Reliance Industries Ltd to enter textile JV with Chinese Shandong Ruyi

MOSCOW (MRC) -- Reliance Industries (RIL) has announced a joint venture with China’s Shandong Ruyi Science and Technology Group to "reposition its textile business on a high growth path", said Indianexpress.

As part of the deal, Mukesh Ambani-run RIL will transfer its existing textile business into a newly incorporated company, for which RIL will receive cash consideration.

RIL will own a majority 51% in the proposed JV, with the balance 49% owned by Shandong Ruyi. The proposed transaction is subject to regulatory approvals.

However, RIL has not disclosed the cash consideration for the deal. "RIL’s existing textile business is the founding business of RIL and operates under the well-known brand ‘Vimal’. It has a prominent presence in the Indian textile market, especially in the worsted and synthetic suiting fabric segments," RIL said in a statement.

The JV will build on RIL’s existing textile business and wide distribution network in India and Ruyi’s state-of-the-art technology and its global reach. The JV will benefit from the strength of the ‘Vimal’ and ‘Georgia Gullini’ brands and plans to introduce some of the well-known global brands of Ruyi. Qiu Yafu, chairman, Shandong Ruyi Group, said: "…we see our joint venture with Reliance as a significant event for the group. To enter the Indian market with Reliance we truly believe is the bright future of this joint venture business."

As MRC wrote before, Reliance Industries has signed a memorandum of understanding with Mexico’s Pemex to jointly assess the potential for upstream oil and gas business in Mexico and other international markets. Reliance and Pemex will share their expertise and skills to further strengthen the relationship between the two players.

Reliance Industries is one of the world's largest producers of polymers. The company's polymer production in 2010-11 (polypropylene, polyethylene and polyvinyl chloride) made 4,094 kilo tonnes.

MRC

MOSCOW (MRC) -- Imports of polycarbonate (PC) for sheet extrusion from Europe totalled 23,500 tonnes from January to November 2014, remaining at the last year's level, according to MRC DataScope report.

Russian importers managed to maintain the last year's shipping quantities of extrusion granules, despite the rouble devaluation. This means that, despite the trend of imports displacement, demand for European material does not weaken.

Kazanorgsintez, Russia's only PC producer, increased its share to 67% over the stated period (from 64% over the same period last year). To date, the plant produces almost all its quantities for domestic sales (about 6,000 tonnes per month).

The Russian market can consume about 7,000 tonnes of PC for sheet extrusion per month in the season (spring, autumn). Demand has weakened recently both in the PC market and in the finished products market. The deferred demand was registered in the market on the back of seasonality and the deterioration of the general macroeconomic situation, the weakening of the rouble and lower purchasing power of the population. Purchasing went down to the necessary minimum in order to avoid the accumulation of stocks, which lead to exchange losses (if we consider the activities related to foreign trade).

Consumers also are waiting for stabilization of the national currency and a reduction in the overall prices. Thus, importers and distributors in the PC market will start next year with significant stocks. This is especially true for European material. Given the dynamics of price increases for Russian PC in November and December amd in the case of the rouble strengthening in 2015, imported PC will create a serious competition for domestic material, because large suppliers often take the foreing currency risks. In this case, prices of European granules might be equal to prices of Russian material.

The Russian PC market is represented by the segment of sheet extrusion PC, which accounts for over 80%. The main European suppliers of extrusion grade PC are such companies, as Sabic Innovative Plastics and Bayer. Their import share in the total consumption of the segment is slightly more than 30% and varies, depending on the macroeconomic indicators. Asian polymer is also available in the extrusion PC market (5% of the total imports of extrusion grade PC).

The overall PC impots to the Russian market dropped over the first eleven months of 2014 by 8% year on year and totalled only 33,500 tonnes.

MRC

MOSCOW (MRC) -- Despite the continued cuts of linear low density polyethylene (LLDPE) prices in foreign markets, a major devaluation of the Russian rouble offset this fact for Russian consumers. December prices of butene LLDPE (C4) greatly exceeded Rb100,000/tonne, according to ICIS-MRC Price report.

The Russian LLDPE market depends on imports by more than 90%, therefore, price adjustments of LLDPE in foreign markets leads to a proportional change in prices in Russia. Prices of LLDPE C4 in foreign markets, particularly, in the Middle East, fell by USD80-120/tonne over the past three months. However, the autumn devaluation of the Russian rouble against the dollar not only eliminated this factor, but also led to new record prices - Rb110,000/tonne FCA, including VAT.

Many suppliers of Middle Eastern butene LLDPE announced their offer prices in foreign currencies because of the high volatility of the dollar and the euro. At the same time, the price spread was rather wide in the market: from EUR1,480/tonne, including VAT and delivery, to EUR1,620/tonne, including VAT and delivery. Some suppliers said this price dispersion was caused by the exchange rate risks and total payments problems, so that they had to play safe and include the risks in the price of polyethylene (PE).

Some market players said they were unable to purchase LLDPE at such prices and were forced to suspend procurement of material in favor of low density polyethylene (LDPE). A similar situation took place in February and March, when the devaluation also led to a major price rise, and the market "got accustomed" to new realias for several months.

At the same time, many market participants reported tight supply of LLDPE, particularly, with MFR = 3 (melt flow index), despite high prices and weaker demand, As a result, even some very large producers of stretch films had to limit their capacity utilisation and even suspend production.

According to unofficial information, Nizhnekamskneftekhim does no plan to resume its LLDPE production until the second half of February or early March.
MRC

MOSCOW (MRC) -- DuPont Co., the chemicals company under pressure from an activist investor to break itself up, agreed to sell its business that makes Neoprene, a synthetic rubber it invented 83 years ago, said Bloomberg.

DuPont will sell the unit to a new joint venture that will be 70 percent controlled by Japan’s Denki Kagaku Kogyo KK (4061), with Mitsui & Co. holding the rest. Wilmington, Delaware-based DuPont announced the deal in a statement today, without disclosing any terms.

Neoprene is used in chemical- and weather-resistant items such as wet suits. DuPont’s production is based in La Place, Louisiana.

Trian Fund Management LP is calling on DuPont to split off its faster-growing units such as agriculture from more cyclical businesses including its safety and protection segment.

As MRC wrote before, for the fourth consecutive year, DuPont has been listed in 2014 as a Top 100 Global Innovator by Thomson Reuters. An honoree since the inception of the program, DuPont is recognized for its innovation and the worldwide influence of its inventions.

DuPont is an American chemical company that was founded in July, 1802. The company manufactures a wide range of chemical products, leading extensive innovative research in this field. The company is the inventor of many unique plastics and other materials, including neoprene, nylon, Teflon, Kevlar, Mylar, Tyvek, etc. DuPont was the developer and main producer of Freon used in the production of refrigeration equipment.
MRC