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Grupa Azoty schedule for PDH/PP project in Poland slides into 2023

November 24/2020

MOSCOW (MRC) -- The scheduled startup of Grupa Azoty’s (Tarnow, Poland) flagship Polimery Police propane dehydrogenation (PDH) and polypropylene (PP) project at Police, Poland, has been delayed to the first quarter of 2023 due to the impact of the COVID-19 pandemic, reported Chemweek.

The project is proceeding “without major obstacles,” said Grupa Azoty chairman Mariusz Grab, while reporting the company’s third quarter financial results. However, faced with the pandemic’s impact, the schedule has been “extended by three months,” Grab says. The contractor’s remuneration has also been increased by EUR33 million (USD39 million) as a result, he adds. Hyundai Engineering is the general contractor.

Construction of the estimated EUR1.5-billion project is currently 32% complete, according to the company. Completion was previously scheduled for the fourth quarter of 2022. Work currently underway includes foundation work, hydrotechnical works, and the installation of propane and ethylene tanks at the port of Police.

The Police project includes a 437,000-metric tons/year PDH plant, feeding a similar-capacity PP unit. Honeywell UOP is providing its PDH technology and W.R. Grace its Unipol PP process.

Grupa Azoty announced a net profit of 41 million Polish zloty (USD10.9 million) for the third quarter, down 32% year on year (YOY), due mainly to negative margins in its plastics business, it says. Sales totaled Zl2.4 billion, down Zl148 million YOY, while EBITDA of Zl250 million declined nearly 25% compared to the prior-year period. The company says its plastics and chemicals businesses were both “strong influenced” by the pandemic, contributing to zero margins in chemicals and negative margins in plastics.

Sales in the plastics segment declined Zl93 million YOY to Zl245 million, with an EBITDA margin of minus 3.3%, down 5.2 percentage points YOY. Prices of basic raw materials such as benzene and phenol remained low, while product prices - mainly polyamide - decreased sequentially during the third quarter and were approximately 20% lower YOY, it says. “The situation in the segment remains difficult,” it says.

The chemicals segment recorded a rise in 6.6% rise YOY in sales to Z612 million but EBITDA margin decreased by 5.8 percentage points to 0.1%. Sales in quantitative terms for most of the segment’s products were higher during the quarter compared to the prior-year period, although there was a “significant decrease” for sulfur and other urea solutions, it says. Prices were lower YOY for almost all chemical products, however, with the largest negative price deviations for oxo alcohols and melamine, which was hit by a decline in demand in the furniture market, it notes.

Grupa Azoty’s fertilizer segment was described as stable during the quarter, with increased sales volumes and a high EBITDA margin, due to relatively low gas prices, it says. Fertilizer sales totaled Zl1.44 billion, down YOY from Zl1.52 billion, with the EBITDA margin of 13.8% down slightly from the equivalent quarter last year.

As MRC informed earlier, in May 2019, PDH Polska, owned by top Polish chemical group Azoty and Grupa Azoty Police, signed a EUR 993 million turn-key contract with Hyundai Engineering Co., Ltd for the execution of the Polymers Police investment project. The "Polymers Police" project is a strategic undertaking of Grupa Azoty Capital Group implemented by PDH Polska S.A., a special purpose vehicle. "Polymers Police" is one of the largest chemical investments in this part of Europe. The aim of the project is to build a completely new petrochemical complex, the scope of which will include: PDH Unit; PP Production Unit; PP Logistics Infrastructure; Handling and Storage Terminal (gas terminal) and Auxiliary Systems. The annual production capacity of the complex is to reach 437 thousand tonnes of polypropylene.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
Author:Margaret Volkova
Tags:PP, PP random copolymer, propylene, petrochemistry, Grupa Azoty Zak, Honeywell, Hyundai Petrochemical, W.R. Grace, Poland, Russia.
Category:General News
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