Construction industry in Russia declines

MOSCOW (MRC) -- Construction industry in Russia has been showing a decline, despite the active development of construction in the past few years, RBC reports.

The only driver of demand for housing (and the residential segment occupies an impressive share of the construction market - 30-50% depending on the region) remains a mortgage. And in order to stimulate buying activity, the Central Bank lowers the key rate, and after it, banks reduce interest on the mortgage. However, the number of loans issued nevertheless decreases - by 13.2% in six months.

The absence of more or less bright prospects in construction also affects the state of the building materials market. In this segment, a steady decline trend is also observed.

Active development of construction in the past few years was a result of major sporting events - the Olympics and the World Cup. Thanks to them, investments increased 3-4 times a year. Today, world sports are left behind. And despite the fact that development continues (they modernize the housing and communal services, repair houses and roads, build new infrastructure), there will be no and will not be a multiple increase in investment volumes and the pace of construction. At least until new equally global projects appear in Russia.

The Ministry of Economic Development hopes that investment growth rates in the second half of the year will reach 4-5%. In the meantime, they are only shrinking: the Central Bank of Russia estimated the fall in the second quarter at 1.3–1.8% compared to the same period last year. Today, investors are not ready to invest in either construction or the production of building materials, since the terms and prospects for the return on these investments are difficult to predict.

According to the MRC Annual Report, construction growth in the near future, according to experts, is not to be expected. The commissioning of housing in the country by 2024 will fall to 56–64 mln sq meters. m. But at the same time, in 2019, housing commissioning will grow by 5–7%, because in 2016–2017. There were no crisis situations and developers brought out new projects. The real downward trend associated with amendments to the shared law will appear at the end of 2020. In 2018, the demand for polyvinyl chloride from manufacturers of molded products was reduced by 10%, most of all the demand from panel manufacturers dipped - more than 18%.

MRC

MOSCOW (MRC) -- Export prices for bottled grade PET in Asia last week fell slightly to the range of USD840-870/tonne, FOB China, according to the ICIS-MRC Price Report.

Export prices of bottled grade PET in Asia in the previous week were in the range of USD855-880/ tonne, FOB China.

The margins of PET production in the region remains low. If the current price levels continue for some time, the level of capacity utilisation may be reduced.

Yisheng Petrochemical, the largest producer of terephthalic acid (PTA) in China, plans to launch a new plant with a capacity of 600,000 tonnes/year of PET in September-October. The plant will consist of two lines of similar capacity.
MRC

MOSCOW (MRC) -- Imports of suspension polyvinyl chloride (SPVC) into Russia totalled 130,100 tonnes in the first eight months of 2019, up by 55% year on year. Imports also increased by 174% year on year to 36,900 tonnes, according to MRC's DataScope report.

Last month's exports of Russian suspension (excluding shipments to the countries of the Customs Union ) were 4,800 tonnes, compared to 21,900 tonnes in July. Shutdowns for maintenance at SayanskKhimPlast and Bashkir Soda Company with a one-month delay in restart led to a major decrease in export shipments. Thus, overall exports of resin from Russia were 130,100 tonnes in January-August 2019, compared to 83,900 tonnes a year earlier.

Indian buyers were the main foreign importers of Russian resin this year. Overall sales of resin totalled 75,300 tonnes over the stated period. Turkish and Polish producers with shipments of 11,200 tonnes and 4,600 tonnes, respectively, occupied the second and third positions.

The end of the outages from turnarounds at two Russian plants was also the main reason for lower imports. August SPVC imports were 10,100 tonnes versus 13,700 tonnes a month earlier, with US producers accounting for the main decreased in shipments (1,400 tonnes versus 8,400 tonnes in July).

Overall imports of material totalled 36,900 tonnes over the stated period versus 13,500 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Sibur and India’s Reliance Industries Ltd. have launched butyl rubber production at the joint integrated petrochemical plant Reliance Sibur Elastomers Private Ltd. in the Indian city of Jamnagar, said TASS, citing Chief Executive Officer of Russia’s petrochemical giant Sibur Mikhail Karisalov at the sidelines of the Eastern Economic Forum.

"A test batch of butyl rubber has been produced already. The annual capacity is 120,000 tonnes there, first dozens of tonnes have already been produced," he said.

"As for the date of the official launch, official ceremony — probably when the next intergovernmental commission meeting is held, probably, some other occasion and date will be determined. The fact is that a new facility of that type exists in India, while the official launch is a mere formality," he explained.

The joint venture between Sibur and Reliance Industries — Reliance Sibur Elastomers Private — was founded in 2012 for the construction of the butyl rubber production facility at the Reliance Industries’ integrated petrochemical plant in Jamnagar. Karisalov told TASS earlier that the company and partners would invest over USD600 mln in the facility.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.

MRC

MOSCOW (MRC) -- Suncor Energy Inc. will spend USD1.4 billion to upgrade its Oil Sands Base Plant near Fort McMurray, the company said, as per Bloomberg.

Calgary-based Suncor will build two natural gas co-generation units that will replace three petroleum coke-fired boilers.

The project will provide steam generation needed to extract crude oil and will generate 800 megawatts of power that will be transmitted to Alberta’s power grid. Suncor said the investment will cut greenhouse gas emissions associated with the plant’s steam production by 25 per cent.

“This is a great example of how Suncor deploys capital in projects that are economically robust, sustainability minded and technologically progressive,” said Suncor President and CEO Mark Little in a release.

In addition to reducing greenhouse gas emissions, the new units are also expected to reduce sulphur dioxide emissions by 45 per cent and nitrogen oxide emissions by 15 per cent, and increase demand for clean natural gas from Western Canada.

The project is expected to be in service by the second half of 2023.
MRC