SIBUR updates organisational model of its plastics and rubber business

MOSCOW (MRC) -- The merger of SIBUR’s and TAIF’s historical assets resulted in an exponential growth of plastics, elastomers and organic synthesis business in terms of absolute volume of production, range and applications of products, said the company.

The Company believes that this offers a great potential for further development. To that end, a decision has been made to divide the Plastics, Elastomers and Organic Synthesis Division into two standalone business units both supervised by Sergey Komyshan, SIBUR’s Management Board member and Executive Director. Member of the Management Board and Managing Director Alexander Petrov will be the Head of the Plastics and Organic Synthesis Division, while Timur Shigabutdinov, another member of the Management Board and Managing Director, will be in charge of the Synthetic Rubbers Division.

The Plastics and Organic Synthesis Division will consolidate assets with a total capacity of some 3 mtpa. The Division’s further expansion will be driven by the development of medium-tonnage chemicals, which enjoy strong demand in the Russian market. Once implemented, the respective projects will substitute imports of products such as MAN and DOTP and make a strong contribution to the growth of Russia’s non-commodity exports. In addition, the Company plans to use this business to expand the production of feedstock for high-margin products in the specialty chemicals segment, which currently has an insignificant presence in the domestic market.

Mr Petrov will also continue to supervise SIBUR’s production support function as it pursues increasingly ambitious goals – integrate procurements within the combined company, keep pace of changes and implement the existing functional initiative portfolio: import substitution, category strategies, optimisation of technical solutions, and use of digital tools.

The standalone Synthetic Rubbers Division was established in response to a more than 3-fold increase in the rubber business as a way to focus on delivering operational improvements for rubber production facilities, which today have a total capacity of around 1.2 mtpa. The Division will be responsible for developing new grades with unique consumer properties, creating customer services and offering comprehensive solutions, as well as expanding footprint across segments and geographies. With its unparalleled integrated business model, the combined company will be able to ramp up the efficiency of its rubber business by increasing the availability of feedstock, predominantly butadiene, and develop production of most popular butadiene-based rubbers going forward.

Alexander Petrov, Head of the Plastics and Organic Synthesis Division, member of the Management Board and Managing Director of SIBUR, said: "Our aim is to considerably scale up our business by relying on medium-tonnage chemicals projects focused on import substitution. An important part of that will be securing the right set of projects to make use of monomers from the new Nizhnekamskneftekhim cracker and benefit from the integration of processes of SIBUR’s traditional supply chain and its new asset perimeter. Another goal for us is to increase the presence of our products in the construction industry, partly by expanding our range of grades and partly by offering customers new solutions and replacing traditional construction materials with polymers."

Timur Shigabutdinov, Head of the Synthetic Rubbers Division, member of the Management Board and Managing Director of SIBUR, said: "The combined company boasts an unrivalled portfolio of synthetic rubbers. Our priority is to respond to customer needs by further growing the business using the expertise under our belt, cutting-edge R&D assets, and access to the latest technologies. Once all the investment projects are completed, these initiatives will make SIBUR one of the world's Top 5 synthetic rubber producers."

In October, SIBUR closed the deal to acquire 100% of TAIF JSC, which includes Nizhnekamskneftekhim, Kazanorgsintez and TGK-16.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

SIBUR manufactures and sells petrochemical products on the Russian and international markets in two business segments: olefins and polyolefins (polypropylene, polyethylene, BOPP, etc.), as well as plastics, elastomers and intermediate products (synthetic rubbers, expanded polystyrene, PET, etc.).
MRC

1. Dow expects Q4 earnings decrease

MOSCOW (MRC) -- Dow expects Q4 earnings before interest, tax, depreciation and amortisation (EBITDA) to be about USD150-200m lower than market consensus, said the company. The reason: higher raw material costs and lower polyethylene (PE) and co-product pricing. However, the company is seeing continued economic and supply recovery in Q4, it said. It noted “robust” end-market demand strength across industrial and consumer markets, as well as improving supply positions following weather-related outages, turnarounds and start-up of new PE capacity in the US Gulf Coast region. Nevertheless, logistics challenges continue to constrain demand, it said.

MRC

MOSCOW (MRC) -- Epsilyte (The Woodlands, Texas), a leading North American producer of expandable polystyrene (EPS), has announced an increase in its prices of all EPS grades for December shipments on higher feedstock and logistics costs, said the company.

Thus, the price of the company's EPS grades rose by 5 cents/pound (cts/lb) or USD110/tonne, effective 1 December, 2021 or as contracts allow.

Escalating cost pressure felt throughout the supply chain, including raw materials and freight, necessitate this adjustment.

As MRC reported earlier, Epsilyte increased its October and November EPS prices in the region by the same amount.

EPS is a rigid form of polystyrene (PS) used in insulation foams for the construction industry as well as for packaging.

According to ICIS-MRC Price report, in Russia, demand for material will continue to subside seasonally in November. Consumer activity was moderate in the domestic EPS market, which corresponded to the current season. Russian producers did not adjust their selling prices last week. Domestic prices of Russian material were in the range of Rb183,000-205,000/tonne CPT Moscow, including VAT.

Epsilyte is owned by private equity firm Balmoral Funds (Los Angeles, California). Epsilyte is one of North America’s leading producers of expandable polystyrene resin. The company is focused on solving customer needs for efficient, high-R value EPS. This includes reducing energy usage in buildings, ensuring safe and healthy food through innovative packaging technology, and participating in infrastructure investment both in the United States and abroad.
MRC

MOSCOW (MRC) - The seasonal decline in demand does not affect the prices of polyvinyl chloride (PVC) in the Russian market. Most producers have agreed to roll over November prices for December, but there are exceptions, according to the ICIS-MRC Price Report.

There was a noticeable decrease in PVC prices in Asia in the second half of November, including in China. In other regions, the price situation was steady, prices remain at a record high. A similar situation was in the Russian PVC market.

The seasonal decline in demand for the second month in a row does not put pressure on PVC prices in Russia.
Local producers agreed to roll over the November price level for December shipment, but in some cases, converters also reported that prices have increased up by Rb5,000/toone.

Imports of suspended PVC in the current year increased by 31% compared to the same time in 2020 and reached almost 55,800 tonnes in ten months. However, imports could not saturate the Russian market with PVC, including due to a significant increase in demand.

In addition, the bulk of imports comes with long delays due to global problems with logistics, which also makes its own adjustments to the work of converters. In a number of areas, imported PVC is much cheaper than Russian material, but it is more an alternative in "theory".

Exchange rate risks and difficulties with logistics in the last couple of months have led to a significant drop in PVC purchases in foreign markets, and this situation is unlikely to change in the near future. Negotiations on the December shipment of Russian PVC started in the middle of last week, but not all producers started discussing supplies.

Negotiations continued this week, but they were unsuccessful for the converters - PVC did not fall in price, and in some cases even rose in price again. Since the summer months, the range of prices for Russian PVC was quite large at manufacturers. Deals for December PVC supplies with K64/67 were in the range of Rb175,000-201,000/tonne CPT Moscow, including VAT. PVC K 70 from one of the producers has risen in price.
MRC

MOSCOW (MRC) -- Indonesia will need to increase the bio-content of its palm oil-based biodiesel to 40% by 2024 or risk missing its renewable energy targets, reported Reuters with reference to a senior official's statement on Wednesday.

Indonesia has a mandatory biodiesel program with 30% palm oil content known as B30. Longstanding plans to increase the palm content to 40% by 2021 were delayed due to cheaper fuel costs and record high palm prices.

"The use of (only) B30 will not achieve the RUEN target for 2025," Dadan Kusdiana, the director general of the country's energy ministry, told a virtual conference.

He was referring to Indonesia's goal to increase renewable energy use to 23% of its total energy consumption by 2025, which required biodiesel consumption of 13.9 kiloliters that year.

"The ministry will prepare B40 blending mandatory regulation to ensure investment certainty," Dadan said, adding that more studies and road tests were required.

Indonesia's energy ministry earlier on Wednesday said it will increase its 2021 biodiesel allocation to meet higher demand for fuel. Next year's biodiesel consumption meanwhile, is set to jump to over 10 MM kiloliters.

While fuel prices bottomed out during the thick of the global pandemic, petrol and diesel prices at the pump in Asia and Europe reached near-record peaks this year, making palm a more attractive feedstock for biofuels.

As MRC wrote before, deployment of carbon capture storage (CCS) in Indonesia by American energy giant ExxonMobil Corp could cost about USD500 mln. In November 2021, Pertamina and ExxonMobil signed a MoU during the COP26 summit to look at ways of using CCS in Southeast Asia's largest country. CCS facilities are likely to be implemented in two Indonesia oil and gas fields, namely the Gundih field in Cepu and the Sukowati field in Bojonegoro, in Central and East Java respectively.
MRC