Negotiations over February prices began in the Russian PVC market

MOSCOW (MRC) -- Negotiations over February contract prices of Russian polyvinyl chloride (PVC) started this week. Producers announced a price increase of Rb4,000/tonne from January, according to ICIS-MRC Price report.

Negotiations over prices of Russian suspension PVC (SPVC) for February shipments to the domestic market began on Monday. Local producers unanimously announced an increase of 7% from January in February contract prices. Converters realized that a price hike could not be avoided, but at the same time they complained that such a price rise was hard enough to accept, given the limited financing.

The possibility of purchasing imported material by converters disappeared in November because of the major rouble devaluation. Even now, when February export prices in the United States and China dropped by more than USD100/tonne to USD740-750/tonne CFR St Petersburg and USD710/tonne DAP Dostyk, respectively, and given the current exchange rate, prices of imported PVC approached Rb70,000/tonne, including VAT and delivery.

Russian converters realize that at the moment there are no alternatives to the local PVC and will have to accept price increases. At the same time, most companies are experiencing serious problems with working capital. Interest rates have risen significantly since December and reached 25% per annum, while to get the credit is quite difficult.

Window profiles producers account for the most deplorable situation. Due to the high quality requirements, many producers of this products use in their production exclusively imported materials (additives, titanium dioxide, etc.). And the rouble devaluation actually doubled the cost of these materials.

Some large converters said they intend to achieve deferred payment for February contract because of issues with the working capital. Otherwise, companies will simply refrain from buying this month.
MRC

CB&I wins renewed services pact at Texas refinery

MOSCOW (MRC) -- CB&I has been awarded a contract renewal valued at approximately USD65 million by a leading crude oil refiner, reported Hydrocarbonprocessing with reference to the company's announcement.

The contract is for long-term maintenance, small capital construction projects and other industrial services at its facility near the Gulf Coast of Texas.

"CB&I is focused on building sustainable value for our customers through improved reliability and performance," said Patrick K. Mullen, president of CB&I's engineering, construction and maintenance operating group.

"This contract renewal underscores the confidence our customers place in CB&I's ability to provide real-time operational improvements in an environment where safety is paramount," he added.

As MRC informed previously, in late 2013, CB&I was awarded a contract valued at approximately USD1 bln by Ingleside Ethylene LLC, a joint venture between Occidental Chemical Corporation (OxyChem), a subsidiary of Occidental Petroleum Corporation, and Mexichem, S.A.B. de C.V. (Mexichem) for the engineering, procurement and construction of an ethane cracker and associated utilities and offsites to be located at OxyChem's complex in Ingleside, Texas,
MRC

Toray to expand polyester staple fiber business at Korean subsidiary

MOSCOW (MRC) -- Toray Industries, Inc. has announced that it has formulated a plan to expand the polyester staple fiber business at Toray Chemical Korea Inc., the acquisition of which Toray completed in February 2014, to pursuit synergy effects within Toray Group, said the producer on its site.

According to the plan, Toray will boost production capacity of low melt polyester staple fiber (LM polyester staple fiber) at TCK’s Gumi I Plant in Gumi, Gyeongsangbuk-do by about 1.7 times to 170,000 tons.

The additional LM polyester staple fiber production facility is expected to start production in July 2016.

In addition, Toray will also increase production capacity of bi-component staple fibers of both polypropylene-polyethylene and polyester-polyethylene (bi-component fibers) used to produce nonwoven fabric for personal hygiene materials materials, whose demand has been growing rapidly.

LM polyester staple fiber is used as binder (a bonding agent) to combine staple fibers using heat in the manufacturing process of nonwoven fabric, and it is mainly used in nonwoven fabric used for acoustic insulation material for automotive and cushions for mattress and other furniture.

In July 2004, prior to Toray’s acquisition, TCK started producing LM polyester staple fiber and currently has the third biggest share in the global market. With the expansion of production facility, Toray Group aims to establish its position in the growing LM polyester staple fiber market and increase sales of and income from nonwoven fabric staple fiber.

Moreover, the market of nonwoven fabric for personal hygiene materials, for which bi-component fibers are used, is expected to grow at an annual rate of 6%, due to the demand increase reflecting improving living standard of the people in emerging countries primarily in Asia and the advent of the aging society in developed countries.

In preparation for the expansion of polypropylene spunbond market, Toray Group has been enhancing its production capacity in major countries in Asia. The composite fiber production capacity increase at TCK would enhance the product lineup of the materials, from filament to staple fibers, used in nonwoven fabric for personal hygiene materials products.

As MRC wrote before, in late December 2014, Toray Industries, Inc. announced that the company and its subsidiary Toray Advanced Materials Korea, Inc. would expand the production facility for high-performance polypropylene (PP) spunbond at P.T. Toray Polytech Jakarta (TPJ) by 18,000 tons per year. After the enhancement, the production capacity of TPJ will be about 37,000 tons per year, boosting the Toray Group-wide PP spunbond production capacity to about 153,000 tons per year. The added production facility at TPJ is expected to start operating in September 2016.

Toray Industries is a multinational corporation headquartered in Japan that specializes in industrial products centered around technologies in organic synthetic chemistry, polymer chemistry, and biochemistry. Its founding business areas were fibers and textiles, as well as plastics and chemicals. Toray Group Malaysia companies are involved in four main businesses -- polyester fibres, textiles, plastic resins and polyester films.
MRC

Rosneft challenge of sanctions sent to EU court by U.K. Judges

MOSCOW (MRC) -- OAO Rosneft’s lawsuit challenging U.K. sanctions targeting Russia’s conduct in Ukraine was sent to a European Union court by a pair of London judges, said Bloomberg.

Judge Jack Beatson said in London Tuesday that the U.K. tribunal couldn’t resolve all the legal issues raised by Russia’s largest oil producer and the case would be sent to the European Court of Justice in Luxembourg.

Rosneft is among Russian companies already appealing to European courts in an effort to overturn sanctions imposed over Russian President Vladimir Putin’s policies in Ukraine, which have helped stoke capital outflows and a ruble collapse and pushed Russian’s economy to the brink of recession.

EU leaders threatened to tighten sanctions on Russia as soon as Thursday over its alleged support for pro-Kremlin rebels in eastern Ukraine, who are engaged in the worst clashes with government troops since a September truce.
Rosneft lawyer Pushpinder Saini argued in court that the U.K. sanctions were too vague. Phrases including "deepwater" and shale exploration, and financial assistance need to be better defined. Saini also said that it’s not clear whether the restrictions cover global depository receipts.

"Rosneft was not named" among five Russian entities singled out, Saini said. "But Rosneft is the party that will suffer."

Another lawyer for Rosneft, Joe Hage of Joseph Hage Aaronson LLP, said in an e-mail, "We are pleased that at an expedited hearing the English High Court decided to refer the case to the European Court of Justice for a ruling on the validity and effect of the EU sanctions."

Tim Ward, a lawyer for the U.K. government, said Rosneft’s complaints were :artificial” and the definitions in the sanctions were "sufficiently clear."

He said the restrictions were meant to place a cost on Russia’s activity in the Ukraine and it was "unthinkable" that the European community intended them to depend on the technical issues Rosneft was raising.

Russia’s two biggest banks, Sberbank and VTB Group, have also appealed their inclusion on sanctions lists at the EU court, as has Vnesheconombank, or VEB, and its Ukrainian unit Prominvestbank. OAO Gazprom Neft and billionaire Arkady Rotenberg have also filed appeals.

EU foreign ministers are meeting on Jan. 29 to consider whether tighter sanctions on Russia related to eastern Ukraine are appropriate.
MRC

Sasol to delay decision on gas-to-liquids plant in Louisiana

MOSCOW (MRC) -- South African petrochemicals group Sasol on Wednesday said it would delay its USD8.1 billion investment in an ethane cracker in Louisiana, in response to low global oil prices, said Reuters.

In a statement, the company also said it would identify other opportunities to cut costs over the next 30 months.

A cracker converts ethane taken from natural gas into ethylene, the basic building block in the manufacture of plastics and chemicals. In October 2014, Sasol announced its final investment decision relating to the USD8.9 billion petrochemical complex, which consists of an ethane cracker that will produce 1.5 million tpy of ethylene. The complex will also comprise six chemical manufacturing plants, enabling infrastructure and utility improvements.

Sasol said it would still proceed with the construction of a smaller planned ethane cracker and plant, also slated for Westlake, that would produce ethane-based products, like plastics and chemicals. Sasol said that by moving forward on that smaller project it could reassess whether to go ahead with the bigger GTL investment. The ethane cracker and plant was estimated to cost between USD5 billion and USD7 billion.

The project’s size and scale had become a symbol of what many observers saw as a renaissance of American manufacturing. Many foreign firms, including European industrial giants, have been drawn to the U.S. in recent years by low energy prices, thanks in large part to an explosion in shale gas drilling.

The company said it expects to focus on saving additional cash by undertaking project phasing and reductions, capital restructuring, working capital improvements, margin enhancement and further fixed cost reductions. It didn’t disclose details and said cost savings would be laid out in March at the company’s first-half results.

Sasol Limited is an integrated energy and chemical company based in Johannesburg, South Africa. It develops and commercialises technologies, including synthetic fuels technologies, and produces different liquid fuels, chemicals and electricity.

MRC