Even China has turned its back on Russia: Beijing refused to save key sectors of Russian industry

Due to international sanctions, large Russian industrial enterprises will be forced to stop production in a few months. Even Russia's biggest ally, China, has refused to save companies from bankruptcy.

According to the Russian media, this is stated in a collective letter to the Minister of Industry and Trade of the Russian Federation Anton Alikhanov from 20 large industrial companies. They include representatives of the automotive and construction industries and manufacturers of household appliances.

In particular, we are talking about polymethylene polyphenylene isocyanate (PPI) – these substances are used in the production of assembly foams, sealants, self-leveling floors, pipes, refrigerator components, and auto parts. The Russian economy was completely dependent on imports of PPI, and there is no substitute for it in most applications.

Due to the 14th package of sanctions imposed by the European Union in response to Russia's full-scale aggression against Ukraine, the supply of this substance has stopped. It is no longer shipped not only by suppliers from the "hostile" United States, Europe, and Japan but also from "friendly" China – earlier, Wanhua Chemical Group, the largest producer of PPI in the country, announced a complete halt to supplies to Russia.

Russia tried in vain to negotiate supplies with the Saudi company Sadara Chemical. Even though Saudi Arabia has not joined the sanctions regime against Russia, the company has not confirmed the possibility of shipments to Russia.

The situation for the Russians is complicated by the fact that PPI has a very limited shelf life, so importers cannot stockpile this component. The existing stocks will last only two months, and the possibilities to set up gray schemes are very limited.

"This decision has come as a shock to the industry, as given the limited inventory of market participants and the limited shelf life of PPI, maintaining this situation over the next few months will entail risks of shutdown and bankruptcy of existing production facilities," the letter says. Local experts confirm this and say that the market has already started to panic because of what is happening.

It is worth noting that the Russian Federation has been trying to establish its own PPI production for 10 years – this item was included in the industrial development program back in 2014. As of 2024, not a single full-fledged plant has been built in the country, and the PPI that is still produced in Russia is unsuitable for use in household appliances.

Against this backdrop, representatives of industrial companies are asking the Russian government to urgently resolve the issue with China to resume accepting orders for PPI and to help reach an agreement with Saudi Arabia. They also emphasize the need to resolve the problems with making payments for MDI in Chinese banks.

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