Investments into Ukrainian polymers industry down three times to $US 50 mln in 2009

KYIV (PRIME-TASS) -- Investments into the Ukrainian polymers industry in 2009 decreased three times, to $US 50 million, compared to 2008 - according to the data provided by MRC (MOSCOW). Investments into equipment in that industry had been growing by 26% annually since 2002, and peaked in 2008. The Ukrainian market of bulk polymers (polyethylene, polypropylene, polyvinyl chloride and polystyrene) dropped by 10.5%, down to 582 kt, in 2009 - according to the company. The polyvinyl chloride sector was affected most of all others - it shrank by 19%. Polyethylene demand dropped by 7.6% to 293 kt. High-density polyethylene production is still idle in Kalush (Ivano-Frankovsk Region, LUKOIL Group); therewith, the market fully depends on imports.

The balance in the high-density polyethylene market is expectedly to change after the production site in Kalush is launched either at the end of 2010 or in the first half of 2011. Estimated polypropylene consumption went down by 6%, to 104 kt. At the same time, polypropylene output in Lisichansk (CJSC LINIK, Luhansk Region, TNK-BP Group) even increased 16%.

President of the Council of Representatives of the Polymers Industry of Ukraine Andrey Antonov predicts that demand for polymer packaging will become 15-20% stronger in Ukraine in 2010. ⌠That growth will mainly be relating to film products. The construction market is expectedly to become more active by the end of the year, which may boost demand for polymer pipes", he said. He believes that "during the crisis that'd been lasting since 2008 and during the entire 2009 producers became more resistant to the unstable market."

"Today, the survived and stronger companies run their businesses in an absolutely different way: they analyze, plan and follow well-defined development strategies," Andrey Antonov added.

MRC

Russian PVC producers fixed February contract prices at the level of RUB42.500-44.000/mt, including VAT, СРТ Moscow. In the first half of the month, prices for Asian and North American resin went up on average by RUB500/mt, and now they vary within the range of RUB43.500-45.000/mt, including VAT, СРТ Moscow.

March prices for Russian resin are expectedly to go up being pushed up by high PVC prices in Asia, Europe and North America.

Reduced output and shutdown of several PVC units in Europe resulted in cut exports. Some producers already raised their export prices last week. American and Asian suppliers have not announced their PVC prices for March shipments, yet.

For more detailed information on the Russian PVC market, see Price Reports.

MRC

PARIS (WSJ)--Oil major Total SA's (TOT) French refineries were producing at minimum levels Wednesday due to employees' industrial action but the company has taken measures to ensure supplies to customers, a Total spokesman said.

Union Confederation Generale du Travail, or CGT, said in a statement that 95% of employees at all Total's six refineries in France were on strike, while 80% of the group's French storage units were also hit by the action, planned since Feb. 3 to protest against the company's intention to cut refining capacities.

"We don't comment on how many employees are on strike," the spokesman said.

"The company took measures so that this action at that stage has no impact on supplies to customers," the spokesman said, adding that refineries "are producing at minimum levels."

The strike is initially planned to last 48 hours but employees are to meet later in general assemblies to decide whether to extend it, CGT said.

The industrial action was agreed because Total has postponed its decision on the fate of its French Flanders refinery, which has been idled since Sept. 15, due to over capacities, following a drop in refining margins amid a fall of demand for oil refined products in Europe.

February 18 (Business Standard) -- Global petrochemical major LyondellBasell, whose majority stake Reliance Industries (RIL) is looking to buy, today said it has reached a settlement with creditors paving the way for the company to exit bankruptcy.

As part of the agreement, the Unsecured Creditor's Committee and holders of the company's substantial debt have agreed to support its reorganisation plan, a statement by LyondellBasell said.

Weighed down by massive debts, LyondellBasells US operations and one of its European holding companies had filed for Chapter 11 bankruptcy protection in 2009.

In November last year, LyondellBasell and Mukesh Ambani-led RIL disclosed a "preliminary non-binding offer" by the Indian firm for taking a majority stake in the chemical major.

Going by industry sources, RIL's bid could be more than $12 billion.

The new agreement with creditors increases the amount from $300 million to $450 million that would be distributed to the holders of general unsecured claims, the millennium bonds and 2015 notes. The extra $150 million would be paid in the form of reorganised equity.

The company said the dispute between unsecured creditors and these defendants has been limiting its ability to complete approval of disclosure statement and reorganisation plan.

LyondellBasell pointed out that it would continue to work with all parties to design a confirmable reorganisation plan that maximises value for creditors.

The US-based company is privately owned by ProChemie GmbH, a JV of Access Industries and ProChemie Holding.

MRCMRC Reference

LyondellBasell. The share in the Russian market in 2008:
PE - 1.4% (including HDPE - 2.5%, LDPE - 0.3%);
PP - 4.1% (including block-copolymers - 9.5%).

Annual sales growth in Russia, during the recent 5 years:
PE - 27%;
PP - 88%.

The leader in the following polymers processing technologies:

pipe extrusion;

film extrusion;

injection molding.

AMSTERDAM (Reuters) -- Benelux chemicals companies AkzoNobel NV and Solvay will show the economic recovery is continuing, but cautiously and slowly as they report improving fourth-quarter results on Thursday.

Both companies are expected to show more resilient volumes, but no sharp improvement in their trading environment, hit also by pricing pressures, but partly offset by margin improvements.

AkzoNobel is expected to report a 10.5 percent rise in earnings before interest, tax, depreciation and amortisation (EBITDA) excluding one-offs of 421 million euros ($574.7 million), according to the average forecast from a Reuters poll.

In the same period last year it reported EBITDA of 381 million euros.

"We expect the company to improve margins further on the back of cost cutting, and see volumes improving year-on-year on the back of an absent destocking effect and emerging markets exposure," ING analyst Jan Hein de Vroe said.

AkzoNobel is targeting 540 million euros in operational savings and synergies from its acquisition of British paints company ICI by end-2011, but is poised to exceed that target having achieved 530 million euros in savings by its third quarter results last October.

The company - which has lagged its closest rivals for years in terms of operating margins - is targeting an EBITDA margin of 14 percent by the end of 2011, but analysts say AkzoNobel could either lift its target or exceed it.

"We expect AkzoNobel to realise an EBITDA margin of 13.8 percent in 2010, close to its target. If a recovery occurs in 2010, AkzoNobel could achieve its medium-term target a year ahead of schedule," RBS analyst Mutlu Gundogan said.

But worries still persist, with SNS Securities analyst Danny van Doesburg warning results from rival paint makers Sherwin-Williams and PPG suggest volumes remain under pressure and the recovery is slower than anticipated.

AkzoNobel was also fined 40.6 million euros in November by the European Commission for belonging to a price fixing cartel and the deadline to appeal the fine has expired. AkzoNobel could therefore book a charge, impacting its net profit.

AkzoNobel's improved margins come after it divested its drugs unit and narrowed its focus, a move that Belgian peer Solvay has also opted for, closing the sale of its drugs unit to Abbott Laboratories on Tuesday.

On Thursday, Solvay - which is targeting acquisitions after the drugs unit sale - is expected to report a 74 percent rise in recurring earnings before interest and tax (REBIT) to 217 million euros based on the average forecast from a Reuters poll.

In the year-earlier period, however, Solvay - one of the world's leading makers of polyvinyl chloride (PVC), heavily used in construction - reported a 53 percent slump in REBIT, hit by plunging demand for plastics and 30 million euros in inventory writedowns.

But despite the rise in group REBIT, ING's De Vroe said PVC volumes are likely to have remained very low in the quarter, with margin pressure from U.S. imports and price competition in Europe.

Margins at the chemicals unit should be "more or less intact" with lower energy costs countering the fact that volumes will have come under pressure, De Vroe said, noting that soda ash prices will have remained fairly stable.

Solvay is the world's leading maker of soda ash, a key raw material for glass and the outlook remains tough.

"We expect 2010 to be a difficult year in chemicals, as we expect a price decline of more than 5 percent in soda ash in 2010, resulting in approximately 3 percent lower REBIT margins," Rabo Securities analyst Fabian Smeets said.

MRC