Turnarounds of GCC producers put pressures on prices of PE and PP

MOSCOW (ICIS-MRC) - The scheduled shutdown on turnaround of the largest petrochemical complexes in the Middle East amid active purchases from Asian markets resulted in a serious increase in prices of polyethylene (PE) and polypropylene (PP). January prices of PE and PP for CIS markets increased by USD80-130/tonne, from December, according to ICIS-MRC Price report.

Planned turnarounds of the largest GCC petrochemical complexes along with high demand from Asian markets have become one of the main drivers for the increase in PE and PP prices. Asian and Middle Eastern producers increased prices over the month by USD80-130/tonne.

The largest petrochemical complex in the UAE Borouge stopped its capacity for scheduled turnaround. 10 plants from GCC countries (with the total monthly capacity of LLDPE 118,000 tonnes, 353,000 tonnes of HDPE and 238,000 tonnes of PP) plan to stop on turnaround over January-April 2013. These turnarounds coincid with a period of active procurement (January-February) of PE and PP from Asian markets, particularly China and India.

GCC producers are planning to meet the needs of the Asian market primarily, and only then the markets of Africa, Europe and Turkey. The limited supply from the largest suppliers is pushing prices up.

The price increase also refers to CIS markets. The deals for January shipment of Middle Eastern and Asian HDPE and LLDPE are in the range of USD1,630-1,700/tonne, CFR St. Petersburg and Odessa. PP increased up to USD1,600-1,640/tonne, CFR St. Petersburg and Odessa, for PP-homo.

Some market participants believe that in March after reopening of GCC plants from turnarounds, and an increase in export quotas, PE and PP prices will be going down. Though the current price rise was caused by a limited supply there is no fundamental economic reasons for price increase. Middle Eastern producers, in their turn, say that the current price increase is economically grounded by the current price of oil.


MRC

MOSCOW (MRC) -- DSM Dyneema, the inventor and manufacturer of ultra high molecular weight polyethylene (UHMWPE) fiber branded as Dyneema, officially opened its new Asia Pacific Technical Center in Singapore on 11
January, reported compositesworld.

In addition to traditional materials testing capabilities, the center houses Singapore’s first-ever independent ballistics testing facility, featuring two ballistic ranges, as well as labs for conducting comprehensive tests for both personal and vehicle armor applications in Dyneema. Tests can be carried out in accordance with international and regional ballistics standards. For DSM Dyneema, this will be the third global ballistics testing facility, complementing the existing technical centers in the U.S. and Europe.

"With the setup of the Technical Center in Singapore, DSM Dyneema will be able to further expand and reinforce its global R&D expertise via local channels," says Christian Widdershoven, vice president, marketing and sales at DSM Dyneema. "The center is designed to meet current and future needs of customers in the rapidly growing Asia Pacific region. It will bring our company and solutions closer and faster to them."

We remind that, as MRC informed earlier, DSM is going to invest about EUR100 million in three new R&D facilities in Delft and Sittard-Geleen (both in the Netherlands) over the next two years.

In November 2012, DSM reached an agreement with Borealis AG for the sale of DEXPlastomers V.o.F, a 50/50 Joint Venture of DSM with an affiliate of ExxonMobil Chemical. DSM will also sell its LLDPE Compact Solution Technology to Borealis. Subject to customary approvals and notifications, the transaction is expected to close in Q1 2013.
MRC

MOSCOW (MRC) -- Saudi Arabia’s National Petrochemical Industrial Company (Natpet, Jeddah) introduced a thermoforming PP grade to improve performance in the production of transparent thermoformed cups, trays and containers, said Natpet in its press release.

Natpet said that H03TF improves converter productivity and product performance, providing high clarity and aesthetics with increased dimensional stability for thermoformed products, in both shallow and deep drawn parts.

Utilising "Hyperform" HPN-600ei reinforcing additive from Milliken (Spartanburg, South Carolina, USA), the new material enables converters to achieve shorter cycle times compared with conventional nucleated PP without comprising on quality, Natpet said.

As MRC wrote earlier, Natpet has built a 400,000 MT/Year polypropylene plant in Yanbu Industrial City on the west coast of Saudi Arabia. This Plant is producing a wide range of polypropylene product mix of (Homopolymers, Random & Heterophasic Copolymers) that is suitable for a wide variety of applications.

Natpet has acquired state of the art Spheripol process to produce Polypropylene from LyondellBasell, which is the world leader in polypropylene technology.
MRC

MOSCOW (MRC) -- Construction of a new complex processing oil, gas and petrochemicals in Azerbaijan is the largest project to be implemented in the next few years, not only for the State Oil Company of Azerbaijan (SOCAR), but for the whole country, said Trend.az.

This was recently stated by head of SOCAR Rovnag Abdullayev during a meeting with the president and CEO of the American company Air Products John McGlade.

According to a statement issued by SOCAR, Abdullayev spoke about projects implemented by the State Oil Company in Turkey, construction of a new shipyard and the Sumgayit plant for production of nitrogen fertilisers in Azerbaijan, construction of a new oil refinery in Turkey, expansion of the petrochemical complex Petkim's port, as well as a power plant to be built there.

"These are big challenges for SOCAR and its partners in the next five years," Abdullayev said.

The Air Products Company has more than 20 years of experience in manufacturing equipment for the production of industrial and liquefied gas for oil refining and petrochemical industry facilities. The company has more than 40 subsidiaries and its annual sales exceed USD10 billion.

SOCAR includes production association Azneft (companies producing oil and gas on land and sea) and Production Association Azerkimya (chemical industry), production association Azerigas (gas distribution).
The State Oil Company is the only producer of oil products in the country (it has two refineries on its balance sheet) and also owns petrol stations in Azerbaijan, Georgia, Ukraine and Romania. SOCAR possesses a network of petrol stations in Switzerland and is the co-owner of the largest Turkish petrochemical complex Petkim.
MRC

MOSCOW (MRC) -- Gazprom's sales are likely to fall further in 2013 as weak economic conditions lead to continued low demand in Europe, the company's key market for natural gas, reported hydrocarbonprocessing with refrence to Fitch Ratings' new report released on Monday.

Russian gas production data for 2012 indicate that Gazprom's European and FSU gas sales fell slightly more than expected.

Europe and the FSU remain key markets for Gazprom, which has a monopoly on the export of Russian natural gas. For example, in the second half of 2012, it generated over 76% of its revenue from sales of gas outside of the Russian Federation, which accounted for only 44% of its gas sales by volume.

The drop in European gas volumes and prices was partly caused by litigation by some of its European gas buyers, and price renegotiations and compensation payments that followed. This shows that Gazprom's position in Europe remains somewhat challenging, the credit-watch company said.

Fitch added that it believes prices and volumes of European gas consumed under take-or-pay arrangements will not dramatically change in the foreseeable future.

Take-or-pay provisions usually cover 80% of contractual gas volumes; therefore there is some headroom for gas volumes to fall before triggering the take-or-pay clauses.

Gazprom's concessions to European buyers represented no more than 10%-15% of the total oil-based price, leaving the prices under these contracts well above market gas prices, which are now almost delinked from the oil price.

Fitch said it believes that Gazprom will have to continue negotiating further concessions with those European buyers that may have alternative sources of gas supply.

Fitch forecasts that eurozone GDP will contract by 0.1% in 2013, following an expected 0.5% contraction in 2012. The trend should reverse in 2014, when 1.2% GDP growth is forecast. The company expects that gas demand in Europe will continue to be weak in 2013 but may start increasing in 2014.

Last week the Russian Ministry of Energy said that total natural gas production in the country fell by 2.2% in 2012 to 655 billion cubic meters (bcm), while Gazprom's gas production declined by 5.1% to 482bcm.

Russian gas sales abroad in 2012, mainly to Europe and the FSU, fell by 8.7% to 186bcm. Gazprom previously reported a 10% volume drop in first-half 2012 sales to Europe and a 29% volume drop in sales to the FSU countries.

As MRC wrote previously, Gazprom also continues to closely examine the situation with shale gas. At present, Gazprom believes that shale gas production in Russia is not feasible due to the high availability of conventional gas reserves, the cost of production is significantly lower than the estimated costs of shale gas development, and also carries significant environmental risks, but Gazprom will continue to monitor the shale gas development in various regions of the world, the results of which it will report to the Board of Directors in the IV quarter of 2013.
MRC