Indonesia plans to proceed with complex to reduce reliance on some PC imports

MOSCOW (MRC) -- The Indonesian government expects to begin work next year on a USD4-billion fertilizer and petrochemical complex in Bintuni Bay, West Papua, which is intended to help the country shift from being a net importer to a net exporter, said Apic-online.

Panggah Susanto, the Industry Ministry's director general for manufacturing-based industry, said the integrated complex will produce urea and ammonia-based fertilizers and a range of petrochemicals including methanol, polyethylene and polypropylene. Commercial production is expected to begin in 2016.

The project has not yet been assured of gas allocations, which are expected to come from the Tangguh liquefied natural gas field in West Papua.

Panggah noted that several investors, both domestic and foreign, have expressed interest in participating in the complex. He cited Chandra Asri and Ferrostaal, who have agreed to study the feasibility of developing a methanol-based olefin project in Bintuni to produce up to 175,000 t/y of ethylene and 400,000 t/y of polypropylene.

As MRC wrote before, Pertamina has requested an Indonesian government guarantee of protection that would restrict other companies from building petrochemical refineries capable of producing 1 million tpa in the country. Pertamina, citing petrochemicals as one of its "core growth pillars," has disclosed plans to invest about USD5 billion in an integrated refinery and petrochemical complex on Java Island.
MRC

MOSCOW (MRC) - Kazakh imports of high-density polyethylene (HDPE) in the first half of 2013 grew only by 2% on the back of a weaker demand from the main consuming sectors, according to MRC analysts.

Imports of HDPE to Kazakhstan in June 2013 exceeded 8,500 tonnes, while in May it was 7,400 tonnes. In general, HDPE imports in the first half of the year 2013 to Kazakhstan totalled about 48,000 tonnes, from 47,200 tonnes year on year.

Such a small increase in demand for HDPE in the first half of the year resulted from a sluggish demand for polyethylene from the producers of pipes (the share of pipe HDPE in the total consumption of the country accounts for more than 70%) and overall situation in the industry (production of polymers and rubber have risen in the first half of the year only by 1 , 2%).

Russian polyethylene prevails in the structure of HDPE imports to Kazakhstan, with about 43% in the total imports.
A significant share of the Kazakh market also accounts for South Korean and Thai HDPE.
MRC

MOSCOW (MRC) -- Imports of suspension polyvinyl chloride (PVC-S) to Kazakhstan in the first six months of 2013 rose by 20%, according to MRC DataScope.

Kazakh companies in June increased imports of PVC-S up to 4,000 tonnes from 1,500 tonnes in May.

Overall, imports of PVC to Kazakhstan in the first half of the year totalled 12,900 tonnes, whereas last year this index amounted to 10,800 tonnes.

The growth in demand for PVC in the Kazakh market took place despite cuts in construction works (in the first half of 2013 commissioning of residential buildings decreased by 4%).
MRC

MOSCOW (MRC) -- Chinese producers of acetylene polyvinyl chloride (PVC) again raised the export price for the Russian market by USD20/tonne, according to ICIS-MRC Price Report.

After a prolonged stable pricing Chinese producers of acetylene PVC firstly increased exports prices in mid-July by USD20/tonne. The second price increase was announced last week and also made USD20/tonne. As a result, export prices of Chinese acetylene PVC for the Russian market grew to USD930-960/tonne DAP Dostyk. Chinese producers explained the necessity of price increase by the uptrend in the domestic market.

Russian companies significantly reduced their purchases of Chinese resin in May and June because of the weaker prices and oversupply in the Russian PVC market. In July they continued to cut PVC purchases.

Thus, the imports of Chinese PVC in June totalled about 11,200 tonnes, and over the three weeks of July this figure fell to just 5,000 tonnes.
MRC

MOSCOW (MRC) - Petrochemical company LyondellBasell, which operates a 280,000 barrel-per-day (bpd) Houston refinery, said on Friday its ethanol credit obligations, or RINs, could reach USD200 million in 2013, up from USD30 million last year, an increase that could pressure its refinery margins, said Reuters.

That was the forecast by LyondellBasell's chief executive, assuming prices for those credits remain near last week's high levels.

Refiners need ethanol credits, or Renewable Identification Numbers (RINs), to prove they have blended their share of renewable fuels into gasoline and diesel. If they do not blend, they need to buy a RIN for each gallon of ethanol.

Speaking at an earnings conference call, the company's CEO, Jim Gallogly, said rising RIN prices had almost doubled LyondellBasell's spending on the credits to USD50 million in the second quarter of this year.

The RINs market has been volatile this year as refiners fear a shortage should they not be able to blend enough ethanol. This prompted a rally in prices which last year were less than 20 cents and often at 5 cents.

The increased cost of RINs was one reason why LyondellBasell's refinery EBITDA earnings for the second quarter were USD20 million, compared with USD160 million a year earlier, which had been boosted by a USD53 million insurance settlement.

Refineries argue that because the requirement to blend renewables rises volumetrically each year, while gasoline consumption falls, they will soon hit "the blend wall" whereby they would be required to blend more than they can safely do.

They also say they can only blend up to 10% of ethanol per gallon of gasoline or diesel as anything more could damage vehicles, for which they or gasoline retailers would be blamed. The ethanol industry disputes that, saying use of gasoline blended with 15% ethanol has been authorized in younger cars.

As MRC wrote before, LyondellBasell will raise its ethylene capacity in North America by 18% in coming years through several debottlenecking projects.Locations where ethylene capacity will be expanded include crackers in Corpus Christi, La Porte and Channelview, Texas, according to the company. The projects are scheduled to be finished in 2014 and 2015.

LyondellBasell as a whole posted second quarter revenues of USD11 billion and EBITDA earnings of USD1.65 billion, versus year ago revenue of USD10.7 billion and EBITDA earnings of USD1.59 billion.
MRC