Many Russian industrial enterprises are threatened with production stoppages and bankruptcy due to the loss of imports of critical chemical raw materials from China. Panic is growing in the market, and twenty large companies have already appealed to the Kremlin for help. This was reported by the Polish media outlet Rzeczpospolita, citing Russian media, according to Komersant ukrainskyi
The problem lies in the ban on the sale of isocyanates (MDIs) to Russia, imposed by the fourteenth package of EU sanctions. These compounds are needed for the production of polyurethane foams, sealants, self-leveling floors, pipes, refrigerator components, and automotive parts. In a letter to the Kremlin, Russian companies claim that Russia’s economy is 100 per cent dependent on MDI imports.
Suppliers from the US, Europe and Japan stopped supplying Russia with this raw material immediately after the sanctions were imposed in June 2024, and now China has joined them. China’s largest MDI producer, Wanhua Chemical Group, announced a complete halt to exports to Russia.
An attempt to reach an agreement with Saudi Arabia also failed: the Saudi concern Sadara Chemical did not confirm the possibility of deliveries to Russia.
At the same time, Russia does not produce these chemical compounds, and their black imports through third countries that help Russia circumvent sanctions are also difficult due to the very short shelf life of the product. Since black imports take longer, there is a very high probability that this option is not suitable for Russia.
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“This decision came as a shock to the industry, as given the limited resources of market participants and the limited shelf life of MDI, maintaining this situation for the next few months is associated with the risk of production stoppages and bankruptcy of existing enterprises,”
– the letter’s signatories wrote.
Market participants note that panic has already begun there. Stockpiling MDI is technically impossible as it decomposes quickly, and the existing reserves will last only two months.
“The losses caused by the lack of this component will be huge. In most applications, it cannot be replaced. And these are jobs, these are people who need to get paid, but because of the lack of a key component, companies will not be able to provide them,”
– complains one market participant.
“Without MDI, it is impossible to produce the foam used to make thermal insulation, and not only construction companies but also, for example, refrigerator manufacturers will suffer from this.”
– says another household appliance manufacturer.
The launch of MDI’s own production was included in the Kremlin’s industrial development programme back in 2014, but no full-fledged plant has been built in 10 years. It was more convenient, faster and cheaper for Russian companies to buy proven and high-quality MDI from abroad.
In the letter, representatives of industrial enterprises ask the Kremlin to urgently resolve the problem “at all levels of interaction” with China, as well as to help reach an agreement with Saudi Arabia. Businesses also point to the need to urgently resolve problems with servicing MDI payments in Chinese banks. The latter have stopped servicing transactions with Russian companies.