Petrochemical production hit by heavy floods across Central Europe

MOSCOW (MRC) -- Central European countries including Germany, Austria, the Czech Republic, Hungary, Slovakia and Romania have been struggling with devastating floods due to rising rivers since earlier this week which resulted in with deaths across the region, according to Apic-Online.

Meanwhile, production at some chemical and petrochemical companies was also reported to be affected from the heavy flooding with production or delivery disruptions emerging for PVC, PS and PE.

Two Polish companies reportedly halted their petrochemical production given safety issues caused by severe weather conditions. Anwil declared force majeure on the output from their plant in Neratovice, Czech Republic earlier this week. The force majeure is expected to remain in place until June 20, according to industry sources. The company normally produces 130,000 tons/year PVC at the facility.

In addition, Synthos had to shut all units at their petrochemical complex located in Kralupy, Czech Republic. The company reportedly stated that their power plant was flooded with water. The facility houses a 30,000 tons/year GPPS and a 50,000 tons/year HIPS plant in addition to a 170,000 tons/year styrene and 90,000 tons/year butadiene plant.

A distributor in Italy reported, "A Central European producer declared a force majeure on their PVC output due to severe weather conditions which caused a flood at their warehouses. Therefore, they cannot offer their material until they verify the conditions of the products."

A packaging converter in Italy also mentioned that he asked for 8 cargoes from his Central European PS supplier, but he received only 2 cargoes as the seller has limited availability due to adverse weather conditions.

A source from a Serbian polymer producer who offers PE materials to Turkey also commented on the situation. "We are still providing smooth and normal deliveries by truck but our rail shipments have been delayed for several days due to the floods in Europe." He hopes that their rail deliveries will normalize by Sunday or Monday. Players in Turkey reported tight prompt PVC supplies in the south region this week. Some players noted that it may ease thanks to the materials on the way whereas some other players claimed that all those en-route materials were already secured.

A source at a Hungarian petrochemical producer also reported, "We have had to recall some trucks from flooded areas of Germany and rail deliveries are facing delays through Austria as the government is limiting the number of trains that can move through the country at any one time. We are afraid that the floods will spread to the south and may affect the Balkan countries soon."
MRC

MOSCOW (MRC) -- The global automotive plastics consumption market revenue is expected to grow from USD21,617 mln in 2012 to USD46112 mln by 2018 at an estimated CAGR of 13.4% from 2013 to 2018, as per Plastemart with reference to MarketsandMarkets.

In 2012, Asia-Pacific was leading in the Automotive Plastics Consumption volume by 50.5%, followed by Europe (28%), North America (11.3%), and rest of the world (10.1%). Among these regions polypropylene leads consumption by 37%, followed by polyurethanes (PU) (17.3%), acrylonitrile butadiene styrene (ABS) (12.3%), composites (11.5%), high density polyethylene (HDPE) (10.8%), polycarbonates (PC) (6.8%), and polymethyl methacrylate (PMMA) (4.4%), due to their easy forming properties and their availability at cheaper price than other materials.

The researchers on light weight plastic materials such as composite materials, reinforced plastics, and polymers have come up with improved material qualities that make them suitable for use in interior, exterior and under bonnet components of automobiles. The careful selection of these automotive plastics is very important in the industry as it enables designers to improve durability, meet load bearing requirements, and achieve reduction in vehicle weight. The Automotive Plastics are among one of the widely preferred alternatives for light-weighting of automobile as they offer enhanced properties such as superior impact strength, easy mold-ability, improved aesthetics, and reduced weight as compared to conventional automotive components such as High speed steel (HSS) and Aluminum. The increasing demand of passenger cars and the supply to fulfill the same in Asia-Pacific is one of the main drivers for increasing consumption of automotive plastics globally.

As MRC wrote previously, BASF has set up a new Coatings Technical Competence Center ASEAN in Bangkok, Thailand, aimed at ASEAN growing automotive market. This new facility supports technical and laboratory activities mainly in motorcycle coatings including technology transfer, product development, performance testing, color design and development, and houses a sales and marketing team as well as a technical service team of more than 20 professionals, all catering to motorcycle manufacturers in the ASEAN region.
MRC

MOSCOW (MRC) -- China's National Development & Reform Commission said on Wednesday that it has approved the acquisition by SK Group (Seoul) of a 35% stake in a USD2.7-billion petrochemicals complex at Wuhan, Hubei Province, said Chemweek.

Sinopec and SK signed a preliminary agreement in 2011 to form a petchems joint venture at Wuhan. Financial details were not disclosed. The complex, completed at the end of last year, is designed to produce 800,000 m.t./year of ethylene, 300,000 m.t./year each of high-density polyethylene and low-density polyethylene.

SK Energy Co. (096770.SE), South Korea"s largest refiner by capacity, holds the remaining 35% of the complex. The project will also produce key petrochemical products including 300,000 tons of high-density polyethylene, 300,000 tons of linear low-density polyethylene and 400,000 tons of polypropylene.

China Petroleum & Chemical Corporation, or Sinopec Limited is a Chinese oil and gas company based in Beijing, China. It is listed in Hong Kong and also trades in Shanghai and New York . Sinopec is the worlds fifth biggest company by revenue.
MRC

MOSCOW (MRC) -- Reliance Industries has outlined a three-year investment plan of 1.5 trillion rupees (USD26 billion) to further expand its businesses which range from gas production and oil refining to selling groceries and vegetables, reported The Wall Street Journal.

The plan Chairman Mukesh Ambani presented at a meeting of shareholders is bigger than what he announced a year ago, when he said the company would spend 1.0 trillion rupees over five years.

Mr. Ambani, India's richest man, said Reliance would invest in all the major sectors it operates, including in oil and gas, retail and communications. Most of the projects he mentioned are in India. Internationally, a key focus area is shale gas, because production from its three joint-venture shale-gas fields in the U.S. is helping the company offset falling natural gas output in India.

"Reliance has embarked on the largest investment program in its history," Mr. Ambani said at the meeting, but didn't provide specific details of the plans, including on launching its much-awaited broadband communications services.

Still, the investment plan of India's fourth-largest company by market value highlights its confidence in the country's economic growth, which slowed to its weakest in a decade in the fiscal year ended on March 31 but is expected to gather pace again from this year. The government, which has been facing criticism for slow policy reforms, has taken several steps since late 2012 to boost economic expansion and these include fast clearances for infrastructure and industrial projects and easier rules for foreign investment in some sectors.

As MRC informed previously, earlier Reliance unveiled an USD18 billion investment plan for India over the next five years. Besides, in late 2012, Reliance Industries announced its plans to expand capacity at its refineries in the western state of Gujarat.

Reliance Industries is one of the world"s largest producers of polymers. The company"s polymer production in 2010-11 (polypropylene, polyethylene and polyvinyl chloride) made 4,094 kilo tonnes.
MRC

MOSCOW (MRC) -- Strong domestic and overseas orders for food and beverage packaging materials are giving plastic product producers in the country a bullish feel for 2013, as per GV.

Meanwhile, engineering plastic product manufacturers, faced with a weakened consumer electronic market especially in the audiovisual segment, are turning to the automotive and power tool industries to look for fresh opportunities.

Plastic packaging material manufacturer SLP Resources Bhd expects 2013 to be even better than 2012. Group managing director Kelvin Khaw said it had so far obtained orders up until the third quarter.

“For the first half of this year, the group's orders have a value of over RM30 million. A lot of these orders are from food and beverage manufacturing companies which require packaging materials for the forthcoming Hari Raya celebrations in August.

"Last year was good but 2013 is expected to be even better, making it the best year for the group since it was incorporated in 2006," he said.

Khaw said the group was in the process of installing a new RM5.5 million production line for its Kulim plant that would increase annual output of packaging materials to about 30,000 tonnes this year.

"About 20% to 30% of the packaging materials to be produced are in the thin-gauge category, ranging from six to 20 microns in thickness, which are becoming increasingly popular.

"Thin-gauge plastic materials are more cost-effective to produce as they require less raw material. In terms of quality, they are as strong and durable as the thicker gauge plastic material," he added.

However, Khaw said that the first quarter of 2013 was slightly slower than the previous year's corresponding period.

"Orders picked up in the second quarter. The challenge for us this year is the rising cost of production due to the implementation of minimum wages, which will erode our bottom line. We expect to pass some of the costs to the customers," he said.

Plastic resin prices are now hovering at USD1,500 per tonne compared with USD1,400 about two weeks ago.

“The rise in prices probably has to do with the pick up of demand from China after its manufacturing sector took a break to celebrate the May 1 Labour Day holiday," he said.

Khaw said contribution from the domestic market to revenue would remain at about 50% this year, although the plan was to reduce dependency on the local market by 2016.

"By 2016, the plan is to bring down the domestic contribution to 30% and increase the overseas contribution to 70%," he added.

Cepco Trading Sdn Bhd is also expecting the food and beverage sector to drive its growth. Its director Jansen Lim said that for the first half of 2013, the company expected to see a strong single-digit growth in the orders for its high-impact polystyrene, polypropylene, and polyethylene terephthalate packaging materials compared with the same period a year ago.

Meanwhile, due to the slowdown in demand for audiovisual consumer electronic products, Prestige Dynamics Sdn Bhd is looking at the automotive and power tool business to drive growth this year.

As MRC informed previously, German chemical giant BASF SE and Malaysia's Petronas Chemicals Group will invest USD500 million to build an aroma ingredients production facility in the eastern state of Pahang. 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.
MRC