MRC news digest over the past week

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

1. Russian market participants expect PS prices to decline.

Although the contract price of styrene monomer (SM) in Europe in April decreased by EUR64/tonne to EUR1,411/tonne, FOB ARA, Russian producers have not significantly changed their price quotation. Participants of the PS market are waiting for the price reductions from Russian producers due to the ongoing SM price cuts in Europe. Thus, in the beginning of April, spot prices of SM were at USD1,560-1, 580/tonne, and in the mid-April the price has fallen to USD1,530-1,540/tonne. Buyers of polystyrene in the Russian market on the back of sliding SM prices are waiting for the price adjustments from Russian producers.

2. PP imports to Ukraine in Q1 2013 grew twofold.

Ukraine's imports of polypropylene (PP) is rapidly growing on the back of the outage of local producer Linik. Thus, PP imports to Ukraine in Q1 2013 grew more than twofold, reaching 39,300 tonnes, from 19,000 tonnes in Q1 2012. March PP imports to Ukraine reached 14,600 tonnes, up 20% from February. March imports of homopolymer of polypropylene (PP-homo) to Ukraine amounted to about 11,400 tonnes, up 18% from February. The total import supplies of PP-homo in the first quarter of 2013 reached 31,700 tonnes, up 166% year on year. This year Ukrainian companies have significantly increased the imports of PP-homo from Saudi Arabia, India and the United States. The share of European producers has declined, the only exception made the material by Rompetrol production. Imports of block copolymers of propylene (PP-block) last month made 1,200 tonnes, which is almost equal to the February imports. Ukraine's imports of PP-block in the first quarter of this year made around 3,300 tonnes, up 10% year on year. In January - March 2013 imports of PP-random is very close to 3,000 tonnes, up 24% year on year. Only pipe producers increased their demand for PP-random in Q1, while other sectors, on the contrary, reduced it.

3. Output of products from polymers in Russia rose by 13% in Q1, 2013.

In the first quarter, Russian converters of polymers increased production of finished products by 12,8% year-on-year. The sector of sheets production accounted for the largest production volume, while, by contrast, the output of bottles, flasks and similar articles from polymers slumped by 14,8% to 3.13 billion items. However, the output of these products in March rose by nearly a quarter from February and reached the level of 1.24 billion items. The production of plates, non-porous sheets in March fell to 13,500 tonnes, while in February this index made 17,900 tonnes. In January-March, 2013, the total output of plates, non-porous sheets by Russian plants made about 51,000 tonnes, up 30% year-on-year. In the construction sector, plastic windows and window sills accounted for the largest increase in production volumes. According to Rosstat, last month the output of these products amounted to 1.6 million square metres, up 22% from February. Overall, in January-March this year, the production volume of plastic windows and window sills made 3.9 million square meters, an increase of 21% year-on-year. In March 2013, the output of doors and their polymer boxes reached 60,400 square metres, an increase of 26% from February. However, in January-March 2013, the total production volume of doors and polymer boxes grew by only 3,3% year-on-year. The production of plastic pipes and fittings in March rose to 47,200 tonnes, up 12% from February. Over the first three months of 2013, the total output of plastic pipes and fittings went up to 127,000 tonnes, up 6,4% year-on-year. Last month, the output of plates, polymer non-porous and non-reinforced films made about 70,900 tonnes, an increase of 9% compared to February. In January-March 2013, the total production volume of these products amounted to 183,000 tonnes, up 7,1% year-on-year.

4. Imports of PET to Ukraine grew by nearly 3% in Q1, 2013.

In the first quarter, 2013, Ukrainian companies increased their imports of PET granulate by 2,6% year-on-year. In January-March 2013, imports of PET to Ukraine for the production of PET preforms mades about 38,700 tonnes, nearly 1,000 tonnes more than last year. In 2012, imports of granulate amounted to about 37,800 tonnes. February accounted for the peak volumes of imports in the first quarter of the year. In February, total imports of PET made about 16,000 tonnes, while in March, the supply of granulate to the country amounted to about 14,300 tonnes.

5. Russian PET production in March rose by 20%.

In March, Russian producers increased the output of bottle polyethylene terephthalate (PET) granulate by 20% from February and reached 41,300 tonnes. Russian companies in March have produced 41,300 tonnes of PET granulate, up by 5,600 from February. The increase in production resulted from the increased capacity utilization of Alco-Naphtha, Kaliningrad, and a larger number of calendar days in the month. Sibur-PETF, Senezh and Polyef kept the same level of their capacity utilisation. For the Q1 2013 Russia's production of PET granulate made about 112,000 tonnes, which is slightly more than in the same period last year - 110,000 tonnes.

6. Asian PET prices fell following drop in feedstock prices.

Export prices of bottle PET granulate for CIF countries declined by USD10/tonne following the decline in the spot prices of paraxylene (PX), purified terephthalic acid (PTA) and monoethylene glycol (MEG). Asian PET granulate prices having recovered last week resumed their downtrend again on the back of the falling feedstock prices. PX price in China dropped by USD50/tonne, PTA prices were cut by USD27-29/tonne and spot quotations of MEG were at USD21-23/tonne lower than the week before. The future trend of PET prices is uncertain due to the falling prices of feedstock in the market. Buyers prefer to stay on the sideline.

7. Production of polyethylene in Russia rose by 9% in March.

In March, the output of polyethylene (PE) by Russian producers increased by 9% from February and reached 149,000 tonnes. In the first quarter of the year, the total production volumes made 436,000 tonnes. All Russian producers of high-density polyethylene (HDPE) reduced their level of capacity utilization with the exception of Gazprom neftekhim Salavat (its output grew to 5,900 tonnes). Nizhnekamskneftekhim accounts for the largest cut in the output - 9% compared to February (to 15,600 tonnes). In March, Kazanorgsintez and Stavrolen produced 43,000 tonnes and 24,400 tonnes, respectively. The overall output of HDPE in March amounted to 89,000 tonnes. In the first quarter of the year, the total production volume of HDPE by Russian producers made more than 266,000 tonnes, up 43% year-on-year. The March production volume of low-density polyethylene (LDPE) made 60,000 tonnes, up 16% from February. Last month, all Russian producers raised their volumes of LDPE production. Overall, in January-March, the total production of LDPE amounted to 169,700 tonnes, up 4% year-on-year. Linear polyethylene (LLDPE) was not produced in March.

8. Imports of titanium dioxide to Russia grew by half in March.

In March, imports of titanium dioxide (TiO2) to Russia increased by 53% year-on-year. Last month, the total supply volumes of the imported material to Russia amounted to 8,760 tonnes. All major suppliers of titanium dioxide to the country, such as Ukraine, the USA, China and Germany, accounted for the growth of import shipments. According to customs statistics, in March 2013, imports of TiO2 for the production of paints and varnishes made 6,460 tonnes. About 1,700 tonnes of specialized grades of TiO2 for the production of rigid compounds were imported. About 600 tonnes of titanium oxide were imported for the production of paper, building materials, household chemicals and for other segments of pigment consumption. In Q1 2013, imports of titanium dioxide to the Russian domestic market amounted to about 21,600 tonnes.

9. Ukrainian exports of titanium dioxide in March fell by 25%.

Ukraine's exports of titanium dioxide in March decreased by 24% year on year. On the back of weak consumer activity in foreign markets Ukrainian producers have reduced the sales of titanium dioxide. In March, export shipments of Ukrainian titanium dioxide fell by 3,500 tonnes as compared to March 2012, and amounted to about 11,000 tonnes. Compared with February 2013 exports declined by 1,16 tonnes. The exports fell due to the overproduction of the material in the world, which resulted in a decrease in spot prices of titanium dioxide. Ukraine's exports of titanium dioxide in Q1 2013 on the back of decline in foreign prices made 33,300 tonnes, from 38,000 tonnes in Q1 2012 - down 12% year on year. The increase in exports relative to the previous year was seen only in January and made only 340 tonnes, while in February and March, exports of TiO2 fell by 1,570 tonnes and 3,500 tonnes respectively.

10. Ukrainian imports of PE in Q1 2013 increased by 11%.

Ukraine's imports of polyethylene (PE) in Q1 2013 increased by 11% and made 83,500 tonnes, on the back of an increase in the demand due to the outage of Ukrainian Karpatneftekhim (Lukoil Group). March PE imports to Ukraine decreased by 3%, from February and made 25,600 tonnes. However, in January - March, the total imports of polyethylene to the Ukrainian market made 83,400 tonnes, up 11% year on year. Last month's imports of high density polyethylene (HDPE) to Ukraine decreased by 6% compared with February and made about 11,000 tonnes. The total imports of HDPE in Q1 2013 amounted to 33,800 tonnes, up 28% year on year. Imports of low-density polyethylene (LDPE), after the peak in January continued to decline, and in March was about 7,900 tonnes, due to large carryovers from the end of last year and weak demand for finished films from many sectors of consumption. In January - March of the current year, the total imports of LDPE to Ukraine made 29,600 tonnes, down 5% year on year. Linear polyethylene (LLDPE) is the only polyethylene, which shows a stable growth. March imports of LLDPE increased to 5,800 tonnes, up 20% from February. In Q1 2013 LLDPE imports by increased by 15% to 17,200 tonnes. The main increase in consumption provided the producers of multilayer films. Import of other polymers of ethylene in the first quarter of 2013 remained practically at the level of the first quarter of 2012 and made a little more than 1,000 tonnes.

11. Production of caustic soda in Russia surged by 9% in March.

In March, the total output of caustic soda by Russian plants increased by 9% from February. Because of the large number of calendar days in March compared to February, the final production volumes of domestic plants rose by 8,100 tonnes and made about 95,000 tonnes last month. Meanwhile, an average capacity utilization of Russian caustic soda producers remained unchanged. The share of Kaustik (Volgograd) accounted for 20% of Russia's production of caustic soda. Last month, Sayanskkhimplast and Kaustik (Sterlitamak) produced 18% and 16% of the total production volumes of the material, respectively. Overall, in Q1 2013, the output of caustic soda by Russian plants amounted to 276,400 tonnes. The production of caustic soda in Russia remains stable year-on-year. Thus, in the first quarter of 2012, Russia produced 276,300 tonnes of caustic soda.

12. PET consumption in Russia rose by 4% in March.

In March, consumption of polyethylene terephthalate (PET) in Russia increased by 4% from February to 52,500 tonnes. In the Russian PET market, a seasonal increase in market players' activity contributes to the growth of the estimated consumption of the material. Amid rising demand, domestic plants have raised their production of granulate. Overall, in March, PET production in Russia surged by 20% from February and made 41,300 tonnes. In March, imports of PET to Russia amounted to about 14,700 tonnes, whereas in the previous month this index equalled 16,000 tonnes. In January-March, the estimated rate of consumption of the material in Russia increased by 5% or 6,500 tonnes year-on-year. In the first quarter of the year, the final consumption volumes made 146,000 tonnes. In 2012, the peak indices for the estimated PET consumption by Russian companies accounted for June. Thus, in June 2012, domestic converters consumed about 59,000 tonnes of the material.

13. Russian DOP will go up in value in May.

In April, the planned outage for maintenance at Salavat plant and a growing seasonal demand led to a serious increase in prices of DOP plasticizer in the Russian market. In early April, the increasing cost of 2-ethylhexanol resulted in rise in prices of DOP plasticizer in the Russian spot market by Rb3,000/tonne to the level of Rb70,000-72,000/tonne, including VAT and delivery. Since 20 April, Gazprom Neftekhim Salavat has shut its DOP production for a monthly turnaround. As a result, in the last week of April, the plasticizer prices reached the level of Rb72,000-75,000/tonne, including VAT and delivery, in the spot market. Russian producers do not exclude further increases of DOP prices in May on a continuing rise in feedstock prices and limited supply. Price offers for June shipments of South Korean DOP were voiced in the range of USD77,000-79,000/tonne, including VAT and delivery.

14. Investments in PVC processing in 2012 decreased by 21%.

In 2012, the investments in processing of PVC made USD74.3 mln, down 21% from 2011, when investments rose sharply after two-years fall in investments. Investments in PVC processing in 2008 was 2.5 times higher than in 2012. In 2012 there were installed 436 production lines with total capacity of PVC processing about 450,000 tonnes/year, down almost 21% from 2011. The investments in the largest sector of PVC processing - extrusion profile-moulding products (PMP), which in 2004-2012 made more than 50% of the total investment in the processing of PVC, gradually slow down compared to to the pre-crisis period with average annual growth of investments about 30%, is now being close to saturation. The capacities of PMP production in 2012 amounted to 147,000 tonnes, down 19% compared to 2011, while in 2008 this figure was 435,000 tonnes. Total investments in equipment for the production of PMP made USD36 mln, down 19% from 2011 and more than two times less than in the record 2008. The largest share of investments in the sector PMP (more than USD20 mln) was provided by the sector of window profiles. At the same time, growth in PVC processing by cable extrusion almost doubled - to 41,000 tonnes (74 production lines), which is more than twice less than the capacities of imported lines in 2008.
MRC

MOSCOW (MRC) -- Shanghai Chlor-Alkali is in plans to shut a caustic soda plant for maintenance, said Apic-online.

A source in China informed that the plant is planned to be shut in June 2013. It will remain off-stream for around one month.

Located in Shanghai, China, the plant has a production capacity of 720,000 dry mt/year.

As MRC informed before, Chinese material is still a leader in imports of solid caustic soda to Russia. The share of Chinese material made 95% of total imports in February. The total imports of solid caustic soda in February made 4,200 tonnes.

Shanghai Chlor-Alkali Chemical Co., Ltd. manufactures and markets chlorine and alkaline chemicals. The Company's products include caustic soda, polyvinyl chloride, and other basic chemicals. Shanghai Chlor-Alkali Chemical also has operation in property development.
MRC

MOSCOW (MRC) -- German chemical giant BASF SE and Malaysia's Petronas Chemicals Group said Thursday that they will invest USD500 million to build an aroma ingredients production facility in the eastern state of Pahang, said BASF.

The project is part of an existing joint venture between BASF and the petrochemical arm of Malaysia's state energy company Petroliam Nasional Bhd that stretches back to 1997. BASF holds 60% in the joint venture, with the rest owned by Petronas.

BASF and Petronas Chemicals plan to produce citral, L-menthol and citronellol--ingredients used to make fragrances and flavors that will end up as personal care and food products--that will cater to demand from the Asia Pacific, according to a joint statement. Initial production will start in 2016 and employ 110 people, it said.

"The integrated aroma chemicals complex will open up a new business frontier, tapping into the flavors, fragrance and pharmaceuticals markets," Wan Zulkiflee Wan Ariffin, chairman of Petronas Chemicals, said in the statement.

BASF is one of the leading producers of aroma ingredients worldwide, with a product range that includes geraniol, citronellol, linalool and L-menthol. Aroma ingredients are sold to the flavor and fragrance industry, and are used mainly in home and personal care products and fine fragrances, as well as in the food industry and in pharmaceutical applications.

As MRC informed earlier, in January this year, BASF and PETRONAS announced the termination of their preliminary agreement on a joint venture for the production of specialty chemicals as a part of PETRONAS' petrochemical complex (RAPID), which is being build in the state of Johor, Malaysia. As per the preliminary agreement signed in March 2012, a new joint venture (BASF - 60%, PETRONAS - 40%) was aimed to produce izononanol, reactive polyisobutylene, nonionic surfactants, methanesulfonic acid, and a number of intermediate products.

BASF and PCG founded their joint venture BASF PETRONAS Chemicals Sdn Bhd in 1997. The company currently operates an integrated complex situated at the Gebeng Industrial Zone, Pahang. The company’s share capital is 60% held by BASF and 40% by PCG with a total initial investment of about MYR 3.4 billion for acrylic monomers, oxo products and butanediol production facilities. In the new project, the partners will invest according to their stake.

MRC

MOSCOW (MRC) -- Lanxess has opened a new Asia-Pacific Application Development Center for its plastics in the Hong Kong Science & Technology Park, according to GV.

It is run by the High Performance Materials (HPM) business unit. The Asia-Pacific Application Development Center will be the technology hub for customers in the Asia-Pacific region and India. It offers customers comprehensive engineering services in all stages of developing a new application; for injection moulded and blow moulded parts, as well as for composite sheet applications.

According to Lanxess, the center will enhance the company's capabilities to serve the expanding Green Mobility trend by providing testing services for plastics applications in the auto industry in application areas including: under-the-hood, chassis, engines and oil pans.

Lanxess is quick to respond to the increase in demand for products from the HPM business unit due to the trend toward lightweight construction in vehicle production by investing in the expansion of the capacities in the Asia Pacific region. In Wuxi, China, Lanxess completed the expansion at the production facility for high-tech plastics in 2011. It has raised production by around 20,000 tpa to a total of approximately 60,000 tpa. In 2012, the company opened a new compounding plant in Jhagadia, India, with an initial capacity of 20,000 tpa. These two facilities supply the entire Asia-Pacific region with Durethan and Pocan.

We remind that, as MRC wrote previously, LANXESS is strengthening its product portfolio for biocides to serve the megatrend urbanization. Thus, in early April, the German specialty chemicals group acquired Singapore-based PCTS Specialty Chemicals Pte. Ltd. for an undisclosed amount. Through the acquisition, LANXESS is now one of the leading suppliers of biocides for paints and coatings in the rapidly-growing Asia-Pacific region.

Lanxess is a leading specialty chemicals company with sales of EUR 8.8 billion in 2011 and currently around 16,900 employees in 31 countries. The company is currently represented at 48 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals.
MRC