Grupa Azoty reduces production in March and April after difficult first quarter in 2023 - Issue 391 || PKN Orlen-petrochemical production Jan-Apr 2023 - Issue 391 || Central European styrene trade Jan-Apr 2023 - Issue 391 || Polish polyethylene production & trade Jan-Apr 2023 - Issue 391 || Polish polypropylene production & trade Jan-Apr 2023 - Issue 391 || Polish synthetic rubber trade, Jan-Apr 2023 - Issue 391 || Central European MDI trade Jan-Apr 2023 - Issue 391 || Central European methanol trade Jan-Apr 2023 - Issue 391 || Russian chemical industry-new terminals required to serve Chinese market - Issue 391 || Russian butadiene production Jan-Apr 2023 - Issue 391 || Russian plastics and polyethylene production Jan-Apr 2023 - Issue 391 || Russian polyethylene trade Jan-Apr 2023 - Issue 391 || PTA deliveries from China to Kaliningrad - Issue 391 || Russian methanol production Jan-Apr 2023 - Issue 391 || Russian methanol exports, Jan-Apr 2023 - Issue 391 || Methanol plant at Volgograd signs agreement with Chinese company - Issue 391 || Russian polyurethane raw materials 2023 - Issue 391 || Uzbek methanol island-Air Products - Issue 391 || Russian Methanol Production, exports and domestic sales 2023 - Issue 392 || Polish petrochemical production Jan-May 2023 - Issue 392 || Olefin 111 project outline - Issue 392 || Polimex Mostostal and Naftoremont-Naftobudowa-Olefin 111 project - Issue 392 || Hungarian propylene exports Jan-Apr 2023 - Issue 392 || Central European styrene trade Jan-May 2023 - Issue 392 || Czech petrochemical trade, Jan-May 2023 - Issue 392 || Polish rubber trade Jan-May 2023 - Issue 392 || Hungarian TDI-MDI exports Jan-Feb 2023 - Issue 392 || Russian propylene exports & sales Jan-May 2023 - Issue 392 || KPI polypropylene outage & exports - Issue 392 || Russian methanol producer operational balances 2023 - Issue 396 || Russian Methanol Exports October 2023 - Issue 396 || Polish Polyol Exports 2022-2023 - Issue 396 || Polish Polyol Imports 2022-2023 - Issue 396 || Central European isocyanate trade Jan-Sep 2023 - Issue 396 || Czech polyol imports Jan-Sep 2023 - Issue 396 || Polish polyol trade Jan-Sep 2023 - Issue 396 || Isocyanate/polyol imports from China into Russia - Issue 396 ||
 
  

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Impact of sanctions on the Russian chemical industry

Although Russian production volumes have shown little overall change since the full-scale invasion of Ukraine in February 2022, sanctions and economic dislocation from the West have had a major impact on Russian organic chemical and polymer markets.  The effects have been felt across the board from domestic market sales to raw material sourcing, in addition to other key factors such as more difficult logistics, problems in securing plant equipment and components.  There have been advantages for Russian producers from sanctions, but overall these are heavily outweighed by the disadvantages of not being able to access Western technology and Western markets.

Due to sanctions and the swift exit of major Western engineering companies a number of projects inside Russia have had to be aborted or at least face an delayed schedule.  Unfinished projects have led to several major legal cases where the Russian partners are suing Western companies for breach of contract, despite the fact that these companies had little option.  Technology licenses have been sanctioned which means that has culminated in the abandonement of many Russian methanol and other chemical projects.  Those that have continued were fairly advanced by early 2022 and thus Russian companies such as SIBUR have found ways to replace Western equipment or Western expertise.

In terms of the domestic market, SIBUR and other Russian companies have benefited from the exit of Western companies and have been able to fill gaps in a wide range of product areas.  Polyethylene consumption has risen noticeably since 2021, particurlay in regard to pipe manufacture for water and gas.  Some of the demand for pipes has come from the new territories which Russia has annexed from Ukraine.  

In the organic chemical sector Russia is actively developing its own production of plasticizers, including phthalate-free such as DOTP (dioctyl terephthalate).  Since 2019, the annual consumption of DOTP in Russia has increased from 1-2,000 tpa to 106,000 tpa, and imports have decreased from 60,000 tons to 40,000 tons. The total consumption of plasticizers amounted to 180,000 tons in 2023.

Prior to 2022 Russian methanol producers depended heavily on exports to Europe in order to maintain high production levels, but the introduction of sanctions which came into full effect from June 2023 has had a major impact.  China has since become the major export market for Russian methanol which has involved much larger rail distances and low profit margins.  Synthetic rubber exports have undergone a similar cycle to methanol, but the higher prices of the various grades allow the costs of logistics to managed and to still be profitable.

China has become vital for not only Russian exporters but also imports of products that were previously sourced from the West.  Higher grade polyolefins are sent to Russia from China in addition to polyurethane raw materials such as isocyanates and polyols.  However, sanctions prevent some aspects of trade being undertaken and China's refusal to make payments with Russian counterparties has become a difficulty in purchasing imported equipment.

In conclusion markets inside Russia have adapted better than expected since sanctions were first introduced in 2022, and have performed even better than some of the European chemical sectors.  The process of replacing market has thus far been complex and challenging, and the removal of sanctions is seen as important for the chemical industry in the long term.  It is impossible to speculate This probably may only be possible following the defeat of Russia, and the emergence of a new regime.   

 

Central European Chemical and Polymer Prices 2024 (€/ton)
Petrochemicals
Product Jan  Feb Mar Apr  May
Propylene 913.1 858.1 913.2 982.2 916.5
Butadiene 707.2 727.0 793.7 861.7 916.5
Benzene 964.9 957.6 1051.5 1218.7 1038.2
Toluene 927.3 1031.5 1081.1 1174.9 1056.8
Styrene 1223.7 1279.8 1484.1 1158.7 1525.0
           
Organic Chemicals
Product Jan  Feb Mar Apr  May
Methanol 383.4 371.5 385.4 424.6 386.2
2-EH 1150.6 1218.9 1519.6 1464.7 0.0
Ethylene Glycol 630.1 669.9 646.4 622.4 719.8
Propylene Glycol 2066.8 1955.9 1856.6 1672.4 1530.6
Phenol 1240.4 1216.4 1298.0 1481.7 1447.1
Bisphenol A 1323.9 1295.7 1269.5 1305.9 1334.8
Acetone 836.4 912.7 985.1 936.1 0.0
Acetic Acid 956.4 566.3 513.9 546.6 524.9
Ethyl Acetate 1107.2 1140.7 1151.9 1288.1 1262.4
VAM 1182.1 909.2 648.2 1031.9 0.0
Phthalic Anhydride 1084.3 1013.0 1177.5 1120.6 1409.2
Maleic Anhydride 1129.7 1149.0 1212.5 1265.5 1306.4
Plasticizers 1055.5 1007.3 986.7 1045.7 1522.9
PTA 771.4 766.4 774.0 675.4 0.0
Anilne 1283.1 1424.8 1595.8 1569.7 1426.8
Acrylonitrile 2082.6 2041.9 2016.4 2087.7 0.0
TDI 2258.2 2359.9 2420.8 2420.0 3029.2
           
Polymers
Product Jan  Feb Mar Apr  May
Polyethylene 1680.5 1662.6 1843.1 1795.4 1439.0
Polypropylene 1336.9 1268.0 1479.3 1465.1 1570.7
Polyols 1036.9 1011.0 1086.9 963.5 2297.0
PET  1029.1 1060.6 1106.0 1087.2 0.0
Polycarbonate 2871.5 2774.8 2959.1 2817.8 0.0
MDI 1883.1 1860.9 1977.6 2030.0 2177.3
Polyurethane 1073.1 1040.9 1011.0 1186.6 0.0
           
Synthetic Rubber 
Product Jan  Feb Mar Apr  May
Synthetic Rubber 1957.6 1941.8 2066.6 2037.0 1991.4
Butadiene Rubber 1240.4 1216.4 1298.0 1481.7 1447.1
S-SBR 1566.5 1676.8 1695.1 1428.9 0.0
Butyl Rubber 2757.6 2541.2 1998.0 2055.7 2294.5
HBR 2410.1 2516.7 2385.2 2343.2 0.0
Isoprene Rubber 1685.0 3593.2 1841.7 1586.8 1782.3
NPR 2797.8 2337.8 2168.6 3707.0 0.0
EPDM 2034.4 2017.3 1812.9 1820.5 2056.7

 

 

 
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