Mitsubishi-Asahi Kasei merger to cut ethylene capacity by 30% by 2012

(plastemart) -- Post merger of their ethylene operations, Mitsubishi Chemical Holdings Corp. and Asahi Kasei Corp. plan a 30% reduction in ethylene capacity, trimming production costs by 3-4 bln yen by 2012. The two petrochemical majors will merge their ethylene operations under a 50-50 joint venture on April 1, 2011 to run their plants at a petrochemical complex in Okayama Prefecture. Each ethylene plant has an annual output capacity of 500,000 tons, together accounting for 12% of total output capacity in Japan.

Over the past many years, Japan's ethylene crackers have operated at near full run rates on growing demand in China. A supply glut from the feedstock advantaged Middle East (offering material at less than 10% of prices in Japan) as well as increasing capacity in China will result in reduced demand in the Japan. Mitsubishi and Asahi anticipate that domestic production capacity will rise to 30% more than market demand and domestic consumption. If automakers and electronics firms move production overseas, demand will continue to shrink. This could lead to further consolidation by the two partners into one plant, a move that would cut costs by 8-9 billion yen.

MRC

SITTARD (omnexus) -- With the new PP random copolymer 'SABIC PP Qrystal', SABIC claims to provide optical performance in their products while making energy savings during production.

SABIC PP Qrystal is a random copolymer that was recently developed with both the final product and the process in mind.

It is highly transparent, offers good antistatic properties and meets the precise demands of markets such as injection-molded houseware, office and home storage, lids and cap & closures. The levels of transparency and gloss make the resulting products highly competitive on the shelf.

MRCMRC Reference

Sabic. The share in the Russian market in 2008:
PE - 0.2%;
PP - 0.4%;
PS - 0.2%.

Annual sales growth in Russia over the last 5 years:
PE - 33%;
PP - 62%.

MOSCOW (SIBUR) -- SIBUR vice-president Petr Degtyarev has been appointed to the seat of Oil and Gas Director in Department of Energy of Russian Federation.

Petr Degtyarev came to SIBUR in 1999 as leading manager in production administration. In 11 years Mr. Degtyarev was taking up posts of head of a department in production administration, deputy head of material source administration, petrochemical department director, hydrocarbon supplies department director, hydrocarbon and monomer primary processing department director, deputy head of monomer and liquid chemical production administration, deputy head of plastics and organic synthesis administration. In 2006 Petr Degtyarev was appointed to the seat of operations vice-president.

Petr Degtyarev has played a significant role in creation and development of the biggest petrochemical holding in Russia. The company is hoping that experience and knowledge will promote the confident growth of Russian petrochemistry.

MRC
MRC Reference

Sibur Holding is the largest Russian petrochemical group.

Shareholders:
Gazprombank (70% minus 1 share);
Gazfond (25% plus 1 share);
5% reserved for option program.

The share in the Russian market in 2008:

polyethylene - 11.1%;

polypropylene - 16% (including PP-random - 11.2%);
ABS - 5.2%;
PVC - 8.1%.

(plastemart) -- Abu Dhabi-based polymer manufacturer Borouge has inked an agreement to build a second production plant in China's Guangzhou to produce 105,000 tpa of compounded polypropylene. Construction work on the plant is expected be completed by the middle of 2012, while investment outlay has not been disclosed. The new compounding plant will also benefit from the Application Research and Development Centre being established in Shanghai and the Innovation Centre being built in Abu Dhabi, UAE.

MRCMRC Reference

Borealis. The share in the Russian market in 2008:

polyethylene - 4.1% (including HDPE - 4.7%, LLDPE - 8.7%);
polypropylene - 3.2% (PP-impact - 7.5%).

Annual sales growth in Russia over the last 5 years:
polyethylene - 11%;
polypropylene - 6%.

Leader in polymers processing technologies:
extrusion coating;
cable extrusion;
injection molding.

The peak of PS consumption was in 2007, when construction sector was actively developing and there was a great demand for heat-insulation materials. According to MRC Annual reports, by year 2009 results, the consumption formed about 361 kt, 12% exceeding 2006 results. PS demand in 2010 is possibly to reach the level of 2008/ This should be promoted by actively developing energy-saving programs and the development of production sites of international giants like Samsung Electronics, LG, BSH Bosch und Siemens in Russia (see mrcplast.com from April 9).

Total PS production in Q1 was on the level of same period 2009 (about 66 kt). As in other polymers' markets, PS exports in 2009 went up by 32%. However, in 2010 exports were seriously reduced and by Q1 results formed 115 kt. In the figure went down to 1,6 kt, due to reduction of suppliese into China and Turkey.

Still weak demand for polystyrene in the domestic market has held the increase of imports which was given green light by Common Customs Tariff (see mrcplast.com from January 15). So, feedstocks from foreign producers in Q1 2010 have certainly increased comparing with same period in 2009 (47% to 30 kt). However, it is almost 40% lower than Q4 2009 figures.

MRC

More detailed event analysis, and PS market development forecast can be found in MRC Annual reports.