MRC news digest over the past week

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

1. Investments in PS processing exceeded USD140 million in 2012.

In 2012, Russian companies invested USD141.7 million in polystyrene and styrene plastics processing. This is a 24% decrease compared to 2011. If investments in the increased processing capacities (tonne/year) are evaluated, then in 2012 complete lines with the total processing capacity of 258,000 tonnes of polystyrene per year were installed, which is only 7% less than in 2011. Russian companies increased their investments in the Chinese equipment, the supply volume of which is estimated at USD49 million. Such an equipment mainly includes automatic moulding machines for processing of several types of polymers, including polystyrene. At the same time, investments in European equipment fell in value terms from USD50.5 million in 2011 to USD28 million in late 2012. In terms of processing technologies, the largest share of investments accounts for the moulding equipment - 175,000 tonnes per year, up 19% compared to 2011. The total production capacity of the supplied equipment for foaming exceeded the level of 2011 by 12% and amounted to 53,000 tonmes per year.

2. Ukrainian companies achieved serious cuts European polyolefins prices.

Weak demand in the domestic market, and uncertain perspectives in April forced Eastern European producers cut export prices of polyolefins. Ukrainian companies get price reductions by EUR20-60/tonne. The contract prices of ethylene and propylene for March in Europe were agreed by EUR50 and EUR55 above February's level. However, European makers on low demand in export markets have not been able to pass increased feedstock costs on their PE and PP prices. Ukrainian companies reported by mid-March some Eastern European producers had been forced to reduce their prices even by EUR20-60/tonne, from the February level. In early March, the offers for European high-density polyethylene (HDPE) to Ukraine were voiced at EUR1 ,260-1, 320/tonne, FCA. Offers for polypropylene were voiced at EUR1 ,200-1, 280/tonne, FCA, for PP-homo. By mid-March, some Ukrainian companies managed to get price reductions from Eastern European makers.

3. February production of HDPE in Russia decreased by 8%.

In February, the total output of high-density polyethylene (HDPE) by Russian enterprises decreased by 8%, from January to about 85,000 tonnes on seasonal factors, as well as due to lower capacity utilisation of some enterprises.
Overall, despite the low demand in the domestic market, the Russian producers keep capacity utilization at a high level (over 95%), the only exception made Stavrolen (Lukoil Group), which last month reduced the production of HDPE to 23,400 tonnes. In early March, the company stopped two of the three reactors for a few days. Kazanorgsintez produced in February 39,000 tonnes of HDPE (from 37 million tonnes in February 2012). Nizhnekamskneftekhim keeps capacity utilization at 100%, from February production - about 18,000 tonnes. The fourth largest producer of HDPE - "Gazprom neftekhim Salavat" last month produced about 4,700 tonnes. Low demand and excess supply of HDPE in the domestic market, have forced the Russian makers to increase export sales.

4. Imports of polyethylene to Ukraine slashed in February by 17%.

In February, weak demand and oversupply in the Ukrainian market resulted in a decline in polyethylene (PE) imports. PE exports also fell to 26,300 tonnes, down 17% from January figure. 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.

5. Price offer of Russian PET widened last week.

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. 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. 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.

6. Investments in PET processing in 2012 amounted to 47,2 million.

In 2012, investments in equipment for PET processing in Russia decreased by 4% compared to 2011 and made USD47,2 million. 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 extrusion of PET films were almost absent over the past year.

7. Prices of LDPE began rising in Ukraine.

Rising prices in foreign markets and decline in imports put pressure on the prices of low-density polyethylene (LDPE) in the Ukrainian market. By mid-March, LDPE prices had increased by UAH500/tonne. Seasonaly weak demand for low-density polyethylene (LDPE) and excess supply have been keeping the prices from rising in the Ukrainian market for quite long time, despite the increase in prices in foreign markets. But by mid-March LDPE prices in Ukraine began growing under the pressure of another price increases in the foreign markets and the seasonal increase in demand for film goods. During January-February 2013 prices of LDPE in the Ukrainian market were at UAH14,600-15,000/tonne, CPT Kiev, including VAT, for the 158 LDPE. Leading Russian producer - Kazanorgsintez stopped its deliveries of LDPE to Ukraine from March. Considering that January supplies of Russian PE to the Ukrainian market made about 6,800 tonnes, then two-weeks imports from Russia in March fell to 1,500 tonnes. Azerbaijani producer Ethylene-Polyethylene (Socar) stopped its sales of LDPE from 19, March to 27, March due to the holiday Nowruz. Supplies of LDPE from Belarus were also significantly reduced. All of these factors had led to an increase in LDPE prices in the Ukrainian market by mid-March.

8. Output of products made of polymers in Russia grew by 25% in February.

In February, Russian converters of polymers increased production of the finished goods. Last month, the increase in production made on average 25%. After the unsuccessful January due to the long New Year holidays, Russian plants raised production of the finished polymer products in February. Last month, the increase in production ranged from 12% to 31% depending on the consumption sector. Traditionally, the largest increase in production accounted for the construction sector, namely, the production of plastic windows and window sills. According to Rosstat, in February 2013, the total output of these products made 1,3 million square metres, up 31% from January. In January-February, the total production volumes of plastic windows and window sills amounted to 2,3 million square metres, up 24% year-on-year.

9. Imports of PET to Russia grew by 78% in February.

Imports of PET to Russia grew by 78% compared to January 2013. Following the preparation for the season, in February, Russian companies increased their import purchases of the material for the production of PET preforms. Also the market received the volumes of the material purchased last December in anticipation of the growth of granulate quotations in Asia. Last month, total imports of PET to Russia amounted to 16,000 tonnes, up 78% from the previous month. In comparison with the same period last year, imports of PET decreased by 1,200 tonnes. The share of PET of Chinese brands in the structure of supplies made about 52%. Totally over the past month, Russian consumers of PET granulate received about 8,200 tonnes of Chinese PET. At the same time Korean imports increased significantly. If compared to the previous month, supplies of Korean PET made more than 5,600 tonnes, which is equivalent to 35% increase in January. The volumes of export deliveries of Russian bottle PET remained relatively stable compared to January and made about 1,400 tonnes in February. Meantime, if compared to sales in the foreign markets last year, exports of Russian PET fell by 75% in February.

10. Imports of titanium dioxide to Russia grew by a quarter.

In February, imports of titanium dioxide to the Russian domestic market increased by a quarter from January 2012, amid expectations of rising prices and reducing residues at the converters' warehouses, according to DataScope report. Totally, over the stated period, Russian consumers received 7,100 tonnes of titanium dioxide. The February imports increased by 1,300 tonnes year-on-year. This year, the February purchasing volumes are the highest compared to the same period since 2010. In the structure of supplies, the grades of Ukrainian and American TiO2 saw a significant growth.

11. Imports of PET to Ukraine rose by 78% in February.

The February volumes of PET import to Ukraine increased by 78% from January, which equals to more than 7,300 tonnes of bottle PET granulate. Totally, last month, Ukrainian companies shipped about 15,900 tonnes of granulate. The growth of imports was anticipated and justified by both a seasonal factor and attractive PET prices in the foreign markets in December, 2012. On the beginning of an upward price trend, Ukrainian companies increased purchasing volumes to generate stocks in preparation for the season. For the second consecutive month there have been no shipments of Korean PET granulate. In February, the lion's share of imports accounted for the Chinese granulate brands, to the detriment of Korean PET. Totally, about 12,000 tonnes of Chinese PET of China Resources Chemicals, Dragon Special Resin, SK Chemicals, Jiangsu Sanfangxiang, etc. origin arrived in the Ukrainian market last month.
MRC

The output of Russian EPS was by 1,6% higher in February than in January 2013

MOSCOW (MRC) -- In February 2013, the production volume of expandable polystyrene (EPS) in Russia made 10,100 tonnes, according to MRC ScanPlast.


The February output of EPS by Russian producers exceeded that of January 2013 by 1,6% with Alphapor, produced at the facilities of SIBUR-Khimprom (Perm), to account for 78% of the total production volume. On a low consumption of the material in the first quarter of 2013, the producer slightly rediced the level of its capacity utilization. In January 2013, 8,800 thousand tonnes of the material were produced compared to 7,800 tonnes in February 2013.

The output of EPS at Angarsk polymer plant made 1,500 tonnes of the material, which corresponds to an average annual capacity utilization of the maker in 2012.

752 tonnes of EPS were manufactured at Plastik (Uzlovaya), which is 20% less than in January 2013. However, the production volumes of early 2013 are significantly higher than those of 2012, namely, 1,680 tonnes and 1,150 tonnes, respectively.

MRC

Chevron is negotiating with buyers Canadian LNG export

MOSCOW (MRC) -- Chevron is in talks with potential buyers for Canada's first exports of liquefied natural gas, paving the way for a USD15 billion project that would open up a new route for North American gas to Asia, informed Hydrocarbonprocessing with reference to the Financial Times reports.

Chevron aims to sign contracts to sell about 60-70% of the gas ahead of the project, the report says.

The planned Kitimat plant on Canada's west coast would export shale gas from fields in British Columbia in the form of LNG. The fields hold an estimated 50 trillion cubic feet of gas, the report says.

The project is a 50-50 joint venture between Chevron and US independent oil and gas group Apache. The project has already gained an export license and permission to build a pipeline from the plant site to the coast. At capacity, it would produce 10 million tpy of LNG, the report adds.

The report says that Chevron is keen to price the gas in relation to oil, which is higher than the price of natural gas. Japanese buyers have, however, recently taken advantage of cheaper North American shale gas to negotiate LNG contracts linked to the US natural gas benchmark, according to the report.

As MRC informed earlier, in September, 2011, Chevron Corp had launched its USD 28.4bn Wheatstone liquefied natural gas project in Western Australia, seeking to tap into growing Asian demand with its second LNG export project in the country. Apache Corp, Kuwait Foreign Petroleum Exploration Company (KUFPEC), Royal Dutch Shell, and Kyushu Electric are all equity participants in Wheatstone, and hold 13%, 7%, 6.4% and 1.83%, respectively while Chevron holds the rest.

Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States, and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining, marketing and transport; chemicals manufacturing and sales; and power generation. Chevron is one of the world"s six "supermajor" oil companies.
MRC

Honeywell technology for more propylene in China

MOSCOW (MRC) -- UOP LLC, a subsidiary of Honeywell International Inc ., recently procured a contract from Fujian Meide Petrochemical Co. Ltd - a wholly-owned subsidiary of China Packing Group Company Ltd - to deploy UOP C3 Oleflex process technology for increased propylene production, said Nasdaq.

The UOP C3 Oleflex process technology will be used to convert propane to propylene, a substance used in the production of packaging and other similar types of materials. Additionally, Honeywell's UOP will also provide equipments, staff training and technical and other services to Fujian Meide's facility.

Honeywell's UOP already has business ties with Fujian Meide. Earlier, in 2011, it licensed its C3 Oleflex process technology to Fujian Meide to produce 660,000 metric tons of propylene annually. The new unit is expected to produce the same annual quantity starting 2015.

The technology from Honeywell is well suited to meet the rising demand for propylene across the world. According to market projections, China accounts for more than 15% of the global demand. Domestic demand for propylene is further expected to grow 5% to 6% annually. As the demand for propylene increases, producers are on the look-out for ways to maximize product yield and reduce production costs. The excellent performance of Honeywellls' UOP C3 Oleflex process technology is a likely solution to this as it reduces costs, generates high returns on investment and maximizes operational flexibility. UOP's combined Oleflex projects is expected to increase propylene production globally by more than 5 million metric tons in the next 3 years.

As MRC wrote eralier, Honeywell's UOP granted the third technology license for its breakthrough methanol-to-olefins (MTO) technology to China"s Shandong Yangmei Hengtong Chemicals. The Chinese company will use Honeywell UOP"s advanced MTO process to convert methanol from gasified coal into ethylene and propylene.

Honeywell is a global diversified technology and manufacturing company with a wide range of aerospace products and services, control, sensing and security technologies for buildings, homes and industry, turbochargers, automotive products, specialty chemicals, electronic and advanced materials, process technology for refining and petrochemicals and energy efficient products and solutions for homes, business and transportation.

MRC

LyondellBasell grants second Spheripol license to Nizhnekamskneftekhim

MOSCOW (MRC) -- LyondellBasel, one of the world's largest plastics, chemical and refining companies,l has announced that OAO Nizhnekamskneftekhim, the largest petrochemical company in Russia, has selected the company's Spheripol process technology for a new 400 KT per year single-line polypropylene (PP) plant to be built in Nizhnekamsk, Russia Federation, according to LyondellBasell's press release.

The start-up of the new facility is projected after 2015.

"This is the third polyolefin process technology that we have licensed to them building on a relationship that spans more than eight years," said Bob Patel, Senior Vice President of Olefins and Polyolefins, Europe, Asia, International (EAI) and Technology at LyondellBasell.

Spheripol technology offers the wide range of polymers applications, unmatched safety record, and operability among the best in the industry. Production rates of up to 550 KT per year are available, which makes it the technology of choice for the production of polypropylene.

We remind that, as MRC reported earlier, in early July, LyondellBasell announced that ZapSibNeftekhim L.L.C, a fully owned subsidiary of SIBUR, has selected the Spheripol process technology from LyondellBasell for a new 500 KT per year single-line polypropylene (PP) plant to be built in Tobolsk, Russia Federation.

Headquartered in the Netherlands, LyondellBasell is one of the world's largest plastics, chemical and refining companies. LyondellBasell manufactures products at 58 sites in 18 countries. The company produces chemicals, fuels, and polymers used for packaging, clean fuels, durable textiles, medical applications, construction materials, and automotive parts. LyondellBasell is also a leading licensor of polypropylene and polyethylene technologies. The more than 250 polyolefin process licenses granted by LyondellBasell are twice that of any other polyolefin technology licensor.
MRC