MRC news digest over the past week

MOSCOW (MRC) -- MRC news digest over the past week.

1. Russian PVC producers kept a high level of capacity utilization in Januaryю

Despite a serious slump in demand, Russian PVC producers kept a high level of capacity utilization in January. Producers are forming additional stocks in anticipation of a seasonal increase in demand and decrease in imports. January is the lowest month of the year in terms of demand. However, Russian producers of polyvinyl chloride (PVC) kept high operational rates. Last month the total output of unblended PVC (suspension and emulsion) in Russia made 58,500 tonnes. The high level of capacity utilization has remained since October 2012. In winter months (the period of low demand) high operational rates account for the desire of Russian producers to form additional PVC inventories in anticipation of a seasonal increase in demand, reduction of imports and shutdown of PVC production at Sibur-Neftekhim. Last month, the output of PVC made 56,600 tonnes. All Russian producers actually retained indices of the resin output at the level of December. This year, Russian companies have had limited export quotas of PVC from the U.S. Limited quotas in January-February were due to scheduled outages for maintenance at Formosa and Georgia Gulf's facilities. But it is possible that the quotas for the Russian market will be also limited after the planned shutdowns. Though PVC makers from the north of China increased their production capacity last year, there is still a bottleneck in the supply of acetylene PVC - limited rolling-stock. Many Russian companies report that they have not been shipped the resin as per December contracts yet.

2. Exports of TiO2 from Ukraine rose by 3% in January.

In January 2013, sales of Ukrainian titanium dioxide (TiO2) to the foreign markets rose by 3.4% to 10,200 tonnes.
The share of export shipments of "Crimean Titan" titanium dioxide made around 77%. Last month "Crimean Titan" exported 7,874 tonnes of TiO2. Exports of Sumykhimprom TiO2 made 2,300 tonnes, accounting for 22% of the total sales of titanium dioxide by Ukrainian producers to the foreign markets. MRC analysts report that the largest sales market of the Crimean TiO2 is Turkey. Most of Sumykhimprom production has been exported to Russia. In 2012, the total exports of Ukrainian titanium dioxide amounted to 135,700 tonnes. In 2011, Ukrainian producers of titanium dioxide exported 138,900 tonnes of TiO2. Last year the fall in shipments was due to a general decline in global consumption of titanium dioxide in the main processing sectors of the material.

3. Russian PE producers increased output up to 150,000 tonnes in January.

Due to a high level of capacity utilization, Russian PE producers managed to increase production of polyethylene to more than 150,000 tonnes in January. Since November last year, the output of polyethylene has been increasing in Russia. In January, Russian producers showed a high level of capacity utilization, despite a serious decline in demand in all sectors of PE consumption. Makers of high-density polyethylene (HDPE) accounted for the main increase in the output. The total output of HDPE exceeded 92,000 tonnes, while the production of low-density polyethylene (LDPE) made about 58,000 tonnes. Russian makers did not produce LLDPE in January. Producers of low-density polyethylene (LDPE) kept a high level of capacity utilization last month, except for Tomskneftekhim and Angarsk polymer plant. The total output of LDPE at these plants amounted to 20,600 tonnes and 4,500 tonnes, respectively.

4. The volume of imports of titanium dioxide to Russia grew by 44%.

In January 2013, imports of titanium dioxide to the Russian domestic market increased by 1,800 tonnes, which is equivalent to 44% increase from January 2012. This January, imports of titanium dioxide made about 5,700 tonnes. With the general increase in imports, import volumes of Ukrainian titanium dioxide remained at the level of January, 2012, and made 1,600 tonnes. The increase in purchases of TiO2 by Russian consumers accounted for American, Chinese, and German grades. The growth of purchases of the material from these countries made 74%, 43% and 116%, respectively, year-on-year. As it was reported previously, in 2012, imports of titanium dioxide to Russia amounted to 66,000 tonnes, down 15,000 tonnes compared to 2011. According to market players, over stocks of the material from the previous year caused the fall of imports, which affected the poor performance of deliveries in the first two quarters, as well as the general decline in demand from the key consumers of the material in Russia.

5. Asian PET prices remain stable while feedstock prices are falling.

Last week's prices of Chinese and Korean PET granulate remained stable, while the cost of the feedstock - purified terephthalic acid (PTA), monoethylene glycol (MEG) and paraxylene are going down. Last week, the adjustment of feedstock prices did not affect the price of PET granulate. Despite the decline in prices of PTA by USD15-19/tonne, MEG by USD30-33/tonne, the price of bottle PET in China and South Korea remained at the same level. The range of prices of Chinese and Korean PET granulate was voiced at USD1,560-1,600/tonne, FOB. Spot prices of aromatic hydrocarbons have also decreased on the back of decreasing prices of oil. Last week's prices of paraxylene fell by USD21-25/tonne. Due to the expectation of high seasonal demand producers of PET granulate will try to keep prices at current levels, because of low margins, the source said. At the same time, another trader believes that this week the Asian makers of PET would cut the prices slightly. According to a trader, Asian suppliers of granulate will cut the export price of bottle PET on average by USD10/tonne.

6. Low demand limit the growth of PVC contract prices in Russia.

Low seasonal demand and limited working capital keep the prices of PVC in the Russian market stable. Some Russian makers have already announced the rollover of February prices of PVC for March. The demand for PVC in the Russian market is still a fairly low on the back of seasonal factors. Many converters traditionally have problems with working capital in the winter months. The sales in the sector of profiled moldings is better than last year, although some converters said that sales are below their targets. Russian producers keep a high level of capacity utilization, imports are higher than last year. All these factors keep prices of PVC in the Russian market stable, despite the rise in prices in foreign markets. The negotiations on Russian PVC contract prices for March begins on Monday. Some converters report that they could get February prices of Russian resin for March. Part of converters reported that Russian producers aimed to raise prices. The contract prices of Russian PVC for March are voiced at Rb45,500-46,500/tonne, CPT Moscow, including VAT, for the resin to the point K = 64/67.

7.Consumption of PET in Russia increased by 11% in January.

In January 2013, the domestic consumption of PET in Russia grew by 11% year-on-year. In January, the estimated consumption of PET granulate in Russia amounted to about 43,000 tonnes, up 11% year-on-year. The positive dynamics of consumption was achieved by increasing imports amid decline in export shipments of the material and the stability in production of Russian producers of PET granulate. As it was reported previously, in January 2012, the supply volumes of imported PET to Russia grew by more than 3,000 tonnes year-on-year (which is equivalent to a 50% increase) and made about 9,000 tonnes. The growth of imports of bottle PET was due to several factors. Firstly, the rise in prices of bottle PET, which began in late November last year, caused an increase in purchases by Russian converters. Secondly, the increase in consumer activity and lack of significant stock residues in Russia resulted in a shortage of the material in the domestic market, which led to the increased purchases of the material from Asia. According to PET converters, this February, imports of the material is also expected to increase from January. January's export shipments of PET granulate declined due to weak demand for pellets in Europe, as well as unattractive price offers in the European markets, given that demand in Russia remained stable. Therefore, the volumes of Russian PET were sold out in the domestic market. Production performance of the domestic plants remained relatively unchanged. In general, Russian makers produced about 35,000 tonnes of bottle PET in January, while in January 2012, this index made 35,700 tonnes of PET granulate. In January 2013, there was a steady demand in the market. PET sellers reported that sales figures in January 2013 were significantly better year-on-year. According to sources, the absence of carryover stocks at the market players' warehouses had a positive impact on sales activity in the first month of the year.

8. Production of caustic soda in Russia decreased by 2.6% in January.

In January 2013, the production of caustic soda in Russia decreased by 2.6% compared to December 2012.
Traditionally, the output of caustic soda in January dropped from December indices of the previous years. This January was no exception. Over the first month of 2013, the production of caustic soda at Russian plants made 94,500 tonnes, down 2.6% or 2,500 tonnes from December 2012. Over the stated period, the production volumes of caustic soda at Kaustik (Volgograd) amounted to about 18,000 tonnes. At the same time, its capacity utilization was 78%. Kaustik (Sterlitamak) capacities remain significantly underutilized. With the potential capacity of the plant to produce 25,000 tonnes per month, its output made 16,000 tonnes in January, 2013. Meantime, the operating rates of the producer of caustic soda did not exceeded 64%. Over the stated period, in the structure of the caustic soda production, the share of Kaustis (Volgograd) made 19%, while the shares of SayanskKhimPlast and Kaustik (Sterlitamak) in the total production volumes of the material made 17% each.

9. LDPE prices in Russia to increase in March.

Russian producers of low density polyethylene (LDPE) are going to increase price in March further, despite the low demand. Seasonal factor still puts pressure on the Russian market of low density polyethylene. Demand for finished products is weak, and as a result, converters limit the purchases. After the January decline large converters increased their purchases of LDPE in February, in particular, for the production of shrinkable films, but the demand in the whole is still poor. In mid-February, many Russian producers raised prices of LDPE by Rb350-2,000/tonne, from January, citing low margins. However, the rise in PE prices has not resulted in increase in consumer activity. Many converters are still not in a hurry to increase the volume of purchases due to the lack of big orders for finished products.

10. Russian producers to keep PP prices in March intact.

Russian polypropylene (PP) makers hope to keep February price level for March, though many converters expect lower prices amid low demand and the start of a new plant in Omsk. February was quiet enough for the Russian market of polypropylene. Many converters restricted their purchasing volumes amid weak demand for finished goods. In addition, the launch of a new polypropylene plant in Omsk, at the production site of Polyom (Titan Group), also influenced the buying activity. The information about a new supplier in the polypropylene market foremost put a heavy pressure on importers. Prices of Turkmen raffia went down to the level of Rb60,000-61,000/tonne, FCA Astrakhan, including VAT. Russian producers did not start adjusting PP prices in February. Last week of February, price offers for Omsk polypropylene appeared in the market. Meanwhile, Polyom does not actively promote its production in the market, the company is more focused on the development of the technology and strategy of promoting polypropylene in the market. By the end of the month, consumer activity had fallen noticeably. Many converters expect an increased competition among producers in March and, as a result, lower PP prices.
MRC

MOSCOW (MRC) -- Russia's OAO Lukoil has signed a deal to sell its refinery in Ukraine's Black Sea port of Odessa to Vetek Group, reported Hydrocarbonprocessing with reference to Lukoil's statement.

The refinery, with a capacity of 3.9 million tpy, has been idle since the end of 2010. As MRC reported previously, Odessa refinery with the capacity of 2.8 million tonnes per year was stopped in October 2010 due to the economic situation in the Ukrainian oil market and changes in the oil supply chain. Lukoil management repeatedly discussed with the Ukrainian Government the removal of technical barriers to launch Odessa refinery.

The decision to sell is part of a plan by Lukoil - Russia's No. 2 crude oil producer - to restructure its international refining assets, the company said.

The deal is expected to be closed before June 1, after both sides fulfill a number of conditions, Lukoil said, without elaborating.

Lukoil said Vetek will acquire 99.6% of the refinery's stock, but didn't disclose any financial terms.

Vetek is a Ukrainian gas trader owned by Ukrainian businessman Serhiy Kurchenko, Ukrainian media has reported, citing company statements.

Lukoil is one of the leading vertically integrated oil companies in Russia. The main activities of the company include exploration and development of oil and gas, manufacturing and marketing of petroleum products.
MRC

MOSCOW (MRC) -- Stavrolen (Lukoil group) resumed production of polyethylene (PE) and polypropylene (PP) after a short outage for maintenance, reported MRC analysts according to Price report.

The company shut its PE and PP production capacities for maintenance on March 1. Operations at ethylene cracker were also suspended as part of routine maintenance.

On Tuesday, 5 March, the ethylene cracker became operational. Polyethylene and polypropylene production is planned to resume work since 6 March.

Stavrolen production capacities of high density polyethylene (HDPE) make 300,000 tonnes and those of polypropylene make 120,000 tonnes per year, respectively. In January, 2013, the plant produced 26,400 tonnes of HDPE and 11,700 tonnes of PP.
MRC

MOSCOW (MRC) -- An explosion rocked a chemical company in La Porte, creating a massive fireball and smoke that could be seen for miles around, according to Abclocal.

The fire broke out at the AkzoNobel plant in La Porte at about 1pm on Monday. Emergency workers responded quickly to the thick black smoke and bright orange flames that billowed out of the AkzoNobel plant. The 80 to 100 employees and contractors were quickly evacuated, but one didn't escape without injury and was transported to a local hospital.

The fire was brought under control in about 45 minutes. AkzoNobel officials confirmed to Eyewitness News it was a chemical used to manufacture plastics.

"We did have a fire in our magnesium alkals unit and we responded with our emergency response team, our internal team, and now they have the fire under control," said AkzoNobel spokesperson Julie Sullivan.

The company said the product burning was magnesium oxide, and not toxic. Plant officials say it's too early to tell what caused the fire. That remains under investigation.
MRC

MOSCOW (MRC) -- Clariant, a world leader in specialty chemicals, is extending its colour and special effects' testing services for packaging sector customers in North America, according to the company's press release.

The acquisition by the company of a new production-scale stretch blow-moulding machine and other available services at its ColorWorks Design & Technology Center in West Chicago, Illinois, now make it possible for developers of PET (polyethylene terephthalate) plastic containers to evaluate Clariant colour and special-effect masterbatches in full-size, three-dimensional bottles instead of flat injection-molded chips. They also now make their decisions about colour and special effects and produce sample containers, all in one facility.

The machine is typical of those used in actual package manufacturing, so designers and brand managers are now able to develop realistic samples for almost immediate evaluation. Clariant also has extrusion blow-molding machines available to produce for mono- and multi-layer containers made of polyolefins.

We remind that, as MRC wrote previously, earlier last year Clariant Masterbatches developed new liquid vehicle technology (LVT) aimed at elimination of many problems that had prevented wider use of liquid color and additive concentrates in extrusion blow moulding of polyolefins (high- and low-density polyethylene and polypropylene).

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.
MRC