SIBUR plans to fully repay the NWF loan for the construction of Zapsibneftekhim

SIBUR plans to fully repay the NWF loan for the construction of Zapsibneftekhim

MOSCOW (MRC) -- After the launch of Zapsibneftekhim at full capacity, SIBUR decided to use the significantly increased free cash flow to reduce debt, according to the Kommersant.

After the launch of Zapsibneftekhim at full capacity, SIBUR decided to use the significantly increased free cash flow to reduce debt, according to the Kommersant newspaper.

According to the newspaper, the company is going to fully repay the loan of the National Wealth Fund (NWF), which was attracted in 2015 for the construction of Zapsibneftekhim. The company borrowed USD1.75 billion (at that time - 118.6 billion rubles) at the rate (inflation in the United States plus 1 percentage point) maturing in 2030.

The Izvestia newspaper notes that the reason for the early repayment of the debt could have been the high efficiency of the complex already in the early days of its operation.

Thus, Zapsibneftekhim had a positive impact on the implementation of the international cooperation and export national project. According to analysts, the contribution of production in Tobolsk to the growth of non-resource exports of Russia exceeded 16%. In addition, according to Sibur itself, products manufactured at Zapsibneftekhim can make a significant contribution to solving the problem of import substitution. For various categories, the volume reaches 85–95% of the total market. For example, in the production of stretch films, pipes and cable insulation, this figure can exceed more than 90%.

According to the Kommersant newspaper, during the period of using the loan, SIBUR paid USD290.5 million (17.8 billion rubles) of coupon income to the state budget. SIBUR has already informed the government of its intention to pay off its debt to the NWF.

As per MRC, On 10 August, the Central Bank registered an additional issue of ordinary shares of PJSC SIBUR Holding, the largest petrochemical holding in Russia and Eastern Europe, reported BusinessOnline. Now the authorized capital of PJSC SIBUR Holding is Rb21,784, 791. There are 2,178,479.1 ordinary shares in circulation with a par value of Rb10 each one. In accordance with the decision on the additional issue, the issuer is placing 384,437,000.489 new ordinary shares by private subscription.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

SIBUR manufactures and sells petrochemical products in the Russian and international markets in two business segments: olefins and polyolefins (polypropylene, polyethylene, BOPP, etc.), as well as plastics, elastomers and intermediate products (synthetic rubbers, expanded polystyrene, PET, etc.).
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COVID-19 - News digest as of 17.08.2021

1. Westlake earnings increased in Q2 on post-pandemic recovery

MOSCOW (MRC) -- Westlake Chemical Corporation reported record quarterly earnings in the second quarter 2021 compared to the previous year, as strong demand encouraged higher sales prices and margins, said the company. The vinyls segment made record income, driven by higher sales prices, margins and sales volumes for polyvinyl chloride (PVC) resin market on regaining strength in the building and construction materials business. Olefins also tracked record income from operations in the second quarter on higher sales prices and margins across the portfolio, on the back of good global demand, and tight supply, partially offset by lower polyethylene (PE) sales volumes.


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Crude oil futures in Asia largely steady as pandemic concerns limit upside

Crude oil futures in Asia largely steady as pandemic concerns limit upside

MOSCOW (MRC) -- Crude oil futures were stable to slightly higher in mid-morning trade in Asia Aug. 17 amid bargain-hunting by investors, with the upside limited by the rising number of COVID-19 cases globally sapping market sentiment, reported S&P Global.

At 11:20 am Singapore time (0320 GMT), the October ICE Brent futures contract was up 4 cents/b (0.06%) from the previous close at USD69.55/b, while the NYMEX September light sweet crude contract was 8 cents/b (0.12%) higher at USD67.37/b.

A resurgence in COVID-19 cases globally fueled by the delta variant has impacted the oil demand outlook in August, particularly in China, the world's largest energy consumer.

"China also reported weaker-than-expected industrials and retail sales on Monday, stoking fears about the global recovery, and oil demand," said Avtar Sandu, senior commodities manager at Phillips Futures, on Aug. 17.

Other analysts shared similar bearish views, noting that mobility in China has fallen sharply as authorities impose strict guidelines to curb rising COVID-19 infection rates.

China's refineries processed 13.96 million b/d of crude in July, down 6% from a record high of 14.86 million b/d in June, National Bureau of Statistics data released Aug 16 showed. The volume was also down 0.9% year on year, marking the first year-on-year fall since March 2020.

As MRC informed earlier, crude oil stockpiles fell modestly last week, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

Reliance Industries conducts turnaround at one PP line in Jamnagar

Reliance Industries conducts turnaround at one PP line in Jamnagar

MOSCOW (MRC) -- Reliance Industries (RIL) has taken off-stream one of its polypropylene (PP) plants in Jamnagar, India for a scheduled maintenance, according to CommoPlast with reference to market sources.

Thus, this unit with an annual capacity of 400,000 tons/year of PP was shut on 5 August 2021 and will remain idle for approximately one month.

The local supply is expected to take a hit from the shutdown, especially when demand is recovering from the COVID-19 outbreak.

As MRC reported earlier, RIL shut its another PP unit in Jamnagar, India for a 20-day maintenance on 15 October, 2020. This unit came back online on 5 November, 2020. The plant has an annual capacity of 480,000 tons/year.

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. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
MRC

Formosa to start up its expanded PVC production capacities in Baton Rouge in Q4 2022

Formosa to start up its expanded PVC production capacities in Baton Rouge in Q4 2022

MOSCOW (MRC) -- Formosa Plastics USA, part of Formosa Petrochemical, has postponed the start-up of its expanded polyvinyl chloride (PVC) production capacities at its existing plant in Baton Rouge, Louisiana, to Q4 2022, reported S&P Global with reference to sources familiar with company operations.

Initially, the company planned to launch the expanded capacities at its 513,000 mt/year of PVC plant in Q4 2021. Formosa did not respond to inquiries about the delay.

The company intends to debottleneck production at this plant, adding 130,077 mt/year of PVC capacity, according to permitting documents.

Formosa's last public announcement about the expansion came in November 2019, when it was in "detailed engineering design" with steady commercial operation slated for Q4 2021, a year later than announced in December 2018.

As MRC informed earlier, as part of the expansion project, new equipment will be installed at this plant, including the one for the production of halogenated acids, whose products Formosa will use to produce vinyl chloride monomer (VCM). As a result of the modernization of PVC production, the company plans to increase the output of material and its sales by 20%.

Back in 2017, Formosa announced its plans to expand PVC capacity in Louisiana, and in March 2019, the Louisiana Economic Development and FPC began to discuss this project. The state had allocated a grant of USD500,000 for this project.

According to MRC's ScanPlast report, Russia's overall production of unmixed PVC totalled 580,500 tonnes in the first seven months of 2021, up by 4% year on year. At the same time, one producer reduced its output.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
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