PP prices reached another historical record in Russia at the end of March

MOSCOW (MRC) - The shortage of polypropylene (PP) in several regions of the world has become the main reason for the rapid rise in prices since the beginning of the year. The Russian market did not stand aside, and in February - March, local converters faced an unprecedented rise in prices. By the end of March, prices reached another record, with some sellers announcing further increase for April shipment, according to the ICIS-MRC Price Report.

PP prices grew dynamically in the markets of Latin America, Europe and Turkey, and at the same time, export prices for Russian producers also grew. As a result, under the pressure of the export alternative and limited supply from a number of suppliers, PP prices began to rise in the Russian market as well.

In the late March prices of homopolymer PP in Russia increased by more than 50% since the beginning of the year, setting new historical records. The export prices of Russian producers exceeded the prices in the domestic market in February - March.

So, depending on the direction of export, export deals in the first month of spring were in the range of USD1,840-2,130/tonne FCA, for homopolymer PP. And only by the end of March, domestic prices of polypropylene in Russia approached export parity for certain regions, while prices stabilised in some export markets. It was very difficult for Russian converters during February - March to pass the new polypropylene price to the cost of finished products.
The processes of renegotiating the prices of finished products were very painful, especially with retail chains.

Because of this the market was divided into three parts. The first group reduced purchases due to difficulties in passing new PP prices to finished products, there were cases of complete suspension of work. The second group of companies, despite record price levels, has good demand for finished products and is ready to accept higher prices in order to fully fulfill obligations to their customers.

The third group of buyers does not have an increased demand for finished products and is ready to put up with low capacity utilisation. Spot offers for the supply of homopolymer PP raffia in the first days of February started at Rb113,500/tonne CPT Moscow, including VAT, whereas at the end of March the cost of this PP from some sellers exceeded the level of Rb170,000/tonne CPT Moscow, including VAT.

A similar situation was with other types of polypropylene. Last week, price discussions started regarding April supplies of polypropylene, with some sellers discussing further price increases. Deals of propylene copolymers were discussed above Rb200,000/tonne CPT Moscow, including VAT.
MRC

COVID-19 - News digest as of 31.03.2021

1. Pandemic prompts Spanish oil refiner to offer furlough scheme for 30% of its staff

MOSCOW (MRC) -- Spanish oil refiner Petronor, majority-owned by Repsol, has offered a furlough scheme for one third of its 900 employees in response to a major reduction in fuel demand due to the COVID-19 pandemic, according to Hydrocarbonprocessing. The refinery in Bilbao, northern Spain, with a capacity of 220,000 barrels of crude oil per day has been processing crude at 60% capacity for 271 days, the company said on Monday, during which time it offered training to keep employees active. Unable to keep this up, the company said it would now start negotiations with labour representatives to decide on temporary layoffs until the end of 2021.

MRC

Clariant joins the European Circular Plastics Alliance

MOSCOW (MRC) -- Clariant (Muttenz, Switzerland), a focused, sustainable and innovative specialty chemical company, has officially joined the EU Circular Plastics Alliance, which is part of the company's active support for the transition towards a more circular plastics economy, as per the company's press release.

The alliance aims to enhance plastics recycling in line with the objectives of the EU Circular Economy Action Plan and the Green Deal program.

Clariant is committed to the Alliance’s goal to boost the EU market for recycled plastics to 10 million tons by 2025. The company’s focus is on addressing the obstacles that are hampering a higher circularity of products within the plastics value chain, in line with the waste hierarchy principles. Clariant’s strategy is based on a smart combination of design for reduction, recycling, and reuse options, as well as solutions for mechanical or chemical recycling.

“Specialty chemicals can act as enablers for new solutions that enhance circularity of plastics by maintaining the value of products, materials and resources in the economy for as long as possible, and by minimizing the generation of waste. Clariant aims to be a leading provider of specialty chemicals that are indispensable to transform a one-way plastics value chain into a circular plastics economy,” said Richard Haldimann, Head of Sustainability Transformation.

Back in 2019, Clariant also established EcoCircle, a company-wide initiative that goes beyond a product focus, looking at the entire value chain, identifying the most sustainable and viable solutions for a circular plastics economy. “With EcoCircle we have the right platform and competencies to identify solutions for closing the loop and to engage with key stakeholders to accelerate plastics circularity,” added Richard Haldimann.

As MRC wrote previously, earlier this month, Clariant and India Glycols Limited (IGL), a leading company in the manufacturing of green technology-based chemicals, announced a strategic partnership to establish a 51-49% joint venture (JV) in renewable ethylene oxide (EO) derivatives.

And in October 2020, Clariant announced the construction of a new state-of-the-art catalyst production site in China. This project represents a significant investment which further strengthens Clariant’s position in China and enhances its ability to support its customers in the country’s thriving petrochemicals industry.

The new facility will be primarily responsible for producing the Catofin catalyst for propane dehydrogenation, which is used in the production of olefins such as propylene. Thanks to its excellent reliability and productivity, Catofin delivers superior annual production output compared to alternative technologies, resulting in increased overall profitability for propylene producers, says the company. Construction at the Dushan Port Economic Development Zone in Jiaxing, Zhejiang Province was scheduled to commence in Q3 2020, and Clariant expects to be at full production capacity by 2022.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.
MRC

Pandemic prompts Spanish oil refiner to offer furlough scheme for 30% of its staff

MOSCOW (MRC) -- Spanish oil refiner Petronor, majority-owned by Repsol, has offered a furlough scheme for one third of its 900 employees in response to a major reduction in fuel demand due to the COVID-19 pandemic, according to Hydrocarbonprocessing.

The refinery in Bilbao, northern Spain, with a capacity of 220,000 barrels of crude oil per day has been processing crude at 60% capacity for 271 days, the company said on Monday, during which time it offered training to keep employees active.

Unable to keep this up, the company said it would now start negotiations with labour representatives to decide on temporary layoffs until the end of 2021.

"The current uncertainty about a return to mobility, primarily depending on the vaccination process, makes it impossible to predict when the refinery can go back to functioning normally," the statement said.

Petronor said it thought the situation was temporary and it was continuing to work towards a future in the low-carbon energy industry.

As MRC reported earlier, Spain's Repsol is seeking European pandemic recovery funds to support projects including new biofuel plants and 'green' hydrogen production made from renewable sources in a pivot away from oil and gas to supplying low-carbon energy.

We remind that Repsol's refinery at Puertollano in central Spain has carried out an upgrade of its olefins unit. The modernization was a part of planned maintenance of the cracker and chemical derivative plants at the end of 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 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Repsol S.A is an integrated Spanish oil and gas company with operations in 28 countries. The bulk of its assets are located in Spain.
MRC

Chemical Activity Barometer rose 1.2% in March

MOSCOW (MRC) -- The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 1.2% in March on a three-month moving average (3MMA) basis, following a 1.0% increase in February, said ACC.

On a year-over-year (Y/Y) basis, the barometer rose 5.5% in March.

The unadjusted data show a 1.2% gain in March following a 0.9% gain in February, ACC said. The diffusion index rebounded to 82% in March, well above the long-term average of 58%. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for February was revised upward by 0.18 points and the reading for January was revised downward by 0.57 points. The March data are provisional and subject to revision.

In March, production-related indicators were positive. Trends in construction-related resins and related performance chemistry were solid and suggest further expansion past the weak February home sales and housing starts. Resins and chemistry used in other durable goods were strong. Plastic resins used in packaging and for consumer and institutional applications were positive. Performance chemistry for industry was mixed. U.S. exports were positive, while equity prices showed further gains. Product and input prices were positive, as were inventory and other supply chain indicators.

As it was written earlier, Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 1.0% in February on a three-month moving average (3MMA) basis following a 1.8% increase in January. On a year-over-year (Y/Y) basis, the barometer rose 1.3% in February.

We remind, that Russia's output of chemical products rose in February 2021 by 5.3% year on year. Thus, production of basic chemicals increased year on year by 7.5% in the first two months of 2021. According to the Federal State Statistics Service of the Russian Federation, mineral fertilizers accounted for the greatest increase in the January-February output. Production of benzene dropped to 113,000 tonnes in February 2021, compared to 120,000 tonnes a month earlier. Overall output of this product reached 241,000 tonnes over the stated period, down by 7.5% year on year.

The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the U.S. economy’s business cycle, and the barometer can be used to determine turning points and likely trends in the broader economy. Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.
MRC