SIBUR summarises key operational results for 2023

SIBUR, Russia's largest producer of polymers and rubbers, summarised the company's key operational results for 2023 at the Ruplastica international trade fair, which was held in Moscow on 23–26 January 2024, said the company.

In 2023, SIBUR ramped up the sales of its key products, with the share of supplies to the Russian market rising to 75%. Since 2021, SIBUR has been consistently increasing its sales in the domestic market, which is the Company's priority, by reducing export sales and continues to stimulate further growth in local polymer processing and reducing imports of finished polymer products.

In 2023, polymer consumption in Russia showed a record growth of 10% to 4.4 mt. Four percent of this growth is attributable to joint programmes between SIBUR and customers, such as import substitution of polymers, expansion of processing capacities, and substitution of conventional solutions with those based on polymers. In 2023, SIBUR completed 330 programmes with more than 270 partners, which is equivalent to 176 kt of products.

Off the back of growing demand from Russian processors, in 2023 SIBUR's domestic sales of polypropylene and polyethylene increased by 11% year-on-year, while sales of BOPP films, elastomers, plastics and organic synthesis products grew by 16%, 8%, and 11%, respectively. As the main raw material for polymers and elastomers is LPG, SIBUR's facilities have quadrupled its consumption over the last five years to more than 70% of the fractionation volume, which translated into lower exports of this product.

In 2023, transport showed the most impressive growth in polymer consumption. Since early 2022, SIBUR has developed new grades of polypropylene, polyethylene, ABS, polycarbonate, and rubbers for the transport industry with a potential of more than 90 ktpa. Polymer products are widely used in compounds, batteries, fuel tanks, vibration and noise insulation, and many other car parts to reduce vehicle weight and make it eco-friendlier.

Consumer goods producers also increased their demand for polymers by 7% due to the growth in the country's output of footwear, household appliances, and toys.

The construction industry's demand for polymers exceeded 1.6 mtpa. Since 2022, SIBUR has introduced over 15 new grades to substitute conventional solutions and imports of more than 100 kt of products. The use of polymer materials with their increased energy efficiency and durability in the construction industry and housing and utilities sector eliminates losses and offers additional benefits, including by reducing GHG emissions.

2023 also saw an increase in polymer consumption by agriculture and healthcare, up 1.5% and 6%, respectively.

Due to its industry-specific approach to customers, SIBUR is well aware of the needs and specifics of key polymer consuming sectors, is capable of bringing new solutions to the market faster and supporting their wider application.

We remind, SIBUR began construction of a research and technology scaling center in Kazan, which will provide for a full cycle of creating new synthetic materials for key sectors of the Russian economy, the company's press service said in a statement. The key areas of operation for SIBUR's R&D center will be the development and scaling of new polyolefin and heterogeneous catalysts, synthesis and piloting of new products for the development of the company's existing chains and creation of fundamentally new materials, process modeling and engineering, development of new technologies, implementation of projects aimed at decarbonization, a closed cycle economy and digital initiatives.

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Prices of 2 Ethyl hexanol (2-EH) are anticipated to increase globally as OQ Chemical, a leading oxo-alcohol manufacturer announces price hikes for the for the product in the global market with effective from March 1, 2024, said the company.

On February 15, 2024, OQ Chemicals announced prices hikes of EUR 100/MT for the European market and 110/MT in the prices of 2-EH for the North American, and Asian market respectively.

In terms of supply, prices of feedstock Propylene (Chemical Grade) are further anticipated to show an increment in the global market which is anticipated to increase production costs of 2-EH. The present challenges in the supply chain system were recorded to have been persistent which continued to increase transportation costs.

On the demand side, demand of 2-EH from the downstream plasticizer and paint industry from the construction and automotive sector was recorded to be healthy in North American and Asian markets. Across the US market, commercial building and housebuilding segments mainly provided support for the 2-EH market as mortgage rates were recorded to have increased with current mortgage rates being recorded at 6.77% and 6.12% for a 30-year and 15-year fixed term contract, respectively. In terms of the commercial building segment, major hotel players were recorded to have observed an increment in the number of projects and renovations therefore further pressuring the demand for 2-EH. Moreover, despite the automotive sector continuing to witness a slowdown, residential housebuilding sector continued to improve on the back of perennial shortage of secondhand homes in the US market as evidenced by an increment in the number of outlays, and an anticipated high demand for housing in the spring months.

In the European market, prices of 2-EH continued to be driven increasing production costs of feedstock Propylene which continued to show an increment of 1.3% during the first half of February 2024, mainly due to crisis at the Red Sea which delayed imports of the feedstock from the exporting US market. In terms of demand, demand for 2-EH continued to remain subdued as the construction sector continued to remain in retrenchment during February 2024, with project cancellations and declining permits. All three segments of the construction sector continued to remain subdued with significant contractions being witnessed in the housebuilding, commercial building, and civil engineering activities. This consequently continued to have a detrimental impact on the downstream plasticizer industry.

Across the Asian market, the market situation of 2-EH was also driven by high freight charges which led to expensive imports of the product and a moderate demand from the downstream plasticizer industry as demand returns due to upcoming Chinese Lunar New Year which is expected to witness an increment in the renovation activities.

We remind, Mexico's Orbia has decided to put a pause on the expansion plans for its polyvinyl chloride (PVC) production capacity due to a challenging market situation that adversely impacted its profits in 2023. The company's polymer division, which includes PVC, faced a substantial setback in the fourth quarter of the previous year, reporting a 54% year-on-year decline in earnings before interest, taxes, depreciation, and amortization (EBITDA), amounting to USD47 million. Additionally, sales within this division experienced a 21% year-on-year decrease, reaching USD577 million.

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Polymer LLC has marked a significant milestone with the launch of large-format polyethylene film production in the Smolensk region, said Chemanalyst.

This accomplishment signifies the completion of an ambitious investment project aimed at establishing the Polymer-2 production complex in the region.

The construction of this new complex has not only increased the production capacity of the enterprise but has also introduced a groundbreaking production line, unparalleled in Russia. This state-of-the-art line is designed to manufacture large-format polyethylene films with an impressive width ranging from 6 to 18 meters and a thickness spanning 180 to 250 microns.

The successful realization of this project has elevated the daily production capacity of the enterprise, soaring from 180 to 230 tons per day. Additionally, the innovative line's capability to produce large-format polyethylene films is poised to address diverse applications and market demands.

Governor Vasily Anokhin of the Smolensk region expressed his satisfaction with the collaboration between Polymer and the government in bringing this substantial investment project to fruition. He emphasized the project's far-reaching impact, not only in expanding the production complex but also in generating employment opportunities. The establishment of the Polymer-2 complex has resulted in the creation of 310 new jobs in Desnogorsk. Over the years, Polymer LLC has demonstrated its commitment to regional development, investing nearly 3.1 billion rubles in its expansion, thereby contributing to the economic vitality of the Smolensk region.

The new production line specializes in the manufacture of greenhouse films, silage films, cover films, mulching films, and other applications relevant to the agricultural sector. This diversification aligns with Polymer LLC's strategic initiatives, catering to the evolving needs of industries such as agriculture, where polyethylene films play a crucial role in various applications.

The greenhouse films produced by the new line contribute to the agricultural sector by providing optimal conditions for plant growth and protection. Silage films aid in the preservation of animal feed, ensuring its quality for livestock. Cover films serve a variety of purposes, including protecting crops from adverse weather conditions and promoting optimal growing environments. Mulching films play a role in weed control, moisture retention, and temperature regulation in agricultural settings.

Earlier announcements indicated that Polymer LLC has plans to allocate approximately 2 billion rubles for the creation of a production complex dedicated to packaging materials in the Smolensk region. This forthcoming venture underscores the company's commitment to expanding its operational footprint and addressing the demand for diverse polyethylene-based products.

The Polymer-2 production complex represents a significant addition to Polymer LLC's presence in the Smolensk region, complementing the existing Polymer plant situated in Desnogorsk. The Desnogorsk facility encompasses installations dedicated to the production of polyethylene packaging films, showcasing the company's versatility in catering to varying complexities within the packaging sector.

We remind, SIBUR began construction of a research and technology scaling center in Kazan, which will provide for a full cycle of creating new synthetic materials for key sectors of the Russian economy. The key areas of operation for SIBUR's R&D center will be the development and scaling of new polyolefin and heterogeneous catalysts, synthesis and piloting of new products for the development of the company's existing chains and creation of fundamentally new materials, process modeling and engineering, development of new technologies, implementation of projects aimed at decarbonization, a closed cycle economy and digital initiatives.

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OMV Petrom, the largest integrated energy producer in South-eastern Europe, announces the signing of two financing contracts through the NRRP, for the construction of two production facilities for green hydrogen with a total capacity of 55 MW at the Petrobrazi refinery, said the company.

The contracts were signed with the Romanian Ministry of Energy for a maximum funding amount of EUR 50 million; the total investment is approximately EUR 140 million. The funding was obtained following the reopening, in July 2023, of the competitive call for projects supporting investments in green hydrogen, initially launched in 2022.

Christina Verchere, OMV Petrom CEO: "Through our Strategy 2030, we committed to support the energy transition in Romania and the region, with investments of around EUR 11 billion by the end of this decade, of which approximately 35% will support low- and zero-carbon projects. We have made great strides in renewables and electro-mobility projects, and with this project we are adding hydrogen to our portfolio of low carbon projects."

Radu Caprau, member of OMV Petrom's Executive Board, responsible for Refining and Marketing: "We are proud to be among the first green hydrogen producers in Romania. Green hydrogen, produced from renewable energy sources, is a viable solution for a low-carbon future. By developing these projects at Petrobrazi, we are taking important steps towards sustainable refining activity."

The projects consist of building two water electrolysis plants of 35 MW and 20 MW at the Petrobrazi refinery. The entire production process will be powered by renewable energy, therefore carbon-free, allowing the hydrogen obtained to be classified as green hydrogen.

The annual amount of green hydrogen to be produced by the two projects has been estimated at approximately 8 kilotons. Integrating green hydrogen into the production process of green fuels, such as sustainable aviation fuel and biodiesel, will lead to a CO2 emission reduction of minimum 70% compared to conventional fuels.

The projects are currently in the engineering phase aiming to reach final investment decision in 2024.

We remind, OMV has been reaffirmed as a sustainability leader by independent rating agencies in the fields of Environmental, Social and Governance (ESG). OMV recently attained a score in the 94th percentile of its industry in S&P Global’s annual Corporate Sustainability Assessment (CSA), leading to its inclusion in the prestigious Dow Jones Sustainability World Index (DJSI World) and DJSI Europe for the sixth consecutive year. The DJSI World represents the top 10% of the largest 2,500 companies in the S&P Global Broad Market Index, based on long-term economic, environmental, and social criteria. OMV was also included in S&P’s Global Sustainability Yearbook 2024.

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Saudi Aramco and TotalEnergies SE contractor Hyundai Engineering & Construction Co. Ltd. has let a heater supply contract to Lummus Technology to provide eight proprietary Short Residence Time ethylene cracking heaters at joint venture Saudi Aramco Total Refinery & Petrochemicals Co.'s (Satorp) Amiral petrochemical complex in the Kingdom of Saudi Arabia, said the company.

Satorp has licensed multiple Lummus technologies at the Amiral complex including its ethylene, refinery off-gas recovery and treating, pygas hydrotreating, methyl tertiary butyl ether, isobutylene, butene and butadiene extraction technologies.

In July 2023, Hyundai Engineering & Construction Co. Ltd. was contracted for work on the complex’s mixed-feed cracker that will be equipped to produce 1.65 million tonnes/year (tpy) of ethylene and related industrial gases (OGJ Online, July 3, 2023). This contract also includes EPC for associated utilities, flares, and interconnecting systems to support the project’s other main packages.

Scheduled to begin commercial operations in 2027, the Amiral complex aims to provide feedstock to proposed petrochemical and specialty chemical plants slated to be built, owned, and operated in the Jubail industrial area by other global downstream investors for manufacturing, Aramco and TotalEnergies said.

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