Propylene consumption hits 85m tonnes in 2013

MOSCOW (MRC) -- About 85 million tonnes of propylene, the second most important petrochemical feedstock, were consumed worldwide last year, according to a recent study, said Tradearabia.

The study by market research institute Ceresana pointed out that its direct applications include production of important chemicals such as propylene oxide, acrylonitrile, cumene, butyraldehyde and acrylic acid, besides the plastic polypropylene.

The study analysed the effect of the shale gas boom in the US and the new production processes will have on the global market for propylene and its derivatives, said Oliver Kutsch, chief executive officer of Ceresana. The forecast was provided for up until 2021.

A large share of propylene output occurs either as by-product in the steam cracking of ethylene or catalytic cracking in refineries, it said. As a result of an increasing use of ethane, steam crackers produce more and more ethylene and less and less propylene. But Ceresana expects a rising amount of propylene to be manufactured using on-purpose technologies. This development is expected to lead to a stabilisation of prices for propylene.

Therefore, Ceresana expects propylene revenues to rise at a lower rate of 5.3 per cent per annum until 2021, compared to the previous eight years, even though demand for propylene continues to rise quite significantly.

The most important of the on-purpose technologies for the production of propylene is the dehydrogenation of propane (PDH technology). Given an increasing price differential between propylene and propane, this technology is becoming more profitable not only in countries with extensive gas resources, said the study.

The new PDH plants are currently put on stream in various regions and production potential for propylene will rise accordingly, it said.

Supported by the new PDH plants, propylene production in North America is set to rise significantly in the future after output fell between 2005 and 2013. The highest growth rates, on the other hand, has been forecast for Eastern Europe, where development will be dominated by Russia, and the Middle East. Western Europe, however, will suffer the combined effects of increasing international pricing pressure and weak demand development, with the study anticipating a decline of production volume in this region.

As a result of the limited Chinese crude oil resource, manufacturers of propylene are dependent in imports. Output of non-crude oil based propylene products is to be increased considerably in the future.

In order to achieve this goal, new coal to olefins (CTO) and PDH plants will be put on stream. According to Ceresana analysis, Chinese production will increase by up to eight per cent in upcoming years. Due a rapid surge of demand, however, China will continue to import large amounts of propylene.


MRC

MOSCOW (MRC) -- New laws signed by Russian President Vladimir Putin are predicted to benefit Russian oil and refined product exporters while hurting domestic petrochemical producers and refiners, Moody's Investor Service said, as per Plastemart.

However, to mitigate the impact of the expected higher feedstock prices, Russia is planning to refund excise duties to the petrochemical companies, Russian industry sources said. Export duties on crude and refined products are to be slashed by 50% over three years, while increasing extraction taxes 1.7-fold for oil and 6.5-fold for gas condensate.

The new law is predicted to lower the tax burden on oil exporters 2-3%, with Rosneft, Lukoil and Tatneft anticipated to benefit the most, as increased production costs are more than offset by lower export duties. Domestic petrochemical producers will struggle to pass on increased costs as the government discourages above-inflation fuel price rises. The situation could worsen further if the ruble continues to depreciate, having lost 40% since the beginning of 2013, and extraction becomes more expensive.

The so-called tax maneuver lowers the export duty on naphtha from 90% to 85% of the crude export duty. But to mitigate the effect of the lower duty, which will push the export netback up and subsequently domestic naphtha prices, the government will offer a refund to petrochemical users who use naphtha as a feedstock. Petrochemical users are already exempt from an excise duty on naphtha, but will receive a refund 1.37 times the amount of the naphtha excise duty in 2015 when they use it as a feedstock. Separately, they will receive refunds of the excise duty on benzene, paraxylene and orthoxylene at the amount of 2.88 times in 2015, when those are used for further downstream petrochemical production.
MRC

MOSCOW (MRC) -- Ferro Corporation has announced today that it has completed the acquisition of tile coating manufacturer Vetriceramici S.p.A. for EUR83 million (approximately USD104 million), subject to customary working capital and other purchase price adjustments, reported the company on its site.

Vetriceramici was owned by Milan, Italy-based Private Equity Funds’ Management Company Star Capital SGR S.p.A. and other related minority owners. The acquisition was previously announced on September 21, 2014.

"Vetriceramici is an excellent strategic fit with our existing tile coatings business and our performance colors and glass business".

The all-cash transaction was funded with excess cash and borrowings under the company’s existing revolving credit facility. It is expected to be accretive to Ferro’s adjusted diluted earnings per share by USD0.12 to USD0.14 in 2015.

Vetriceramici, based in Casola Valsenio, Italy, is a leading supplier of ceramic coatings to high-end tile manufacturers. It has manufacturing facilities in Italy and Mexico, a mixing plant in Poland, and research and development and sales offices in Italy and Turkey. The product line includes high-value, specialty frits and grits (finely-milled frits), glazes, digital inks and other specialized tile coatings, and forehearth color solutions.

"Vetriceramici is an excellent strategic fit with our existing tile coatings business and our performance colors and glass business," said Peter Thomas, Chairman, President and CEO of Ferro Corporation. "The acquisition is in line with our strategy to focus resources on our glass-based coatings businesses, adds to our frit production capacity and expands our geographic footprint. We are excited about bringing these two strong tile coatings businesses together and are eager to assist in accelerating the globalization of the Vetriceramici brand. We look forward to working with the team at Vetriceramici to build on their impressive accomplishments to date."

As MRC informed earlier, in July 2014, A. Schulman, Inc. completed its acquisition of a selected majority of the assets of the Specialty Plastics business segment from Ferro Corporation for USD91 million in cash. The acquisition includes four facilities located in the United States as well as operations in Spain.

Ferro Corporation is a leading global supplier of technology-based performance materials, including glass-based coatings, pigments and colors, and polishing materials. Ferro products are sold into the building and construction, automotive, appliances, electronics, household furnishings, and industrial products markets. Headquartered in Mayfield Heights, Ohio, the company has approximately 4,190 employees globally.

Vetriceramici S.p.A. designs, develops, manufactures, and supplies special products for the ceramics industry. Vetriceramici produces fusion colored grains, technical grains, matte colored micro-grains, frits, double charge products, ceramic glazes, and inks for digital printing. Its products are used in various high-value applications in the ceramic tile and color and glass markets. The company, based in Casola Valsenio, Italy, was founded in 1987 and employs over 200 people.
MRC

MOSCOW (MRC) -- Styron, the global materials company and manufacturer of plastics, latex and rubber, and its affiliate companies in Europe have announced price decreases for all polystyrene (PS) and copolymer grades, reported the company on its site.

Effective immediately, or as existing contract terms allow, the December contract and spot prices for the products listed below will be reduced, as follows:

- STYRON general purpose polystyrene grades (GPPS), STYRON and STYRON A-TECH high impact polystyrene grades (HIPS) - by EUR110/tonne;
- MAGNUM ABS resins - by EUR80/tonne;
- TYRIL SAN resins - by EUR90/tonne.

As MRC informed earlier, Styron had increased prices of all polystyrene (PS) grades last month. Thus, November contract and spot prices for the products listed below rose, as follows:

- STYRON general purpose polystyrene grades (GPPS), STYRON and STYRON A-TECH high impact polystyrene grades (HIPS) - each by EUR10/tonne;
- the prices for MAGNUM ABS resins and TYRIL SAN resins rolled over from October.

Styron is a leading global materials company and manufacturer of plastics, latex and rubber, dedicated to collaborating with customers to deliver innovative and sustainable solutions. StyronпїЅs technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Styron had approximately USD5.3 billion in revenue in 2013, with 19 manufacturing sites around the world.
MRC

MOSCOW (MRC) - Demand for high density polyethylene (HDPE) in Russia seasonally weakened in November, however, this factor did not lead to price drop. Supply remained tight in injection moulding HDPE market, but in the near future the situation will change, according to ICIS-MRC Price Report.

Seasonal factor last month led to a reduction in demand for HDPE in pipe and film consumption sectors. However, because of lower production rates and weaker imports allowed producers to keep HDPE prices at the level of October. Supply of blow moulding HDPE was good in November on the back of the significant growth supply from Kazanorgsintez.

The shortage was still felt in the market on injection moulding PE because of tight supply from local producers; prices for imported material in the late November exceeded the level of Rb100,000/tonne. Demand for pipe HDPE seasonally weakened in November; some Russian producers said they would reduce the output of the material. As a result, these two factors balanced the market and helped to keep the October price level in November.

Spot deals for PE 100 were done in the range of Rb80 000-82 500/tonne FCA, including VAT. Many market participants reported a weaker demand for film HDPE in November.

The offers for Gazprom neftekhim Salavat appeared in the market, at the same time Kazanorgsintez reduced the offer of PE in the domestic market. Prices for HDPE were steady in November, with deals for Russian PE done in the range of Rb80 500-83 000/tonne FCA, including VAT.

Middle Eastern HDPE was offered in the range of Rb85,000-87,000/tonne, including VAT and delivery.

Russian producers resumed supply of blow moulding HDPE in November. The first was Kazanorgsintez in the early November, and the second - Gazprom neftekhim Salavat in the late November. November prices for blow moulding HDPE were in the range of Rb80,500-83,000/tonne FCA, including VAT.

Supply for injection moulding HDPE remained tight, as Russian producers did not resume supply in the domestic market. Converters had to buy imported material, which due to the rouble devaluation reached Rb105,000/tonne FAC, including VAT.

Gazprom neftekhim Salavat this week offered injection moulding HDPE in a quite wide range of Rb82,000-88,000/tonne FCA, including VAT.
MRC