Central European and Russian chemical news-2022

1 July 2022

Russian chemical industry’s mixed signals

Data on the current state of the Russian chemical industry looks rather contradictory.  On the one hand, the general deterioration of the economic situation due to the Ukrainian events has not culminated to any major consequences thus far.  On the other hand, there are ominous signs of a crisis. Derivative industries such as household chemicals and paint and varnish products report declines whilst the production of fertilizers has fallen by around 10%.  The loss of European and North American customers cannot replaced quickly whilst many potential customers (including China and India) are afraid to work with Russian businesses in order not to fall under secondary sanctions.

Anecdotal reports indicated that chemical production started slowing in June at some smaller plants, linked directly or indirectly to the sanction regime.  In addition to sanctions there is the complicated strong rouble which limits margins for exports.  Imports are difficult to facilitate, and thus Russian producers are unable to benefit from the strong rouble. 

For the large plants such as Nizhnekamskneftekhim and Kazanorgsintez, production is considered stable at present although difficulties may arise later in the year from the import of components and equipment for the maintenance of plants.   

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-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


  • BASF has announced that it will wind down its remaining activities in Russia and Belarus by the beginning of July.  Regarding the assets in the energy group Wintershall Dea BASF wanted to transfer its 67% stake to minority shareholder LetterOne.  Wintershall Dea was formed in 2019 as a result of the merger of BASF and Dea LetterOne, but the minority shareholder has so far rejected this proposal. M. Friedman.  BASF holds 67% of Wintershall Dea's common stock, LetterOne 33%.

  • Sale of Western Assets in Energy and Petrochemicals

     

    Company

    Main Asset Sale

    Air Products

    Industrial gases

    BASF SE

    Wintershall Dea

    Clariant

    Business suspended

    Corteva Agroscience

    Agrochemical

    DSM

    Engineering plastics

    ExxonMobil

    Sakhalin-1 project

    FMC

    Agrochemical

    Haldor Topsoe

    Catalyst sales and methanol licences

    Henkel

    10 household plants

    Kemira

    Inorganic chemical sales

    Lyondellbasell

    Business suspended

    Shell

    Sakhalin-2 LNG project

    Solvay

    Business suspended

         
     

    Henkel looking for buyers of production sites

    The Henkel Group produces household chemicals, cosmetics and construction products. The concern owns the brands Pemolux, Persil, Pemos, Losk, Laska, Vernel, Fa, Taft, Shamtu, Schwarzkopf, Syoss, Ceresit, Metylan, glue Moment and others.
    Kemira exits the Russian market
    After the start of a war in Ukraine and the imposition of sanctions against Russia, buyers in different regions of the country began to complain about the lack of office paper in stores. In retail outlets, retail prices for it increased on average four times.
    12 May 2022
  • EU sanctions on Russian crude
    Hungary and Slovakia have been granted an extension to the end of 2023 for abolishing all crude imports from Russia.  The unprovoked invasion of Ukraine, and evidence of war crimes, has pushed the EU to take bolder steps on energy sanctions.  However, imposing measures that could reduce, or fully cut, Russian energy supplies to the EU have been a complicated task for the bloc.  In 2021, Russian oil imports accounted for about 25% of the bloc’s crude purchases.  Natural gas represents the most significant energy source from Russia for the EU, accounting for about 40% of all the bloc’s imports.  Ceasing it overnight would have major economic consequences, particularly for the German chemical industry.


    Russian fertiliser exports fall 17% in first quarter in 2022
    Export supplies of fertilisers from the Russian Federation in the first quarter decreased by 17% (by 1.6 million tons), while domestic transportation increased by 1.2 million tons.  At the same time, shipments through ports remained almost at the level of last year, and deliveries across land borders fell by a third.  In March there was a reorientation of fertiliser supplies to the land borders and partially to the Far East, from Europe to the Asian direction.
     

    Russia provides more than 30% of the needs of local farmers in nitrogen fertilisers and 25% in phosphates.  The combined share of Russia and Belarus in the supply of potassium chloride to the European market before the sanctions against Belaruskali reached 50-60%. Higher costs and revenues increased the values in Russian chemical and plastics trade in 2021 over 2020.  Import costs for chemicals and plastics increased from $42.320 billion in 2020 to $53.280 billion in 2021, whilst export revenues increased from $22.480 billion to $35.620 billion.  High gas prices from the second quarter onwards drove fertiliser export revenues to record levels in 2021, whilst higher costs for pharmaceuticals and organic chemicals impacted to a lesser extent on import values.  Imports of chemical industry products increased due to an increase in the supply of polymers and rubber by 28.4%, organic and inorganic chemistry products by 15.7%, and pharmaceutical products by 5%.   
     

    EU sanctions on Russian organic chemicals
    From the trade data for 2021 shown opposite, the table signals which petrochemical and organic chemical products have been sanctioned and those hitherto excluded.  Under the terms of the sanctions no new business with the EU area is permitted after 9 April and all current contracts need to be completed by 10 July.  Another smaller group of products including pentaerythritol, boric acids, and lithium oxide were required to complete contracts by 16 April.
    Product groups affected by sanctions
    It is mostly impractical to redirect phenol and styrene exports to other markets, at least in the short term, and so this may result in Russian producers reducing utilisation rates.  Phenolic resins have been sanctioned affecting the wood industry in Russia, although formaldehyde and methanol are excluded and at least can continue trading with the EU if logistics allow.  Isocyanates TDI and MDI are not sanctioned although polyurethane is listed reflecting how all supply chains are affected to some degree.    
    Russian chemical production
    Since the invasion many Western companies announced their withdrawal from the Russian market and the cessation of investments.  There are also difficulties with the sale of Russian products abroad due to sanctions and due to problems with payment and logistics.  Chinese authorities fear that local companies may face sanctions, and urge companies to carefully approach investments in Russia, Sinopec, China National Petroleum Corp (CNPC) and China National Offshore Oil Corp (CNOOC) are forced to assess the impact of sanctions on their multibillion-dollar investments in Russia.
     

    4 April 2022
    Petrochemical feedstock supply for Central Europe shows a mixed picture of heavy dependence to partial and limited dependence, with some countries better placed than others to withstand a full embargo of Russian oil and gas.  Poland is probably the best placed to operate normally under an embargo, largely due to its investments in terminals for oil and gas and a gradual reduction of purchases from Russia. 
    Total Energies wants to turn off the tap for Russian crude oil at Leuna in East Germany and to be converted to tanker supply by the end of 2022 although this seems a challenge and could affect the chemical triangle in Saxony-Anhalt and Saxony. The chemical industry in Germany is already being affected by high energy costs and an embargo on oil and gas could lead to production stoppages in some cases. 
     

    25 March 2022
    In March, China's foreign ministry summoned officials from three energy companies to review their business ties with Russian partners.  The companies have set up task forces on Russia-related issues and are working on contingency plans in case of business disruptions and secondary sanctions. 
     

    24 March 2022
    Technology sales for many chemical processes have been placed under sanctions which will mean no new business can be done after 27 May.  Apart from official sanctions and self-sanctions of Western companies wishing to withdraw from the Russian market, construction of projects also faces the challenge of higher foreign worker costs after the sharp devaluation of the rouble.  

    Amur Gas Chemical Complex

    Month

    Project progress

    October 2021

    23.0%

    November

    26.5%

    December

    30.0%

    January 2022

    32.8%

     

     

    For the Baltic Gas Chemical Complex at Ust Luga whilst the engineering and project construction is being undertaken by Chinese companies the technology is European which complicates the construction of the petrochemical complex.   The German withdrawal from Nord Stream 2 means that gas will not be available under current conditions.  It was assumed that 45 billion cubic metres of ethane-containing gas would come from the fields of West Siberia to the gas distribution hub at Ust-Luga.  At the same time, 20 billion metres of gas were to go to Nord Stream 2, which was frozen by Germany following Russia’s invasion of Ukraine.  In addition, sanctions have been imposed on the company-operator of the Nord Stream 2 AG gas pipeline which is now facing bankruptcy.

     

    Not only is gas processing and petrochemical production planned for Ust Luga, but blue hydrogen is also part of the project based on gas of the Nadym-Pur-Taz region in Yamal.  Lummus has been commissioned to supply a total of fourteen furnaces, but this contract looks difficult now.  Construction work began only on the ethylene plant at Ust Luga on 17 November 2021, where concrete was established on the base of the first of 14 pyrolysis furnaces.  Builders poured the first concrete, almost 400 cubic metres, into the base of the gas chemical complex at Ust-Luga.   The problem could come from keeping the foreign workers from China and Turkey satisfied in the context of a dramatic fall in the value of the rouble.    
     

    Impact on availability of pharmaceuticals
    The Russian market is highly dependent on foreign supplies of chemical components and equipment for the production of medicines.  Even those substances that are synthesized in Russia use imported components. Logistical problems in the pharmaceutical market began a long time ago: Covid restrictions have affected the market since 2020.  No one has imposed sanctions on pharmaceuticals, but companies abroad are afraid to cooperate.
     

    Will sanctions work
    In the first two months this year chemical production and trade performed normally, from March onwards there are many uncertainties.  Plastics production in January-February rose from 916,000 tons to 946,000 tons whilst ethylene and propylene production amounted to 399,800 tons and 267,600 tons respectively.  February was largely normal until the latter part of the month. 
    International historians will no doubt analyse the Putin regime as a huge-wasted opportunity for Russia.  Instead of oil and gas revenues being used for the modernisation and economic development of Russia, this windfall funds have been directed towards military equipment and mega-projects which have yielded little benefit.


    18 March 2022
    The Russian invasion of Ukraine has had significant effects already on the Russian chemical industry in terms of sanctions, logistics, and board room resignations.  All because of one man’s obsessions and inability to accept or comprehend the modern world.   International historians will no doubt analyse the Putin regime as a huge-wasted opportunity for Russia.  Instead of oil and gas revenues being used for the modernisation and economic development of Russia, this windfall funds have been directed towards military equipment and mega-projects which have yielded little benefit.Under current circumstances the chemical sector is set to go backwards in terms of production and trade until the political landscape in Russia is changed.  In the first month of sanctions and company boycotts effects are being felt on logistics, raw material purchases, etc, affecting supply availability for a variety of products combined with higher prices.   Paper mills have been forced to stop due a lack of reagents, delays are being encountered for plant protection agents, Procter and Gamble has had to increase prices of household chemicals by around 4%, etc. 

    Logistical challenges for Russian chemical trade

    In the middle of March the Finnish rail group (VR Group) notified that they are stopping taking cargo from several fertiliser producers including Uralkhim, Uralkali, Evrokhim, and Togliattiazot and in addition methanol from Tomet.  Fertiliser exports account for around 30% of all Russian chemical industry exports.

    A significant proportion of Russian mineral fertilisers are transhipped through European ports.  Mainly, these are the ports of Estonia (Muuga and Sillamäe), Latvia (Riga and Ventspils) and Finland (Kotka).  The volume of transportation of Russian mineral fertilisers to the Baltic ports in 2021 amounted to 7.7 million tons, to the ports of Finland 1.3 million tons (in total, this is about a quarter of their total exports).

    A significant proportion of Russian mineral fertilizers are transshipped through European ports. Mainly, these are the ports of Estonia (Muuga and Sillamäe), Latvia (Riga and Ventspils) and Finland (Kotka).  The volume of transportation of Russian mineral fertilizers to the Baltic ports in 2021 amounted to 7.7 million tons, to the ports of Finland - 1.3 million tons (in total, this is about a quarter of their total exports).

     

    The exodus of international companies from the Russian market has been extraordinarily swift although where there are fixed assets it has made the departure more complicated.  In the chemical industry Clariant, LyondellBasell and Solvay have all suspended business contacts with Russia.  Bayer remains in Russia where the market accounts for 2% of total sales but does not exclude the possibility of withdrawing.  In the middle of March Bayer threatened to suspend crop supply sales to Russia next year unless the country stops its attacks on Ukraine.

    ?  Technology sanctions affect licensing companies such as Linde, Lummus and Haldor Topsoe and in the engineering sphere companies such as Technip and Maire-Tecnimont are affected.  Siemens suspended its business in Russia at the start of March, becoming the largest German company to sever ties with the country following its invasion of Ukraine.

    Nizhnekamksneftekhim EP-600 foreign workers strike

    A strike demanding the indexation of wages following the change in the dollar exchange rate was staged in March in Nizhnekamsk by workers of the Turkish construction company Gemont. The organization is currently building an EP-600 plant for Nizhnekamskneftekhim.  The administration of Gemont LLC reports on timely payment of salaries and the absence of debts, but the amounts that workers receive in their hands to send to families in Turkey and the CIS countries have significantly decreased as a result of the collapse of the rouble.

    Due to the high volatility of exchange rates, a special working group including representatives of the customer company, the contractor and construction personnel made an agreed decision on the formula for calculating labour contracts, the payment for which is tied to the exchange rate of foreign currencies.  The heads of Nizhnekamskneftekhim and Gemont met with the employees today: as a compromise, the builders will receive a salary at the rate of 90 roubles to $1.  That rate is well below the current exchange rate of 140 roubles to the dollar and thus the whole cost structure has been destabilised.  The EP-600 ethylene complex is one of the key strategic projects of Nizhnekamskneftekhim.

     

    ?  So far only chemical companies with links to the defence sector have been sanctioned, the most import of which is the Salavat Chemical Plant (not connected in any way to Gazprom neftekhim Salavat).  SIBUR has not been sanctioned even if one of its main shareholders Gennady Timchenko (with a 17% stake) has been placed under sanctions by the US, UK and EU.  On 9 March the EU imposed sanctions on SIBUR’s CEO Dimitry Konov, whilst also imposing the same on the head of the fertiliser group Phosagro culminating in a resignation.  In another case Dmitry Mazepin, who was on the EU sanctions list, sold a 52% stake in the company that owns Uralkhim ??and resigned.   Uralkhim is one of the largest companies in the market of mineral fertilisers in Russia of which the main assets include the Azot at Berezniki, the KChKhK branch in the city of Kirovo-Chipetsky, and Voskresensk Mineral Fertilisers, etc.   The company is also the owner of Uralkali, a major global potash producer.   
     

    The reason for sanctioning Dmitry Konov is that he works in sectors of the economy that provide substantial income to the government of the Russian Federation, which is responsible for the annexation of Crimea and the destabilization of Ukraine.  In retrospect Konov was considered fortunate to escape sanctions after Crimea in 2014.  If SIBUR is considered to be contributing financially towards Putin’s war machine then it could mean the whole chemical industry is under question and they will be banned from exporting.
     

    In the first half of March cargo worth hundreds of millions of euros is accordingly stuck for both export and import.  The list of the largest logistics companies that refuse to accept goods in Russia and deliver shipments is growing every day, including shipping companies Maersk, Hapag-Lloyd, Ocean Network Express, Yang Ming, etc.  From 50 to 70% of the total volume of exports from Russia has been suspended, until there is an opportunity to transport it.


    In view of the bottlenecks in logistics combined with the limitations on how Russian companies can either pay or receive payment the Russian economy and industry may find it hard to avoid collapse.  Apart from companies not wishing to work with Russia the introduction of sanctions means that customs officials need to inspect every container is inspected to make sure that there are no dual-use goods, sanctioned goods or cargo for recipients who have fallen under sanctions.  Another factor is that European insurance companies refuse to insure cargoes coming to Russia from Asia, and suppliers now require full prepayment.  On the Black Sea, insurers either refuse to insure ships and cargoes related to Russia, or have significantly increased the cost of insurance.
    In the middle of March the Finnish rail group (VR Group) notified that they are stopping taking cargo from several fertiliser producers including Uralkhim, Uralkali, Evrokhim, and Togliattiazot and in addition to methanol from Tomet.  Fertiliser exports account for around 30% of all Russian chemical industry exports.
     

    11 March 2022
    Technology sales for many chemical processes have been placed under sanctions which will mean no business can be done after 27 May, whilst regarding current product sales traders are shunning Russian sourced material unless there are no alternatives.  The Ministry of Trade and Industry stated in March that a number of foreign cargo carriers and EU customs authorities have taken an extremely cynical position and are sabotaging the export of Russian methanol.  Self-sanctioning and isolation just compounds the problems that Russia faces. 
     

    10 March 2022
    All petrochemical projects could be affected the sanctions however advanced they might be.  Even if the equipment has been paid for already sanctions could affect the completion of the Irkutsk Polymer Plant for 650,000 tpa of polyethylene and Lukoil’s construction of a 500,000 tpa polypropylene project.  SIBUR is reported to have purchased most of the equipment for the 2.7 million tpa Amur Gas Chemical Complex at Svobodny but not all has been delivered.  Receiving equipment by river transport when the water navigation season opens in May could become complicated.  The Amur Gas Chemical Complex needs to be connected to the Power of Siberia gas pipeline for gas to supply hot water for technological, heating and other needs. 

    Projects in doubt-Novatek and low carbon ammonia to Germany

    Novatek and Uniper SE signed an agreement at the end of 2021 for the long-term supply of low-carbon ammonia with a volume of up to 1.2 million tpa, mainly to the German market.  The agreement set out the terms of Uniper's supply of low-carbon ammonia, which will be produced at Novatek's promising Ob gas-chemical project using carbon dioxide capture and storage technologies.   The products will be supplied to the planned Uniper ammonia import terminal at Wilhelmshaven..  This project is now on hold.

     

    Contracts for technological equipment for gas processing were placed with Linde which is now subject to sanctions and is one of the few companies in the world which owns the technology of large-scale gas liquefaction.  Linde is yet to inform Rusgazdobycha of its position but it is hard to see how the contract can continue without facing major repercussions elsewhere. 


    7 March 2022
    Exports to Ukraine stopped on 23 February  The Ukrainian railways disabled the border crossing points in order to prevent the Russian forces using them. 
    In March difficulties of transportation of methanol for export through Kotka-Hamina have been encountered by Russian producers.  In response the Ministry of Industry and Trade of the Russian Federation recommended to Metafrax Chemicals to suspend the shipment of pentaerythritol and urotropin for export to the EU countries.  


    Shell, despite the announced departure from Russia, bought a batch of Russian Urals oil from trader Trafigura in early March with a record discount of $28.5 per barrel against Brent. An amount of 725,000 barrels were purchased by Shell from which a profit of around $20 million was made.  Shell later made an apology for buying Russian crude.Sanctions were imposed on 22 February by the UK on one of SIBUR’s shareholders Gennady Timchenko (17% share February followed by the EU.  This freezes assets, imposes a travel ban, etc, on Timchenko who was an ex-KGB operative in East Germany and owns 17% of SIBUR.  He started his career in the chemical industry in the 1990s selling xylenes from the Kirishi refinery.  A major shareholder in SIBUR is Leonid Mikhelson with 36% who to date is not under sanctions.  S&P lowered the credit ratings of SIBUR to CCC in response to the new political and economic climate as it affects Russia.   

    CIREC Monthly Newsletters (bimonthly-every two months)

    Russian Methanol Production and Trade News (including investment projects)


 

Central & South East Europe-latest developments

 

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 chemical markets Jan-Apr 2022

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

10.0

8.9

Magnitogorsk MK

14.2

11.5

Nizhny Tagil MK

2.8

2.7

Others

3.5

3.1

Total

257.8

235.8

Russian benzene production amounted to 443,600 tons in the first four months in 2022 versus 445,800 tons in the same period in 2021.  Nizhnekamskneftekhim increased benzene production from 101,400 tons to 102,500 tons, whilst Gazprom neftekhim Salavat reduced production from 69,400 tons to 63,300 tons. 

Benzene sales on the Russian domestic market to 257,800 tons in the first four months in 2022 against 235,800 tons in the same period in 2021.  Angarsk Polymer Plant reduced sales from 18,500 tons to 16,500 tons whilst SIBUR-Kstovo increased sales from 26,400 tons to 29,900 tons.  Uralorgsintez in the Perm region reduced shipments from 25,600 tons to 22,900 tons. 

Gazprom Neft at Omsk increased sales from 33,200 tons in the first four months last year to 34,300 tons whilst Gazprom neftekhim Salavat reduced sales from 13,300 tons to 12,900 tons.  Regarding importers, Karpatneftekhim from Ukraine increased shipments to the Russian market to 4,600 tons in the first two months before stopping production on 24 February whilst shipments from Belarus reduced from 11,000 tons to 4,000 tons. 

The Russian domestic market for benzene has become complicated due to the artificial rouble rate.  Sellers have been advised by the Federal Advisory Service (FAS) not to use European quotations and foreign exchange rates when setting selling prices.  Regarding current supply, Uralorgsintez started a maintenance shutdown at the start of April which should last until the end of the month.  Kirishinefteorgsintez is also reported to be down in April which should affect overall production volumes. 

Lukoil continues to export benzene to foreign markets through its Stavrolen division, in particular to European countries where benzene trade is not under sanctions.  In the first four months in 2022 Russian benzene exports amounted to 23,400 tons, which was slightly up on the same period last year.

Russian caprolactam production, Jan-Apr 2022

Russian Caprolactam Production (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Kuibyshevazot

67.4

62.9

Shchekinoazot

19.9

18.4

SDS Azot

40.8

45.1

Total

128.1

126.5

Russian caprolactam production amounted to 128,100 tons in January to April 2022 against 126,500 tons in the same period in 2021.  Kuibyshevazot increased production from 62,900 tons to 67,400 tons whilst SDS Azot at Kemerovo reduced production to 40,800 tons from 45,100 tons.  Caprolactam was placed under EU sanctions from the fifth round adopted on 8 April 2022.  Exports are not likely to be affected significantly as most of the Russian caprolactam goes to Asia, particularly China and Taiwan. 

Russian caprolactam exports dropped from 200,000 tons in 2020 to 159,500 tons in 2021.  Although Shchekinoazot increased exports from 45,400 tons to 59,400 tons, SDS Azot at Kemerovo reduced shipments from 101,200 tons to 80,700 tons and Kuibyshevazot reduced shipments from 53,400 tons to 19,300 tons.  Overall caprolactam exports dropped from 237,300 tons in 2020 to 196,700 tons in 2021.  Main export markets for Russian caprolactam remain China and Taiwan which took 87,600 tons and 58,800 tons in 2021 respectively.

 

Russian orthoxylene-toluene, Jan-Apr 2022

 

Russian Orthoxylene Domestic Sales (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Gazprom Neft

34.6

35.7

Ufaneftekhim

13.8

16.1

Kirishinefteorgsintez

7.8

13.5

Total

56.2

65.3

Both orthoxylene and toluene have been listed under EU sanctions applied from 8 April 2022, although trade volumes for each product are relatively small.    

Russian Toluene Production (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Kinef

0.0

7.3

Gazprom N Salavat

6.4

12.6

Slavneft-Yaros

9.7

13.5

LUKoil-Perm

11.0

14.7

Gazprom Neft

29.2

21.7

RN Holding

13.1

10.3

Ufaneftekhim

38.0

6.7

Others

5.1

9.0

Total

112.6

95.7

Orthoxylene domestic sales in Russia amounted to 56,200 tons in the first four months in 2022 against 65,300 tons in the same period in 2021.  Gazprom Neft reduced domestic shipments from 35,700 tons to 34,600 tons whilst Ufaneftekhim reduced shipments from 16,100 tons to 13,800 tons.  Kirishinefteorgsintez reduced domestic shipments of orthoxylene from 13,500 tons to 7,800 tons. 

Russian toluene production totalled 112,600 tons in the first four months in 2022 against 95,700 tons in the same period in 2021.  Gazprom Neft reduced production from 21,700 tons to 29,200 tons whilst Ufaneftekhim increased from 6,700 tons to 38,000 tons.  

 

Russian phenol market, Jan-Apr 2022

 

Russian Phenol Production (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Ufaorgsintez

20.3

21.3

Kazanorgsintez

26.8

26.7

Novokuibyshevsk Petrochemical

22.2

25.7

Omsk Kaucuk, Omsk

26.5

16.5

Total

95.8

90.1

Phenol 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 and that no contracts could be signed after 9 April.  Russian phenol exports rose from 6,400 tons in January to April 2021 to 17,300 tons.

Russian Phenol Exports by Supplier

(unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Omsk Kaucuk

10.9

0.8

Novokuibyshevsk Petrochemical

3.5

3.6

Ufaorgsintez

3.0

2.0

Total

17.3

6.4

Sales of phenol on the domestic market are larger which means that producers are not over dependent on export activity.  Sales of phenol on the domestic market totalled 43,600 tons in the first four months in 2022 against 44,800 tons in the same period this year with Ufaorgsintez reducing shipments from 20,700 tons to 15,900 tons. 

Russian Domestic Market Phenol Sales by Supplier (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Omsk Kaucuk

11.4

5.5

Novokuibyshevsk Petrochemical

16.2

18.7

Ufaorgsintez

15.9

20.7

Total

43.6

44.8

Kazanorgsintez cumene modernisation

As Russia’s most integrated phenol producer Kazanorgsintez has concluded the first stage of modernisation of its cumene unit linked to its polycarbonate production chain.   Cumene capacity is expected to remain unchanged at 110,000 tpa.  Using a solid zeolite catalyst, the plant is able to work for several years without replacement.  

As the sole producer of polycarbonates in Russia, Kazanorgsintez, provides itself with most of the necessary raw materials, including cumene.  Benzene is purchased on the merchant market whilst propylene comes from the company’s naphtha-based cracker production.  This completes the chain through phenol and acetone to Bisphenol-A through to polycarbonate.  The production of polycarbonates at Kazanorgsintez has also recently been modernised, increasing capacity from 77,000 tpa to 100,000 tpa which just about meets domestic demand.

 

Russian rubber production Jan-Apr 2022

 

Russian synthetic rubber production totalled 568,000 tons in the first four months in 2022 against 595,000 tons in the same period in 2021.  Export destinations for Russian synthetic rubber producers is being forced to change in view of EU sanctions.

Butadiene production dropped in April to 49,854 tons against 59,163 tons March.  ZapSibNeftekhim reduced production from 28,468 tons to 21,880 tons, whilst Nizhnekamskneftekhim reduced production to 17,095 tons against 20,800 tons.

 

Russian Butadiene Production (unit-kilo tons)

Producer

Jan

Feb

Mar

Apr

ZapSibNeftekhim

28.125

24.000

28.468

21.88

Nizhnekamskneftekhim

21.635

19.110

20.800

17.095

Togliattikaucuk

4.390

2.920

5.250

4.845

Sterlitamak Petrochemical Plant

3.040

3.851

1.800

2.589

Omsk Kaucuk

2.325

3.445

2.845

3.445

Total

59.515

53.326

59.163

49.854

Consumption of rubber in the production of tyres amounted to 138,100 tons in January to April 2022 against 134,600 tons in the same period last year.  Tyre exports from Russia to the EU have now been sanctioned, which has opened some doors to other markets such as China.  Effectively any foreign owned tyre plant inside Russia is limited to the domestic market.  Consumption of rubber for tyre manufacturers comprise both natural and synthetic, with natural rubber being purchased from countries such as Indonesia, Malaysia, Thailand, etc.   

Russian Tyre Production (unit-kilo tons)

Product

Jan-Apr 22

Jan-Apr 21

Car Tyres

119.0

112.8

Lorry tyres

14.4

18.6

Agricultural tyres

4.7

3.3

Total

138.1

134.6

Efremov Synthetic Rubber Plant-new markets

As a non-integrated rubber producer Efremov Synthetic Rubber Plant is facing higher costs from butadiene prices which is struggling to pass on to a slowing market.  Efremov Synthetic Rubber Plant is one of the largest Russian producers of high molecular weight polyisobutylene.  The company’s share of export from sales increased to 76.3% against 55.9%. 

The main problem facing Efremov Synthetic Rubber Plant is that 43% of exports of polyisobutylene went to Germany last year, with 12% going to the UK, and thus in the face of sanctions the company needs to find new markets.  Last year the company was able to pass on higher costs to the market and revenues rose 2.2 times to 4.65 billion roubles.  Net profits rose by 2.8 times to 312.5 million roubles in 2021.   

Sterlitamak Petrochemical Plant-rediredcing exports

Sterlitamak Synthetic Rubber Exports (€ million)

Category

2021

2020

SBR

54.8

34.4

Isoprene

68.3

48.1

Others

0

0.2

Total

123.1

82.7

Sterlitamak rubber plants started plant maintenance on 18 June which will last until later July.  Sterlitamak Petrochemical Plant and its adjacent plant Sintez-Kaucuk export isoprene rubber and SBR.  Isoprene rubber exports have had to change course as Ukraine was its largest export destination in 2021, taking around 15% total shipments.  Overall whilst the Sterlitamak rubber plants are better set up to redistribute their sales to Europe than Nizhnekamskneftekhim it will require time to find new customers.   On the production side, maintenance started on the rubber plants on 18 June lasting until July.   

Tatneft sold its tyre business to KAMA

Tatneft sold its tyre business Nizhnekamskshina to Tatneftekhiminvest-holding in June.  Nizhnekamskshina has been experiencing difficulties with the production of tyres due to problems with the supply of imported components for rubber compounds.   

Despite having taken over Togliattikaucuk in 2019 Tatneft lacks its own petrochemical base to complete the integration into the tyre business.  The tyre complex of Tatneft in 2021 produced more than 12 million pieces of tyres, an increase of 8.6% compared to the previous year which was due to the restoration of the production of passenger and light truck tyres.

Russian methanol production Jan-Apr 2022

Russian Methanol Production

(unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Shchekinoazot

515.5

331.1

Gazprom Methanol

277.5

337.8

Metafrax Chemicals

433.8

421.7

Akron

37.0

35.0

Azot Novomoskovsk

51.4

97.9

Angarsk Petrochemical

12.9

15.8

Azot Nevinnomyssk

39.4

38.1

Tomet

241.8

163.3

Ammoni

35.1

45.5

Totals

1644.6

1486.1

Russia produced 1.645 million tons of methanol in the first four months in 2022 against 1.486 million tons in the same period in 2021.  Metafrax Chemicals at Gubakha produced 433,800 tons against 421,700 tons in January-April 2021, whilst Gazprom Methanol at Tomsk reduced production from 337,800 tons to 277,500 tons.  

Tomet produced 241,800 tons of methanol in the first four months in 2022 against 163,300 tons in the same period in 2021. 

Russian Methanol Exports by Producer

(unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Azot Nevinnomyssk

1.0

3.6

Azot Novomoskovsk

20.6

32.1

Akron

4.9

3.2

Metafrax Chemicals

169.5

150.8

Gazprom Methanol

91.1

167.7

Tomet

119.0

47.7

Shchekinoazot

385.6

237.4

Ammoni

1.0

0.0

Total

792.5

642.5

Shchekinoazot produced 515,500 tons in the first four months in 2022 against 331,100 tons in January to April 2021, the increase due to the addition of new capacity.  Also, in the Tula Oblast Azot at Novomoskovsk reduced production from 97,900 tons to 51,400 tons.  Ammoni in Tatarstan reduced methanol production from 45,500 tons in the first four months in 2021 to 35,100 tons in the same period this year.   Effectively the difference in the production volumes this year can be attributed to the restart of the second line at Tomet and the start of the third plant at Shchekinoazot.  Producer sales from domestic and export shipments totalled 1.364 million tons 1.208 million tons in the same period in 2021.   

Russian methanol exports, Jan-Apr 2022

Russian producer exports of methanol rose in the first four months from last year from 642,500 tons to 792,500 tons this year.  Tomet exported 119,000 tons of methanol in the first four months up from 47,700 tons in the same period in 2021. 

Russian Methanol Exports by Destination

Country

Jan-Apr 22

Jan-Apr 21

Belarus

68.6

41.2

Finland

290.2

308.2

Germany

1.0

1.3

Kazakhstan

12.0

7.4

Latvia

17.1

5.8

Lithuania

33.1

30.8

Netherlands

111.9

28.0

Poland

144.1

108.3

Romania

26.5

30.1

Slovakia

49.0

83.2

Turkey

21.8

5.1

UK

8.4

0.0

Ukraine

11.9

21.3

Others

0.5

0.1

Total

796.1

670.9

Metafrax Chemicals reduced exports from 150,800 tons in January and April 2021 to 169,500 tons this year whilst Gazprom Methanol reduced exports from 150,800 tons in 169,500 tons.  The largest Russian exporter in the first four months was Shchekinoazot shipping 385,600 tons versus 237,400 tons in January to April 2021. 

Destination figures for methanol exports, which can include numbers from previous months, comprised 796,100 tons for the first four months versus 670,900 tons last year.  Finland accounted for 290,200 tons of Russian methanol exports in the first four months against 308,200 tons in the same period in 2021.  Poland increased deliveries from Russia from 108,300 tons to 144,100 tons whilst exports to the Netherlands rose from 28,000 tons to 111,900 tons.  The rise in exports to the Netherlands was due to higher production and transhipment in 2022 from Tomet at Togliatti. 

Russian methanol domestic sales, Jan-Apr 2022

Merchant sales of methanol on the Russian domestic market amounted to 572,600 tons in the first four months in 2022 against 565,000 tons in the same period in 2021.  Tomet increased sales from 105,300 tons to 135,800 tons whilst Gazprom Methanol reduced sales from 157,000 tons to 141,600 tons.  Metafrax Chemicals reduced shipments to the domestic market from 136,100 tons in January to April 2021 to 129,500 tons in the same period this year.    

Russian Methanol Purchases by Consumer

(unit-kilo tons)

Consumer

Jan-Apr 22

Jan-Apr 21

Nizhnekamskneftekhim

118.8

104.5

Togliattikaucuk

18.9

42.7

Uralorgsintez

7.8

15.6

SIBUR-Khimprom

1.0

8.5

SIBUR Tobolsk

14.2

11.4

Omsk Kaucuk

38.3

29.3

Novokuibyshevsk NPZ

9.0

10.0

Uralkhimplast

7.2

7.3

Slavneft-Yanos

4.2

4.2

Metadynea

27.6

34.4

Kronospan

34.4

41.8

Gazprom

95.6

71.0

Khimsintez

19.1

6.2

Volzhsky Orgsintez

16.1

3.0

Togliattiazot

45.3

26.2

Others

86.8

162.8

Total

544.3

578.8

Russian Methanol Domestic Sales (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Azot Nevinnomyssk

9.1

5.9

Azot Novomoskovsk

45.6

65.8

Metafrax Chemicals

129.5

136.1

Gazprom Methanol

141.6

157.0

Tomet

135.8

105.3

Shchekinoazot

90.4

64.2

Ammoni (Mendeleevsk)

20.6

30.8

Total

572.6

565.0

In April the domestic market continued to provide opportunities for producers but on a more reduced basis than in March.  Both synthetic rubber and phenol-formaldehyde resins, which are major consuming applications of methanol in Russia, have been placed under EU sanctions from its fifth round.  Nizhnekamskneftekhim is Russia’s largest domestic merchant methanol consumer, already facing pressure on production levels due to the difficulties in selling products to Europe. 

Some methanol producers such as Akron at Novgorod are better placed to continue producing at full rates where internal processing accounts for a large part of the usage.  From total methanol production of 105,000 tons by Akron last year 91,000 tons was consumed in the production of formalin.  Formalin is not listed on EU sanctions, whilst the finished products urea-formaldehyde resins from Akron are shipped largely to Belarus. 

Regarding domestic consumers Nizhnekamskneftekhim recorded a rise in methanol purchases from 104,500 tons in the first four months to 118,800 tons whilst Gazprom increased purchases from 71,000 tons to 95,600 tons.  Nearly all of the methanol purchases made by Gazprom come from its subsidiary Gazprom Methanol.  Togliattikaucuk reduced methanol purchases from 42,700 tons in January to April 2021 to 18,900 tons, the drop being mainly due to lower MTBE production. 

In the sector for urea-formaldehyde resins Kronospan bought 34,400 tons of methanol against 41,800 tons in January to April 2021 and Metadynea reduced purchases from 34,400 tons to 27,600 tons.  Uralkhimplast at Nizhniy Tagil decreased methanol purchases for resin production from 7,300 tons to 7,200 tons.  Khimsintez increased purchases of methanol from 6,200 tons in the first four months last year to 19,100 tons in January to April 2022.  Khimsintez is focused on the production of chemical products for technical purposes including formalin and synthetic resins.  The company's turnover last year stopped at 4.694 billion roubles and the net profit at 195.235 million roubles.

Tomet could be integrated back into Togliattiazot

Tomet Methanol Production & Sales

(unit-kilo tons)

 

Jan-Apr 22

Jan-Apr 21

Production

241.8

163.3

Exports

119.0

47.7

Domestic Sales

135.8

105.3

Inventory

-13.0

10.3

Reports indicate that Tomet could be incorporated back into the Togliattiazot, the site where the methanol plant is based.  The plant assets were sold off a decade ago and Tomet has operated as a separate entity.  As with other parts of Russian industry Tomet has become subject of a corruption enquiry and political intrigue which eventually led to its bankruptcy in 2021.  Togliattiazot is one of the world's largest producers of ammonia where there has also been changes at board level and has become dominated by shareholders of Uralkhim.  It is also Tomet’s largest merchant consumer of methanol.

The sale of a land plot with a production complex for the production of methanol took place in 2010 at a price of 132 million roubles, but the claim is that this was only a fraction of the value of the plant.   The problem is that it is difficult to invalidate a transaction completed over ten years ago.  The new management team of ToAZ not only tries to return the property through the recognition of transactions as invalid, but also to compensate for losses up to 2020.

Shchekinoazot-methanol processing and cluster

Shchekinoazot Methanol Production & Sales

(unit-kilo tons)

 

Jan-Apr 22

Jan-Apr 21

Production

515.7

331.0

Exports

385.6

237.4

Domestic Sales

90.4

64.2

Inventory

39.7

29.4

In the first four months in 2022 Shchekinoazot has increased methanol production, exports and sales but as exports start to weaken the company is looking for alternative markets to Europe.  Although domestic sales have been higher this year, volumes are relatively small compared to production.  Internal processing requirements are very small at this stage for Shchekinoazot, although the company is focused on derivative plants

In May Shchekinoazot received delivery of equipment from China for the construction of its new plant for concentrated low-methanol formalin.  The capacity of the plant is 110,000 tpa and is part of the company’s strategy to develop downstream processing and to reduce the dependency on merchant sales.  The formalin project includes further processing into urea-formaldehyde resins with a capacity of 220,000 tpa. 

Shchekinoazot is the most export-oriented of the methanol producers.  The company faces short term challenges in maintaining full production even if it possesses medium and long-term plans to focus more on internal methanol processing.  Part of these plans include local companies using methanol for resin production.  Chinese company Wuxi Huali Petroleum and Chemical Engineering was chosen as the licensor (of the KMMF-110 unit (110,000 tpa of and Bakelite for the licensor of the KMFS-220 unit.  Both of these units are intended for completion by the end of 2024 but even then, will only consume around 150,000 tpa of methanol.

Metafrax Chemicals completes AKM complex

Metafrax Chemicals Methanol Production & Sales

(unit-kilo tons)

 

Jan-Apr 22

Jan-Apr 21

Production

433.8

421.8

Exports

169.5

150.9

Domestic Sales

129.5

136.1

Inventory

134.9

134.8

Metafrax Chemicals is probably the most developed of all the Russian methanol producers due to its downstream processing into formalin and other products, combined with long term arrangements with domestic merchant customers.  Exports are still very important and if the European export routes are blocked it is not clear how the company can export elsewhere and still be profitable. 

Other than methanol Metafrax Chemicals is completing the construction of the Ammonia-Urea-Melamine complex. Design institute GIAP from Dzerzhinsk has been responsible for the construction of the complex based on technology from the Swiss company Casale.  To date, the volume of commissioning work has approached 95%.  The complex is planned that it will be put into operation in 2022.  As part of the Ammonia-Urea-Melamine complex, Metafrax is building a carbon dioxide extraction plant, which will allow emissions from the main production of Metafrax to be reduced by more than half.

Haldor Topsoe withdrawing from Russian market

Haldor Topsoe Methanol Licenses Awarded by Russian companies

Producer

Location

Date of Start-up

AEON

Volgograd

2025

Gaz Sintez

Vysotsk

2025

National Chemical Group

Primorsky Krai

2025

Nizhnekamskneftekhim

Nizhnekamsk

2023

Shchekinoazot

Shchekino

2011, 2018 and 2021

Although methanol production technology has not been sanctioned directly by the EU, the US or Japan this has not prevented licensors, contractors and partners withdrawing from the Russian market.  Haldor Topsoe is in the process of settling all official liabilities in Russia and Belarus and plans to go out of business within a few months. The company's Moscow office, which currently employs about 80 people, will also be closed.  Haldor Topsoe is the world leader in the production of catalysts.  The company is also a supplier of low-carbon solutions for the production of petrochemical products, oil refining, and hydrogen.  In recent years Haldor Topsoe’s SynCOR methanol technology has been selected by a number of Russian companies for projects.  Shchekinoazot completed its third plant with Haldor Topsoe in September 2021 and has been working on other plants at the Shchekino site.

Russian butanol production Jan-Apr 2022

Russian N-Butanol Production (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Angarsk Petrochemical company

12.6

10.9

Azot Nevinnomyssk

5.1

3.9

Gazprom neftekhim Salavat

18.8

20.0

SIBUR-Khimprom, Perm

8.9

8.1

Total

45.4

42.9

     

Russian Isobutanol Production (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Angarsk Petrochemical Company

8.8

5.7

Gazprom neftekhim Salavat

11.3

11.1

SIBUR-Khimprom, Perm

17.4

8.2

Total

37.5

25.0

Russian normal butanol production rose from 42,900 tons in the first four months in 2021 to 45,400 tons in the same period in 2022.  Gazprom neftekhim Salavat was the largest Russian producer, reducing production from 20,000 tons to 18,800 tons in January to April 2021. 

Isobutanol production in Russia increased from 25,000 tons in the first four months last year to 37,500 tons in 2022.  SIBUR-Khimprom increased production in the first four months from 8,200 tons in 2021 to 17,400 tons.  However, SIBUR-Khimprom encountered some production difficulties in March which has affected availability of oxo alcohols for merchant sales.  There is little availability from other producers at Salavat, Angarsk and Azot at Nevinnomyssk which uses butanols further processing into solvents. In addition, the plant was still idle at the beginning of April when scheduled repairs were carried out.

Russian producers intended to ship 1,500 tons of normal butanol to the domestic market in April, and 2,400 tons to foreign markets.  Sales destinations include China and Turkey which should not face complications from sanctions. 

The Angarsk petrochemical complex stopped production of butanols on 20 June for scheduled repairs. The plant is expected to be out of action for 40 days.  In 2021, production totalled 47,026 tons of butanols, including 27,973 tons of n-butanol (6% less than in 2021) and 19,053 tons of isobutanol (+2%).

Russian plasticizer market 2022

Russian Plasticizer Trade 2022 (unit-kilo tons)

   

Exports

   
 

Jan

Feb

Mar

Apr

DOTP

2.339

1.044

0.542

0.136

   

Imports

   
 

Jan

Feb

Mar

Apr

DOP

0

0

0

0.023

DOTP

0.669

0.483

0.823

0.989

DINP

1.923

2.535

0.907

2.411

Both imports and exports of plasticizers declined in volume in April against March as transportation and other sanctions take effect.  SIBUR-Khimprom has reduced export activity of DOTP due to increased focus on the domestic market, whilst for DOP the producer Gazprom neftekhim Salavat stopped production for scheduled repairs lasting from May to mid-June.  Demand for plasticizers in the domestic market is softening and prices are expected to fall in the third quarter.   

Impact of EU sanctions on Russian organic chemicals

Oxo alcohols were placed under EU sanctions from 8 April.  Although direct trade for butanols and 2-EH is limited with Europe, the sanctions imposed by the EU could affect other derivatives.  For the most part oxo alcohols are consumed domestically either through internal processing or merchant market sales and so judged in isolation the sanctions do not create problems. 

Due to the side effects of sanctions and logistical route difficulties the downstream market for oxo alcohols is feeling some impact, particularly in the paint industry where missing raw materials have started to emerge.  Around 50% of water-dispersion coatings for the Russian market are sourced from Germany, Poland, Finland and Korea.  Aliphatic polyurethane paints are not produced in Russia at all and are essential for cars.   The problem is also that it will not be possible to accumulate large stocks of paints and varnishes before the introduction of restrictions in July.  Suppliers have reserves for two three months and are actively negotiating with manufacturers from other countries.  China is the primary alternative for sourcing, but it is not clear about availability and delivery times. 

Russian acetone market Jan-Apr 2022

Russian acetone production amounted to 31,500 tons in the first four months in 2022 against 27,600 tons in the same period in 2021.  Omsk Kaucuk produced 15,500 tons of acetone against 3,900 tons whilst Kazanorgsintez increased production from 17,900 tons to 18,400 tons. 

Russian Acetone Production (unit-kilo tons)

Producer

Jan-Apr 22

Jan-Apr 21

Ufaorgsintez

13.1

16.0

Kazanorgsintez

18.4

17.9

Novokuibyshevsk Petrochemical

12.5

15.8

Omsk Kaucuk

15.5

3.9

Total

59.4

53.6

Acetone 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 and that no contracts could be signed after 9 April.  The Netherlands is the largest destination for Russian acetone exports, with Latvia and Lithuania also important.   Exports of acetone from Russia totalled 14,100 tons in the first four months in 2022 against 17,400 tons in the same period last year.

Russian ethyl acetate imports, Jan-Apr 2022

Russian Ethyl Acetate Imports (unit-kilo tons)

Company

Jan-Apr 22

Jan-Apr 21

Laxmi Organics Industries

248.2

511.8

Ineos

314.1

1420.1

Others

254.5

1457.3

Total

816.8

3389.2

Ethyl acetate imports into Russia dropped by 76% in the first four months in 2022, from 3,389 tons in January to April 2021 to 817 tons.  From January to April 2022, Ineos supplied 314 tons against 1,420 tons in the same period last year.  The major distributor in the domestic market Ruskhimset did not purchase from Ineos so far this year. 

The domestic market for paints and varnishes is witnessing a fall in demand, and at the same time producers are affected by the lack of individual raw materials for the production of coatings.  The exit of some European companies from the Russian market also had an impact on the decline in sales figures.

SIBUR maleic anhydride project completion

Russian Imports of Maleic Anhydride (unit-kilo tons)

Country

2021

2020

China

6.5

5.5

Germany

0.7

0.6

Taiwan

0.1

0.6

South Korea

0.1

0.4

Others

0.0

0.0

Total

7.4

7.2

The completion of the maleic anhydride project at Tobolsk is SIBUR's largest investment project for the development of medium-tonnage and low-tonnage chemistry in Russia.  It is aimed at stimulating non-primary exports and developing the depth of hydrocarbon processing on the basis of its own butane.  Maleic anhydride is used in the production of unsaturated polyester resins, Bisphenol A, in addition to a wide range of applications in other industries.   The plant’s capacity of 45,000 tpa is expected to operational by the end of 2022 but SIBUR needs to find export markets in order to run at 100% utilisation.  The launch of production should meet the needs of domestic producers as demand last year was estimated at less than 10,000 tons. 

Orgsintez-hydrogen peroxide project

Russian Hydrogen Peroxide Imports (unit-kilo tons)

Country

2021

2020

Belgium

3.5

5.5

Finland

74.1

68.8

Netherlands

0.8

2.0

Sweden

5.9

4.0

Others

1.6

1.8

Total

85.9

82.2

Orgsintez will invest 9.7 billion roubles in expanding the production of hydrogen peroxide at the Khimprom site at Novocheboksarsk.  The investment will allow Khimprom to launch the production of highly concentrated 100% hydrogen peroxide with a capacity of 50,000 tpa, which is equivalent to 150,000 tpa of 30% peroxide concentration.  The total production volume of 30% of hydrogen peroxide in 2024 at Khimprom will amount to about 250,000 tpa, which will fully cover the needs of the Russian market.

Orgsintez-sodium chlorate project

Bashkir Soda-calcium chloride

The Bashkir Soda Company (BSK) has begun designing a new workshop for the production of granular calcium chloride with a capacity of 300,000 tpa.  The range of applications of calcium chloride is quite wide, including metallurgy, the construction sector, utilities, the mining and chemical industries, as well as the oil industry.  

Orgsintez is considering a project for sodium chlorate at Novocheboksarsk with a capacity of 50,000 tpa, as well as a project for the second stage of calcium hypochlorite production with a capacity of 15,000 tpa.  The new production using advanced technologies and management will replace the import of sodium chlorate by 80%.  The sodium chlorate project is scheduled for completion by 2027 and the second calcium hypochlorite project by 2025 so these do represent medium term investments.  Khimprom already produces a complex of oxidants including hydrogen peroxide, chlorine, calcium hypochlorite, and sodium hypochlorite.

Russian Sodium Chlorate Imports (unit-kilo tons)

Country

2021

2020

Finland

27.4

27.3

Uzbekistan

9.2

9.0

Sweden

0.8

0.5

Total

37.3

36.8

Siberian Titan-TiO2

Siberian Titan plans in 2023 to begin construction of the production of titanium pigment dioxide based on fluoride technology in the Tomsk region.  The estimated production capacity will be 10,000 tpa which corresponds to about 10% of consumption in Russia.  The company hopes to receive a construction permit in 2022, and to start construction in 2023.

Akripol-Saratov, increase in reagents

Saratov chemical plant Chemical Plant Akripol has doubled the production of reagents aimed to replace imports.  Over the first four months of 2022, the volume of shipments doubled against the same period in 2021.  Akripol is the only company in Russia that has introduced its own technology for the production of polymers based on acrylamide and acrylic acid. The company is also engaged in the development of chemical reagents for oil and gas producing companies, mining and processing plants, water utilities, coal industry and agriculture.  The US is the largest supplier of reagents to Russia, followed by Germany and the UK. 

Azerkhimya-olefin expansion

Azerkimiya (part of SOCAR) plans to complete the modernisation of the Ethylene-Polyethylene plant at Sumgait in the first quarter of 2023.  Some new technological installations, new furnaces, tanks and warehouses for storing raw materials were built.  Before the modernisation, the capacity of the plant for the production of ethylene was 100-110,000 tpa and propylene 60-65,000 tpa.  After the modernisation, the plant's capacity for propylene will rise to 187,000 tpa and ethylene 190,000 tpa or even 210,000 tpa.

The company is also working to update the energy resources of the plant.   In the third quarter in 2022, it is planned to put into operation an additional steam turbine generator, which will increase electricity production at the plant by two-fold.  Projects for the construction of a new high-voltage substation and the expansion of the existing water-cooling system are in the final stages.

Kazakh PVC & and other projects

The issue of providing raw materials for a prospective PVC plant in Kazakhstan as part of a jv with the Bashkir Soda Company.   The aim is to construct a plant for 120,000 tpa at Sastobe near Shymkent in the south of the country.   Currently Kazakhstan buys PVC products from China, Russia and Uzbekistan.  For the production of PVC, Kazakhstan has access to chlorine and hydrocarbons, but does not yet produce ethylene.  In December 2021, Kazakh company Kaustik at Pavlodar and Bashkir Soda Company (BSK) signed an agreement on the establishment of a joint venture for projects totalling up to $1 billion.  The companies signed an agreement that implies cooperation between BSK and Pavlodar Kaustik to obtain chlorine-containing products, including import-replacing products such as zirconium oxychloride for which there are rich deposits (mineral zirconide) in Kazakhstan there are rich deposits of raw materials necessary for the production of zirconium oxychloride.  In 2021 BSK supplied 203,000 tons of chemical products to Kazakhstan from which revenues totalled around $44 million.  The largest share in the export of products produced by BSK was soda ash, sodium bicarbonate, caustic hard soda, and other products.

Kazazot-investment projects

Kazakh fertiliser producer KazAzot is undertaking six new projects in fertiliser intermediates in Kazakhstan.   In particular, KazAzot plans to build a production of carbon ammonium salts with a capacity of 15,000 tpa and ammonium sulphate with a capacity of 40,000 tpa which are scheduled to be completed by 2024.

Uzbek polyethylene demand

Due to a sharp increase in demand in the domestic market in Uzbekistan, the polyethylene products produced by the Shurtan gas chemical complex are fully sold to the domestic market.  In 2021, the complex processed 4.2 billion cubic metres of natural gas raw materials, 135,200 tons of polyethylene granules, 3.5 billion cubic metres of purified gas, 117,500 tons of liquefied gas, 103,600 tons of gas condensate, and 1,100 tons of sulphur.

Uzbekneftegaz possesses a total capacity to produce 490,000 tpa of polyethylene and 90,000 tpa of polypropylene.  Last year exports of polypropylene amounted to 59,000 tons for $83.960 million and polyethylene exports amounted to $91.470 for 93,000 tons.  

Uzbekneftegaz polyethylene expansion

Uzbekneftegaz has confirmed its expansion plans for the Shurtan Gas Chemical Complex, raising polymer capacity to 505,000 tpa by the end of 2024.  A new source of raw materials in the form of naphtha is being added from the GTL plant which equates to 430,000 tpa.  The new investments for Shurtan include a complex with a capacity of 280,000 tpa of polyethylene grades for pipes, films, blown, and cast as well as 100,000 tpa of homo, cast, and new grades of polypropylene.

Turkmenistan-isobutane plant

Turkmenistan is involved in the construction of a new isobutane plant at a polymer plant the Kiyanly located on the Caspian coast.   It was planned to start the production of isobutane in 2020. In May 2021, Turkmengaz announced a second international tender for the construction of an isobutane production unit at this plant.  The polymer plant in Kiyanly was opened in October 2018. The cost of its construction amounted to $3.4 billion The project was implemented by the state concern Turkmengaz together with LG International Corp, Hyundai Engineering and TOYO Engineering Corporation.

Russian Petrochemical Production 2022
Benzene                            
  Producer Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
  Angarsk Polymer Plant 8.218 7.413 7.204 6.274 6.712 0.000 0.000 0.000 0.000 0.000 0.000 0.000 35.821
  Gazprom Neft 9.672 8.534 8.426 7.67 7.592 0.000 0.000 0.000 0.000 0.000 0.000 0.000 41.894
  LUKoil-Neftekhim 7.138 7.367 5.801 7.786 7.209 0.000 0.000 0.000 0.000 0.000 0.000 0.000 35.301
  LUKoil-Permnefteorgsintez 4.533 4.299 4.027 4.614 13.824 0.000 0.000 0.000 0.000 0.000 0.000 0.000 31.297
  Magnitogorsk MK 3.994 3.702 4.364 1.004 3.994 0.000 0.000 0.000 0.000 0.000 0.000 0.000 17.058
  Nizhnekamskneftekhim 25.599 23.908 26.705 26.293 26.941 0.000 0.000 0.000 0.000 0.000 0.000 0.000 129.446
  Novolipetsk MK 0.53 0.519 1.221 1.142 1.058 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4.470
  Gazprom Neftekhim Salavat 18.45 17.172 11.279 16.5 18.935 0.000 0.000 0.000 0.000 0.000 0.000 0.000 82.336
  Severstal 3.2 2.788 3.4 2.839 1.741 0.000 0.000 0.000 0.000 0.000 0.000 0.000 13.968
  SIBUR-Holding  7.83 6.593 8.35 7.438 7.861 0.000 0.000 0.000 0.000 0.000 0.000 0.000 38.072
  Slavneft-Yaroslavlorgsintez 5.864 4.056 5.177 2.101 1.547 0.000 0.000 0.000 0.000 0.000 0.000 0.000 18.745
  Surgutneftegaz 0.557 0 0.556 0.615 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.728
  Ryazan RN Holding 2.712 3.294 1.602 2.166 2.346 0.000 0.000 0.000 0.000 0.000 0.000 0.000 12.120
  Ufaneftekhim 8.517 7.886 5.913 3.841 4.216 0.000 0.000 0.000 0.000 0.000 0.000 0.000 30.373
  Ural Steel 0.89 0.818 0.694 0.514 0.55 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.466
  Uralorgsintez 7.442 6.454 6.895 1.792 9.258 0.000 0.000 0.000 0.000 0.000 0.000 0.000 31.841
  Zapsib 5.467 5.375 6.358 4.295 6.148 0.000 0.000 0.000 0.000 0.000 0.000 0.000 27.643
  SANORS 2.261 1.945 2.207 1.57 1.806 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.789
  Total 122.8737 112.123 110.179 98.454 121.738 0.000 0.000 0.000 0.000 0.000 0.000 0.000 565.368
                             
Butanol totals                            
  Producer Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
  Angarsk 5.415 5.481 5.192 5.116 5.599 0.000 0.000 0.000 0.000 0.000 0.000 0.000 26.803
  Azot, Nevinnomyssk 1.420 1.331 1.331 0.881 1.402 0.000 0.000 0.000 0.000 0.000 0.000 0.000 6.365
  Gazprom n Salavat 7.143 3.817 6.014 6.564 3.080 0.000 0.000 0.000 0.000 0.000 0.000 0.000 26.618
  SIBUR-Khimprom 8.447 13.639 0.000 0.000 7.906 0.000 0.000 0.000 0.000 0.000 0.000 0.000 29.992
  Total 22.425 24.268 12.537 12.561 17.987 0 0.000 0.000 0.000 0.000 0.000 0.000 89.778
                             
N-Butanols                            
  Producer Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec  Total
  Angarsk Petrochemical Company 3.397 2.952 3.183 3.061 3.190 0.000 0.000 0.000 0.000 0.000 0.000 0.000 15.783
  Azot, Nevinnomyssk 1.481 1.420 1.331 0.881 1.402 0.000 0.000 0.000 0.000 0.000 0.000 0.000 6.515
  Gazprom neftekhim Salavat 4.525 7.143 3.817 3.282 2.126 0.000 0.000 0.000 0.000 0.000 0.000 0.000 20.893
  SIBUR-Khimprom, Perm 1.838 2.332 2.893 1.868 2.607 0.000 0.000 0.000 0.000 0.000 0.000 0.000 11.538
  Total 11.241 13.847 11.224 9.092 9.325 0.000 0.000 0.000 0.000 0.000 0.000 0.000 54.729
                             
Isobutanols                            
  Producer Jan    Mar Apr May Jun Jul Aug Sep  Oct Nov Dec Total
  Angarsk Petrochemical 2.463 2.298 2.009 2.055 2.409 0.000 0.000 0.000 0.000 0.000 0.000 0.000 11.234
  Gazprom Neftekhim Salavat 2.198 3.577 2.197 3.282 0.954 0.000 0.000 0.000 0.000 0.000 0.000 0.000 12.208
  SIBUR-Khimprom 3.917 4.871 5.424 3.199 5.299 0.000 0.000 0.000 0.000 0.000 0.000 0.000 22.710
  Total 6.115 10.746 7.621 6.481 6.253 0.000 0.000 0.000 0.000 0.000 0.000 0.000 46.152
                             
Ethylene                            
  Producer Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
  Angarsk Polymer Plant 20.473 18.812 19.853 19.137 19.894 0.000 0.000 0.000 0.000 0.000 0.000 0.000 98.169
  Kazanorgsintez 58.728 53.683 59.394 50.733 56.776 0.000 0.000 0.000 0.000 0.000 0.000 0.000 279.314
  Stavrolen 28.315 27.790 26.617 28.378 29.442 0.000 0.000 0.000 0.000 0.000 0.000 0.000 140.542
  Nizhnekamskneftekhim 54.632 50.122 53.757 54.427 55.951 0.000 0.000 0.000 0.000 0.000 0.000 0.000 268.889
  Novokuibyshevsk Petrochemical 4.491 3.941 4.131 3.710 3.785 0.000 0.000 0.000 0.000 0.000 0.000 0.000 20.058
  Gazprom N Salavat 31.794 29.424 17.611 30.631 28.557 0.000 0.000 0.000 0.000 0.000 0.000 0.000 138.017
  SIBUR-Kstovo 33.916 32.372 36.360 34.444 36.056 0.000 0.000 0.000 0.000 0.000 0.000 0.000 173.148
  SIBUR-Khimprom 5.283 4.182 4.878 4.912 4.919 0.000 0.000 0.000 0.000 0.000 0.000 0.000 24.174
  Tomskneftekhim 24.461 23.329 25.040 25.573 25.101 0.000 0.000 0.000 0.000 0.000 0.000 0.000 123.504
  Ufaorgsintez 11.005 10.734 10.805 8.666 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 41.21
  Tobolsk 126.697 120.490 128.653 30.391 114.305 0.000 0.000 0.000 0.000 0.000 0.000 0.000 520.536
  Total 399.795 374.879 387.099 291.002 374.786 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1827.561
                             
                             
Methanol Producer Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
  Shchekinoazot 134.504 122.108 134.176 124.938 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 515.726
  Sibmetakhim 81.530 73.640 73.090 49.210 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 277.470
  Metafrax 113.000 99.023 111.800 110.002 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 433.825
  Akron 9.300 8.600 9.765 9.350 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 37.015
  Azot, Novomoskovsk 20.185 17.880 13.325 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 51.390
  Angarsk Petrochemical  3.114 2.310 3.243 4.250 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 12.917
  Azot, Nevinnomyssk 12.392 11.570 8.094 7.301 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 39.357
  Tomet 69.863 69.235 61.494 41.201 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 241.793
  Ammoni 10.287 7.819 8.546 8.429 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 35.081
  Total 454.175 412.185 423.533 354.681 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1644.574
                        9.05    
Phenol                            
  Producer Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
  Ufa 5.194 5.958 5.122 3.999 4.087 0.000 0.000 0.000 0.000 0.000 0.000 0.000 24.360
  Kazan 7.209 6.872 5.632 7.083 7.451 0.000 0.000 0.000 0.000 0.000 0.000 0.000 34.247
  Samara 5.775 5.223 7.601 3.597 3.850 0.000 0.000 0.000 0.000 0.000 0.000 0.000 26.046
  Omsk Kaucuk, Omsk 7.535 6.632 6.364 5.981 0.002 0.000 0.000 0.000 0.000 0.000 0.000 0.000 26.514
  Total 25.713 24.685 24.719 20.660 15.390 0.000 0.000 0.000 0.000 0.000 0.000 0.000 111.167
                          0  
Phthalic Anhydride                         0  
  Producer Jan  Feb  Mar Apr May  Jun Jul Aug Sep  Oct Nov Dec Total
  Gazprom neftekhim Salavat 1.359 1.236 1.172 1.221 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4.988
  Kamteks-Khimprom 7.875 8.159 4.896 4.381 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 25.311
  Roshalsky Plasticizer Plant 0.934 0.402 1.090 0.737 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.163
  Total