Cement supplies to Russia from Belarus increased sharply in the third quarter of this year, as reported by RBC. In the first two months of the third quarter alone, more than 434,000 of cement were delivered to Russia from the union state, which is 61% more than in the same period last year.
SoyuzCement sees certain risks for Russian cement plants. According to market participants, Belarus started to supply us more cement because of the Western sanctions imposed on this country. If the volume of cement supplied continues to grow, as the Federal Customs Service (FCS) warns about it, it may lead to problems at the Russian productions. However, the Ministry of Industry and Trade disagrees with this statement.
According to the data for January-October, 1.27 million tons of cement was delivered to Russia from Belarus. Last year, our country purchased 1.3 million tons from the Republic of Belarus. Belarus is the largest supplier of this type of construction materials, as it accounts for more than 70% of the total imports. At the same time, cement supplies to Russia from Egypt and Iran also increased.
Meanwhile, market players have appealed to the Ministry of Industry and Trade, as reported by RBC, because of the sharply increased imports of cement from Belarus. The answer was the following:
“The Ministry of Industry and Trade does not register an increase in supplies. On the contrary, according to the information received from the Ministry it decreased by 21% during the first 10 months of the current year. However, the Ministry of Industry and Trade refers to the data of the Federal Customs Service. The press service of the Federal Customs Service, in turn, specified that they cannot disclose indicators of the volume of certain import positions due to the fact that customs statistics was classified in April this year after the start of a special military operation in Ukraine and the ensuing Western sanctions.
Executive Partner of SMPRO Vladimir Guz said that the company operates with the information it receives directly from enterprises, while the customs statistics coming to the Ministry of Industry and Trade may not reflect the entirety of data, as both Russia and Belarus are members of the EAEC, and, therefore, cement at the border is not subject to customs inspection. At the same time, between the states that are members of the EEU, as noted by RBC, goods are transported freely without state control and customs declaration.
Enterprises in the Leningrad Region and the Moscow Region began to buy more cement. According to SMPRO, two enterprises, Krichevcementnoshifer and the Belarusian Cement Plant, increased their exports to Russia.
So, why did the supplies of cement from the neighboring country increase so dramatically? As Guz noted, in some cases the Belarusian cement is 5% cheaper than the Russian one. In addition to that, the producers provide commodity credits. According to Vyacheslav Shmatov, the chairman of the board of Soyuzcement and the director general of Russia's biggest cement producer Eurocement, Belarusian producers can offer such preferential conditions to their buyers, because they have subsidies and various privileges from the state. In Belarus, for instance, as Shmatov noted, cement plants are exempt from land and property tax, as well as they get loan debt repayments.
What is the downside of increasing cement imports for Russia? If the growth of cement imports per year increases to 5 million tons, it would, according to Shmatov, force 2-3 Russian cement plants out of the market.
Meanwhile, in Russia, according to RBC, cement plants have a combined annual capacity of 95 - 105 million tons of cement. At the moment, according to SMPRO, there are 65 cement production sites in Russia. It is 58 plants with a full cycle and 7 grinding plants.
According to Lenta.ru, earlier, the media reported that European countries are going to soften some of the anti-Russian sanctions. In particular, the ban on the transport of fertilizers, cement, as well as “other products” may be lifted. Due to the fact that the EU countries, by imposing ill-considered numerous sanctions against Russia, did more harm to themselves, there are now prerequisites for the abolition of a number of restrictions. International trade and economies are closely linked, and disruption of years of established logistics routes inevitably leads to disruptions and the need to reconsider further actions.