Russian producers raise contract PVC prices

MOSCOW (MRC) -- Negotiations over August contract prices have begun in the Russian polyvinyl chloride (PVC) market. Some Russian producers have announced price increases of Rb4,000-5,000/tonne on the back of a shortage, according to ICIS-MRC Price report.

Negotiations over contract PVC prices for August shipments already started a week earlier. Demand for suspension polyvinyl chloride (SPVC) was strong in the market because of seasonal factors. At the same time, there was virtually no alternative for many local converters to Russian material at the moment. As a result, companies were forced to accept Kaustik's (Volgograd) higher contract PVC prices for August, up by Rb4,000-5,000/tonne from July.

Tight supply was caused by a major fall in imports (47% over the first six months of 2014), as well as a series of upcoming outages for maintenance at Russian plants.

Thus, SayanskKhimplast with the capacity of 280,000 tonnes per year, Russia's largest PVC producer, plans to shut down its production for virtually a one-month turnaround in early August. The plant has not had stocks in recent months because of a slump in imports and was forced to limit its shipments to contract customers in July. August shipments of SayanskKhimplast's resin will be scarce.

Bashkir Soda Company will shut down its production (210,000 tonnes per year) for 20 days in mid-September. Kaustik (Volgograd) will stop its PVC production (90,000 tonnes per year) for two weeks in early October.

All these factors led to a shortage of material on the back of reduced purchasing in foreign markets, particularly, in the United States. At the same time, only those companies that are not able to use Chinese acetylene resin in their production (supply of resin with K = 65 is more than sufficient in the market) were experiencing tight supply in the market.

Bashkir Soda Company will begin next week negotiations over contract PVC prices for August shipments. According to unofficial information, the company also intends to raise prices further.

In general, August and September will be quite hard for Russian converters in terms of material availability and prices. US imports are unlikely to help to reduce the shortage of PVC in the market because of long delivery. The start-up a new plant RusVinyl (JV of SIBUR and Solvin) in Nizhny Novgorod region, which, according to unofficial information, is to be held in late July - early August, is unlikely to improve the situation either.
MRC

MOSCOW (MRC) -- 51,300 tonnes of polyamide (PA) were exported from Russia to foreign markets in the first half of 2014, down by 22% year on year, according to MRC DataScope.

PA exports from Russia mean imports of PA 6 because this grade accounts for almost 100% of all shipments.

Unfilled PA 6 of Kuibyshev Azot, Russia's only PA 6 producer, is mostly exported to China, India and Turkey. Foreign converters mainly use it for production of yarns and fibers, as well as for further processing into PA-based copolymers and compounds.
The PA 6 segment of the Russian market is more export-oriented, than domestically-oriented. PA copolymers (especially, glass-filled grade PA 6 and PA 66), PA emulsions (PA water dispersions) and basic PA 66 account for the strongerst demand from Russian converters. These PA grades are not produced in Russia and their consumption is fully dependant on imports.

MRC

MOSCOW (MRC) -- Japanese Idemitsu Kosan's wholly-owned subsidiary Petrochemicals (Malaysia) has lowered the operating rate at its 110,000 tpa high impact polystyrene (HIPS) plant at Pasir Gudang this month to 80%, said Plastemart.

Operating rates were at 100% in June. The reason for the lowered run rate is slowing demand due to rising HIPS prices -- caused by increasing styrene monomer prices -- and the Muslim fasting month of Ramadan. Run rates are likely to be gradually lowered to 70% if demand remains low.

Idemitsu also has a 240,000 tpa styrene monomer plant at Pasir Gudang, run by its subsidiary Idemitsu SM (Malaysia), which is expected to shut in mid-August for a one-month turnaround.

Meanwhile, Petrochemicals (Malaysia) plans to shut its HIPS plant in January next year for a one-month turnaround.
MRC

MOSCOW (MRC) -- South Korea's SK Global Chemical is running its 350,000 mt/year styrene monomer plant at Ulsan at full capacity in July, similar to June and May, but is considering run cuts as margins are being squeezed, as per Plastemart with reference to a company source in Platts.

The plant, originally owned by German chemical major BASF, was idled in late 2008. It was bought by SK Global in 2009 and restarted late this April. Due to the plant being relatively old and idle for several years, it was less cost-efficient than newer plants, the source said. The source said margins were not good at the moment, although SKGC is completely self-sufficient in terms of feedstocks benzene and ethylene.

Several other SM producers in Japan and Southeast Asia have recently cut or considered cutting operating rates due to negative margins caused by relatively high benzene and ethylene prices while SM prices have been relatively stagnant due to a high inventory level in key market China.

As MRC reported earlier, last July, SK Global Chemical and China Petroleum & Chemical Corp. signed an agreement that establishes a joint venture between the two companies to operate Sinopec's recently completed 800,000 tonnes per year naphtha cracker in Wuhan, China. The USD2.9-billion project includes facilities for the production of 300,000 tonnes per year of high-density polyethylene (HDPE), 300,000 tonnes per year of linear low-density polyethylene (LDPE) and 400,000 tonnes per year of polypropylene.
MRC

MOSCOW (MRC) -- Evonik Industries and AkzoNobel have entered into negotiations to build a membrane electrolysis facility at AkzoNobel's site in Ibbenburen (Germany), as per Evonik's press release.

The objective of the negotiations is to establish a joint venture for the new construction and shared operation of an electrolysis facility for potassium hydroxide solution and chlorine. The negotiations of the two companies are expected to be finalized by the end of 2014.

The law stipulates that the production of potassium hydroxide solutions with the current mercury electrolysis technology must be phased out by 2018. The new membrane electrolysis will replace this procedure with an environmentally-friendly and sustainable method.

"This investment would allow us to reliably supply our customers with our potassium hydroxide solutions in the long term", explained Gregor Hetzke, Head of Evonik's Advanced Intermediates Business Unit. "At the same time, it would make an important contribution to the environmentally-friendly and sustainable production of potassium hydroxide solutions."

The membrane electrolysis facility in Ibbenburen is to have a nominal annual capacity of approximately 130,000 metric tons of potassium hydroxide solution and a nominal annual capacity of approximately 82,000 metric tons of chlorine. After the startup of production, which is projected for the third quarter of 2017, AkzoNobel would take over the marketing of chlorine and hydrogen or process the substances directly at the Ibbenburen site. Meanwhile, Evonik would take over the marketing and further processing of potassium hydroxide solution at its Lulsdorf site, where Evonik processes potassium hydroxide solution into potassium carbonate.

As informed previoulsy, Essen-based Evonik Industriesis making an investment in the double-digit-million euro range in a new research center at the Rheinfelden site. Starting at the beginning of 2016, research into silanes will be carried out in modern laboratories in the four-story building. Silanes are used in the electronics industry, in the tire industry, for the production of adhesives and sealants as well as plastics, and in the construction industry.

Evonik, the creative industrial group from Germany, is one of the world leaders in specialty chemicals. Its activities focus on the key megatrends health, nutrition, resource efficiency and globalization. Evonik benefits specifically from its innovative prowess and integrated technology platforms. Evonik is active in over 100 countries around the world. In fiscal 2013 more than 33,500 employees generated sales of around EUR12.9 billion and an operating profit (adjusted EBITDA) of about EUR2.0 billion.
MRC