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The Russian Federation faced a new wave of economic problems after the introduction of the 14th package of sanctions by the European Union. This time, strategically important industries related to the supply of methylene diphenyl diisocyanate (MDI), a key chemical component used in the automotive, construction and home appliance industries, were under attack.
In particular, the Chinese chemical giant Wanhua Chemical Group and the Saudi company Sadara Chemical have officially stopped supplying MDI to Russia. As reported by the Polish newspaper Rzeczpospolita, this step was a real shock for the Russian industry, because the country was 100% dependent on the import of this component. Earlier, European, American and Japanese suppliers left the market due to the imposed sanctions.
Why is this important?
MDI is one of the critical ingredients in the production of polyurethane foams, which are widely used in insulation materials, automotive parts and household products. As a result of the new restrictions, many Russian enterprises that need this material were on the verge of stopping.
In addition, there is another problem: the short shelf life of MDI. This factor makes it difficult to stockpile or organize alternative supply chains through third countries. Russia, known for its ability to circumvent sanctions with the help of intermediaries, may not have such opportunities this time.
Russian dreams and reality
Back in 2014, Russia planned to start its own production of MDI, however, as reality shows, no full-fledged plant was built in 10 years. This vividly illustrates the chronic problem of Russian industry — dependence on Western technologies and investments.
Due to the lack of MDI in Russia, several key industries were at risk. More than 20 largest representatives of the automotive industry, construction companies and manufacturers of household appliances signed a joint letter to the government with a request to take urgent measures. However, options for maneuver remain limited.
What’s next?
Faced with a new wave of economic difficulties, Russia will likely be forced to look for ways to localize production or increase cooperation with other countries such as India or Turkey. However, this task may take years, and the consequences of the absence of MDI will be felt now.
The introduction of sanctions by the European Union once again emphasizes the vulnerability of the Russian economy, which is dependent on foreign supplies in key sectors. Time will tell how the Kremlin will solve this problem, but one thing is clear – geopolitical isolation and economic pressure continue to hold back the development of Russian industry, exacerbating the internal crisis.
