Europe styrene off to a sluggish start in 2012 amid weak demand

(ICIS) -- The European styrene market has seen a slow start to the year so far as lacklustre demand from key derivative sectors and some ongoing length is keeping activity muted and prices stagnant, sources said on Thursday.

While benzene prices are gradually creeping up on good demand and upward pressure from crude oil due to supply concerns in light of the tensions in both Iran and Nigeria, slow demand for styrene and polystyrene is keeping the market ⌠uninspiring, according to one source.

January styrene deals were at USD 1,280-1,295/tonne (EUR 1,011-1,024/tonne) FOB (free on board) Rotterdam last week, and bids and offers this week have for the most part stayed within this range.
⌠If benzene keeps pushing, the February styrene contract will have to jump up a fair bit or else [operating] rates will have to be cut, said one player.

The January styrene barge contract was confirmed at EUR 1,214/tonne on an ex-works basis last week, up EUR 120/tonne from the previous month in line with higher raw material costs.

There is also good availability for January styrene in Europe, which is keeping any price rises at bay.
⌠There is some length in the market now that all the plants are running, explained one trader.
Another source said that when the market is long, this has a negative impact on overall liquidity.

However, a robust Asian market is keeping prices from falling significantly. February numbers in the region are currently at USD 1,370-1,390/tonne FOB Korea.

With the arbitrage window to Asia open, any further price drops would lead to material being shipped out of Europe. As a result, January prices have hovered just below the $1,300/tonne mark since last week.

Despite the slow start to 2012, other players remain upbeat.
⌠I think were are going to see a nice contango into March, said one trader.


MRC

Reduction of polymer import duties in Russia will be carried out in two steps

MOSCOW (MRC) -- On December 16, Russia signed an agreement on joining the WTO, and before June 15 the documents on entry to the World Trade Organization (WTO) must be ratified. For the polymer industry in Russia the reduction of import duties will be carried out in two steps, the latter of which will be completed in 2014.

On December 16, 2011 at the WTO Ministerial Conference in Geneva, Russia signed an agreement on joining the trade organization. It was signed by the Minister of Economic Development and Trade of the Russian Federation, Elvira Nabiullina. During the 220 days prior to June 15, 2012 the Russian side should ratify a package of documents on accession to the World Trade Organization, and within 30 days after notification of WTO about the completion of the ratification procedures, Russia will be a full-fledged member.

In accordance with the reached agreements, the average tariff on imports to Russia will be reduced to 7.8%, compared with 10% in 2011 for all products. For polymer industry the reduction of import duties to be held in two stages for the majority of large volume polymers, the exception will make only PET granulate. Import duties on polyethylene terephthalate will be reduced from current 5% to 4% immediately after the entry into force of the WTO rules.

The reduction of import duties on polyolefins (polyethylene and polypropylene), is planned in two steps, the latter of which will be completed in 2014, and import duty will be reduced to 6.5%. Intermediate stage will be held in 2013, with the import duty to be reduced to 8.3-9.1%, depending on the grade of polyolefin. The exception will be only for a linear polyethylene, which import duty, by the contrary, will be increased to 6.5% from the current zero rate.



The reduction of import duty on high impact polystyrene and ABS is also planned in two steps, so that in 2014, import duty will be gradually reduced from the current 10% to 6.5%, as per suggestions of the regulations of WTO. The duties on general purpose polystyrene and expanded polystyrene, by contrary, are expected to be risen from zero rate to 6.5% until 2014.
Import duties for masterbatches (colours) and calcium carbonate are scheduled to decrease to 6.5% immediately after the entry into force of the WTO rules. Import duties on PET performs and BOPP film will be reduced in two stages by 2014 and reach 6.5%.

The exact dates of duties changes on polymers and polymer products will be known only after the full ratification.


MRC

BASF invest in equity ownership position in Sion Power

(basf) -- BASF has invested USD 50 million to acquire an equity ownership position in privately held Sion Power, the global leader in the development of lithium-sulfur (Li-S) batteries, based in Tucson, Arizona.


This equity partnership expands upon an existing joint development agreement that BASF Future Business GmbH established with Sion Power in 2009 to accelerate the commercialization of Sion's proprietary Li-S battery technology for electric and plug-in electric vehicles and other high-energy applications over the next decade.

The agreement with Sion Power provides a long-term complement to BASF's current activities in the areas of electrolyte formulations and lithium-ion cathode materials development, including its start-up of an advanced cathode materials manufacturing plant in Elyria, Ohio, later this year. These initiatives are being managed under BASF's new global business unit ⌠Battery Materials, which was launched on January 1, 2012, to integrate the company's current and future battery materials-related activities within a single operating unit managed by its Catalysts division, based in Iselin, New Jersey.

BASF had previously announced its intention to invest a three-digit million euro sum in researching, developing and producing advanced battery materials through 2016. The company is also exploring next-generation battery materials concepts, including the lithium-sulfur technologies now in early stage development with Sion Power.


MRC

Spot prices of acrylic acid in Asia may see a sharp increase in Q2-Q3

(ICIS) -- Spot prices of acrylic acid in Asia may see a sharp increase in the second and third quarters of the year as a spate of plant turnarounds in the northeastern and southeastern parts of the region will tighten supply, industry sources said on Thursday.


On 11 January, acrylic acid prices were assessed at a 20-month low of USD1,900-2,000/tonne (EUR1,501-1,580 /tonne) CIF (cost, insurance and freight) CMP (China Main Port). Prices were last seen below USD1,950/tonne on 14 April 2010, according to ICIS data.

Acrylic acid and several acrylic esters prices have been falling since the start of the fourth quarter due to weak demand, excess supply and concerns about the eurozone sovereign debt crisis. ⌠Regional producers will continue to grapple with a supply overhang of acrylic acid and acrylic esters in the first quarter of this year, but this scenario will definitely change moving into the second and third quarters of this year, said a northeast Asian producer.


Demand for acrylic acid usually peaks from April to September, as activities in the downstream construction and real estate industries go back on full swing during the summer and spring seasons.
Theses industries typically slow down during the fourth quarter of each year, due to the harsh winter season in northeast Asia. Acrylic esters are used in the production of paints.


But this year will see several turnarounds occurring at the onset of the peak demand season.
Japan's Nippon Shokubai plans to shut its crude acrylic acid and glacial acrylic acid (GAA) plants in Java, Indonesia, from mid-June to end July for a catalyst change, said a company source said.
The company owns and operates a 60,000 tonne /year crude acrylic acid plant and a 100,000 tonne/year acrylic esters plant at the site, the source said. With the shutdown of its acrylic acid plants, Nippon Shokubai's production of acrylic esters will also be affected.


MRC

The European chemical sector to face tough H1

(ICIS) -- The European chemical sector is expected to experience a challenging start to the year, with a fall in chemical prices, destocking, and the possibility of a recession in 2012 pointing to a discouraging short-term outlook, analysts at global bank HSBC said on Wednesday. However, HSBC said that the chances of a turnaround in the industry's prospects in the second half of the year could improve, as low stock levels in several end-markets might lead to some restocking once economic uncertainty clears, particularly in Europe. ⌠Our near-term outlook for the European chemicals sector remains cautious, but it looks like 2012 might turn into a year of two halves, the analysts said.


⌠The sharp drop in chemical prices and lead indicators across the world, as well as our economists' view that Europe will be in a recession in 2012, do not bode well for the sector's prospects for the next couple of months. On top of that, the sector is up against tough comparables, as the first half of 2011 was one of the best periods the sector has ever experienced, they added.


⌠However, reduced inventories as well as an improvement in cyclical leading indicators - PMIs [purchasing manager indices] and chemical prices might have bottomed out - fuel hopes for restocking and for that matter a more encouraging second half of the year, the analysts said.

HSBC's analysts said that global PMI in December (PMI being an indicator of the economic health of the manufacturing sector, based on new orders, inventory levels, production, supplier deliveries and the employment environment) had stabilised, and it therefore looks like November might have been the bottom of the trade cycle. This stabilisation in the PMI points to expectations of restocking, particularly in the second half of 2012.

⌠This seems to hold true for numerous upstream chemicals, as several petrochemicals producers stated during the Gulf petrochemical forum in mid-December, but also for some end-markets such as electronics/semiconductors. Furthermore, the recent recovery in soft commodity prices should go some way to restore the confidence of farmers, and therefore demand for fertilizers, the analysts said.


MRC