ru.png Paper Distributors Associaton

Mr. Jan Hugo Engstrom
46 Pereyaslavskaya st., buil 2
12911 MOSCOW
RUSSIA
tel. +7 495 787 0150
faxnr. +7 495 787 0155
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www.sbo-paper.ru

 

Papermerchanting in Russia in 2012

 

Russian Economy, Commodities and Services Market

 

Russia demonstrated the highest economic growth among the G8 countries at year-end 2012, yet it also continued to retain the lead in the G8 in terms of the rate of consumer price inflation (6.6%).

In 2012 the Russia's GDP volume stood at 103.4% in comparison with 2011. The economic growth of the RF slowed down compared to its 4.3% increase recorded in 2011.

The 2012 Index of Industrial Production reached 102.6% compared to 2011.

The 2012 estimates of fixed capital investments showed 106.7% versus the 2011 level.

For the year 2012 the Consumer Price Index (CPI) in Russia was 106.6% and the cost of minimum food set increased by 7.8% on average.

The 2012 unemployment rate was 5.7% on average.

In 2012 the volume of population incomes rose by 10% in comparison with the previous year. The population spending on goods and services rose by 11.2% compared to 2011.  For this period the population saved 12.9% more money than for the same period in the previous year. The 2012 food products retail turnover grew by 3% and that of non-foods by 8.4%. The paid services market turnover rose by 3.5 %.

According to preliminary data by the Ministry of Finance of Russia the 2012 Federal Budget deficit was 0.1% of GDP as compared to the Budget surplus of 0.8% a year earlier. The budgetary incomes totaled 20.9% of GDP (20.8 of GDP in 2011) while the federal expenditures amounted to 21% of GDP (20% of GDP in 2011).

For the January-December period of 2012 the Russia's foreign trade turnover amounted to US$864.7 billion (102.2% to 2011), of which US$ 529.3 billion (101.4% to 2011.) was export, and US$335.4 billion fell on import  (103.6% to 2011).

 


Paper and printing market

 

In 2012 the total printed goods output in Russia practically did not change in comparison with 2011. The printing services market have failed to get balanced after the crisis: a number of letterpress plants struggle on while showing low or even zero profitability.  The operational printing capacities exceed the demand and are not fully utilized.  The terms of production planning are short, and the principal tool of competition is price. In many respects it happens due to the fact that a sizable proportion of the advertising budgets have pulled out of the printing business. The cardboard packaging market may be considered more or less stable yet the share of cardboard sales by paper distributors goes down giving way to direct purchases.

All the year round the wholesalers felt the pressure of huge inventory in stock both carried over from 2011 and accumulated in 2012. It can be explained by impulsive unpredictable demand on the part of printing establishments and by complexity of mid-term planning as well. Consequently the wholesale distribution was all the year round accompanied by tough competition, low paper and board prices, and slump in margins. At year-end 2012 there were significant non-payments by letterpress plants and rise in debts.

And still the major problem of the market in general is coming from the 2012 accession of Russia to WTO. According to the Protocol of Accession of Russia to WTO and the Schedule of concessions and obligations all coated papers and boards not produced in Russia are subject to 5% import customs duties. In July 2012 the President of Russia signed the law on ratification of the Protocol. The time of accession came on August 23, 2012, when the Protocol and the Schedule entered into force. But....instead of the 5% duties there are 15% duties in effect which are applied by the decision of the Russian Government on 16 codes of imported coated papers and boards! Thus Russia directly violates its WTO commitments.  It came as a surprise to all players of the market, pushed the prices and costs up and resulted in general sales drop. Over 600000 tons of papers and boards to the tune of US$700 million are imported to Russia under these 16 codes annually. Member countries of the European Union supply about 80% of the import.

 

 

Activities of the Paper Distributors Association

 

 

 

At mid-year 2012 the Association urgently engaged itself in settling the problem created by such unforeseen violation of the WTO accession terms that momentarily nullified the anticipated "rules of the game".  Meetings and consultations were organized, statements for mass media made and petitions to the Government submitted. However we have not yet succeeded in bringing the import duties in compliance with the obligations to WTO.  The Government justifies its decision by a necessity to support future investment projects of coated paper manufacturing in Russia.  But the 15% duties have been in force for 13 years heretofore and neither of the declared projects has been implemented so far. We continue our work on the issue with the Government of Russia and the European Union, and all major companies in the sector are also involved in the process.

Up until the time of the Russia's accession to WTO temporary 5% import duties had been applied on certain grades of coated papers and boards. Everyone was expecting that the 5% duties on these and other types of papers and boards would become permanent from the moment of the accession to WTO.  As long as the issue of application of the reduced duties according to the WTO Protocol was dragging on we had to turn around a submission to the Government requesting yet another extension of the tentative 5% duties.   Presently this submission undergoes the process of approval by the Customs Union (Russia, Belarus and Kazakhstan have formed a common customs space and tariff since 2010). We hope that the 5% duties will be further extended and eventually applied on a permanent basis in compliance with the Russia's commitments to WTO.

The issues of customs duties reduction were central on the agenda of the Association in 2012 and they remain so in 2013.

We continue our work on other important issues as well. In 2012 the Paper Distributors Association prepared an industry report titled "Russian Market of Printing Papers" for the Federal Press and Mass Communications Agency of Russia. The report was made public and is presently available free to all. In December 2012 we organized an industrial forum "Publishing and Printing Industry in Russia, Paper and Board Market". Heads of enterprises and companies took part in the work of the forum, and strategic decisions on the market support and development were elaborated there. We are also going along with development of our statistic sector and the work on reduction of bad debts.

 

 

facts&figures