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27 June 2022

Russian chemical production Jan-Apr 2022

Russian Chemical Production

(unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

Caustic Soda

435.0

446.4

Soda Ash

1,226.0

1,159.0

Ethylene

1,452.8

1,489.0

Propylene

999.0

1,062.5

Benzene

462.0

455.2

Xylenes

194.0

196.9

Styrene

243.8

260.5

Phenol

95.8

92.0

Ammonia

6,200.0

6,800.0

Nitrogen Fertilisers

4,035.0

3,927.0

Phosphate Fertilisers

1,461.0

1,457.0

Potash Fertilisers

2,863.0

3,551.0

Plastics in Bulk

3,557.0

3,552.0

Polyethylene

1,132.0

1,146.0

Polystyrene

198.0

197.0

PVC

359.2

372.5

Polyamide

67.0

66.8

Synthetic Rubber

568.0

595.0

Synthetic Fibres

67.0

68.2

Production volumes in the mainstream Russian chemical industry in the first four months appear similar to numbers in 2021, but the underlying trend for many products is slowing.  Projects under construction face more challenges than normal due to sanctions whether official or self-sanctioning and at least most will be delayed if not frozen. 

As inventories accumulate and logistical bottlenecks intensify producers could be forced to reduce utilisation rates in the second half of the year.   Ethylene production decreased in the first four months from 1.489 million tons in 2021 to 1.453 million tons whilst propylene dropped from 1.063 million tons to 999,000 tons.  Demand for olefins for the production of derivatives came under pressure in the second half of the second quarter, as the impact of sanctions start to feed into the market. 

According to Rosstat, the Russian government statistics department, industrial production in April declined by 1.8% following a 1.1% decline in March.  Chemical production specifically fell 6% in April against March which was caused mainly by restrictions on the export of certain types of fertilisers.  Also, the shortage of some imported components affected production of the Russian paint and varnish industry in April (12.7% down) and household chemicals, perfumes and cosmetics which was 13.6% down. 

The production of polymers in Russia amounted to 3.557 million tons in the first four months in 2022 against 3.552 million tons in January to April 2021.  Polyethylene production fell from 1.146 million tons to 1.132 million tons in the first four months in 2022.  More than half of the olefin and polyolefin production in Russia is undertaken by plants belonging to the SIBUR and TAIF groups which merged in 2021.   Replacing polyethylene imports for sectors such as food packaging and gas pipes may help SIBUR to sustain production levels at various plants belonging to the group.  It is not clear though how much access SIBUR has to flame retardants, dyes, stabilizers, etc, that are used in the final stages of polyethylene production and allows sale to customers. 

Product gaps for Russian chemical producers

In the immediate term chemical producers are striving to fill some of the product gaps left with the exit of Western suppliers, whilst looking more eastward for sales and raw materials.  There may be some other routes for European raw materials to enter Russia.  Every effort will be made to develop products and technologies which were previously imported, but there are significant limits to what is possible. 

Russian plants produced 568,000 tons of synthetic rubber in the first four months in 2022, versus 595,000 tons in 2021.  In view of the dependence of exports for synthetic rubber producers in Russia, and the sanctions imposed on products such as butadiene rubber and butyl rubber, the forecast for production in 2022 is much lower than in 2021.  In the base chemical sector Russian ammonia production dropped to 6.8 million tons whilst caustic soda dropped from 446,400 tons to 435,000 tons. 

Sanctions from 10 July

After 10 July imports of a wide range of chemicals into Russia from the EU will cease.  The total volume of prohibited products has not yet been estimated, but the impact is expected to be widespread.  Moreover, logistics are complicated by the ban on the handling of Russian cargo in European ports adding to the mounting challenges for business.  The supply of resins, special polymers, additives to plastics, oils, solvents, surfactants, catalysts, etc, have been banned whilst several European suppliers have even refused to supply even non-sanctioned products.  The severity of the sanctions will place extreme pressure on the chemical industry as with other industries. 

Speciality chemicals where Russia seeks new sources

Chemical plant protection products

Catalysts, initiators, inhibitors

Surfactants, chemical reagents and solvents

Chemicals for food additives

Adhesives and sealants, pigments

Additives to fuels and lubricants

Oil sanctions and market transition for chemical production

The main focus of the sixth round of sanctions was on oil and the ban on seaborne trade.  At the same time the EU has expanded its list of goods subject to export restrictions, including 80 chemicals that could be used to manufacture chemical weapons.  Products include antimony, calcium carbide, ethanol, white and yellow phosphorus, chemical precursors for nerve agents, continuous flow reactors, etc.  Russian chemical companies are searching for alternative suppliers in China, Korea and other countries in the Asia-Pacific region.

Russian catalyst shortages

Chemical plants have begun to experience a shortage of raw materials for the production of sulphuric acid. The problem is the supply of special vanadium catalysts to produce sulphuric acid on which Russia is almost completely dependent on imports.  Traditional suppliers of catalysts, BASF, DuPont and other suppliers have previously announced the termination of their activities in Russia. Because of this, there were interruptions in the supply of raw materials to the plants.

Russian Chemical Catalyst Import Sources 2021

Country

Share

US

34.7%

Germany

10.6%

Japan

9.1%

Italy

8.6%

France

7.6%

Denmark

6.7%

India

5.9%

Belgium

4.1%

China

3.1%

UK

3%

Domestic chemical companies concede that it will be extremely difficult to replace European vanadium catalysts.  Currently, there are two plants in Russia for the production of vanadium catalysts at Samara and Shchelkovsky, but there are doubts about reliability as Russian analogues is fraught with accidents and explosions at plants.

EU Sanctions imposed on technology sales to Russia

From 8 April 2022

Aromatic hydrocarbon production units

Hydrogen generation technology

Naphtha isomerisation units

Polymerisation units

Refinery fuel gas treatment and sulphur recovery technology

Process units for gas cooling in the LNG-process

Cold boxes in the LNG-process

Attempts were made to replace imported vanadium catalysts were made in the days of the Soviet Union, but even then, it was impossible to completely do without imported raw materials.  One of the options for getting out of the situation is the re-equipment of production but this process is expensive.  Without financial state support, rearmament will take up to ten years.

Russian petrochemical project update

Ust Luga gas processing plant, prospects

VAT exemption for imported equipment for gas processing plants

The Ministry of Industry and Trade of Russia has proposed to exempt investors from VAT on the import of equipment for the construction of a gas chemical complex as part of the ethane-containing gas processing complex at Ust-Luga.   This measure proposal is seen as largely symbolic as the necessary equipment is sanctioned by Western countries some Asian partners. 

After the introduction of technology sanctions and announcements by Western contractors and licensors that they were leaving the Russian market, the broad assumption is that most gas-chemical projects will be delayed if not frozen.  The Ust Luga (KPEG) project is probably the most affected of the projects already under construction whereby the official withdrawal of Linde should at least stall the investment or prevent it from reaching conclusion.  Companies undertaking large gas projects in Russia, including gas liquefaction projects, are considering the possibility of using domestic and Chinese technologies. Neither country has a track record in this type of engineering so more information would be required before these alternative options could be considered tenable. 

Whether sanctions affect petrochemical projects in Russia depends on the status of the project itself.  Construction of the petrochemical complex at Ust Luga had only just started, and some foundations may continue to be laid.  KPEG is supposed to include two complexes.  The first is the integrated complex for processing and liquefaction of natural gas under Ruskhimalliance and the second is the gas chemical complex under Baltic Chemical Complex, a subsidiary of Rusgazvydobuvannya.

Gazprom is concentrating on how to replace foreign technologies and equipment in order to ensuring Russian LNG projects.  The only providers of technologies of large-scale liquefaction of gas include Shell, ConocoPhillips and Linde.  Until recently all projects were focused on foreign licensors, in particular Linde which had managed to circumvent loopholes through the sanctions imposed after Russia’s occupation of Crimea. 

The contract with Linde for technological equipment and lifetime service support was concluded in 2021 and parts of Gazprom believe that without it the project cannot continue.   There has been some suggestion that Linde may be able to transfer the technology through its subsidiary Linde Engineering Rus.  However, Linde already has withdrawn from the Amur Gas Chemical Complex and also the jv at Severstal where heat exchangers were being produced for the Baltic LNG project at Ust Luga. 

Even if the technology transfer was allowed to go ahead the question remains where the equipment will be manufactured.  Moreover, It is impossible to ship liquefied gas without special pumps and these are produced only in the US and Japan.  Russian companies are looking how to replace such pumps, which could be a lengthy process and may not be successful.  China is not expected to provide an alternative as it has no history in these technologies.  Such is the strange nature of Russian society in the present day that Gazprom cannot clarify the obvious reasons why this project may be held up. 

Amur Gas Chemical Complex-new equipment sought

Nizhnekamskneftekhim-EP 600 contractor change

SIBUR decided to terminate the contract with Gemont LLC (a subsidiary of the Turkish Gemont) for the construction of the EP-600 ethylene unit at Nizhnekamskneftekhim.  The termination is due to SIBUR’s concern that the contractor will not be able to carry out work on schedule.   To save the project, the holding decided to break the contract with the general contractor, who began the current construction in the midst of the pandemic in 2020.  SIBUR is now in the process of arranging a new contractor for the project.  The project represents a key investment for Nizhnekamskneftekhim and the petrochemical industry in Tatarstan.  All the equipment has been delivered, but it is not clear if completion will be made on schedule.   

Progress in the installation of the pyrolysis unit for Amur Gas Chemical Complex had achieved 84% of the schedule by the start of May, and for polymer installations the estimated completion was 86%.   The withdrawal of Western partners from the project means that work is necessary to replace foreign equipment with other sources.

For the Amur Gas Chemical Complex, a large amount of equipment has been delivered already, having been transported via the Amur and Zeya rivers in 2021, but more equipment is required in 2022 and there is no sign that navigation has started. SIBUR still hopes that some equipment deliveries might start sometime before August although there is no indication of that being possible under current conditions.  Rather freeze the projects it is seen as more expedient to continue investing in power sources, infrastructure and base foundations, and hope for solutions either technological or political.     

The focus is primarily on the equipment of pyrolysis furnaces, complex compressor and pumping equipment, and proprietary heat exchange equipment.  Also, the company is focused on a number of auxiliary packages, which are critical to the project and seem quite complex for the selection of replacements and ensuring comfortable terms for the manufacture of such equipment.

In May the construction of supporting infrastructure comprising water and energy supply facilities for the future complex was carried out.  The final stage includes commissioning works at the artesian water intake, the construction of a 500 kV substation and step-down transformer substations is underway.

 2 June 2022

Russian Methanol Production 2022                  
Producer Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Akron 9.3 8.6 9.8 9.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.1
Ammoni 10.3 7.8 8.5 8.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 17.0
Angarsk PC 3.1 2.3 3.2 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 7.5
Azot Nevinnomyssk 12.4 11.6 8.1 7.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 39.4
Azot Novomoskovsk 20.2 17.9 13.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 51.4
Metafrax Chemicals 113.0 99.0 111.8 110.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 433.8
Shchekinoazot 134.5 122.1 134.2 124.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 515.7
Gazprom Methanol 81.5 73.6 73.1 49.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 277.5
Tomet   69.9 69.2 61.5 41.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 241.8
Total 431.5 393.5 423.5 354.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1603.1
                             
Russian Methanol Producer Balance (unit-kilo tons)
                             
Akron    Novgorod                      
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 9.3 8.6 9.8 9.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 37.0
Exports 1.6 0.0 1.2 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.3
Domestic sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Captive/Inventory 7.7 8.6 8.5 8.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 33.7
                             
Ammoni Mendeleevsk                        
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 10.3 7.8 8.5 8.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 35.1
Exports 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 1.1
Domestic sales 4.5 5.1 3.7 7.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.6
Captive/Inventory 5.8 2.7 4.8 0.1 0.0 0.0 0.0 0.0 0.0 -0.1 0.0 0.0 13.4
                             
Angarsk Petrochemical Company                          
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 3.1 2.3 3.2 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.9
Exports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Domestic sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Captive/Inventory 3.1 2.3 3.2 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.9
                             
Azot Nevinnomyssk                          
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 12.4 11.6 8.1 7.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 39.4
Exports 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0
Domestic sales 2.3 2.9 2.4 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 9.1
Captive/Inventory 10.1 8.6 5.7 4.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 29.3
                             
Azot Novomoskovsk                          
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 20.2 17.9 13.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 51.4
Exports 5.5 2.5 2.1 10.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.6
Domestic sales 12.2 11.3 11.5 10.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 45.6
Captive/Inventory 2.5 4.0 -0.3 -21.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -14.8
                             
Metafrax Chemical Gubakha                          
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 113.0 99.0 111.8 110.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 433.8
Exports 38.3 45.5 41.2 44.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 169.5
Domestic sales 32.8 25.9 34.1 36.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 129.5
Captive/Inventory 41.9 27.6 36.5 28.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 134.9
                             
Shchekinoazot Shchekino                          
    Jan  Feb  Mar Apr May Jun Jul Aug Sep  Oct Nov Dec Total
Production 134.5 122.1 134.2 124.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 515.7
Exports 100.0 88.9 86.8 109.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 385.6
Domestic sales 21.1 20.8 26.1 22.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 90.4
Captive/Inventory 13.4 12.4 21.2 -7.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 39.7
                             
Gazprom Methanol Tomsk                          
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 81.5 73.6 73.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 277.5
Exports 37.6 32.4 21.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 91.1
Domestic sales 35.3 32.7 38.2 35.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 141.6
Captive/Inventory 8.6 8.6 13.8 -35.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -4.4
                             
Tomet Togliatti                          
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 69.9 69.2 61.5 41.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 241.8
Exports  32.0 27.8 20.1 39.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 119.0
Domestic Sales 39.6 34.4 37.3 24.5 0.0 0.0 0.0 0.0 0 0.0 0.0 0.0 135.8
Captive/Inventory -1.7 7.0 4.0 -22.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -13.0
                             
Total 2022 Summary
    Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
Production 454.2 412.2 423.5 305.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1595
Exports  214.9 197.2 172.6 206.3 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 791
Domestic Sales 147.7 133.2 153.3 138.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 572.6
Captive/Inventory 91.5 81.8 97.7 -39.3 0.0 0.0 0.0 0.0 0.0 -0.1 0.0 0.0 231.6
% ratio exports of production 47.3 47.8 40.7 67.5                 67.8

 

Russian-Polish methanol news

 

Russian Methanol Exports by Producer

(unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Azot Nevinnomyssk

1.0

3.6

Azot Novomoskovsk

20.5

32.1

Akron

3.4

3.2

Metafrax Chemicals

169.5

150.8

Gazprom Methanol

91.1

167.7

Tomet

119.0

47.7

Shchekinoazot

379.0

237.4

Ammoni

1.0

0.0

Total

784.4

642.5

 


 

Exports increased to 784,400 tons in first four months against 642,500 tons in January to April 2021

 

Polish methanol imports totalled 220,110 tons in the first quarter in 2022 against 172,233 tons in the same period in 2021.

 

Domestic merchant sales increased slightly from 565,000 tons in January to April 2021 to 572,600 tons in the first four months this year.

 

 

Feedstock uncertainty in Central Europe

The sixth round of sanctions finally agreed within the EU were applied from 31 May 2022, but only related to seaborne shipments and excludes deliveries made by the pipeline Druzhba.  In 2021 a total of 34.2% of the crude oil processed in Germany came from Russia of which two-thirds came via the Druzhba pipeline, the rest by sea.  The eastern parts of Germany are supplied with Russian oil almost exclusively via the Druzhba pipeline.

MOL-olefin shutdown completed

The MOL Group completed its overhaul of its cracking unit at Tiszaújváros at the end of May.  The company operates two ethylene plants with a capacity of 380,000 tpa and 300,000 tpa and can also produce 220,000 tpa of propylene and 135,000 tpa of butadiene at the Tiszaújváros site.

Hungary was cited as the main objector to a full oil ban, but other countries also in Central Europe are not in a position operate refineries fully without pipeline deliveries.  TotalEnergies, which operates the Leuna refinery, stated that it had cut Russian imports into the plant by more than 60% from October 2021 to May 2022 by bringing in additional volumes through the Polish port of Gdansk.  Further cuts are expected through the end of the year and the refinery aims to cut all Russian imports in 2023. 

In theory both east German refineries at Schwedt and Leuna can import oil from the Polish terminal Gdansk Naftoport, but accordingly it meets around only half of required volumes.   Thus, the construction of the second line of the Plock-Gdansk oil pipeline is becoming more likely.  

Refining and petrochemical margins Central Europe

PKN Orlen’s model refining margin increased to $24.3 per barrel in May versus $20.5 in April, $10.8 in March and $2.7 in February.  Lotos increased margins by even greater numbers, rising to $59.9 in May against $6.9 in February.  MOL continues to suppress its margins for essentially political reasons; the last record was published in March. 

Petrochemical margins for PKN Orlen in May amounted to €1399 per ton, down from €1456 in April, but still much higher than historical comparisons.

Gas supplies and chemical production Central Europe

Gas supply from Russia to Europe has become tighter, posing threats to chemical production in some countries.  From 11 July to 21 July Nord Stream 1 is down for annual maintenance and there are concerns over the restart.    

In late June Germany stressed that the use of gas for energy production and industry will be reduced due to supply fluctuations and uncertainty.  The filling of storage facilities will be a priority in the face of winter.  The chemical industry accounts for around 15% of all natural gas requirements in Germany whilst a third of the oil imports in Germany have come from Russian sources.  The gas supply to Germany is mainly covered by the Nord Stream 1 pipeline. 

Alternatives to gas for chemical producers

The problems and uncertainty over gas supply from Russia is expected to speed up the transition to other energy sources, both renewable and non-renewable.  A combination of LNG and coal is likely to form the basis for the short-term strategy whilst longer term wind power from the Baltic could become more significant and some producers are considering nuclear reactors using with SMR (Small Modular Reactor) technology.

Thus, the reduction from Russia in June due to a combination of political and technical reasons is causing German chemical companies to monitor gas supplies closer than normal.   

BASF has to date been securing sufficient amounts of natural gas to keep its European sites running but is preparing for a potential supply squeeze which could happen any time.   Germany has announced a fresh package of measures to cut gas consumption, including restarting old coal-fired power plants, to help offset lower gas supplies from Russia.

Czech gas grid operator Net4Gas observed an overall reduction in gas transit in June but has said supplies to the country itself had been sufficient.  Czech imports of natural gas from Russia increased in April to 851,002 tons against 503,330 tons in March with expenditure rising from €705.915 million to €1.106 billion.  Bulgaria has already been disconnected from Russian gas supply but will be able to receive Azerbaijani gas in July when the Bulgarian-Greek interconnector starts operating. 

Poland had its gas supply directly from Russia stopped in May but is in a better position for gas supply than other European countries and has been able to buy some reverse gas from Germany.  Grupa Azoty is the largest consumer of natural gas in Poland and has hitherto received normal volumes.  Of the 20 billion cubic metres of gas that Poland consumes annually Zaklady Azotowe in Pulawy takes about 1 billion cubic metres. 

PKN Orlen-petrochemical production Jan-Apr 2022

PKN Orlen Production

(unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

 Ethylene

162.5

99.4

 Propylene

155.7

96.4

 Butadiene

23.5

13.3

 Toluene

3.6

3.9

 Phenol

17.2

16.2

 Polyethylene

112.9

62.9

 PVC

101.3

72.6

Polypropylene

119.3

89.9

PKN Orlen increased petrochemical production in the first four months at Plock, reducing the requirement for imports of propylene and butadiene compared to 2021.  Ethylene production at Plock totalled 162,500 tons in the first four months against 99,400 tons in the same period in 2021 when renovations were being carried out, whilst propylene production rose from 96,400 tons to 155,700 tons.  Butadiene production increased from 13,300 tons to 23,500 tons.   

PKN Orlen-investments in Czech Republic

PKN Orlen has invested Kc 2.4 billion (€96.9 million) in Orlen Unipetrol aimed at the ongoing modernisation of production technologies in both refineries located at Litvinov and Kralupy nad Vltavou.  This included work on the hydrogen partial oxidation unit, the construction of a new unit for the production of liquid hydrocarbon DCPD, and the construction of the eleventh cracking furnace of the ethylene unit.

PKN Orlen-Olefin 111 project approval & ABB contract

Key developments have taken place regarding PKN Orlen’s Olefin 111 project in the past month.  Firstly, the Mazovian Voivode (administration) has approved the construction project and granted a building permit for the Olefin III complex at Plock. The decision is immediately enforceable.  Olefin III is being developed to increase production capacity at Plock by approximately 60% and represents a $3 billion investment, expanding the existing site by 100 hectares. 

Secondly ABB solutions has been commissioned to support PKN Orlen’s goal of reducing CO2 emissions by 30% per ton in the production of ethylene and propylene.  ABB control and advanced automation systems is to be used by PKN Orlen to optimize production efficiency, increasing yield, analysing raw material consumption, monitoring energy use and ensuring product quality.

PKN Orlen signed a contract for the construction of the Olefin III installation complex at its main plant in Plock in June 2021 with Hyundai Engineering and Técnicas Reunidas.  ABB, now working alongside Hyundai Engineering and Técnicas Reunidas, has been employed to install their market leading distributed control system at the new Olefin III complex at Plock.  Integrating control architecture across the entire mega development, PKN Orlen will be able to constantly monitor and analyses plant productivity, maximizing asset performance, managing power consumption, ensuring product quality, and optimizing process efficiency in real time.  

The construction schedule is planned for completion in the first quarter of 2024, and the production launch of the Olefin III complex is expected at the beginning of 2025.  The completion of the project will contribute to an increase in operating EBITDA by around zl 1 billion (€212 million) per annum.  it also means that carbon dioxide emissions per ton of product are to be reduced up to 30%.

Czech petrochemical trade, Jan-Apr 2022

Czech Petrochemical Imports (unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

Ethylene

11.161

1.404

Propylene

11.541

16.376

Butadiene

23.958

28.286

Benzene

27.035

28.017

Toluene

2.655

2.539

Styrene

7.758

15.689

Czech exports of ethylbenzene declined in the first four months in 2022 to 38,854 tons from 39,070 tons in the same period in 2021.  All the ethylbenzene was shipped from Kralupy to Oswiecim in Poland, all within the structures of the Synthos Group. 

Czech Petrochemical Exports (unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

Ethylene

5.039

11.623

Propylene

0.014

0.016

Butadiene

0.114

1.032

Benzene

18.278

15.072

Toluene

3.845

3.293

Ethylbenzene

38.854

39.070

Ethylene exports from the Czech Republic amounted to 5,039 tons in the first four months against 11,623 tons in the same period 2021 whilst imports rose from 1,404 tons to 11,161 tons.  Propylene imports dropped from 16,376 tons in January to April 2021 to 11,541 tons in the same period this year.  Czech imports of butadiene dropped from 28,286 tons in the first four months in 2021 to 23,958 tons in the same period in 2022. 

Polish organic chemical imports Jan-Apr 2022

Polish Imports of Aromatics (unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

Caprolactam

2.079

7.035

Ethylbenzene

38.864

44.958

Paraxylene

20.389

17.868

Phenol

40.001

13.130

Phthalic Anhydride

10.432

9.637

PTA

0.823

21.937

Styrene

34.365

35.751

TDI

26.486

26.929

Toluene

7.651

7.447

In the first four months in 2022 Polish trade in organic chemicals comprised €810.3 million for exports and €1.796 billion in imports. 

Polish Organic Chemical Imports (unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

Acetic Acid

15.938

14.401

Acetone

2.453

1.472

Adipic Acid

4.004

2.754

Butadiene

31.352

37.753

DEG

10.227

9.317

DINP/DOP

9.403

7.526

Ethyl Acetate

5.295

4.900

Ethylene Glycol

17.881

17.429

Ethylene Oxide

6.070

9.836

Isopropanol

3.657

3.026

Maleic Anhydride

4.513

4.940

Melamine

8.362

7.552

Methanol

313.069

228.283

Propylene

64.361

88.179

Propylene Glycol

7.476

7.996

VAM

6.931

6.532

In the aromatics sector phenol recorded a large increase in the first four months to 40,001 tons, of which 10,879 tons came from Russia.   In other product areas, styrene imports amounted to 34,365 tons in the period January to April 2022 versus 35,751 tons in 2021 whilst ethylbenzene imports dropped from 44,958 tons to 38,864 tons.  Paraxylene imports into Poland amounted to 20,839 tons in January to April 2022 against 17,868 tons in 2021.  Imports were divided between France and Russia for supply. 

Imports of propylene into Poland dropped in the first four months to 64,361 tons against 88,179 tons in the same period last year, which was due mostly to the higher production undertaken at Plock. 

A similar trend followed for butadiene, dropping from 37,753 tons to 31,352 tons.  The largest increase in imports this year has been for methanol where volumes rose to 313,069 tons in the first four months in 2022 from 228,283 tons.  This significant rise was attributed directly to the war in Ukraine which has meant that Poland has been used as a transit route for Russian origin methanol for delivery to South East Europe. 

Polish polyolefin trade Jan-Apr 2022

Poland imported 228,615 tons of polypropylene homo grade in the first four months in 2022 for a total value of €397.650 million.  Russia was the largest supplier, providing 46,400 tons for €68.500 million.  Imports from Russia are expected to fall in the second half of 2022 in line with sanctions.  Exports of polypropylene homo grade amounted to 73,647 tons for €125.497 million.  The largest destination for Polish exports was Germany, shipping 20,384 tons for €34.126 million. 

For propylene copolymers Poland imported 111,399 tons in the first four months in 2022 for €221.576 million whilst exports amounted to 31,610 tons for €62.199 million.  Germany was the largest source of imported propylene copolymers, shipping 31,788 tons to Poland for €62.678 million.

Polish Polyethylene Trade Jan-Apr 2022 (unit-tons)

Product

Import

Export

LDPE & LLDPE

221,557

27,757

HDPE

170,990

86,213

EVA copolymers

6,390

949

EAO olefin copolymers

77,449

7,875

Other ethylene

21,689

1,749

Total

498,075

124,942

In the polyethylene sector imports into Poland totalled 498,075 tons in the first four months in 2022 against exports of 124,942 tons.  Import costs amounted to €904.277 million in January to April 2022 against export revenues of €202.634 million.

LDPE and LLDPE comprised the largest category of imports, totalling 221,557 tons of which LLDPE amounted to 91,558 tons for €162.386 million.  Imports of LLDPE were sourced mostly from West Europe. 

Polish Imports of PP Homo Jan-Apr 2022

Country

Ktons

€ million

Saudi Arabia

10.3

14.3

Austria

9.0

16.1

Belgium

11.1

21.6

Czechia

19.6

34.0

Denmark

1.0

1.9

Egypt

6.4

10.3

Finland

1.1

2.4

France

4.8

9.6

Spain

1.4

2.7

Netherlands

8.0

15.2

South Korea

18.6

30.9

Lithuania

1.8

3.1

Germany

45.9

86.7

Oman

2.9

4.6

Russia

46.4

68.5

Slovakia

13.1

23.7

Hungary

5.5

10.7

Vietnam

1.6

2.7

Italy

11.7

24.1

Others

8.6

14.3

Total

228.7

397.6

HDPE is the largest export category from Poland, shipping 86,213 tons in the first four months in 2022 for €135.542 million.  Imports still outstripped exports though, amounting to 170,990 tons in the first four months for €284.479 million.  Germany has been the largest source of imports of HDPE this year and also the largest destination for exports, with inward shipments totalling 47,645 tons against outward shipments of 39,470 tons.  Poland imported 12,044 tons of HDPE from Russia in the first four months.

Polimery Police achieves more than 90% of construction schedule by end-April

The Polimery Police project in northern Poland is now more than 90% completed overall with sub-projects such as the assembly of key devices and apparatus as well as flyovers and pipelines underway. 

The target production capacity of the Polimery Police complex, i.e., after obtaining full production capacity, will be 429,00 tpa of propylene and 437,000 tpa of polypropylene.  This investment will enable the diversification of Grupa Azoty's business activities and strengthen the competitive position of Polish on the European market of plastics producers.  The scope of the project also includes a gas port, a transhipment and storage terminal, providing the possibility of obtaining the raw materials necessary for the production by sea.

Other parts of the project include the cryogenic separation system necessary to separate hydrogen from the post-reaction mixture in the PDH (propane dehydrogenation) process. The separated hydrogen will be subject to further purification and will be used for the internal needs of the PDH process.  It will also be sent to Grupa Azoty Zaklady Chemiczne Police.  At the transhipment and storage terminal, the assembly of two propane tanks with a total capacity of 80,000 cubic metres and an ethylene tank with a capacity of 12,000 cubic metres has been completed. On the PDH propane dehydrogenation installation, the assembly work of the torch has been completed. 

Polish Imports of Propylene (unit-kilo tons)

Country

Jan-Apr 22

Jan-Apr 21

Lithuania

0.000

5.444

Germany

20.784

44.753

Russia

20.132

13.786

Ukraine

19.020

24.346

Others

4.424

0.012

Total

64.360

88.341

In addition to the dependency on propylene monomer imports, Poland has in recent years been increasing its imports of polypropylene and propylene copolymers.  Thus, a significant part of the volume of the production under Grupa Azoty Polyolefins will be directed to domestic customers.  At the end of April 2022, the material progress in the implementation of the project amounted to 91%.   

Lukoil-Neftochim-polypropylene project

The position for the Lukoil refinery at Bourgas is yet to be clarified under EU sanctions regarding the polypropylene project and whether the Russian ownership prevents it from operating as a normal entity.  Some proposals have been put forward inside the EU for the refinery to be nationalised, but it is not clear if Lukoil wants to sell its assets in south east Europe.     

Lukoil-Bourgas PP & propylene production

 

2016

2017

2018

2019

2020

2021

Polypropylene

 60.0  

 73.4  

 61.1  

 77.8  

 69.9  

70.0

Propylene

 33.2  

 26.4  

 13.8  

 21.6  

 10.1  

15.2

The polypropylene project which is a key part of Lukoil’s strategy in Bulgaria is under review from all sides.  Lukoil signed a contract with Lummus Technology's Novolen division in 2020 to provide licensed technology for a new polypropylene plant at the Bourgas site.  The project also includes basic design, personnel training, and the supply of catalysts.  The capacity of the proposed plant was proposed at 280,000 tpa.  Lukoil-Neftekhim has already held a tender for construction and installation of the new polypropylene production facility.  Polypropylene production already exists at Bourgas with average output running at around 70,000 tpa. 

HIP Petrohemija-review by NIS

Serbian refining company NIS is undertaking a tender for a detailed energy audit of all facilities of HIP-Petrohemija, including its polyethylene facilities.  This involves the preparation of energy consumption balance and drawing up plans for HIP’s strategic goal for reducing energy consumption and increasing energy efficiency.  Other activities include examination of the type of consumers, and how the company should develop its marketing programme.  NIS currently holds around 90% of Petrohemija's shares after completing the purchase in 2021.  Polyethylene export revenues from Petrohemija amounted to $187.8 million in 2021 against $122.7 million in the same period in 2020.

Chimcomplex-higher revenues and costs

Chimcomplex posted rises in revenues and exports in the first five months of the year, helped in particular by export prices.  At the same time high energy costs are affecting profits margins.  Chimcomplex is currently undertaking a 2022-2030 Strategic Plan worth €2.5 billion in total.  Investments into existing and new lines are aimed at increasing annual turnover €10 billion by the end of the decade. 

Some of the projects include a new plasticizer plant of DOTP 20,000 tpa will integrate products resulting from the chemical recycling of PET plastic waste.  In addition to this investment package, up to €725 million is being allocated to promote the relaunch of the manufacture of VCM/PVC facilities and photovoltaic panels for renewable energy.  Other projects that could be included comprise recycling of PET and polyurethanes, and the production of green methanol by syngas. 

As part of its development in May Chimcomplex purchased 94.4% of the share capital of Sistemplast S.A. Ramnicu Valcea which provides integrated solutions for mechanics, design, construction, verification, and monitoring of industrial works. 

Polish PTA sales  Jan-Apr 2022

Polish PTA Exports (unit-kilo tons)

Country

Jan-Apr 22

Jan-Apr 22

Belarus

2.156

2.602

Germany

124.776

108.675

Lithuania

15.544

12.366

Switzerland

3.521

1.476

Turkey

1.496

0.000

Others

11.062

2.088

Total

158.554

127.207

PTA exports from Poland amounted to 158,554 tons in the first four months of 2022 against 127,207 tons in the same period in 2021.  Average prices for Polish PTA exports amounted to €888 per ton against €763 in the same period in 2021.   Germany remained the main customer for Polish PTA, taking 124,776 tons in January to April 2022 against 108,675 tons in the same period in 2021.  Lithuania was the second largest destination for PTA export shipments, taking 15,544 tons versus 12,366 tons.

Synthos-rubber projects

Russian Butadiene Rubber Exports to EU

(unit-kilo tons)

Country

2021

2020

Austria

1.1

0.8

Czech

11.3

10.1

Belgium

1.2

0.2

Estonia

0.0

0.0

Finland

0.9

0.8

France

3.5

2.8

Germany

8.2

8.5

Hungary

13.4

10.2

Latvia

0.7

0.4

Lithuania

0.5

0.2

Poland

22.0

17.7

Romania

16.8

14.3

Slovakia

12.0

10.7

Spain

9.4

5.9

Total

101.0

82.5

The deficit in the supply of butadiene rubber is creating difficulties for tyre producers in Europe.  Much of the material was previously imported from Russia, which European tyre manufacturers now have difficulties in sourcing.  In the first four months in 2022 Poland imported 42,358 tons of synthetic rubber from Russia at a total cost of €81.810 million.  Volumes in April amounted to 8,869 tons, the lowest amount in the first four months.

Butadiene rubber exports from Russia to the EU amounted to $165.4 million in 2021, with the largest recipient countries including Poland, Hungary, Romania and Slovakia.  Already consumers are negotiating with alternative suppliers.

In response to the lack of Russian butadiene rubber Synthos has decided to expand its butadiene rubber capacity by 50% which will help to address ongoing market shortages of the material.  The programme involves projects at the group’s facilities at Schkopau and Kralupy. 

Polish imports of synthetic rubber from Russia 2022

 

Jan

Feb

Mar

Apr

Kilo tons

9.268

10.427

13.794

8.869

€ million

17.163

19.639

26.198

18.810

Czech imports of synthetic rubber from Russia 2022

 

Jan

Feb

Mar

Apr

Kilo tons

2.737

2.721

3.128

2.386

€ million

5.074

4.788

5.706

4.183

By the end of 2022, Synthos will add 20,000 tpa of new capacity for butadiene rubber production at Kralupy after debottlenecking.  At the start of 2023, Synthos plans to restart a 30,000 tpa plant at Schkopau which was formerly operated under Trinseo.   Designed for the production of nickel/neodymium BR, the former

Trinseo plant at Schkopau was idled in 2020.  For the Trinseo acquisition itself Synthos estimates that it will add around €80-100 million per annum to the group EBIDTA.  Moreover, the plant at Schkopau possesses research and development facilities, which will increase the group's capabilities. 

Central European isocyanates, Jan-Apr 2022

Czech MDI Imports (unit-kilo tons)

Country

Jan-Apr 22

Jan-Apr 21

China

0.697

1.064

Belgium

4.352

4.338

Germany

4.070

6.141

Italy

0.022

0.010

Hungary

2.055

2.454

Netherlands

1.159

0.591

Others

0.500

0.573

Total

12.754

15.171

Polish MDI Imports (unit-kilo tons)

Country

Jan-Apr 22

Jan-Apr 21

Germany

16.731

17.496

Netherlands

6.278

4.851

Hungary

15.127

18.235

Belgium

10.761

8.814

Others

4.224

2.478

Total

53.120

51.874

MDI imports into the Czech Republic totalled 12,743 tons in the first four months in 2022 against 15,171 tons in the same period in 2021.  Total costs for MDI imports increased from €31.588 million in January to April 2021 to €31.952 million in the same period in 2022, with average prices rising from €2.056 per ton to €2.505.

MDI imports into Poland totalled 53,120 tons in the first four months in 2022 for a total value of €137.566 million.  Average prices amounted to €2.690 per ton, with April numbers amounting to €2718.  TDI imports into Poland amounted to 26,839 tons in the first four months in 2022 at an average price of €2763 per ton. 

Significant supply shortages were felt on the polyols and TDI market in 2021 and the situation for 2022 is also challenging due to the rising costs of raw materials based on the increase in oil and gas prices.  The situation in Russia and Ukraine could also influence supply chains for raw materials, whilst consumption of polyurethanes could come under pressure as inflation erodes purchasing power.  Polish polyurethane producers reported reasonable results for the first quarter this year but the view from companies such as PCC Rokita and Ciech that sales of polyurethane foams should see softening as the year progresses.

Central European methanol trade Jan-Apr 2022

Polish Methanol Exports 2022

Country

Jan-Apr (ktons)

Jan-Apr (€ million)

Austria

26.6

10.9

Czech

26.6

11.5

Germany

36.4

15.2

Romania

5.2

2.2

Slovakia

14.4

6.3

Ukraine

1.1

0.7

Hungary

11.8

4.7

Others

2.5

1.5

Total

124.6

52.8

Exports of methanol from Poland amounted to 39,000 tons in April as the south-Central European countries continued to be unable to import directly from Russia.  Slovakia imported 7,900 tons of methanol from Poland in April against 6,400 tons in March whilst Hungary imported 6,000 tons against 5,800 tons.  In total exports of methanol from Poland totalled 124,600 tons in the first four months for €52.8 million, reflecting an average price of €424 per ton.

Polish Methanol Imports (unit-kilo tons)

Country

Jan-Apr 22

Jan-Apr 21

Belarus

0.044

1.295

Finland

17.184

25.049

Lithuania

0.579

2.716

Germany

38.026

26.992

Netherlands

0.000

25.619

Norway

16.787

4.299

Russia

240.237

141.470

Others

0.287

0.756

Total

313.144

228.196

In order to facilitate an increase in export activity in March and April this year Poland has had to increase imports, rising in the first four months from last year from 228,196 tons to 313,144 tons.  Costs totalled €114.852 million in January to April.  The average price for Polish imports comprised €366 per ton in the first four months this year, and for Russia in particular €364. Polish traders are trying to diversify methanol sources in case producers from Russia are forced to be reduced or to even stop completely.  

Czech Methanol Imports (unit-kilo tons)

Country

Jan-Apr 22

Jan-Apr 21

Germany

2.353

5.330

Russia

12.697

16.420

Poland

10.924

8.420

Others

0.932

0.507

Total

26.906

30.682

Russia increased exports to Poland from 141,470 tons to 240,037 tons whilst Norway increased shipments from 4,299 tons to 16,787 tons.  Germany increased exports to Poland in the first four months in 2022 to 38,026 tons from 26,992 tons in the same period last year.  

Czech imports of methanol amounted to 26,096 tons in the first four months in 2022 against 30,682 tons in the same period in 2021.  Russia accounted for 12,697 tons in January-April 2022, followed by Poland with 10,924 tons. Prices per ton for methanol imports into the Czech Republic increased from €337 in the first four months in 2021 to €430 in 2022.

Ciech Group-decarbonisation plan

Polish Chemical Production (unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

Caustic Soda Liquid

142.3

115.0

Caustic Soda Solid

27.8

28.9

Caprolactam

57.4

55.5

Polystyrene

24.7

24.7

EPS

34.0

29.6

Synthetic Rubber

97.1

86.7

Ammonia (Gaseous)

862.0

947.0

Pesticides

25.2

28.4

Nitric Acid

805.0

883.0

Nitrogen Fertilisers

690.0

749.0

Phosphate Fertilisers

112.0

154.5

Potassium Fertilisers

100.3

113.5

The Ciech Group is undertaking a decarbonisation plan within the framework of the ESG strategy objectives: by 2026 it intends to reduce carbon dioxide emissions by approximately 33% (compared to 2019), and in 2033 to stop using coal in energy production processes.  At present, however, the production of chemical products using coal is cheaper than using natural gas which complicates the strategy in the short term.  Coal-fired combined heat and power plants are currently operating at the Inowroclaw and Janikowo soda ash plants.   Ciech’s aim is to gradually move away coal in favour of obtaining energy from natural gas, thermal waste processing or nuclear energy (through SMRs).

Russian ethylene production, Jan-Apr 2022

Russian Ethylene Production (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Angarsk Polymer Plant

78.3

77.9

Kazanorgsintez

222.5

193.1

Stavrolen

111.1

115.4

Nizhnekamskneftekhim

212.9

214.6

Novokuibyshevsk Petrochemical

16.3

19.1

Gazprom n Salavat

109.5

122.2

SIBUR-Kstovo

137.1

131.2

SIBUR-Khimprom

19.3

19.7

Tomskneftekhim

98.4

95.5

Ufaorgsintez

41.2

26.3

ZapSibNeftekhim

406.2

474.1

Total

1452.8

1489.0

Russian ethylene production totalled 1.453 million tons in the first four months in 2022 against 1.489 million tons in the same period in 2021.  Supply appears to be exceeding demand, with producers under pressure to reduce prices for merchant ethylene.  ZapSibNeftekhim at Tobolsk produced 406,200 tons in January to April 2022 down from 474,100 tons in 2021. Nizhnekamskneftekhim produced 212,900 tons of ethylene against 214,600 tons in 2021 whilst Kazanorgsintez rose from 193,100 tons to 222,500 tons.

Other important ethylene producers included SIBUR-Kstovo which produced 137,100 tons versus 131,200 tons.  In Bashkortostan Gazprom neftekhim Salavat produced 109,500 tons against 122,200 tons, whilst Ufaorgsintez increased production from 26,300 tons to 41,200 tons.  Stavrolen at Budyennovsk reduced ethylene production to 111,100 tons against 115,400 tons in the first four months in 2021.

Russian propylene production, sales and exports, Jan-Apr 2022

Russian Propylene Production (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Angarsk Polymer Plant

43.7

43.7

Kazanorgsintez

18.5

16.5

Lukoil-NNOS

109.8

63.8

Stavrolen

61.9

46.0

Nizhnekamskneftekhim

107.6

107.6

Novokuibyshevsk

11.6

12.6

Omsk Kaucuk

18.4

4.5

Polyom

66.4

65.0

Gazprom Neftekhim Salavat

48.8

53.9

SIBUR Kstovo

61.9

59.2

SIBUR-Khimprom

28.8

20.0

Tomskneftekhim

52.2

52.1

SIBUR Tobolsk

0.0

3.0

Ufaorgsintez

56.7

59.8

ZapSibNeftekhim

312.8

454.6

Total

999.0

1062.5

Russian propylene production amounted to 999,000 tons in the first four months in 2022 against 1.063 million tons in the same period in 2021.  The combined ZapSibNeftekhim and SIBUR Tobolsk plants reduced production from 457,600 tons in the first four months in 2021 to 312,800 tons in 2021. 

In Tatarstan Nizhnekamskneftekhim produced 107,600 tons of propylene in the first four months in 2022 whilst Kazanorgsintez increased production from 16,500 tons to 18,500 tons.

 

In Bashkortostan Gazprom neftekhim Salavat produced 48,800 tons of propylene versus 53,900 tons whilst Ufaorgsintez reduced production from 59,200 tons to 48,800 tons.  In the Nizhny Novgorod region SIBUR-Kstovo increased production of propylene from 59,200 tons to 61,200 tons in 2022.  Lukoil-NNOS at Kstovo increased production from 63,800 tons to 109,800 tons. 

 

Russian propylene sales Jan-Apr 2022

Russian Propylene Exports (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Lukoil-NNOS

34.7

13.4

SIBUR-Kstovo

10.6

6.8

Angarsk Polymer Plant

6.6

0.0

Stavrolen

0.0

14.2

Total

51.8

34.4

Propylene exports from Russia amounted to 51,800 tons in the first four months in 2022 against 34,400 tons in the same period in 2021.  Lukoil-NNOS increased export shipments from 13,400 tons to 34,700 tons whilst SIBUR-Kstovo shipped 10,600 tons against 6,400 tons in January-April 2021.  In 2021 ZapSibNeftekhim purchased 67,100 tons of propylene on the merchant market against 73,900 tons in 2020.  ZapSibNeftekhim is completing the first stage of modernisation of the propane dehydrogenation unit (PDH), the purpose of which is to increase the capacity of this production by around 4%.  This will help purchases of merchant propylene.   

Russian Propylene Domestic Sales (unit-kilo tons)

Company

Jan-Apr 22

Jan-Apr 21

Angarsk Polymer Plant

11.1

16.3

SIBUR-Kstovo

67.8

45.7

Lukoil-NNOS

61.8

57.7

Stavrolen

10.3

1.8

Others

0.5

0.1

Total

152.6

121.9

ZapSibNeftekhim increased merchant propylene purchases from 22,800 tons in January to April 2021 to 48,200 tons in the same period this year.  Russia’s largest merchant consumer Saratovorgsintez reduced purchases of merchant propylene from 62,200 tons to 61,800 tons and SIBUR-Khimprom reduced purchases from 13,500 tons to 10,300 tons.  Other consumers included Akrilat at Dzerzhinsk which is part of SIBUR-Neftekhim.  Akrilat produced 26,700 tons of butyl acrylate and 10,400 tons of 2-ethylhexyl acrylate.  Also, about 4,000 tons of acrylic acid of polymer grade were produced.

Russian Propylene Domestic Purchases

(unit-kilo tons)

Consumer

Jan-Apr 22

Jan-Apr 21

Saratovorgsintez

61.8

62.2

Volzhskiy Orgsintez

3.8

3.9

Akrilat

12.7

0.0

SIBUR-Khimprom

10.3

13.5

Omsk-Kaucuk

4.3

1.3

Tomskneftekhim

1.7

1.8

ZapSibNeftekhim

48.2

22.8

Ufaorgsintez

7.5

5.3

Khimprom Kemerovo

2.7

1.8

Plant of Synthetic Alcohol

1.1

5.7

Others

3.0

7.7

Total 

157.0

126.1

Russian sales of propylene on the domestic merchant market amounted to 152,600 tons in the first four months in 2022 against 121,900 tons in the same period in 2021.  The largest propylene supplier to the domestic market was Lukoil-NNOS, shipping 61,800 tons against 57,700 tons in January to April 2021.

 

Russian styrene production, sales and exports, Jan-Apr 2022

Russian Styrene Production

(unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Nizhnekamskneftekhim

99.5

100.4

Angarsk Polymer Plant

12.5

15.1

SIBUR-Khimprom

50.9

48.3

Gazprom n Salavat

64.1

70.5

Plastik, Uzlovaya

16.7

26.1

Total

243.8

260.5

Russian Styrene Exports

(unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Angarsk Polymer Plant

0.3

1.4

Gazprom Salavat

25.1

34.6

Nizhnekamskneftekhim

0.0

1.0

SIBUR-Khimprom

4.8

0.3

Total

30.2

37.4

Russian styrene production declined slightly from 260,500 tons in the first four months in 2021 to 243,800 tons in the same period this year.  

Nizhnekamskneftekhim reduced production from 100,400 tons to 99,500 tons where most of the styrene is used internally for polystyrene and synthetic rubber output.  Gazprom neftekhim Salavat reduced styrene production from 70,500 tons to 64,100 whilst SIBUR-Khimprom increased 48,300 tons to 50,900 tons.

Styrene was included on the list of EU sanctions, published on 8 April, which means that Russian producers must conclude all export business to Europe prior to 10 July this year.  No contracts could be signed after 9 April. 

Russian Styrene Domestic Sales

Producer

Jan-Apr 22

Jan-Apr 21

Angarsk Polymer Plant

8.8

9.5

Plastik

0.4

0.2

Gazprom n Salavat

22.8

22.4

SIBUR-Khimprom

10.8

16.4

Nizhnekamskneftekhim

0.1

1.0

Total

42.9

49.5

Domestic merchant sales of styrene reduced from 49,500 tons in the first four months in 2021 to 42,900 tons in the same period in 2022.  Angarsk Polymer Plant reduced sales from 9,500 tons to 8,800 tons whilst Gazprom neftekhim Salavat increased sales from 22,400 tons to 22,800 tons. 

SIBUR-Khimprom reduced sales from 16,400 tons to 10,800 tons.  At the beginning of May, producers were faced by large inventories due to the reduction in export deliveries.  

Finnish Railways announced the beginning of the termination of contracts for the carriage of goods from the Russian Federation.  On the domestic market producers are reducing prices due to oversupply.

Russian polymers under EU sanctions

Russian producers are trying to compensate for sanctions and reduce dependency on other imports for a wide range of industries and applications such as automotive, food packaging, etc.  There are numerous product areas where replacements can be created, with the biggest problems likely to be faced in the production of polyolefins.  By the end of 2022, the Russian compounding industry, could be able to develop and replace up to 80% of polymeric materials necessary for the production of automotive components.

A wide range of polymers have been placed under EU sanctions, imposed on 8 April, although the main grades of polyethylene and polypropylene can still be traded in Europe.  Even if sanctions have been avoided so far logistical challenges have already made sales of HDPE and LDPE to European customers more difficult.  Around half of volumes of ethylene-alpha-olefins and propylene copolymers are sourced from West Europe, and it may not be straightforward in replacing these volumes with supplies from other regions.  

Nizhnekamskneftekhim expands propylene copolymer production

Tomskneftekhim & Kazanorgsintez new polyethylene grades for food packaging

Tomskneftekhim and Kazanorgsintez have conducted a successful homologation of polyethylene grades for the production of packaging by Danaflex (Russia's largest manufacturer of flexible packaging and films).  Previously, in the production of packaging for snacks, Danaflex used polyethylene and components of European production.  A significant increase in prices for polymers in the EU, the volatility of foreign currencies against the rouble, as well as current logistical restrictions led to a significant rise in price of imported raw materials, and also limited the possibility of its purchases. The proposed brands allowed Danaflex to completely replace imported products and switch to an alternative production technology with 100% use of domestic components. The use of SIBUR holding's grades also allowed Danaflex to reduce the cost of purchasing raw materials.

In May and June Nizhnekamskneftekhim has started to expand the production polypropylene block copolymer brands used in the manufacture of non-pressure storm and domestic sewer systems. The polypropylene brand has successfully passed homologation at the production of Ikazplast, a leading player in the market of polymer pipeline systems in the North-West region of Russia.   Previously, when producing sewer pipes, the company used imported European-made polypropylene.

A significant increase in prices for polymers in the EU as well as current logistical restrictions led to a significant rise in price of imported polypropylene, and also limited the possibility of its purchases.  Thus, the imported product cost the manufacturer 30-40% more expensive than SIBUR's product.  Nizhnekamskneftekhim in April started to see the effects of sanctions and whilst the company is working on trying to sell into other markets so far products accumulate in warehouses.

SIBUR-pipe grade production at ZapSibNeftekhim

SIBUR plans to launch the production of a more complex pipe grade brand at ZapSibNeftekhim which will make it possible to replace imports of European production by around 50%.  SIBUR is ready to supply up to 100,000 tpa of polyethylene for Russia’s gasification programme.  In June, ZapSibNeftekhim wanted to launch the production of block copolymer of polypropylene PPI003EX, used for the production of corrugated pipes for non-pressure engineering systems. This brand is characterized by high frost resistance, shock resistance, etc.  SIBUR and leading manufacturers of pipe products will create a working group to jointly refine the technology and recipe of the brand. 

In the third quarter, SIBUR aims to begin production of a black brand of polyethylene HD 03594 RC, resistant to the spread of cracks. In 2023, SIBUR will offer domestic processors HD 03594 RC polyethylene grades in blue and orange colours, which will further expand the range of PE100 class products and allow processors to develop the production of multilayer pipes.  The company is developing a brand of polyethylene for in-house water supply pipes and underfloor heating, which can be used at temperatures up to 80 degrees.

Russian paraxylene production April 2022

Russian Paraxylene Production 2022

(unit-kilo tons)

Producer

Mar

Apr

Gazprom Neft

10.589

5.616

Kirishinefteorgsintez

11.427

8.402

Ufaneftekhim

4.150

4.357

Total

26.166

18.375

Russian paraxylene exports have been affected over the second quarter through the self-sanctioning by the Finnish railways, blocking shipments to the Finnish ports on and off since the invasion of Ukraine.  Russian paraxylene production amounted to 18,375 tons in April against 26,166 tons in March with falls being noted for Gazprom Neft and Kirishinefteorgsintez.  Sanctions may have some effect on production volumes of paraxylene, particularly Kirishinefteorgsintez, but probably not affect the PTA chain significantly in the short term. 

The intention of the Finnish railways is to phase out all business with Russia in the next few months.  Paraxylene is included on the list of EU sanctions, published on 8 April, although other products in the PX-PET chain remain have not been included in the official embargo.  For paraxylene It means by EU regulations that Russian producers must conclude all export business to Europe prior to 10 July this year and that no contracts could be signed after 9 April. 

Sanctions will mean that Russian producers will be unable to benefit from the high paraxylene prices in Europe although some markets in Asia could provide an option.  All of the paraxylene from Russia until now has been exported to Finland and Belarus.  Russian refineries that produce paraxylene have to find other markets or reduce utilisation rates.  China is a huge importer of paraxylene, but logistics represents an issue for Russian exporters. 

 

Russian PTA-PET raw material supplies

Polief Domestic Raw Material Purchases (unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

MEG

Nizhnekamskneftekhim

19.5

10.0

SIBUR Neftekhim

0.3

16.0

Acetic Acid

Azot Nevinnomyssk

5.2

6.1

Polief increased purchases of MEG from Nizhnekamskneftekhim from 10,000 tons in the first four months last year to 19,500 tons whilst from SIBUR-Neftekhim at Dzerzhinsk purchases dropped from 16,000 tons to 500 tons. 

For Ekopet at Kaliningrad, due to shipping problems has prevented deliveries of both PTA and MEG over the second quarter.  Most of the PTA into Kaliningrad is sourced from China and has traditionally been supplied by the Danish company Maersk through the Suez Canal.  At the ports of Bremerhaven and Gdansk, the polymer is reloaded on other ships.  This route has been affected by sanctions and even industrial action.  Thus far Ekopet has managed to survive the disruptions to PTA supply but could face production problems in the second half of the year. 

Regarding MEG, Ekopet has traditionally purchased supplies from Saudi Arabia through its trading arm Ecopolymer but for the first time for several years there were no deliveries in March and April.  Ekopet was able to source MEG through SIBUR-Neftekhim in Russia and was able to resume supply from SABIC in May. 

SIBUR-REO PET recycling  

SIBUR has concluded an agreement with recycling group REO whereby starting in the third quarter of 2024, REO will supply up to 10,000 tpa of flex for Polief.  To fulfill its obligations under the contract, REO implements an investment project for the production of PET flex from used food packaging. It is envisaged that REO will purchase bottles on sorting, send them for recycling and sell the resulting PET flex to SIBUR. The plant where the bottles will be processed is located in the Chelyabinsk region.  Transparent and blue flex will be supplied to SIBUR's Bashkir facility Polief for the production of food-grade v-PET (r-PET) granules under the Vivilen brand with a secondary raw material content of up to 25%. This contract provides a third of the company's need for PET flex after reaching the design capacity. Due to the supply of REO to the production of SIBUR, it is planned to send up to 600 million plastic bottles annually for recycling.

 

Russian benzene market and production Jan-Apr 2022

Russian Benzene Domestic Sales (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Angarsk Polymer Plant

16.5

18.5

SIBUR-Kstovo

29.9

26.4

Severstal

12.6

11.1

Uralorgsintez

22.9

25.6

West Siberian MC

21.0

22.1

Ryazan NPZ

9.0

7.7

Slavneft-Yanos

17.0

21.7

Gazprom Neft (Omsk)

34.3

33.2

Gazprom neftekhim Salavat

12.9

13.3

Stavrolen

13.4

0.0

Nizhnekamskneftekhim

20.3

9.1

Karpatneftekhim

4.6

3.2

Naftan

4.4

11.0

Atyrau

2.0

0.6

Novolipetsk MK

3.0

0.7

Chelyabinsk MK

3.5

5.4

Koks