Penoplex reduces April PS prices for Russian market

MOSCOW (Market Report) -- Penoplex, Russia's largest producer of foaming polystyrene (PS), has reduced its April selling prices of general purpose polystyrene (GPPS) for the Russian market by Rb10,000/tonne from the previous month, according to ICIS-MRC Price report.

Demand for the Kirishi plant's material remained quite good.

Demand has been subsiding rapidly in the construction segment of the Russian PS market. Buyers reduced their orders for April purchasing of material from some traders by half. A number of small- and medium-sized converters were forced to temporarily suspend production because of the tightening of the quarantine conditions.

Penoplex is a large Russian producer of polymer-based building and decorative materials. The company began its activity in 1998 with the launch of Russia's first line for the production of heat-insulating materials from extruded polystyrene foam under the PENOPLEX trademark. The company has eight production sites, seven of which are located in Russia and one - in the Republic of Kazakhstan (Almaty region), with a total production capacity of 4 million cubic metres.

Prices of Middle Eastern PP slump for April shipments to CIS markets

MOSCOW (MRC) -- Amid more than a double fall in oil prices, Middle Eastern producers were forced to make an equally great reduction in export polypropylene (PP) prices for April shipments to the CIS markets, according to ICIS-MRC Price report.

Negotiations over April prices of Middle Eastern PP began in the middle of last week. All market participants said Middle Eastern PP suppliers significantly reduced their export prices of propylene polymers for this month's shipments, in most cases, the price reduction was USD90-100/tonne.

Deals for April shipments of propylene homopolymers (homopolymer PP) were discussed in the range of EUR870-920/tonne FCA, down by EUR90/tonne from March. Deals for block copolymers of propylene (PP block copolymers) were negotiated in the range of EUR940-980/tonne FCA, down by EUR100/tonne from the previous month.

Some market participants also reported higher offer prices for US PP. Thus, PP block copolymer for April shipments was offered at an average of USD940-960 per tonne, CIF.

Ukraine increases imports of Nizhnekamskneftekhim GPPS and HIPS in Jan-Feb 2020 by 14%

MOSCOW (MRC) -- Imports of Nizhnekamskneftekhim's general purpose polystyrene (GPPS) and high impact polystyrene (HIPS) to Ukraine rose in the first two months of 2020 by 14% year on year to 1,800 tonnes, according to MRC's DataScope report.

This figure was at 1,580 tonnes in January-February 2019.

The share of Nizhnekamskneftekhim's material grew to 57% in the overall structure of imports to the Ukrainian market for the first two months of 2020 from 40% in January-February 2019.

February imports of Russian material increased by 57% to 1,100 tonnes from 700 tonnes in January 2020, imports were at 920 tonnes in February 2019. The share of Nizhnekamskneftekhim's GPPS and HIPS was 65% in February versus 39% a year ealrier.

Overall imports of these polystyrene grades into the country fell in the first two months of 2020 by 21% year on year to 3,140 tonnes from 3,950 tonnes in January-February 2019. The share of Iranian material in the total imports rose to 20% (620 tonnes) from 6% (250 tonnes) a year earlier, whereas the share of deliveries from Hungary grew to 19% (590 tonnes) from 10% (390 tonnes). Germany, one of the last year's largest importers, have not shipped material to the region since the beginning of this year.


Prices of European PVC fall by EUR65-80/tonne for CIS markets

MOSCOW (MRC) -- Negotiations over prices of European polyvinyl chloride (PVC) for April shipments to the CIS countries began last week. Ethylene prices fell significantly in Europe this month, however, European producers intend to limit the reduction in export PVC prices for April, according to ICIS-MRC Price report.

The April contract price of ethylene was agreed down by EUR200/tonne from the previous month, which theoretically allows to talk about a reduction of EUR100/tonne in net cost of PVC. However, European producers do not intend to make a proportional reduction in PVC export prices, aiming to maintain the necessary margin of polymer production. A decrease of EUR65-80/tonne in export PVC prices for April shipments to the CIS markets has been discussed.

Demand for PVC subsided from consumers in the CIS countries in April due to the quarantine measures taken by local authorities. However, many consumers do not intend to refuse from April purchases. There are no restrictions on export quantities of European producers, with the exception of the Polish manufacturer, which will shut its production capacities for maintenance.

Several buyers said some producers wanted to limit the reduction in export PVC prices by the amount of EUR65/tonne from March, but consumers resisted and hoped to achieve a greater reduction in prices of resin.

Ethylene overbuild mitigated by operating conditions

MOSCOW (MRC) -- Even before the arrival of coronavirus disease 2019 (COVID-19), world ethylene production capacity was set to grow far ahead of demand during 2020-22, and now the excess could swell by another 6 million metric tons/year (MMt/y) or more, according to Chemweek.

However, the outlook for producers may not be as gloomy as it seems. Although a first look at the data suggests a global nameplate operating rate of just 86% in 2020, a deeper look into actual operations shows that the effective operating rate could be as high as 95%, says Steve Lewandowski, vice president/olefins at IHS Markit. Lewandowski recorded his analysis for the IHS Markit World Petrochemical Conference 2020 Online, which runs Friday, 3 April to 17 April.

"I remain a bit more bullish than most because of the way the economics and the assets run," he says.

IHS Markit has sharply reduced its forecast for 2020 ethylene demand growth from 6–7 MMt/y to just 1 MMt/y or so. By contrast, the forecast for new production capacity has changed little. "We have pulled back a little bit of these projects because of the virus, but still some 12.5 MMt/y are expected to be onstream by the end of 2020," says Lewandowski.

Not all of this capacity will be available, however, owing to delays in start-up and ramp-up success. A heavy turnaround schedule will cut into the existing production base.

Feedstock availability is also a problem in some regions. "The advantage of importing ethane is reduced more and more," notes Lewandowski. "Will that capacity really be available to run?" Those steam crackers that can shift to heavier feedslates will not be able to produce as much ethylene.

China's coal-to-olefin (CTO) and methanol-to-olefin (MTO) units will be difficult to operate profitably, and integrated producers may choose to purchase ethylene for their downstream operations. "With the drop in oil price, the advantage of producing derivatives via methanol is really economically out of the money," says Lewandowski.

Each of these factors will boost operating rates above the forecast nameplate of 86%. "When I take out start-up and ramp-up, and I take out some of these feed limitations, the operating rate moves up to 89%," says Lewandowski. "When I go through the next tranche - derating because of feed switching, taking MTOs out, some capacity rationalization - I go to 93%. And going further down in MTO and CTO, I can move up to 95% operating rates."

We remind that, as MRC informed earlier, Sinopec Zhongyuan Petrochemical restarted its methanol-to-olefins (MTO) plant in China in mid-February 2019, following an unplanned outage. The was shut on November 5, 2018 owing to bearish market conditions. Located at Henan in China, the MTO plant has an ethylene and propylene capacity of 100,000 mt/year each.

Besides, Jiutai Energy Group undertook an emergency shutdown at its methanol-to-olefins (MTO) plant in Erods, Inner Mongolia on July 21, 2019 owing to mechanical issues. The plant remained off-line for about 4-5 days. Located in Inner Mongolia, the MTO plant has an ethylene capacity of 150,000 mt/year and propylene capacity of 200,000 mt/year.

Ethylene is the main feedstock for the production of polyethylene (PE).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim.