HIP Petrohemija to expand its polyethylene plants

(HIP Petrohemija) -- The Government of the Republic of Serbia on its session Thursday, December 15, 2011, adopted a Budget Act proposal for 2012. This proposal contains, among other issues, guarantee issuance by the Republic of Serbia in the favour of the business bank as a security for providing a loan for financing the first phase of the investments program in 2012, which includes capacity expansion of HIP Petrohemija's polyethylene plants, the amount of investment being EUR 27 mln.

Providing the loan for HIP Petrohemija with the guarantee of the Republic of Serbia is just a part of the Agreement on Strategic Partnership between NIS (Oil Industry of Serbia) and Serbian Government in a field of increasing production efficiency and financial stability of HIP-Petrohemija, which was signed on November 21, by NIS CEO Kirill Kravchenko and Minister of Economy and Regional Development, Nebojsa Ciric.

Since the adoption of the Republic Budget by the National Assembly is expected to take place before December 30, 2011, at the latest, the adopted proposal for the budget act is the first step in the investment program realization and also presents confirmation by Serbian Goverenment of their intention to support the business and financial recovery to HIP-Petrohemija - as judged by the company management who also express their expectation that the Government will also support HIP-Petrohemija in 2013, for additional amount of EUR 35 mln, as predicted by the investment program.


Asian butanediol appears poised to hit a new 10-month low in early next year

(ICIS) -- Asian butanediol (BDO) appears poised to hit a new 10-month low in early next year because of weak demand in key China market as construction slows in the country and a regional supply overhang, industry players said on Wednesday.

On 20 December, bulk-based BDO cargoes were offered at USD2,450-2,500/tonne (EUR1,862-1,900/tonne) CFR (cost and freight) CMP (China Main Port). The offer level represented new nine-month low for BDO, and it was the sixth consecutive week that BDO prices had fallen. Industry players, however, said that the worst is yet to come.

On Wednesday morning, one regional producer said that it was prepared to continue reducing its offers in order to control its inventory levels. ⌠Since early November, we have not received a single enquiry for spot BDO cargoes. We don't foresee any improvement moving into the first quarter of 2012, given the terrible state of the Chinese real estate market, said the producer.

A downturn in real estate development slows down BDO sales because it is a feedstock for polyurethane (PU), which in turn is used in products for the construction industry in the form of flexible, high-resilience foam seating, rigid foam insulation panels, high performance adhesives, surface coatings, surface sealants and hard-plastic parts.

The last time BDO prices plummeted below USD2,500/tonne CFR CMP was on 8 February 2011.
Local media in China reported that government-sponsored land auctions in cities nationwide have slowed in recent months, reflecting shrinking consumer demand and what one executive called a ⌠winter mode strategy of major developers.

The China Index Academy said home prices fell by an average 0.28% month on month in November, the third monthly decline in a row.


EPS producers in North America announced price increases

(ICIS) -- North American expandable polystyrene (EPS) producers have announced price increases of between 4-6 cents/lb (USD88-132/tonne, EUR68-102/tonne) for mid-January, based on higher feedstock prices and other costs, sources said on Tuesday.

Current US EPS prices are in the range of 84-92 cents/lb for block and package material. Current Mexican EPS prices are in the range of 103-105 cents/lb for block material and 101-103 cents/lb for package material, as assessed by ICIS.

NOVA Chemicals announced a price increase of 4 cents/lb for non-modified EPS grades that don't include a flame retardant and 6 cents/lb for modified EPS grades that use a flame retardant, with both increases effective on 15 January, sources said.

Mexico EPS producer Polioles, which on Monday announced a 2 cent/lb increase in the differential between modified and non-modified EPS, on Tuesday came out with an additional announcement of a 4 cent/lb increase for all grades effective on 16 January, according to a customer letter obtained by ICIS.
Other North American producers were expected to follow with similar price increase announcements.

The increase for non-modified EPS is related to recent higher prices for feedstock benzene. While contract benzene settled down by 15 cents/gal to USD3/gal in December, spot benzene price discussions for January rose as high as USD3.66/gal on Monday. The increase for modified EPS is based on higher costs for the flame retardant hexabromocyclododecane (HBCD).

Major North American EPS producers are BASF, NOVA Chemicals, Flint Hills Resources, Styrochem, Nexkemia, Idesa and Polioles.


SIBUR concluded sale of 100% of OJSC SIBUR-Fertilizers

(SIBUR) -- CJSC ⌠SIBUR Holding and CJSC ⌠Holding Company ⌠Siberian Business Union have signed an agreement for the sale of a 100% stake in OJSC ⌠SIBUR- Fertilizers. The deal is to be approved during the nearest CJSC ⌠SIBUR Holding Board of directors meeting.

At the time of the transaction, OJSC ⌠SIBUR- Fertilizers included the following companies: OJSC ⌠Azot (Kemerovo), ⌠Angarsk Nitrogen Fertilizer Plant LLC, and ⌠Biysk Railcar Repair Enterprise LLC. OJSC ⌠Mineral Fertilizers (Perm) is not included in this transaction.


Russia's chemical sector to remain stable over the next 12-18 months

(ICIS) -- Russia's chemical sector will remain stable over the next 12-18 months as strong demand from Asia and Latin America offsets a slowdown in Europe, ratings agency Moody's said on Wednesday. "While we expect demand from Europe to slow due to ongoing economic uncertainty, demand in Asia - particularly China and India - and Latin America remains robust," said senior analyst Julia Pribytkova.

Russian chemical producers will also benefit from planned increases in polymer production, supported by strong growth in Russia's retail and construction sectors, the ratings agency said.

Demand for fertilizers will remain strong, with support from emerging and domestic markets outweighing slowing demand in Europe.

There are risks in this sector, however, from cheap North American feedstocks, increasing production of nitrogen-based fertilizers in the Middle East and a rise in Chinese domestic production, Moody's said in its ⌠special comment report.