Styron to maintain a new pricing approach in PS market

(Styron) -- On 18 October, Styron announced that it is goin to adopt a new pricing approach following significant shifts in supply and demand in the polystyrene (PS) market.

The main reason of the new pricing approach is the closure of European PS plants, which might result in 10% reduction of active production capacity in Europe. Styron believes that it is the favourable time to address the current level of margins almost unsustainable for PS producers; proposing that it is time for the industry to move away from feedstock pricing and towards value pricing.

In recent months, according to Styron's press release, PS margins have eroded due to escalating raw material costs. However, this does not deter the commitment of Styron to continue to invest in this market and look for new avenues for industry growth. The closure of Ineos’ PS plant at Marl, Germany creates the opportunity for Styron, as well as other producers, to introduce a value based pricing model instead of basing pricing on feedstock. Styron believes that only a sustainable pricing strategy based on value creation will allow PS stakeholders to continue to innovate in the industry.

PS is a key strategic business for Styron and an industry it will continue to focus innovation efforts on to help their diversified customer-base remain competitive in the different markets they serve such as packaging, appliances, building and construction. We remind that Styron Europe has recently raised its polystyrene contract and spot prices for October by Eur50/mt (USD65/mt). The price increase applies to all its general purpose grade PS and high impact grade PS prices. Styron did not provide details of its prices but cited rising costs associated with the manufacturing of PS grades in Europe.
MRC

MOSCOW (MRC) -- MRC news digest as of 22.10.12.

1. The production of large polymers in Ukraine slashed by 71% in September.

In September, the total output of large polymers in Ukraine dropped to 6,600 tonnes, down 71% from August. Over the past nine months, Ukrainian companies produced about 233,000 tonnes of polymers, up 7% year-on-year, according to MRC ScanPlast. The major producer of polymers in Ukraine, Karpatneftekhim (Lukoil group) shut down its production (polyethylene, ethylene, caustic, polyvinylchloride) for maintenance in September. The outage is expected to take approximately two months, but, according to unofficial information, production might be shut for a longer period of time. In September, the production volume of GPPS and EPS in Gorlovka made 2,400 tonnes, which is the maximum rate in the current year. In January-September, concern Stirol (Gorlovka) produced about 14,400 tonnes of polysterene.

2. September imports of PVC to Ukraine down by 21%.

Import of PVC to Ukraine in September fell to 8,600 tonnes. Over the nine months of this year, total imports of suspension amounted to 63,400 tonnes, down 32% year on year, according to MRC DataScope report. Expectedly, the main decline in imports fell on the resin from the U.S. After stops on scheduled maintenance at the end of July - early August European makers increased their export quotas for the Ukrainian market. As a result, imports of resin from Europe in September amounted to 6,600 tonnes, from about 5,100 tonnes in August. The stoppage of PVC production of Karpatneftehim in September will provide quite high volumes of PVC imports in October and November.

3. PP prices went down in Asia by USD10-40/tonne.

Last week, PP prices in Asia were reduced by USD10-40/tonne amid low demand and the global worsening of economic situation. The immediate market perspectives remain unclear, according to MRC Price Report. Many polyolefin plants in China resumed operations in late September-early October after outages for scheduled maintenance. South-East countries have also considerably reduced their need for polypropylene. In Indonesia, the zero duty for ASEAN producers might result in the increased competition between suppliers, yet, the converters are not in a hurry to replenish their inventories. Elsewhere in the region, converters report that they have already covered their October needs in the polymer. Many market participants expect the buying activity in the PP market in Asia to keep being low on high volatility of oil futures and unfavorable outlook for the world economy. PP supplies from Saudi Arabia are limited and they are unlikely to affect the market.

4. Asian PE prices fall on weak demand.

Last week, the price of polyethylene (PE) in the Asian market reduced by USD10-45/tonne on weak demand. The situation is not expected to change in the near future, according to MRC Price Report. Last week, the price quotations of PE in Asia were cut due to the weak demand. High volatility of oil futures, the ongoing sluggish demand for polymers and pessimistic outlook on the economy continue to put significant pressure on the Asian market. Many Chinese importers are worried that the prices of polyethylene in the Chinese domestic market can be significantly reduced on increased supply in the market. The demand for PE in Southeast Asia is also weak. The agreement on duty-free trade within ASEAN came into force in Indonesia. According to some market participants, this agreement will increase competition between suppliers in the market. In Thailand and the Philippines many converters have purchased polyethylene until the end of the month.

5. Ethylene-Polyethylene plant restarts PE and ethylene production.

On Tuesday, 16 October, Azerbaidjani LDPE producer "Ethylene-Polyethylene" of SOCAR's Azerkimya Production Association started production after a long-term turnaround, report MRC analysts. As MRC reported earlier, the plant was shut on 1 August for a 30-day's maintenance. Initially the production was planned to be restarted in early September. However, the producer delayed the resuption of production several times due to technical issues. Along with the resumption of production, the company voiced its export offers for October PE shipments.

6. In September, production of PVC in Russia decreased by 19%.

Last month, Russian producers because of scheduled and unplanned shutdowns have reduced production of unmixed PVC (suspension and emulsion) to two years’ minimum. In September, Russian producers decreased production of PVC by 19%, from August to 32,930 tonnes. This is the minimum production volume over the past two years, as per MRC ScanPlast. From late August to mid-September the largest producer of PVC in Russia - SayanskKhimPlast had stopped its capacities on the planned turnaround. In September, company produced about 11,000 tonnes. Kaustik (Sterlitamak) due to technical problems on the pipeline and the limited supply of ethylene was forced to stop production twice and cut capacity utilization. In September, the company produced about 9,500 tonnes of PVC. The other PVC producers kept their capacity utilization at the August level. The total volume of PVC in Russia amounted to about 31,000 tonnes, from 40,700 tonnes in August.

7. In Europe October PS prices to be settled soon.

After the negotiations on the supply of polystyrene (PS) for October, the participants agreed to increase the price by EUR25-30/tonne, as per MRC analysts. The negotiations on European PS for October were tense, after the producers’ announcements of the price increase by EUR50/tonne. However, the market participants are going to work out a compromise. To the date, the producers’ offers of PS for October exceed the September price level only by EUR25-30/tonne, with minor variations. Other suppliers also confirmed the deals up by EUR20-30/tonne, from the previous month. Producers still aim to push the price increase by EUR50/tonne to those buyers that have not made contracts for the supply yet.

8. PTA prices starts rising again in Asia.

After two week’s decline, last week PTA quotations in Asia continued their gradual upward movement. Last week, the cost of one tonne of PTA grew in value by USD23-26/tonne, according to MRC Price кeport. The dispersion of spot prices of imported PTA at Chinese ports made USD1,081-1,094/tonne, СFR China. Market players reported high buying activity from the consumers of the material. Market sources also reported a significant impact which paraxylene was making on the growth of PTA prices. Last week, spot paraxylene quotations rose by USD25-40/tonne. Imported Korean paraxylene was offered at USD1,570-1580/tonne, СFR China.

9. September production of Russian PP down by 18%.

Last month, the total volume of Russian producers of polypropylene decreased by 18%, from August and amounted to 61,000 tonnes. The decline in the PP production in September was due to the scheduled shutdowns of three production plants: Stavrolen, Neftekhimiya (Kapotnya) and Tomskneftekhim, according MRC ScanPlast. Over the nine months, Tomskneftekhim and Ufaorgsintez increased the production of polypropylene to 100,000 tonnes and 91,000 tonnes respectively. Nizhnekamskneftekhim actually kept production at the level of last year - about 158,900 tonnes. Stavrolen and Neftekhimiya (Kapotnya) reduced production volumes by 43% and 4% to 55,000 tonnes and 82,100 tonnes.

10. Spot PET prices decrease in Russia.

MOSCOW (MRC) -- Russian producers are reducing their PET price offers for the domestic market following declining demand from converters, according to ICIS-MRC Price report. Russian PET prices for the domestic market went down to Rb59,000-61,000/tonne, CPT Moscow, including VAT. According to sellers, the demand in the Russian spot market keeps falling in October. In the low season, granulate consumption by PET-preform makers is rather weak. Meantime, shipments from the plants for contract clients are stable, said a source. Price offers of Asian Pet for Russian converters have not changed. According to some converters, the real level of spot deals in the market can be Rb58,000/tonne, CPT Moscow, including VAT, at the moment. Consumers expect the further price reduction of bottle PET in November. Demand for the material will remain sluggish which will force producers and traders to make concessions to the buyers.

11. Plastics output in Russia rose by 10% over the past nine months.

This year, Russian companies have increased production of plastic products. Over the past nine months, the output grew by 10% year-on-year. The largest increase accounts for plastic pipes production, according to MRC ScanPlast. Production of plastic pipes, hoses and fittings has been growing most rapidly this year. In September, the production of plastic pipes, hoses and fittings made about 78,900 tonnes. In January-September, the total output of plastic pipes, hoses and fittings by Russian plants made about 528,4000 tonnes, up 26% year-on-year.

12. EPS prices continue to rise in Russian market.

The tightened supply of Permian and Asian expandable polystyrene (EPS) in the market resulted in an increase of price quotations from suppliers, as per MRC analysts. Last week it was officially launched the second production line of expandable polystyrene in Perm, which increases annual production capacity of Sibur-Khimprom to 100,000 tonnes. On expectations of the additional volumes of the Permian material in the market traders have significantly cut the import of Asian EPS in recent months. Thus, in September, the volume of imports fell to 6,700 tonnes, down 42% from July 2012. On the back of the low stocks of Asian feedstock, as well as the limited supply of the Permian EPS, the price of the material is increasing. More information you can find in ICIS-MRC Price Report.

13. Russian producers reduced caustic soda output by 8% in September.

Russian makers reduced the production volume of caustic soda to 84,400 tonnes in September, down 8% from August. The decline in production was caused by scheduled and unscheduled outages at two major production sites, according to MRC ScanPlast. The reduction of caustic production in September was caused by a scheduled outage for maintenance at SayanskKhimPlast and unscheduled outage at Kaustik (Sterlitamak). In Q3 2012, the total output of solid caustic soda made about 52,000 tonnes, while Kaustik (Volgograd) and Kaustic (Sterlitamak) produced about 33,300 tonnes and 18,700 tonnes, respectively. In general, in January-September, the total output of caustic soda in Russia made about 806,000 tonnes, up 5,5% year-on-year.
mrcplast.com

(fibre2fashion) -- JGC Corporation announced that its wholly-owned Saudi Arabian subsidiary, JGC Gulf International Co. Ltd. has been awarded a contract for expansion of ethylene manufacturing facilities for the Rabigh phase II project. The contract was awarded by client Saudi Aramco and Sumitomo Chemical Company.

The lump-sum turnkey contract calls for the engineering, procurement, and construction (EPC) services associated with an expansion of the ethylene manufacturing facilities in Rabigh, Saudi Arabia. The expanded facilities will have a capacity of 300 thousand tons per year of ethylene, and are scheduled to be completed in 2015.

As worldwide demand for petrochemicals rises, Rabigh Refining and Petrochemical Company, a joint venture between Saudi Aramco and Sumitomo Chemical, has been operating an integrated refining and petrochemicals complex (the Rabigh I Project) in Rabigh, Saudi Arabia. In parallel, Saudi Aramco and Sumitomo Chemical have been conducting a feasibility study for the Rabigh Phase II Project, to expand the original complex.

The ethylene manufacturing facility that JGC Gulf will be expanding has a capacity of 1.3 million tons per year, and was constructed by JGC Yokohama and completed in 2008 as a part of the Rabigh I project. The ethylene facility makes up one of the core facilities of the complex, with a vital function as the upstream producer of base chemicals used for synthesis of many other chemical products downstream.
MRC

(Reuters) - Czech downstream oil group Unipetrol (UNPEsp.PR) said it expected an operating profit of a couple of hundred million crowns for the third quarter, after a second-quarter loss.

Unipetrol, majority owned by Polish group PKN Orlen PKNA.WA, booked a one-off positive EBIT impact of around 200 million crowns (USD11 million) in the period.

Foreign exchange developments had a positive impact of about 130 million crowns, offset by losses on other financial instruments, the company said on Friday.

The results were also helped by higher prices for crude oil and refining and petrochemical products.

Unipetrol reported an operating loss of 437 million crowns in the second quarter due to inventory revaluation losses.

Unipetrol , a.s. is a group of companies operating in the petrochemical industry in the Czech Republic. In 2005 Unipetrol became a part of the PKN ORLEN Group, the largest oil processor in Central Europe. The UNIPETROL Group is oriented mostly towards oil processing, fuel distribution and petrochemical production. In all of these business areas the Unipetrol Group is among the key players both in the Czech Republic and on the Central European market.
MRC

(hellenicshippingnews) -- Sinopec Group, China's biggest refiner and second-biggest oil producer, is building what experts predict will become the largest oil storage terminal in Southeast Asia, in the Batam free trade zone in Indonesia.

In an investment worth USD850 million, Sinopec Kantons Holdings, a unit of the company, will hold a 95 percent stake in the PT West Point Terminal project, which will include a 2.6 million cubic meter oil storage facility capable of storing up to 16 million barrels of crude and refined fuels, and the construction of extensive port facilities.

The company said the project's location will help it increase its market shares in Southeast Asia, Northeast Asia and the Middle East.

The Batam project will be Sinopec's first big facility near Singapore, generally considered the hub for Asia's oil trading activities. The Chinese refiner first established its presence there 15 years ago, and it now trades refined products there with a team of around 50.
Taking 18 to 24 months to complete, the project has about 360 hectares of land set aside for it. A refinery and petrochemical project are also being considered in a second phase of development, a source familiar with project details said.
China National Petroleum Corp, Asia's largest producer of oil and gas, has a 35% stake in a 14 million-barrel universal oil terminal on Singapore's Jurong Island.

MRC