The epidemic has promoted the development of e-commerce and boosted the demand for packaging in Russia

The League of Waste Paper Processors Association, together with a number of Russian companies in the market, wrote an open letter to Russian Prime Minister Mikhail Mishustin in March.

The letter said that the price of MS-5B waste paper, which is used as raw material for producing commercial cardboard, has risen sharply. The problem is that there is no other substitute for this waste paper, and it is also necessary for commodity packaging.

According to the alliance's data from March 2021, the price of one ton of MS-5B waste paper reached 22,000 rubles (about 1,857 yuan), three times that of a year ago. The open letter pointed out that retailers "raised" the price of this waste paper.

"At the same time, the Russian market is highly competitive and it is impossible for manufacturers to fully transfer the increase in waste paper prices to the prices of finished products, which puts them on the brink of zero profitability." Manufacturers believe that if raw material prices continue to rise, it may lead to an increase in the cost of food and other necessities.

The explosive growth of e-commerce boosts packaging demand

The import substitution policy announced by the Russian authorities in 2014 played an important role in the development of packaging production in Russia. In 2020, the pandemic triggered an explosion in e-commerce sales, boosting the Russian economy. At the same time, e-commerce has become the main driver of the development of the packaging market, while the health sector has also become a major driver for the pulp and paper industry.

Data analysis agency Data Insight estimates that at least 10 million Russians started online shopping in the first three months of COVID-19 self-isolation last year. According to experts from the agency, the epidemic will increase online transactions in Russia at an average rate of at least 6% per year before 2024.

All of this has raised the status of corrugated packaging, especially for manufacturers. A senior manager of a production company said that due to these reasons, the demand for corrugated paper has increased sharply. However, according to the Union of Waste Paper Processors, the industry's production in Russia did not achieve the expected growth, with corrugated paper production increasing by only 6.2% and waste paper packaging board increasing by 16%.

The demand structure of Russia's packaging industry has changed

In addition to the demand from the e-commerce industry, other industries also have high demand for packaging. According to experts from the Institute of Development Center of the Russian Higher School of Economics, Russia's individual fields of sanitary products, food packaging, e-commerce and medical equipment have high demand for pulp and paper.

At the same time, demand for industrial packaging (such as bags for building materials and packaging for the automotive industry) has decreased, and demand for printing and office supplies has also fallen sharply. The Institute of Development Center of the Russian Higher School of Economics emphasized that the demand structure has changed.

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