Recovering Russian Economy Revitalizes Demand for Specialty Chemicals

Russia is on the verge of reporting a full economic recovery and this will in turn lead to a higher demand for specialty chemicals, market watchers expect. The financial sanctions imposed on Russia by Western nations in the wake of the Ukraine crisis dealt a blow to the Russian economy. But the country is finally on the brink of emerging from the rough phase.

As the state of the Russian economy improves, the demand for specialty chemicals is expected to return to pre-crisis levels. According to current projections, the surge in the demand for specialty chemicals will largely be brought about by the defense and aerospace, construction, food processing, and consumer electronics industries.

The Russian defense sector, for instance, is expected to see a few multimillion dollar deals in the next few months. The Russian Defense Ministry has reportedly initiated talks with manufacturers of specialty chemicals for the development of chemical-based weapons and combat equipment. The Russian air force has also been in talks with U.S. specialty chemicals supplier, Socomore, to obtain specialty chemicals for a project pertaining to sixth-generation Russian combat aircraft. Currently being developed by the United Aircraft Corporation (UAC), the aircraft is expected to enter serial production somewhere between 2020 and 2022, as it is still in the design stage.

In recent years, the Russian chemicals market has been characterized by a shift from commodity chemicals to specialty chemicals. This shift has opened new avenues for investments for chemical multinationals. These opportunities are accentuated by the fact that the current market penetration levels of specialty chemicals remain low in Russia.

The booming Russian construction industry, too, is ready to take off and will create substantial demand for specialty chemicals in the near future. What might aid the growth of the Russian specialty chemicals market is also the fact that labor costs in Russia are lower than in several other emerging nations. As a result, there is a strong likelihood of chemical majors setting up full-fledged specialty chemicals production facilities in the country over the foreseeable future.

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