Avtovaz begins assembling Lada cars in Azerbaijan

Avtovaz begins assembling Lada cars in Azerbaijan

JSC Avtovaz has launched a project to assemble Lada cars in Azerbaijan and plans to assemble 1,500 cars in the country in 2024, the Russian automaker's press service said, as per Interfax.

Avtovaz said that it has organized a receiving area for vehicle kits, an assembly shop, and a parking lot for storing finished cars at one of the production sites in Azerbaijan. Personnel specially hired as part of the project have received the necessary training from specialists from Togliatti.

Avtovaz head Maxim Sokolov said that the Lada production site in Azerbaijan could produce up to 1,500 cars this year.

"We are starting with Granta, and plan to expand the range of local production by the end of 2024 with the Niva Legend and Travel family; and test samples have already been assembled and are undergoing a quality audit, as well as the Vesta family. The annual production output could reach up to 4,000-5,000 cars in the next few years," Avtovaz's press service quoted Sokolov as saying.

Launching local production in Azerbaijan should assist Lada in returning its market share in the country to the pre-crisis levels, and in boosting the brand's presence, Sokolov said.

We remind, production of all types of motor vehicles increased 16% in Russia in 2023 to 720,000 units. Last year production increased 16%; over 720,000 cars from different segments rolled off assembly lines in our country. In total, over 1.3 million cars of all types were sold on the domestic market.


Oil refining capacities in Russia sufficient for supplying domestic market

Oil refining capacities in Russia sufficient for supplying domestic market

Russian oil refining has sufficient capacity to supply the domestic market with fuels, Gazprom Neft chief Alexander Dyukov told reporters, as per Interfax.

Commenting on the idea of increasing the capacity of refineries located closer to the east, he noted: "Theoretically, it is possible to build another refinery. But we are not considering such a possibility. We believe that the existing capacities are enough to supply the domestic market with diesel fuel and gasoline."

According to Dyukov, the Omsk refinery after modernization provides a refining depth of virtually 100%. "We 'squeeze' the maximum possible volume of gasoline, diesel fuel and other petroleum products from oil there," the Gazprom Neft head said.

He added that Gazprom Neft has increased the production of petroleum products at its refineries, without specifying the volumes.

We remind, Gazprom is sticking to its goal of achieving 100% of the technically possible level of network gasification by 2030, and is actively working with the regions via five-year programs, Deputy Chairman of the Board of Gazprom Oleg Aksyutin said in an article in the company's corporate magazine. "It is expected that due to gasification and post-gasification alone, the increase in demand in the domestic market could reach nearly 20 bcm by 2030," the article says.


PE market is in the extended downcycle of low operating rates and margins

PE market is in the extended downcycle of low operating rates and margins

The polyethylene (PE) and polypropylene (PP) markets are both in the midst of an extended downcycle of low operating rates and margins sparked by massive overbuilding and delayed rationalization, according to industry experts who spoke at the World Petrochemical Conference by S&P Global, as per Chemweek.

“By our estimation, [the polyethylene] industry went into a downcycle in the second half of 2022, and the conditions that drove us there persist,” said Jesse Tijerina, head of global polyolefins at S&P Global Commodity Insights. “It’s this oversupply that we’ve been talking about … and then also [the] somewhat weaker global economic demand that we experienced in ‘23 and expect it to go into ‘24 as well. Much like in ethylene, there is additional excess capacity still planned in the next three years, which complicates the matter from a recovery perspective. Without action, these conditions will continue to put pressure on profitability, and we think this could go into 2027 or beyond.”

PE capacity additions outpaced demand growth by 13.5 million metric tons (MMt) over the last four years, Tijerina noted, pulling the global operating rate down from 87% in 2020 to 79% in 2023. Under current demand projections, this excess capacity will not be absorbed for another two or three years; meanwhile, more new capacity is slated for start-up, so the operating rate will remain mired near 80% through 2027.

China is the major contributor to the excess, accounting for 53% of the new capacity anticipated in 2020–27, while the rest of Asia accounts for just 11%. However, demand in China, which averaged nearly 6.5% over the last 10 years, is forecast to slow to just over 4% during the next 10 years. Demand will grow by nearly 8% in South Asia and nearly 6% in Southeast Asia.

The supply/demand imbalance has weighed heavily on PE margins, and regional divergence has been compounded by high crude oil pricing. Tijerina noted that integrated cash margins for naphtha-based production of high-density polyethylene (HDPE) in Asia fell deep into negative territory during 2022–23, and they are forecast to remain negative until 2030. In contrast, margins for ethane-based producers in the US are forecast to narrow through 2026, but they will remain positive near $500 per metric ton, and by 2030, they will bounce back to around $1,000 per metric ton.

With the current downcycle for the PE market already nearly two years long, a V-shaped recovery in profitability is no longer an option, and a U-shaped recovery seems increasingly unlikely, said Tijerina. “We’re likely into an L-shape recovery, and the real question is, how long is this going to take? When we look at our supply fundamentals … it suggests that meaningful action has to be taken now… Delaying projects closer to the upcycle or canceling them altogether is an action that would definitely help. And then, of course, the much-talked-about rationalization as well.”

Several issues affect the pace of rationalization. “Number one, owners generally have an emotional attachment to their assets, and this, in a way, is [a] headwind to rationalization,” Tijerina observed. “Most companies feel that they can weather the storm and that others will not be able to.” By the same token, rationalization is easier following an acquisition or a takeover. “Generally, this is because the new owner is not as emotionally attached to the assets,” he said. “Even if the owners are inclined to rationalize, there’s often resistance from labor unions or local governments.”

Tijerina reminded the WPC audience that while the duration of the downcycle in PE is difficult to predict, it will ultimately end. “Polyethylene will continue to enjoy healthy growth by our estimations [equivalent to] six to eight world-scale polyethylene units per year.”

We remind, Shantou Mingca Packaging Co Ltd and ExxonMobil Asia Pacific Research & Development Co., Ltd (ExxonMobil) announced an innovative double bubble Polyethylene-based Shrink Film solution, the next generation of Polyolefin Shrink Film, created using ultra-low density Exceed XP performance polyethylene. PEF can be used to package products in a variety of shapes, such as electronics, household and personal care products, medicines, food, books and magazines, plastic utensils, and toys.


Symrise-led JV to manufacture personal care ingredients in India

Symrise-led JV to manufacture personal care ingredients in India

Symrise has entered into a joint venture dedicated to manufacturing personal care ingredients in India with Andhra Pradesh-based pharmaceutical actives maker Virchow Group, said Indianchemicalnews.

The new company, Vizag Care Ingredients, is based in Visakhapatnam, including one local chemical manufacturing site. Production is slated to begin by the end of June.

Symrise's global sales organization will carry out promotion and sales activities of the products manufactured by the joint venture, which is majority owned by the German firm.

The Visakhapatnam facility is Symrise’s first chemical manufacturing site outside Europe and the Americas.

Vizag Care Ingredients plans to expand the site in the coming years to facilitate the production of world-scale volume of beauty ingredients, serving the APAC region and beyond.

Symrise believes the move will strengthen its leading position as a supplier of high-quality personal care solutions, including multifunctional product protection ingredients, high-performance actives & botanicals, and next-generation UV filters.

“Our entire customer base will benefit from the proximity, efficiency, and sustainability advantages that come with a supply of our market-leading cosmetic ingredients portfolio out of India,” said Symrise Scent & Care president Dr. Joern Andreas.

"Virchow Group and Symrise share the same values, so this partnership perfectly fits,” he added.

“Together, we will manufacture modern ingredients in India that drive innovation, safety, and efficacy for our global customers. In addition, we seek to make an impact in the local community of Visakhapatnam by continuously investing and creating jobs.”

We remind, Saudi chemical manufacturer Sabic signed a memorandum of understanding with Pashupati Group, an India-based mechanical and chemical recycler of PET and polyolefins, said the company. The companies will explore, evaluate, and develop local business opportunities for recycling waste plastics in India, including the potential development of a pyrolysis plant to provide Sabic with feedstock for its circular polymers.


Kazakhstan expects nearly USD2 bln from Russian oil transit to China

Kazakhstan expects nearly USD2 bln from Russian oil transit to China

The Majilis or lower house of Kazakhstan's parliament has ratified the protocol amending the agreement between Kazakhstan and Russia on transporting Russian oil through Kazakhstan to China dated December 24, 2013, as per Interfax.

The protocol, signed in St. Petersburg on June 16, 2023, extends Rosneft's agreement with CNPC for 100 million tonnes of oil over 10 years. The pumping tariff is set at USD15 per tonne, with a USD2.1 tariff on the Tuymazy-Omsk-Novosibirsk-2 (TON-2) pipeline section. This facilitates long-term oil transportation through main pipelines from Russia to China via Kazakhstan (Tuymazy-Omsk-Novosibirsk-2 (TON-2) and Priirtyshsk-Atasu- Alashankou) until January 1, 2034.

"The agreement's extension will guarantee the oil supply to the Pavlodar Petrochemical Plant via the Omsk-Pavlodar pipeline. From 2024 to 2033. The projected revenue from transporting Russian oil through Kazakhstan to China is estimated at USD1.71 billion for both sections, with no associated risks," Kazakh Energy Minister Almasadam Satkaliyev said.

Including replacement profits, revenue is estimated at USD1.851 billion.

The previous 10-year agreement, valid until January 1, 2024, saw 90.9 million tonnes of Russian oil transit through Kazakhstan to China, generating USD1.327 billion in revenue.

We remind, Russia announced additional voluntary cuts in oil supply mainly in the form of production cuts rather than exports, as it faced curtailed refining capacity as well as stricter sanctions. Russia has declared plans to cut its oil output and exports by an additional 471,000 bpd in April-June in coordination with some OPEC+ participating countries. While the world's second-largest oil exporter has been reducing 500,000 bpd in exports of crude oil and oil products in the first quarter, it has decided to scale down export limits in the second quarter and focus on production curbs instead.