZ
• BCG expects Russia to be the 6th largest global auto market by 2020 with sales of 4 mio units p.a.
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15
The Russian Automotive Industry
Russian light vehicle market - by source
73%
72%
64%
52%
0
1.000
2.000
3.000
2007
2008
2009
2010
'00
0 u
nit
s% Russian produce/ total foreignbrandsImports
Foreign brands produced in Russia
Russian brands
• The Russian government, seeing that imports of foreign cars were rising very fast, has imposed high import duties on imported cars to encourage local production
• In 2010 the share of cars sold - but produced by foreign companies in Russia - reached parity with the cars produced in Russia by local companies
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16
Most major foreign producers are invested in production in Russia
• As shown on the map there are four main clusters for automotive production in Russia
• Most of the world’s leading car producers have invested in production in Russia, partially motivated by the government’s heavy import duties on cars :
Source : AEB/E&Y
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17
The Russian Construction Industry
• Overall Russian construction grew by an ACGR of 17% between 2005 and 2008
• The drop of 15% was due to a buffering by the state which is directly involved in constructing houses and in various infrastructure projects e.g. Sochi
• Early in 2011, the prime minister has announced house construction targets which for a 50% increase in spending, some of which is supposed to come from private investors
Russian Construction Output 2005 - 2010
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2005 2006 2007 2008 2009 2010
bln
RUB
-20,0%
-15,0%
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
20,0%
Annu
al g
row
th in
%
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18
The Russian Pipe Industry
• Russia’s large distances combined with the size of the oil and gas industries means Russia is a huge consumer of steel piping
• The corrosive environment means that pipes often have to be changed as often as every three years
• There is certainly a large potential opportunity for composite pipe but steel is a very established material in Russia while composites are at their beginning
• There are several small diameter filament winders in Russia but the industry needs strong promotion of the benefits of composites as well as ensuring standards are established and respected.
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19
The Russian Aerospace Industry
• Russia had a strong aerospace industry prior to 1990 in both passenger and military planes
• In 2006 the Russian government created the United Aircraft Corporation (UAC) which merged the aircraft activities of the three major producers, namely Sukhoi, Irkut and Tupolev
• UAC currently has five major aircraft development projects underway including the regional Super Jet – 100 and the short/ medium range MS - 21
• The Russian Technologies State Corporation (RT) founded in 2007 is an umbrella for many aircraft related technology companies
• RT has set aside funds for a new carbon fiber enterprise in Ulianovsk
• Production facilities have been upgraded including the purchase in 2010 of 1 MAG CF tape layer
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20
The Russian Railway Industry• Russia plans to build an expanded
high-speed railway network with Sapsan trains
• until 2017 Moscow - St. Petersburg660 km, € 15 bln
• in total 3.000 km new HS-tracks until 2018
• for the Public-Private-Partnerships a concession-modell is foreseen:Design-Built-Finance-Maintain (DBFM)
• www.hsrail.ru
• a very old park of waggons of „electrichki“ the suburban trains, which need to be exchanged
• Alstom bought 25%+1 in Transmash
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21
Football World Cup 2018
• Russia will spend € 7 bln - € 14 bln on upgrades to infrastructure in the 13 host cities
• 13 new stadiums with a lot of new seats
• Russia needs to build or renovate an enormous amount of hotel rooms, FIFA said
Zur Anzeige wird der QuickTime™ Dekompressor „“
benötigt.
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22
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
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23
The Russian Composites Market
• The Russian Composites Industry is focused mainly on glass fibre composites
• There is only a very small production of carbon fibre and 2 of Basalt and natural fibre composites have yet to be seriously developed
• Glass reinforcement fibre volumes (excl. yarns) have been publicly reported but glass fibre consumption takes place in both non-polymer and polymer based composites segments :
– Mesh production (for façade cladding)– Fabric for bitumenous roofing– Veil production (for roofing and PVC flooring)– Geotextiles
– Moulded polymer composite production
• The composites segment in Russia, which was 156 kT in 2010 (based on 33% glass content) grew by an ACGR of 16% over the 2006 volume of 86 kT
2010 total Glass fibre reinforcement Consumption
in Russia/ Belorussia in 2010 (est.): 100 kT
Veil11%
Roofing21%
Mesh1%
Composites62%
Geotextil5%
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24
Per capita comparison
• The potential for growth of the Russian composites market can best be seen by comparing the 2010 per capita production of composites
• The US leads the world with a consumption of 8.6 kg/ person/ year
• The EU 27 produces 4.9 kg/ capita/ year
• China in spite of its fast growth in consumption of composite materials is only at a level of 2.5 kg/ person/ year
• Russia in 2010 was at a level of 1,1 kg per capita per year
2010 per capita production of composites by country
8,6
4,9
2,5
1,1
0,0
2,0
4,0
6,0
8,0
10,0
12,0
in k
g/ cap
ita/ year
Source : Connectra
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25
2010 status of key composite manufacturing processes in Russia
Process Status 2010Glass k tpa
Additional Comments
Hand Lay Up, RTM
6Only in 2011 a Chopped Strand Mat
line was started, so either fabrics are used or mats were imported
Spray Up Relatively few machines in Russia 1
Filament Winding
There are multiple filament winding companies who have converted
themselves from making rocket launcher tubes
12For composites to penetrate the pipe industry to any reasonable degree will
require a large industry effort
Pultrusion Well established as a process with some leading companies
1
SMCBauTex has started an SMC production
with a capacity of 12.000 tpaestablishing a Technicum for Moulding
0,2the Russian car producers have no
experience with SMC, trucks just starta deficit in presses and technology
BMCTraditional product used in the electrical industry was a phenolic based BMC, tiny
UP market1,5
Thermoplastic Compounding
Several large TP compounders specialised in glass reinforced
10
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26
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
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27
Challenges and Hurdles to Success in Russia
• High inflation of an average of 10% per year, 2011 expected 7 - 8%versus a very strong Russian Rouble
• Coming years economy maybe stagnant
• Cartels and price collusions because of a non-functioning anti-monopoly comittee
• bad business climate because of corruption, permanent danger from executive organs such as tax inspection, customs, fire inspection etc.
• unsecured investment conditions because of bureaucracy and a lot of red tape (missing one-window-stop)
• very little support culture and attention to SME
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28
Outline of presentation
• Key points on Russia & the Russian Economy
• Key Russian industry sectors
• The Russian Composites Market
• Challenges to investments in Russia
• Future prospects
![Page 29: 1 The Russian Composites Market JEC International Composites Summit Paris, March 30th, 2011.](https://reader035.fdocuments.us/reader035/viewer/2022062307/551b275e550346d41a8b48f5/html5/thumbnails/29.jpg)
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Future prospects for Composites in Russia• Challenges
– Need for creating greater awareness of composites within industry
– Life-time cost saving, a usual argument for composites replacing traditional materials, may be more difficult to sell in a country which thinks in terms of job maintenance and early replacement repeat jobs
– Need for local production of high quality resins
• The composite producers, represented by their association “Union of manufactureres of composite materials”, have recognized the importance of National Standards for the composite materials
• a National Standard for “Pipes out of fiber-reinforced thermosets” ready to be inked
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Future prospects for Composites in Russia
• in 2011 another 20 National Standard projects shall be prepared, during the following years 30 - 40 p.a.
• the All-russian Institute of Aviation Materials has prepared the following Standards:
– carbon fiber fabrics, technical requirements and testing methods– nano-modified prepregs, types and main parameters– nano-composite materials, binding nano-modified polymers, types and
main characteristics
• these Carbon specification initiative by GOST showing the focus on catching up with progress on the international composite markets
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Future prospects for Composites in Russia
• Market potential
– two new furnaces of glass fiber in Russia: 20 kT and 45 kT will give rise to new and additional applications because of client’s support and easier access
– Given today’s low usage of composites in all major potential markets there appear to be good prospects for continued double digit growth of the composites market
– especially in selected fields connected with oil & gas and with projects, which are strongly funded and supported by the state, such as infrastructure in roads, railway, aviaition and housing construction
– given the pressure for localization the automobile industry will give strong growth incentives, esp. quality-wise
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Thank you for your attention