Penoplex postponed restart of GPPS production in Kirishi due to shortage of feedstock

MOSCOW (MRC) -- Penoplex, Russia's largest producer of extruded polystyrene foam, was forced to postpone the resumption of its general purpose polystyrene (GPPS) production at the Kirishi plant because of a shortage of feedstock - styrene monomer (SM), the company's sources told MRC on Thursday.

This plant with a capacity of 50,000 tonnes of GPPS per year was shut for maintenance on 5 August 2019 and was supposed to return to operation on schedule - on 5 September, according to ICIS-MRC Price report.

Sources said the first lots of feedstock have already begun to arrive at the plant, thus, an approximate deadline for launching the Kirishi plant's polystyrene (PS) production is now scheduled for 15-18 September.

There was an acute shortage of material, including GPPS, in the Russian PS market in late August, which was partially caused by the outage at the Kirishi plant.

In addition, the resumption of Gazprom neftekhim Salavat's GPPS production after a scheduled turnaround was delayed for several weeks. The plant’s production capacities were taken off-stream for maintenance in July, and premium GPPS grades had not yet entered the market as of the end of last week.

Penoplex is a large Russian producer of polymer-based building and decorative materials. The company began its activity in 1998 with the launch of Russia's first line for the production of heat-insulating materials from extruded polystyrene foam under the PENOPLEX trademark. The company has eight production sites, seven of which are located in Russia and one - in the Republic of Kazakhstan (Almaty region), with a total production capacity of 4 million cubic metres.
MRC

MOSCOW (MRC) -- SIBUR and Gazprom entered into a preliminary agreement setting out the key commercial terms for the supply of liquefied petroleum gas (LPG) from Gazprom’s Amur Gas Processing Plant (GPP) to SIBUR’s Amur Gas Chemical Complex (GCC), said the producer on its site.

The document was signed by Dmitry Konov, Chairman of the Management Board of SIBUR Holding, and Alexey Miller, Chairman of Gazprom's Management Committee.

Gazprom’s Amur GPP treats natural gas to be supplied to China and also produces liquefied petroleum gas, pentane-hexane fraction, helium, and ethane fraction. In its turn, SIBUR is developing the project to construct Amur GCC, which would be integrated with the GPP in a single technology chain to process ethane and LPG into polymers for the domestic and global markets.

According to the preliminary agreement, Gazprom will supply 1.5 mtpa of LPG and ethane fraction to the Amur GCC at formula-based prices. As a result, SIBUR will be able to increase its output from 1.5 mt of polyethylene to 2.3 mt of polyethylene and 400 kt of polypropylene. Earlier SIBUR and Gazprom signed a contract for the supply of ca. 2 mtpa of ethane fraction.

The preliminary agreement will enable SIBUR to continue working on the extended version of its Amur GCC project and make a final investment decision by the end of 2019, while Gazprom will acquire a reliable consumer of valuable gas feedstock produced at the Amur GPP.

This partnership will foster the creation of the largest gas processing and gas-chemical cluster in the Amur Region to boost the economic and social development of the entire Far Eastern Federal District. The cluster will enable the Russian processing of the hydrocarbon feedstock from the Amur GPP into in-demand, high added-value products, while also creating over 4,000 skilled jobs at the GCC and the GPP, and more than 5,000 jobs in associated industries, and enhancing the social, transport, and service infrastructure of the town of Svobodny in the Amur Region. It should also significantly boost tax payments to state and municipal budgets.

Dmitry Konov, Chairman of the Management Board at SIBUR Holding: "The signing of the agreement opens up an opportunity for us to increase the amount of hydrocarbon feedstock to be processed in Russia. If we opt for an extended version of the project, LPG will be processed domestically instead of being exported, thus providing additional feedstock for related industries and enabling us to manufacture more high-tech export-oriented products".

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. Meanwhile, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

SIBUR is a uniquely positioned vertically integrated gas processing and petrochemicals company. We own and operate Russia’s largest gas processing business in terms of associated petroleum gas processing volumes and are a leader in the Russian petrochemicals industry. As of 31 March 2014, SIBUR operated 27 production sites located all over Russia, had over 1,400 large customers engaged in the energy, chemical, fast moving consumer goods (FMCG), automotive, construction and other industries in approximately 70 countries worldwide and employed over 27,000 personnel.

MOSCOW (MRC) -- Dmitry Konov, Chairman of the Management Board at SIBUR Holding presented the Amur Gas Chemical Complex (GCC) project to President Vladimir Putin at the Eastern Economic Forum, as per SIBUR's press release.

The Amur Gas Chemical Complex (GCC) project is set to build one of the world's largest gas chemical facilities in the Svobodnensky District of the Amur Region as part of the Svobodny Priority Development Area (PDA). Feedstock for the project will be sourced from the Amur Gas Processing Plant (GPP), which is currently being built by Gazprom to process wet gas from deposits in Siberia and the Republic of Yakutia and then supply it to China. The Amur GCC and GPP will be in close proximity to each other and technologically connected.

SIBUR may implement the project in a basic or extended configuration. The basis configuration provides for processing of 2 mtpa of ethane fraction to come from the Amur GPP. It will have a capacity of 1.5 mtpa of ethylene that could be further transformed into polyethylene grades enjoying both domestic and global demand. The project will create about 1,000 new high-tech jobs at the GCC and auxiliary facilities.

The extended configuration boasts a larger capacity of up to 2.7 mtpa of end products resulting from an additional 1.5 mtpa of liquefied petroleum gas (LPG) supplied by the Amur GPP. If the extended option comes to life, the Amur GCC will become the world's largest producer of polyethylene and polypropylene. The capacity expansion would create up to 300 additional jobs in the region, boosting overall fiscal revenues by RUB 4 bn.

As of now, a long-term agreement for the supply of feedstock (ethane fraction) has been signed with Gazprom and licence agreements and FEED contracts have been made with the engineering companies. As the GCC site is being prepared for construction, SIBUR is working on the project’s extended configuration and holding talks with Gazprom on LPG supplies. The Company is also expecting a potential decision by the government to introduce a negative excise tax on LPG that will create equal processing conditions for various petrochemical resources. The project configuration decision will be finalised by the end of 2019.

Dmitry Konov, Chairman of the Management Board at SIBUR Holding: “The Amur GCC project is certain to attract new technologies to the region boosting social infrastructure development, while also contributing to high-tech production and promoting Russia's non-commodity exports. SIBUR has extensive and successful experience completing major petrochemical projects on time and on budget. Currently, we are working on pre-commissioning at ZapSibNeftekhim, Russia's largest petrochemical facility".

The Amur GCC will be built using cutting-edge production and digital technologies and leveraging advanced solutions of the world's leading licensors to ensure the facility’s long-term seamless operation, its industrial and environmental safety and energy efficiency.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. Meanwhile, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.
MRC

MOSCOW (MRC) -- Ukraine's overall production of high density polyethylene (HDPE) fell in the first seven months of 2019 by 12% year on year, totalling 50,800 tonnes, according to ICIS-MRC Price report.

July HDPE output rose in Ukraine by 9.3% from the previous month to 9,400 tonnes. This figure was at around 8,600 tonnes in June.

Meanwhile, in August, Karpatneftekhim reduced its capacity utilisation by 20% from July, the same level of utilisation is also planned for September.

As reported earlier, Karpatneftekhim announced a reduction of USD48/tonne from August in its HDPE prices for September shipments to the domestic market.
MRC

MOSCOW (MRC) -- The September contract price of propylene was settled in Europe down by EUR50/tonne from the previous month. Therefore, all European producers announced a reduction in export polypropylene (PP) prices for September shipments to the CIS markets, according to ICIS-MRC Price report.

Negotiations over September prices of European PP have begun at the beginning of this week. All market participants said European producers reduced their export prices of propylene polymers for this month's shipments, but in some cases, the price decrease was less than the cut in prices of European propylene.

Deals for September shipments of propylene homopolymers (homopolymer PP) were discussed in the range of EUR1,005-1,055/tonne FCA, down by EUR30-50/tonne from August. Deals for block copolymers of propylene (PP block copolymers) were negotiated in the range of EUR1,090-1,130/tonne FCA, also down by an average of EUR30-50/tonne from the previous month.

Some European producers had restrictions for export shipments, but they were not critical for most buyers. Consumers partially met their needs for PP due to deliveries from the Middle East.
MRC