MRC news digest over the past week

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

1. The output of Russian EPS was by 1,6% higher in February than in January 2013.

In February 2013, the production volume of expandable polystyrene (EPS) in Russia made 10,100 tonnes. The February output of EPS by Russian producers exceeded that of January 2013 by 1,6% with Alphapor, produced at the facilities of SIBUR-Khimprom (Perm), to account for 78% of the total production volume. On a low consumption of the material in the first quarter of 2013, the producer slightly rediced the level of its capacity utilization. In January 2013, 8,800 thousand tonnes of the material were produced compared to 7,800 tonnes in February 2013. The output of EPS at Angarsk polymer plant made 1,500 tonnes of the material, which corresponds to an average annual capacity utilization of the maker in 2012. 752 tonnes of EPS were manufactured at Plastik (Uzlovaya), which is 20% less than in January 2013. However, the production volumes of early 2013 are significantly higher than those of 2012, namely, 1,680 tonnes and 1,150 tonnes, respectively.

2. Ukrainian exports of TiO2 in February increased by 18%.

In February, exports of Ukrainian titanium dioxide to foreign markets increased by 1,900 tonnes (up 18%) from January. February exports of titanium dioxide made 12,100 tonnes. The first place in February exports took the Crimean Titan with 9,150 tonnes of titanium dioxide up 16% from January. Sumykhimprom has risen its exports by 25% from January to 2,840 tonnes. Russia remains the leading market for Ukrainian exports of TiO2. In February TiO2 exports to Russia increased by 43% compared with January. Supply of titanium dioxide to the markets of Germany and Turkey are also growing. Last month export shipments of the material to these countries increased by 17% and 33% from January. However, export shipments of Ukrainian titanium dioxide in January-February 2013 are still low. In total in January-February exports of titanium dioxide from Ukraine amounted to 22,300 tonnes, which is 5% lower than in 2012 (23,600 tonnes).

3. Russian producers of PVC in February cut capacity utilization by 2%.

The capacity utilization of the production of polyvinyl chloride (PVC) in February fell by 2%. However, the current loading is still quite high. In February, the total output of PVC made 51,500 tonnes. Capacity utilization of the production of a unmixed PVC (suspension and emulsion PVC) in Russia in February decreased by 2% compared with the January figure. In February Russian producers loaded their capacities almost by 100%, the only exception was Kaustik (Sterlitamak). The total production of PVC made 49,800 tonnes, where emulsion PVC - 1,900 tonnes. In January this year, the total production of PVC made 56,600 mln tonnes (February's decline was due to the calendar factor), emulsion - 1,900 tonnes. A leading maker of PVC SayanskKhimPlast last month produced 23,700 tonnes of resin. Kaustik (Sterlitamak) in February reduced the capacity utilization by 8% compared with the January. The output of PVC last month was 15,900 tonnes. Kaustik (Volgograd) in February increased by 1% its level of capacity utilization, the output of the resin made 7,400 tonnes. Sibur-Neftekhim (Sibur Group) in February kept the capacity utilization at the January level. The output of resin was 2,84 tonnes. In July 2012 Sibur began stopping chlorine production at its subsidiary "Caprolactam". The production of PVC is planned to be stopped in April 2013.

4. Prices of North American PVC fell by USD10-20/tonne for the Russian market.

Last week suppliers of North American PVC cut the prices for the Russian market slightly. Russian companies are in no hurry to contract the resin, expecting further price reductions. High prices of North American PVC in February and March forced many Russian companies reduce their purchases in the US significantly, some companies even completely halted their purchases. Russian market is the third largest exporter for North American producers of PVC, and traders due to the serious decline in purchases cut prices for April. Last week, the offers for the April shipments of PVC from the US were voiced at USD1,065-1,080/tonne, CFR St Petersburg, down USD10-20/tonne from March. According to some market participants, Russian companies are in no hurry to contract resin for April shipments. Many companies are waiting for further price reductions. North American suppliers of PVC are not going to reduce prices further. Traders reported a revival in demand from other export markets, as well as small volumes of unsold inventories of PVC.

5. January imports of polyethylene to Kazakhstan decreased by 24%.

The imports of polyethylene (PE) to Kazakhstan in January on seasonal factor decreased by 24% from December 2012 to about 10,900 tonnes. The imports of high-density polyethylene (HDPE) declined while the imports of low-density polyethylene (LDPE) remained unchanged. Imports of HDPE in January fell to 9,500 tonnes, down 27% from December 2012. Where the imports of HDPE from the Common Customs Union (Russia, Belarus) made 4,500 tonnes, while in December, this figure was 6,500 tonnes. HDPE imports from other countries made 5,000 tonnes, while in December 2012 - 6,500 tonnes. In January 2013, imports of high-density polyethylene to Kazakhstan made 10,600 tonnes, down 10% from January 2012. This year imports of HDPE declined due to the weaker production of polyethylene pipes. LDPE market was more stable. Thus, LDPE imports in January made 1,4 tonnes, which was equal to imports in December 2012. The import of LDPE in January 2012 made just over 1,000 tonnes. In 2012 the total imports of polyethylene to Kazakhstan made 109,700 tonnes, where 93,500 tonnes was HDPE and 16,200 tonnes was LDPE.

6. The total output of PET in Russia made almost 36,000 tonnes in February.

In February, the total production volumes of PET granulate in Russia remained relatively stable compared to January on changes in the structure of the material in the country. In February, the production volumes of Russian companies almost did not alter from January and amounted to 35,700 tonnes. The decrease in the output was observed at SIBUR-PETF, Polief and Senezh, while the capacity utilization at Alco-Naphtha (Kaliningrad) increased (to 60%). In March, the production of PET granulate in Russia is expected to increase compared to February. In the structure of PET production in February, the bulk of the output accounted for the Bashkir plant Polief and Kaliningrad plant Alco-Naphtha. The share of these plants in the total output of bottle granulate in Russia made 31% each. In its turn, the share of Senezh and SIBUR-PETF in the structure of the material production the country was divided by 21% and 17%, respectively. In January-February 2013, Russian companies produced about 71,000 tonnes of the material, which is equal to the same indice year-on-year.

7. Russian producers aim to increase LDPE prices in April.

Russian producers aim to increase the price of low-density polyethylene (LDPE) in April after price rises for March, despite the weak demand in the domestic market. Cold weather still limits the demand for low-density polyethylene (LDPE) in the Russian market, that is why converters doubt that the producers will be able to undertake the price increase, citing the oversupply in the market. At the same time, the difficulties of the transportation and turnarounds of the plants will affect the price forming. The traffic of trucks will be restricted in the Republic of Bashkortostan from 1, April, and from the middle of April the same traffic restrictions will be seen in Tatarstan. Kazanorgsintez stops its LDPE capacities on almost month's turnaround from 18, April. According to unconfirmed information, Ufaorgsintez plans to stop its LDPE capacities in mid-May on 10-days maintenance. However, market sources report that Kazanorgsintez and Ufaorgsintez plan to increase the prices of LDPE for April by Rb1,500 - 2,000/tonne.

8. The output of caustic soda fell by 8% in February.

The February production volumes of caustic soda by Russian producers of caustic declined by 8% from January. In February, the output of caustic soda in Russia dropped by 7,500 tonnes compared to January and amounted to about 87,000 tonnes last month. In the structure of the total production volumes, Kaustik (Volgograd) accounted for 19% of the output. The share of Sayanskkhimplast was about 18%, while that of Kaustik (Sterlitamak) made about 17%. The remaining volumes were produced by the other eight producers of caustic soda in Russia. Overall, in January-February, the output of caustic soda in Russia totaled 181,400 tonnes, which is equal year-on-year. In January-February 2012, the production volumes of caustic soda by Russian plants made 181,560 tonnes.

9. Demand for DOP in Russia had increased significantly.

The upcoming turnaround of Gazprom neftekhim Salavat's production of dioctyl phthalate plasticizer (DOP) has caused a stir in the Russian market. In anticipation of the shortages and rising prices of the material, some large customers are actively forming additional stocks of DOP. Gazprom neftekhim Salavat, one of the largest Russian producers of DOP plans to stop its capacities on the turnaround on 20, April. As MRC analysts said earlier, Gazprom neftekhim Salavat had stopped its DOP capacity in late January to mid-February. Market participants expect that in early April DOP prices in Russia will increase on growing feedstock costs: DEG (two ethylhexanol) and orthoxylene. According to market sources, DOP prices may increase at least by Rb1,500/ tonne. So, Gazprom neftekhim Salavat's turnaround and a seasonal increase in demand may result in the deficit of the DOP and spur the price growth in the second half of the month. The deals for March deliveries of Russian DOP were at Rb68,000-71,000/tonne, including VAT and delivery.

10. February consumption of PET in Russia increased by 16%.

February consumption of PET granulate in Russia rose by 16% to 50,000 tonnes, from January 2013. The demand for PET granulate in the Russian market grew in February considerably. Russia's imports of bottle PET in February grew to 16,000 tonnes, up 78% from January on increased buying activity. The total production of PET granulate by Russian producers remained at January level - 35,700 tonnes. Thus, the share of imports in Russia's consumption in February made 32%, where in January the share of PET imports in Russian converters' consumption was 21%. In the coming months the demand for PET granulate in Russia will continue the upward trend. Due to the seasonal factors Russia' processing volumes should increase in March and April. Total consumption of PET in Russia in January-February this year exceeded 93,000 tonnes, up 6% year on year.
MRC

MOSCOW (MRC) -- In the last week of March, quotations of Asian bottle PET for export shipments dropped again amid falling feedstocks prices and weak demand from producers of polyester fibers, according MRC ScanPlast.

This week spot quotations of bottle PET again showed a downward trend in China and Korea. Sluggish consumer activity and pressure by lower feedstocks prices forced Asian makers to make major discounts in price in order to maintain the current level of sales. The price range of Chinese PET went down to USD1,390-1,410/tonne, FOB China, reported the CIS market players.

The Korean material also dropped in value, although it was offered at a bit more expensive price than Chinese grades. The range of the South Korean PET granulate made USD1,420-1,430/tonne, FOB Busan. We remind that from the beginning of the month the price of granulate in Asia fell on average by USD160/tonne.

According to Ukrainian converters, the price of Chinese PET, including delivery to Ukraine, was voiced at the level of USD1,443-1,475/tonne, CIF Odessa, excluding VAT, at the end of the week.

Russian converters of the material reported that, given the current prices in the foreign markets, the selfcost of the material in Russia will amount to USD1,475-1,515/tonne, DAP Moscow, excluding VAT.
MRC

MOSCOW (MRC) -- Over 1,000 employees of Romania’s largest chemical producer Oltchim started a protest outside the production unit in Ramnicu Valcea on Thursday morning ( March 28 ), as they were unhappy with their unpaid salaries and the news that they would be laid off, before the company’s reorganization plan was approved, said Romania-insider.

Oltchim is currently insolvent and going through a reorganization. Around half of the protesters come from the petrochemical division in Pitesti, which is also part of Oltchim, and they too complained of unpaid salaries and of their division still not being functional.

Employee unions say the production facility in Ramnicu Valcea is working at only 6% of its capacity, and the EUR45 million promised as working capital never came. The money would have allowed an increase in production to 65%, which would have also kept employees working.

Oltchim’s preliminary financial results for 2012 show that losses doubled and sales halved last year. The insolvent chemical producer, which went through a failed privatization attempt last year, saw losses increase to around EUR 90.5 million in 2012. Meanwhile, sales dropped to under EUR 171 million last year (see MRC news).

Production stopped at the factory last year for extended periods of time, which was reflected in the operating losses – some EUR 62 million, or three times bigger than in 2011.

By December 31, 2012, Oltchim’s total debt had reached over EUR 620 million. The Romanian Government approved Oltchim’s insolvency on January 23, with a consortium of Rominsolv SPRL and BDO Business Restructuring RPRL as judiciary administrator. This came soon after the state failed to privatize Oltchim in a first privatization stage, which was won by media mogul Dan Diaconescu, who then failed to pay the pledged amount.

The state announced it was seeking European Commission (EC) approval to grant the factory state aid. The government is requesting approval for some EUR45 million in state aid for Oltchim in the much delayed and still ongoing privatization process of the state owned facility.

MRC

MOSCOW (MRC) -- A new organizational structure for Russian state oil giant Rosneft, which recently finalized its purchase of joint venture TNK-BP, is expected in June, reported The Wall Street Journal with reference to Rosneft's chief executive Igor Sechin.

He said key decisions about the new organization had already been made but that revisions would be "confirmed at the general meeting in June," according to Russian news agencies.

Earlier this month, The European Commission announced that the merger of Rosneft and TNK-BP does not object to European competition rules.

Last week, Rosneft signed a deal to double oil supplies to China to 31 million metric tons a year. Earlier this week, Rosneft said its board of directors had approved a potential loan worth up to around USD10 billion from TNK-BP.
MRC

MOSCOW (MRC) -- Honeywell Resins and Chemicals LLC has agreed to pay a USD3 million civil penalty for alleged Clean Air Act violations at its Hopewell, Va., plant, and improve the facility’s air pollution control equipment and processes, the Justice Department and the U.S. Environmental Protection Agency (EPA) announced.

The proposed consent decree resolves violations of federal and state air pollution regulations at the Hopewell plant, the world’s largest single-site producer of caprolactam used in the production of nylon, and ammonium sulfate used for fertilizer. According to EPA and the Virginia Department of Environmental Quality, the facility violated Clean Air Act limits on emissions of nitrogen oxide (NOx), benzene and other volatile organic compounds (VOCs) and particulate matter. The plant also allegedly failed to comply with requirements to upgrade air pollution control equipment, to detect and repair leaks of hazardous air pollutants, and to develop safeguards on benzene waste.

In addition to the USD3 million civil penalty, Honeywell has agreed to reduce harmful air pollutants, install selective catalytic reduction at four production trains at the facility, conduct a third-party benzene waste operations audit, and implement an enhanced leak detection and repair program at the facility. Honeywell will also perform a mitigation project valued at approximately USD1 million at the facility. The settlement reduces annual emissions of NOx by about 6,260 tons, and cuts annual emissions of benzene, other VOCs and hazardous air pollutants by 100 tons. The estimated cost for injunctive relief to address these emissions will be approximately USD66 million dollars. The civil penalty will be split evenly between Virginia and the United States.

As MRC wrote earlier, Honeywell has been awarded four major contracts worth a combined USD40 mln over an 18-month duration for the Borouge petrochemicals complex in Ruwais, Abu Dhabi. Honeywell will be the main automation contractor (MAC) for the project, providing Linde and other engineering, procurement and construction (EPCs) contractors involved in the project with integrated control and safety systems.
MRC