Global PP capacity expected to continue rising to 86 mln tonnes by 2018

MOSCOW (MRC) -- Global polypropylene (PP) capacity has increased at a Compound Annual Growth Rate (CAGR) of 5.2% from 2003, reaching 65 mln tons pa in 2013, and is expected to continue rising to 86 mln tons by 2018, at a slightly higher CAGR of 5.8%, reported Plastemart with reference to GlobalData.

China and Russia will be the leading contributors to future PP capacity increases and will account for a combined 45% of global additions over the next five years.

Carmine Rositano, GlobalData's managing analyst covering Downstream Oil & Gas, says: "A demand-side push is driving additional capacity in China, forcing it to produce more domestic PP. Indeed, China will lead new global PP capacity increases over the next five years, as its goal of self-sufficiency drives 7.48 mln tons of additions, of which 97.6% will come from new plants and the remainder from the expansion of existing facilities." China is expected to account for 62.4% and 35.5% of planned Asian and global capacity additions by 2018, respectively.

Russia will be the second largest contributor to growth, mainly due to the country's recent diversification into the petrochemicals sector, which has seen substantial investment in bulk polymer industries, such as polyethylene and PP.

Rositano explains: "Until 2012, Russia's PP capacity was only 0.65 mln tons, but this increased to 1.33 mln tons in 2013 and is further expected to reach approximately 3.48 mln tons by 2018, with all additions coming from new plants." Venezuela and India will be the respective third and fourth largest contributors to capacity increases over the next five years, with both countries investing in the PP sector to cater to the domestic market and replace imports.

As MRC wrote previously, scheduled maintenance works at Russian plants have just begun, but PP prices soared in the Russian domestic market. Given the turnarounds of another three producers in August it is clear that next month will also be difficult in the Russian PP market.

July - September are traditional period of scheduled maintenances at Russian producers. The first in the queue was Tobolsk-Polymer, which shut its 500,000 tonnes/year PP production on a month long turnaround on 30, June.
The shutdown of the largest PP producer in Russia immediately led to a serious rise in prices. The shutdown of other Russian PP productions in Tomsk, Omsk and Ufa will aggravate the situation in the market further.
MRC

MOSCOW (MRC) - Finnish packaging maker Huhtamaki on Friday reported second-quarter operating profit in line with market expectations and stood by its outlook for trading conditions to remain relatively stable in 2014, said Reuters.

The company, known for making paper cups for McDonald's , posted April-June underlying operating profit of 54 million euros (USD73 million) compared to a mean forecast of 53.6 million in a Reuters poll of analysts and year-ago 49.2 million.

Sales in the quarter amounted to 628 million euros, also in line with analyst expectations.

Huhtamaki said earlier on Friday it will start evaluating options for its Films business and could eventually divest the operation.

As MRC wrote before, Huhtamaki, the Finnish-based consumer packaging specialist with worldwide operations, will build a moulded fibre egg packaging unit adjacent to its existing packaging facility in the greater Moscow area.
The new unit will concentrate on a narrow range of high-volume premium egg packaging, with complementary products sourced from other Huhtamaki units and technology licensees. This supply network enables the company to start sales and deliveries while the new unit is still under construction. The company already has a specialised fresh foods sales force in Russia.
MRC

MOSCOW (MRC) -- Egypt has proposed three petrochemical projects to the UAE for a total investment of USD540 mln, according to a senior official at the Ministry of Petroleum, said Plastemart.

The projects included establishing a factory to produce bio-ethanol from molasses, the output of which would reach 100,000 tons of molasses annually, with investment in the project totaling USD250 mln. The project would be implemented in the next fiscal year (FY), according to the ministry’s plan.

Another proposal focused on building a plant for production of bio-ethanol from rice straw, with annual capacity of 100,000 tons of rice straw. The investment in this project would be USD240 mln and would be implemented through the FY 2016-2017.

The third project would increase polyvinyl chloride (PVC) production, used in making pipes, with the target implantation date as FY 2016-2017. Close to 40,000 would be produced annually, while the investment in the project is estimated at USD50 mln.

The UAE has expressed its willingness to invest in the petroleum sector and is currently evaluating which project to go forward with in the coming period.

As MRC wrote before, Toyo Engineering has been jointly awarded with ENPPI, an engineering company under the Egyptian Ministry of Petroleum, a contract to build a 400,000 tpa polyethylene plant in Egypt. The new facility will be a part of Ethydco's petrochemical complex to be established in Alexandria, the Arab Republic of Egypt, and owned by ETHYDCO (The Egyptian Ethylene and Derivatives Company) under the investment law No. 8/1997 of Egypt. This will be the largest polyethylene plant in Egypt.
MRC

MOSCOW (MRC) -- Russia’s crude exports on tankers are poised to fall to the lowest in at least six years as a government push to improve and expand domestic refineries means more oil is exported as fuels like diesel, reported Hydrocarbonprocessing.

Seaborne crude shipments from the world’s biggest energy exporter via the state-run pipeline system in August will fall 9.2% from this month to 2.215 million bpd, according to loading programs obtained by Bloomberg News. That’s the lowest since Bloomberg began tracking the data in 2008.

Russia’s two biggest crude terminals, Primorsk and Novorossiysk, will both export the least on record.

Russian oil companies are refining more crude domestically after President Vladimir Putin pushed them to spend billions of dollars modernizing plants. Output of diesel and fuel oil are the highest since at least 2009, Energy Ministry data show.

This puts pressure on European refiners who are already receiving less Russian crude as flows are diverted to China, which has been less critical of the Kremlin’s role in Ukraine, according to KBC Energy Economics.

"This trend of falling crude exports means we’re finally seeing results from the refinery modernization push," said Alexander Nazarov, an oil analyst at OAO Gazprombank in Moscow. "Refining is picking up and crude output has peaked."

Russia produced 10.55 million bbl of crude in June, up 0.1% from a month earlier in the first increase since January, according to the Energy Ministry’s CDU-TEK unit. The country’s refineries operated at the highest rate in two years on June 26, with offline daily processing capacity falling to 26,000 metric tons, before rising to 48,500 tons on July 23, according to CDU-TEK.

As MRC wrote previously, Russia will give all the necessary support to Shell in the Anglo-Dutch supermajor’s projects in the country, said President Vladimir Putin in April 2014. Putin, under pressure from international powers over continued destabilisation in Ukraine, met with Shell’s chief executive Ben van Beurden in Moscow in late April. "I am very pleased that your company plans to expand its area of activities in Russia," Russian news agency Itar-Tass quoted the president as saying to van Beurden. Shell has a large presence in oil and gas-rich Russia, including at the Sakhalin-2 project off the country’s far eastern region.
MRC