LOTOS and Grupa Azoty in PLN 12bn joint Polish petrochemical project

MOSCOW (MRC) -- Grupa LOTOS S.A. and Grupa Azoty S.A. signed an agreement on the future formation of a special purpose vehicle to conduct a comprehensive feasibility study on the construction of a new petrochemical complex, in the vicinity of both LOTOS and Grupa Azoty's existing installations, said LOTOS in its press release.

The project’s value is estimated at approximately PLN 12bn, making it the largest investment in the Polish industrial sector in recent years. The complex will help reduce Poland's chemical trade deficit, and will create between 5,000 and 7,000 jobs during the construction stage, and approximately 2,000 new jobs following commencement of its commercial operation.

Under the agreement, Grupa LOTOS and Grupa Azoty will use a special purpose vehicle to run the project, with project costs (preparation of the feasibility study and financing of the SPV's operations) shared equally between both parties.

Upon completion of the feasibility study, an investment decision is expected to be made, in 2014. If the project is given the green light and the financing structure agreed, construction of the complex will occur throughout 2016-2018, with operations commencing in 2019.

As an investment project, the planned petrochemical complex is on a level with the construction of a new refinery. Related capital expenditure will be twice the amount spent by Grupa LOTOS in 2007-2011 on their 10+ Programme.
It will also help improve Poland's trade balance, increase its export opportunities for high-margin chemical products, and provide the domestic industrial sector with access to state-of-the-art technologies from around the world.

As MRC wrote before, Grupa LOTOS S.A. has selected Axens to provide the technology license for a new Coker Naphtha Hydrotreater at its Gdansk refinery. This contract is part of the Gdansk refinery development and modernization program based on heavy residue coking technology.

Grupa LOTOS is one of the largest companies in Poland. It is an oil company operating both in Poland and abroad, whose business consists in the extraction and processing of crude oil, as well as wholesale and retail sale of high-quality petroleum products. Apart from Grupa LOTOS, which manages the refinery in Gdansk, the LOTOS Group currently comprises 15 other companies operating under the LOTOS name. One of them is based in Lithuania and another one in Norway.
MRC

MOSCOW (MRC) -- BASF will increase its selling prices for butanediol and derivatives in Europe, according to the company's press release.

Prices for the following products will be increased with immediate effect, or as existing contracts permit: 1,4 butanediol (BDO) - by EUR50/tonne, tetrahydrofuran (THF) - by EUR70/tonne, polytetramethylene ether glycol (PolyTHF) - by EUR70/tonne.

The price adjustments reflect mainly the increase of raw material cost.

BDO and its derivatives are used for producing engineering plastics, polyurethanes, solvents and elastic spandex fibers.

THF is a high-quality intermediate that serves, for example, as a specialty solvent in the production of pharmaceuticals.

PolyTHF is used to make elastic spandex fibers for a large variety of textiles, including underwear, outerwear, sportswear and swimsuits. It also serves as a chemical building block for thermoplastic polyurethanes (TPU), which are used to make hoses, films and cable sheathing. Other applications include thermoplastic polyetheresters, polyetheramides and cast elastomers for the production of wheels for skateboards and inline skates.

As MRC wrote previously, in late November, 2013, BASF produced its first commercial volumes of 1,4-butanediol (BDO) from renewable raw material, and is offering this product to customers for testing and commercial use.

BASF is the leading chemical company. It 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. As for BDO and BDO-equivalents, BASF currently manufactures these products at its sites in Ludwigshafen, Germany; Geismar, Louisiana; Chiba, Japan; Kuantan, Malaysia; and Caojing, China, and has an annual capacity of 535,000 tonnes.
MRC

MOSCOW (MRC) -- Nizhnekamskneftehim, Russia's largest polystyrene (PS) producers, has maintained its November contract prices for December shipments, according to ICIS-MRC Price report.

The company's representatives said prices of general purpose polystyrene (GPPS) and high impact polystyrene (HIPS) for the Russian domestic market were left at November's level. At the same time, demand fell significantly in the GPPS market in November, while buying activity in the HIPS market remained high.

According to MRC analysts' estimates, Gazprom neftekhim Salavat's prices will also remain unchanged in December. The plant will follow the policy of the main market monopolist - Nizhnekamskneftekhim and will not reduce prices, despite weaker demand.

New contract prices for styrene monomer were also announced this week (2 December). December contract prices for styrene monomer in Europe rose by EUR10/tonne from November and were announced at EUR1,375/tonne FOB ARA (Rotterdam - Amsterdam - Antwerp).
MRC

MOSCOW (MRC) -- Growth in consumer activity amid tight supplies from Russian producers led to a shortage of film high density polyethylene (HDPE) in earlly December, according to ICIS-MRC Price report.

Buying activity in the local film HDPE market significantly increased in early December. Converters started actively forming additional inventories in anticipation of long New Year holidays. At the same time, some companies reported tight supply of polyethylene (PE) in the market.

The lack of film HDPE in the Russian market was caused by temporary reductions in supplies from Russian producers, namely, from Kazanorgsintez (its production was reduced in favor of blow moulding HDPE) and Nizhnekamskneftekhim (it had produced linear low density polyethylene (LLDPE) until mid-November and has begun producing a new extrusion grade since then).

The price spread in the Russian film HDPE market was wide enough on Monday, 2 December. Offer prices for Gazprom neftekhim Salavat's PE started from Rb61,500/tonne CPT Moscow, including VAT (low prices are explained by the novelty of this PE in the market). Offers for Stavrolen's PE started from an average level of Rb63,500/tonne FCA, including VAT. Offers for Kazanorgsintez's film HDPE were heard at an average of Rb65,000/tonne FCA Kazan, including VAT.

Some traders have temporarily suspended PE sales because of its obligations to the regular customers.

Tight supply of film PE in the Russian market will continue until next week. Kazanorgsintez will have raised its capacity utilisation and Nizhnekamskneftekhim will have resumed production (first shipments are expected on 12 December) by this time. In the meantime, prices might grow slightly.
MRC