NEO Group is working to full capacity

MOSCOW (MRC) -- NEO GROUP, one of the largest European PET producers, says it is currently working to full capacity, although the first days of the lockdown were followed by some minor challenges in the logistics chain, said Sustainableplastics.

"The food industry and related activities were pronounced strategic during the pandemic, and so our production is in full swing,” says Paulius Ambrazaitis, the chairman of NEO GROUP.

“The demand for packaged food currently grows, it is both fuelled by safety and longer shelf life that decreases the number of shopping trips. We are also seeing an increase in demand for segments such as bottles for disinfection liquids and the medical sector - the market needs more test containers, medicine packaging, and other products that use PET."

Production increased 15% last year at NEO GROUP according to the preliminary figures, while turnover dropped 6% to €508m. The decrease is attributed to the drop in raw material prices. Currently, NEO GROUP is fulfilling its first-quarter plans and expects at least 'stable' sales for the rest of the year. "We've been hearing negative feedback from the public regarding the plastics. It looked like the plastics industry was Public Enemy No. 1. Now, as the world faces a major pandemic, we see an increasing understanding that plastics packaging is probably the safest one, it has great barrier properties and prolongs the shelf life of products. Plastics are also needed everywhere - for the production of medical masks, shields, and disposable clothing. This is all made of polyethylene, polyester, PET. Safety is the main priority now. However, as consumers, we should remain responsible by recycling and not littering," commented Ambrazaitis who also highlighted NEO GROUP's commitment to circular economy efforts, as well as research and investment in this field.

Another Klaipeda PET giant - Orion Global PET, a member of Indorama Ventures family - is a little more reserved, but still very confident today. The company says its production, planning, and payments in the supply chain have all been steady, but logistics and supply processes now require a bit more effort from the company.

"I'm certain that once the pandemic is gone, the markets will need some time to strengthen,” says Jitendra Kumar Malik, the CEO of Orion Global PET. “I believe the negative impact of COVID-19 will take some time to heal. Nevertheless, by taking into account the globality of the pandemic and plans by governments to allocate finances, we believe we shall handle the situation well. We believe that our experience and capital will allow us to make the right decisions to secure our continuity and to stabilize the demand of our products used in the food and medical industries."

He says that the Klaipeda company maintained a "stable result" last year, but he doesn't want to speculate on this year's result because of unstable oil prices. He also stresses that society is interested in COVID-19-related information, but the protection of society and the health system is not possible without special fibres and plastics.

"I'd like to believe that eventually, the focus of the society will return to the areas of environment and packaging, but consumers will not be manipulated by selective facts,” Malik said.

”After the pandemic is gone, we will further strive to introduce society to our operations, deepen its understanding of PET during our educative meetings with school and university students, meetings with other industry players and in conferences."

He also added that the company has tested remote work during the lockdown and it worked very well. "We needed to review our operations management processes and to find new, better collaboration and information management measures,” Orion's manager said. “It worked well and we plan to continue after the outbreak."

As per MRC's ScanPlast report, Russia's estimated PET consumption decreased to about 53,890 tonnes in February 2020, down by 3% year on year. 100,830 tonnes of PET chips were processed in Russia in the first two months of 2020. February PET production in Russia dropped to 45,800 tonnes, down by 5% year on year. Russia's overall PET production fell in January-February 2020 by 13% year on year.

MRC

MOSCOW (MRC) -- Qingdao Haiwan Chemical, has planned resume operations at its styrene monomer (SM) plant in Shandong, according to Apic-online.

A Polymerupdate source in China informed that, the company is likely to bring on-stream its plant following a turnaround by end-April, 2020. The plant was shut on March 21, 2020.

Located at Qingdao in Shandong province in China, the SM plant has a production capacity of 500,000 mt/year.

According to ICIS-MRC Price report, in Russia, Nizhnekamskneftekhim reduced its April selling PS prices by Rb10,000/tonne. GPPS for injection moulding and extrusion was offered at Rb86,000-90,000/tonne CPT Moscow, including VAT, whereas HIPS - at Rb90,000-94,000/tonne CPT Moscow, including VAT. Penoplex reduced its GPPS prices by Rb10,000/tonne. Demand for the Kirishi plant's material remained quite good. And Gazprom neftekhim Salavat reduced its indicative prices by Rb8,000/tonne, and its GPPS prices for small- and medium-sized buyers have not been settled yet.

Qingdao Haiwan Chemical Co., LTD. was founded in 1947, one member enterprise of Qingdao HIWAN GROUP LTD in Dongjiakou Industrial Park, located in NO.66, Gangfeng Road, Poli Town, Huangdao District, Qingdao city, Shandong Province. The company's main product includes 32% and 50% caustic soda, vinyl chloride (VCM), SG-8, SG-7, SG-5, SG-3 type of polyvinyl chloride (SPVC), dichloroethane (EDC), styrene etc.
MRC

MOSCOW (MRC) -- The Retal Industries group sees the recent developments from a quite positive perspective. In Klaipeda FEZ, it owns one of the largest European PET producers - NEO GROUP- and an HDPE caps and APET film manufacturer, Retal Baltic, said Sustainableplastics.

The initial data indicate that Retal Baltic generated some €46m in revenue last year, a 4.2% decrease compared to the year before. However, the company’s output at 22,400 tons was only 2.6% below 2018. Retal suggests that a major part of revenue decrease can be attributed to plummeting PET prices. This notwithstanding, company, also saw its profit rise 6% last year.

This year, Retal Baltic plans to fully employ the expansion projects of 2019 and to increase output to 28,000 tons. Consequently, it expects revenue to grow by 20% to €54.5m.

"Both of our core products - HDPE caps for drinks packaging and food-grade APET film - remain strategically important, even under the circumstances of business and societal restrictions,” says Viktorija Jureviciute, the CEO of Retal Baltic.

“Since the COVID-19 outbreak, we have witnessed a slight increase in demand from our existing customers; however, some projects with our new and prospective customers have temporarily stalled. That is because some testing, equipment set up, auditing, aligning, and other processes are always needed when onboarding new customers.”

As Retal Baltic increased its production capacity of caps by 15% and 35% for film, the company expects the revenue from these segments to grow in line with these numbers. While the numbers from March and early April look good, prolonged lockdowns and quarantines may impact projects with new customers. "We aren't concerned too much, as we have been paving long term relations with our customers,” said Jureviciute. “However, we are aware that the pandemic impacts various processes for both us and our partners. For instance, we were planning to upgrade some of our equipment, but our suppliers from Northern Italy aren’t operating currently. We expect to be late with this particular project, but by a few months, not more. Another challenge is the decrease of deposit PET bottle collection and recycling: consequently, there are less materials in the secondary PET market and the prices are growing. However, oil, as the primary material for PET, is getting less expensive."

The company also admits that decisions for future investment and expansion projects are currently on hold at both Retal Baltic and its international partners. However, the company is eager to resume its investment considerations once the situation becomes more stable. In March, Retal Baltic provided more than 3 tons of special APET film to Lithuanian makers' community, manufacturing protective shields for medics. The company has even modified some of its production processes to pursue this initiative. Jureviciute says that this contribution was pro bono, however, the company sees demand for such materials from the commercial segment. In the short run, such materials for protective shields may account for 2-3% of Retal Baltic's portfolio; however, this demand should significantly decrease or disappear after the pandemic goes away.

"Speaking of the long run though, it's obvious that product safety, sterility and long shelf life have now become incredibly important factors in society,” Jureviciute notes.

“But only plastics industry insiders have been talking about this and were rarely heard. The current situation has shown that we should split the features of packaging materials from the questions of their use, collection, and recycling. I'm certain that the 'safety first' principle will stick around for a long time among the consumers. Of course, we do support the efforts in the circular economy, recycling and environmental fields, but it now becomes clear that the market and its regulators won't be able to ignore the basic need for safety.”

As per MRC's ScanPlast report, Russia's estimated PET consumption decreased to about 53,890 tonnes in February 2020, down by 3% year on year. 100,830 tonnes of PET chips were processed in Russia in the first two months of 2020. February PET production in Russia dropped to 45,800 tonnes, down by 5% year on year. Russia's overall PET production fell in January-February 2020 by 13% year on year.
MRC

MOSCOW (MRC) -- ExxonMobil Corp kicked off construction on Wednesday of its USD10 billion petrochemical complex in south Chinese city Huizhou, reported Reuters with reference to state news agency Xinhua.

The complex, which consists of a 1.6 million tonnes per year ethylene facility, is one of the few mega petrochemical projects in China wholly owned by a foreign investor.

As MRC informed before, in September 2019, ExxonMobil announced plans to spend GBP140 million over the next two years in an additional investment program at its Fife ethylene plant, which has a capacity of more than 800,000 t/y.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

MOSCOW (MRC) -- The world economy may suffer its worst year since the Great Depression of the 1930s, the International Monetary Fund (IMF) says in its latest forecast, said Canplastics.

“The COVID-19 pandemic is inflicting high and rising human costs worldwide,” IMF said in its April 2020 World Economic Outlook. “As a result of the pandemic, the global economy is projected to contract sharply by –3 per cent in 2020, much worse than during the 2008–09 financial crisis.”

Just three months ago, IMF had forecast that more than 160 countries would register income growth on a per-capita basis. Now, it expects negative per-capita income growth this year in 170 countries.

“The world has changed dramatically in the three months since our last World Economic Outlook update on the global economy,” said Gita Gopinath, IMF economic counselor, in the Foreward to the latest report. “A pandemic scenario had been raised as a possibility in previous economic policy discussions, but none of us had a meaningful sense of what it would look like on the ground and what it would mean for the economy.”

The outlook for Canada calls for a contraction of 6.2 per cent this year followed by growth of 4.2 per cent in 2021.

“It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,” Gopinath continued

A partial recovery is projected for 2021, IMF said, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound. “Much worse growth outcomes are possible and maybe even likely,” IMF said. “This would follow if the pandemic and containment measures last longer, emerging and developing economies are even more severely hit, tight financial conditions persist, or if widespread scarring effects emerge due to firm closures and extended unemployment.”

In a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8 per cent in 2021 as economic activity normalizes, helped by policy support. “There is extreme uncertainty around the global growth forecast,” IMF said. “The economic fallout depends on factors that interact in ways that are hard to predict, including the pathway of the pandemic, the intensity and efficacy of containment efforts, the extent of supply disruptions, the repercussions of the dramatic tightening in global financial market conditions, shifts in spending patterns, behavioral changes (such as people avoiding shopping malls and public transportation), confidence effects, and volatile commodity prices.”

According to IMF, economic policies will also need to cushion the impact of the decline in activity on people, firms, and the financial system; reduce persistent scarring effects from the unavoidable severe slowdown; and ensure that the economic recovery can begin quickly once the pandemic fades. “Because the economic fallout reflects particularly acute shocks in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses,” the report said. “Such actions will help maintain economic relationships throughout the shutdown and are essential to enable activity to gradually normalize once the pandemic abates and containment measures are lifted.”

So far, IMF said, the fiscal response in affected countries has been swift and sizable in many advanced economies – such as Australia, France, Germany, Italy, Japan, Spain, the United Kingdom, and the U.S. “Many emerging market and developing economies – such as China, Indonesia, and South Africa – have also begun providing or announcing significant fiscal support to heavily impacted sectors and workers,” IMF said. “Fiscal measures will need to be scaled up if the stoppages to economic activity are persistent, or the pickup in activity as restrictions are lifted is too weak.”

Economies facing financing constraints to combat the pandemic and its effects may require external support, IMF noted. “Broad-based fiscal stimulus can preempt a steeper decline in confidence, lift aggregate demand, and avert an even deeper downturn,” the report said. “But it would most likely be more effective once the outbreak fades and people are able to move about freely."

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC