Russian HDPE market: results of 2019

MOSCOW (MRC) - This year was quite difficult for the Russian market of high density polyethylene (HDPE). HDPE market was oversupplied over the year. Autumn scheduled maintenances of the two largest producers did not affect the balance of the market; the last two months of the year were remembered for a dynamic reduction in prices, said MRC analysts.

2019 was atypical for the HDPE market and rather complicated over the past few years. Excess imports put significant pressure in the first half of the year in the Russian market, as a result of which HDPE was constantly getting cheaper after the record price level that was reached in October 2018. The seasonal factor led to a stronger demand in the summer months and a slight increase in prices.

September shutdowns for repairs of the two largest producers - Stavrolen and Kazanorgsintez did not lead to a shortage, and had only a short-term affect on prices. The oversupply led to lower prices since October, while the dynamics of falling prices intensified in November - December.

2020 will be even more difficult due to the launch of a new production in Tobolsk. The availability of HDPE in the Russian market exceeded demand by 10-12% in the first half of the year, which was mainly due to the growth in imports.

Imports grew by 40% in January - June 2019 compared to the same period a year earlier. The main increase in the imports accounted for for raffia from Central Asia.

It is worth noting that the volume of imports could be even greater if the new plant in Turkmenistan - the Kiyanlynsky Polymer Plant (annual capacity of 386,000 tonnes) worked stably. HDPE prices were on average at Rb110,000/tonne CPT Moscow, including VAT in the Russian market in January for blow moulding and film polyethylene.

And under the pressure of excess supply, polyethylene prices fell to Rb100,000/tonne CPT Moscow, including VAT and below in y July.
Prices stabilised in the polyethylene market in summer, and the market itself was already more or less balanced in terms of supply and demand.
Moreover, Gazprom neftekhim Salavat shut its facilities for lengthy repairs in July, and some market participants began to prepare for September, when Stavrolen and Kazanorgsintez, with a total capacity exceeding 800,000 tonnes per year, stopped their facilities for lengthy repairs.

The shutdown of the two largest Russian manufacturers in September led to short-term price increases, but it did not led to a shortage.
Some consumers built up additional stocks of HDPE in the period of scheduled maintenances, but to a greater extent the lack of Russian polyethylene was offset by record volumes of imports since 2012.

External deliveries exceeded 30,000 tonnes in July - November, with the exception of October. With the end of turnarounds at domestic manufacturers in mid-October, prices began to go down under the pressure of an increase in HDPE supply.

The dynamics of lower prices for polyethylene increased in November - December. Prices fell below the level of 2018.

It is also worth noting that a new plant, ZapSibNeftekhim, with a total capacity of 1.5 mln tonnes per year, began to produce HDPE in test mode in November. The debut of the new producer was with the production of injection moulding HDPE.

The appearance of natural pipe polyethylene is expected in the first quarter of 2020. In fact, the new producer in its rated capacity exceeds the total capabilities of the existing four manufacturers. There will be a complete reformatting of the Russian HDPE market in 2020, taking into account new realities and doubling of capacities with an increase in demand by 3-5% per year.

MRC

MOSCOW (MRC) -- Changzhou New Solar Chemical has shut its No. 1 styrene monomer (SM) plant owing to technical issues, according to Apic-online.

A Polymerupdate source in China informed that the company has halted operations at the plant on December 26, 2019. The plant is likely to remain shut till mid-January, 2019.

Located at Changzhou city, Jiangsu province in China, the No. 1 SM plant has a production capacity of 350,000 mt/year.

SM is the main feedstock for the production of polystyrene (PS).

According to MRC's DataScope report, overall imports of general purpose polystyrene (GPPS) and high impact polystyrene (HIPS) to Russia rose in the first eleven months of 2019 by 11% year on year to 44,700 tonnes. This figure was at 40,200 tonnes in January-November 2018. At the same time, GPPS and HIPS imports to the Russian market slumped by 40% in November, totalling 3,600 tonnes versus 6,000 tonnes in November 2018. Imports of material into the country were 3,600 tonnes in October 2019.

Changzhou New Solar Chemical Co., Ltd. was founded in 2007. The company's scope of activity includes the production of petrochemical products.
MRC

MOSCOW (MRC) - Versalis, the petrochemical division of Italy's Eni SpA, plans to stop a cracking unit in Priolo, Sicily, for repairs in the last days of December, Polymerupdate reports.

The capacity of the cracking unit at this complex is 490,000 tonnes of ethylene and 130,000 tonnes of propylene per year. The maintenance works will last until February next year. Loading at this cracking installation was reduced in November and December.

It was previously reported that Versalis shut repairing this cracking unit in the spring of 2018.

Ethylene and propylene are the main raw materials for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to ScanPlast of Market Report, the estimated PE consumption in Russia amounted to 1,589,580 tonnes in the first nine months of this year, which is 7% more than a year ago.Shipments of all PE grades increased.
Calculated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Versalis is a petrochemical company, a 100% subsidiary of the Italian oil and gas company Eni SpA. The company produces a wide range of petrochemical products, and is also one of the world's leading elastomer companies.
Eni spa (Ente Nazionale Idrocarburi) is an Italian oil and gas company headquartered in Rome. Eni operates in 70 countries.
mrcplast.com

MOSCOW (MRC) -- Japan's largest refiner JXTG Nippon Oil & Energy is looking to reduce term crude oil imports from the Middle East in 2020 in order to diversify supply sources and adopt a flexible feedstock procurement strategy in preparation for stricter marine fuel sulfur requirements, reported S&P Global with reference to the president of parent company JXTG Holdings' statement Friday.

"We are looking to reduce fixed deals as much as possible in order to be able to buy light and heavy grades as needed on a spot basis," Tsutomu Sugimori said at an earnings press conference in Tokyo.

"This would be most economically rational as well as helping (us) to respond to the IMO (mandate)," Sugimori said, referring to the International Maritime Organization's sulfur limit mandate for marine fuels from next year.

The possible move by JXTG, which has an installed refining capacity of 1.93 million b/d, to reduce its Middle East term crude supply is significant because the supply from the region accounted for 88% of Japan's total crude imports in 2018.

Japan's term crude imports also accounted for 69% of the 3.06 million b/d imported in 2018, with spot supplies making up the balance, according to the Ministry of Economy, Trade and Industry data.

Asked whether JXTG is looking to cut term crude procurements from the Middle East, Sugimori told reporters: "After all the Middle East accounts for the largest amount of our term (supply)." "If we are reducing them (term procurements), that's only the region," he added.

Sugimori's remarks came as JXTG has already made efforts to diversify its crude supply sources to generate economic benefits, while keeping the Middle East as its main supply source.

Japanese refiners typically import crude on VLCCs from the Middle East and refine sour grades with desulurizers to generate economic benefits, while they import arbitrage cargoes on smaller Aframax or Suezmax tankers.

"While the Middle East is currently large (as a supply source) because of the economical rationale, there are some issues surrounding the Strait of Hormuz," Sugimori said.

Tokyo became nervous after the September 14 attacks on Saudi Arabian oil facilities, which occurred after two ships, including one operated by a Japanese shipping company, were attacked on June 13 just outside the Strait of Hormuz. A key route for oil tankers in the Persian Gulf, the Strait of Hormuz is used for around 80% of Japan's crude imports.

JXTG's ambition to adopt a more flexible approach in its crude procurements also came at a time when the refiner is increasingly adjusting its production of IMO-compliant bunker fuels following its start of commercial supply in October.

The IMO will cap global sulfur content in marine fuels at 0.5% from January 1, down from the current 3.5%. This applies outside the designated emissions control areas, where the limit is already 0.1%.

"Our principle is to minimize residual output in our throughput system," said Sugimori, adding that the company will still be able to find buyers for its high sulfur fuel oil supply after making a good progress in cultivating a customer base.

To produce IMO-compliant bunker fuel oil, JXTG is looking to buy light crude oil from the Middle East, the US and Russia, Sugimori said.

"Although I am not sure how this works out by our unit configurations, we should aim for the system to take any (crude) from anywhere," Sugimori said. "The more we diversify [our supply sources], the easier it becomes to respond to the IMO (mandate)."

Since the start of the supply of IMO-compliant bunker fuel, JXTG has been ready to supply 0.5% sulfur bunker fuel oil at eight refineries - all of the refineries it had planned to supply the fuels.

As MRC informed before, JXTG Nippon Oil & Energy resumed operations at its cracker on June 17, 2018, following an unplanned shutdown. The cracker was taken off-line in end-May 2018 owing to Furnace issues. Located at Kawasaki in Japan, the cracker has an ethylene production capacity of 540,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.
MRC

MOSCOW (MRC) -- Alfa Laval, a leading global provider of specialized products and engineering solutions based on its key technologies of heat transfer, separation and fluid handling, has strengthened its operations in the United States with three new facilities, expanding its commitment to serving its customers in the United States, reported Hydrocarbonprocessing.

These investments better position Alfa Laval as a key partner for its customers throughout the United States. Alfa Laval customers will benefit from greater accessibility to the products, services, capabilities and industry-leading expertise they need to improve their processes and enhance their business’ sustainability and profitability.

"Our focus is to add value to our customers’ businesses through quality, a reliable supply chain, stability, performance innovation, and deep product and application experience" says Jo Vanhoren, managing director and president, North America Cluster, Alfa Laval. "The expansion gives us greater flexibility to adapt to customers’ needs. We’re producing closer to our customers, enhancing sustainability overall, and we’re faster, as needed, to serve our customers better."

Already the market leader in the United States and North America, this USD50 million investment continues to increase the company’s pace of innovation, while providing a stronger local presence for its customers in the United States. These state-of-the-art facilities provide Alfa Laval customers access to the company’s expert engineers for unrivaled product and application competence, and service centers designed around making it easier for customers to keep their equipment and processes optimized for performance.

"We are investing in logistical excellence - localized production, service, supply and distribution - to create even better experiences for our customers," says Vanhoren. "Our focus is to add value to our customers’ businesses. We are committed to developing a more sustainable environment and turning our customers’ sustainability challenges into business opportunities."

The company has expanded its facility in Richmond, Va., with a new brazed heat exchanger production unit. This will provide customers in the United States with an enhanced and streamlined supply chain for this range of compact heat exchangers. Because of this expansion, 90 % of the most popular brazed heat exchanger models will be produced in the United States.

Alfa Laval has expanded its facility in Greenwood, Ind., to house a new, automated distribution center which, combined with a centralized transportation hub outside of Indianapolis, will shorten order lead times for its customers. The facility features state-of-the-art service center upgrades for reconditioning and repair of plate heat exchangers, decanters and high-speed separators. Plus, an all-new high-speed separation center of competence has been developed, offering factory acceptance, media testing, and hands-on customer training from expert Alfa Laval engineers.

Alfa Laval also expanded its facility in Broken Arrow, Okla., with an all-new spiral heat exchanger manufacturing facility, adjoining its existing air-cooled heat exchanger facility. Together, these facilities offer a Welded Competence Center for customers in these demanding market applications.

As MRC reported earlier, Alfa Laval has recently won an order to supply compact heat exchangers to a refinery and petrochemical plant in China. The order has a value of approximately SEK 100 million and is booked in the Welded Heat Exchangers unit of the Energy Division. Deliveries are scheduled for 2020.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.
MRC