MRC news digest over the past week

MOSCOW (MRC) -- MRC news digest over the past week.

1. The cost of polystyrene goes up in Ukraine.

In the Ukrainian market, the cost of polystyrene (PS) will increase in February after a rise in quotations of such producers, as concern Stirol, Nizhnekamskneftekhim and SIBUR-Khimprom. In late January, representatives of concern Stirol (Gorlovka) announced an intention to increase the price offers for February. As per the preliminary information, the cost of expanded polystyrene in early February was at the level of UAH19,400-19,600/tonne. However, market participants admit the possibility of a price growth for the material in February. Russia's largest PS producer Nizhnekamskneftekhim raised its prices by Rb2,000/tonne for Ukrainian companies for February. In late January, SIBUR-Khimprom (Perm) rose its quotation for February by USD70/tonne, as a result, the cost of Alphapor reached the level of USD1,970/tonne, FCA Perm. However, this week there was information that the cost of the material for the companies that had not concluded contracts yet would increase to USD2,050/tonne, FCA Perm. This increase is of the deferred nature, as the producer preserved prices in late 2012-early 2013, while the cost of the alternative - Asian - material has increased considerably.

2. Prices in the Russia DOP market stopped falling.

By January, the price situation in the Russian market of dioctylphthalate plasticizer (DOP) had stabilized after a sharp fall in prices in November. Some market participants do not exclude a price rise in the near future. By early February, prices of Russian DOP had remained in the range of Rb62,000-65,000/tonne, FCA, including VAT. But, according to some market participants, they are likely to grow in the near future. Gazprom neftekhim Salavat has suspended production of DOP, and now it is shipping the remains of the material as per the January contract obligations. Some market participants do not exclude that with the resumption of production of plasticizer, Gazprom neftekhim Salavat will announce a price increase.

3. European makers reduced PP prices for CIS markets.

European makers in February were forced to cut export prices of polypropylene for the CIS countries. Despite the increase in the contract price of propylene in Europe, which was agreed by EUR10/tonne up from the January level, European producers were forced to reduce export prices of polypropylene for the CIS countries by EUR20-40/tonne. It resulted from the low demand and the strengthening of the euro. The negotiation on February prices of European PP for CIS markets continued last week. Many market participants reported that they managed to get price reductions. The deals for February homopolymer of polypropylene (PP-homo) were discussed at EUR1 ,170-1, 230/tonne, FCA. The prices of block copolymers of propylene (PP-block) started from EUR1, 240/tonne, FCA.

4. In 2012 PS production in Ukraine decreased by 9%.

In 2012 Ukraine produced about 19,000 tonnes of polystyrene (PS). In relation to the 2011 production of polystyrene in Ukraine last year (18, 925 tonnes) was cut by 9%. In 2012, the structure of polystyrene production in Ukraine changed. The share of expandable polystyrene (EPS) decreased from 71% in 2011 to 60% in 2012. At the same time, the share of general purpose polystyrene (GPPS), respectively, increased from 29% in 2011 to 40% in 2012. Similar changes have taken place due to the increase in demand for general purpose polystyrene from Russian refiners in the south region. Lower logistics costs increase the competitiveness of the material in this area. In 2012 the volume of general purpose polystyrene made 7,505 tonnes, up 39% from 2011. Production of EPS, however, decreased by 23% and amounted to 11,350 tonnes of material.

5. Price of PET to grow in Russia.

Last week, Russian makers of PET increased the price in the domestic market by Rb250-1,000/tonne, on the deficit of spot volumes and gowing prices of Asian granulate. By the end of last week, price quotation of Russian PET had grown to Rb63,500-65,500/tonne, CPT Moscow, including VAT. Price of Belarusian PET granulate for February shipments to Russia was raised to Rb63,200-63,500/tonne, CPT Moscow, including VAT (Rb52,000/tonne, FCA Mogilev, excluding VAT), which is up by Rb2,500/tonne from the export price of the Belarusian PET in January. Amid rising prices of Asian PET, the prices of Korean and Chinese PET granulate for Russian converters, at the current rate of the national currency 1USD = 30RUB, including logistics, will be at Rb63,000-64,000/tonne, CPT Moscow, including VAT.

6. HDPE imports to Russia decreased by 37% in January.

In January, the import volumes of high density polyethylene (HDPE) to Russia amounted to about 24,000 tonnes, down 37% month-on-months. Pipe and film HDPE accounted for the largest decline in imports. Last year was a record one for the Russian market in terms of import volumes of HDPE. In 2012, 410,000 tonnes of HDPE were imported to the Russian market. In January, on a seasonal decrease in demand and stable operations of all the Russian producers, HDPE imports dropped to 24,400 tonnes, which is actually equal to the production volumes of January, 2012. Last month, exports of HDPE fell across all sectors of consumption. Expectedly, film and pipe polyethylene accounted for the largest decline in imports. Last month, import of film HDPE made about 3,000 tonnes, while in December last year this index made 7,300 tonnes. Polyethylene from South Korea and the United States accounted for the reduction in supplies. Imports of pipe HDPE dropped to 6,300 tonnes, down 46% from December, 2012. The reduction of imports was due to a seasonal factor, and European and Asian polyethylene accounted for it. Imports of blow moulding and injection moulding HDPE decreased by 15% (to 3,000 tonnes) and 10% (to 4,000 tonnes), respectively, compared to December 2012.

7. PET converters from the CIS countries report an increase in the purchasing cost of granulate in Asia.

PET converters continue to report an increase in purchasing prices of the Asian material. Last week, export prices of Chinese and Korean PET rose by USD10-20/tonne. Last week, the upward trend in PET granulate prices in Asia went on. During the week, export prices of Chinese producers increased slightly on average by USD10-20/tonne. The range of export prices of Korean PET made USD1,560-1,570/tonne, FOB Korea. The price offer for Chinese bottle PET was voiced at USD1,560-1,580/tonne, FOB China. On the increasing price level in Asia, producers from the CIS markets also registered a rise in the purchasing cost. The price of Asian PET for Russian buyers, including delivery to the Central region of Russia, made USD1,650-1,670/tonne, DAP Moscow, excluding VAT. The quotation in Ukrainian ports also increased to USD1,640-1,660/tonne, CIF Odessa.

8. Poliom launched the production of polypropylene.

Poliom (Titan Group), Omsk, has launched a new 180,000 tonnes/year production of polypropylene (PP) on 11, February. The construction of a new plant in Omsk had begun in 2005, the commissioning was scheduled for the second half of 2011. But, due to several reasons, including financing, the terms of the project was shifted and the launch took place only on 11, February 2013. Poliom (Titan Group) is a fifth Russia's polypropylene production. Another Russian production of PP is expected to be launched soon in Tobolsk. Tobolsk-Polymer (Sibur Group) has officially announced the start of 500,000 tonnes/year production in the beginning of April. Given the start of production in Tobolsk, by mid-2013 the total production capacity of polypropylene in Russia will amount to 1.36 m tonnes.

9. January imports of polypropylene to Russia declined by one-third.

In January, imports of polypropylene (PP) to Russia amounted to about 14,000 tonnes, down one third from December. The decline in PP imports resulted from the seasonal factors. Last year, the imports of polypropylene to Russia reached a record high 276,500 tonnes, up 43% from 2011.External supplies of polypropylene last month decreased in all grades. Expectedly , the largest decline in imports was seen in homopolymer polypropylene (PP-homo) with about 5,000 tonnes, whereas in last December, it made 8,500 tonnes. The supplies of polypropylene (raffia) from Turkmenistan were cut most of all. Imports of copolymers of propylene fell to 8,600 tonnes, down 27% from December 2012. The main decrease made block copolymers of propylene (PP-block). Import of PP-block decreased in January by 26% to 3,500 tonnes, while supplies of stat- copolymer of propylene (PP-random) exceeded just 2,000 tonnes.

10. LDPE prices in Russia increased despite low demand.

Russian producers of low density polyethylene (LDPE) raised prices in the first week of February, citing the low margins. Despite the low seasonal demand for LDPE, Russian makers in early February decided to increase the prices by Rb350-1,000/tonne. The rise in prices has not affected the sales of LDPE, many converters are still not in a hurry to form additional inventories, the only exception make the major manufacturers of shrinkable films. Last week Kazanorgsintez and Ufaorgsintez announced increase in contract prices of LDPE by Rb350-600/tonne, from January. Tomskneftekhim this week announced increase in LDPE prices by Rb1,000/tonne. Russian producers have explained this price growth by low margins. Demand for LDPE in Russia is low.

11. In 2012 market capacity of consumption soda in Russia grew by 4%.

In 2012 Russia's market of caustic soda increased by 4% compared to the previous year. However, the psychological mark of 1 million tonnes and has not been reached. The growth of caustic soda output in Russia contributed to the rising calculated consumption in 2012. Last year capacity of the Russian market of caustic soda increased by 4%, from 2011 and amounted to 969,000 tonnes. The consumption of caustic soda in Russia grows for the third year in a row. As MRC wrote earlier, the least consumption of caustic soda was seen in Russia in 2009. After the crisis, the market has declined significantly - up to 866,000 tonnes. Despite the growth in consumption in 2012, the total consumption of caustic soda in Russia are still below pre-crisis level. Russia's market of caustic soda reached peak capacity in 2006 and amounted to 1.09 million tonnes. MRC analysts report that last year's output of caustic soda in Russia rose to 1.095 million tonnes. Total volumes of export shipments exceeded 160,000 tonnes. The imports of caustic soda to the Russian domestic market fell by 23% from 2011, and amounted to about 35,000 tonnes.

12. Imports of PVC to Ukraine increased by 24% in January.

In January, imports of suspension polyvinyl chloride (SPVC) to Ukraine amounted to about 9,400 tonnes, up 24% from December. Such a serious increase in imports was due to the desire of some market participants to form a low-cost stocks of raw material. Early last year, imports of SPVC to Ukraine were scarce and made on average slightly more than 3,000 tonnes in January-February. Low levels of imports were due to a stable performance of the domestic producer - Karpatneftehim (Lukoil group). In September, PVC production was stopped for an indefinite period, the Ukrainian market became totally dependent on imports. The situation in January this year only proved this - PVC imports rose to 9,400 tonnes. In January, imports of suspension PVC from Europe made about 3,000 tonnes. There were also small preliminary purchases of the European resin before the start of the season last month.
MRC

MOSCOW (ICIS-MRC) -- Weak demand for polyethylene from the export markets and the strong euro have forced European makers to reduce export prices of high-density polyethylene (HDPE) for the CIS markets, according to a ICIS-MRC Price Report.

February has proved difficult for European makers of HDPE in foreign markets. In the end of January, the European makers aimed to raise prices for February shipment, but in the middle of the month, many makers , on the contrary, have reduced prices of HDPE by EUR30-50/tonne.

In early February the offers for February European HDPE for CIS markets were voiced at EUR1,250-1,320/tonne, FCA. By mid-month European makers under pressure of low demand and the expensive euro had been forced to cut their prices to EUR1 ,200-1, 270/tonne, FCA. Moreover, as some market participants noted, in some cases the prices of blow moulding HDPE were even below EUR1, 200/tonne, FCA.

The lower prices from Asian and Middle Eastern producers aggravate the price formation in Europe. Offers for HDPE shipment in late February - early March were voiced at USD1 ,600-1, 670/tonne, CIF Odessa and USD1 ,620-1, 690/tonne, CFR St. Petersburg.

MRC

MOSCOW (ICIS-MRC) -- Last week, the price offer for bottle PET in the foreign markets remained stable on absence of price volatility in Asia, according to MRC Price report.

In Asia, most producers of PET granulate stayed away from the market amid slowdown of market players in connection with the celebration of the New Year according to the lunar calendar. Sellers did not want to sell out the material at low prices and empty their stocks.

One of the major Korean producers set its prices at USD1,560-1,580/tonne, FOB, for shipments to Russia and Eastern Europe. The price level of Chinese PET was identical to that of the Korean one and ranged USD1,560-1,580/tonne, FOB. According to a trader, this week Asian PET producers are likely to raise their prices for export shipments.

Due to the lack of activity in the Asian region, European PET market players did not change their price offer for spot shipments either. The price range in the domestic market settled down at EUR1,310-1,330/tonne, FD Europe, after rising in the first half of February. Some European makers intend to increase the price by the end of the month. Prices were voiced in the range of EUR1,340-1,350/tonne, FD Europe.

As it was reported previously, last week the price of Russian PET for the domestic market increased by Rb200-500/tonne.
MRC

MOSCOW (MRC) -- Asia's top refiner Sinopec (China Petrochemical Corp) has received approval from China's environmental authorities to expand its refinery complex in southern China's Hainan province, according to Hydrocarbonprocessing with reference to the Ministry of Environmental Protection.

Sinopec will expand the capacity of its Hainan refinery to 13 million tpy of crude oil, or about 261,000 bpd from the current 8 million tonnes, or 160,000 bpd, the ministry said in a statement Sunday on its website.

Meanwhile, the company will build a new ethylene unit with an annual capacity of 1 million tons, the statement said.

Total investment in the expansion project will be 41.72 billion yuan (USD6.64 billion), it said, without giving a timetable for the completion of the project.

Sinopec is China's top ethylene producer and accounts for about two-third of China's total output. It produced 9.45 million tonnes of ethylene last year, the company said in January. In 2012, China produced 14.87 million tonnes of ethylene, down 2.5%, according to the Ministry of Industry and Information Technology.

As MRC informed previously, BASF and Sinopec would jointly explore the possibility of building a world-scale isononanol (INA) plant in Maoming Hi-tech Industrial Development Zone, Maoming, China. The final scope of the investment will be determined following the outcome of the joint feasibility study, which is expected by the end of 2012.

China Petroleum & Chemical Corporation (SINOPEC) is a large scale integrated energy and chemical company with upstream, midstream and downstream operations. Sinopec is the worlds seventh biggest company by revenue.
It is one of the major petroleum companies in China. Sinopec"s business includes oil and gas exploration, refining, and marketing; production and sales of petrochemicals, chemical fibers, chemical fertilizers, and other chemical products. SINOPEC is China"s largest manufacturer and supplier of major petrochemical products. It is the second largest producer of crude oil in China. Its refining capacity and ethylene capacity rank No.2 and No.4 globally.
MRC

MOSCOW (MRC) -- With effect from January 1, 2013, China will cut the polyethylene import duty for Least Developed Countries to 3%, from 6.5%, provided the landed prices of low density PE and high density PE from these countries exceed USD3,800/mt on a cost-insurance-freight (CIF) basis, said Plastemart.

Asia's polymer market has shrugged off China's new preferential import duties for polyethylene from some countries. The reason for this disregard could be that the minimum price for the tax reduction to kick in is seen as too high and trade flows from these nations are almost negligible.

Meanwhile, countries that will be eligible for the preferential import tax rate are almost nearly absent from China's historical trade data. China's main import sources of HDPE and LDPE are Saudi Arabia, Iran and South Korea.

Only Sudan was seen as an import source of HDPE for China in 2012, at a total volume of 0.85 mt for the year with imports landed in China in April and June, historical data from China's customs bureau showed.

According to the United Nation's definition, a country would be named Least Developed Country if its three-year average gross national income per capita falls below USD750, has weak human resources and economic vulnerability. Forty-eight countries fall under this category, with 33 of them in the African continent. Some countries that fall into the category are Laos, Sudan and Yemen.

As MRC wrote earlier, in late December 2012, Turkey is set to face an upward revision in customs duties on HDPE and homo PP imports out of developing countries from 4.8% to 6.5% as of January 1, 2013. This is the second phase of the customs duty revision as they were first raised to 4.8% from 3% on September 6. Customs duties on LDPE imports from developing countries were immediately increased from 3% to 6.5% on the same date.

MRC