The Initiatives of the Arkhangelsk Pulp and Paper Mill and the Titan Group of Companies in the field of forest relations are regularly reflected in federal regulatory legal acts Anatoly Bobrakov, Deputy Minister of the Russian Federation for the Far East and the Arctic Development: “The Residents of the Russian Arctic Can Aspire to the Entire List of State Support Measures”Best Domestic Traditions are Supported at the Arkhangelsk Pulp and Paper Mill The employees of the APPM planted a garden on Melnikov Street in Novodvinsk The New APPM Turbine is Connected to the PRANA Predictive Monitoring System The Future of the Corporate Printed Issues Was Discussed in NovodvinskThe Initiatives of the Arkhangelsk Pulp and Paper Mill and the Titan Group of Companies in the field of forest relations are regularly reflected in federal regulatory legal acts Anatoly Bobrakov, Deputy Minister of the Russian Federation for the Far East and the Arctic Development: “The Residents of the Russian Arctic Can Aspire to the Entire List of State Support Measures”Best Domestic Traditions are Supported at the Arkhangelsk Pulp and Paper Mill The employees of the APPM planted a garden on Melnikov Street in Novodvinsk The New APPM Turbine is Connected to the PRANA Predictive Monitoring System The Future of the Corporate Printed Issues Was Discussed in NovodvinskThe Initiatives of the Arkhangelsk Pulp and Paper Mill and the Titan Group of Companies in the field of forest relations are regularly reflected in federal regulatory legal acts Anatoly Bobrakov, Deputy Minister of the Russian Federation for the Far East and the Arctic Development: “The Residents of the Russian Arctic Can Aspire to the Entire List of State Support Measures”Best Domestic Traditions are Supported at the Arkhangelsk Pulp and Paper Mill The employees of the APPM planted a garden on Melnikov Street in Novodvinsk The New APPM Turbine is Connected to the PRANA Predictive Monitoring System The Future of the Corporate Printed Issues Was Discussed in Novodvinsk

The Arkhangelsk Pulp and Paper Mill proposes restructuring the support instruments of import substitution projects

23 jun 2022

The total physical production volumes of pulp and paper industry products during the first four months of 2022 do not show any indicators of critical decline, and in certain areas continue to show growth confirming the trends in the market of recent years. But the situation for the period from January to April of this year cannot be the basis for forming long-term trends, as February, March and April taken separately are too inconsistent in statistics. Nicolay Krotov, Director for Relations with Government Bodies of the Arkhangelsk Pulp and Paper Mill JSC, stated in his speech at the board meeting of the Chamber of Commerce and Industry on June, 22.

According to the Rosstat data (Russian Federal State Statistics Service) in January –April 2022 the prices for pulp and paper products increased monthly by 1.2% - 3.6%, and compared to the same period in 2021 the prices for pulp and paper products increased by 28.5%.

However, according to the representative of APPM, the complex picture of changes can be tactually felt by the results of half a year, and still more realistically by the results of 9 months. The rapidly changing situation, alarming expectations, gloomy forecasts, the reaction of the authorities to new challenges allow so far just to guess what will happen next and not to form any trends based not on statistical calculations but on common alarming expectations.

Nicolay Krotov noted that for almost all kinds of products excluding bleached sulfate pulp and testliner export volumes decreased in the first four months of the year compared to the same period in 2021. With a significant drop in demand in the domestic market, primarily for corrugated packaging, the duration of the period of stable production volume is only limited with storage rooms capacities at enterprises. Unfortunately, it is difficult enough to expect positive changes in the corrugated packaging market.

The change in the geography of product deliveries, the replacement of European markets with Asian, Middle Eastern and Latin American ones is not an absolute problem in itself, the world demand for the products of Russian pulp and paper industry is stable, the quality of the products and the reliability of the producers are known to everyone. But the accentuated shift of the main supply vector to the east brought about logistical collapse in goods traffic to China. The logistics problem is the key one in the difficult situation the industry is in today. For the plants, primarily from the European part of the country, the change in logistics supply chains has led to a significant increase in the time, distance and cost of products transportation from the plant to the end-buyer.

Since the beginning of March, 2022 these factors have caused an avalanche-like increase in sea freight rates and rates for multimodal container transportation, as well as a sharp decrease in the number of available fleet due to the sanctions against Russian ship owners and the refusal of European container carrier companies to work with cargoes from Russia. Compared to the 4th quarter of 2021 the container cargo delivery from Arkhangelsk to China has more than doubled, the cost of container transportation to the countries of Northern Africa has increased by more than 1.5 times.

The second most important problem is the provision of the pulp and paper production with consumables, primarily chemicals. As far back as March this issue became acute for enterprises due to the refusal of European suppliers to fulfill contracts for the supply of large-tonnage (bulk) chemicals: sodium chlorate, sulphurous anhydride, hydrogen peroxide. And in this situation it is necessary to note the actions of the management of the largest Russian plants, which searched for acceptable solutions to eliminate the problem in the shortest possible time. Every single plant decided on alternative suppliers of chemicals. However, due to logistics, the guaranteed provision of the production with “chemistry” is visible for two-three months in advance.

The situation is similar with other consumables and accessories. The replacement of European machine clothing, felts and other components with Asian counterparts, which is to be carried out at most enterprises this autumn, will again require super efforts from the technologists of Russian enterprises. At the same time, according to Mr. Krotov there exist risks of either reducing the quality of products or technological losses.

In such an abnormal situation the Arkhangelsk Pulp and Paper Mill offers a package of non-standard solutions on six priority issues. It is stimulation and provision of comfortable conditions for foreign companies from friendly countries to make it possible for them to create representative offices in Russia to provide service support in terms of imported spare parts, consumables, chemicals, equipment, etc. At the same time the APPM offers employment for freed-up Russian highly qualified employees of service companies from unfriendly countries which wind down their activities in Russia, to provide services according to their competence.

Among the important measures the plant sees restructuring the support instruments of import substitution projects including when they are implemented by participants in industrial clusters, the development of a state (national) system of forest certification, mechanisms for its promotion in the markets of friendly countries, and thereafter in other markets, the expansion of state support mechanisms for strategic organizations of timber industry complex of Russia besides the ones which are currently operating in accordance with the Rules for the provision of subsidies from the federal budget to Russian civil industry organizations in order to reduce the cost of transporting products, approved by a decree of the Government of the Russian Federation №496 in 2017.

The Arkhangelsk Pulp and Paper Mill also proposes to increase the guaranteed dimensions of navigation passage on inland waterways of federal importance traditionally used for transporting timber goods by water transport (the Northern Dvina, the Pechora, the Angara, the Lena rivers, etc).