Some Russian factories face bankruptcy due to ban on supply of important raw materials

Russian industrial businesses in some industries face bankruptcy due to the inability to purchase critical chemical raw materials abroad, including from "friendly" countries.

Source: a letter sent to the Russian government by 20 large Russian companies, The Moscow Times reports

Details: The letter was sent by representatives of the automotive industry, construction companies and manufacturers of household appliances.

The 14th package of EU sanctions has resulted in the suspension of supplies of polymethylene phenyl isocyanates (another name for methylene diphenyl diisocyanate, MDI) to Russia. These are used in the production of foams, sealants, self-levelling floors, pipes, refrigerator components and car parts.

According to a letter sent to Anton Alikhanov, the Minister of Industry and Trade of Russia, the economy is 100% dependent on imports of this material.

Suppliers from the US, Europe and Japan stopped shipping, followed by China. China's largest MDI producer, Wanhua Chemical Group, announced a complete halt to supplies to Russia.

At the same time, an attempt to reach an agreement with Saudi Arabia was unsuccessful, the industrialists complain. Sadara Chemical did not confirm the possibility of shipments to Russia.

Quote: "This decision has come as a shock to the industry, as given the limited stocks of market participants and the limited shelf life of MDI, maintaining this situation over the next few months will entail the risk of shutdown and bankruptcy of existing production facilities," the letter says.

Alexei Gorokhov, Executive Director of the NAPPAN Association (uniting manufacturers of building panels in Russia), confirmed that "panic has already begun in the market".

The fact is that it is technically impossible to stockpile MDI, as it decomposes quickly, and the existing stocks will last only two months.

Quote: "The loss from a shortage of this component will be huge. There is nothing to replace it in most applications. After all, these are jobs; these are people who need to be paid, but the companies will not be able to provide them," said Gorokhov.

Without MDI, it is impossible to produce the foam used to make thermal insulation, but not only construction companies will suffer, but also, for example, refrigerator manufacturers, warns Anton Guskov, an official representative of RATEK (an association of trading companies and manufacturers of electrical household and computer equipment).

Quote: "We do not produce it (MDI), and if we do, it is produced in small quantities and in a quality unsuitable for household appliances," Guskov complains.

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