Russia Bans Exports of 6 Petrochemical Products Outside Eurasian Economic Union for Three Months

Key Facts

Russia has temporarily banned exports of 6 petrochemical products to destinations outside the Eurasian Economic Union for three months, under a decision issued on November 2, Interfax reported, citing the government. The government said the measure aims to ensure a stable supply of raw materials to Russian industrial facilities. The list includes coal-based benzene and petroleum-based benzene, toluene, ortho-xylene, para-xylene and phenol. The decision does not cover gasoline used as motor fuel, as the list concerns compounds used in industrial and intermediate products. Interfax quoted the government as saying the decision "aims to maintain a stable supply of raw materials to Russian industrial facilities."

The restrictions apply to shipments bound for destinations outside the Eurasian Economic Union, with exemptions for products transiting as part of international transport operations and supplies provided as part of international humanitarian aid. Shipments needed to meet the requirements of Russian organizations operating in the Svalbard archipelago are also exempt. The scope of these exemptions limits the ban to specific transit or supply cases, while commercial exports to other destinations remain subject to the restriction. The list has industrial significance because the materials are used to manufacture paints and varnishes. These products are used in the automotive, aviation, shipbuilding and railway manufacturing sectors, as well as in packaging and consumer goods.

Uses cited by Interfax include food containers, floor coverings, cable insulation and medical industry applications, as well as paints and varnishes. The availability of these inputs therefore affects a range of manufacturing supply chains, from transportation to packaging and medical products. The government said the decision is intended to ensure a stable supply of raw materials to industrial facilities. A Russian government commission was considering a ban on exports of aromatic compounds in August, according to an earlier report by Kommersant cited by S&P Global. The report said lower output of some materials was linked to unplanned refinery maintenance and noted that the compounds are also used in gasoline production.

S&P Global's report on the previous year put Russia's gasoline production at 1.3 million tons, down 10.3% year over year, and toluene production at 361,000 tons, down 6.8%. Xylene production totaled 370,000 tons, down 17.3% year over year. The report said high domestic prices had almost halted export flows of these materials, which were not substantial, so the ban was not expected to have a major impact. That places the new restriction in the context of a market where exports were already limited, according to the report published in August. The report also said the share of aromatic compounds in gasoline rose to 42% after environmental standards were eased, compared with a previous limit of 35% under the Euro-5 standard.

The decision comes as Russian manufacturing remains in contraction, despite a limited improvement in the monthly reading. S&P Global's manufacturing Purchasing Managers' Index rose to 49.9 in October from 49.8 in September, with contraction continuing for a third consecutive month. New orders fell for a third month, amid reports of competitive pressure, weak demand and declining customer purchasing power. External demand fell by the most since May 2022. Output declined for a third month, though at a slightly slower pace, while backlogs of work continued to fall for a twenty-first month.

The survey reported that input costs rose because of higher material prices and supplier fees, but input cost inflation slowed to a seven-month low. Meanwhile, selling price inflation slowed to its lowest level since April amid competitive pressure, while business confidence improved to its highest level in four months. Weak demand and output indicators coincided with companies cutting employment again as workloads declined. Employment had fallen in September for a tenth consecutive month, at the fastest pace since May, according to the S&P Global report cited by Interfax. These indicators provide industrial context for the government's decision to secure raw materials for domestic factories.

The petrochemical export ban follows an extension of other restrictions on fuel exports. On October 31, the Russian government extended restrictions on exports of diesel, marine fuel and gas oils that apply to producers through January 31, 2027, Vedomosti reported. The newspaper said the general ban on fuel exports was also in force through that date. The new restrictions on petrochemical products, by contrast, were set for three months. Industrial feedstocks thus join a group of Russian export restrictions aimed at securing domestic supplies, with the covered products and expiration dates differing.