Reliance expects better results in Q2 2013

MOSCOW (MRC) -- The rupee's steep slide, combined with strong petrochem margins, is likely to help energy-to-retail conglomerate Reliance Industries (RIL) offset the weakness in its refining margins and the decline in oil and gas production when it reports results for the July-September quarter, as per Financial Express.

Analysts on an average expect RIL to report a profit of R5,449 crore for the second quarter ended 30 September. In the same quarter last year, RIL earned R5,409 crore.

"We highlight that RIL is likely to benefit from the full impact of customs duty hike in polymers announced during May, as well as INR depreciation, resulting in margin expansion in its petchem business," analysts at Morgan Stanley wrote in a recent client note.

The government in May raised the import duty on polymer products to 7.5% from 5%. This was a major boost for RIL as polymers, which are used as a key input in sectors as diverse as automobiles, mining and steel, contribute 44% to RIL's petrochemicals revenue according to a report by Goldman Sachs. Revenue from the petrochemicals business accounts for around 24% of the company's total revenue.

Meanwhile, a weak rupee is also a major boost for RIL, which is responsible for about 14% of India's total exports according to the company's annual report.

As MRC wrote previously, Reliance Industries posted a better-than-expected net profit that was also its biggest in six quarters, helped by an increase in refining margin. Net profit for the fiscal fourth quarter ended on March 31 rose 32% to 55.89 billion rupees (USD1.03 billion) from 42.36 billion rupees a year earlier. Sales, however, fell 1.2% to 841.98 billion rupees from 851.82 billion rupees due to declining natural-gas production at its block off India's east coast.

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. Reliance Industries is one of the world's largest producers of polymers.
MRC

MOSCOW (MRC) -- Brazilian imports of plastic resins rose 26% to USD1.39bn in the first half of 2013 from USD1.10bn in the same period last year, said Bnamericas.

There was a sharp increase in imports of polyethylene from the US, reflecting the renewed competitiveness of US chemical exports as a result of the use of feedstocks from shale gas.

In the same period, Brazilian resin exports fell 15.9% to USD914mn from USD1.08bn.

Based on data from the ministry of trade, Abiplast said that 25% of Brazil's imports, the highest share, came from Nafta excluding Mexico, 18% came from the Mercosur trade bloc, 16% from non-Mercosur countries in Latin America, and 10% from the European Union.

Of Brazil's resin exports, 33% went to Mercosur, 25% to the rest of Latin America and 16% to the EU.

Imports of low-density polyethylene (LDPE) rose 48% to USD109mn, with 38% of the imports originating in Nafta excluding Mexico.

Linear low-density polyethylene imports (LLDPE) were up 25% at US$281mn, 43% from Nafta excluding Mexico, and high-density polyethylene (HDPE) imports rose 35% to USD239mn, 47% from Nafta excluding Mexico.

Polyvinyl chloride (PVC) imports increased 19% to USD306mn, while imports of polyethylene terephthalate (PET) increased 39% to USD120mn, 65% of which came from Asia.

Polypropylene (PP) imports rose 11.9% to US$234mn, with the European Union supplying 15% of imports. Brazil's imports of polystyrene (PS) increased 28% in the first half of the year to USD30.6mn. Expanded polystyrene (EPS) imports were up 53% at USD44.4mn.

As MRC wrote before, Brazilian manufacturers and others that import thermoplastic resins will likely slow their buying until new, lower tariffs go into effect on 1 October. Brazilian Minister of Finance Guido Mantega announced on 1 August that the government will not renew an import tariff increase on 100 products, including polyethylene grades such as HDPE, LDPE and LLDPE.
MRC

MOSCOW (MRC) -- Saudi Arabia is to commit shale gas to a new power plant in the north of the country as the major oil-producing state looks to expand its unconventional footprint, said Upstreamonline.

Khalid Al-Falih, chief executive of state-owned player Saudi Aramco, revealed at the World Energy Congress (WEC) in Daegu, South Korea on Monday that an unidentified unconventional gas programme in “the frontier northern region” is "ready to commit gas" to the project.

The proposed power plant development would involve a 1000-megawatt facility to feed a phosphate mining and manufacturing centre.

Saudi Arabia’s moves on unconventional plays have been keenly watched as many have perceived its large oil exports as coming under pressure from the share gas boom in North America.

Falih said that demand for oil in absolute terms is likely to rise around 20 million barrels per day during the next two decades. "That’s equal to the current production of the world’s two largest oil producers, Russia and Saudi Arabia, combined," he exclaimed.

Apart from unconventional exploration, Saudi Arabia has been moving outside of its traditional onshore and shallow-water fields with deep-water exploration ongoing in the Red Sea.

Also at the WEC, Alexander Moskalenko, chief executive of energy efficiency body GCE Group, said: "The global trends in shale gas will not have an immediate impact on the global economy as the level of energy consumption on the planet increases by 20% each year".

MRC

MOSCOW (MRC) -- BASF, the largest diversified chemical company in the world, will increase prices in Europe, Africa and Western Asia for straight acrylic and acrylic styrene polymer dispersions, reported the company on its site.

Prices will rise by up to EUR80/tonne and for redispersible acrylic powders and acrylic resins - by up to EUR120/tonne with effect from October 15, 2013, or as contracts allow.

The price increase is necessary due to the significant rise in the cost of raw materials.

The products affected by the price increase are used as polymers for construction chemicals and fiber bonding.

As MRC wrote previously, in September 2013, SIBUR, a leading Russian gas processing and petrochemicals company, and the German chemicals giant BASF signed a long-term cooperation memorandum to supply additives used for polymer production and processing at SIBUR’s production facilities. The deal provides for supplies of additives used to produce polypropylene, polyethylene, synthetic rubbers, thermoplastic elastomers (TPE), and ABS plastics at SIBUR's production facilities, with BASF ensuring also technical support.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF had sales of EUR72.1 billion in 2012.
MRC

MOSCOW (MRC) -- The president of the Russian Federation Vladimir Putin started today a complex on production of polypropylene in the Tyumen region worth 60 billion rubles, said Ru-facts.

Start to new production of petrochemical holding SIBUR was given today by the president of Russia Vladimir Putin. Earlier the head of state examined the automated line of packing and packing of finished goods where polypropylene in the form of coarse-grained powder is packaged in bags then goes to consumers.

As the vice-chairman of board of SIBUR Holding Mikhail Karisalov told to Vladimir Putin, the plant in Tobolsk lets out to 60 brands of polypropylene which is applied in the most various areas, beginning from disposable tableware and finishing automobile details.

The Tobolsk Polymer complex consists of two installations: productions of propylene with a power of 510 thousand tons per year and production of polypropylene with a power of 500 thousand tons per year. The complex is located near other production of SIBUR – Tobolsk-Neftekhim from which the raw materials (600 thousand tons of propane a year) will arrive. "The manufacturing techniques of polypropylene are connected with propane and propylene dehydrogenation. In this regard implementation of the project will allow to process annually over 600 thousand tons of the propane made from associated oil gas", – noted in SIBUR.

Having brought into new production into operation, SIBUR expects to become one of three largest global manufacturers of this polymer.

Construction was conducted both on means of holding, and with attraction of a project financing (the main creditor – VEB which has opened a credit line on 1,441 billion dollars). More than 320 companies participated in the project, in peak of works on a platform more than six thousand builders from the Russian Federation and other countries were involved.

Let’s remind, polypropylene is included into the three of the plastic compounds most widespread in the world. It is chemically inert material from which make food container and packing, details of cars, pipes for a water supply system, medical devices and many other things.
MRC