Air Liquide, Linde seek helium as US reserves drop

MOSCOW (MRC) -- For 50 years a vast aquifer in the heart of the Texas panhandle has held as much as 30% of the word’s helium reserves, acting as a safety valve that buoys supplies when the global market is interrupted, Hydrocartbonprocessing.

The site in Amarillo is a hangover from the Cold War era and its phased closure increases the risk of supply shortages and higher prices, spurring a dash by the top two industrial gas companies, Linde and Air Liquide, to secure other helium resources in markets from Qatar to Siberia.

The Manhattan-sized rock formation, owned by the Bureau of Land Management, is being wound down with its reserves "effectively sold out by 2021," according to Nick Haines, helium chief at Munich-based Linde, the world’s No. 1 industrial-gas company. As companies wrestle with already squeezed supplies and an increasingly volatile helium market, the question for Haines is: "In the post-BLM era, how will the industry manage?"

At stake is access to a USD2.7 billion market that touches products from smartphones and scanners to deep-sea diving tanks and the humble party balloon.

With only about 15 helium sources globally, North Africa and the Middle East are becoming the industry’s new production powerhouses, leaving companies jockeying for position to secure supplies. Linde and its rivals have one eye on a decision on a crucial Qatari helium project tender and are also looking closely at Iran’s potential, according to Zurich-based IHS Global analyst Ralf Gubler.

The Amarillo site, a natural limestone-walled rock formation covering 13,900 acres and currently holding 10 billion cubic feet, is a throwback to the space race. When the Cold War eased, it began to sell them off in 1996. Legislation passed in October scheduled a shuttering of the BLM facility by September 2021.

Amarillo’s importance to stabilizing helium prices showed last year, when production in Algeria stopped and the U.S. failed to push through legislation to release more of the Amarillo reserves quickly enough. The price of helium from Algeria, where Linde has a plant with Sonatrach SpA, increased to USD10.24 in March from USD5.54 a cubic meter in 2009, according to IHS analyst Gubler.

Last year, Air Liquide started up the world’s largest helium purification and liquefaction unit at Ras Laffan Industrial City in Qatar, which is run by RasGas Co. That tripled the kingdom’s capacity and made it the world’s second- largest producer of the gas with one-quarter of global output. Air Liquide, which has offtake contracts in the first two helium plants in Qatar, is hoping to be selected for a third one.

As MRC wrote before, Air Liquide signed an agreement with Russian producer RusVinyl to supply oxygen, nitrogen and compressed dry air to its new polyvinyl chloride (PVC) plant in Kstovo, Russia. Air Liquide would invest, build and operate a new air separation unit with a capacity of more than 350 tonnes/day of oxygen in Kstovo, in the region of Nizhegorodskaya oblast.

L'Air Liquide S.A., or Air Liquide, is a French multinational company which supplies industrial gases and services to various industries including medical, chemical and electronic manufacturers.
MRC

MOSCOW (MRC) -- Evonik Industries has formally commenced operations at a new hydrogen peroxide plant in Jilin, China, said Hydrocarbonprocessing.

The new production plant has an annual capacity of 230,000 metric tons. Evonik has invested over $136 million (EUR 100 million) in the site, thereby raising its current global capacity for hydrogen-peroxide production to more than 900,000 metric tons per annum.

Evonik will supply H2O2 from Jilin straight to the neighboring propylene oxide plant run by Jishen Chemical Industry Co., which has likewise been newly erected. A long-term supply agreement was signed for this purpose.

Jishen will use the hydrogen peroxide to manufacture propylene oxide on the basis of the HPPO process. Propylene oxide is used predominantly to make the polyurethane intermediates that are used in the manufacture of products such as upholstery for car seats and furniture or insulation material for the construction and refrigeration industry.

Evonik developed the HPPO process together with ThyssenKrupp Uhde. The new plant in Jilin is the second of its kind. Evonik, ThyssenKrupp Uhde, and a Korean chemicals company as the licensee were the first companies worldwide to use the HPPO process on an industrial scale back in 2008 in Ulsan (Korea).

To date, hydrogen peroxide has been used mainly as a bleaching agent by the textile and pulp industry. The HPPO process now allows this eco-friendly oxidant to also be employed in the direct chemical synthesis of propylene oxide. The benefits of the new method are that it requires much lower investment costs, has high production efficiency, and has excellent environmental compatibility.

As MRC wrote before, Evonik Industries was paving the way for a new technology whose applications include automotive finishes that are more scratch-resistant than ever before. The specialty chemicals company has developed an industrial-scale method for producing silane-modified binders for automotive finishes. The advantage of these silane-modified binders: silane groups increase crosslinking density, making it possible to create automotive finishes that are flexible yet harder, leading to improved scratch resistance.

Evonik, the creative industrial group from Germany, is one of the world leaders in specialty chemicals. Its activities focus on the key megatrends health, nutrition, resource efficiency and globalization. Evonik benefits specifically from its innovative prowess and integrated technology platforms. Evonik is active in over 100 countries around the world. In fiscal 2013 more than 33,500 employees generated sales of around EUR12.9 billion and an operating profit (adjusted EBITDA) of about EUR2.0 billion.
MRC

MOSCOW (MRC) - Russian market of polycarbonate (PC) increased to about 53,000 tonnes in the first six months of the year, up 9% compared with the same time a year earlier, according to MRC ScanPlast.

The main reason for the growth was development of its extrusion segment, which traditionally takes about 80% of the market. Currently it is characterised by surplus because of the seasonal decline in demand. Traders have built up stock inventories ahead of the second (after May) seasonal peak in demand for PC, which occurs in September.

Converters have completely switched to production of sheets of thickness 6, 8, 10 mm or more. Capacity utilisation at sheets producers is now at a level of 20-30% because of the weak demand for the product.

Importantly, the only Russian producer, Kazanorgsintez, is oriented to the domestic market at the expense of exports. 29,500 tonnes or 98% form the total producer's production since the beginning of this year occurred for PC for sheet extrusion, which were delivered in domestic market. The producer's share in the total consumption in the Russia's extrusion segment was about 66% since the beginning of this year.

Thus, given the current consumption we can see a tendency for a gradual import substitution in the extrusion industry. Converters because of high prices for imported products, (especially medium and small) prefer to buy Russian PC instead of Asian one. In particular, this applies to those producers who are just entering the market, and for which the high cost of feedstock and consequently finished products will prevent entry into the industry.

MRC

MOSCOW (MRC) - Russia's production of polypropylene (PP) increased by 23% in the first six months of this year, compared to the same period in 2013, according to MRC ScanPlast.

June PP production in the country was 88,400 tonnes, compared with 90,200 tonnes in May. Russia's PP production totalled 498,800 tonnes in January - June 2014, compared with 405,000 tonnes year on year. Despite such a serious production figures, Russian PP producers have not yet fully implemented their production potential.

Many Russian producers increased their production volumes in the first half of 2014, the exception were only Neftekhimiya (Kapotnya) and Tomskneftekhim. Their PP production over the reported period was 59,200 tonnes and 67,300 tonnes, down 1% and 2% compared with the first six months in 2013, respectively.

Nizhnekamskneftekhim and Ufaorgsintez increased their PP production by 2% and 6%, respectively, to 104,300 tonnes and 64,100 tonnes.
Poliom (Titan Group, Omsk) launched 180,000 tonnes/year PP production in February 2013, but this year the company has expanded its production capacity to 210,000 tonnes/year. Poliom's PP production was 86,300 tonnes in January - June of this year.

Russia's largest producer of polypropylene - Tobolsk-Polymer (SIBUR) in recent months reached a fairly high level of production rates. The producer's PP output was 97,800 tonnes in the the six months of this year. The production potential at Tobolsk-Polymer allows to produce monthly at least 40,000 tonnes.

Stavrolen's 120,000 tonnes/year PP production has been idle since late February. Company officials have repeatedly expressed readiness to restart PP production, using imported propylene from 1, June, but because of the feedstock shortage the restart was postponed.

Thus, the Russian producers have sufficient capacity (resumption of Stavrolen and increase in capacity utilisation at Tobolsk-Polymer) tp increase domestic PP production.

MRC

MOSCOW (MRC) - Prices for high density polyethylene (HDPE) continued to rise in the Russian market on tight supply. At the same time, many pipe producers are not able to quickly adapt to the new prices, according to ICIS-MRC Price Report.

Seasonal increase in demand back in June led to an price rise for Russian pipe HDPE of Rb2,000-3,000/tonne.
This trend continued in July. In general, HDPE prices are expected to rise in the next few months because of a further increase rise in feedstock prices and tight supply.

Producers of PE pipes in their turn said they could hardly to adapt to an ongoing rise in feedstock price. Price offers for July delivery of Russian natural PE100 reached Rb82,000/tonne, including VAT and delivery. Price offers for Russian black PE100 reached Rb83,000/tonne, including VAT and delivery. Asian black PE100 price was heard on average at Rb85,000/tonne FCA, including VAT.

Supply of pipe PE has tightened in the Russian market in July significantly on the back of technical problems on Kazanorgsintez and reduction in production at Nizhnekamskneftekhim. Situation is expected to only get worse in the next few months.

A key supplier of natural PE100 in the Russian market - Gazprom neftekhim Salavat will shut its HDPE capacities for a month long turnaround. Kazanorgsintez plans to shut its black PE 100 capacities on a month long maintenances from 18, September.

This series of scheduled maintenance has the primary threat to the Russian producers of PE pipes, as there is no much alternatives available in the foreign markets. On the other hand, many producers complained that they did not manage to respond to higher feedstock prices so quickly. At the moment, the difference in the cost of feedstock and the finished tube often does not cover the costs of production, not to mention profits.

Taking into account reduced investment in the construction sector rising cost of polyethylene pipe has negative impact on demand.
MRC