Russian PVC market: Results of 2020

MOSCOW (MRC) - Despite the coronavirus pandemic, the demand for unmixed polyvinyl chloride (PVC) in Russia in 2020 did not decrease, but actually remained at the level a year earlier. At the same time, prices have reached record levels and continued to rise, according to the ICIS-MRC Price Report.

The pandemic and lockdown led to a decrease in demand for unmixed PVC in Russia in the first two months of spring, despite the seasonal factor. But already in May, refining volumes began to recover in all consumption sectors and remained at a good level until the end of the year. The same situation was in the world market of PVC.

Demand was strong in many regions of the world in the second half of the year, and production shutdowns led to a lack of supply and record price levels over the past 10 years. High world PVC prices began to put pressure on the Russian market in the autumn, and the Russian suspension PVC exceeded Rb95,000/tonne in December.

Russian producers actually managed to keep last year's production figures for unmixed polyvinyl chloride at the level of 2019, with the only exception being emulsion PVC. Thus, the production of suspension PVC amounted to about 866,100 tonnes for eleven months of 2020, which corresponds to the figure a year earlier. Production of EPVC decreased to 25,200 tonnes, down 7% year on year.

By reducing export sales, domestic producers managed to reduce the volume of imports of suspension PVC; the total volume of external supplies of suspension PVC decreased to 40,000 tonnes in January - November of this year, down 17% year on year. At the same time, imports of suspension PVC fell to a record low over the past 15 years.

Thus, the demand for PVC suspension amounted to about 727,200 tonnes in the eleven months of this year, which actually corresponds to the figure a year earlier. The market for emulsion polyvinyl chloride showed a minimal increase of about 1% to 122,400 tonnes.

Three producers have shut their capacities for scheduled maintenances this year. The largest ones, SayanskKhimPlast and RusVinyl, shut capacities in July - August, Kaustik (Volgograd), stopped twice because of technical reasons in May - June and October.

PVC prices reached their minimum level in May and began to grow in June under the pressure of the situation in the foreign markets. Contract prices for Russian K64 and K67 PVC in December increased to Rb95,000/tonne CPT Moscow, including VAT for deals less 500 tonnes, breaking a record in history. And already for January supplies, producers announced a price increase of Rb15,000-20,000/tonne.
MRC

MOSCOW (MRC) -- A shortage and record high prices of suspension polyvinyl chloride (SPVC) in the global markets for over than 10 years have led to a similar situation in Russia. Domestic producers announced another and record-breaking price hike for January shipments, which was not seen during the whole history of the price increases, according to ICIS-MRC Price report.

This year has become unusual for the global PVC market. The shortage of PVC has remained in many regions of the world since summer, and prices have been hitting further records over the past more than 10 years. In the first quarter of 2021, the situation in the global PVC market is unlikely to change dramatically. The Russian PVC market is not isolated from the global one, all global events immediately have consequences for Russian consumers. Russian producers intend to achieve a price rise of Rb15,000-20,000/tonne for January shipments of suspension.

Demand for resin from Russian processors has been subsiding for the past two months, but at the same time, domestic producers had insignificant stocks. And, as a result, many consumers did not have the opportunity to build up additional inventories of material even amid constant price increases.

Traditionally, in January, demand for SPVC from Russian converters is the lowest for the whole year due to the long New Year holidays and the plants' scheduled shutdowns for maintenance. But most consumers are in no position to refuse from January purchases partially due to the fact that it was not possible to build up additional inventories in the previous months.

Prices rose again for January shipments in many regions of the world, breaking another record. And for some buyers, SPVC prices exceeded USD1,500/tonne CFR. As a result, the import alternative was virtually completely absent for Russian consumers in comparison with domestic material. Even given the planned price increase for January shipments, Russian PVC was still cheaper than its imported analogues.

The absence of alternatives and the need to replenish their inventories did not give consumers a choice. It will not be possible to avoid another wave of price increases, and converters were trying to limit the rise in PVC prices in their negotiations.

Negotiations over January shipments of Russian PVC began on Wednesday, prices of Russian PVC with K64/67 were discussed in the range of Rb111,000-115,000/tonne CPT Moscow, including VAT, for quantities of less than 500 tonnes.
MRC

MOSCOW (MRC) -- Neste is launching a new product, Neste RE, a 100% renewable and recycled raw material for plastics and chemicals production, said Hydrocarbonprocessing.

It is a product for tackling climate change through reducing the need to use virgin fossil resources, while it also provides a new solution to the end-of-life related challenges the polymers and chemicals industries are facing today. Neste RE can be used in a wide range of plastics applications, from sports gear to toys, even in sensitive applications such as high-performing medical equipment. Neste RE makes it possible to use bio-based waste and residues and waste plastic in the manufacture of high-quality products.

World’s economy is only 8.6% circular today. The urgency to move towards a truly circular economy is high (source: IPCC Global warming report) and will deserve a variety of different technologies. Neste has a decade-long experience in developing and producing renewable and circular solutions for transportation, and is now extending its offering to the polymers and chemicals sectors. With this, Neste supports the reduction of crude oil dependency by providing more sustainable alternatives to the currently used virgin fossil-based feedstock in plastics and chemicals production.

"We need to take drastic action to achieve the necessary change towards a circular economy in materials. With Neste RE, we combine the best of renewable and recycled materials, to serve as a sustainable feedstock alternative for the polymers and chemicals sectors. This new product provides a new solution for the industry to close the circle of material flows. Neste RE is available globally, and together with like-minded partners, we can use Neste RE as a tool to change and revolutionize plastics,” says Lars Borger, vice president of Renewable Polymers & Chemicals at Neste.

Neste RE is both renewable and recycled: the product’s renewable components can be produced from waste and residue oils and fats and sustainably-produced vegetable oils. The recycled component is produced from chemically-recycled plastic waste that cannot be recycled mechanically, such as colored, multilayer or multi material packaging.

The more fossil resource based content is replaced with content from renewable or recycled origins, the better for our planet. In 2018, over 29 million tons of post-consumer plastic waste was collected, and of this, only 9.4 million tons was directed to recycling (source: Plastics Europe) – even less actually recycled. Furthermore, the share of global oil production used to produce plastics, which is currently 6%, may reach 20% by 2050 (source: New Plastics Economy, Ellen MacArthur Foundation). To tackle these numbers by accelerating the plastics industry’s transformation towards a circular bioeconomy, urgent action is required, collaboration among some of the industry forerunners playing a key role.

Neste’s collaborations are already bearing fruit: In 2019, Neste collaborated with LyondellBasell to produce the world’s first commercial-scale volumes of renewable, bio-based polypropylene. And in March 2020, Neste collaborated with Borealis to produce renewable polypropylene with renewable propane at a propane dehydrogenation facility for the first time in history. Clariant added an entire range of additives based on Neste RE. Together with Recycling Technologies and Unilever, Neste combines expertise to test and validate systems to chemically recycle waste plastics. In a strategic cooperation with Covestro, Neste is promoting the use of sustainable raw materials in plastics production, particularly in the production of polycarbonates. And, together with Jockey, Neste has a collaboration with a target to develop the market for rigid packaging from sustainable renewable and recycled materials for food and non-food applications.

Neste RE is available worldwide to the polymers and chemicals value chain including brands wishing to add bio-based and recycled content to their offering. Neste RE is a drop-in solution compatible with existing polymers and chemicals production infrastructures. Materials produced with Neste RE are of high quality – identical to plastic products made out of virgin fossil feedstock, e.g. recyclable similarly to their virgin fossil counterparts.

As MRC informed earlier, Neste, a leading producer of renewable diesel and sustainable aviation fuel and a forerunner as a provider of renewable and circular solutions for the petrochemical industry, and LG Chem, South Korea’s largest diversified petrochemicals company and a leading manufacturer of lithium-ion batteries for energy solutions, have announced their aim to build a strategic long-term partnership to develop and grow the biopolymers and biochemicals market globally, and more specifically, in the LG Chem’s home market Korea.

As MRC reported earlier, LG Chem, a South Korean petrochemical major, has shut down its naphtha cracker in Yeosu following a fire. The company said a fire broke out at its central control room at the Yosu cracker complex at around midnight local time (15:00 GMT) on 5 November. The country's largest chemical company said it was in the process of figuring out the cause of the fire. The facility can process about 1.2 million tonnes of ethylene per year (tpy).The cracker shutdown is expected to last at least three weeks.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

MRC

MOSCOW (MRC) -- Brazil’s state-run oil company Petrobras is seeking 800 million reais (USD152 million) in compensation from engineering group Odebrecht in arbitration proceedings over its alleged violation of the shareholders agreement in petrochemical company Braskem, reported Reuters.

Petroleo Brasileiro SA, as the oil firm is known formally, said in a securities filing it had formalized the compensation request on Monday.

Odebrecht is seeking to sell its 38.3% stake in Braskem SA, while Petrobras aims to offload its 36.1% stake.

As MRC informed previously, Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July, 2020. She said during the company's recent webinar that Petrobras plans to give more time for potential investors to make offers for the company"s assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras's stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the company's stake in Braskem within a year. Petrobras owns 32.15% of Braskem.

We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem"s back burner for several years.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras" activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

MOSCOW (MRC) -- Research suggests the amount of plastic waste entering the world’s oceans could almost triple to 29 MMtpy by 2040, said Hydrocarbonprocessing.

It is a bleak prediction that highlights the scale of the challenge, which must be addressed not only by governments and consumers, but also by plastics manufacturers themselves. The solution may lie in the next-generation of degradable plastics.

As we discovered through the coronavirus pandemic, the problem with trying to phase out plastics – even the single-use variety - is that there is often nothing else to replace them with (as of yet). That is why, rather than focusing on plastics consumption, we should instead be directing resources towards finding sustainable solutions that address the issue of plastic waste at source.

New technologies are currently being developed as part of an industry push to prevent non-degradable materials clogging up our oceans. Scientific research now underway into the next generation of plastics aims to create products that can degrade efficiently, and which can be reused or recycled. While biodegradable plastics already exist, conventional non-degradable plastics still dominate for two simple reasons: they are more affordable and perform better than their more environmentally-friendly counterparts.

One approach to correcting this involves applying new chemistry to existing processes, which is something we are exploring at Aramco. Part of our ongoing research involves experimenting with subtle changes to the plastics manufacturing process, as they investigate ways to create conventional plastic products that degrade under specific conditions.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-November 2020 output. Last month"s production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1% year on year.
MRC