Production of large volume polymers in Ukraine decreased by 22%

MOSCOW (MRC) - Ukrainian producers amid uncertain conditions in 2012 reduced production of large volume polymers by 22%. BY now only one of the three petrochemical complexes works - Stirol, according ot MRC SkanPlast.

After a successful 2011 the last year for the Ukrainian makers of large volume polymers become catastrophic. Only one of three petrochemical complexes currently operates - Stirol (DF Group), which produces polystyrene (PS). The largest of them complex - Karpatneftekhim (Lukoil Group) stopped production for indefinite time. Linik (TNK-BP) may resume operation only at the end of Q3 2013. The production of large volume polymers in 2012 amounted to 238,000 tonnes, down 22% from 2011.


Linik was the first, which stopped production of polypropylene in April 2012 because of economical inexpediency. Company management made statements regarding the suspension of production at LINIK in the beginning of 2011, but the real stoppage of refining took place in March 2012, the production of polypropylene was closed a month later.

Over the less than four months in 2012 Linik produced 23,600 tonnes of polypropylene, while the total score of production in 2011 amounted to 94,000 tonnes. Currently Linik is under a change of ownership, and unofficially the new owner is planning to resume polypropylene production in September.


The largest producer of polymers in Ukraine - Karpatneftekhim (annual capacity of 300,000 tonnes of PVC, 100,000 tonnes of PE) due to unprofitability was forced to stop production of polymers in September last year. Among the main reasons of the closure company mentioned non refund VAT, high excise duties on feedstock, as well as high energy tariffs. Totals production of PVC and PE for the year 2012 amounted to 121,600 tonnes and 73,500 tonnes respectively. The question of resuming production of polymers Karpatneftehim is not considered.

The oldest chemical complex - Stirol continues production of polystyrene, but last year it was forced to cut production due to limited supply of styrene and low demand for polystyrene. In 2012, the company produced about 19,000 tonnes of polystyrene, which is 16% lower than in 2011.


MRC

Fitch affirms SIBUR at BB+

MOSCOW (MRC) -- Fitch Ratings has affirmed Russia-based JSC SIBUR Holding's (OAO SIBUR Holding, SIBUR) Long-term Issuer Default Ratings (IDR) at 'BB+' and its Short-term IDR at 'B', said Fitch in its statement.

The Outlook on the Long-term IDR is Stable. The agency has simultaneously assigned SIBUR Securities Limited's proposed issue of guaranteed notes (the Notes) an expected foreign currency senior unsecured rating of 'BB+(EXP)'.

The Notes' final rating is contingent on the receipt of final documentation conforming to information already received and further details regarding the amount and tenor of the Notes.

SIBUR's ratings are supported by its leading position in the Russian petrochemicals sector, diversified portfolio and access to associated petroleum gas (APG) which ensures low costs versus most international peers and underpins its strong operational cash flow generation over the cycle.

SIBUR is the largest integrated gas processing and petrochemicals company in Russia and CIS as well as Central and Eastern Europe as measured by revenues.

Company purchases associated petroleum gas and liquid hydrocarbon feedstock from major Russian oil and gas companies and processes them into energy products, including liquefied petroleum gases, natural gas and naphtha and further into various petrochemical products, including basic polymers, synthetic rubbers, plastics, products of organic synthesis, intermediates and other chemicals.

MRC

Sabic sees profit decline as Europe demand stutters

MOSCOW (MRC) -- Saudi Basic Industries Corp. (SABIC) may report a 14 % decline in annual profit, highlighting the petrochemical maker’s struggle with slowing economies in Europe and a resurgent U.S. chemical industry, said Businessweek.

Net income at the world’s largest petrochemical company by market value probably fell to 25.1 billion riyals (USD6.7 billion) from 29.2 billion riyals last year, according to 14 analysts polled by Bloomberg. The Riyadh-based company may report results as early as Jan. 19.

The U.S. shale gas industry is testing the long-standing advantage that state-owned Sabic has had from proximity to the world’s largest reserves. As MRC wrote, Dow Chemical Co. (DOW) is adding an ethylene plant in Texas fueled by local shale supplies. Heightened competition comes at a time when demand among European automotive and construction clients has ebbed.

“The shale-gas revolution in North America is really a game changer,” Ahmed Shams El Din, Cairo-based director of equity research at EFG-Hermes Holding SAE, said in an e-mail. “It provides the chemicals industry with cheap and sustainable access to ethane and methane gas that will facilitate building low-cost chemical and fertilizer capacity.”

Europe’s economic woes also reduced demand for Sabic. Lower pricing has weighed on earnings this year, with further pressure stemming from weak demand for polymers and derivates against a backdrop of slowing growth in China and volatility in energy prices, El Din said.

Sabic’s results will provide a window on European chemical companies, from synthetic rubber-maker Lanxess AG (LXS) to BASF SE. (BAS) The company has taken five years to integrate GE Plastics, which it bought in 2007 for USD11.6 billion in it’s biggest transaction to date.

“Sabic’s consolidated earnings are also leveraged to Sabic Innovative Plastics, which is currently loss making due to high feedstock prices and relatively weak end market demand in automotive, construction and electronics,” El Din said.

MRC

Caustic soda plant of Sulfindo to shut operations

MOSCOW (MRC) -- PT Sulfindo Adiusaha is likely to shut operations at its caustic soda plant, said Apic-online.

Located at Merak in Indonesia, the caustic soda plant has a production capacity of 315,000 mt/year.

The plant, will be taken off-stream for a maintenance turnaround in June 2013 and will remain shut for 2-3 weeks.

PT Sulfindo Adiusaha was established in 1987. Company has diversified chemical business by creating products such of EDC, VCM, and PVC. Company informs in its site that it has production of ehylene diclhloride ( C2H4Cl2 ) with capacity of 370,000 TPA and vinyl chloride monomer ( C2H3Cl ) with capacity of 130,000 KMT / year, polyvinyl chloride with capacity of 95,000 MT / year.

These products have strengthened and supported Sulfindo's presence in the market as an integrated Chlor-Alkali producer in Indonesia.

MRC

PP imports to Russia in 2012 increased by 43%


MOSCOW (MRC) - Imports of polypropylene to Russia in 2012 increased by 43% compared with 2011. Start of production of two new sites in Omsk and Tobolsk in 2013 should significantly change the balance of the Russian market of polypropylene, according to MRC DataScope.

PP imports to Russia in December last year rose to 20,400 tonnes. Total imports in 2012 to Russia made about 276,400 tonnes of polypropylene, up 43% year on year. Production capacities are unable to meet the growing needs of the Russian market of polypropylene, but in the second half of 2013, the balance of the market may change with the launch of two new sites with total capacity of 430,000 tonnes.

Russian converters faced shortage of polypropylene in April-May last year. Price of homopolymer polypropylene (PP homo) amid deficit in May rose to Rb72,000-74,000/tonne, CPT Moscow, including VAT. The market began to actively seek alternative sources of supply polypropylene. Since May, imports of polypropylene to Russia began to rise and reached a peak in June - more than 34,000 tonnes.

The total volume of import of PP-homo to the Russian market in 2012 amounted to 138,500 tonnes, up 35% more than a year ago. External supplies of block copolymers of propylene increased by 35% to around 51,400 tonnes. Imports of stat- copolymers of propylene increased by 67% to 47,000 tonnes.


Two new production sites are expected to be launched in the middle of the Q2. Omsk Polyom (Titan Group) has an annual capacity of 180,000 tonnes. Technology "Spheripol" from company LyondellBasell allows to produce about 80 grades of polypropylene, including copolymers of propylene. Tobolsk-Polymer (Sibur Group) plans to launch first polypropylene plant capacity of 250,000 tonnes per year. However, production range will include only homopolymers of propylene.

Given the launch of new capacities and existing production sites in the second half of the year we can expect a major structural change in the market of PP homo. The specifics of the market of copolymers of propylene will slow down substitution of import by Russian product.


MRC