MRC news digest over the past week

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

1. EPS prices Ukraine remain steady.

Major suppliers of expandable polystyrene (EPS) to Ukraine keep their price offers for May shipments at April's level. Thus, the Ukrainian producer Concern Stirol (Gorlovka) has kept its quotation at UAH19,300-19,400/tonne, FCA.Russian producer SIBUR-Khimprom has also retained its previous price offer for May shipments, which amounted to USD2,000/tonne FCA Perm. In the Ukrainian market, the price of Perm Alphapor is UAH21,000/tonne with downward and upward deviations depending on quantities of material and terms of payment. Meantime, the Polish producer Synthos has set its price offer at EUR1,460/tonne FCA. In April the value of the Polish polystyrene ranged EUR1,470-1,570/tonne FCA. The price of material is expected to continue to grow in the coming weeks on the back of positive expectations regarding demand for EPS in the Asian region.

2. March imports of PET to Kazakhstan fell by 60%.

In March 2013 imports of PET to the domestic market of Kazakhstan decreased by 60% compared with February. In March imports of PET granulate to Kazakhstan totalled to about 3,400 tonnes, while in February the imports of PET to the region amounted to more than 5,400 tonnes. Cheaper Chinese PET made the biggest share in the structure of the imports, with more than 2,400 tonnes. The supplies of Korean PET made about 1,000 tonnes.According to market players, the reason for decline in imports was the drop in spot prices in Asia and weaker demand in the domestic market, resulting in the cuts of the purchases in China and Korea. At the same time, market players are sure that April imports exceed the March level.

3. LDPE prices at auction in Belarus remained steady.

Buying activity in the domestic auction for the sale of low density polyethylene (LDPE) in Belarus was high, but in fact all the deals were closed at starting prices. On May 16, there was domestic auction for the supply of high-density polyethylene (LDPE) in Belarus. Buying activity at the auction was high enough, the only exception was the LDPE for shrinkable film production. Though the demand for LDPE is high in the market, its prices remained almost at the starting level - BRb12.97 - 13.49 m/tonne FCA Novopolotsk, excluding VAT. The negotiation for export prices are scheduled on May, 17.

4. April output of HDPE in Russia dropped by 14%.

In April, Russian producers reduced their production volumes of high-density polyethylene (HDPE) by 14% from March to 76,000 tonnes. The decline in the output was caused by the switch of Nizhnekamskneftekhim to the production of linear low-density polyethylene (LLDPE) in April. In April, all Russian HDPE producers virtually kept the March level of capacity utilization with the only exception being Gazprom neftekhim Salavat, which increased its production by 21%. Over the past four months of the year, the total output of HDPE in Russia amounted to 341,000 tonnes.

5. Russian exports of HDPE in April grew by 90%.

Russia's exports of high-density polyethylene (HDPE) in April increased by 90% and exceeded 25,000 tonnes. Low demand for HDPE in the domestic market, coupled with a high level of capacity utilization forced some Russian producers to increase export sales significantly. April exports of HDPE to Russia (excluding the countries of the Customs Union) rose to a record high since the crisis in December 2009 (22,430 tonnes) and made 25,400 tonnes, which accounted about one third of all produced Russian HDPE in April. The leader in export sales of HDPE in April was Stavrolen (Lukoil group). Last month the company shipped to foreign markets about 14,300 tonnes, which is almost two and a half times more than in March. Kazanorgsintez in April almost doubled its March output - 9,300 tonnes. Gazprom neftekhim Salavat also increased its activity in the foreign markets. Pipe HDPE made the main volume of April exports - 77%. Film and injection moulding HDPE both made 10% from total exports. About 97% of April exports of Russian HDPE was shipped to four countries: China (63%), Ukraine (16%), Germany and Turkey (9%). In the first four months of this year, Russian producers exported more than 60,000 tonnes of HDPE, from 32,700 tonnes over the same period of time in 2012.

6. North American PVC prices for Russia exceeded USD1,010/tonne.

North American suppliers of polyvinyl chloride (PVC) continue to raise prices for the Russian market. In early May, export prices of North American PVC for the Russian market were in the range of USD950-970/tonne CFR St Petersburg. But already after the May holidays, suppliers of North American PVC began to increase prices gradually. As a result, this week price offers for the resin to be shipped in early June rose to USD1,010-1,040/tonne, CFR St Petersburg. Such a sharp increase in export PVC prices in the US after a slump in March-April made many Russian companies temporarily suspend procurement of the raw material. Excessive import volumes of resin to Russia in March-April and weak demand for finished products allowed to build sufficient stocks of material. Some companies have temporarily shifted to purchases of resin in Europe. In their turn, suppliers of North American PVC expect the rise in export prices to last, at least, till August.

7. Russian imports of PE in April dropped by 7%.

Imports of polyethylene (PE) to Russia in April 2013 fell by 7% to 61,400 tonnes. The decline in imports was seen in the supplies of all PE grades with the exception of low density polyethylene (LDPE). Low demand for finished products and large leftovers of feedstock forced many Russian companies to reduce in April the purchases of polyethylene in foreign markets. In April, imports of high-density polyethylene (HDPE) to the Russian market on the back of excess supply from Russian producers and the low demand for finished goods decreased to 27,000 tonnes.
The largest decrease was seen in the supply of HDPE for extrusion coating of large steel pipes for the production by blow moulding. External supplies of linear polyethylene (LLDPE) in April decreased by 8% compared with March and totalled 18,000 tonnes. Reduction in imports resulted from the low demand for the finished film products and the reopening of LLDPE production by Nizhnekamskneftekhim. Imports of low-density polyethylene (LDPE) in April made to 10,900 tonnes with the import from Belarus, which was close to the March figure - 10,500 tonnes. Imports of copolymers of ethylene and other compositions of polyethylene in April of this year totalled 5,600 tonnes. During the first four months of this year, the total volume of imports of polyethylene to Russia made 236,000 tonnes, up 13% compared with the same period a year ago. Import volumes of linear polyethylene (up 45%) and other copolymers of ethylene and PE compositions (up 49%) increased substantially.

8. Production of rubber and plastic goods in Belarus increased by 11%.

In January - April of this year, production of rubber and plastic goods in Belarus increased by 11.4%. The production of plastic windows and window sills showed the largest increase. Belarusian producers of rubber and plastics have demonstrated a positive trend in the production of finished products this year. Over the four months of this year production of all key products increased, the only exception made the production of plastic doors. According to the National Statistical Committee of the Republic of Belarus, April production of plastic windows and window sills increased to 38,500 square meters, up 16% from April 2012. Production of pipes, hoses and fittings made from polymers in the Republic of Belarus last month totalled 1,340 tonnes.

9. Russian production of finished products made of polymers goes down.

After February surge Russia's production of finished products made of polymers has been going down since March. April production of polymer products grew only by 2%. In February 2013 the production of finished products made of polymers in Russia grew by 15%. In March, many Russian companies on the back of the weak demand in the domestic market reduced the production of finished products. April production of key goods made of polymers (pipes and films) fell to the lowest level, which reflects the current state of the Russian economy. According to the Federal State Statistics Service, the total production of pipes, hoses and fittings made of polymers in Russia in April totalled 48,100 tonnes, which is 2% more than in March.

10. Ufaorgsintez resumed PP production after maintenance works.

Ufaorgsintez (part of "Bashneft"), Russia's largest petrochemical company, resumed polypropylene (PP) production after a weekly shutdown for maintenance. On Sunday, 12 May, the company stopped its PP production for a scheduled turnaround. Initially the maintenance works were to last for two weeks, but company's employees managed to complete them within a week's time. PP production was resumed on Monday, 20 May.

11. Russian DOP rose by Rb80,500/tonne in the spot market.

By late May, a price rise of feedstocks and limited supply had led to a major increase in the price of dioctyl phthalate plasticizer (DOP) in the Russian market - by as much as Rb80,500/tonne. Some market participants do not rule out further price increases. In late April, Gazprom neftekhim Salavat shut its DOP plasticizer production for a turnaround. In May, the price of one of the feedstocks for DOP production - 2-ethylhexanol - increased by Rb7,000/tonne from April. All these factors have resulted in a serious increase in the price of DOP plasticizer in the Russian market. By late May, spot prices for Russian DOP plasticizer had reached Rb79,000-80,500/tonne, including VAT and delivery. The limited supply of Russian plasticizer made some companies actively buy imported material. Deals for June shipments of Korean DOP were concluded in the range of Rb81,000-82,000/tonne, including VAT and delivery.

12. Increase in excise duty on beer will result in fall of PET processing volumes in Ukraine.

A three-fold increase in the excise duty on beer will hit the largest consumption market of PET granulate and adveserly affect the production of PET preforms in the country. As reported previously, Ukraine's Ministry of Income proposes to increase the rates of the excise duty on beer almost three-fold - from UAH0.87/liter to UAH2.43/liter. This innovation is provided for by the draft law "On Amendments to the Tax Code and other legislative acts." According to MRC analytics, more than 50% of beer produced in Ukraine are poured in PET bottles. As per Russia's experience, a rapid increase in excise duties on beer will reduce the consumption of the product and market stagnation. The other day, Carlsberg Ukraine's CEO Pyotr Chernyshev also said in his interview to Interfax that in the case of increase in the excise duty on beer in Ukraine, Carlsberg do not rule out the possibility of closing one of the plants in Ukraine.
MRC

MOSCOW (MRC) -- In April, Russian petrochemical plants reduced the production of olefins and aromatics by 7% from March, according to MRC analysts.

According to the Federal State Statistics Service, the output of olefins (ethylene and propylene) totalled 1,356,000 tonnes, the production volume of benzene and styrene totalled 145,300 tonnes.

Last month, the total outpout of ethylene amounted to 229,000 tonnes, up 6% from March. In January-April, Russian petrochemical plants produced 917,000 tonnes of ethylene, up 20% year on year.

The April output of propylene was 118,000 tonnes, while in March it made 119,000 tonnes. Over the four months of the year, production of propylene reached 440,000 tonnes, up 17% year on year.

The output of benzene and styrene in April amounted to 86,800 tonnes and 58,500 tonnes, up 17% and 3% from March, respectively. Over the four months of the year, the production volume of benzene and styrene totalled 400,000 tonnes and 217,300 tonnes, respectively, an increase of 3.4% and 20.7% year on year, respectively.
MRC

MOSCOW (MRC) -- Since the beginning of the year imports of polystyrene (PS) has exceeded 66,000 tonnes, up 8% year on year, according to MRC DataScope.

Expandable polystyrene (EPS) accounts for the largest supply volume, namely 20,100 tonnes, down 20% year on year.

In April, imports of PS to Russia were 19,790 tonnes, whereas EPS imports made 7,300 tonnes of material.

Both key EPS suppliers to the Russian market - Loyal and BASF - have reduced their shipments to Russia compared to the same period in 2012. Meantime, Styrochem, which accounts for 2,310 tonnes in 2013 or 11.5% of the total EPS imports, increased deliveries by 20%.

Imports of general purpose polystyrene (GPPS) in April virtually did not changed from March and reached 5,090 tonnes. Since early 2013 this index exceeded 18,000 tonnes, up 41% year on year. Styrolution still accounts for the largest share of supply, namely 62%.

Despite a slight drop in ABS imports in April, this index has increased by 17% since the beginning of the year and totalled 12,400 tonnes of the material. Samsung Cheil, LG Chem and Styrolution, whose share in the structure of supplies accounts for 31%, 29% and 13%, respectively, preserve their positions of key ABS suppliers to the Russian market.

Imports of high-impact polystyrene (HIPS) have come close to 10,000 tonnes from the beginning of the year, up 37% year on year. In April, imports of HIPS made 2,200 tonnes. Polimeri Europa, Styrolution and LG Chem account for the main share of the supply since early 2013.

MRC

MOSCOW (MRC) -- National Iranian Petrochemical Organization (NIPO) says Turkey and Egypt have agreed with Iran's proposal to form an international petrochemical association similar to the Organization of Petroleum Exporting Countries (OPEC), as per Plastemart with reference to Press TV.

"On the sideline of the petrochemical conference of the D8 group of countries, Turkey and Egypt, as the two biggest producers of petrochemical products and engineering polymers in the Middle East, agreed to Iran's oil proposals," NIPO Managing Director Abdolhossein Bayat said. Bayat noted that Iran would hold talks with several other petroleum producing Islamic countries in the near future to further discuss the establishment of an international petrochemical association.

We remind that, as MRC informed previously, EQUATE Petrochemical Company said recently that Gulf petrochemical investments will exceed USD 250 billion by 2015. On the occasion of EQUATE's sponsorship of the Gulf Petrochemicals & Chemicals Association (GPCA) 4th International Conference for Plastics Conversion (PlastCon 2013), EQUATE Procurement Director Muayad Al-Faresi said, "Currently, most petrochemical downstream industries in the entire Gulf are somewhat basic and not that sizable due to these countries being mainly exporters of basic petrochemical products."

OPEC is the Organization of the Petroleum Exporting Countries. It is an oil cartel whose mission is to coordinate the policies of the oil-producing countries. The goal is to secure a steady income to the member states and to secure supply of oil to the consumers. OPEC is an intergovernmental organization that was created at the Baghdad Conference on September 10-14 1960, by Iraq, Kuwait, Iran, Saudi Arabia and Venezuela. Later it was joined by nine more governments: Libya, United Arab Emirates, Qatar, Indonesia, Algeria, Nigeria, Ecuador, Angola, and Gabon.
MRC