Toyo wins engineering contract for Russian refinery modernization

MOSCOW (MRC) -- Toyo Engineering has been awarded a contract from Russia's TAIF-NK to provide services for detailed engineering and procurement on the oil refinery modernization project in Nizhnekamsk, reported Hydrocarbonprocessing with reference to the company's statement.

The current project utilizes the VCC (veba combi cracker) process of US-based KBR to be implemented at the heavy residue conversion complex (HRCC) for the first time in the world.

The project is scheduled to be completed in 2016. The upgraded complex will convert the following oil refinery heavy residues: 2,700,000 tpy of vacuum residue and 1 million tpy of vacuum gas oil, with a high ratio of conversion to valuable oil products, according to project officials.

In 2015 the Russian government plans to annul the decree currently in effect of lowering the heavy residue export taxes towards increasing added value for the exported petroleum products and compliance with the motor gasoline environmental standards (Euro 5) being used domestically.

In this regard, oil refineries in Russia were given directions for urgently establishing units for heavy oil conversion.

Toyo said it was awarded the contract based on its successful experiences in construction more than 60 plants in both Russia and CIS countries from the 1960s and for receiving a high appraisal for its engineering know-how on numerous projects in the field of heavy oil conversion.

Toyo added that it plans to actively expand its business and marketing activities in years to come for energy and petrochemical projects.

We remind that, as MRC informed previously, Japan-based Toyo Engineering has been awarded a contract by Malaysia's Petronas for the rejuvenation and revamp project of the No. 4 gas processing plant located in Kerteh, Terengganu.
MRC

MOSCOW (MRC) -- Throughout the first two months of the year, Asian PET producers complained of very poor margins as strong feedstock costs left most producers operating at or even beneath their theoretical production costs based on spot feedstock prices, said Apic-online.

Over the past few weeks, however, feedstock costs have retreated faster than PET prices, leaving Asian PET producers operating with more favorable margins even as PET prices retreat.

Spot PET prices on an FOB China, cash basis opened the year trading with a heavy discount relative to spot PX prices on an FOB Korea basis. Outside of a single week towards the beginning of January, spot PX prices retained a premium over PET prices, suggesting that Asian PET producers were facing heavy margin pressure. Last week, the premium carried by PX over PET fell before PET prices gained a premium over PX for the first time in 2013 during the current week.

Theoretical production cost calculations based on spot PTA and MEG prices suggest that Asian PET producers were operating with negative margins throughout the most of the first two months of the year, with only a few producers offering at the upper ends of the ranges managing to maintain prices above their theoretical costs. In keeping with the trends observed in the PX market, spot PTA and MEG prices have been retreating faster than PET prices over the past few weeks, leaving Asian PET producers with some additional breathing room on their margins.

As MRC wrote eralier, a sharp fall in purchasing prices of Asian PET for the CIS countries for two weeks in a row, may force Russian producers of granulate to lower prices for the domestic market. Such a sharp slash in import prices might force Russian producers to reduce their price offer for spot shipments in March. It should be noted that last week the price of Russian PET remained stable and was voiced at the level of Rb64,500-65,500/tonne, CPT Moscow, including VAT.
MRC

MOSCOW (MRC) -- Low seasonal demand and oversupply of DOP plasticizer in Russia are putting pressure on prices, report MRC analysts.

Despite mid-March, the demand for dioctylphthalate plasticizer (DOP) remains low in the Russian market. The operations at all four Russian plants are stable, export sales of the plasticizer are almost completely absent. All these factors are putting pressure on the market and keep prices down.

Since the beginning of this year, Russian DOP rose in value on average by Rb2,000/tonne. In the spot market, the price dispersion of the plasticizer is large enough, price offers are voiced in the range of Rb68,000-71,000/tonne, CPT, including VAT. According to some market participants, there will be no major price changes till the end of the month.

DOP is used in the production of plasticized polyvinyl chloride (PVC).
MRC

MOSCOW (MRC) - Imports of polyethylene to the Russian market are gradually increasing. In February, the total volume of imports rose to 56,000 tonnes (up 7% from January). Despite the low demand in the market, the external supplies exceeded last year's level, according to MRC DataScope.

As MRC analysts expected, the main increase in imports fell on LLDPE. The imports of polyethylene in the current year exceeded last year's figures. In February 2012, taking into account the outage of Stavrolen PE imports to Russia amounted to 50,500 tonnes.

Last month the import of high density polyethylene (HDPE) to Russia amounted to slightly more than 25,000 tonnes (from 24,400 tonnes in January). February imports of pipe and film HDPE grew to 7,000 tonnes and 4,800 tonnes, respectively, while in other import direction declined. In February 2012, imports of high-density polyethylene made 25,200 tonnes.

Imports of linear polyethylene (LDPE) in Russia increased to 16,400 tonnes, with about 95% of total imports accounted for film grade polyethylene. Imports of LLDPE compared to January of this year increased by 16%. In February 2012, the external supply of linear polyethylene was about 12,300 tonnes.

Imports of low density polyethylene (LDPE) in February increased by 10% compared with the January amounted to 10,000 tonnes (including supplies from Belarus), which corresponds to the level of February 2012. The growth of external supplies resulted from increased demand from makers of multilayer films, while LDPE demand for film lamination, on the contrary, decreased.


MRC

MOSCOW (MRC) -- Reshaped Clariant, a world leader in specialty chemicals, increases profitability in the fourth quarter and its full-year sales grew by 8% to CHF 6.04 billion and EBITDA margin - by 13.3% on solid development in the core businesses, informed 4-traders.

In the fourth quarter, Clariant reported 2% sales growth in local currencies on the back of 3% higher volumes and 1% lower prices. In Swiss francs, sales were 1% higher, at CHF 1.509 billion compared to CHF 1.491 billion a year ago.

Clariant's full-year 2012 sales made CHF 6.038 billion compared to CHF 5.571 billion in the previous-year period, up 8% in local currencies and in Swiss francs. The 8% increase was driven by the acquisition of Sud-Chemie, while organic growth was flat with 2% higher prices offsetting lower volumes.

Sales development in 2012 was heterogeneous across all regions and businesses. From a regional perspective, all regions except Europe grew double-digit. Europe declined 2% while growth dynamics in Asia/Pacific remained robust during the year.

In an overall demanding market environment, there was strength in the Catalysis & Energy and Oil & Mining Services Business Units (BU), both growing double-digit in a year-on-year comparison. Industrial & Consumer Specialties and Functional Materials held up well due to their limited exposure to the economic cycle. While Masterbatches managed to resist the weakness in Europe, the Pigments and Additives BUs were impacted by the severe downturn in some end-markets - mainly in Coatings, Printing and Electronics - and primarily in Europe.

At 28.9%, the gross margin improved from 27.5% recorded in the previous year. The improvement was the result of a positive volume/mix effect and a stringent margin management which over-compensated higher costs for the underutilization of production capacities. Year-on-year, prices increased by 2% while raw material costs remained stable.

The EBITDA before exceptional items from continuing operations was 4% lower year-on-year, contracting to CHF 802 million from CHF 835 million. EBITDA margin before exceptionals stood at 13.3% compared to 15.0% for the continuing operations in the previous-year period.

Full-year operating cash flow was strong with CHF 468 million compared to CHF 314 million one year ago, following the normal seasonality with a build-up in inventories in the first half of the year followed by a reduction in inventories and therefore cash flow generation in the second half-year.

Net debt stood at CHF 1.789 billion and was therefore lower compared to the CHF 1.934 billion recorded at the end of the third quarter 2012, but close to the CHF 1.740 billion reported at year-end 2011. Consequently, the gearing, reflecting net financial debt in relation to equity, improved to 59% from 64% at the end of the third quarter 2012, and was only marginally higher compared to the 58% recorded at year-end 2011.

The repositioning of the portfolio in 2011 and 2012 has brought Clariant to a sustainably higher level of profitability and net income. As MRC wrote previously, in 2012 Clariant announced it would be looking for strategic options for the four BUs Textile Chemicals, Paper Specialties, Emulsions Detergents & Intermediates and Leather Services. In a first phase, Clariant announced an agreement to sell its Textile Chemicals, Paper Specialties and Emulsions businesses to SK Capital, a US-based investment firm. Subject to regulatory approvals, the transaction is expected to close by the end of Q2/2013. In a second phase, strategic options are currently evaluated for Leather Services and Detergents & Intermediates. Therefore all four BUs are reported as "discontinued operations", starting with 2012 full-year results.

For 2013, Clariant expects a persisting soft macroeconomic environment characterized by high volatility. While solid growth in the emerging markets is most likely, no significant growth impulses are expected from the European and the North American economies.

In this scenario, Clariant will focus on growing the seven core businesses and a continuous cost discipline. This will lead to further top-line growth in local currencies and an improved profitability in 2013. For the mid-term, Clariant confirms its 2015 targets of an EBITDA margin of above 17% and a return on invested capital (ROIC) above peer group average.
MRC