PP prices risen in Russia by 17% and higher since early 2021

MOSCOW (MRC) -- A shortage of polypropylene (PP) intensified in the global markets in February, prices have reached record levels for the past few years. A similar situation was also registered in the Russian market, PP prices reached record highs, according to ICIS-MRC Price report.

In the previous years, PP became cheaper in the Russian market in January-February under the pressure on weak demand and oversupply. This year's situation change dramatically. High prices in foreign markets put a major pressure on prices in Russia. The rise in prices of propylene homopolymer (homopolymer PP) began in January, but the dynamics of price growth intensified in February. Prices have increased by more than 17% since the beginning of the year.

The shortage of PP in the global markets was exacerbated in the second half of February by unplanned shutdowns of several producers in the United States due to frosts. The shortage of PP in Europe pushed prices up by 15% in February, whereas in Turkey prices of homopolymer PP raffia exceeded USD1,800/tonne CFR last week.

Such a rapid rise in PP prices in a number of the world's regions since the beginning of the year also pushed the largest producers to constantly raise prices in the Russian market. Russian producers' export prices for a number of destinations have been higher than domestic ones for a long time.

Imports of cheap PP from Turkmenistan decreased, and prices grew to USD1,515/tonne FCA/FOB in the last export trades, whereas export prices averaged USD1,050/tonne FCA/FOB in early December.

Supply of PP was tight in the Russian market in February, some converters could not fully meet their needs in polymer even amid record high prices. The situation with the polymer availability is unlikely to improve in March.

Some sellers' spot offers for homopolymer PP raffia had exceeded Rb130,000/tonne CPT Moscow, including VAT, by late February, whereas prices of this PP grade did not exceed Rb104,500/tonne CPT Moscow, including VAT, back in early January.

BASF increases prices for BDO, derivatives in Europe

MOSCOW (MRC) -- BASF has hiked its European selling prices for 1,4-butanediol (BDO) and its derivatives with immediate effect or as contracts allow, reported Chemweek.

No reasons for the increase were given.

The price of BDO has been increased by EUR800/metric ton (USD963/metric ton), along with the derivatives n-methyl-2-pyrrolidone and n-ethylpyrrolidone. The prices for tetrahydrofuran and polytetramethylene ether glycol have each risen by EUR1,050/metric ton.

BDO and its derivatives are used for producing engineering plastics, polyurethanes, solvents, and elastic spandex fibers. BASF operates a 190,000-metric tons/year BDO plant at Ludwigshafen, Germany, and a 156,000-metric tons/year plant at Geismar, Louisiana, according to IHS Markit data.

BASF announced in November last year its 60/40 joint venture with Petronas Chemicals Group, BASF Petronas Chemicals, would close its 100,000-metric tons/year BDO plant at Kuantan, Malaysia, in March 2021 due to BDO overcapacity in the region. It also closed its 25,000-metric tons/year BASF Idemitsu Co. JV plant at Chiba, Japan, in December last year, again citing the region’s overcapacity and a declining BDO market in Japan.

As MRC wrote before, in mid-February, BASF said it was restarting one of its steam crackers at its Ludwigshafen complex in Germany after operations were halted last Wednesday due to a technical issue. The naphtha cracker produces ethylene and propylene, and is one of two crackers on the site. One has a production capacity of 420,000 metric tons/year, with the other’s capacity at 240,000 metric tons/year, according to IHS Markit data.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.

Milliken PP additive for thermoforming uses cleaner chemistry to deliver brighter look

MOSCOW (MRC) -- Designed for use by thermoformers, Milliken & Company’s Chemical Division’s latest high-performance additive for polypropylene (PP) homopolymers delivers an excellent balance of physical properties and superb aesthetics - all enabled through cleaner chemistry, as per the company's press release.

Hyperform HPN 909ei checks all those boxes, and more, as this formulation also addresses an important aspect for safety reassurance in the European Union. Tailored specifically to minimize migration, especially in food-contact applications, this new grade of Hyperform has one Specific Migration Limit (SML) less than the previous generation product. A lower number of SMLs means there is one less substance that must be monitored and tested for, reducing customers’ compliance burden. With this simplification, the reassurance of safety is even stronger. This is vital, given that this type of PP homopolymer is typically used to thermoform drink cups and lids, food packaging, and trays.

Traditional nucleating agents require customers to sacrifice impact to gain greater stiffness. Hyperform HPN 909ei, however, delivers improved stiffness (flexural modulus) while maintaining the impact performance. It also provides isotropic shrinkage (similar shrinkage in both directions, thereby reducing warpage) and a higher heat-deflection temperature, which offers improved heat resistance vital for hot-fill and microwaveable applications. It also helps to override the nucleation effects of pigments, thereby reducing design complexity.

Hyperform HPN 909ei achieves all this without sacrificing aesthetics. “In fact,” notes Bhavesh Gandhi, global product line manager for Milliken’s Chemical Division, “it yields products with excellent optical properties, including lower haze, reduced yellowing and an overall cleaner look. This can further enhance sustainability,” he says, “by allowing end users to replace other resins in various applications with highly recyclable PP, with its low overall carbon footprint.”

With its growing range of Hyperform HPN high-performance additives, Milliken continues to help converters improve their processing and enhance the performance of their final PP parts.

As MRC reported earlier, in September 2020, Milliken (Spartanburg, North Carolina) said it had joined the Polypropylene Recycling Coalition (PRC), an industry collaboration launched in July by The Recycling Partnership (TRP) aimed at improving recovery and recycling of PP in the US.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.

Milliken is an innovation company that has been exploring, discovering, and creating ways to enhance people’s lives since 1865. The company creates coatings, specialty chemicals, and advanced additive and colorant technologies that transform the way we experience products from automotive plastics to children's art supplies.

Grace to acquire Albemarle contract-manufacturing business for USD570 million

MOSCOW (MRC) -- WR Grace says it has entered into a definitive agreement to acquire Albemarle’s fine chemistry services (FCS) business for approximately USD570 million, including USD300 million paid in cash at closing and USD270 million funded through the issuance to Albemarle of non-participating preferred equity in a newly created Grace subsidiary, said Chemweek.

Grace expects to finance the cash portion of the transaction with a mix of cash and debt. The company will acquire Albemarle's contract-manufacturing facilities at Tyrone, Pennsylvania, and South Haven, Michigan, as part of the deal. The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions, including receipt of certain regulatory approvals.

The terms of the agreement have been unanimously approved by Grace’s board, the company says. The transaction is structured to provide financial flexibility to Grace and it significantly strengthens and expands Grace’s existing pharma portfolio, the company says. The acquisition is expected to be accretive to Grace’s revenue growth rate, EBITDA margin, and adjusted earnings per share in 2021, Grace says. It adds approximately $60 million in full-year run-rate EBITDA in 2021, with EBITDA margins of more than 35%, it says.

Grace also expects modest near-term cost synergies with greater commercial and capital avoidance synergies over the longer term. The investment is aligned with Grace’s stated capital-allocation strategy and M&A criteria, the company says. Meanwhile, seller financing adds financial flexibility and capital efficiency, it says.

"This acquisition is strategically and financially compelling and aligns perfectly with our strategy of building a higher-growth portfolio by extending our existing capabilities into higher-growth, high-value end markets,” says Hudson La Force, president and CEO of Grace. “Combining these businesses strengthens our innovation and manufacturing capabilities and gives us scale that will further strengthen our customer value proposition and drive meaningful financial results for our shareholders.," La Force says.

Albemarle’s FCS business posted net sales of USD61.4 million and adjusted EBITDA of USD18.4 million in the fourth quarter of 2020. It is focused on contract manufacturing for the pharmaceutical, agricultural chemical, lubricants, and specialty chemical industries. The business's products include custom and generic active pharma ingredients (APIs) and registered starting materials (RSMs).

The divestment will leave Albemarle with three businesses: bromine specialties, catalysts, and lithium. "This transaction reflects our ongoing commitment to actively and continuously refine our portfolio as we focus Albemarle on its core, growth-oriented business segments. Fine chemistry services is a profitable business, and we have confidence that Grace is positioned to help it thrive," says Kent Masters, CEO of Albemarle.

Grace says that its board is working, meanwhile, with management and its financial advisors on a review of potential strategic alternatives to maximize value for shareholders. The process remains active and the company continues to pursue a number of potential opportunities, but there is no guarantee the review will result in any transaction or specific outcome, the company says. Grace does not intend to disclose developments unless or until the company determines that disclosure is appropriate or required, it says.

Goldman Sachs and Moelis & Co. are serving as Grace’s financial advisors and Fried, Frank, Harris, Shriver & Jacobson is serving as legal counsel to Grace on the transaction. Goldman Sachs, Moelis, and Wachtell, Lipton, Rosen & Katz are serving as advisors to Grace on the ongoing review of strategic alternatives.

BofA Securities is acting as exclusive financial advisor to Albemarle and Troutman Pepper Hamilton Sanders is acting as legal advisor to the company in connection with the transaction, Albemarle says.

As MRC informed previously, in April 2018, W. R. Grace & Co. completed the USD416 million acquisition of the Polyolefin Catalysts business of Albemarle Corporation.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased.

Reliance to shut PVC plant in Hazira for maintenance

MOSCOW (MRC) -- Reliance Industries Ltd (RIL) is planning to shut one of its polyvinyl chloride (PVC) plants in India in March 2021 for a brief turnaround, according to CommoPlast with reference to market sources.

The unit located in Hazira is Reliance’s largest PVC plant with an annual capacity of 360,000 tons/year and is expected to remain shut for 15 days.

Reliance owns three PVC plants in India with plans to construct a new unit, however, the producer has yet to reveal the exact timeline for the new project.

The existing operations include the 360,000 tons/year unit in Hazira, the 315,000 tons/year unit in Dahej, and the 80,000 tons/year unit in Vadodara.

As MRC informed earlier, RIL undertook planned shutdown at its PVC plant in Dahej in late May, 2017, and the facility remained off-line for around 3 weeks. Located at Dahej in Gujarat, India, the plant has a production capacity of 315,000 mt/year.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia slightly exceeded 500 tonnes in January, down by 68% year on year. At the same time, exports decreased by 15%. January SPVC imports to Russia fell to 500 tonnes from 1,600 tonnes and 6,000 tonnes in January and December 2020, respectively. High PVC prices in the foreign markets and long New Year holidays put serious pressure on import purchases of PVC from Russian companies.

Reliance Industries is one of the world's largest producers of polymers. The company produces polypropylene, polyethylene and polyvinyl chloride and other petrochemical products.