February LDPE prices rose in Russia to record levels

MOSCOW (MRC) -- Despite seasonal factors, February low density polyethylene (LDPE) prices grew significantly, prices reached record levels over the past few years. A similar situation in foreign markets was the main reason, according to ICIS-MRC Price report.

In the previous years, LDPE in the Russian market became cheaper in January-February due to low seasonal demand and oversupply. The current year was an exception. High polyethylene (PE) prices in foreign markets and, as a result, a good export alternative forced Russian producers to increase their LDPE prices similarly in the domestic market. In early February, LDPE prices went up by more than 12% from January.

In November-January, LDPE prices in Europe rose by more than EUR300/tonne, European producers intend to raise their February prices further - by EUR200/tonne. A similar situation was registered in the Turkish market. At the same time, it should be noted that LDPE prices increased by an average of only USD200/tonne over the past three months in Asia.

It was the rapid rise in LDPE prices in several regions of the world over the past few months that was the main reason for the price rise in the Russian market. Some Russian producers contracted LDPE for February shipments to Europe at EUR1,140-1,170/tonne, FCA, which is higher than the price level in the Russian market, even given the increase in early February.

There is no shortage of LDPE in the Russian market, weak demand and record high prices have offset supply restrictions from some producers so far. Thus, there were disruptions in PE shipments from Kazanorgsintez, and Ufaorgsintez also reduced its capacity utilisation by 30% because of the fire.

In early February, spot offer prices for 108 grade LDPE started from Rb117,000/tonne CPT Moscow, including VAT, whereas a couple of weeks ago, prices of this PE grade did not exceed Rb107,000/tonne CPT Moscow, including VAT. The situation is similar for other LDPE grades.

Demand for PE subsided significantly is early February, many converters foundnd it difficult to quickly accept new prices primarily because of the difficulty of transferring the new cost of material to finished products. Some contracts for finished products were settled back in December, when PE prices were down by an average of 15% from February.
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1. Albemarle launches USD1.3-billion stock offering, expects sequential sales increase

MOSCOW (MRC) -- Albemarle has commenced a USD1.3-billion common stock offering, to raise funds for multiple lithium expansion projects, according to Chemweek. The projects are in Australia, Chile, and the US. Albemarle will also use the proceeds to pursue “opportunities in China,” and for short-term debt repayment and general corporate purposes, the company says. Shares in Albemarle closed at USD169.35 on 2 February, and reached a 52-week high on 20 January. The company has about 106.5 million shares outstanding. J.P. Morgan is acting as lead book-running manager and underwriter on the offering. The underwriters have a 30-day option to purchase up to USD195 million additional common shares.

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MOSCOW (MRC) -- Crude oil futures rose during mid-morning trade in Asia Feb. 3 after the American Petroleum Institute reported a large draw in US crude inventories, underscoring the bullish sentiment being fostered by improved demand-supply fundamentals across the oil market, reported S&P Global.

At 10:46 am Singapore time (0246 GMT), the ICE Brent April contract was up 26 cents/b (0.45%) from the Feb. 2 settle at USD57.72/b, while the March NYMEX light sweet crude contract was up 27 cents/b (0.49%) at USD55.03/b.

The rise in oil futures came after API data released late Feb. 2 showed a sizable 4.26 million-barrel draw in US crude inventories in the week to Jan. 29. The data also indicated a marginal improvement in fundamentals for downstream markets, reporting 240,000-barrel and 1.62 million-barrel draws in US gasoline and distillate inventories, respectively.

The market will look to more comprehensive inventory data due for release by the Energy Information Administration later Feb. 3 for confirmation. If the EIA data validates the API data, oil markets could receive yet another boost.

Oil markets had already been turning bullish as demand in the physical market ticks higher and Saudi Arabia's 1 million b/d output cut begins to constrict supply.

"Oil continues to strengthen today with Brent just shy of USD58/b before profit-taking set in. Considerable activity in the physical market is behind the move," said Stephen Innes, chief global market strategist at Axi, in a Feb. 3 note.

The slow amelioration of the coronavirus pandemic in parts of the world has inspired further confidence in the demand outlook for oil.

Analysts noted that both infection and hospitalization numbers in the US were declining and that the Biden administration was on track to meet its target of administering 100 million vaccinations in 100 days. China also seems to have stemmed a coronavirus resurgence that had oil analysts worried in January, reporting only 25 infections Feb. 2, a one-month low.

"Crude prices are rallying as the US has turned a critical corner in the fight against COVID-19... the biggest risk remains a setback in Chinese crude demand and so far that does not seem to be happening," said Edward Moya, senior market analyst at OANDA, in a Feb. 3 note.

The market also has its eyes set on the OPEC+ Joint Ministerial Monitoring Committee meeting scheduled for later Feb. 3, which will provide a preview for the OPEC+ meeting in March, when the alliance is expected to unveil its production plan going forward.

"The big question (for the meeting) is how this rapid price rise might open up another potential can of worms for OPEC as members will want to pump more oil, not to mention US shale will be eager to step on the production accelerators," Innes said.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).
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MOSCOW (MRC) -- Versalis S.p.A. (San Donato Milanese), the chemical company of Italian energy major Eni, has licensed to Enter Engineering Pte. Ltd. a Low-Density Polyethylene/Ethyl Vinyl Acetate (LDPE/EVA) swing unit to be built as part of a new Gas-to-Chemical Complex based on MTO-Methanol to Olefins technology to be located in the Karakul area in the Bukhara region of the Republic of Uzbekistan, said Chemweek.

The plant is part of a global complex that will have a major importance in Central Asia due to its size and the technologies involved. Enter Engineering Pte. Ltd., one of the largest construction companies in the region, will act as licensee on behalf of the Uzbek Company Jizzakh Petroleum JV LLC, who will own and operate the LDPE/EVA unit and the entire Gas to Chemical Complex once built and made ready for operation.

The licensed plant will be based on the Versalis proprietary LDPE/EVA Technology. The unit will be designed for a maximum production of EVA equivalent to180,000 metric tons per year (m.t./yr). LDPE and EVA are ethylene polymers and co-polymers possessing a suitable balance between processability and mechanical properties, which are widely used in the industry for the production of materials covering a variety of applications including film, coating, injection moulding, packaging, medical appliances, foams and as a base component for hot melt adhesives.

The LDPE/EVA technology is part of the wider polymers’ technologies portfolio offered by Versalis to produce high-value products. Versalis’ background and expertise as licensor of its proprietary technologies relies on its enduring R&D and lab & pilot plant testing capabilities, and full-scale operational experience at its own production facilities. This knowledge strengthens Versalis’ actions to support and assist its licensees in achieving their specific needs from the project development phase throughout the operational stages.

The contract has been acquired by Versalis in cooperation with ECI Group, a US based plant-lifecycle specialist providing services in design, engineering, procurement, construction, technology and consultancy particularly focused on polyolefins plants. ECI Group comprises Engineers and Constructors International (US), Simon Carves Engineering Ltd. (UK) and International Technical Excellence Center (US).

As per MRC, Versalis, Eni's chemical company and a leader in the production and marketing of elastomers, and AGR, company that owns technology for the devulcanization of post-consumer elastomers, signed an agreement to develop technological innovations and new products and applications with recycled rubber.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

Eni is an Italian multinational oil and gas company headquartered in Rome. It has operations in in 79 countries, and is currently Italy's largest industrial company. The Italian government owns a 30.3% golden share in the company, 3.93% held through the state Treasury and 26.37% held through the Cassa depositi e prestiti. Another 39.40% of the shares are held by BNP Paribas.
MRC

MOSCOW (MRC) -- Nikkiso Cryogenic Industries’ Clean Energy and Industrial Gases Group (Group), a part of Nikkiso Co., Ltd (Japan), has recently announced the sale of its Turboexpander Business Line to Air Liquide, according to Hydrocarbonprocessing.

Located mainly in Santa Ana, California, the Turboexpander Business Line designs, manufactures and sells Turboexpanders within the industrial gas industry as well as the natural gas liquefaction industry.

Air Liquide is a world leader in gases, technologies and services for Industry and Health and has been the largest customer of the Nikkiso Group’s Turboexpander Business Line.

Nikkiso’s Cryogenic Service (NCS) unit will remain an authorized service company and will continue to provide Aftermarket Services, including repair and servicing of ACD designed and built Turboexpander machines while Air Liquide will provide service activities to its plants and its third party plants customers. This arrangement will guarantee all ACD service clients will continue to receive strong support going forward.

“We are confident the Turboexpander Business Line will continue to grow under Air Liquide’s management, and look forward to continuing to provide our services in favor of the entire ACD clientele with Air Liquide for a long time to come,” according to Peter Wagner, CEO of Cryogenic Industries and President of the Group.

As MRC wrote earlier, in September 2020, Air Liquide finalised an agreement with Sasol to acquire the biggest oxygen production site in the world with a plan to reduce its carbon dioxide (CO2) emissions by 30%. After the announcement on July 29, the international major industry gas company has now entered into a business purchase agreement with Sasol to acquire the oxygen production site in Secunda, South Africa.

We remind that Sasol's world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol's new cracker, the heart of LCCP, is the third and most significant of the seven LCCP facilities that came online and will provide feedstock to the company's six new derivative units at Sasol's Lake Charles multi-asset site.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
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