Limited supplies and approaching Ramadan perk up demand in Egypt

MOSCOW (MRC) -- In Egypt, players in the polymer markets report seeing an improvement in their businesses as limited locally held supplies coupled with approaching Ramadan have started to revive some buying interest amongst converters, as per Plastemart.

However, players continue to question the sustainability of the current situation given the weak economic conditions under which the country has been suffering. Players agree that supply levels for the various polymers are very limited owing to restricted import activities. Imports into the country have been affected for some time from the higher USD/EGP dollar parity which stems from a lack of dollar reserves ever since the political turmoil resulted in the main foreign currency sources drying up, such as tourism.

As a result of this situation, most players turned to the black market to meet their dollar needs at the expense of paying higher costs. Consequently, import trade has become more and more scarce and locally held polymer availability started to tighten. Meanwhile, recent shutdowns at the local PVC producer EPC and the HDPE producer SIDPEC also worsened the situation, although producers have been reported to have resumed their operations. In the PP market, the local producer EPPC has not been making offers for over two months and some players claim that the producer is not likely to offer before June. EPPC previously had commented that it was difficult to judge a fair price amidst ongoing parity issues.

A converter remarked, "We expect to see higher PVC prices when considering the limited availability. We hear from other market participants that they are struggling to get even import quantities in the amounts they ask."

In the PE market, a manufacturer remarked, "Local market levels are moving up but demand is still limited to the needs. Most converters opt to add some off grade materials to their purchases in order to balance their costs. Approaching Ramadan has revived the end product markets a bit, especially for film products, but we do not expect this situation to be sustainable when considering the current economic and political conditions inside the country. Meanwhile, hike expectations from the Middle Eastern producers for June also fuel sellers to hold onto their materials." A different player highlighted that the overall end product markets revived for the food packaging sector. "Demand has improved when compared to before but it might not be a long lived revival once Ramadan sets in."

As MRC wrote earlier, Chevron is in advanced talks to sell most of its downstream assets in Egypt and Pakistan in a sale that could be valued at around USD300 million. The company is conducting separate sale processes for its assets in both countries, the sources said in the report.

MRC

Use of plastics in automotive sector to grow

MOSCOW (MRC) -- Plastics find major applications in electrical components and interior and exterior furnishings of automobiles. The majority of the application market for automotive plastics is under the purview of these two application segments accounting for almost 70% of the total consumption, as per Plastemart.

Plastics are also used in other parts in automobiles such as power trains, under the hood and chassis. The market for these applications is expected to show growth over the forecast period. Polypropylene (PP) has been the most widely used plastic in automobiles in recent years and is expected to hold sway for the entirety of the forecast period till 2018.

Polyurethane (PU), acrylonitrile butadiene styrene (ABS), polyvinyl chloride (PVC) and polyethylene (PE) are the other major plastic materials that have been in great demand in automobile manufacturing. Polycarbonate (PC), polymethyl methacrylate (PMMA), polyamides (PA) such as nylons and other plastics including polyoxymethylene (POM) and polyethylene terephthalate (PET) are also in great demand in various automotive applications.

Biodegradable plastics are a more environment friendly option to plastics sourced from crude oil and derivatives. After a certain time period these plastics begin their degradation process and are easy to dispose without causing adverse effects on the environment. Starch based and polylactic acid (PLA) based biodegradable plastics have been the most common materials used in the automotive industry. Newer biodegradable plastics such as PHA, PCL and PBS are being used in small quantities for automotive applications. Biodegradable plastics have been analyzed separately as a potential opportunity, the estimates for these plastics have not been included in the overall market estimate and have been provided separately.

Traditionally, although North America and Europe have been the biggest markets for plastics in automobiles, Asia Pacific has been the largest consumer of automotive plastics in recent years. This can be attributed to the tremendous growth in the automotive industry in the region and the huge and apparent never-ending demand for automobiles in many economies of Asia Pacific. Europe has been the second largest market for automotive plastics followed by North America and Rest of the World (RoW).

As MRC wrote earlier, automotive production is a significant industry in Russia, directly employing around 600,000 people or 1% of the country's total work force. Russia was the world's 15th largest car producer in 2010, and accounts for about 7% of the worldwide production. In 2009 the industry produced 595,807 light vehicles, down from 1,469,898 in 2008 due to the global financial crisis. The largest companies are light vehicle producers AvtoVAZ and GAZ, while KAMAZ is the leading heavy vehicle producer. Eleven foreign carmakers have production operations or are constructing plants in Russia. As of August 2012 Russia is the largest car market in Europe

MRC

Orpic to invest USD3.6 bln in Sohar plastics project

MOSCOW (MRC) -- Orpic — the Sultanate’s refining and petrochemicals flagship — will invest around USD3.6 bln in the development of a massive petrochemicals scheme that will form the cornerstone of an ambitious downstream plastics-based industry in Oman, said Plastemart.

When completed by 2018, the Sohar Plastics Project together with the refinery improvement venture, will produce one of the most efficient integrated refinery and petrochemical complexes in the world.

At the heart of the project is a steam cracker to be built adjacent to Orpic’s refinery at the Port of Sohar. An extraction plant to be built at Fahud, close to Oman’s gas production fields, will extract natural gas liquids (NGLs) from natural gas. These NGLs, together with the C2+ component, will be transported to steam cracker via a new 300-km pipeline that will run from Fahud to Sohar. Also as part of the plastics complex, Orpic will construct HDPE and LLDPE plants at Sohar, as well as undertake an expansion of its existing polypropylene plant.

When operational in 2018, the Sohar Plastics Project will produce 420,000 tpa of high density polyethylene (HDPE), 420,000 tpa of low density polyethylene (LDPE), 215,000 tpa of polypropylene, 168,000 tpd of additional gasoline, and 46,000 tpa of additional benzene. These petrochemicals, together with those produced by existing Orpic plants, will account for six of the seven principal building blocks necessary to sustain the growth of a strong downstream petrochemicals industry in Oman, Al Mahrouqi said.

Oman Oil Refineries and Petrochemical Companies (ORPIC) is in talks with two local banks to raise USD2.5 bln to expand its Sohar refinery and refinance a previous loan.

We remind that in late 2012 Orpic announced that its production of world class high quality polypropylene homopolymer at Sohar plant has crossed 1 million tonnes. This was a significant milestone for the polypropylene (PP) plant in Sohar, which began production in October 2006.
MRC

Rosneft buying out Itera

MOSCOW (MRC) -- Russian energy powerhouse Rosneft is beefing up its presence in the home market by taking full control of a compatriot gas company, according to Upstreamonline.

The Igor Sechin-led player is snapping up the 49% stake in Itera which it does not already own. Rosneft completed the purchase of a 51% share in Itera in the second half of last year after tagging on a 6% share to its 45% holding for USD188 million.

The smaller share purchase meant it received title for the remaining 45% stake in Itera by transferring its licence for the Kynsko-Chaselsky block in the Yamal-Nenets autonomous region to the gas independent.

Rosneft said in August that it also passed its 100% share in the block’s operator Kynsko-Chaselskoye Neftegaz to Itera. There has been no confirmation from either company that Rosneft is taking its holding in Itera to 100%.

Itera, which was the first private company to put gas fields into operation in the Far North of Russia, says on its website that its current joint venture with Rosneft has proven and probable reserves of gas of 372.4 billion cubic metres.

Rosneft and Mitsui have signed an agreement to jointly develop the massive Far East Petrochemical Company (FEPCO) project. The deal was signed by Rosneft president Igor Sechin and by Shintaro Ambe, representative director of Mitsui & Co., in the presence of the Russian President Vladimir Putin and Prime Minister of Japan Shinzo Abe.
MRC

Pemex petchem trade deficit widens to USD10.7mn in Jan-Apr

MOSCOW (MRC) -- Mexican state oil company Pemex's trade deficit in petrochemical products widened to USD10.7mn in the first four months this year from USD2.1mn a year earlier, according to the latest monthly statistics on the company's website, said Bnamericas.

Exports in the period totaled USD50.0mn and imports USD60.7mn compared to USD87.4mn and USD89.5mn respectively in January-April 2012.

In April, Pemex reported a deficit of USD3.3mn (exports USD18.3mn, imports USD21.6mn) compared to a surplus of USD15.6mn (exports USD31.4mn, imports USD15.8mn) year-on-year.

In volume terms, January-April exports and imports fell from 191,600t to 166,100t and from 69,100t to 46,200t, respectively. In April exports decreased to 40,900t from 46,300t and imports rose to 15,700t from 10,000t.

Meanwhile, domestic petrochemicals sales fell 9.76% in the first four months to 12.1bn pesos (USD970mn) from 13.4bn pesos a year ago. Last month revenues dropped 1.55% year-on-year to 2.94bn pesos from 2.99bn pesos.
In January-April this year domestic sales volumes fell 11.8% to 1.33Mt while in April volumes slipped to 342,500t from 354,000t.

The company did not give reasons for the changes. Pemex's petrochemicals arm is called PPQ.

We remind, Pemex has signed a noncommercial agreement with Exxon Mobil to share technical and scientific information of mutual interest. Pemex said in a press release that the five-year agreement renews the two oil companies' relations in matters of cooperation.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).
MRC