Sistema acquires 98% stake in United Petrochemical for RUB 6.2 bln

MOSCOW (MRC) -- Sistema JSFC, the largest publicly-traded diversified holding company in Russia and the CIS, has acquired a 98% stake (resulting in effective ownership of 100%) in OJSC United Petrochemical Company (UPC) from the Group's subsidiary JSOC Bashneft for RUB 6.2 billion, according the the company's press release.

The value of the stake is based upon an independent appraisal carried out by an international consultant.

UPC's development plans will be financed partly by its own cashflow, as well as debt financing and joint venture initiatives with leading international petrochemical companies.

Mikhail Shamolin, President and Chief Executive Officer of Sistema, commented: "This acquisition is a natural expansion of our energy investments. UPC is already one of the leading petrochemical producers in Russia with a reliable supply of raw materials from Bashneft's downstream operations and competitive production costs. Combined with Russia's increasing consumption per capita of petrochemical products, UPC provides Sistema with a solid entry into an attractive and growing sector.

UPC's development plans currently envisage organic growth focused on existing and new production lines, as well as commenced discussions with leading international petrochemical groups on possible joint venture opportunities".

UPC is a vertically integrated petrochemical group which owns four enterprises located in the Bashkortostan region: Ufaorgsintez, Tuimazinkoye and Shkapovskoye Gas Processing Plants and Bisphenol-A plant. In 2012, UPC generated a combined revenue of RUB 17.9 billion.

Ufaorgsintez is one of the leading petrochemical producers in Russia. Polypropylene and ethylene account for over 50% of its production line, while 90% of total sales are made to the domestic market. The company benefits from an established production chain with feedstock sourced from Bashneft's Ufa refineries, the Tuimazinskoye and Shkapovskoye Gas Processing Plants, which produce liquid petroleum gas and nafta from stable natural gasoline (SNG). As MRC informed previously, Ufaorgsintez has just announced an increase in contract polypropylene (PP) prices by Rb550-2,000/tonne amid strong demand and tight supply and an increase in contract low density polyethylene (LDPE) prices for the domestic market from 16 September by Rb1,000-1,550/tonne.
MRC

MOSCOW (MRC) -- Following a EUR50/tonne price increase on August 1st 2013, Arkema, a France-based chemical manufacturer, has announced a further EUR50/tonne price increase effective early September for its entire Evatane range - high content Ethylene Vinyl Acetate (EVA) copolymers, according to the company's press release.

Both price increases, amounting to EUR100/tonne over the August and September period, have become necessary following two consecutive months of raw material cost increases, while EVA market prices have significantly eroded since the beginning of 2013.

Marketed under the trademark Evatane, Arkema's EVA products are functional polyolefins used in highly diverse industrial applications, including hotmelt, cable, multilayer packaging film, technical polymer modification, solar panel, petroleum additives, bitumen and inks.

As MRC wrote previously, Arkema has recently declared a project to divest its tin stabilizer business to PMC Group, a New Jersey-based performance plastics and chemicals manufacturer. This planned divestment of organometallic products includes Fascat catalysts, Thermolite tin stabilizers and fine chemicals. Therefore, Arkema strives to refocus its activities on expanding core specialty businesses.

Arkema is a leading European supplier of chlorochemicals and PVC. Kynar and Kynar Flex are registered trademarks of Arkema Inc. Moody's Investors Service has upgraded Arkema S.A.'s senior unsecured rating to Baa2 from Baa3. The outlook on the rating was changed to stable from positive.
MRC

MOSCOW (MRC) -- Technology from Honeywell's UOP has been selected to produce key ingredients for fuels and synthetic rubber in China, reported Hydrocarbonprocessing with reference to officials' announcement.

China's Panjin Heyun New Material Co. will use UOP's C4 Oleflex process to produce isobutylene, a key ingredient for fuels and synthetic rubber. This is UOP's third C4 Oleflex license in China this year.

Panjin Heyun New Material Co. will also use UOP's Butamer process, which converts normal butane to isobutane, thereby maximizing the feedstock utilization to the Oleflex process.

Southeast Asia is the world's largest producer of rubber, and China is the largest consumer, accounting for 33% of the world's rubber consumption, according to a 2012 report. China's economy is expected to grow about 8% this year, further increasing the country's need for key materials.

"UOP technology is currently being used in China to produce about 5 million metric tons annually of key petrochemicals, and we look forward to working with Panjin to continue supporting the country's efforts," said Pete Piotrowski, senior vice president and general manager of Honeywell's UOP process technology and equipment business.

The new unit, which is expected to start up in 2014, will process approximately 400,000 tpy of isobutane feedstock at its facility in Liaoning Province, China. UOP will provide the engineering design, technology licensing, catalysts, adsorbents, equipment, staff training and technical service for the project.

As MRC informed previously, UOP LLC, a Honeywell company, has been recently selected to provide technology for the world's largest on-purpose propylene production facility, located on the U.S. Gulf Coast. Ascend Performance Materials Operations LLC will use Honeywell's UOP C(3) Oleflex process technology to convert propane to propylene, a key ingredient in the production of materials such as nylon, films and packaging. Petrochemical makers are installing additional propylene capacity to meet growing demand and to make up for the shortage of propylene production from traditional refining and petrochemical sources.

Besides, OOO Kirishinefteorgsintez selected Honeywell to supply its experion process knowledge system (PKS) and advanced alarm manager system at the company"s refinery in Kirishi, in the Leningrad region of Russia.
MRC

MOSCOW (MRC) -- Xuzhou Haitian Petrochemical has restarted its polypropylene (PP) plant, reported Apic-online.

A Polymerupdate source in China informed that the plant restarted on September 18, 2013. It was shut on August 26, 2013 owing to shortage of propylene feedstock.

Located in Jiangsu province, China the plant has a production capacity of 200,000 mt/year.

As MRC informed previously, in October 2012, Xuzhou Haitian Petrochemical started commercial production at a new PP plant with the capacity of 200,000 tpa in Jiangsu Province.The new plant will produce PP chips for the production of yarns, copolymers and pipe grades.
MRC

MOSCOW (MRC) -- Market players consider PVC supplies from USA limited as availability from the country is also expected to be curtailed by planned shutdowns at domestic producers, according to Plastemart.

Shintech has halted production at its PVC complex in Louisiana for three weeks in H2-September. OxyVinyls is also slated to undergo a shutdown at its 950,000 tpa PVC plant in Pasedana for 2-3 weeks in October.

The US is the largest import supplier of PVC for Turkey, Egypt and China.

As MRC wrote previously, scheduled and unscheduled maintenance works at the Russian plants as well as a serious decline in imports led to a shortage of PVC with a K value of 70. By early September, prices reached the level of Rb50,000/tonne, according ICIS-MRC Price Report. The deficit began to be felt in the second half of August. And by early September, the lack of the resin in the Russian market increased in anticipation of the shutdowns at Bashkir Soda Company (Sterlitamak) and KAUSTIK (Volgograd).
MRC