MRC digest report as of 12.11.12.

MOSCOW (MRC) -- MRC digest report as of 12.11.12.

1. European producers had to reduce polyolefin prices again.

European producers had to slash more substantially export polyolefin prices in November despite a slight price cut of contract ethylene and propylene prices, according to MRC Price report. Due to a high level of oil and naphtha quotations, contract prices of ethylene and propylene in Europe for November shipments slightly dropped: by EUR15/tonne and EUR20/tonne, respectively, from October. However, low demand for polyethylene and polypropylene in both domestic and export markets push European makers to reduce polyolefin prices more significantly, than those of olefins. Negotiations on November export prices in Europe for the markets of the CIS countries have just begun, however, some companies had to get a price reduction. Negotiations on HDPE prices for November shipments started from the level of EUR1,270-1,310/т, FCA, and on polypropylene - EUR1,170-1,220/т, FCA.

2. Price of Russian PS to rollover against expectations.

Strong demand for polystyrene amid rising feedstock prices in Europe and Asia are likely to result in the rollover of Russian price of polystyrene for November from October level, according to MRC analysts. The pricing policy of the Russian makers of polystyrene for November was the main topic of discussion among the buyers of the material in the last ten days of October. Buyers expected that the price of GPPS would be reduced on the back of the low seasonal demand for the material. At the same time, spot prices of styrene monomer in Europe cut by more than USD100/tonne in October gave a hope to a price reduction of the European material in November. However, the contract price of the styrene monomer in Europe on 1, November, has not been agreed. The deficit of benzene in October resulted in rising contract prices of it by EUR43/tonne to EUR1,032/tonne, FD NWE.

3. PVC prices are going down in Asia on sluggish demand.

Low demand for PVC in Asia keeps putting pressure on prices. In the near future, the downward price trend in the region is going to continue, according to MRC Price Report. In the PVC market of North-East Asia bearish sentiment still prevails. Suppliers are still facing low demand, ample supply and falling prices. Last week, deals for November shipments of the Asian PVC were concluded in the range of USD930-950/tonne, CFR. Deals for PVC shipments from the USA in late October were stricken in the range of USD870-890/tonne, CFR. Meanwhile, there are suggestions that price offers for the North American material for December shipments will drop to the level of USD830-850/tonne, CFR. In the Chinese domestic market, there was also a price cut last week on declining demand and an increased competition from the imported material. According to many market players’ expectations, the demand for PVC will keep on declining despite good weather conditions and probable transport issues.

4. Russian Tobolsk-Polymer to begin PP production in Q2 2013.

On 30, October Russia’s major petrochemical company Sibur had a meeting with Ukrainian converters in Kiev in order to establish a regional network of sales due to the launch of the polypropylene plant in Tobolsk. Artem Krupinov, Sibur’s PP Product Manager, said that 500,000 tonne/year of PP, Tobolsk-Polymer plant will be the largest production of polypropylene in Russia and in the world. Tobolsk-Polymer will produce large volume polymers - raffia, injection molding, spunbond and films. Each of the segments will offer 2-3 grades in order to meet the needs of customers.

5. Iranian ban of polymers export caused rise of PE prices in Asia.

Last week price quotations of HDPE and LDPE increased in Asia due to the Iran’s prohibition of the export of polyethylene. PE prices rose by USD10-25/tonne, compared to the previous week, despite the decline in ethylene prices in the region. Iran's government has banned the export of manufactured goods from the country, including polyethylene. All shipments are temporarily suspended, polyethylene began to accumulate in the ports. At the same time, Iranian suppliers guarantee that all requirements by previous contracts will be concluded. The ban of PE exports from Iran is potentially beneficial factor for other makers, particularly in LDPE and HDPE market segments. Iranian polyethylene is often sold at lower prices in the market. At the same time, some traders believe that the price of polyethylene in the region is unlikely to rise dramatically, even if PE export from Iran would not be renewed, as demand in the region is still low.

6. Rosalkogol to not ban beer in PET bottles.

Rosalkogolregulirovanije (RAR) at last took a long-waited decision for converters of PET packaging for beer. Vadim Zhivulin, Head of the Regulatory Impact Assessment of Economic Development, said that the demand to ban the use of PET packaging for beer has been excluded from the draft technical regulations on the safety of alcoholic beverages. In case if this amendment was adopted, Russian market of PET could be cut by a third with devastating affects for the market. Due to the unclear situation many projects for the expansion of major Russian brewers’ were under the question. Cancellation of this amendment is positive news for all PET market participants. Export-oriented Belarusian and Ukrainian brewers also depended upon the decision of Rosalkogolregulirovanije. In order to defend the market, producers of PET, converters and brewers put a lot of effort. The decision applies to all members of the Customs Union.

7. European producers reduce export PVC prices for CIS countries.

European makers have to slash export prices for the CIS countries on the back of declining demand and drop of export PVC prices in the other regions, according to ICIS-MRC Price report. The contract price of ethylene in Europe for November shipments was agreed by EUR20/tonne lower than the October level, which is equal to the PVC production costs reduction by EUR10/tonne. However, European makers have to cut export PVC prices for the CIS countries more significantly on declining demand and decrease of export quotations. This week, negotiations on export prices of European PVC for the CIS countries went on. Deals for the resin to be shipped in the first half of the month are being negotiated in the range of EUR770-810/tonne, FCA, which is on average by EUR20/tonne lower than the level of the second half of October.

8. Ukraine refused to raise import duties on polymers.

On Tuesday, 6, November Ukrainian Parliament adopted a law to increase import duties on dozens of goods. The polymers were not included into the group under this law, as per MRC analysts. The authors of the law admitted that additional annual tax revenue for the increased import duties can make about USD2bln. However, in the latest amendment all the polymer group was completely removed. Thus the changed import duties do not apply on polymers and the ready products made of them.

9. Year-to-day PS production in Ukraine made 15,000 tonnes.

The tightened supply of styrene monomer resulted in a decrease of polystyrene (PS) production in Gorlovka to 15,400 tonnes of PS from the beginning of 2012, as per MRC analysts. In October, the production volume of PS by Stirol totaled 1,000 tonnes of material, where 650 tonnes fell on expandable polystyrene (EPS) and 350 tonnes of general purpose polystyrene (GPPS). PS production in October made only 40% of the September’s level on the back of feedstock deficit. Due to this shortage of styrene monomer Stirol’s output of EPS and GPPS resulted in two weeks stoppage of the production.

10. Stavrolen loaded HDPE production at 100%.

Stavrolen (Lukoil Group), the second largest producer of HDPE had loaded its capacities by the end of October at 100% after a long period following the accident at the gas distribution unit for the production of ethylene on 15, December, 2011. Due to the accident the company was forced to suspend its work for a few months. Active preparation for the launch of ethylene complex and HDPE production started in August 2012. The pyrolysis unit was launched at the end of September, the first volume of high density polyethylene was produced in early October. By the end of October, all three reactors of HDPE (total annual capacity of 300,000 tons) were loaded by 100%. The output of polyethylene over the incomplete month made more 22,000 tonnes.
MRC

MOSCOW (MRC) -- PP imports to Ukraine in October increased by 14% from September and reached a record of 11,780 tonnes. The growth of imports resulted in the first place from the shutdown of LINIK, as per MRC ScanPlast.

By the end of October the total volume of external supplies of polypropylene to the Ukrainian market grew by 14% compared with September and reached 11,780 tonnes. Which is an absolute record over the last few years. Such significant growth in imports was due primarily to stoppage of the domestic producer - LINIK.

The Ukrainian maker’s capacities allowed to produce about 9,000 tonnes of homopolymer of propylene in a month. LINIK delivered to the domestic market in the past two years on average about 4,000 - 4,500 tonnes of polymer per month. From the middle of April 2012 LINIK suspended production of polypropylene and its resumption is expected not earlier than in March 2013.

Also worth noting is that a sufficiently large amount of polypropylene because of the complicated logistics entered the Ukrainian market only in October, though they should be delivered in September, in particular, from the Middle East and India.

In general, over the ten months of this year, the total volume of imports of polypropylene to Ukraine amounted to about 91,000 tonnes, up 41% year on year.

MRC

MOSCOW (MRC) -- In November, pressure on Ukrainian companies-importers of polymers increased from the customs authorities. Importers have to bear extra costs for customs clearance, report MRC analysts.

According to many companies-importers of polymers, the pressure from the customs authorities for customs clearance of the goods increased in November. Importers have to bear higher tax liabilities while customs clearance of polymers due to overstated indicative prices (the price at the Ukrainian border, below which the goods cannot cost, according to customs authorities).

In September-first half of October, high PE and PP prices in the foreign markets allowed customs authorities to increase indicative prices significantly when importing. In particular, European HDPE (HS code 3901209000) arrived in the Ukrainian market on average at the prices of EUR1,380-1,440/tonne, FCA; homopolymer PP (HS code 3902100000) - at EUR1,320-1,380/tonne, FCA. As a result, indicative HDPE and PP prices rose to the level of USD1,800/tonne и USD1,700/tonne, respectively.

However, PE and PP prices in the foreign markets have started to go down since mid-October. In particular, European HDPE went down in value to the level of EUR1,270-1,350/tonne, FCA. In November, deals for HDPE in Asia and the USA were concluded at USD1,520-1,580/tonne, CIF Odessa.

Amid lower polymer prices in the foreign markets and excessive indicative prices, Ukrainian companies-importers have to incur increased tax liabilities, which, on the one hand, results in increase in tax revenues to the state budget and, on the other hand, in maintaining the high cost of polymers in the domestic market amid global price cut.
MRC

(chemicals-technology) -- Spain-based La Seda de Barcelona (LSB) is planning to dispose of its PET polymer and raw material plants to raise new capital to develop its PET and chemical operations.

"LSB has PET plants in Spain, Italy, Greece and Turkey and raw material chemical units in Spain and Portugal."
The company wants to sell the plants only if it is unable to get the help of other industrial partners to form a joint venture in order to support its chemical operations.

LSB's intention to sell off its business has been revealed by its executive president Carlos Moreira da Silva after an LSB shareholders meeting.

The move is the result of LSB's unsuccessful attempt in July 2012 to raise EUR40m in new share capital for a downstream investment programme.

LSB is also in preliminary talks with five industrial partners to offer a 25% stake in the new business which integrates all its upstream PET, terephthalic acid (PTA), glycol and recycling operations. The company is also anticipating a positive result in March 2013.

LSB has PET plants in Spain, Italy, Greece and Turkey and raw material chemical units in Spain and Portugal.
The company is most likely to begin the PET business disposal initially with its Adana business. As MRC wrote earlier, La Seda de Barcelona sold industrial and intellectual rights to a number of its processes to India's Invista.
MRC

(chemweek) -- Evonik Industries today reported a 5% increase in third-quarter net income to EUR355 million (USD452.7 million) on 6% lower sales of EUR3.42 billion, partly due to the July 2011 divestment of the company’s carbon black business. Organic sales declined 2% year-on-year, with volumes down slightly.

Selling prices were stable. Adjusted Ebitda slipped 2% to EUR731 million while adjusted Ebitda margin was 21.4%, compared with 20.6% in the third quarter of 2011.

"Evonik is still doing well, even in the difficult conditions," says Klaus Engel, chairman. Despite the challenging global economic situation and the weakened demand since the summer, especially in Europe, the company remains confident. Evonik is making good progress with its On Track 2.0 efficiency enhancement program introduced in spring 2012 and targets "sustained annual cost savings of around EUR500 million by the end of 2016. "The company expects to report slightly higher sales for fiscal 2012 while operating result will "probably be in line with or slightly above the excellent 2011 level."

Evonik’s consumer, health & nutrition business reported a 3% increase in sales to EUR1.08 billion and a 3% rise in adjusted Ebitda to EUR279 million.

Evonik is one of the world's leading specialty chemicals companies. The company's specialty chemicals activities focus on high-growth megatrends especially health, nutrition, resource efficiency, and globalization and on entering attractive future-oriented markets.
MRC