SIBUR and Sinopec enter JV to produce synthetic rubbers

MOSCOW (MRC) -- During Russian President Vladimir Putin’s state visit to China, SIBUR, a leading Russian gas processing and petrochemicals company, signed a contract with China Petroleum and Chemical Corporation (or "Sinopec") to establish a joint venture for the construction of a 50,000 tpa butadiene nitrile rubber (or "NBR") plant at the Shanghai Chemical Industry Park, 50km south of Shanghai, reported SIBUR on its site.

Sinopec’s share in the joint venture will be 74.9% and SIBUR’s will be 25.1%. Chinese President Xi Jinping and President Vladimir Putin were both present at the signing ceremony.

The parties also signed a technology license agreement for the use of SIBUR's NBR production technology at the new facility. SIBUR’s specialists will take part in establishing the new facility’s production and commercial operations.

Sinopec expressed, "Last year the two parties developed a joint venture on the site of the Krasnoyarsk Synthetic Rubber Plant (or KZSK) in Russia. Sinopec purchased 25% + 1 share of KZSK. Today, a significant proportion of KZSK products are delivered to the Chinese market through their partnership with Sinopec. Sinopec believes that with the establishment of this new joint venture in Shanghai, Sinopec will be better equipped to fulfil market demand and contribute to China’s economic development."

SIBUR expressed, "China remains a fast developing market, committed to replacing imports with domestic production. Sinopec is a leader in this market with significant resource capabilities, and this, combined with SIBUR’s advanced technologies for producing butadiene nitrile rubbers, will enable a successful long-term partnership between the two companies. It will also enable us to develop a highly competitive production facility in China and expand SIBUR’s footprint in the Asia market."

Butadiene nitrile rubber (NBR) is essentially an acrylonitrile and butadiene copolymer obtained by the emulsion polymerization method. Due to high resistance to aggressive agents NBR is widely used for the manufacture of various oil-and-petrol resistant industrial rubber products. NBR is essential to manufacture aircraft fuel tank seals, fuelling hoses, bag fuel tanks, and aircraft window seals. The material is used in conveyor belts for the food industry and in rubberised textile fabrics for aggressive environments.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.

Sinopec Corp. is one of the largest scale integrated energy and chemical company with upstream, midstream and downstream operations. Its principal business includes: exploring, developing, producing and trading crude oil and natural gas; producing, storing, transporting and distributing and marketing petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products. Its refining capacity and ethylene capacity rank No.2 and No.4 globally. Sinopec listed in Hong Kong, New York, London and Shanghai in August 2001. Sinopec Group, the parent company of Sinopec Corp., is ranked the 5th in Fortune Global 500 in 2012.
MRC

MOSCOW (MRC) -- Idemitsu Kosan, one of Japan’s largest refining and petrochemical companies, is in plans to shut a naphtha cracker for maintenance turnaround, reported Apic-online.

A Polymerupdate source in Japan informed that the plant will be shut in September 2014. It is likely to remain off-stream for around 45 days.

Located in Tokuyama, Japan, the cracker has a production capacity of 623,000 mt/year and propylene capacity of 450,000 mt/year.

We remind that, as MRC informed previously, Idemitsu Kosan is in plans to shut its aromatics plant for maintenance turnaround in July 2014. It is likely to remain shut for around 50 days. Located in Chiba, Japan, the plant has a PX capacity of 265,000 mt/year, benzene capacity of 577,000 mt/year and MX capacity of 353,000 mt/year.

Idemitsu Kosan is a Japanese petroleum company. It owns and operates oil platforms, refineries and produces and sells petroleum, oils and petrochemical products. The company runs two petrochemical plants in Chiba and Tokuyama. The two naphtha crackers can produce up to 997,000 tonnes of ethylene per year.
MRC

MOSCOW (MRC) -- Imports of polyethylene terephthalate (PET) into Russia increased by 20,000 tonnes from January to April 2014, up by 32% year on year, and exceeded 85,000 tonnes, according to MRC ScanPlast.

April PET imports reached 30,000 tonnes, which is the highest level since June 2011.

Higher imports in spring is traditional on the back of preperations for a season. However, this year's increased imports were caused by more favorable prices in China and restricted contract quantities this year, market players said.

According to ICIS-MRC Price report, current prices of Chinese PET, including delivery to ports in the East of the country, are in the range of USD1,247-1,260/tonne CIF, excluding VAT. If the current exchange rate of USD1 = Rb34,6 is taken (given it is stable at the time of delivery), then prices of Chinese PET, including delivery to the Central region, will be at Rb59,500-60,000/tonne CPT Moscow, including VAT. At the same time, spot PET prices in Russia start from Rb63,500/tonne.

Chinese grades account for almost 75% of the total imports, if the supply structure is regarded, while Korean grades account for only 10.6%.

MRC

MOSCOW (MRC) -- Production of high density polyethylene (HDPE) in Russia dropped by 10% over the first four months of 2014. The main reasons for lower production were an outage at Stavrolen and Nizhnekamskneftekhim's switch-over for the production of linear low density polyethylene (LLDPE), according to MRC ScanPlast.

April HDPE output in Russia totalled about 60,800 tonnes. Thus, Russian producers reduced their HDPE production from January to April 2014 to 306,000 tonnes from 340,700 tonnes a year earlier. The outage at Stavrolen (force majeure) and Nizhnekamsneftekhim's switch-over for LLDPE production affected production figures over the first four months of the year.

The HDPE output at Russian plants from January to April 2014 looks the following way.

Gazprom neftekhim Salavat accounted for the most significant increase in production over the first four months of 2014. The plant's HDPE output rose to 34,300 tonnes over the said period, up by almost half year on year. Gazprom neftekhim Salavant has recently launched additional capacities for ethylene production, which will allow the plant to increase its HDPE production to 100,000 tonnes.

Kazanorgsintez (part of TAIF group), Russia's largest polyethylene (PE) producer, showed a more modest increase in production. The plant's HDPE output totalled about 176,300 tonnes over the first four months of the year, up by 6% year on year.

Nizhnekamskneftekhim (part of TAIF group), Russia's third largest HDPE producer, reduced its production from January to April 2014 to 47,500 tonnes from 51,000 tonnes a year earlier. As reported earlier, the plant's lower output was largely caused by its switch-over to LLDPE production over the stated period.

MRC

MOSCOW (MRC) -- Idemitsu Kosan Co. and Mitsui & Co. have decided to not move forward with their proposed joint venture to construct a linear alpha olefins unit on the US Gulf Coast, reported Dow in its press release.

Accordingly, The Dow Chemical Company has terminated the initial arrangement among the three companies.

Dow’s strategic growth investments on the US Gulf Coast remain on track. The company is evaluating several high-return, alternative uses for the ethylene that was included in this arrangement. Further, Dow will continue to access its existing supply network of linear alpha olefins.

Collectively, the company’s US Gulf Coast projects are expected to contribute more than USD2.5 billion in EBITDA once fully operational.

We remind that, as MRC informed previously, in March 2013, Dow Chemical signed a long-term ethylene off-take agreement with a new Japanese joint venture that was supposed to allow the chemical producer to enhance its performance plastics franchise. The joint venture was formed between Japanese companies Idemitsu Kosan and Mitsui & Co. to construct and operate a linear alpha olefins unit on the US Gulf Coast.

As reported earlier, alpha olefin demand will grow with a CAGR of 4.2% from 2013 to 2018 and reach 4.6 million metric tons. The alpha olefin Market is mainly driven by polyethylene application, which accounts for the largest consumption share of alpha olefins.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene (PE), polypropylene (PP), and synthetic rubber. In 2013, Dow had annual sales of more than USD57 billion and employed approximately 53,000 people worldwide. The company's more than 6,000 products are manufactured at 201 sites in 36 countries across the globe.
MRC