Accident at Gazprom Pererabotka plant may lead to lower supply of feedstock to ZapSibNeftekhim

MOSCOW (MRC) -- The accident at Gazprom's Urengoy condensate preparation plant on 5 August might lead to a reduction in liquefied petroleum gases (LPG) production in Russia by about 15% and, as a result, to lower supply of feedstock for the production of LPG at ZapSibNeftekhim (part of SIBUR), the largest polymer production plant in the Russian Federation, reported Kommersant, citing experts' estimates.

Ethane is extracted from the condensate at the plant, after which the condensate is sent to the Surgut plant for stabilization (feedstock capacity - 12 mln tons per year), where lighter fractions - LPG and NGLs - are isolated from the feedstock.

As Anna Lishnevetskaya from Petromarket notes, if the Surgut plant completely stops, this will lead to a 12% decrease in the supply of feedstock for the production of LPG to the largest petrochemical complex in Russia - ZapSibNeftekhim. SIBUR told Kommersant that they are waiting for an estimate of the planned volumes of supplies from partners and that it is too early to make forecasts.

“In any case, we will strive to prevent a reduction in domestic sales and unloading of petrochemical plants,” they stressed. Also, Gazprom neftekhim Salavat (GNS, part of Gazprom) and TAIF will be deprived of some of the raw materials for the production of petroleum products.

As a result of the fire, one of the two deethanization lines of the Urengoy plant was apparently seriously damaged, and the second line was shut as a precaution. Gazprom Pererabotka announced on 8 August that condensate supplies to the Urengoy plant resumed from 7 August, without specifying the quantities. According to Kommersant's interlocutors, at best, the current capacity of the Urengoy plant will be cut by half.

As reported earlier, on 22 June, 2021, ZapSibNeftekhim produced 2 mln tonnes of polyethylene (PE) since the start of the plant. The complex's products are also shipped throughout Russia, to the CIS countries and Europe, Turkey and China. The Tobolsk plant produces 24 grades of PE used for the production of polymer films, packaging, blown containers, tubular products, and it is gradually replacing imported polymers in the domestic market, while increasing exports.

As MRC informed before, after the launch of ZapSibNeftekhim, SIBUR tripled its polymer capacities, Mikhail Karisalov, General Director of the company, said in December last year. Zapsibneftekhim was launched at full capacity on 1 December, 2020. M. Karisalov said the main result of the launch of ZapSibNeftekhim is the completion of SIBUR's transformation into a world-class petrochemical company.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High density polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.

ZapSibNeftekhim is SIBUR's largest project, the construction of which was completed in May 2019. After reaching its design capacity, it became the largest modern petrochemical complex in Russia. The project is the plant for the production of various PE grades (1.5 mln tonnes) and PP grades (500,000 tonnes). The budget of the complex is USD8.8 bln.
MRC

MOSCOW (MRC) -- PJSC "Nizhnekamskneftekhim" (NKNKh, part of TAIF) has decided on a contractor for the construction of a new polypropylene (PP) plant, said the company.

Thus, on 6 August, 2021, in Kazan, in the head office of TAIF JSC, three contracts were signed between NKNKh and the Chinese company China Machinery Engineering Corporation (CMEC) for the construction of a PP production with a capacity of 400,000 tonnes per year based on LyondellBasell's Spheripoll technology.

Contracts were concluded for the provision of design services and the supply of documentation; for the purchase and supply of equipment, as well as for the provision of technical consulting services. The documents were signed by Airat Safin, General Director of Nizhnekamskneftekhim PJSC, and Fan Yangshui, President of China Machinery Engineering Corporation.

These contracts are linked by a tripartite framework agreement, in which China Huanqiu Contracting & Engineering Co., Ltd. is the main design subcontractor for CMEC.

According to the statement, NKNKh is already one of the leaders in this segment in the Russian Federation. After the commissioning of a new PP production facility, Nizhnekamskneftekhim will almost triple its PP output and become one of the largest PP producers in Europe.

As MRC reported earlier, the construction of the NKNKh's olefin complex was completed by 30% in July, 2021. The construction of the olefin complex is carried out within the framework of a memorandum of strategic cooperation concluded in June 2017 between TAIF Group, which includes Nizhnekamskneftekhim, and the German company Linde AG. The basic agreement on the design, supply of equipment and provision of services for the commissioning of the first stage of the future plant was signed between Nizhnekamskneftekhim and the Linde Engineering division. In February 2019, a contract for construction and installation works was signed with the Turkish company Gemont. The planned completion date for the construction and installation works of the olefin complex is July 2023.

According to MRC's ScanPlast report, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Shipments of propylene homopolymer (homopolymer PP) and block copolymers of propylene (PP block copolymer) increased. Supply of injection moulding statistical copolymer of propylene (PP-random) has decreased.

PJSC "Nizhnekamskneftekhim" (NKNKh) is one of the largest Russian manufacturers of petrochemical products. The industrial complex of the company includes ten major production plants and ten departments (Railway Transport, Ethylene pipelines, etc..). NKNKh produces more than 120 types of chemical products, including synthetic rubber, polyethylene, polypropylene, polystyrene, surfactants. Nizhnekamskneftekhim is a member of TAIF Group of Companies.

China HuanQiu Contracting and Engineering Corporation (HQC) is a subsidiary of China Petroleum Engineering Corp. Ltd. - China National Petroleum Corporation. The company specializes in the construction of refineries, petrochemical plants and chemical fertilizer plants associated with oil refineries and mining plants.
MRC

MOSCOW (MRC) -- Despite the end of the period of shutdowns for maintenance, some Russian producers raised again their suspension polyvinyl chloride (SPVC) prices. At the same time, the excitement subsided in the market, and converters were already reluctant to accept new prices, especially given higher imports, according to ICIS-MRC Price report.

In July, scheduled shutdowns for repairs at Bashkir Soda Company and SayanskKhimPlast created additional pressure on the already scarce Russian market. Converters partially switched to the purchase of imported PVC, while the imported resin often arrived with a long delay. In August, the rush subsided in the market, Russian producers quickly resumed production after the turnarounds, and supply of resin increased in the market partially because of a major rise in imports. However, some European producers raised their PVC prices further.

Bashkir Soda Company and SayanskKhimPlast shut their production capacities for scheduled repairs in mid-July, and the outages did not exceed two weeks. The plants' production capacities are 240,000 and 350,000 tonnes per year, respectively.

The next and last shutdown for maintenance among Russian producers will take place at Kaustik' (Volgograd) production capacities in the third decade of September and will last for three weeks. The plant's annual production capacity is 90,000 tonnes.

Shutdown for maintenance at two domestic producers during the high season led to a major increase in imports, despite the export restrictions of Chinese producers. According to preliminary information, July imports of suspension reached 13,500 tonnes, compared to 5,000 tonnes a month earlier. Large quantities of acetylene PVC from China are also planned for shipment to the Russian market in August.

A significant increase in imports and the end of the shutdowns for repairs at Russian plants brought down the excitement in the market. Many converters said there were already no such serious problems with resin with K=64/67, as it was the case in July. In addition, imported resin became cheaper than some Russian producers' resin in August. A shortage remained in the PVC markets with K=58/70.

Amid growing supply of PVC in the market, converters were no longer in a hurry to confirm new prices of Russian producers and often tried to find an alternative at a lower price. At the same time, not all producers decided to further increase domestic prices of resin in August.

As a month earlier, deals for Russian resin with K64/67 were done in a very wide range: Rb155,000-201,000/tonne CPT Moscow, including VAT for quantities up to 500 tonnes, compared to Rb151,000-200,000/tonne CPT Moscow, including VAT, in June. Prices for K=58/70 PVC grew to Rb175,000-216,000/tonne CPT Moscow, including VAT.
MRC

MOSCOW (MRC) -- Specialty chemicals company LANXESS completed the second-largest acquisition in its history on August 3 with the takeover of Emerald Kalama Chemical, as per the company's press release.

The US-based specialty chemicals manufacturer was majority-owned by affiliates of private equity firm American Securities LLC. All required regulatory approvals have been received. The enterprise value of Emerald Kalama Chemical was USD1.075 billion (EUR 900 million). After deducting liabilities, the purchase price was approximately USD 1.04 billion (EUR870 million), which LANXESS financed from existing liquidity.

“Emerald Kalama Chemical gives us another major boost on our growth path. The new businesses are an optimal strategic fit for us. We are strengthening our position in markets with attractive growth rates and opening up new high-margin application areas, especially in the beverage and food sector or in cleaning and cosmetic products. What's more, Emerald Kalama Chemical is perfectly backward integrated - strengthening our value chain in Consumer Protection. This segment is thus an important engine on the way to making LANXESS even more stable and profitable,” said Matthias Zachert, Chairman of the Board of Management of LANXESS AG.

With the closing of the transaction, LANXESS grows by around 470 employees and the three production sites in Kalama/Washington (USA), Rotterdam (Netherlands) and Widnes (Great Britain).

In 2020, Emerald Kalama Chemical achieved global sales of approximately USD425 million (EUR 375 million) and EBITDA pre exceptionals of around USD90 million (EUR80 million). Within three years, LANXESS expects an additional annual EBITDA contribution of around USD30 million (EUR25 million) from synergy effects. The acquisition will already be earnings per share accretive in the first fiscal year after its completion.

As MRC reported earlier, in April 2021, LANXESS expanded its Colortherm Yellow pigment range for heat-resistant high-performance plastics. Two new inorganic yellow pigments are now available, namely Colortherm Yellow 5 and Colortherm Yellow 26.

We remind that Russia's output of chemical products rose in June 2021 by 10.2% year on year. However, production of basic chemicals increased year on year by 8.2% in the first six months of 2021. according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary forms and synthetic rubbers accounted for the greatest increase in the output in January-June 2021.

LANXESS is a leading specialty chemicals company with about 19,200 employees in 25 countries. The company is currently represented at 74 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. Through Arlanxeo, the joint venture with Saudi Aramco, Lanxess is also a leading supplier of synthetic rubber.
MRC

MOSCOW (MRC) -- China's fuel demand is on track to hit record highs this year on a rebound in car sales and booming domestic air travel, even as a resurgence of COVID cases slows movement in some cities in the near term, reported Reuters with reference to analysts.

Despite slowing growth for diesel, the main industrial fuel, overall consumption of gasoline, diesel and aviation fuel in the world's top crude oil importer is expected to grow by 7% to 11% in 2021 to a record between 8.4 million and 8.9 million barrels per day, analysts at consultancy SIA Energy, IHS Markit and Energy Aspects estimated.

By comparison, the International Energy Agency (IEA) in March forecast China's demand for gasoline, jet fuel and diesel would rise by 6.5% to 8.2 million bpd in 2021.

China's strong growth in fuel use has helped stoke a 50% jump in global crude oil prices from 2020.

The latest outbreaks of the COVID-19 Delta variant across 17 provinces are expected to constrain travel in the near term, but analysts say the overall growth trend remains intact.

"If fast containment can be achieved by mass testing, and future large-scale outbreaks can be avoided with the vaccination rollout, gasoline and jet will be still on track to hit a record," ISH Markit analyst Shi Fenglei said.

Gasoline demand, which accounts for a quarter of China's refined fuel use, is forecast to rise by 11% to 13% this year to a record 3.8 million to 4.1 million barrels per day, well above the IEA's March forecast of 3.5 million bpd.

"Gasoline leads the growth as people drive more for long-distance travel, (there are) more ride-hailing services and motorbike e-commerce deliveries," said Seng Yick Tee, senior director at SIA Energy.

New passenger vehicle sales are expected to rise 7% this year, marking China's first annual growth since 2017, said Tao Gao, light vehicle specialist with IHS Markit.

As MRC wrote earlier, China's crude oil imports rebounded in July from a six-month low as state-backed refiners ramped up output after returning from maintenance, though independent refineries slowed restocking amid probes by Beijing into trading and taxes.

We remind that earlier this year, Sinopec Engineering (Group) and ExxonMobil (Huizhou) Chemical (EMHCC) entered into a BEPC (basic design, engineering, procurement and construction) contract for the proposed Huizhou Chemical Complex Project (Phase I). The main units of the project include a 1.6 million tonnes/year ethylene flexible feed steam cracker, downstream polymer and derivative units and utilities. The main product units include two performance polyethylene (PE) lines and two differentiated performance polypropylene (PP) lines.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High density polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
MRC