PC imports to Ukrainian market fell by 36% from January to July 2015

MOSCOW (MRC) -- Imports of polycarbonate (PC) to the Ukrainian market slumped over the first seven months of 2015 by 36% year on year and totalled 1,600 tonnes, according to MRC DataScope report.

Market players still reported a shortage of material in the market, even despite lower consumption. Sabic Innovative Plastics, the main supplier to the market, has announced an increase in delivery dates, which, in its turn, might cause delays in shipments for Ukrainian converters. It has also become known of the availability of Bayer's material, without the appropriate documentation and of the authentically unknown origin, in the local market.

There was a traditional summer slowdown in the market because of the holiday season. In addition, the general business activity has been still subsiding. Ukrainian traders said they were considering alternative markets for their expansion. The Belarusian market might be one of the attractive destinations for shipments of polymer. There was still a cooperation with the Russian market regarding deliveries of finished products.
Demand for finished products was very weak in the country, which made converters reduce their production and purchasing of material.

The economic situation in the Ukrainian market is far from stabilizing, which prevents the reconstruction and development of small and medium-sized businesses. Many investment projects were cancelled, consumption has been falling. The political instability in the country has a negative impact on international trade relations. Expensive energy resources was one of the reasons for the increased self-cost in the industry.

MRC

MOSCOW (MRC) -- China detained the owners of a hazardous-chemicals storage warehouse rocked by deadly explosions in Tianjin as authorities sought to discover the cause of the latest industrial accident to hit the country, said Hydrocarbonprocessing.

The executives of Tianjin Dongjiang Port Rui Hai International Logistics Co. are in police custody, according to the official Xinhua News Agency. All investigators have said publicly so far is that the giant explosions, which killed 50 people, were started by a fire.

Tianjin, home to the world’s 10th-largest container port, is a central part of the government’s push to develop the area around Beijing, 120 kilometers (75 miles) away. The blasts raise new questions about the speed of the buildout there -- and across China -- after three decades of breakneck economic growth.

The incident is "a kind of by-product of China’s too-rapid development," said Hu Xingdou, an economics professor at the School of Humanities and Social Sciences at Beijing Institute of Technology. While the cause of the blasts aren’t yet known, "poor urban planning and lax management of dangerous chemicals also led to this incident," Hu said.

The port city of more than 15 million people has become a gateway to northern China for shipments of metal ore, coal, automobiles and crude oil, and is home to manufacturing operations for companies including Deere & Co. and Caterpillar. Deere said it temporarily suspended Tianjin operations.

The two blasts late Wednesday night shattered windows in buildings for kilometers around and disrupted operations at the port. The death toll included 17 firefighters, Xinhua reported. A total of 701 people were hospitalized, including more than 70 with critical injuries, it said.

Industrial accidents are rife in China. Last year a fireball ripped through a factory in Kunshan that finishes vehicle rims, killing at least 75 workers and injuring 185. That came after a crude-oil pipeline leak and blast killed 55 people in Qingdao.

Tianjin Port Development Holdings said in a statement to the Hong Kong stock exchange that it’s assessing the damage but doesn’t expect to suffer a material loss from the accident. Shares of the company, suspended Thursday, are due to resume trading Friday.
MRC

MOSCOW (MRC) -- Borealis, the maker of chemicals and plastics whose biggest plant is in Abu Dhabi, said events in China have the potential to cause a steep drop in polymer prices that would pressure manufacturers with factories in higher-cost regions, said Hydrocarbonprocessing.

The Chinese yuan’s tumble is already being felt in the market place, CEO Mark Garrett said in an interview. Borealis, which part owns a petrochemical facility in Abu Dhabi, is at the "extreme good end" of the cost curve, leaving the marginal producers to suffer most, he said. "It could be quite steep," Garrett said Thursday. "I hope it’s not."

China’s surprise devaluation of its yuan currency versus the dollar has broad implications for petrochemical and polymer prices, putting added pressure on prices that are already depressed, Markus Mayer, an analyst at Baader Bank said in an Aug. 12 note. Companies including Royal Dutch Shell and Braskem have delayed some projects, and the China situation will lead to more planned investments being shelved, according to CEO Garrett.

Royal DSM, Bayer’s material science division, Akzo Nobel and BASF are the companies most at risk among the stocks covered by Baader, Mayer said.

For now, the outlook jars with Borealis’ earnings for the second quarter, which surged as sustained demand combined with a weaker euro and lower raw-material costs boosted margins. Garrett said results for the three months through June don’t reflect the outcome expected for the full year. Margins in the plastics known as polyolefins have this year hit levels not seen since 2007, Garrett said.

As a result, quarterly profit more than doubled to 351 million euros (USD390 million), the Vienna-based company said Thursday in a statement. Sales declined 2.5% to 2.04 billion euros.

Borealis, 64% owned by Abu Dhabi and 36% by Austrian oil company OMV, is benefiting from the drop in oil prices, while at the same time the company’s Borouge 3 facility in Abu Dhabi has come on stream. That’s feeding more products into the market at a time when imports into Europe from further afield are being priced out by a weaker euro.

Borouge is on track to increase production to 4 million tons over the next two years, part of a wave of new capacity that’s set to come on stream. Next year, the petrochemical capacitites of Iran will affect the global market, and in 2017 five new crackers producing petrochemicals are scheduled to start up in the US.

"The global overcapacity at the beginning of the value chain will affect all organic chemical companies," Baader’s Mayer said. "The question will be only when and how severe. Companies at the top end of the value chain with R&D driven specialty chemicals will feel it latest and with the lowest effect."

Garrett said the challenge for Borealis remains reliability. Borealis has had to put added effort into raising the performance of ammonia and fertilizer plants bought from Paris-based Total. "For this reason operational excellence remains a key focus for the company," Garrett said.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries. It generated EUR 8.3 billion in sales revenue in 2014.
MRC

MOSCOW (MRC) -- Songwon Industrial Group released its financial results for Q2. The Group announced sales of 157,009 Mil. KRW and a gross profit margin of 20.3% for Q2 - an increase of 6.5% points compared to Q2/2014, said the company in its press release.

After a good start into the year 2015, with a significantly improved gross profit margin in Q1, Songwon saw a more predictable and robust Q2/2015 - despite the ongoing challenging market conditions. In Q2, the economic situation in Europe continued to remain instable. Compared to Q2/2014, Songwon’s Q2/2015 results were affected by strong forex devaluations (EUR/USD, JPY/USD), and the oil price.

Due to the drastic weakening of the Euro against the Korean Won and other relevant currencies, Songwon experienced lower sales revenues in Europe at the beginning of the year. Business in Japan was similarly affected by the continued weakening of the Yen. In Q2, the decision was made to selectively go for price increases to offset volume losses at lower margin accounts.

The price increases in local currencies were successfully implemented but were partly eroded by an additional weakening of the FX against the KRW. This resulted in an overall reduction in consolidated sales of -6.5% compared to the first six months of 2014.

During Q2/2015, Songwon’s production sites ran steadily without any disruptions. Raw material costs in Q2/2015 were significantly lower when compared to Q2/2014, although a slight raw material price increase took place in Q2/2015 versus Q1/2015. In spite of this, there were also raw material shortages which negatively affected the availability of some finished products, particularly in the lube additive segment.

However, Songwon’s production stability coupled with selective price increases and significantly weaker raw materials in Q2/2015 as compared to Q2/2014, did lead to an impressive recovery of the gross profit margin. EBITDA and EBIT increased notably to 25,993 Mil. KRW and respectively 17,295 Mil. KRW during Q2/2015 compared to Q2/2014.

The reduction of uncertainties regarding foreign exchange rates combined with the stabilization of some political instability (especially Europe and the Near Middle East), is leading to a general upturn in economic activities. The polymer industry’s output is expected to increase significantly and subsequently lead to a higher demand for antioxidants. As the cost of raw materials slowly increases, the pressure on prices is expected to weaken and Songwon anticipates a higher demand for products on the back of the global recovery of economic activities.

As MRC informed earlier, SIBUR, a Russian petrochemical company, Songwon International AG a European branch of Songwon Industrial Co. Ltd, South Korea, and UTS, a Swedish-Russian distribution company, signed a long-term cooperation agreement to supply additives used for polymer production and processing at SIBUR’s production facilities.

Songwon Industrial Co., Ltd. is the 2nd largest manufacturer of polymer stabilizers in the world with an almost 50 year history of breakthrough solutions. Songwon provides added-value products and innovative solutions to the plastics industry. The company’s extensive product portfolio includes polymer stabilizers, alkylphenols and alkylcresols, PVC stabilizers, plasticizers, tin intermediates, polyurethanes, SAP and flocculants.
MRC

MOSCOW (MRC) - "Bashkir Soda Company" (BSC, a former Sterlitamak "Kaustik"), a division of the JSC "Bashkir Chemistry", shut production of polyvinyl chloride (PVC) for scheduled maintenance works, said ICIS-MRC Price Report, citing customers of the company.

BSC shut production of suspension polyvinyl chloride (SPVC) for scheduled maintenance on 12, August. According to the company's customers, maintenance work will last 14 days, the production is to be resumed fully on 27, August.

The producer postponed the date of the shutdown several times. Previously the beginning of maintenance works was scheduled for the last week of August.

The annual production capacity of PVC at the plant is 230,000 tonnes. The company this year plans to increase its capacity up to 240,000 tonnes/year by the introduction of technological innovations.

Total PVC production at BSC reached 125,300 tonnes in the first six months of the year, up 11% year-on-year.
JSC "Bashkir Soda Company" was founded in April 2013 by the takeover of JSC "Soda" to JSC "Kaustik". The company together with JSC "Berezniki Soda Plant" and the transport company JSC "Transneftehim" is a part of JSC "Bashkir Chemistry".

The company offers nonorganic and organic chemicals, as well as PVC and PVC processing products. Its products include soda ash, refined sodium bicarbonate (baking soda), white carbon black, calcium chloride, PVC cable compounds, caustic soda, hydrochloric acid, dichloroethane, corrosion inhibitors, chloroparaffins, polyethylenepolyamines, PVC films, and others.
MRC