Ukraine to increase import tariffs on polymers and products made of them by 5%

MOSCOW (MRC) - Ukraine may introduce an additional 5% import duty on polymers and products made of them, from 1, January 2015, according to a text of the bill imposed by the Government to the Verkhovna Rada and published on the website of the Parliament.

Cabinet registered the bill "On the balance of payments of Ukraine" (N156) and "On amendments to the Customs Code of Ukraine" (N1563) in the Verkhovna Rada on 23, December. According to the draft law, the import of food products (product groups 1-24, according UKTVED) will be imposed by an additional duty of 10%, the rest goods (group 25-97) - at the rate of 5%. Polymers and products made of them belong to the group 39.

In addition, the rate of 10% government introduces for the goods imported into the territory by Ukraine nationals.
The duties will be introduced during 12 months, "regardless of the country of origin of the goods and trade agreements concluded by Ukraine."

The government will release vital goods from the duties collection: natural gas, steam coal, the fuel for nuclear power plants, oil and petroleum products, gold and precious metals, humanitarian aid.

In the explanatory memorandum the Government notes that the introduction of such temporary import charges corresponding to the position of the WTO, as the balance of payments of Ukraine significantly deteriorated.

As MRC reported earlier on 10 December, the Ukrainian parliament submitted a bill to increase the import duty on suspension polyvinyl chloride (SPVC) to 6.5% from 1, January 2015.
MRC

MOSCOW (MRC) - Ukrainian producer of polymers Karpatneftekhim, subsidiary of Lukoil Group, is to resume production in March-April 2015, writes Capital, citing an interview with a representative of the president of Lukoil in Ukraine Sergey Chmyhalov.

"If the economic situation will be favourable Karpatneftekhim will be restarted in spring 2015. I think it is beneficial to all: the region, which receives an operating company with an annual turnover of USD7 bn, and investors for whom the plant's shutdown is also unprofitable, "- he said.

S. Chmyhalov also said that fall in oil prices - a good incentive for the development of oil refining and petrochemicals in Europe and in Ukraine. But to make the business profitable, state has to support it. "We should be supported quite a bit in all three directions. The first - reduction of railway tariffs for transportation of the feedstock, the second - abolishment of excise duty on petroleum products, which is necessary for the production of PVC and polyethylene, the third - the protection from SPVC imports. We will work with the government on the implementation of these items, in order to begin production in April", - said S. Chmikhalov.

As the newspaper writes, Karpatneftehim has a support in the parliament. Investors are looking forward to the introduction of protective tariffs on imported suspension PVC (SPVC), which the company can produce in excess of the needs of Ukraine; as well as exemption from excise duties on imports of feedstock.

A bill to impose tariffs on imported SPVC at a rate of 6.5% was re-registered in the parliament on 10, December.
The chances of being accepted are large enough.

Karpatneftekhim is the only Ukrainian producer of polyvinyl chloride, polyethylene, ethylene, as well as one of two producers of caustic soda. Its capacity to produce PVC is 300,000 tonnes/year, polyethylene - 110,000 tonnes/year.
As MRC wrote before, the producer resumed PVC production on 8, November 2013 and PE on 10, September 2013 following the shutdown from September 2012. However, Karpatneftekhim in November 2013 shut PE production, and in the end of December 2013 - the production of SPVC.
MRC

MOSCOW (MRC) - Ufaorgsintez, subsidiary of United Petrochemical Company (UPC), announced an increase in the contract prices of polypropylene (PP) and low density polyethylene (LDPE) by Rb500-2,000/tonne, effective from 1, January 2015, according to ICIS-MRC Price Report.

The company's customers, price for general purpose film LDPE grew by Rb1,000/tonne, compared with the level on 15, December; price for shrinkable films LDPE by Rb1,400/tonne. Prices for homopolymer PP remained steady compared with the level on the middle of December, block copolymer PP grew Rb500 - 1,000/tonne. Prices for PP random copolymer grew by Rb2,000/tonne.

Ufaorgsintez OAO was founded in 1956 and is based in Ufa, Russia. As of January 22, 2010, Ufaorgsintez OAO operates as a subsidiary of Bashneft Joint Stock Oil Company. "United Petrochemical Company" (UPC) owns 87.76% of Ufaorgsintez"s registered capital. Bashneft sold Ufaorgsintez"s stake to UPC in May 2013.

Ufaorgsintez OAO manufactures organic synthesis products in Russia and Europe. Its products include ethylene, propylene, ethanol, cumol, ethyl benzol, phenol, acetone, copolymer rubber, polyolefines, polyvinyl chloride and polyethylene items, thinners, and dilutants. The plant"s annual polypropylene (PP) production capacity is 100,000 tonnes. UPC owns 87.76% of the share capital Ufaorgsintez.

Total PE and PP production at Ufaorgsintez was 75,300 tonnes and 111,600 tonnes in the first eleven months of 2014, respectively.
MRC

MOSCOW (MRC) -- Shipments of Russian expandable polystyrene (EPS) to foreign markets fell from January to November 2014 by 27% year on year and totalled 16,700 tonnes, according to MRC ScanPlast report.

SIBUR is the main exporter of Russian EPS. Plastik, Uzlovaya, the former part of SIBUR and sold in December 2013, almost did not ship any material for exports. Plastik's exports totalled less than 300 tonnes over the stated period.

Stronger domestic demand was the reason for lower exports. The rouble devaluation had a significant impact on the price rise of imported EPS for Russian companies. This year's demand for Russian material was strong on the back of high prices of imported EPS.

In their turn, Russian plants have chosen a policy of supporting local converters and reduced the quota for exports. At the same time, export prices were announced in US dollars and exceeded domestic prices in roubles, calculated at the foreign currency exchange rate.

Ukraine is the main consumer of Russian material. Exports to Ukraine were 15,800 tonnes from January to November 2014 versus 20,800 tonnes a year earlier.

Despite the overall decline in the economy of Ukraine this year, EPS consumption grew in the country. EPS imports to Ukraine increased by 25% from January to October 2014 and totalled 26,800 tonnes.

MRC

MOSCOW (MRC) - Russia's production of extrusion polycarbonate (PC) grew to 73,000 tonnes in January-November 2014, up 9% year on year, as per MRC ScanPlast.

Sheet extrusion segment at the moment remains the only one in the Russian PC market, which shows steady growth over the reporting period. Its growth has not fallen even now, in the period of deepening crisis in macroeconomics of Russian market.

The sector is mostly expanding because of the increasing production of Russian PC granules, supplied to the domestic market. The only Russian PC producer in the CIS countries Kazanorgsintez (KOS), delivered 47,800 tonnes of PC in the domestic market over the eleven months of the year, up 12% year on year.

At the same time, the producer has increased its share in the extrusion PC market to 65%, compared with 64% for the corresponding period last year. The remaining share was divided among European producers, the share of Asian material was low. The main importer of extrusion PC to the Russian market was Sabic Innovative Plastics. Its share in the supply of PC granules for sheet extrusion in the current year was 81%. The total calculated consumption of the PC granules in Russia increased to 85,000 tonnes in January-November 2014, up 6% year on year.

The structure of demand remained unchanged. Extrusion segment occurred for 86% of the market, injection moulding - 11%, blow moulding - 3%. At the same time, the consumption of injection moulding grades remained at the same level as last year, extrusion - increased, bottles blow moulding - decreased.

Because of the rouble devaluation and the complexity of the economic situation Russia tries to substitute imports as much as possible.


MRC