Petrobras unveils its five-year investment plan which releaves investors

MOSCOW (MRC) -- Petroleo Brasileiro (Petrobras), Brazil's state-controlled energy giant, kept its five-year investment plan flat for the first time in years, reported The Wall Street Journal.

Petrobras' new investment plan is a relief to those investors who'd feared another increase.

Petrobras has one of the largest investment budgets of any firm in the world at USD236.7 billion for the next five years, as it seeks to develop some of the biggest oil discoveries the world has found in decades. But its ambitions have weighed heavily on its share price in recent years, as production increases have failed to materialize and some projects have been mired by delays and cost overruns.

Investors and analysts lauded the company for focusing on boosting crude-oil production and cutting spending on new refineries, although they warned the firm still needs to demonstrate tangible progress. Next year could prove to be something of an inflection point, as new projects that come online later this year will add to production, although the company could still be spending more than it earns.

"If that production becomes reality, the increases will be significant over the next decade," said Joao Pedro Brugger, who manages USD100 million at Porto Alegre's Leme Investimentos.

"The new plan, at least on paper, puts the company in the right direction," said Credit Suisse in a research report. "Now it's time for management to turn it into reality."

Petrobras warned its financial picture will deteriorate further in 2013 as the large investment comes just as revenues are at a low. That's bad news for investors who watched the company post its worst annual net profit since 2004 last year. The company blamed the depreciation of the real against the dollar and higher operational costs for falling profits over the past year among the other reasons.

Petroleo Brasileiro S.A. or Petrobras is a semi-public Brazilian multinational energy corporation headquartered in Rio de Janeiro, Brazil. It is the largest company in the Southern Hemisphere by market capitalization and the largest in Latin America measured by 2011 revenues.
MRC

MOSCOW (MRC) -- In February, weak demand and oversupply in the Ukrainian market resulted in a decline in polyethylene (PE) imports. PE imports fell to 26,300 tonnes, down 17% from January figure, according to MRC DataScope Report.

In December 2012-January 2013, Ukrainian companies were actively purchasing PE in the foreign markets in anticipation of price increases. In those months, imports of PE totaled 33,800 tonnes and 31,500 tonnes, respectively.

In February, low seasonal demand and significant carry-over stocks from last months led to a decrease in purchases of polyethylene in the foreign markets with the only exception of high density polyethylene (HDPE). Last month, HDPE imports to Ukraine amounted to 11,600 tonnes, up 4% from January.

The growth of exports is registered in all sectors of consumption and is mostly due to the desire of some companies to form cheap stocks of raw materials in anticipation of the start of the season.

The outage of the domestic HDPE production at Karpatneftehima resulted in a major rise in imports of film HDPE and geographic expansion of shipments. In February, exports of the film material exceeded 6,100 tonnes. Meantime, in January-February this year, the total volume of film HDPE import made more than 12,100 tonnes, up 62% year-on-year. Ukrainian companies have started to actively ship polyethylene from the U.S., the Middle East and Asia.

Last month, supplies of low-density polyethylene (LDPE) decreased by 32% from January and amounted to 8,800 tonnes. In February, LDPE imports are traditionally reduced, the peak of procurement acconuts for December-January, when PE price in the foreign markets are at their bottom. This year was no exception with about 70% of the total volume of imports to account for polyethylene produced in Russia, Belarus and Azerbaijan.

As expected, imports of linear polyethylene (LLDPE) to Ukraine reduced from 6,500 tonnes in January to 4,800 tonnes in February. The main reason is the decline in purchases by producers of irrigated stretch films. At the same time, over the two months of this year, exports of LLDPE made 11,400 tonnes, up 5% year-on-year.

In January-February, the total volume of PE imports to Ukraine amounted to 57,800 tonnes, down 15% year-on-year.

MRC

MOSCOW (ICIS-MRC) -- Spot prices of PET in Russia have not reacted on the decline in PET prices in Asia. Last week's offers of PET granulate in the domestic spot market were mixed on the back of material deficit; the price-spread widened, according to MRC Price Report.

Last week's prices of PET in Russia were at Rb63,400-66,000/tonne, CPT Moscow, including VAT.

According to one of the makers, the price rose to Rb66,000/tonne, CPT Moscow, including VAT, due to the material shortages in the domestic market and the lack of available spot volumes.

At the same time, another producer of PET reduced price offer for the domestic market by Rb1,000/tonne. The source noted that the sales of the material are good and the demand is stable in the market, but the company had to respond to falling prices from importers, to prevent the increase in purchases of foreign raw materials.

As a result, spot prices of Russian PET were settled at Rb64,000-66,000/tonne, CPT Moscow, including VAT.
The price of Belarusian PET granulate for Russian consumers remain unchanged and was at Rb63,400-63,600/tonne, CPT Moscow, including VAT.

At the same time, some buyers are not in a hurry to buy material and expect to price cuts from Russian producers, following the sharp fall in March prices of raw materials in Asia, citing to lower prices of PET granulate in China.

MRC

MOSCOW (MRC) -- In 2012, investments in equipment for PET processing in Russia decreased by 4% compared to 2011 and made USD47,2 million, according to MRC Annual Report.

Investments in the Russian market of PET processing declined in 2012. In general, over the stated period, the investments in PET processing made USD47,2 million, whereas in 2011 the total volume of investments in PET processing amounted to USD49,3 million. In relative terms, the decline in investments is estimated at 4%.

In terms of sectors of PET processing in Russia, there were the following pattern. In 2012, for the first time investments in the production of polyester fibers exceeded those of PET preforms moulding. Totally for the year, USD24,4 million was invested in the production of polyester yarns, which is more than three times higher than the total investments in the sector in 2011. Such a significant increase is explained by the launch of a plant for the production of polyester filament yarns by Freudenberg Politex.

At the same time, investments in PET preform moulding fell by 44% compared to 2011 and totaled USD12,2 million over the stated period. Investments in the moulding have been at a low level for the fourth year in a row, indicating the saturation of the PET preforms market in Russia. The peak of the investment activity in the molding of PET preforms accounted for 2007, when the total investments in the sector amounted to USD54,3 million.

Investments in the extrusion of PET films were almost absent over the past year.

MRC

MOSCOW (MRC) -- Lubrizol, an innovative specialty chemical company, is planning a four-year, USD400 million global expansion of its chlorinated polyvinyl chloride (CPVC) resin and compounding manufacturing sites, the company reported on its site.

With continued strong global demand for the company’s CPVC compounds, Lubrizol’s expansion efforts will be divided into two phases:

Phase 1 is to become operational by end of 2014 with the total capacity of 85,000 tonnes of CPVC resin and 100,000 tonnes of CPVC compound. The total investment in the project makes USD200 million.

Phase 1 includes the previously announced construction of a new CPVC resin and compounding facility in the United States. Initial resin capacity will be 55,000 tonnes and compound capacity will be 65,000 metric tonnes with a total investment of USD125 million.

Construction of a new CPVC compounding plant and warehouse in India is also a part of Phase 1. The total investment of USD40 million will include an initial capacity of 35,000 metric tonnes. The sites that are under final consideration are located in Gujarat and Maharashtra.

Besides, the previously announced joint investment in a CPVC resin manufacturing facility in Thailand is also included in Phase 1. Initial capacity will be 30,000 tonnes with a total investment of USD50 million and subject to receipt of all necessary government approvals.

Phase 2 is targeted to be operational by end of 2016. It adds 85,000 tonnes of CPVC resin and 100,000 tonnes of CPVC compound with total additional investment of approximately USD200 million.

Phase 2 includes an addition of 55,000 tonnes of resin capacity and 65,000 tonnes of compound capacity at the sites in the United States and India, which is under consideration at the moment. The total additional investment will be USD125 million.

Besides, it includes an expansion of the Phase 1 India compounding plant, adding 35,000 tonnes of capacity with total additional investment of USD15 million.

Phase 2 will also see the expansion of the Phase 1 joint investment plant in Thailand, adding 30,000 metric tons of resin capacity. The total additional investment is estimated to be USD50 million.

"Lubrizol is committed to ensuring product availability and quality for our global CPVC customers,” states Eric Schnur, president of Lubrizol Advanced Materials. “Through these global capacity expansion efforts, we will be in a strong position to meet global demand as well as better serve the needs of our existing and future customers to help them achieve their business success."

We remind that, as MRC wrote previously, Sekisui Chemical and Lubrizol will initialise a joint venture (JV) company in Thailand, in order to produce chlorinated polyvinyl chloride (CPVC), which is used as a raw material in pipes for supplying hot water, industry and sprinklers.

The Lubrizol Corporation, a Berkshire Hathaway company, is an innovative specialty chemical company that apart from its production develops and supplies technologies to customers in the global transportation, industrial and consumer markets. Lubrizol’s advanced polymer technology delivers exceptional performance for the plumbing, fire sprinkler, industrial and other building and construction related applications. Lubrizol is providing innovative solutions for its customers’ high-performance application needs and remains committed to ongoing investment in its CPVC capabilities that support future growth.
MRC