Investments into PVC processing in Russia fell by 24% in H1 2014

MOSCOW (MRC) -- Russian companies' investments in equipment for polyvinyl chloride (PVC) processing fell by 24% over the first six months of 2014. Producers of shaped and linear articles accounted for the greatest decrease, reported MRC analysts.

Investments inPVC processing equipment dropped to USD58 million from January to June 2014 versus USD76.6 million a year earlier. Local producers of shaped and linear articles reduced their costs for equipment purchasing, while producers of cables, wires and pipes, on the contrary, increased their spending.

Investments in PVC processing equipment from producers of shaped and linear articles slumped to USD16.6 million over the stated period, down by 46% year on year. Weaker demand for finished products was the main reason for the decline in investment activity from companies in this processing sector. As expected, industry leaders, among which are: Veka Rus, Profine Rus, Deceuninck Rus, Rehau Rus, Brusbox, Deke Extrusion, accounted for the main costs for new equipment purchasing.

Investments in equipment for the production of cable and pipe products rose by 10% and 20%, respectively, in the first six months of the year and totalled about USD8.4 million and USD5.7 million. among key investors - manufacturers of cable products are the following companies : Kirscable, Promteh-Dubna, Pskov cable Plant. The following companies can be singled out among cables and pipes producers, which heavily invested in equipment in the first half of 2014: Polyplastic, Pipelife Rus, Chemkor, TGP Rosal.

Russian companies reduced their purchasing of equipment for compounding, sheet extrusion and coatings this year.
MRC

BASF torn between profit and principle

MOSCOW (MRC) -- Chemicals company BASF expects the Ukraine crisis to de-escalate, easing its bottom line, said Dw.de.

The German firm has turned a healthy profit thanks to big business in Russia, but worries about sanctions. While the European Union weighs how to exert political pressure on Moscow while shielding its own economic interests, a discussion on expanding sanctions against Russia has unsettled parts of Germany's business community.

BASF recorded a double-digit rise in earnings in recent months, but the chemicals giant is weary of the effect sanctions against Russia may have on its profitability and the economy as a whole. A third of jobs in Germany are dependent on the country's strong exports and curtailing German-Russian trade could force some companies that have invested heavily in Russia to make cutbacks.

"Put yourself into our position. We have customers in those countries. Customers we have dealt with for many, many years, sometimes decades, and we have a very trustful relationship with these customers. We want to continue to serve these customers and they also rely on BASF as a supplier. So that has to be our foremost concern," he said.

Talks of further sanctions against Russia have already unsettled some multinational firms. Bock noted that BASF was already feeling the effect of previous sanctions against Russia and was wary to what extent further ones may affect the company's profitability and the economy as a whole.

"We do business in Russia and Ukraine. It's about 2% of our sales and we have seen quite a decline, mostly currency-related in Russia, but heavy decline in Ukraine, which is very important for our crop protection business. This will most probably continue over the course of the year," he said.

"We have said, however, several times, that we have certain concerns about the effectiveness of sanctions. But that is something politicians have to decide right now. If sanctions will be hardened we will comply certainly."

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF had sales of about EUR74 billion in 2013 and over 112,000 employees as of the end of the year. Second-quarter earnings before interest and tax (EBIT), adjusted for one-off items, rose 12.1% to 2.05 billion euros (USD2.76 billion).

MRC

PA6 production in Russia was 71,000 tonnes in the first half of 2014

MOSCOW (MRC) - Production of polyamide 6 (PA 6) in Russia has reached 71,000 tonnes in the first six months of 2014, up 9% compared with the same time a year earlier, according to MRC ScanPlast.

Kuibyshev Azot is a major producer of PA 6 in Russia. The producer's production capacities are 120,000 tonnes/year. The company has been constantly working on the capacity utilisation of more than 100%.

The company produces PA 6 for the production of fibers/filaments and compounding and moulding. Kuibyshev Azot mostly focuses on the exports of polyamide to foreign markets (India, China, Turkey), with more than 70% of total products supplied abroad.

In terms of technology, "yarns and fibers" national production is the dominant producer in the Russian market. Russia does not import PA for the production of yarns and fibers because of the policy of import substitution to support national converters and providing them with products at affordable prices.
MRC

BASF expands innovation campus Asia Pacific in Shanghai

MOSCOW (MRC) -- BASF, the world’s leading chemical company, today broke ground on the second phase of its Innovation Campus Asia Pacific at its Pudong site in Shanghai, China, said the producer in its press release.

The EUR90 million expansion consists of an additional regional research and development (R&D) building and auxiliary facilities and it will be completed by the end of 2015.

"By 2020, around 25% of BASF’s R&D employees will be located in Asia Pacific. The expansion reinforces BASF’s commitment to globalizing its R&D activities and capturing growth opportunities in China and Asia Pacific," said Dr. Andreas Kreimeyer, member of the Board of Executive Directors of BASF SE and Research Executive Director.

The Innovation Campus is BASF’s most important R&D center in the region and is expected to become one of its largest R&D sites outside of Germany. With the expansion, BASF’s regional research capabilities will be further strengthened, focusing primarily on advanced materials and systems as well as adding new areas such as formulations and chemical process and engineering serving growth industries such as automotive, construction, health and nutrition, and home and personal care.

Eighteen months after its inauguration, the Innovation Campus Asia Pacific has strengthened BASF’s position as the preferred innovation partner for customers in the region, for example from the construction, automotive, paint and coatings, home and personal care and packaging industries. Leveraging local market insights and BASF’s strong global R&D network, the teams focus on innovative solutions to address the market needs in various industries across the region. For example, the world’s first co-extrudable Ultradur (polybutylene terephthalate) for the reinforcement of thermally insulated polyvinyl chloride (PVC) window profile, was developed together with Dalian Shide Group. Steel in a PVC window profile is replaced with co-extrudable Ultradur to provide high strength but lightweight reinforcement with mechanical properties required to withstand strong winds and excellent thermal insulation, which enables energy-efficient construction.

In Asia, in addition to the Innovation Campus in Shanghai, BASF also has R&D centers in Japan, Singapore and Korea. An Innovation Campus in India is also planned. BASF increased global spending on research and development to EUR1.8 billion in 2013 (2012: EUR1.7 billion), with around 10,650 scientists and researchers working in 3,000 research projects. With 1,300 patents filed last year and about 151,000 registrations and intellectual property rights worldwide, BASF is at the top of the global Patent Asset Index for the fifth time in succession.

As MRC wrote before, BASF Shanghai Coatings Co., Ltd. has inaugurated its new automotive coatings plant at the Shanghai Chemical Industry Park in Shanghai, China. The expansion of its automotive coatings production capacity with an investment of around EUR50 million further strengthens BASF’s presence in China and its position as a leading coatings supplier to the automotive industry.

BASF is the world’s leading chemical company. Its portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas. BASF had sales of about EUR74 billion in 2013 and over 112,000 employees as of the end of the year.
MRC

Petrochemical expansion to drive growth of Reliance for next few years

MOSCOW (MRC) -- Reliance Industries Ltd (RIL) has posted better-than-expected first quarter earnings. Analysts believe good quarterly results and huge capex to augment its petrochemical facilities will lead to uptick in the stock over the next two fiscals, said Plastemart.

Standalone net profit for the first quarter stood at Rs 5,649 crore, almost flat from the preceding quarter, but 5.5% higher from the corresponding period a year ago. Lower interest and depreciation costs along with slightly better refining margins were the key reasons for higher profit when compared with a year ago quarter. Its standalone revenue for the quarter was at Rs 96,351 crore, up 1.2% on sequential basis and 9.9% higher from the year-ago period.

The petrochemical major's interest costs dropped by a whooping 60% to Rs 324 crore, and depreciation cost declined to Rs 2,024 crore in the quarter from Rs 2,138 crore. RIL's refining and petrochemical margins remained weak sequentially, as per the expectations. Gross refinery margins (GRMs) fell to USD8.7 per barrel from USD9.3/bbl in the March in line with 6% sequential fall in benchmark Singapore complex margins. The company's refining segment EBIT declined 3.7% on quarter to Rs 3,814 crore. Its petrochemical EBIT contracted 13.3% sequentially to Rs 1,863 crore due to weaker polyester chain margins which offset strength in polymer margins.

Petrochem segment is currently going through a weak demand cycle. However, with the recovery in demand in the US and Europe, which likely to peak around 2016-17, new capacities will help the company take full advantage in two years. At the company's last AGM, chairman Ambani announced that the majority of RIL's Rs 180,000 crore investment lined up for next three years would go into petrochemical capacity expansion. Higher crude price and increased output from Panna-Mukta fields pushed the EBIT of exploration and production operations, by 38.4% on-year and 29% sequentially to Rs 487 crore. Improvement in shale gas and retail operations mainly pushed the company's consolidated revenues.

Its consolidated net profit in the first quarter rose 1.3% sequentially, and 13.7% from the year-ago quarter to Rs 5,957 crore and its consolidated revenue during the quarter were at Rs 107,905 crore, up 1.6% sequentially and 7.2% from a year ago. The US shale gas operations Ebitda crossed USD200 million for the first time, while retail revenue grew 14.5% from the year-ago quarter to Rs 3,999 crore in April-June. The company undertook store rationalisation during the quarter to improve margins.

As MRC wrote before, Reliance Industries (RIL) will invest up to USD700 mln in its shale gas venture in the current fiscal and also ramp up spends under the USD13 bln capex programme in the petrochemical and refining business.

Reliance Industries is one of the world's largest producers of polymers. The company's polymer production in 2010-11 (polypropylene, polyethylene and polyvinyl chloride) made 4,094 kilo tonnes.
MRC