The demand for marine coatings in Russia is on the rise driven by a full-fledged boom in the domestic shipbuilding industry. The domestic production has been seen steadily growing thanks to the efforts of some international companies launching their production facilities in Russia as well as local manufacturers who proved to be highly competitive.

The Russian shipbuilding industry is entering a new era. The new government-run fleet renewal program in the fishing industry resulted in up to 40 new fishing vessels with the total worth around Rub 110 billion ($1.8 billion) are slated to be built in the country in the coming few years. Russian shipyards are also mastering the production of cruise liners, with the construction of the first of them already started.

These are both important milestones for the domestic shipbuilding industry since large fishing boats and cruise liners have not been built in Russia for the past 40 years.

Yet it is the development of the Northern Sea Route (NSR) that lead  Russian analysts to say that very bright prospects for the national shipbuilding industry are on the horizon. Russian President Vladimir Putin earlier ordered the government to increase the cargo flow on the NSR nearly fourfold to 80 million tons per year.

NSR is the shortest waterway from Europe to Asia.

Its upcoming development is primarily associated with global warming. The paths that have been captured by ice for several thousand years are now melting and so the ice cap in the region is gradually shrinking. The Russian government expects that the NSR could become a real alternative to the Suez Canal already in the foreseeable future, but the increase in cargo flows requires new tankers, ice-breakers, rescue vessels and auxiliary vessels.

Non-Russian investments

As of today, Russia accounts for only 1.5 percent to two percent of the global marine coatings market, estimated Gennady Averyanov, president of the Russian association of coatings producers Centrlack. There is a clear growth trend on the market, with the increase in demand for coatings for shipbuilding of five percent to 10 percent per year, Averyanov estimated.

“Russian companies are steadily increasing their share of the market. In 2018 and in the first half of 2019 the share of the coatings of Russian origin on the domestic market was between 55 percent and 57 percent. This is an assessment of independent analysts,” Averyanov said.

There are numerous preconditions for growth in the production of marine coating in Russia.

First off, some international companies, including Jotun and Hempel, have localized their production in the country.

“Their production is growing, but not fast enough. It takes not only time to localize composition and to replace the imported raw materials with the local ones, but also homologation and the right approach in order to keep the quality parameters of the products at the same level,”Averyanov said.

Peter De Groot, general director of the Russian division of Hempel confirmed that the company felt itself very comfortable on the Russia market.

“We find that our market share is as high as it has ever been in the last 10 years. So, yes, business is very good for us,” he said.

Hempel takes advantage of the antifouling performance as Hempel’s patented technology that delivers superior fuel savings, as compared to competitors, he said.

“I also believe that Hempel provides the best technical service through its very experienced team. We stand by our service and quality of our products. Also, with our factory in Ulyanovsk, we are a great supporter of high quality local Russian production, providing employment and contributing to the Russian economy and supporting charity,” De Groot added.

Hempel announced plans to double the production performance of its Ulyanovsk plant by 2021.

Jotun opened its factory in Leningrad Oblast, Russia in 2017. The factory can produce up to 12 million liters of paint and 3,600 tons of powder coatings per year. Jotun’s total investment in this project is approximately Rub1.7 billion ($24 million).

Localization Becomes Necessary

Both companies said the production localization was aimed at strengthening their positions on the Russian market.

“Jotun believes that having production in Russia will support our ambitious sales plans and allow us to be closer to our customers,” Morten Fon, Jotun president and CEO said when the Jotun factory was launched.

The idea to localize marine coatings production is also associated with the import-replacement program initiated by the Russian government in 2014.

In some segments, for example, the fishing industry, the government sets certain localization targets on new vessels, and the companies have to match to be eligible to state support.

Some Russian shipyards when launching competitive bidding procedures on marine coatings supply allow only localized companies to participate. Everyone believes this trend would only gain momentum in the future.

“The available capacities of the Russian manufacturers and the international companies with localized production make it possible to limit or even abandon marine coatings import. The tasks to increase the production of coatings for shipbuilding and ship repair exist,” Averyanov said.

“One of the main factors affecting the market is more stringent requirements for [use of] local production under the import-replacement program, which pushes each manufacturer towards a decision to create and increase such production [on the Russian ground] to achieve a noticeable presence on the Russian market,” said Ivailo Atanasov, regional manager East Europe, Russia, Black Sea & Turkey, AkzoNobel. “AkzoNobel Marine and Protective Coatings has invested heavily in its local production in Lipetsk and is beginning to produce a wide range of products for the Russian market.”

Russian School

Russian marine coatings producers could have great prospects thanks to the strong scientific base since several state-owned research institutes have been engaged in R&D projects in this area for quite some time and promise to bring up the result on the market soon.

For example, St. Petersburg State University earlier reported that it had designed antifouling coating with some unique properties that would be in high demand not only in Russia but also in the global market. According to Alexander Railkin, a senior scientist from the university, his team managed to determine a group of natural compounds that were described as being “environmental-friendly and not less effective than the coatings available on the market.”

The scientists have been already running tests of their new coating in the White Sea and South-Chinese Sea. The key feature of the new technology is that scientists are not using any copper in their products, so there is no harm to nature. The compounds tested by the Russian scientists are oxygenating biological macromolecules of weeds and sea inhabitants, so they are not even to make a foothold on the ships.

There are several other projects in different Russian institutions and they all can be of interest to the Russian coatings manufacturers.

“Russian companies have been heavily investing in the development of new coatings for shipbuilding. Russia has a good school, history and production experience in this area, with the understanding of features of coatings for shipbuilding and ship repair,” Averyanov said.  “The receipts of the Russian coatings are adapted under both imported and domestic raw materials.

This gives an opportunity to master the production of new types of coatings, improve the parameters of the already existing ones and timely react to any changes in the tastes of
the customers.”

More Coatings Registered

JSC Russian Paints began forming its commercial offer in the segment of marine coatings in early 2017, said Leonid Ivanov, director of the marine and aviation coatings department of JSC Russian Paints. It was based on the experience the company gained in the area of the anti-corrosion industrial coating as well as a result of some new developments.

“The basic principle that we followed in this project was to offer a full range of coatings under PK-Marine brand to our customers to paint all the main exterior body surfaces, ballast tanks, bulk cargo halls, oil tanks, internal residential and office spaces, plus weld-through primer as marine putty for leveling surfaces. Later, the production of five coatings under the brand name PK-Marine for river vessels repair was added to our portfolio,” Ivanov said.

“Now JSC Russian Paints is actively engaged in testing new ship coatings and conducts a large number of technological tests with our consumers,” Ivanov said, adding that one of the new products the company was ready to bring up to the market was a new ice-resistant coating.

Not only is JSC Russian Paints investing in new coatings, but some other Russian companies, including Acrus, VMP Nave, HC Pigment and Emlak are as well.

St. Petersburg-based Emlak recently supplied all coatings for the construction of the Russian new cruise liner Mustay Karim, which was a unique project for the Russian shipbuilding industry, according to a company spokesperson.

Emlak has manufactured marine coatings for 25 years and not only supplies Russian customers but also exports to the CIS region and the European Union, the spokesperson added.

As of today, there are almost 400 hundred marine coatings registered in the Russian maritime registry of shipping to be used in the country, Ivanov said.

The share of Russian brands is close to 10 percent. One-hundred twenty-six coatings are registered as having the Russian origin, but two-thirds of them have been brought up to the market by localized factories of international companies, Ivanov added. Yet, import-replacement is gaining momentum, as Russian manufacturers participate in the competitive bidding procedures of the Russian shipyards with the increasing frequency.