Russia GDP in March grew for the first time in a year

MOSCOW (MRC) - Russia's gross domestic product (GDP) grew by 0.5% in March on an annualized basis, Vedomosti reports citing data from the Ministry of Economic Development.

According to the ministry, monthly GDP growth was recorded for the first time since March last year. At the same time, according to the results of the first quarter, GDP decreased by 1.3% in annual terms. In the fourth quarter, according to Rosstat, the decline in GDP was 1.8%.

The ministry records growth in the manufacturing industry - in March the figure was 4.2% against a decline of 1.7% in February. "The main contribution was made by the industries of machine-building and chemical complexes. Also, steady growth continued in the light industry and the woodworking complex, positive dynamics in the food industry resumed, the decline in oil refining and the metallurgical complex slowed down," the report says.

The level of recession in the extractive sector of the economy decreased - to minus 5.6% in annual terms in March from minus 9% in February. The transport cargo turnover sector in March showed an increase of 3.9% after declining by 0.5% in February and by 2.1% in January on an annualized basis. The growth was driven by rail, pipeline, sea and road transport. At the end of the first quarter, the indicator increased by 0.4% yoy after falling by 2.2% in the fourth quarter of 2020.

The volume of paid services to the population in March increased by 1.4% yoy after declining by 5.5% in February. Catering turnover increased by 2.3% on an annualized basis after falling by 9.1% in February.

At the same time, retail trade turnover in March 2021 decreased by 3.4% year-on-year "against the backdrop of a high base." This effect was most pronounced in the food segment - a 6% decline in March after a 3% decline in February on an annualized basis.

Earlier it was reported that Russia's GDP growth in the second quarter of 2021 could reach 5.6%, and inflation will be at 5.4% in annual terms. However, the economic recovery process can be negatively affected by a number of factors that are difficult to calculate. Among them, experts call the threat of expanding anti-Russian sanctions by the United States, the continuation of the coronavirus pandemic, and uncertainty in the oil market. The Ministry of Economic Development predicted GDP growth in Russia in 2021 by 3.3%, in 2022 - at 3.4%.

Lenzing raises its earnings outlook for 2021

MOSCOW (MRC) -- Fiber producer Lenzing got off to a better-than-expected start to the financial year 2021, with preliminary EBITDA (earnings before interest, tax, depreciation and amortization) rising by 36.8% year-on-year to EUR 94.5 mn in the first quarter of 2021, according to MarketScreener.

Despite the continuing high degree of volatility in the textile sector due to the COVID-19 pandemic, the Managing Board of the Lenzing Group raises its guidance for the 2021 financial year:

The Lenzing Group expects the operating result to be at least at the level of the pre-crisis year 2019.

The results of the Lenzing Group for the 1st quarter of the current financial year will be published on Wednesday, May 05, 2021.

As MRC reported earlier, Lenzing has taken over management control of Hygiene Austria LP GmbH on March 03, 2021. Stephan Sielaff, Chief Technology Officer at Lenzing, has been appointed to serve as an additional managing director at Hygiene Austria.

We remind that Russia's output of chemical products rose in February 2021 by 5.3% year on year. Thus, production of basic chemicals increased year on year by 7.5% in the first two months of 2021. February production of polymers in primary form was 861,000 tonnes versus 196,000 tonnes in January. Overall output of polymers in primary form totalled 1,770,000 tonnes over the stated period, up by 8.4% year on year.

Manufacturers of XLPE pipes in Russia can quadruple their capacities - Ekoplastics

MOSCOW (MRC) - Ekoplastics, which supplies polymer raw materials from South Korea, believes that from the second half of 2021, the capacities installed in Russia for the production of small-diameter peroxide-crosslinked polyethylene (PEX-A) pipes will be able to satisfy more 80% of domestic demand, the company said.

According to Ecoplastics company estimates, the volume of the Russian market for small diameter PEX-A pipes is about 7000 tons of products per year. Until 2020, the demand was mainly covered by the import of such pipes to Russia from Europe and China. Only about 20% of PEX-A pipes were produced domestically.

In late 2020 - early 2021, the situation on the Russian market for small-diameter pipelines made of peroxide-crosslinked polyethylene (PEX-A) underwent fundamental changes. During this period, the largest Russian pipe manufacturers commissioned or planned to install several twin-screw lines for high-speed extrusion of PEX-A pipes, each with a capacity of up to 30 meters of pipe with a diameter of 16 mm per minute.

One such line is capable of processing more than 1000 tons of peroxide-crosslinked polyethylene per year. In addition, a number of Russian companies have launched or are planning to launch the production of PEXa pipes using ram extrusion (RAM) technology, which is competing with twin-screw technology.

Pipes made of polyethylene crosslinked with peroxide are used in indoor hot and cold water supply systems, as well as in radiator and underfloor heating systems. Despite the impossibility of installing PEXa pipes by welding, as is the case with the most popular PPR pipes on the market.

Earlier it was reported that Ekoplastics, in August last year, agreed with the Korean manufacturer Hanwha Total to start deliveries to the Russian market of a new grade of PE100RC high-density pipe polyethylene. In the summer of 2020, the Korean manufacturer Hanwha Total (formerly Samsung Total) began exporting its new grade of PE100 pipe grade XRC20B, which will be supplied to the Russian market through Ekoplastics, which specializes in the supply of Korean innovative polymeric pipe materials.

According to MRC's ScanPlast, the estimated consumption of PE in Russia amounted to 356.37 thousand tons in the first two months of this year, which is 9% less than in the same period a year earlier. The supply of high-density polyethylene (LDPE) only increased. PP supplies to the Russian market in the first two months of 2021 amounted to 246.87 thousand tons, which is 30% more than a year earlier. The supply of propylene homopolymer (PP-homo) and propylene block copolymer (PP-block) increased.

The Ekoplastics company is a trading company that supplies polymer raw materials from South Korea. Ecoplastics is primarily a distributor of polymers produced by LG Chem. In addition, it has direct long-term contracts with other large Korean manufacturers of polymer raw materials (Hyosung, Huyndai).

Global crude oil demand to peak several years earlier than expected - in 2026

MOSCOW (MRC) -- The rapid adoption of electric vehicles (EV) around the world is likely to cause global oil demand to peak two years earlier than previously expected, reported Reuters with reference to Norway's biggest independent energy consultancy Rystad.

World demand is now seen peaking at 101.6 million barrels of oil per day (bpd) in 2026, down from a forecast made in November of a peak in 2028 at 102.2 million bpd, Rystad Energy said.

"The adoption of electrification in transport and other oil-dependent sectors is accelerating and is set to chip away at oil sooner and faster than in our previous forecast," Rystad wrote.

Before the outbreak of the COVID-19 pandemic in early 2020, Rystad had anticipated that peak oil demand would be reached in 2030 at 106 million bpd.

Aside from the staggering takeover of EVs, assumptions across all our scenarios see oil demand being either phased out, substituted, or recycled across a range of sectors, it said.

As MRC wrote previously, India’s obvious displeasure with restrictions on output imposed by OPEC and its allies, and its aim to diversify crude oil suppliers, may run into the harsh realities of the global market. The world’s third-biggest oil importer and consumer has told state-owned refiners to speed up the diversification of crude imports in order to cut dependence on its main source of supply, the Middle East.

We remind that earlier this month, Mammoet completed the lifting of three columns for the Guru Gobind Singh Polymer Expansion Project in Bathinda, Punjab, India. Thus, the team lifted a 1,305t ethylene fractionator, and 2 propylene fractionators weighing 1,200t and 2,490t - the second of which was lifted in two sections. The completed project is part of an expansion plan to build an integrated petrochemical manufacturing site within Guru Gobind Singh’s current refinery complex. The refiner aims to increase India’s refined hydrocarbon product capacity.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Kazanorgsintez reduced revenue by 13% last year

MOSCOW (MRC) - Kazanorgsintez (KOS, part of the TAIF Group), a major Russian polymer producer, has cut revenue by 13% to RUB 62.8 billion in 2020, Business Online reports.

The indicators of the Tatarstan plastic manufacturer cannot be considered in isolation from the general market situation. And the PPI-ST index, reflecting the dynamics of prices for large-tonnage plastics, sank 9% last year, from 99.4 thousand rubles per ton to 90.7 thousand rubles. The minimum indicator over the past two years fell on June 2020 with its 81.1 thousand rubles, however, the quotes, having found the bottom, quickly went up and closed the year at the maximum values ??in 24 months at the level of 107.1 thousand rubles.

The plastics market has moved in line with the general environment in the world since the announcement of the COVID-19 pandemic. Also, prices for plastics correlate with prices for natural gas, which is the main raw material for their production. In the second half of 2019 and exactly until June 2020, quotations on the gas market decreased to USD1.43 per million BTU, and then sharply surged upward, ending the year at USD2.55 per million BTU.

Within the Russian Federation, prices were relatively stable due to the specifics of Russian pricing. At the same time, KOS's foreign colleagues get access to raw materials at spot prices, which means that they could make plastics cheaper in 2019 and in the first half of 2020, which put pressure on KOS's prices.

Unlike Nizhnekamskneftekhim, KOS receives the lion's share of revenue in the domestic market. At the end of last year, the ratio of its sales in Russia and abroad amounted to 51 billion to 12 billion rubles against 61 billion to 12 billion at the end of 2019.

Compared to competitors in the West, Russian large companies show slightly better performance due to the floating and periodically sinking ruble exchange rate, which allows them to generate more revenue (in national currency, of course) and save on expenses within the country - such as electricity, rail transportation, purchases the same ethylene and further down the list. At the same time, over the year, the domestic currency fell in price against the US dollar by an average of 11% to 72.1 rubles per dollar.

In physical terms, it can be noted that the production capacity at the polycarbonate plant has increased from 65 thousand tons by more than half. The modernization was carried out in two stages: in August - September 2019 and in October - November 2020. According to the results of the first stage of renovation, the productivity was about 88 thousand tons of polycarbonates per year, after the second it was increased to 100 thousand. All modernization works were carried out during the periods of preventive scheduled repairs, without additional production interruptions. As a result, the revenue from the sale of polycarbonates in the first 9 months of 2020 increased by 22.6% to 7.8 billion rubles.

Profit of KOS over the past year decreased by 26%, or 3 billion, to 8.6 billion rubles and returned (adjusted for the exchange rate) in 2014. Although the final result could be much weaker, since the company received only 11.1 billion rubles of operating profit from its core activities - 35%, or 5.9 billion rubles, less than in 2019. Fortunately, the balance of other items was dramatically improved. The negative balance of other income and expenses decreased by 2.26 billion to 320 million rubles. The key role was played by exchange rate differences: negative ones decreased from 1.71 billion to 846 million rubles, while positive ones increased from 315 million to 1.47 billion rubles.

Kazanorgsintez's revenue for 2020 under RAS fell by almost 14%, operating profit - by 35%, and net profit decreased by 26%. At the end of 9 months of 2020, the company showed a decrease in revenue by almost 20% compared to the same period in 2019, respectively, the fourth quarter of 2020 turned out to be the most successful for it. In principle, the entire global petrochemical industry has suffered, as both prices and sales have fallen. The coronavirus pandemic and the related restrictions on business, which persisted in European countries until the end of 2020 and are still ongoing in some countries, have reduced the demand for petrochemical products.

Earlier it was reported that Kazanorgsintez began a project to build a production of polyethylene-vinyl acetate (EVA) and high-pressure polyethylene (LDPE). The capacity of the new production will be 100 thousand tons of EVA / LDPE per year. The Japanese company Sumitomo Chemical will act as the licensor. The production complex will be located on a free site, inside the territory of Kazanorgsintez. To implement the project, it is planned to use the company's own funds and attract debt financing.

According to MRC's DataScope, in January of this year, imports of EVA to Russia increased by only 0.07% to 3.084 thousand tons from 3.087 thousand tons in the same month of the previous year, but by the end of January-December 2020, imports of this type of copolymer ethylene in the Russian Federation decreased by 3.41% - to 38.17 thousand tons (39.52 thousand tons in January-December 2019).

Kazanorgsintez PJSC is one of the largest polyethylene producers and the only manufacturer of polyethylene