MRC news digest as of 15.10.12.

MOSCOW (MRC) -- MRC news digest as of 15.10.12.

1. Asian and Middle Eastern producers to rise PP prices for October.

Asian and Middle Eastern producers on the back of high prices in Europe have announced a price increase for the October shipments of polypropylene by USD30-50/t, as per MRC analysts. Last week the deals for October shipment of polypropylene from Asia to CIS countries were at USD1,480-1,540/tonne, FOB. Makers from Saudi Arabia have voiced their offers in the range of USD1,540-1,580/tonne, FOB. The October decline in export prices of European polypropylene and the expectation of further price cuts in November made many companies from the CIS countries hold back from purchasing of polypropylene in Asia and the Middle East in October.

2. Stavrolen has started the first shipments of HDPE.

The second largest polyethylene maker in Russia, Stavrolen (Lukoil group) started the first shipments of HDPE at the end of last week. On 1 October, the plant produced the first lots of powdered HDPE and the first shipments already began on Friday, report MRC analysts. HDPE production started with the blow moulding grades. Shipments of film and pipe HDPE are scheduled to begin starting from the current week.

3. PVC prices to be cut in Asia.

Buying activity in the Asian market of PVC last week was very low mostly because of the national holidays in China. Many market participants expect the prices for November delivery to be reduced, as per MRC analysts. In the other Asian regions many market participants stop buying PVC because the prices are likely to be cut in the near future. This week the key producers in the region are to voice their PVC prices for delivery in November. Many market participants believe that they will be lower than in October. Small deals were concluded at USD970/tonne, CFR, but it's hard to tell how seriously they affect the November prices.

4. PE prices in Asia remain stable.

Last week, buying activity in the Asian PE market was sluggish. The absence of demand from China due to the national holidays did not result in price fluctuations, report MRC analysts. Decreasing oil quotations and uncertainty about the global economic outlook have considerably slashed interest in purchasing from traders from South-Eastern Asia. Many importers in this region have suspended all purchases in anticipation of a clearer price trend.

5. European PS producders to increase October prices.

On the increased feedstock cost and low profit margin, European makers have been intending to increase their price offers by EUR40-50/tonne in October for the past two months, report MRC analysts. The contract cost of styrene-monomer - feedstock for polystyrene production - has risen by EUR8/tonne. Most PS makers have announced a potential increase in October price offers on average by EUR40/tonne in order to make up for the growth of production costs and to increase profit margin. Last Thursday, on 4 October, Styrolution voiced its intention to increase its price offer by EUR50/tonne for October shipments. Total is expected to raise its price offer by the same amount; however, the company’s confirmation has not been received yet.

6. PVC imports to Russia in September made about 37,800 tonnes.

In September, imports of PVC to Russia amounted to about 37,800 tonnes. Over the nine months, the import volumes of suspension to Russia made about 294,000 tonnes, as per MRC analysts. Expectedly, about 60% of total imports were provided by the resin from the U.S. Also it is worth noting the increase in imports of PVC from China.
Due to the deficit the supplies of acetylene PVC from China grew in September by 60%, from August and reached about 6,000 tonnes. China’s imports of PVC are expected to increase further in October-November.

7. Polystyrene prices in Asia remain stable.

Last week, traders kept the prices of polystyrene (PS) at the same level on the back of low activity in the market during the holidays, as per MRC analysts. The activity in the Asian market of PS last week was weak due to the China’s week-long Mid-Autumn festival and National Day holiday. The holiday was also celebrated in the first half of the week in South Korea and Hong Kong, which affected the sales in the region. Most suppliers, who worked in the holidays, kept price offers at the same level. The price of styrene monomer is kept at USD1,500-1,550/tonne, CFR China, which gives conditions for keeping PS prices in October at the same level.

8. PET producers from China and South Korea keep their prices intact.

Shorter working week has helped to stabilize prices in the Asian PET markets. Buyers and sellers’ activity was practically absent since Asian makers remained their price offers unchanged, report MRC analysts. According to Korean PET makers, sales of the material were made at the price of USD1,400-1,440/tonne, FOB Busan. Shipments were scarce. Price offers of bottle PET have not changed in China. The price level, accessible to customers, made USD1,380-1,410/tonne, FOB China. Meantime, PET producers in Taiwan raised their price offer by USD20/tonne in anticipation of the growth of quotations next week. Price offers of Asian granulate for Ukrainian importers will make USD1,470-1,530/tonne, CIF Odessa, excluding VAT.

9. In September, imports of HDPE to the Russian market hit the record from 2000.

In September, imports of high-density polyethylene (HDPE) to the Russian market reached 42,000 tonnes, reaching its maximum level from 2000. Over nine months, the external supply of HDPE in Russia amounted to about 290.000 tons, as per MRC analysts. This significant increase in imports was mostly due to the prolonged shutdown of the second largest maker of HDPE in Russia - Stavrolen. The main increase in imports expectedly fell on film and pipe HDPE. The shortage of film and pipe polyethylene in the market over the high seasonal demand Russian companies offset by the supply from foreign markets.

10. PP import to Russia slashed by 28%.

PP import to the Russian market keep falling after June’s peak level. In September, the total PP import to Russia decreased to the level of 19,700 tonnes. Over the past nine months, PP exports to the Russian Federation made about 189,000 tonnes, according to MRC Datascope. PP exports to the Russian market keep declining after the June’s record level of 34,300 tonnes. As per preliminary information, last month import of PP went down by 7,800 tonnes and made about 19,700 tonnes. In general, the total year-to-date PP import to the Russian Federation made about 189,000 tonnes, up 37% year-on-year.

11. Prices of Russian DOP remained intact in October.

The prices of Russian DOP for October shipments remained at September level. Some market participants do not exclude that the price level of Russian DOP will remain without significant changes till the end of the year, report MRC analysts. In the spot market, deals for Russian DOP are concluded in the range of Rb76,000-82,000/tonne, FCA , including VAT. Some market players report that the decline in prices of Russian plasticizing agent are unlikely to take place till the end of the year despite a seasonal decrease in demand.

12. Polief to expand the capacity utilisation of PET output.

In the framework of the expansion project "PET-210" Polief delivered to the plant on 5th of October to Blagoveshchensk the solid state polycondensation reactor SSP, according to the press release of the maker. According to the sources of the company, the reactor was delivered by sea from Turkey to Rostov-on-Don, where it was transported to Blagoveshchensk. The contract for the supply of the equipment and technical services was awarded to Italian firm CHEMTEX. Currently the housing for the installation of the reactor SSP is being prepared.
MRC

The production of large polymers in Ukraine slashed by 71% in September

MOSCOW (MRC) -- In September, the total output of large polymers in Ukraine dropped to 6,600 tonnes. Over the past nine months, Ukrainian companies produced about 233,000 tonnes of polymers, up 7% year-on-year, according to MRC ScanPlast.
In September, the total production volume of large polymers (polyethylene, polypropylene, polyvinylchloride and polystyrene) in Ukraine slashed to the level of 6,600, down 71% from August.

The major producer of polymers in Ukraine, Karpatneftekhim (Lukoil group) shut down its production (polyethylene, ethylene, caustic, polyvinylchloride) for maintenance in September. The outage is expected to take approximately two months, but, according to unofficial information, production might be shut for a longer period of time.

By early September, Karpatneftekhim had stopped its HDPE production. Suspension PVC production capacities operated a little less than a week last month. The PVC output made about 4,200 tonnes. In general, the year-to-date production volume of HDPE and PVC made about 73,500 tonnes and 121,600 tonnes, rispectively.

PP production capacities of LINIK, as well as the plant itself, have been shut since April. In the last two months, there were a lot of claims about the resumption of LINIK production, including the claims from the officials of the Lugansk region. However, the plant is unlikely to resume its PP production this year.

In September, the production volume of GPPS and EPS in Gorlovka made 2,400 tonnes, which is the maximum rate in the current year. In January-September, concern Stirol (Gorlovka) produced about 14,400 tonnes of polysterene.
The total year-to-date output of large polymers in Ukraine made about 233,000 tonnes, up 7% year-on-year. However, in the near future, if the government's position towards the enterprises of the industry is not changed, Ukraine runs the risk to have only one operating plant and a complete dependence on imports.

MRC

Oil India and IOC buy 30% stake in shale gas asset in Colorado

(plastemart) -- Oil India and IOC have acquired 30% stake in Carrizo Oil & Gas’ Niobrara shale gas asset in Colorado for USD82.5 mln. OIL will hold 20% stake, while IOC will hold 10% stake in the asset.

Headquartered at Houston, Carrizo is engaged in the exploration, development, exploitation, and production of oil and natural gas, primarily in the Eagle Ford Shale in South Texas, the Barnett Shale in North Texas, the Marcellus Shale in Appalachia, the Niobrara Formation in Colorado, the Utica Shale in Eastern Ohio, and in proven onshore trends along the Texas and Louisiana Gulf Coast regions. Carrizo is also actively developing its oil discovery known as the Huntington Field in the UK North Sea.

In 2011, GailL India through its US subsidiary Gail Global (USA) Inc. acquired 20% stake in Carrizo Oil and Gas’s Eagle Ford shale acreage. As MRC reported earlier, the company had signed a 20-year deal to buy liquefied natural gas (LNG) from the Singapore unit of Russias state-owned gas giant, Gazprom. GAIL India was also planning to buy stake in the 10 mln ton LNG plant at Vladivostok on the Pacific coast in Russia.

In 2010, Reliance Industries entered into a shale gas JV with US-based Carrizo Oil and Gas for a 60% stake in Marcellus Shale acreage in Central and Northeast Pennsylvania for USD392 mln. RIL had also bought a 40% stake in Atlas Energy Inc's Marcellus Shale acreage for USD1.7 bln in April,’10.

Around 32,500 trillion cu. ft (tcf) of shale gas reserves have been identified globally. The US is the leading producer of shale gas. As MRC informed earlier, with the development of new shale gas resources, the US petrochemical industry is announcing significant expansions of US petrochemical capacity. Dow Chemical, Formosa Plastics, and Chevron Phillips Chemical have recently unveiled their expansion plans in North America ondeposits in the Marcellus Shale Formation in New York, Pennsylvania, and Ohio.
MRC

Sahara Petrochemical signs USD107 mln credit facility

(plastemart) -- Sahara Petrochemical Co has inked a 3 year medium-term revolving credit facility with Saudi Investment Bank for 400 million riyals (USD107 mln). The facility is to give standby support both to the company's working capital and to aid future investments.

The Jubail-based producer makes basic petrochemicals including propylene, acrylic acid, ethylene, low and high density polyethylene, caustic chlorine and ethylene dichloride.

September imports of PVC to Ukraine down by 21%

MOSCOW (MRC) -- Import of PVC to Ukraine in September fell to 8,600 tonnes. Over the nine months of this year, total imports of suspension amounted to 63,400 tonnes, down 32% year on year, according to MRC DataScope report.


In September, the total volume of external supplies of PVC to the Ukrainian market fell to 8,600 tonnes, from 10,900 tonnes in August. Expectedly, the main decline in imports fell on the resin from the U.S.

Last month, imports of the U.S. resin decreased to 2,000 tonnes, from 5,500 tonnes in August. The rise in export prices of the U.S. PVC in July-August forced many Ukrainian companies to limit the volume of purchases.

After stops on scheduled maintenance at the end of July - early August European makers increased their export quotas for the Ukrainian market. As a result, imports of resin from Europe in September amounted to 6,600 tonnes, from about 5,100 tonnes in August.


In the whole, over the nine months, the total imports of PVC to Ukraine amounted to about 63,400 tonnes, down 32% year on year. The stoppage of PVC production of Karpatneftehim in September will provide quite high volumes of PVC imports in October and November.

MRC