Russian chemical production Jan-Jun 2022

Production volumes in the mainstream Russian chemical industry were slightly down in the first six months compared to numbers in the same period 2021 with some underlying trends of slowing domestic demand.  Efforts by producers to repivot export sales towards Asia away from Europe may help in the second half of 2022 to maintain production levels.  Whether these volumes sold into new markets are profitable is hard to ascertain; if chemical product sales are facing the same issues as Russian oil sales, then discounted prices for Russian chemical and polymer sales may be expected by new Asian buyers. 

Russian ethylene production decreased in the first six months from 2.260 million tons in 2021 to 2.204 million tons whilst propylene dropped from 1.544 million tons to 1.421 million tons.  Demand for olefins for the production of olefin 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 the Russian government statistics department Rosstat, industrial production in June declined by 1.8% following a 1.7% decline in May.  These numbers may need to be treated with caution as this year Rosstat has changed its methodology in how it calculates economic performance which makes it impossible to compare directly against 2021 and previous years.  However, Rosstat did state that Russian chemical production fell 7.7% in June against June 2021, sounding plausible and which was caused mainly by restrictions on the export of certain types of fertilisers.  Also, the shortage of some imported components has affected production of the Russian paint and varnish industry in June (12.7% down) and household chemicals, perfumes and cosmetics which was 13.6% down. 

The production of polymers in Russia amounted to 5.281 million tons in the first six months in 2022 against 5.445 million tons in January to June 2021.  Polyethylene production fell from 1.749 million tons to 1.722 million tons in the first six months in 2022, due to lower production at Tobolsk.   

European buyers increased purchases of Russian polyethylene in the second quarter before sanctions took full effect.  Regarding the domestic market replacing polyethylene imports for sectors such as food packaging and gas pipes may help SIBUR to maintain sustain production levels at various plants belonging to the group.  Challenges facing SIBUR and its subsidiaries comprise the procurement of flame retardants, dyes, stabilizers, etc, that are used in the final stages of polyethylene production. 

In the rubber sector Russian plants produced 796,000 tons of synthetic rubber in the first six months in 2022, versus 860,000 tons in the 2021.  Reduced tyre production has resulted from the exit of Western companies.

Russian ethylene production, Jan-Jun 2022

Russian ethylene production totalled 2.204 million tons in the first six months in 2022 against 2.260 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 646,800 tons in January to June 2022 down from 732,500 tons in 2021. Nizhnekamskneftekhim produced 323,400 tons of ethylene against 323,600 tons in 2021 whilst Kazanorgsintez rose from 299,100 tons to 331,300 tons. 

Other important ethylene producers included SIBUR-Kstovo which produced 206,800 tons versus 202,800 tons.  In Bashkortostan Gazprom neftekhim Salavat produced 166,100 tons against 180,200 tons, whilst Ufaorgsintez increased production from 37,300 tons to 49,900 tons.  Stavrolen at Budyennovsk reduced ethylene production to 167,500 tons against 180,200 tons in the first six months in 2021.

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

Russian propylene production amounted to 1.420 million tons in the first six months in 2022 against 1.544 million tons in the same period in 2021.  The combined ZapSibNeftekhim and SIBUR Tobolsk plants reduced production from 643,800 tons in the first six months in 2021 to 468,500 tons in 2022. 

In Tatarstan Nizhnekamskneftekhim produced 163,200 tons of propylene in the first six months in 2022 whilst Kazanorgsintez increased production from 25,100 tons to 27,800 tons.In Bashkortostan Gazprom neftekhim Salavat produced 75,400 tons of propylene versus 53,900 tons whilst Ufaorgsintez reduced production from 86,900 tons to 56,700 tons.  In the Nizhny Novgorod region SIBUR-Kstovo increased production of propylene from 89,900 tons to 93,300 tons in 2022.  Lukoil-NNOS at Kstovo increased production from 107,800 tons to 112,900 tons. 

Russian propylene sales Jan-Jun 2022

Propylene exports from Russia amounted to 65,500 tons in the first six months in 2022 against 68,500 tons in the same period in 2021. 

Lukoil-NNOS increased export shipments from 34,800 tons to 39,700 tons whilst SIBUR-Kstovo shipped 10,600 tons against 11,900 tons in January-June 2021. 

In the first half of 2022 ZapSibNeftekhim purchased 74,000 tons of propylene on the merchant market against 27,700 tons in the same period in 2021.  Russia’s largest merchant consumer Saratovorgsintez increased purchases of merchant propylene from 65,000 tons last year when the acrylonitrile plant underwent an extended shutdown to 94,600 tons, and SIBUR-Khimprom at Perm reduced purchases from 25,100 tons to 14,900 tons.  Other merchant consumers included Akrilat at Dzerzhinsk which is part of SIBUR-Neftekhim. 

Russian sales of propylene on the domestic merchant market amounted to 231,800 tons in the first six months in 2022 against 158,800 tons in the same period in 2021.  The largest propylene supplier to the domestic market was Lukoil-NNOS, shipping 93,000 tons against 73,900 tons in January to June 2021.

At the end of July, the supply of propylene on the Russian market still exceeded the demand.  Producers offer propylene around 62,000-65,000 roubles per ton including VAT, but buyers are putting pressure on sellers in a weak economic climate.

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

Russian styrene production declined slightly from 390,400 tons in the first six months in 2021 to 370,800 tons in the same period this year.  Nizhnekamskneftekhim reduced production from 155,400 tons to 154,600 tons, where most of the styrene is used internally for polystyrene and synthetic rubber output.  Gazprom neftekhim Salavat reduced styrene production from 104,200 tons to 97,000 whilst SIBUR-Khimprom increased 72,800 tons to 75,200 tons.

Styrene was included on the list of EU sanctions and thus exports to Europe will drop in the second half of 2022.  For the first half of 2022 exports dropped to 46,500 tons against 54,500 tons in the same period last year. 

Domestic merchant sales of styrene reduced from 62,600 tons in the first six months in 2021 to 58,400 tons in the same period in 2022.  Angarsk Polymer Plant reduced sales from 14,100 tons to 12,500 tons whilst Gazprom neftekhim Salavat increased sales from 28,000 tons to 28,300 tons.  Polystyrene producer and styrene merchant buyer Penoplex shut down its Kirishi plant in mid-August for a two-week shutdown for scheduled repairs.

The Angarsk Polymer Plant resumed styrene production by 10 August after a scheduled overhaul.  In early August, the Angarsk Polymer Plant announced a tender for the sale of styrene monomer in the domestic and foreign markets comprising a total of 900 tons.  

Russian polyethylene and polypropylene exports increase in first half of 2022

Although Russian government banned publication of official foreign trade statistics earlier this year, an economic division of Gazprombank estimates that Russian producers significantly increased the export of polyethylene and polypropylene to Europe in the first half of 2022.  Accordingly, the supply of polyethylene increased by 63% compared to the same period last year to 136,000 tons, and polypropylene by 43% to 196,000 tons.  Although these numbers do not correspond to the data published by the Customs department in 2021, the patterns of trade sound consistent with market changes and market dynamics.  The report states that exports to Turkey increased significantly in the first half of 2022 which has occurred with many products in the chemical and polymer sectors.  Polyethylene exports to Turkey rose by 68% in the first half of 2022 to a total of 82,000 tons and polypropylene rose by 1% to 93,000 tons. 

Conversely to the EU and Turkey external demand from Chinese companies fell almost two-fold, attributed largely due to COVID-restrictions and lower demand.  Thus, any gains for Russian polyethylene producers from extra sales to the EU and Turkey were offset by the drop in purchases from China. 

Gazprombank portends that European consumers of polymers tried to purchase more Russian raw materials before the restrictions came into force.  From 10 July, the supply of polypropylene to the EU from Russia has come under restrictions. Prior to sanctions, Russian producers occupied around 42% of the European market for these products.

SIBUR states that it has reoriented its polyolefins that previously went to Europe to other regions.  The group hopes to increase exports to Southeast Asia, including entering new markets, creating transit points and distribution centres.  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 aims to be able to develop and replace up to 80% of polymeric materials necessary for the production of automotive components.

Biaksplen-new BOPP product categories

SIBUR has developed a new category of BOPP films, which allows to ensure the stability of the brand assortment against the background of a shortage of individual raw materials.  Complex masterbatches will be supplied from China, Israel and possibly India replacing Western imports.  Biaksplen’s total capacity for the production of BOPP films in Russia is 160,000 tpa.  Although the company has been developing export deliveries of films to the EU market, using the ISO 9001 quality management system, the current predicament in economic relations means that new markets need to be sought out.

Russian paraxylene production Jan-Jun 2022

Russian paraxylene production totalled 132,500 tons in the first half of 2022 against 142,200 tons in the same period in 2021.  Sanctions may have some effect on production volumes of paraxylene, particularly Kirishinefteorgsintez, but probably not affect the PTA chain significantly in the short term.  In the first six months Kirishinefteorgsintez reduced paraxylene production from 37,500 tons in 2021 to 27,400 tons whilst Gazprom Neft reduced volumes from 56,700 tons to 52,700 tons.  Ufaneftekhim, which is the main paraxylene supplier to Polief, produced 52,400 tons in January to June 2022 versus 48,000 tons in the same period in 2021.

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.  Sanctions will mean that Russian producers are 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, but Russian refineries have to find other markets or reduce utilisation rates.  China is a huge importer of paraxylene, but logistics represents an issue for Russian exporters.  Gazprom Neft at Omsk Is the only refiner that could export paraxylene at profit, assuming it could be shipped on the Trans-Siberian railway to the Russian Far East ports.

Russian PTA-PET raw material supplies

On 1 August the first Xinjiang-Kaliningrad train left China through the Alashankou checkpoint with PTA intended for Ekopet.   The train is transporting 96 containers with a total weight of 2,474 tons of PTA.

The Xinjiang connection with other parts of China was completed this summer, the route allowing delivery of PTA to Kaliningrad (4,822 km) avoiding sea transport.  According to the Xinjiang Railway, an average of 17 China-Europe freight trains will pass through the Alashankou checkpoint per day.  Most of the PTA into Kaliningrad is sourced from China and has traditionally been supplied by the Danish company Maersk through the Suez Canal. 

Titan Polymer, PET & BOPET projects

Titan-Polymer plant is preparing to launch the production of biaxially oriented polyethylene terephthalate film (BOPET) with a capacity of up to 72,000 tpa in the territory of the Moglino special economic zone near Pskov.  The mechanical readiness of the first Dornier extrusion line is more than 90%, raw materials for production are already in the warehouse.  More than 8.9 billion roubles were invested in the project of the Titan-Polymer plant.

The second stage of Titan-Polymer’s plant for the production of PET for textile and film purposes is currently at the pre-design stage. The advantages of the plant's location on the territory of the Moglino SEZ project includes a distance 280 km to the commercial sea port of Ust-Luga and two border crossings with Estonia and Latvia at a distance of 40 km.  However, due to difficult political relations it is unlikely that the Estonian and Latvian crossings will be possible.  About 30% of products from Titan-Polymer are intended for the export market and 70% will be used for domestic producers.   Semi-continuous and continuous production schemes will be used in the production of PET products, which was originally planned to gradually increase the production volume of textile PET to 210,000 tpa by 2022, and BOPET films to 72,000 tpa.

Russian benzene market and production Jan-Jun 2022

Russian benzene production amounted to 673,500 tons in the first six months in 2022 versus 663,400 tons in the same period in 2021.  Nizhnekamskneftekhim increased benzene production from 151,400 tons to 155,700 tons, whilst Gazprom neftekhim Salavat reduced production from 105,900 tons to 98,300 tons. 

Benzene sales on the Russian domestic market to 380,100 tons in the first six months in 2022 against 353,400 tons in the same period in 2021.  Angarsk Polymer Plant reduced sales from 20,800 tons to 20,500 tons whilst SIBUR-Kstovo increased sales from 43,200 tons to 44,500 tons.  Uralorgsintez in the Perm region reduced shipments from 41,200 tons to 40,100 tons. 

Gazprom Neft at Omsk increased sales from 50,200 tons in the first six months last year to 50,800 tons whilst Gazprom neftekhim Salavat reduced sales from 18,700 tons to 19,700 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. 

Kuibyshevazot increased benzene purchases from 77,400 tons in the first half of 2021 to 96,000 tons whilst SDS Azot reduced purchases from 64,100 tons to 50,100 tons. 

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 six months in 2022 Russian benzene exports amounted to 27,700 tons, which was slightly up on the same period last year.

Russian caprolactam production, Jan-Jun 2022

Russian caprolactam production amounted to 173,100 tons in January to June 2022 against 193,200 tons in the same period in 2021.  Kuibyshevazot increased production from 97,600 tons to 95,000 tons whilst SDS Azot at Kemerovo reduced production to 66,800 tons from 49,000 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 orthoxylene-toluene, Jan-Jun 2022

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

Orthoxylene production in Russia amounted to 92,800 tons in the first six months in 2022 against 99,000 tons in the same period in 2021.  Gazprom Neft reduced production from 55,000 tons to 45,900 tons whilst Ufaneftekhim reduced shipments from 20,000 tons to 18,300 tons.  Kirishinefteorgsintez reduced domestic shipments of orthoxylene from 28,500 tons to 24,000 tons. 

Russian toluene production totalled 165,800 tons in the first six months in 2022 against 115,500 tons in the same period in 2021.  Gazprom Neft increased production from 32,500 tons to 36,600 tons whilst Ufaneftekhim increased from 7,000 tons to 60,400 tons.  

Russian phenol market, Jan-Jun 2022

Russian phenol production totalled 128,700 tons in the first half of 2022 against 128,600 tons in the same period in 2021.  

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.  Russian phenol exports rose from 12,700 tons in January to June 2021 to 18,800 tons.

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 62,300 tons in the first six months in 2022 against 67,500 tons in the same period this year.  Ufaorgsintez reduced shipments from 31,300 tons to 24,500 tons. 

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.  

Kuibyshevazot Jan-Jun 2022

Kuibyshevazot increased the production of polyamide-6 by 25.4% compared to the same period last year, to 88,400 tons.  The production of caprolactam in the reporting period decreased by 7.7%, to 96,000 tons, cord tissue by 22.6%, to 7.7 million linear metres.  The production of ammonium sulphate decreased by 9.7% to 236,000 tons, polyamide filament by 7.9% to 3,200 tons, and ammonia by 5.5% to 525,100 tons. 

In the first half of this year, a large amount of work was carried out in the modernisation of the mineral fertiliser complex, as well as for the production of caprolactam and polyamide.  A new urea plant is close to completion in the construction schedule which comprises a capacity of 525,000 tpa. 

Russian rubber production Jan-Jun 2022

Sales of C4s on the Russian market totalled 226,700 tons in the first half of 2022 against 203,400 tons in the same period in 2021. SIBUR-Kstovo increased C4 sales from 44,600 tons to 53,100 tons in January to June 2022 whilst Tomskneftekhim increased shipments from 33,800 tons to 42,600 tons. 

Nizhnekamskneftekhim reduced C4 purchases on the open market fell from 98,600 tons to 53,900 tons due to lower rubber production, whilst Omsk Kaucuk reduced purchases from 50,300 tons to 44,700 tons. 

Butadiene production dropped in the second quarter to 144,900 tons from 172,000 tons in the first quarter.  ZapSibNeftekhim reduced production from 80,600 tons in the first quarter to 63,000 tons, whilst Nizhnekamskneftekhim reduced production to 61,500 tons against 50,700 tons.

Russian rubber production and consumption Jan-Jun 2022

Russian production of synthetic rubber dropped to 796,000 tons in the first half of 2022 from 860,000 tons in the same period in 2021.  Production has declined since the introduction of EU sanctions, but at this stage now worse than in 2020 at the peak of economic restrictions from COVID-19.  

The Russian tyre industry reduced consumption of rubber, both synthetic and natural to 195,900 tons in the first half of 2022 versus 208,700 tons in the same period in 2021.  The tyre sector is undergoing significant changes following the exit of the major European manufacturers from the Russian market.  China in the first half of the year increased tyre exports to Russia by 44.7% compared to the first half of 2021, to 3.75 million pieces.  In total, 10.9 million tyres were imported to Russia in the first half of 2022, versus 8.5 million tyres in the first half of 2021.  March was the peak of shipments of imported tyres in 2022.

Nizhnekamskneftekhim rubber markets

Nizhnekamskneftekhim is being forced to change geographical direction of its sales and to move away from the EU market which accounted for around 20% of the company’s total revenues in 2021.   The takeover by SIBUR in 2021 provides Nizhnekamskneftekhim with a much stronger financial base in order to survive this year and beyond.  This year Nizhnekamskneftekhim and SIBUR are working on the basis of a 5% fall in revenues and profits from 2021.  In the second quarter sales of synthetic rubber by Nizhnekamskneftekhim to Europe dropped by around three-fold.  Q3 and Q4 may be better than Q2 because of

Russian methanol production Jan-Jun 2022

Russia produced 2.336 million tons of methanol in the first half in 2022 against 2.204 million tons in the same period in 2021.  Metafrax Chemicals at Gubakha produced 565,800 tons against 633,200 tons in January-June 2021, whilst Gazprom Methanol at Tomsk reduced production from 501,900 tons to 374,800 tons.  

Tomet produced 334,800 tons of methanol in the first six months in 2022 against 233,000 tons in the same period in 2021. 

Shchekinoazot produced 759,600 tons in the first six months in 2022 against 496,400 tons in January to June 2021, the increase due to the addition of new capacity.  Also, in the Tula Oblast Azot at Novomoskovsk reduced production from 137,300 tons to 117,500 tons.  Ammoni in Tatarstan reduced methanol production from 69,100 tons in the first six months in 2021 to 55,100 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-Jun 2022

Russian producer exports of methanol rose in the first six months from last year from 973,900 tons to 1083,600 tons in January to June this year.  Tomet exported 119,000 tons of methanol in the first six months up from 74,300 tons in the same period in 2021. 

Metafrax Chemicals reduced exports from 227,300 tons in January to June 2021 to 219,400 tons this year whilst Gazprom Methanol reduced exports from 260,900 tons to 131,100 tons.  The largest Russian exporter in the first six months was Shchekinoazot shipping 568,000 tons versus 354,500 tons in January to June 2021. 

Destination figures for methanol exports comprised 1.100 million tons for the first six months versus 1.038 million tons last year.  Finland accounted for 407,500 tons of Russian methanol exports in the first six months against 514,600 tons in the same period in 2021.  Poland increased deliveries from Russia from 156,600 tons to 219,700 tons whilst exports to the Netherlands rose from 39,700 tons to 124,500 tons.  The rise in exports to the Netherlands was due to higher production and transhipment in 2022 from Tomet at Togliatti. 

Despite logistical difficulties in the supply of methanol to foreign markets, exports of methanol from Russia increased by 9% compared to over May to 158,600 tons of methanol abroad.   Around 120,700 tons were delivered to the countries of the European Union against 105,600 tons in May.  Gazprom Methanol resumed methanol exports in June shipping nearly 35,000 tons through Finland whilst Tomet did not export in June. 

Finland’s national rail operator VR Group reportedly stated that the country has seized hundreds of freight cars linked to Russian firms in line with European Union (EU) sanctions imposed in the wake of Russia’s military incursion against Ukraine.  A total of 865 rail cars from Russia have been confiscated by the Finnish bailiff authority as per Russian Railways’ letter to the Ministry of Transport.

Russian methanol domestic sales, Jan-Jun 2022

Merchant sales of methanol on the Russian domestic market amounted to 826,600 tons in the first six months in 2022 against 806,000 tons in the same period in 2021.  Tomet increased sales from 145,800 tons to 196,400 tons whilst Gazprom Methanol reduced sales from 216,500 tons to 196,400 tons.  Metafrax Chemicals reduced shipments to the domestic market from 208,200 tons in January to June 2021 to 185,700 tons in the same period this year.    Inventory levels totalled 188,900 tons at the start of June which was much higher than normal.  The inventory accumulated by Metafrax allowed the company to sell both on export and domestic markets whilst at the same time undertaking maintenance.

Nizhnekamskneftekhim recorded a rise in methanol purchases from 152,900 tons in the first six months to 158,300 tons whilst Gazprom increased purchases from 102,900 tons to 126,600 tons. 

Nearly all of the methanol purchases made by Gazprom come from its subsidiary Gazprom Methanol.  Gazprom’s methanol deliveries to some of its application areas involve difficult transport routes, including chemical tankers. Togliattikaucuk reduced methanol purchases from 61,900 tons in January to June 2021 to 30,000 tons, the drop being mainly due to lower MTBE production. 

In the sector for urea-formaldehyde resins Kronospan bought 48,800 tons of methanol against 61,500 tons in January to June 2021 and Metadynea reduced purchases from 47,600 tons to 40,000 tons.  Uralkhimplast at Nizhniy Tagil decreased methanol purchases for resin production from 11,500 tons to 11,000 tons.  Khimsintez increased purchases of methanol from 12,000 tons in the first six months last year to 23,600 tons in January to June 2022.  Khimsintez is focused on the production of chemical products for technical purposes including formalin and synthetic resins. 

Shchekinoazot-increased exports and domestic sales in 2022

The rise in methanol production and increased merchant sales, particularly for exports and to a lesser extent the domestic market, has pressured Shchekinoazot into further investment into rail cars.  In the first half of 2022 methanol production by Shchekinoazot increased to 759,600 tons against 496,400 tons in the same period in 2021, with exports rising from 354,500 tons to 568,000 tons.

Since the beginning of 2022, new cargo transportation routes have been developed and implemented, and the turnover rate of the methanol tank fleet has been maximized.  New railcar cisterns used for rail transport, each with a capacity of 73 tons, have become more important due to the railways becoming the dominant form of export logistics.   Thus, the railway fleet of Shchekinoazot for the first half of 2022 was increased by 504 cars; by the end of the year it is planned to purchase a further 150 cars. This is to meet the increase in the volume of shipments and covering the turnaround of railcars in transit which can at some points amount up to 80 railcars per day.

The modernised Kaznacheevka station in the Tula region was opened in December 2021, after a large-scale reconstruction which took place largely in order to help Shchekinoazot cope with the introduction of new plants.  This includes the new 500,000 tpa methanol plant opened in October last year, in addition to other units including nitric acid with a capacity of 270,000 tpa and ammonium nitrate with a capacity of 340,000 tpa.  Other projects which are still under construction for Shchekinoazot include the ammonia and urea complex with respective capacities of 525,000 tpa and 700,000 tpa.   The pre-existing rail infrastructure would not have been able to cope with the increasing volume of traffic that is emerging from the new facilities, combined with the plants already in operation. 

Ruskhim methanol terminal

The technology licensing issue with Air Liquide remains unclear but notwithstanding RusKhim continues to develop its infrastructure and raw material base for the methanol project proposed for Indiga in the Yamal-Nenets region.  The project includes the construction of a methanol plant in the Nenets Autonomous Okrug (NAO) in West Siberia and a port terminal with access to the Northern Sea Route (NSR).  The NSR is a government backed logistical investment designed to improve Russian exports and gain advantage from the melting Artic. The methanol project and port terminal concept at Indiga has recently passed an independent environmental impact assessment.

RusKhim intends to build a gas chemical complex (the former Pechora LNG project) to process natural gas into methanol by 2026. The capacity of the plant is estimated at 1.8 million tpa. The products are planned to be shipped along the NSR to Europe and Asia through the future port near the village of Indiga. Total investments in the construction of production and infrastructure amount to more than 200 billion roubles.

The plant for the production of methanol was planned to be built on the basis of Air Liquide technology.  Almost certainly the license transfer will not take place whilst the war in Ukraine continues and sanctions remain in place.  Thus, if RusKhim wants to proceed with the project it may be forced to seek an alternative technology if at all possible. 

Nakhodka methanol terminal construction

The Nakhodka-Vostochny terminal was constructed in 2004 with capability of transhipment of methanol, but since its inception the terminal has concentrated on other products based on oil or coal.  Thus some reprofiling has been required this year in order to allow Gazprom Methanol at Tomsk to send methanol to the Nakhodka-Votsochny port for export to China, only starting in July.  Although the original capacity was of the terminal was for 1 million tpa of methanol, until this year hardly any product had passed through. 

Whilst it is not yet clear how much space has been allocated for methanol export, another methanol terminal at Nakhodka is required in order to provide a logistical outlet for the NZMU complex under construction which involves a capacity of 1.8 million tpa. Located around 27 km from the port of Vostochny, Nakhodka is targeted for the construction of the marine terminal for transhipment of methanol and fertilisers.  The overall plan includes receiving vessels for loading products that will come from the plant through pipelines.   The area of the terminal's water area is designed to cover a total 38,300 square metres, enabling a methanol loading capacity of up to 1,250 tons per hour.

Vysotsk methanol terminal

In early July 2022, Lukoil held public hearings on the plans to construct a terminal for transhipment of methanol at the port of Vysotsk, which is near the former Finnish town of Vyborg in the Leningrad region. The first stage of the terminal is intended for operational activity n 2024.  At the moment, there is already a Lukoil oil terminal in Vysotsk, where 12 million tpa of petroleum products are transhipped.   The new facilities will include capacities to ship up to 160,000 tpa of acrylonitrile and methanol with a capacity of 1 million tpa. 

The acrylonitrile plant at Saratov is already in operation whilst the methanol project is under construction.   Shipment of methanol to ships will be carried out using two standers equipped with a system for constant monitoring of its position and an emergency disconnection system. It automatically disconnects the stander from the vessel in the event of unacceptable drift along or perpendicular to the berth.  As with all Russian methanol projects, licensing production technology represents the major stumbling block to meeting completion dates.  If Lukoil is not able to build its own methanol plant Vysotsk could potentially act as conduit for other Russian methanol producers which may now be excluded from exporting through the Finnish ports.

Russian butanol production Jan-Jun 2022

Russian normal butanol production rose from 57,700 tons in the first six months in 2021 to 67,600 tons in the same period in 2022.  Gazprom neftekhim Salavat was the largest Russian producer, reducing production from 27,700 tons to 27,200 tons in January to June 2021. 

Isobutanol production in Russia increased from 34,700 tons in the first six months last year to 55,600 tons in 2022.  SIBUR-Khimprom increased production in the first six months from 11,300 tons in 2021 to 27,800 tons. 

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.  Even this absence of producer for market failed to allow butanol prices to rise. 

Demand for butanols in Russia is low and prices are under downward pressure.  Consumption of paints in Russia remains weak following the exodus of foreign producers.  Norwegian paint manufacturer Jotun announced the sale of business to the Russian Atomstroykompleks in July and subsequent withdrawal from the Russian market.

Russian plasticizer market Jan-Jun 2022

Plasticizer imports into Russia revived in the second quarter after a quiet first quarter.  The main feature of the market in the second quarter was the change in supply sources from Central and West European sellers to sources from Turkey, South Korea and China.   Demand for plasticizers in the domestic market is softening and prices are expected to fall in the third quarter.  

Russian phthalic anhydride Jan-Jun 2022

The Russian phthalic anhydride market is faced with the problem of rising feedstock costs and weak demand.  In the first half of 2022 Russian production of phthalic anhydride dropped to 42,000 tons from 54,400 tons in the same period in 2021.  Kamteks-Khimprom at Perm reduced production from 47,900 tons in January to June 2021 to 42,000 tons in the same period in 2022. 

Kamteks-Khimprom suspended work at its phthalic anhydride plant in June and remains idle.   The suspension was largely caused by logistics which itself have been due to sanctions.  Previously existing export chains have become too difficult to service.  October is now the earliest month when Kamteks-Khimprom can resume production, and this is dependent on logistics.

Russian ethylene oxide plants

Nizhnekamskneftekhim launched the production of ethylene oxide in August after an extended stoppage for an overhaul.  Work on the replacement and inspection of column, pumping, capacitive equipment, as well as heat exchangers and pipelines was carried out in July.  The production of ethylene oxide at Nizhnekamskneftekhim was launched firstly in 1980.

SIBUR-Neftekhim has agreements to supply ethylene oxide to neighbouring plants in the Dzerzhinsk area including 150,000 tons to the Sintanol Plant over a period of five years and for Tosol-Sintez 165,000 tons.   Over a ten-year period around 600,000 tons will be supplied to the Sintez-Oka plant at Dzerzhinsk. 

The capacity of the ethylene oxide plant will be increased by 18.6% to 355,670 tpa, and for commercial ethylene oxide by 29% to 168,000 tpa.  Currently the production capacity of SIBUR-Neftekhim is 130,000 tpa of ethylene oxide, 320,500 tpa of glycols, and 35,500 tpa of acrylic acid.  Prior to the war in Ukraine SIBUR-Neftekhim exported ethylene oxide to Europe, including Romania and Poland where EU sanctions now prevent shipments.

Russian acetone market Jan-Jun 2022

Russian acetone production amounted to 79,800 tons in the first six months in 2022 against 80,000 tons in the same period in 2021.  Omsk Kaucuk produced 17,400 tons of acetone against 9,800 tons whilst Kazanorgsintez increased production from 27,000 tons to 27,200 tons.  Acetone was not produced at the Novokuibyshevsk Petrochemical Combine in July due to scheduled repairs, starting on 15 July and lasting to 1 August.

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.   

Russian ethyl acetate imports, Jan-Apr 2022

Ethyl acetate imports into Russia dropped by 78% in the first six months in 2022, dropping from 4,503.4 tons in January to June 2021 to 1,045.8 tons.  From January to June 2022, Ineos supplied 334 tons against 925 tons in the same period last year.  The major distributor in the domestic market Ruskhimset did not purchase from Ineos so far this year.  Imports increased in the second quarter from Turkey and Uzbekistan in order to compensate for the loss of Western suppliers. 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.  

Uzbek polyethylene exports Jan-Jun 2022

In the first half of 2022, Uzbekistan exported 131,700 tons of polyethylene for $137.5 million, which is 34,800 tons less than in the same period of 2021.  Domestic demand has been increasing in Uzbekistan, rising by around 19% in the first half of 2022.  Regarding export destinations Turkey accounted for 52,000 tons in the first six months for Uzbek polyethylene, followed by Latvia (28,000 tons), China (21,000 tons), Russia (12,500 tons), and Kazakhstan (8,000 tons).   

HDPE production in Uzbekistan is carried out by the Uz-Kor Gas Chemical and the Shurtan Gas Chemical Complex.  Uz-Kor Gas Chemical was put into operation in 2016 and has production capacities for the production of ethylene 400,000 tpa, HDPE 387,000 tpa, propylene and polypropylene 83,000 tpa.  The Shurtan gas chemical complex, commissioned in 2011, has a production capacity of 125,000 tpa. 

Kazakh MTO location changed

The launch of the Kazakh MTO project with a capacity of 300,000 tpa of methanol and 600,000 tpa of ethylene and propylene was originally scheduled for 2023.  Due to complications with investors At present adjustments and changes are being made to the configuration of the plant which may delay the start of construction.  Design is expected to start this year whilst preliminary work on a feasibility study has already been completed. The methanol and olefins plant has been set a target of 2027 to become operational.   

The construction of a plant for the production of methanol and olefins was transferred from the territory of the SEZ Seaport Aktau in the Mangistau region to the territory of the SEZ NINT in Atyrau.  The new region was chosen primarily due to the availability of volumes and the composition of gas.

SOCAR Methanol Jan-Jun 2022

SOCAR Methanol produced 271,200 tons of methanol in the first half of 2022, which is 2.8 times higher than in the same period last year.  Methanol exports from Azerbaijan totalled 232,579 tons in the first six months for a total value of $70.678 million.  The share of methanol in the total volume of exports from Azerbaijan amounted to 4.85% of non-oil product exports.

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