Dependence of Russian PE market on imports strengthened in 2012

MOSCOW (MRC) -- In December, imports of polyethylene and its copolymers to Russia made 70 thousand tonnes. In 2012, Russia’s dependence on imports of PE rose by 28%, according to MRC DataScope.

The year of 2012 brought the further dependence of the Russian market on imports of polyethylene and its copolymers. Last year, imports of this commodity group grew by 28% year-on-year and made almost 762 thousand tonnes. It is worth pointing out to a lengthy outage at Stavrolen due to a failure at the production and a rapidly growing demand for the polyethylene stretch film as main drivers of the growth of the dependence
on imports.

Due to a failure at a gas-distribution unit at the pyrolysis workshop, on 15 December 2011, Stavrolen had to suspend production of high density polyethylene (HDPE) for a few months. The production of HDPE was resumed only in early October. As a result, HDPE import rose by 3% and made about 408 thousand tonnes.

The outage at Stavrolen influenced the working schedule of Nizhnekamskneftekhim. The Tatar company had to focus on HDPE production last year, while the output of linear polyethylene (LLDPE) was carried out only in two months: in May and November. Over the past two years, the LLDPE production dropped to 55 thousand tonnes in 2011 and to 29 thousand tonnes in 2012.

The linear polyethylene market keeps on showing high growth dynamics. As per preliminary information, in 2012 demand for LLDPE in Russia made over 200 thousand tonnes, while a year earlier this index made about 147 thousand tonnes. The largest increase in consumption accounts for producers of polyethylene stretch films.

In December, imports of polyethylene and its copolymers made about 70 thousand tonnes. In general, in 2012 exports of this commodity group made almost 762 thousand tonnes, up 28% year-on-year. Despite the launch of new production facilities with the total capacity of 320 thousand tpa over the past five years, the Russian polyethylene market is still a net importer.

MRC

MOSCOW (MRC) -- Total profit of China’s petrochemical industry for 2012 is expected to decrease 6% year-on-year (YoY) to approximately CNY 750 billion, reported plastemart with refrence to China Petroleum and Chemical Industry Association (CPCIA).

In the first ten months of 2012, total profit of the petrochemical industry was CNY 620 billion, down 8.2% YoY. Total profit of the chemical industry decreased 12.3% YoY and that of the oil and gas exploitation industry dropped by 3.1% YoY, the first fall since 2010.

China’s two oil giants in the refining industry suffered greater losses in the first three quarters of 2012. Financial reports show that the refining business of PetroChina suffered a loss of CNY 30 billion during the period while China Petroleum and Chemical lost CNY 16.4 billion.

Although the economical situation was not favourable in 2012 in China, which greatly influenced Chinese petrochemical majors and industry on the whole, experts are quite optimistic about the future outlook, since China will maintain steady economic polices in 2013, leaving room for manoeuvre in the face of global risks while deepening reforms to support long-term growth, as MRC informed earlier. The country will push forward the next stage of economic reforms and will also stabilise its exports while boosting imports to gradually balance the country's international payments and expanding its outbound investment next year.

Besides, China's petrochemical giant, PetroChina, signed an agreement valued at USD2.2 billion with the company Encana Corp to develop shale gas reserves in Alberta and completed construction of a unit at its plant in northeastern China and raised the annual crude-processing capacity to 10 million tonnes, which will greatly add to improve the company's situation.
MRC

MOSCOW (MRC) -- Per capita consumption of plastics in the Gulf has crossed 39 kilogrammes, 33 % higher than the world average and almost 8 times more than India, according to Gulfnews.

The per capita consumption of plastics in North America is 90 kilogrammes, in West Europe it is 65 kilogrammes, 10 kilogrammes in Eastern Europe, 12 kilogrammes in China, 5 kilogrammes in India, 10 kilogrammes in South East Asia and 18 kilogrammes in Latin America.

"Plastics are being produced domestically due to the high availability of petrochemical raw material in the GCC," it says.

"The Gulf States command an 11 % share of the USD600 billion global petrochemical industry. Gulf States could develop a domestic market for consuming their petrochemicals instead of exporting it to almost all other countries in the world," Satish Khanna, General Manager, Al Fajer Information & Services, which organises trade shows including the recently concluded Arabplast 2013, said.

Plastics consumption in the Middle East is rapidly increasing. Events like World Cup Doha 2022 are boosting this consumption. Plastics is also used heavily in infrastructure and this explains the rapidly increasing consumption amongst individuals and corporate alike. Plastics and petrochemical companies in the GCC are equipping their factories with latest technologies and machineries to increase their production capacities. This is where these multi-billion deals at the show were generated."

GCC accounts for 34 % of global demand for pipes as new GCC pipeline networks will need over 5.3 million tonnes of steel pipes in five years, it says, which is equivalent to USD7.2 billion (Dh26.48 billion) in spending.

As MRC wrote earlier, the investments are part of USD50 billion projects to be set up in the petrochemical sector in the six-nation Gulf Cooperation Council (GCC), which already pumps nearly 17% of the world's total chemicals output, showed the figures by the Dubai-based Gulf Petrochemicals and Chemicals Association ( GPCA ).

Moreover, according to World Energy Council, GCC needs to invest up to USD100 billion over this decade to meet the growing energy demand. A big chunk of these investments go to expanding the pipes and tubes networks that serve the oil and gas sector, in addition to other allied sectors such as utilities and transport.


MRC

MOSCOW (MRC) -- In 2012, Mexico's olefins capacities included 1.58 mln tpa of ethylene and 660,000 tpa of propylene, as per Report Buyer.

These fed downstream capacities of 875,000 tpa polyethylene (PE), 590,000 tpa polypropylene (PP), 667,000 tpa polyvinyl chloride (PVC) and 310,000 tpa polystyrene (PS).

It is widely recognised that these capacities are not large enough to meet domestic demand, let alone allow the country to take full advantage of its strategic position as a supplier to the US market. Mexico petrochemical output has suffered due to the effects of the global economic downturn, despite a relatively stable domestic market.

Mexico's dominant oil, gas and petrochemicals producer Pemex reported that its petrochemicals output declined 13.4% year-on-year to 7.38 mln tons in the first eight months of 2012, having fallen 6.1% y-o-y to 12.38 mln tons in 2011.

Mexico is aiming to raise total petrochemicals production capacity from around 9 mln tpa in 2011 to 22.6 mln tpa by 2026; Braskem's Ethylene XXI project will account for 15% of this increase. Reaching this goal is contingent on the full development of the country's shale gas reserves (estimated at 19,300bcm in 2012) as well as a reliable source of raw materials and greater private sector participation.


MRC

MOSCOW (MRC) --The US petrochemicals report examines the short-term trends in domestic consumption and production growth going into 2013, when the local market will feel the effects of the continued global economic slowdown and the eurozone debt crisis, as per Sbwire.

The performance of the US chemicals sector surprised to the upside in H212. Strong growth in the automotive and construction sectors was driven by rising activity in construction related resins, coatings, pigments and other chemicals. In terms of ethylene production, output in Q312 totalled 6.2mn tonnes, down 0.6% year-on-year but up 10.7% quarter-on-quarter.

Ethylene margins gained towards end-2012 due to a fall in ethane feedstock prices caused by longer supply, although this was partly undermined by weaker spot prices and lower cracker co-product values for chemicals such as propylene, butadiene and benzene. The fall in ethane costs filtered through to improved polyethylene (PE) margins.

As MRC wrote this week a number of US companies increased their prices of PE.

Over the long term, the proposed pace of growth in US ethylene capacity could lead to a bust after 2017, when ethylene capacity will total at least 32.8mn tonnes per annum (tpa) and could potentially top 40mn tpa. An increase in cracker capacity – by a third in 2016-2017, and by 50 %by 2020 based on currently confirmed plans – will cause regional and global shock-waves, particularly if it coincides with a downturn in the economic cycle.

US ethane-fed petrochemicals production can undercut naphtha-fed Latin American output and boost US participation in the regional market. As a result, US PE exports could exceed 40% of output by 2017, up from around 20% in 2012.

MRC