PET consumption in Russia increased by 12% in Jan-June 2014

MOSCOW (MRC) - Calculated consumption of polyethylene terephthalate (PET) in Russia increased 346,000 tonnes in January-June 2014, up 12% compared to the first half of 2013, according to MRC ScanPlast.

PET consumption has been growing, despite the stagnation in the beer industry. According to Rosstat, beer production in Russia in the first half of the year decreased by 6.4%. The production of mineral waters in Russia increased by 4.1% over the reported period.
Besides the integration of PET bottles in the segment of dairy and dairy products continued to grow, displacing the polyethylene (PE) packaging, according to MRC analyst Igor Gryshchenko.

Growing market demand was met by increasing imports. The share of imported PET consumption increased to 37% from the total consumption in the country, up 7% compared to the first half of 2013. As it was previously reported, Russia's PET imports increased to 128,000 tonnes in the first half of the year, up 40% relative to the first half of 2013.

The total production volume of PET at the Russian facilities has not changed. Russia's PET production was 218,000 tonnes in January-June 2014. The average capacity utilisation at PET plants in Russia was 71.4%, down 12.2% compared to the same time in the previous year. Russia's PET production increased by 90,000 tonnes in 2014, reaching 610,000 tonnes/year.

Polief has installed the second production line. Despite the stable operation at Polief and steady production capacities at Senege and SIBUR-PET, production volumes at Alco-Naphtha declined.

Exports of Russian PET to foreign markets exceeded 9,000 tonnes over the reported period, down 32% year on year.

Calculated consumption of PET does not include the carryovers.

According to our estimates, the real growth rates of market capacity will be 4-5% in 2014. PET consumption in Russia will decrease in the second half of the year because of the seasonal factors and carryovers in the warehouses of the market players. Therefore, the real growth rate of consumption in the end of the year will be slightly lower.

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