Central Europe

Central European refining and Polish gas supply

Refinery processing in Central and South-East Europe totalled 38.0 million tons in the first half of 2017 against 38,300 tons in the same period in 2016.  PKN Orlen at Plock remains the largest refinery in the region, followed by MOL at the Danube refinery in Hungary, Orlen Lietuva in Lithuania and Grupa Lotos in Poland.

Refining margins remain stable across the region.  PKN Orlen’s model petrochemical margin fell to €903 per ton in August from €920 per ton in July.   The downstream model rose to $13.5 from $13.4 in the previous month. 

In the gas supply sector, PGNiG bought 140,000 cubic metres of LNG from Statoil on the spot market in September to be delivered to the LNG terminal at Swinoujscie.  Since the terminal was opened last year, Poland has also received one spot delivery of LNG from the US and one from Qatar.

Orlen subsidiary Orlen Paliwa plans to expand the Gas Terminal (TGP) at Szczecin, including the modernisation of the quay and the deepening of the bottom for the operation of LPG vessels with a capacity of 10,000 tons. Construction concentrates on two additional rail freight depots along with railway and light rail weights and the construction of railways for about 90 wagons with the use of decommissioning equipment.

Central European ethylene & propylene production

Ethylene production in Central Europe totalled 366,000 tons in the second quarter in 2017 against 328,700 tons in the same period in 2016.  The higher production in the second quarter this year was enabled due to the restart of the Unipetrol cracker in the fourth quarter in 2016 after the 13-month repair programme had been completed.  Propylene production in Central Europe also increased this year, mainly due to resumption of operations at the Litvinov cracker, and totalled 214,000 tons against 195,300 tons in the same period in 2016.   

Ethylene production in Central Europe has been broadly static over the past decade with no new capacity coming onstream.  Production was affected after August 2015 running through to September 2016 due to the major fire at Litvinov that crippled the cracker, and requiring major re-investment.   

Propylene production has followed a similar trend with no new capacity having been brought onstream in the past decade.  Currently two projects are underway in Poland, including the metathesis plant at Plock and the PDH plant scheduled for construction at Police. The PDH installation to be built in the Police complex will be located within the boundaries of the Pomeranian Special Economic Zone.  

Unipetrol-investment in Spolana & polyethylene unit

In 2018, the Unipetrol Group intends to invest Kc 16 billion in plant development but only part is allocated for Spolana.  Although Unipetrol bought Spolana for a low price, it still requires substantial investment particularly in relation to the construction of a new membrane plant for chlorine production.  In November this year, Spolana is starting a granulation unit to produce a new type of fertiliser, ammonium sulphate.   In November, the company will be licensed to run amalgam electrolysis for chlorine and sodium hydroxide.  PVC will then be made from purchased ethylene dichloride.  The problem with the minority shareholders is that they do not believe that there is any additional value for investing in Spolana.

Unipetrol is engaged in the modernisation of the petrochemical complex at Záluží, particularly in relation to the replacement of the polyethylene unit.  The old unit from 1973 is being replaced by a new plant, which is not only more efficient, but also supplying new grades of polyethylene which are currently not available.   Production of polyethylene at the new unit is scheduled to start operations at the end of next year.  

Synthos, Jan-Jun 2017

Revenues increased sharply for Synthos in the first half of 2017, rising from zl 2.111 billion to zl 3.709 billion.  The results in the synthetic rubber division for the first six months totalled zl 442 million against zl 119 million in the same period in 2016. The growth was mostly attributable to increase of butadiene listings.

The results in the styrene plastics division for the first half of 2017 amounted to zl 57 million against zl 77 million for the same period last year.  The main reason for decline of the division’s net results was the loss generated on the EPS products in the business area acquired in 2016.  Other factors included lower margins from polystyrene products, while quantities of products sold remained on similar levels.

Raw material costs rose in the first half of 2017, and thus the total costs of sales increased to zl 2 914 million against zl 1,716 million for the same period in 2016.  Overall the net profit for Synthos in the first half of 2017 was higher by zl 221 million at zl 329 million.

After acquiring plants in France and Holland, Synthos plans joint ventures with partners from Austria and Hungary.  To support these strategic goals Synthos has established a subsidiary in Vienna, Synthos GmbH, which will negotiate terms of cooperation.  Synthos is the largest producer of synthetic rubbers in Europe and consumes significant amounts of butadiene, benzene, ethylene or styrene.  The strategic suppliers for Synthos comprise Orlen and Unipetrol, whilst smaller volumes of feedstocks are purchased OMV and MOL. 

HIP Petrohemija-Russian companies to increase shareholding

Gazprom Neft and Lukoil are increasing their share ownership in HIP Petrohemija in exchange for closing the company’s debt which has been incurred for raw material supplies.  Accordingly, the Serbian subsidiary of Gazprom Neft, NIS will increase its share in HIP from 12.45 to 21% during 2017.  Lukoil will receive about 3% of shares in the petrochemical producer, raising the share of participation of Russian companies to 24%.  A package of 76% will remain under the control of the Serbian government and Serbian state-owned companies. 

In 2016 Petrohemija sold 566.450 tons of petrochemical products, 26% up over 2015, including 85,500 tons of HDPE and 50,660 tons of LDPE.  Receipts from sales amounted to 35.69 billion dinars (about 300 million euros).  The facilities of the company allow to produce 200,000 tpa of ethylene, 90,000 tpa of HDPE, more than 45,000 tpa of LDPE, 35,000 tpa of MTBE and 40,000 tpa of synthetic rubber.  In 2016, capacity utilisation achieved 70%. 

Rompetrol, Jan-Jun 2017

Rompetrol Rafinare registered a net profit of 171 million lei ($44 million/€37 million) in the first half of 2017, up by 20% over the same period last year.  The turnover rose by 14% in the first half of 2017, helped by exchange rate fluctuations, to 4.7 billion lei.

Rompetrol Rafinare carried out investments worth $27.5 million in the first half of 2017, both in development projects for the Petromidia refinery and for maintenance works at industrial installations for refining activities, storage and logistics.  Rompetrol Rafinare exported over 1.1 million tons of products in the first half of 2017. 

Petromidia, one of the company's two oil refineries in Romania, processed 2.4 million tons of crude in the first half of 2017, down by 13% compared to the same period of last year.  This was due to the scheduled stoppage in May.  The refining capacity of Petromidia was 70% in 2016, lower than 83.96% in 2016.  Through its two refineries, Petromidia and Vega, Rompetrol Rafinare accounts for over 40% of Romania's refining capacity and is the only producer of polymers in the country.  In July, KMG stated that had received approval from the Romanian authorities to sell its assets in the country to CEFC China Energy Company Limited.  The transaction is expected to be finalised in the autumn.

 For the petrochemical division, the company produced 64,690 tons of polymers in the first half of 2017, down 14% from 75,538 tons occurred in January to June 2016.  The reduction was caused by the necessary stops for maintenance.

Grupa Azoty, Jan-Jun 2017

As a diverse organisation Grupa Azoty’s revenue and profit structure is subject to wide range of factors, which can quite often counterbalance each other.  The leading sector for Azoty is fertilisers where the interchange between gas prices, product prices and competition play a key part in the group’s financial performance.  In the first six months in 2017 the EBITDA of the fertiliser division fell to zl 384.9 million from zl 495.5 million in 2016, while the plastics division grew to zl 121.1 million from minus zl 25.4 million.  The chemical division’s revenues dropped to zl 151.2 million from zl 165.1 million.  A rise of 20% in gas prices affected the fertiliser division whilst and increased propylene prices led to lower OXO alcohol margins.

In the first half of 2017, prices of caprolactam in Asia were 54% higher year on year, at €1,251 per ton.  The situation on the caprolactam and polyamide 6 markets was mostly attributable to shortages of those materials resulting from unscheduled downtime, maintenance inspections and repairs of production plants, and changes in the legal and legislative regimes on the Asian market.  Thus, caprolactam price were largely driven by the demand-supply balance, and not only by prices of oil-based feedstock.

In the second quarter of 2017, Grupa Azoty’s net profit amounted to zl 104.6 million compared to zl 43.9 million in 2016.  The operating profit increased in April-June this year to zl 123.2 million from zl 48.2 million whilst the EBITDA amounted to zl 267 million.  Of the subsidiaries Grupa Azoty Police recorded the most substantial increase in profit in the first half of 2017.  The company recorded revenues of zl 1,349 billion which was higher than in the first half of last year by over zl 58 million.   Results were helped by the pigment division at Police.   

In the first half of the year Grupa Azoty’s net profit increased to zl 335.5 million from zl 316 million a year ago.  The operating profit rose to zl 442.1 million from zl 437.1 million, and the EBITDA to zl 714.2 million from zl 693.8 million, Revenues totalled zl 4.87 billion from zl 4.63 billion in the first half of 2016.  

In the search for competitive sources of gas, the group seeks to diversify both the geographical regions and the suppliers of gas.  Negotiations with alternative gas suppliers are conducted at the group level, which allows the group to leverage its stronger bargaining position. 

Currently, gas purchased by Grupa Azoty is based on prices quoted on energy exchanges, reflecting prices paid by its competitors in the European Union.  The increase in gas prices also translated into the performance of the chemical division, lowering margins on melamine and urea.  Rising propylene prices (by nearly 56%) outstripped the OXO product price growth (average of 22%).

PCC Rokita, propylene &  Jan-Jun 2017

PCC Rokita signed an agreement on 8 August 2017 with AB Chemicals in Cyprus for the supply of propylene.  The estimated contract value in Its duration is €11.7 million.  PCC Rokita produces propylene oxide at Brzeg Dolny where capacity has been increased from 36,000 tpa to 48,000 tpa. 

PCC Rokita increased revenues in the first half of 2017 by zl 80 million to zl 629 million, whilst the operating profit rose 12% to zl 89.35 million versus zl 69.320 million in the same period in 2016.  Net profits rose by zl 10 million to zl 75.210 million and the EBITDA amounted to zl 119.210 million against zl 106.510 million. 

PCC Exol, Jan-Jun 2017

PCC Exol posted a zl 8.46 million net profit in the firt half of 2017 compared to zl 12.41 million profit a year earlier, with sales revenue of zl 324.98 million as compared to zl 265.89 million.  The increase in sales was mainly due to higher sales prices of bulk products and higher volume of sales, and the ompany also benefited from the situation on the natural oils and derivatives market.

The main impact on the Group's profits in the first half. It had a difficult and dynamic situation on the raw materials market.  On the one hand, there was an unstable price situation for palm kernel oil, and on the other hand, ethylene prices, the key ingredient for ethylene oxide base surfactants, remained relatively high, and prices began to decline slightly at the end of the second quarter. In addition, strong competition kept the price level, which led to the fact that the prices of sold products did not always reflect the relatively high prices of raw materials.

Oltchim, Jan-Jun 2017

Oltchim posted an €8.1 million gross profit in the six months through June, up 50% on the year, while turnover increased 27% to €105.8 million.  Oltchim undertook a general overhaul from 20 August until 31 August.  Sales were unaffected as the company stocks of finished products fully covered the contractual obligations for the maintenance period. 

In July, Chimcomplex Borzesti submitted an offer to take over the assets of Oltchim. Romanian Commercial Services Group (SCR Group), who owns Chimcomplex, will become the direct guarantor of the transaction with over €120 million.   Oltchim is the only producer of liquid caustic soda in Central Europe and the only producer of chlorine and polyether polyols in Romania.  

Chimcomplex said it was joined by US giant Tricon Energy as a commercial partner, five European banks coordinated by ING, and two investment funds based in London and Dubai.  The PCC Rokita Board of Directors announced in July that the company had decided not to offer an offer to purchase Oltchim's assets in Romania.  The Polish company was previously interested in acquiring assets of Oltchim, as it produces similar products such as propylene oxide and polyols.  However, PCC Rokita has decided not to proceed with an offer.

Ciech Jan-Jun 2017

Ciech increased revenues in the first half of 2017 whilst encountering a significant decrease in net profit in the second quarter due to lower margins.   Compared to the situation from the previous year in the second quarter Ciech experienced the effect of higher prices of energy materials and slightly lower prices of some of our products.

The Ciech Group operates in four core divisions, soda ash, which generated 69% of revenues in the first quarter of 69%, organic chemicals (production of foams, resins and plant protection products) which provided 24% of revenue, silicates and glass 5% and transport 3%.  Revenues of the company amounted to zl 883 million (compared to zl 867 million in 2016 and standardized EBITDA was zl 192 million (compared to zl 228 million).  

Russia

Russian chemical consumption & outlook

Consumption rates in the chemical industry in Russia have witnessed marginal growth this year but broadly remain lower than rises recorded in production volumes.  The poor weather over the summer has affected the demand for applications in paints and the construction sector, and such bulk polymers as polystyrene, polypropylene and polyethylene have only shown small increases in consumption volumes.   Huge construction projects such as the bridge linking Russia with Crimea and the Power of Siberia gas pipeline are major stimulants to economic activity, and have helped to compensate for economic areas where there is no political interest.

Projects are generally slow-moving in Russia due to a range of factors including domestic demand, logistics and finance (which has become harder to secure since the imposition of sanctions).  

The main chemical industry project in Russia is taking place at Tobolsk where SIBUR is constructing its global scale petrochemical complex ZapSibNeftekhim, including a cracker of 1.5 million tpa.  Other projects under construction include methanol at Shchekino, Skovorodino and Nakhodka, whilst urea projects are in the early stages at Novgorod, Gubakha and Cherepovets. 

SIBUR is focusing on projects for products in the Urals such as maleic anhydride and plasticizers, whilst Rosneft is looking towards China to develop a new petrochemical strategy for its projects in Samara, East Siberia and the Russian Far East.  Nizhnekamskneftekhim has selected Linde to construct its new 600,000 tpa cracker, whilst neighbouring SafPet is expected to construct a new PTA-PET complex at Nizhnekamsk in addition to the PET projects under construction at Ivanovo and Nalchik.

Russian ethylene capacity & ZapSibNeftekhim

The construction of the new ethylene complex at Tobolsk is the major new capacity addition to the Russian petrochemical industry up to 2020.  The project represents the first new grassroots complex to be constructed in Russia since the start-up of the Tomsk plant in the 1980s. 

Since the break-up of the USSR, nearly all ethylene and propylene facilities in Russia have been modernised and some expanded but grassroots projects have hampered by a wide range of factors.  The Novy Urengoy gas-chemical project for example was aimed originally for completion by the end of the 1990s, and remains in the construction stage. 

In the first half of 2017 SIBUR has selected a loan worth €700 million from a consortium of European banks to finance contracts with contractors for the ZapSibNeftekhim project, including Linde AG and ThyssenKrupp.   Previously the company estimated investments in the ZapSibNeftekhim project at $9.5 billion (in three currencies, including roubles, euros and dollars), of which $1.75 billion consist of funds borrowed from the National Welfare Fund (NWF) as debt financing.  Up to $3.3 billion should be provided by international co-investors, the Russian Direct Investment Fund and commercial banks.  SIBUR plans to invest in the project about $4.45 billion of its own funds.

Russian Far East Projects

By the middle of August Gazprom reported that it had built about 979 kilometres of the pipeline Power of Siberia, and intends to complete 1300 kilometres by the end of 2017.  The constructed part of the gas pipeline makes up 45% of the total length of the section from the Chayanda field to Blagoveshchensk.  

In early August construction of the Amur Gas Processing Plant was started after the foundation stages had been completed.  Questions have emerged over the economic viability of the Amur Gas Processing Plant, whilst at the same the political advantages can be recognised in establishing a production site near the Chinese border.  Economic benefits are largely offset the high cost of development Chayanda and Kovykta fields, as well as the construction of the pipeline Power of Siberia.  Even taking into account the tax benefits the Power of Siberia may be for Gazprom unaffordable.  One reason is the rise in price of construction work, the price of which in practice turns out to be higher than on paper.  

Regarding Rosneft’s Eastern Petrochemical Company project (VNHK), gas supply from Gazprom remains unclear which is vital for the complex.  Putin has instructed the two sides to find a solution independently or otherwise be instructed by government.  Thus, whilst many other parts of the project are being implemented, such as environmental approval and construction of housing facilities for project workers, are largely insignificant until an agreement on gas supply is reached. 

VNHK project approved as member of Petrochemical TOR

The Eastern Petrochemical Company (VNHK) was approved in September as the resident of the Far East Petrochemical TOR (territory for advanced development) which will facilitate the implementation of the project.  VNHK will form the basis for the creation of a petrochemical cluster in the Far East.  The construction of the complex will replace the export of raw materials by the production of high value-added products, supply it to the promising markets of the countries of the Asia-Pacific region, fuels of the domestic market of the Far Eastern Federal District, and will also contribute to the development of infrastructure and related production in the Far Eastern regions. 

The VNHK project is an anchor project of the TOR Petrochemical, the construction site of which is located four kilometres from Nakhodka. The petrochemical complex will produce a wide range of polymer products (polyethylene and polypropylene) for use in industry, at home, as well as in the manufacture of medical products.

SIBUR, Jan-Jun 2017

The net profit of SIBUR increased by 4% in the first half of 2017 to 65.8 billion roubles.  The increase was attributed due to the high operating income based on higher revenues and costs.  In the first half of 2017 SIBUR produced 1.32 million tons of polyolefins and olefins (+9%), 2.98 million tons of plastics, elastomers and intermediate products (+2.9%).  The fractionation of the wide fraction of light hydrocarbons increased by 14.2% and amounted to 4.1 million tons.  The volume of processing of APG did not change and remained at 11 billion cubic metres.

Ethylene oxide production rose from 129,500 tons in the first half of 2016 to 157,500 tons in the same period this year. Polypropylene sales increased by 7.7% to 278,000 tons due to increased capacity utilisation at Tobolsk, while sales of polyethylene increased by 16.7% to 132,000 following expansion of production facilities in Tomsk.  Due to increased demand for synthetic rubber the sales volume increased by 4.3% to 238,000.

Revenues for plastics, elastomers and intermediate products increased by 14.4% to 76.2 billion roubles.  Sales of olefins and polyolefins remained approximately at the level of last year, revenues amounted to 42.6 billion roubles.

SIBUR’s EBITDA for the first six months of 2017 grew by 15% to 75.16 billion roubles.  The growth was due to an increase of 43.9% in the fuel and raw materials division.  At the same time, in the division of olefins and polyolefins, EBITDA decreased by 5.8% due to the rise in price of raw materials for petrochemical plants.   The EBITDA for plastics, elastomers and intermediate products increased by 0.6%.  Overall the company's EBITDA margin increased from 33.3% to 35.5%.

At the end of the first half of the year, SIBUR's total debt amounted to 302.4 billion roubles, a decrease of 11.5% compared to 31 December 2016.  The reduction is due to the repayment of a significant part of the traditional debt, which was offset by new samples within the credit line attracted by the export-credit agencies for the implementation of the ZapSibNeftekhim project. 

The company's capital investments decreased by 42.6% to 48.71 billion roubles.  The reduction in the level of capital investments is due to advance payments in 2016 for the supply of equipment for the ZapSibNeftekhim project, as well as due to a shift in the payment schedule, where more significant amounts of payments are planned in the second half of 2017.

Russian ethylene-propylene production, Jan-Jul 2017

Russian plants reduced ethylene production by 13% in July to 218.800 tons.  This was due to scheduled repairs at the Angarsk Polymer Plant which reduced output by 7.8 times, to 1.400 tons, whilst Gazprom neftekhim Salavat produced only 167 tons against 30,800 tons in June.  Tomskneftekhim increased its production of ethylene by 14% in July to 25.700 tons.  Over the seven months in 2017, Russia produced 1.742 million tons of ethylene which was 10% up on the same period in 2016.

Propylene production in July was affected by maintenance, thus falling 8% to 137,700 tons.  Gazprom neftekhim Salavat produced only 157 tons of propylene in July against 11,000 tons in June.  In addition, the Angarsk Polymer Plant reduced output 5.7 times, to 1,000 tons.  At the same time Tomskneftekhim increased the production of propylene by 14% in July to 13.400 tons.  In the first seven months in 2017 Russian propylene production totalled 1.1 million tons, 10% up on 2016.

Russian propylene & propane-propylene domestic sales, Jan-Jul 2017

Russian companies supplied 29,400 tons of propylene to the domestic market in July, or 9% less than in June.  The main reason for the decline was repair work at the Angarsk Polymer Plant, from where shipments dropped by 27.1 times to 177 tons.  At the same time, Lukoil-NNOS increased the sales of monomer by 8%, to 16,800 tons, and SIBUR-Kstovo by 10% to 11,400 tons.  Sales of propylene monomer on the domestic merchant market totalled 222,200 tons in the first seven months in 2017 against 206,200 tons in the same period in 2016. 

In July, 17,700 tons of propane-propylene fractions were shipped to the domestic market, 46% more than in June.  The Ryazan refinery increased export deliveries in July 1.9 times to the domestic consumers by 41% to 8,700 tons.  Secondly, 2,900 tons of products were shipped from Kazanorgsintez following a major overhaul at the Kazan plant.  Another supplier was Slavneft-Yanos which delivered 5,800 tons.

Russian propylene exports, Jan-Jul 2017

Propylene exports totalled 96,800 tons in the first seven months in 2017 against 78,800 tons in the same period in 2016.  SIBUR-Kstovo replaced Lukoil-NNOS as the leading exporter, shipping 45,800 tons against 28,200 tons in January to July 2016.  Lukoil-NNOS increased exports slightly to 42,400 tons from 41,000 tons.  Poland remains a major market for Russian propylene exports. 

Russian styrene, Jan-Jul 2017

Russian styrene exports dropped sharply in July to only 191 tons, due mostly to maintenance outages by Gazprom neftekhim Salavat and Angarsk Polymer Plant.  For the period January to July 2017, Russian styrene exports totalled 72,300 tons.

Russian producers of styrene reduced the supply to the country's market by 2.8 times in July to 3,200 tons.  Gazprom neftekhim Salavat shipped only 184 tons, due to maintenance, whilst for the same reason Angarsk Polymer Plant did not supply to the market.  In addition, there were no supplies of styrene to the free market from Nizhnekamskneftekhim.

Russian styrene production totalled 403,200 tons in the first seven months in 2017 against 394,000 tons in January to July 2017.  Nizhnekamskneftekhim increased production from 174,000 tons to 180,300 tons whilst Gazprom neftekhim Salavat reduced production slightly from 98,500 tons to 95,800 tons. 

Russian HDPE imports Jan-Jul 2017

HDPE imports into Russia totalled 118,100 tons in the first seven months in 2017, 7% up on the same period in 2016.LDPE imports dropped 15.3% to 37,600 tons.  LLDPE imports totalled 101,600 tons in the first seven months in 2017 against 124,000 tons in the same period in 2016, whilst other grades of polyethylene imports totalled 25,200 tons versus 21,100 tons.  The decrease in external supplies was facilitated by an increase in the load of Nizhnekamskneftekhim. 

Russian HDPE prodcution, Jan-Jul 2017

HDPE production in Russia dropped 0.7% in the first seven months in 2017 to 573,100 tons versus 577,200 tons in the same period in 2016.  Kazanorgsintez increased production by 13% to 316,300 tons, Stavrolen increased by 8% to 168,200 tons whilst Gazprom neftekhim Salavat reduced production by 20% to 51,500 tons.  Nizhnekamskneftekhim produced only 37,100 tons against 77,700 tons in the first seven months in 2016, due to the concentration on LLDPE

Stavrolen postponed scheduled shutdown repairs for two weeks.  Initially, it was intended to begin work on 1 September and then delayed the outage until the middle of the month.  The capacity of Stavrolen allows to produce 300,000 tpa polyethylene.  Kazanorgsintez plans to stop HDPE production for maintenance on 25 September, until 18 October. 

Russian polypropylene imports, Jan-Jul 2017

Imports of polypropylene to the Russian market declined by 4% in January-July 2017 to 92,600 tons.  A total of 33,300 tons of homopolymers of propylene were supplied to the Russian market, against 45,300 tons in January to July 2016.  Imports of propylene copolymers fell by 9.9% to 16,300 tons, whilst block copolymers rose to 23,600 tons.  Supplies of other propylene polymers amounted to 19,400 tons against 15,300 tons.

Russian polypropylene prodcution, Jan-Jul 2017

Polypropylene production in Russia grew by 9% in the first seven months in 2017 to 837,800 tons against 772,000 tons in 2016.  SIBUR Tobolsk produced 304,800 tons which was 25% higher, whilst Polyom at Omsk increased by 3% to 124,400 tons. Ufaorgsintez produced 73.900 tons in January to July 2017 against 68,600 tons whilst Stavrolen increased production by 7% to 70,700 tons.  Other producers included Tomskneftekhim which increased volumes from 71,000 tons to 82,800 tons, Nizhnekamskneftekhim which rose 1% to 127,300 tons and Kapotnya which reduced production by 28% to 53,700 tons.  

Polypropylene supply could become tight in September and October.  SIBUR Tobolsk stopped production in early September for several days for an unplanned maintenance, whilst Stavrolen stopped production on 6 September for a period of two months and Ufaorgsintez in mid-September for 12 days.  SIBUR-Tobolsk remains the overall key to the Russian polypropylene market. 

Russian PVC production & exports, Jan-Jul 2017

Production of PVC in Russia increased by 26% in January-July this year to 530,800 tons.  The capacity utilisation was increased by all enterprises, except for Bashkir soda company.  Sayanskkhimplast produced 156,000 tons of PVC against 42,800 tons in the same period in 2016, whilst RusVinyl produced 180,500 tons versus 180,100 tons.  Kaustik at Volgograd increased the production of suspension PVC by 8.5% to 53,600 tons whilst Bashkir soda company for seven months produced 140,700 tons which is 5.4% lower than last year's figure.

Imports of PVC into Russia declined by 37% in January-July 2017 to 39,400 tons.  China accounted for 37,100 tons of imports in the first seven months against 49,700 tons, European producers have reduced imports from 3,800 tons to 1,900 tons and the US reduced from 7,300 tons to 154 tons.  Sayanskkhimplast resumed the production of PVC in August after a planned stop for 30 days from 24 July.  In June, complex tests were completed at all Sayanskkhimplast production facilities, which confirmed the possibility of producing 350,000 tpa of PVC, 216,000 tpa of caustic soda and 183,600 tpa of chlorine.

Bashkir Soda resumed the production of PVC on 24 August after a short stoppage was forced by lack of ethylene.   The reason is the delay in the start-up of the production of EP-340 at Gazprom neftekhim Salavat after a major overhaul.  Bashkir Soda also has the technical capability to receive olefins from Ufaorgsintez, but supplies are irregular.  The capacity of the Bashkir Soda Company to produce PVC is 240,000 tpa, where the company produced 140,700 tons in the first seven months in 2017. 

Taneko-aromatics start-up

Taneko has set a target that it will be able to start paraxylene production at the Nizhnekamsk refinery in late 2019 or early 2020.  The new aromatics complex under design and construction at Nizhnekamsk consists of 147,000 tpa of paraxylene and 60,000 tpa of benzene.

The introduction of the new aromatics complex is will enable the start of production of PTA and PET under the jv SafPet, including capacities of 210,000 tpa and 250,000 tpa respectively.  For the PET plant, MEG will be made available from nearby Nizhnekamskneftekhim.  PTA production start-up is expected in the third quarter in 2019, conditional on the paraxylene start-up.  In addition to PTA, SafPet is considering the possibility of launching the production of linear alkylbenzenes (LAB) with the capacity of 80,000 tpa.  According to Tatneftekhiminvest-Holding, UOP processes are expected to be applied including Molex, Pakol, and DeFine.

Russian MEG, Jan-Jul 2017

Russian MEG exports fell 27% in In July against June to 9,950 tons, reduced due to higher domestic demand.   SIBUR-Neftekhim reduced exports by 36.2% to 6,100 tons, whilst Nizhnekamskneftekhim reduced shipments by 2.7% to 3,800 tons.  Belarus took 6,900 tons of Russian MEG exports in July, 7.7% less than in June.  Lithuania took 1,300 tons of MEG (70.4% less than in June), whilst deliveries to the Ukrainian market increased by 59% to 705 tons.   Kazakh customers reduced purchases by 4.3% to 575 tons.   In the first seven months in 2017 MEG exports from Russia totalled 88,300 tons of MEG which is 9% more than in the corresponding period of 2016.

Domestic MEG sales in Russia amounted to 13,100 tons in July,.4% less than in June.  Nizhnekamskneftekhim reduced shipments by 44.3% to 4.100 tons, whilst SIBUR-Neftekhim increased shipments by 1.9% to 8,600 tons.  Small trading companies sold 376 tons of MEG (10.9% less than in June).  Polief increased purchases by 2.3% in July to 7,400 tons, whilst Obninskorgsintez increased purchases by 2.7% to 2,300 tons.  Senezh reduced consumption of MEG by 45.5% in July to 1,600 tons, and BaltTechProm increased by 5.3% to 1,100 tons.  In the first seven months of 2017, Russian companies supplied 85,700 tons of MEG to the domestic market, which is 4% more than in the same period in 2016.

Russian benzene exports & sales, Jan-Jul 2017 

The volumes of Russian benzene export for synthesis and nitration decreased 8.7 times to 13,000 tons in July.  Kirishinefteorgsintez was the sole exporter in July which reduced its sales abroad by 2.1 times.  In the first seven months in 2017 Russian benzene exports totalled 71,800 tons, over two-fold higher than in 2016. 

Russian companies increased the sales of benzene for synthesis and nitration in the domestic market in July by 12% to 57,000 tons.  After the repair works at the Ryazan refinery were completed in June, the shipment of the product from this plant to domestic consumers increased 6.5-fold to 2,100 tons.  In addition, Stavrolen increased the supply of aromatic raw materials by 2.4 times to 8,700 tons.  Kirishinefteorgsintez and Slavneft-YANOS, shipments of products to Russian processors increased by 18% compared to June, to 4,300 tons and 6,700 tons, respectively. 

Over the first seven months in 2017, Russian enterprises supplied 359,600 tons of benzene to the domestic market. 

Russian benzene production, Jan-Jul 2017 

Russian benzene production amounted to 88,700 tons in July 8% down on June due mainly to repairs at Gazprom neftekhim Salavat and subsequent drop of 2.7 times to 6,100 tons.  Ufaneftekhim also reduced production in July by 46% to 1,400 tons, whilst Angarsk Polymer Plant was idle in the whole of July after producing 3,700 tons in June.  Increased production was noted at the Ryazan refinery of 6.2 times to 2,600 tons and the West Siberian Metallurgical Plant by 38% to 5,400 tons.  In the first seven months in 2017 Russian benzene production totalled 771,400 tons against 604,700 tons in the same period in 2016.  The main reason for the higher production was the revival of output at both Stavrolen and Angarsk Polymer Plant. 

Russian orthoxylene, Jan-Jul 2017

Russian orthoxylene exports in July amounted to 5,730 tons, almost twice as much as in June of this year.  Gazprom Neft shipped 2,910 tons in July, having completed repairs in June, whilst Kirishinefteorgsintez increased shipments by 3% to 2.600 tons.  Export of orthoxylene by Ufaneftekhim fell by 33% to 210 tons.  The main direction of Russian orthoxylene supplies in July was Finland (94% of gross exports, or 5,390 tons.  In the first seven months of 2017, Russia's exports of orthoxylene amounted to 58,590 tons which is 8% less than in the same period last year.

Russian phenol, Jan-Jul 2017

Market sales on the domestic market were virtually unchanged in January to July 2017 at 77,100 tons.  The product balance is fairly, with some small volumes of export activity and imports coming into the country.  In July Novokuibyshevsk Petrochemical Company exported 490 tons of phenol, up against June after the completion of repairs.  Phenol imports from Finland dropped four-fold in July to 1,300 tons after domestic plants restarted following maintenance.  Russian consumer Astat accounted for 49% of imports from Borealis in July.  Other buyers included Uralkhimplast with 36%, or 445 tons, Pigment (8%, or 96 tons) and Zavod im. Ya.M. Sverdlov (7%, or 88 tons). Imports totalled 3,600 ton in the first seven months in 2017 against 2,500 tons in 2016.  Exports totalled 5,158 tons. 

Russian synthetic rubber market

Demand in the Russian market of passenger tyres has been slow over the summer, affecting domestic consumption of rubber.  In line with global trends prices of Russian isoprene rubbers in the domestic market decreased by 5%, whilst price falls have also been noted for butadiene-styrene rubbers.

Amongst the tyre producers Nizhnekamskshina increased its net profit by 57% in the first half of the year to 333 million roubles.  The company's revenue increased by 11% to 7.85 billion roubles.  The cost of sales amounted to 7.25 billion roubles against 6.56 billion roubles in the first half of 2016.  For 2017 Nizhnekamskshina aims to produce 10 million tyres against 8.77 million in 2016, of which passenger tyres comprised 7.150 million and truck tyres 1.52 million. 

Russian exports of synthetic rubber totalled 513,700 tons in the first half of 2017 against 503,800 tons in the same period last year.  Revenues jumped from $626 million to $945 million, thus reflecting on average price of more than double in 2017.  Isoprene rubber sales totalled 153,800 tons in the first half of 2017 against 130,800 tons whilst polybutadiene shipments rose from 109,100 tons to 119,100 tons.  In the first half of 2017 Omsk Kaucuk increased its exports of rubbers by three times, whilst accounting for around half the plant’s production.  SKS/SKMS brands represent important products for Omsk Kaucuk.  In the first half of 2017 Omsk Kaucuk shipped products to more than 15 countries of the CIS, Europe, Asia, South and North America.  New markets were targeted in January to June 2017, including Kenya, the USA and the Philippines.   

Nizhnekamskneftekhim-expansion of rubber capacity

Nizhnekamskneftekhim aims to producer divinyl styrene rubber for tyres by 2020.  The capacity of the plant is intended to produce 60,000 tpa; the company has already put into operation a special pilot plant and hopes to produce five grades of this rubber.  Also, Nizhnekamskneftekhim plans to increase capacity to produce isoprene rubber from 270,000 tpa to 420,000 tpa.  Gidromashservis (part of the HMS Group) has supplied a large batch of pumping equipment to the plant producing the isoprene monomer at Nizhnekamskneftekhim. 

SIBUR rubber plants Jan-Jun 2017

SIBUR increased production of synthetic rubber in the first quarter, whilst also increasing both export and domestic sales.  Production increased in all categories of synthetic rubber.  In the first half of 2017, SIBUR’s revenue from synthetic rubber sales increased by 39.6% to 27.488 billion roubles from 19.694 billion roubles in the first half of 2016.  This was based on a 33.8% increase in the average price and a 4.3% increase in sales volumes.  

The increase in the average selling price was mainly driven by the market environment reflected by increase in international benchmarks and partly offset by the Russian rouble appreciation.  In the first half of 2017, domestic sales accounted for 33.7% of total elastomers revenue, while 66.3% was attributable to export sales. 

SIBUR is not planning further investments in domestic synthetic rubber capacity, at least at present, but does intend to increase the supply of raw materials through the launch of ZapSibNeftekhim at Tobolsk.  This will complete the production chain from raw materials through to commodity polymers, whilst at the same time facilitating the increase in C4 availability. 

During the first half of 2017 SIBUR Togliatti undertook the modernisation and expansion of butyl rubber capacity increasing from 53,000 tpa to 75,000 tpa, and then isoprene monomer. 

In 2016 SIBUR Togliatti produced 61,000 tons of butyl rubber which is 8% higher than in 2015, whilst the production of butadiene-styrene rubbers increased by 13% and amounted to 47,600 tons.  The production of raw materials for MTBE, isobutane-isobutylene fractions, increased by 21% and amounted to 130,000 tons. 

Russian methanol exports Jan-Jul 2017

Russian methanol exports revived in July after maintenance at Sibmetakhim was completed, and rose 81% over June to 167,000 tons.  Sibmetakhim exported 53,300 tons in July, (32% of Russian exports), Metafrax 38,500 tons (23%), Shchekinoazot 30,000 tons (18%), and Tomet 20,700 tons (12%).  Other exporters included Azot at Novomoskovsk with 18,600 tons (11%), and Ammoni 5,900 tons (4%).

Finland accounted for 62% of exports in July, or 103,700 tons, followed by Poland with 29,400 tons, Slovakia 10,800 tons and Romania 9,400 tons.   The cost of exported methanol in July 2017 decreased by 20% to $270 per ton DAF Russia's border against $323 per ton in June. 

Exports totalled 854,300 tons in the first seven months in 2017 against 928,800 tons in the same period in 2016.  Sibmetakhim, Shchekinoazot and Azot at Novomoskovsk all reduced exports this year whilst increases were noted by Metafrax, Tomet and Akron.  Average prices for Russian methanol exports jumped to $281 per ton this year against $161 per ton in 2016. 

Russian methanol production Jan-Jul 2017

Russian methanol production rose 30% in July over June to 366,500 tons, the rise due mainly to the restart of Sibmetakhim at Tomsk increasing output four-fold to 86,300 tons.  Most other producers reported increases aside Akron at Novgorod which dropped 12% to 8,200 tons.  Metafrax produced 95,000 tons in July 1% up, whilst Ammoni increased by 2% to 18,500 tons.  Tomet increased production by 11% to 79,300 tons whilst Azot at Novomoskovsk increased production by 16% to 20,700 tons.  Production totalled 2.282 million tons in the first seven months in 2017 against 2.160 million tons in the same period in 2016.

Metafrax, Jan-Jun 2017

Metafrax increased the production of marketable products in financial terms by 7% in the first half of the year.  Revenue from sales increased by 8% to 9.56 billion roubles.  The share of exports in sales was 42% against 32.1% in the first half of 2017.  The rise was due largely to the increased sales to China in the first quarter. 

In the first six months in 2017, Metafrax produced 560,000 tons of methanol, 181,000 tons of formaldehyde and 89,000 tons of urea-formaldehyde concentrate.  Other products included 16,000 tons of urotropin and 410 tons of polyamide block.

The company's net profit amounted to 3.6 billion roubles, which is 80% or 1.6 billion roubles higher than in January to June 2016.   Regarding investment plans, in October Metafrax will compete the installation of partial oxidation of natural gas in methanol production and start the commissioning process.  In the reporting period, the company significantly updated the mobile tank fleet for the transportation of methanol.

Russian fertiliser producers, Jan-Jun 2017

Large Russian fertiliser producers have all tended to report losses this year as margins have declined.  Togliattiazot in January-June 2017 reduced its net profit by 14.4% versus 2016 to 3.1 billion roubles.  Revenues in the first half of the year decreased by 17% to 22.5 billion roubles.  The decrease in revenue was due mainly due to a 20% decrease in ammonia sales by 267,000 tons).  At the same time sales of urea increased by 4% (by 13,000 tons.

Akron reduced its net profit by 90% in the first half of the year to 1.95 billion roubles, whilst revenues were unchanged of 46.890 billion roubles.  For the first half year, 3.6 million tons of products were produced, which is 19% higher than in the same period in 2016.  The volume of fertiliser sales increased by 20% to 3.61 million tons. 

Fosagro’s second-quarter net profit fell by 89% to 1.5 billion roubles ($25.4 million) due to a stronger rouble and lower prices.  Revenues fell by 3% to 44.7 billion roubles.  The EBITDA margin, a measure of the company's operating profitability, slid to 27% from 35% in 2016. 

Russian butanol exports, Jan-Jul 2017

In the first seven months in 2017 Russian butanols production totalled 129,900 tons against 136,800 tons in 2016.  At the same time, the volume of exports and the capacity of the domestic market have changed due to the introduction of new processing facilities in 2017.

Butanol exports rose 33% in July over June to 2,950 tons.  The share of n-butanol in was 65%, and isobutanol 35%.  Gazprom neftekhim Salavat shipped 880 tons of butanols in July (30% of Russian exports) to foreign markets, SIBUR-Khimprom 860 tons (29%), Angarsk petrochemical company 700 tons (24%), and Nevinnomyssk Azot 490 tons (17%).  The largest destination in July was Turkey (26% of gross exports), Poland (20%), Ukraine (19%), China (18%) and Netherlands (9%).  In the first seven months in 2017, exports of butanols from Russia totalled 21,770 tons which is 2.7 times less than in the same period last year.

Butanol production in Russia amounted to 14,140 tons in July, 19% less than in June and 24% lower.  In July, Gazprom neftekhim Salavat increased output by 6% to 4,880 whilst SIBUR-Khimprom reduced production by 5% to 1,370 tons.  In the first seven months in 2017 Russian butanol production totalled 138,070 tons which was 1% down on the same period in 2016. 

Russian butanol domestic sales Jan-Jul 2017

Due to the launch of Acrylic Salavat in 2017 the consumption volumes of butanols in the domestic market of the Russian Federation increased by 67% in the first half of 2017 to 104,100 tons   At the same time, the average cost of Russian n-butanol from January to August 2017 increased by 14%.  In the Volga Federal District of the country in mid-August this year, trading companies sold domestic alcohol at 56,500-57,000 roubles per ton, including VAT.

Shortages of normal butanol were seen in August, mainly due to a lack of availability from Gazprom neftekhim Salavat.  The company's products were shipped mainly to the Dmitrievsky chemical plant in August.   SIBUR-Khimprom also stopped the production of butanols at Perm in August for maintenance, and resumed in early September.  From 9 August butanols from SIBUR were not shipped to consumers.  After Gazprom neftekhim Salavat reduced significantly the supplies of butanol to Russian consumers. Angarsk Petrochemical has been able to consolidate itself in the domestic market.  In 2016 production at Angarsk was affected by the outage at the neighbouring Angarsk Polymer Plant which meant that propylene feedstocks were unavailable for a period of five months. 

The fall in butanol supplies from Salavat created a window of opportunity for the Angarsk Petrochemical Company.  This plant is located in the Irkutsk Oblast, far from the main domestic consumers of alcohols, but close to the Chinese border.  Until 2016 the plant’s production was almost entirely exported. 

However, not only the reduction of supplies from Salavat has created an opening for sales on the domestic market but also the development of production of capacity in China has affected export opportunities.  In the first seven months in 2017 Angarsk Petrochemical produced 27,200 tons of butanols, of which only 1,130 tons was exported.  Domestic consumers have adjusted purchasing to Angarsk despite the high cost of shipping from the Irkutsk region. 

SIBUR-maleic anhydride project

SIBUR and the Agency for Technology Development plan to jointly develop the processing of maleic anhydride, where production is planned to be launched by the holding in Tobolsk.  Investments in the joint project, to more than 60 billion roubles, the dominant part of the funds from this amount will be directed to the processing of maleic anhydride.

Currently, the agency is looking for partners to provide technology more than 10 stages and more than 20 anhydride redistributions. Unsaturated polyester resins, malic acid, fumaric acid and other products are being assessed for production   SIBUR estimates that the project could be completed by 2020.

In October 2016, SIBUR announced its plans to launch the production of maleic anhydride in Tobolsk with a capacity of about 45,000 tpa.  The licensing agreement for the project was signed with the Italian engineering company Conser.  As a raw material, SIBUR intends to use its own butane from the gas fractionating plant at Tobolsk. 

At present, maleic anhydride is not produced in Russia.  Demand in the Russian market is estimated at only 4,500 tpa which is covered by imports, mainly from China, Korea and Japan.   With the introduction of a new production, SIBUR plans to completely replace imports, organise export deliveries to Europe and the Middle East.  ANO Agency for Technological Development was established by the Russian government in 2016. The main task is to assist Russian enterprises in implementing world-class technology solutions with the aim of achieving the competitiveness of domestic products.

Russian phthalic anhydride, Jan-Jul 2017

Exports of phthalic anhydride from Russia amounted to 3,280 tons in July 36% less than in June this year but almost 3.5 times higher than in July 2016.  The maximum volume of production in July 2017 was supplied to Egypt (22% of shipments), Brazil (18%), Finland (18%), Poland (13%), Canada (6%), and India (6%).  In the first seven months in 2017, phthalic anhydride shipments from Russia abroad amounted to 29,500 tons which is 23% more than the same period in 2016.

Phthalic anhydride production in Russia amounted to 9,910 tons in July, 4% more than in June and 58% higher than in July 2016.  In the first seven months in 2017, the production of phthalic anhydride in Russia amounted to 65,000 tons which is 34% up on the same period in 2016. 

Russian DOP exports, Jan-Jul 2017

DOP exports from Russia amounted to 214 tons in July against 336 tons in June and 79 tons in July 2016.  All the exports in June and July this year went to Uzbekistan.  Ural Plasticizers Plant exported 167 tons in July and Kamteks-Khimprom 47 tons.  For the first seven months in 2017, exports of DOP amounted to 1,410 tons against 330 tons in the same period in 2016.  In July, Russia imported 1.010 tons of DOP against 521 tons in June.  All the DOP in July came from Korean company Aekyung Petrochemical. 

Russian paints market

Russian paint companies increased shipments by 133% in the first seven months in 2017 to 408,775 tons of which 221,500 tons comprised water based and 187,240 tons of water-soluble coatings.   The Russian paints sector has seen some positive development in the past couple of years, in terms of production and quality improvements, but this year the domestic summer market has been affected by the poor weather combined with the rapidly decreasing solvency of the population.  

Regarding the weather issue, a concentrated period of dry warm weather was mostly absent this year aside the southern parts of Russia.  As a result, the sales of paint and varnish for repair and construction purposes were lower in July and August than expected by market players.  Lower demand than expected has prevented manufacturers from raising prices despite high raw material costs, whilst some manufacturers have been able to compensate for low domestic activity by exporting more product. 

Raw materials where costs have risen include titanium dioxide and solvents.  The cost of titanium dioxide continues to increase steadily, with periodic interruptions in supply, whilst prices of solvents also show an upward trend.

Plastik expand polystyrene plant

Plastik at Uzlovaya is to invest around 70 million roubles in the modernisation of the expandable polystyrene production unit.  The project involves the installation of three more high-performance polymerisation reactors.  Due to the installation of new equipment, EPS capacity could rise by around 10%.  Construction and installation works and commissioning are planned for October 2017.  The launch is expected in November 2017 and is aimed at supplying the domestic market.  Plastics’ current capacities include 60,000 tpa of styrene, 11,300 tpa of EPS and 23,000 tpa of ABS. 

Polyplastik-new composite line at Engels

The composite division of the Polyplastik Group has launched a modernized production line on the site at the Engels site in the Saratov region, resulting in an increase of capacity by 2,000 tpa.  Italian equipment was installed on the production line.  The Engels plant is a major supplier of composite materials for manufacturers of white equipment: Indesit, Electrolux, LG, Samsung, Beko, Vestel, Candu, etc.

Dimethyl ether project Dzerzhinsk

The production of dimethyl ether (DME) in the Nizhny Novgorod region is planned to be put into operation in the first half of 2018.  The investor of the project is the company Aerozoleks which in August received a building permit to proceed.  The plant's capacity will be 10,000 tpa of DME tpa.  The production will be located within the boundaries of the company's site in the Eastern industrial zone of Dzerzhinsk.   Preparatory works at the construction site have been in progress since May 2017.  The technology of production of DME is protected by a patent and belongs to Aerozoleks.  The general designer is OOO Technology (Nizhny Novgorod). 

Dimethyl ether can be claimed as a propellant to produce aerosols in the food and cosmetic industries.  The product can also be used in the manufacture of household chemical goods and building materials. Aerozoleks specializes in the supply of high purity dimethyl ether for cosmetic and technical applications.  Shchekinoazot is also working on the construction of the production of dimethyl ether. The plant's capacity will be 20,000 of perfumery DME.

Japanese interest in constructing gas-chemical plant at Kemerovo

SDS Azot, Sojitz Corporation and Mitsubishi Heavy Industries signed a memorandum on the construction of a gas chemical complex at Kemerovo.  SDS Azot specializes in the production of nitrogen fertilisers and unites Azot Kemerovo and Angarsk Nitrogen Fertiliser Plant.  It has facilities for the production of 1,055 million tpa of ammonia, 957,000 tpa of ammonium nitrate, 515,000 tpa of urea, 314,000 tpa of ammonium sulphate, and 116,000 tpa of caprolactam.

Siberian Chemical Combine-titanium dioxide

The Siberian Chemical Combine plans to carry out all commissioning of equipment for the production of titanium dioxide in the first quarter of 2018.  The aim is to start producing industrial volumes by 2019-2010 under a new company Siberian Titan.   The project assumes 780 million roubles of investments, including 130 million roubles for the creation of the pilot plant in 2017.  The capacity of the new plant is being designed at 20,000 tpa, based on fluoride technology developed at Tomsk Polytechnic University.  

Belarussian chemical production, Jan-Jul 2017

Naftan produced 4,100 tons of propylene in July, up 2.2 times, whilst ethylene increased 2.5 times to 6,800 tons.   Production rose in July after Polymir restarted the damaged line from 2016 and restored the full capacity operation of 130,000 tpa.  Polymir produces a wide range of chemical products, such as LDPE, acrylic fibres, organic synthetic products, hydrocarbon fractions, etc.  In January to July 2017 Belarus produced 33,900 tons of ethylene and 21,700 tons of propylene. 

Methanol production at Grodno increased 1.5 times in July to 8,600 tons after completing maintenance in June.  In the first seven months in 2017 production of methanol at Grodno totalled 45,700 tons against 33,800 tons in the same period in 2016.   Belarus produced 9.500 tons of benzene in July 5% less than in June.   For the period January to July 2017 benzene production in Belarus totalled 62,900 tons, 16% down on the same period in 2016.  Azot at Grodno produced 67,300 tons of caprolactam in January to July 2017 against 74,200 tons in the same period in 2016.

Belarus

Belarussian methanol market, Jan-Jul 2017

Russian methanol exports to Belarus increased five-fold in the first seven months to 33,700 tons.  Imports into Belarus only started in mid-2016 after Azot was unable to meet full demand which increased after the start-up of the Kronochem urea-formaldehyde plant at Mogilev.  Current requirements of Kronochem include 4-4,500 tons of methanol per month.  In 2017, the company has purchased only Russian-produced methanol. 

Besides demand from formaldehyde plants, demand for methanol in Belarus was bolstered with the start-up of the MTBE plant at the Mozyr oil refinery.  Demand for methanol at the refinery is estimated at around 5,450 tons per month, from a total country requirement of 10,000 tons per month.  Azot is not able to meet full demand of 120,000 tpa from its 80,000 tpa plant.   

Belarussian polymer imports, Jan-Jun 2017

Polypropylene imports into Belarus increased by 3.6% in the first half of 2017 to 46,500 tons.  Imports in June amounted to 8,500 tons against 8,300 tons in May.   Homopolymer imports totalled 31,100 tons in January to June 2017 against 30,400 tons in the same period in 2016.  Propylene copolymer imports amounted to 15,300 tons against 14,500 tons. 

PVC imports totalled 15,300 tons in the first half of 2017 against 14,500 tons in the same period in 2016.  Belarussian polyethylene imports increased 7.4% in the first half of 2017 to 61,900 tons against 57,600 tons in January to June 2016. The rise was due largely due to the production problems at Novopolotsk which have since been corrected.   LDPE imports rose from 15,100 tons to 18,000 tons, HDPE imports rose 7.1% to 22,100 tons whilst LLDPE imports fell from 24,400 tons to 21,700 tons. 

Mogilevkhimvolokno modernisation

Mogilevkhimvolokno imported 33,400 tons of PTA in the first six months in 2017 against 25,300 tons in the same period in 2016.  South Korea supplied 21,500 tons in January to June this year versus 9,500 tons in 2016.  The company’s strategy is aimed at reducing DMT in the production process for polyester fibres and increasing PTA which needs to be imported.   Mogilevkhimvolokno can currently produce 138,250 tpa of DMT, 105,000 tpa of PET for the textile industry and 80,000 tpa food PET.  The capacity for production of polyester fibres is rated at 67,000 tpa.

The company aims to completely shift to the production of PET, textile industry and to start production of polyester fibres by compression moulding.  This involves the modernisation of the continuous polycondensation capacity of 240 tons of granules per day or 80,000 tpa.  The next step includes the transition from the production of food-grade PET for textile, launching the production of polyester fibre compression moulding with a capacity of 50,000 tpa. 

Ukraine

Karpatneftekhim-operations & feedstock deliveries

Karpatneftekhim exported 4,028 tons of propylene in July, whilst the capacity utilisation rate in August attained around 70%.  Full capacity loading is targeted by October.  The launch was difficult, lasting from 8 June to 26 June, before products could be produced.   In the first couple of months around 80% of production has been exported, although only 50% of caustic soda is sold inside the country.  The company plans to start the production of benzene after the amendments to the Tax Code of Ukraine where excise duties render it unprofitable.  Overall Karpatneftekhim is purchasing raw materials at $450 per ton, and is selling products worth $800-1,000 per ton.   In effect, it is more profitable to include pyrolysis and get these products than to steal excise. 

The Cabinet of Ministers of Ukraine allowed the company Karpatneftekhim buy and import on preferential terms up to 147,000 tons of naphtha and mixtures of aromatic hydrocarbons in 2017.  In addition, the Cabinet of Ministers has limited quotas for the free importation and purchase of certain types of petroleum products for Karpatneftekhim.   Production at Karpatneftekhim was discontinued in September 2012.  Previously, the plant was repeatedly pointed out the existence of problems in the work because of the state debt to reimburse VAT export and dumping of foreign, particularly US producers of PVC.

Karpatneftekhim-propylene oxide, C4s, etc

A prospective plan for the development of the Karpatneftekhim site envisages the launch of production of propylene oxide and MTBE plants.  Negotiations with licensors are reported to be under way to see what is feasible for the Kalush petrochemical complex.  Karpatneftekhim is close to building an extractive rectification unit to produce concentrated butadiene, isoprene and MTBE involving the processing of C4-C5 fractions...  The construction could take about a year, and should be completed by Q4 2018. 

Ukrainian PVC market, Jan-Jul 2017

Imports of PVC into Ukraine decreased by 3% in January to July 2017 and amounted to 60,700 tons.  The demand for slurry from local manufacturers of profile-molded products decreased, while the need for resin from the producers of plasticized PVC increased.  Imports from the US rose in July to 7,700 tons against 4,300 tons in June, although overall for the first seven months US imports fell to 25,100 tons against 38,800 tons in January to July 2016. At the same time imports of European PVC increased to 23,700 tons against 20,000 tons, and Russian imports amounted to 10.700 tons against 3,800 tons in the first seven months in 2016.

Ukrainian chemical imports, Jan-Jul 2017

Ukraine imported 426 tons of DOP in July, against 542 tons in June.  Czech producer Deza supplied 60% in July and Boryszew 40%.  In the first seven months in 2017 Ukraine imported 2,120 tons of DOP which was 4% less than in the same period in 2016.

Phthalic imports into Ukraine in July amounted to 380 tons versus 462 tons in June and in July 2016 393 tons.  In July, this year Belarusian company Lakokraska at Lida supplied 294 tons to the Ukrainian market, Kamteks-Khimprom 46 tons, Petkim Petrokimya 22 Tons and Nan Ya Plastics 18 tons.   (5%).  In the first seven months in 2017 imports of phthalic anhydride into Ukraine totalled 2,470 tons which is 8% down on 2016.

CB&I-Shurtan

CB&I recently announced in June that had been awarded a technology contract by Shurtan Gas Chemical Complex LLC (SGCC) for a grassroots ethylene complex to be built in southern Uzbekistan. The scope of work includes the license and basic engineering of an ethylene unit, which will use four proprietary SRT heaters, a Hexene-1 unit and a polypropylene unit.  

The Hexene-1 unit will use CB&I's co-monomer production technology to produce Hexene-1 from low-cost C4s, and the polypropylene unit will use CB&I's Novolen® gas-phase polypropylene technology to produce full range polypropylene products.  Uzbekistan made the strategic decision to use a synthetic naphtha product from its Gas-to-Liquids plant located in the Kashkadarya region for the production of olefins, which can then be used for the production of high-value polymer products.

SOCAR-cracker shutdown

SOCAR stopped petrochemical production at the Azerkhimya plant at Sumgait from 10 August for 40 days for maintenance.  During the shutdown, a number of new facilities will be added including preparations for the expansion of propylene capacity to 150,000 tpa by January 2018.  Furthermore, the reconstruction capacity of polyethylene plant will be increased from 60,000 tpa to 105,000 tpa.  Following the second phase of modernisation of the plant capacity will be increased to 185,000 tpa. 

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