CIS Chemical and
5 January 2012 Contact: firstname.lastname@example.org Web www.cirec.net Issue No 13
Russian gas feedstock & petrochemical projects
Russ SIBUR’s integrated Yamal gas processing network ian Chemical Production (unit-kilo tons)
P SIBUR completed and commissioned a key loading rack at roduct Jan-Nov 11 Jan-Nov 10 Noyabrsk in the Yamal region in November for transporting
Acetic Acid 126.6 145.0 natural gas liquids and completing the chain between the
Ammonia 12,347.5 11,700.0 gas processing plants. This has helped create a fully
Benzene 1,017.7 977.4
integrated network in the Yamal region linking four gas
Butanols 185.7 227.4 processing plants, allowing the transportation of products
C Black 666.3 605.8 from associated gas which ultimately end up at Tobolsk.
Caustic Soda 913.4 959.5 The terminal capacity at Noyabrsk when fully operational
E will reach 1.5 million tpa of NGLs. The next step in thylene 2,254.9 2,164.0
Me SIBUR’s programme for Yamal includes concluding the thanol 2,709.3 2,649.5
PET construction of the Vyngapur gas processing plant, 360.0 274.8
increasing capacity to 2.4 billion cubic metres per annum
Phenol 206.9 215.2 of associated gas. Completion of construction and
Phthalic Anhydride 86.9 94.2 commissioning of the Vyngapur GPP is scheduled in
Polyethylene 1,412.1 1,421.4 summer 2012. The significance of the programme in
Polypropylene 627.2 582.6 Yamal is that it will allow SIBUR to increase the security of
Polystyrene 284.8 257.3 supply of raw materials produced in the region, whilst also
Propylene 1,112.9 1,105.3 supplying more feedstocks to other petrochemical plants.
PVC 518.1 499.9
PVC plasticizers 18.3 84.2 The first phase of SIBUR’s programme was undertaken in
Soda 2009, including the reconstruction of Vyngapur Gas Ash 2,584.1 2,464.3
S Processing Plant which had previously operated as a tyrene 442.9 438.6
S compressor station. Another feature comprised the ynthetic Fibres 0.0 96.6
construction of a product pipeline length of about 90 km,
Synthetic Rubber 1,170.5 1,096.2
connecting the Vyngapur GPP with the Urengoy-Surgut
Urea 5,266.5 5,181.4 condensate pipeline. In 2010, the modernisation of the
Gubkinsky Gas Processing Plant (GPP) was completed which allowed SIBUR to achieve 99% levels in
associated gas processing for the first time. In 2011 a new pipeline was opened of 127 km linking the Gubkinsky
GPP the Muravlenkovo GPZ 127 km, in addition to finishing the loading rack at Noyabrsk.
SIBUR considering further pipeline investment to provide feedstock base for Tobolsk cracker plans
SIBUR is exploring the possibility of constructing a pipeline in the Yamal-Nenets region to transport natural gas
liquids from the Purovsky condensate processing plant to the Yuzhniy Balyk Gas Processing Plant (GIC). The
pipeline capacity could be designed to transport up to 4 million tpa. Novatek owns the Purovsky plant and would
supply large volumes of the liquids intended for the pipeline. After transportation to Yuzhniy Balyk, the aim would
be to transfer liquids to Tobolsk where SIBUR is considering the construction of a cracker with a capacity of 1.5
million tpa. The cracker would be connected to new polymer plants which would add to the polypropylene project
at Tobolsk currently under construction).
The construction of the pipeline from Purovsky to Yuzhniy-Balyk has been enabled through Novatek's owner
becoming the largest shareholder in SIBUR. Besides construction of new pipeline, the project involves the
expansion of the existing product pipeline from the Yuzhniy-Balyk GIC to Tobolsk-Neftekhim. The total length of
the product pipeline from Purovsky to Yuzhniy Balyk GIC, and then to Tobolsk-Neftekhim, covers more than a
thousand miles. In addition to the intended 4 million tpa of liquids from Purovsky ZPK to the Yuzhniy-Balyk GIC,
the pipeline between Yuzhniy-Balyk and Tobolsk would be capable of transporting 8 million tpa. It would mean
that Yuzhniy Balyk will represent the key conduit for transporting gas liquids from SIBUR and Novatek’s gas
CIS Chemical Industry News 5 January 2012
processing plants to Tobolsk. The earliest possible date by which the cracker at Tobolsk could be constructed is
2017, and this may well be extended, but the feedstock jigsaw is gradually coming together that would provide
the liquids to undertake such projects.
LUKoil-North Caspian and Budyennovsk projects
LUKoil laid the first stone in October for the new petrochemical complex at Budyennovsk in the Stavropol region,
a project worth in the range of $3 billion. The complex is being designed to process gas from offshore fields in
the North Caspian Sea, connected by pipeline. The complex is has been targeted by LUKoil to start production
in the 2015-2016 period and will comprise 600,000 tpa of ethylene. This is about a third lower than planned
originally, but the existing cracker will be converted from a naphtha base to gas as part of the process.
LUKoil intends to construct three gas pipelines with a
total length of 583 kilometres, to link the new gas-
chemical complex at Budyennovsk with its feedstock
source from the North Caspian. Construction of the
gas processing complex will comprise the capacity to
process of 5 billion cubic metres of gas per annum.
Initial construction started from 20 October last year
and is scheduled to start production in the period 2015-
The first phase of the gas processing facility at
Budyennovsk will require an estimated 32.3 billion
roubles. The second phase is being targeted for 2017,
and would require around 39.7 billion roubles. The third and final phase stretches up to 2020, and this will
require in the range of 71.3 billion roubles. The first phase of the project includes the construction of a gas
processing plant with a capacity of 2 million cubic metres per annum, coupled to the adaptation of the current
Stavrolen cracker to ethane (naphtha is used at present.
The second stage of the project
envisages the construction of a gas
processing plant with a capacity of 4
billion cubic metres per annum, in
addition to a year, construction of an
North Caspian Feedstock Sources
Budyennovsk ethane pyrolysis up to 225,000 tpa. -Stavrolen
Other units include 255,000 tpa of
polyethylene. By 2020 and the end
of the third phase, LUKoil aims to
increase capacity of ethylene up to
600,000 tpa and for polyethylene up
to 600,000 tpa.
An important part of the investment
process is the construction of power
facilities that will meet the demand
from the petrochemical complex and
for processors and small companies
located in the Budyennovsk Technopark. LUKoil-Stavropolenergo is planning a project to build a combined cycle
plant at Stavrolen based on dry stripped gas extracted from the North Caspian Sea. The cost of its
implementation has been estimated at 7.7 billion roubles. The project will not only ensure a reliable supply of
electricity and thermal energy to Stavrolen at present and in future based on expanded capacities. According to
the schedule, the project will be introduced before the end of the 2013.
The third phase construction of the complex planned to build plants for the production of polypropylene capacity
up to 200,000 tpa and construction of gas processing in the chemical products. The concept to create an
industrial park in Budyennovsk involves new business projects for the production of finished products from raw
materials produced by Stavrolen which will create by 2020 more than 6,000 jobs in the eastern zone of the
Stavropol region. In terms of pipelines, the first 365 kilometres will start from the point of landfall, and link up with
the Stavrolen site at Budyennovsk. The second pipeline will comprise Stavrolen-KS George, which will it stretch
18 kilometres and the third pipeline from Stavrolen to Nevinomyssk which will have a length of 200 kilometres.
Chemical Industry Trends in Eurasia 2
CIS Chemical Industry News 5 January 2012
Angarskneftehimproekt, part of Rosneft, has been selected as the chief designer of the petrochemical complex at
Nakhodka for Eastern Petrochemical Company which is owned by Rosneft. The project outline is expected to be
completed by the end of 2012. Rosneft has been attempting to overcome local opposition to its refinery and
petrochemical project in the Nakhodka region, and may have allayed some of the fears. Originally, Rosneft
planned to build a refinery in the Partizansk district of Nakhodka with a capacity of 20 million tpa to be linked to
the ESPO pipeline. However, the project was revised due to a number of factors. One of these included the
necessity of Rosneft to take into account the commercial component of the ESPO pipeline capacity in the new
Nakhodka Complex The current project envisages processing naphtha in the first stage of operations, and oil
E and gas condensate in the second stage to be extracted from Sakhalin. As part of thylene
construction, the project management needs to take such factors into account of
Propylene earthquake possibilities and to strengthen structures accordingly. If the project does not
Butadiene comply 100% with the safety standards, the authorities have warned that the permit to
Alpha Olefins operate will not be granted. Rosneft’s existing petrochemical complex Angarsk Polymer
Bu Plant in the Irkutsk region was constructed in the 1970s with a military purpose in mind tene-1
and ecological concerns largely ignored. However, the Nakhodka project is completely
Hexene-1 different in that is being constructed purely for modern day consumer products in addition
MEG to awareness of environmental issues. The majority of the derivative production planned
Polyethylene from the Nakhodka complex is intended for export.
Feedstock & Petrochemical Markets
Processing of natural gas liquids at Tobolsk-Neftekhim totalled 3.76 million tons in 2011, 8% up on 2010 and
consistent with the annual increases at the gas fractionating plant over the past decade. Ongoing project
construction of units at Tobolsk-Polymer for propylene
and propane dehydrogenation, coupled with a
polypropylene unit of 500,000 tpa, is expected to be
completed in 2013. Part of the propane produced at
Tobolsk-Neftekhim will be sent to nearby Tobolsk-
Polymer for the production of polypropylene.
The project for building a second gas fractionation plant
at Tobolsk-Neftekhim has been approved by SIBUR.
The new facility will be designed to be capable of
processing 2.8 million tpa of gas liquids, raising total
capacity to 6.6 million. The plant will be served by raw
materials being made available from oil companies
which are attempting to reach levels of 95% utilisation for associated gas. Completion of the project is scheduled
for late 2014; the expansion of gas fractionation facilities is part of SIBUR's plan to develop the gas-chemical
industry in West Siberia.
Russ Russian ethylene supply, Jan-Nov 2011 ian Ethylene Production (unit-kilo tons)
Russian ethylene production totalled 2.25 million tons in the
Producer Jan-Nov 11 Jan-Nov 10
period January-November 2011, which was 116,000 tons more
Angarsk Polymer Plant 177.4 179.0
than the same period in 2010. The largest increase was
Kazanorgsintez 345.3 342.5 recorded at Gazprom Neftekhim Salavat. Overall,
Stavrolen 317.9 289.3 Kazanorgsintez is still struggling to increase capacity rates, but
Nizhnekamskneftekhim 546.9 539.4 did receive more feedstocks in November allowing a slight hike
Renova-Orgsintez 51.4 47.8 in production. To supplement ethane the company is buying
Gazprom NS 237.1 207.2 propane-butane fractions. Stavrolen at Budyennovsk increased
S production volumes in 2011, but was then forced to suspend IBUR-Kstovo 226.5 200.6
S olefin production in mid December due to an accident at the IBUR-Khimprom 31.6 29.8
cracker. It could be several months before production restarts.
Tomskneftekhim 226.5 214.5 Stavrolen is the second largest Russian producer of HDPE, after
Ufaorgsintez 94.2 88.7 Kazanorgsintez, and the third largest producer of polypropylene
Total 2254.9 2138.7 after Nizhnekamskneftekhim and Tomskneftekhim.
Chemical Industry Trends in Eurasia 3
CIS Chemical Industry News 5 January 2012
Russian propylene domestic sales
Russian plants produced 102,600 tons of propylene in November, 4% more than in October. Omsk Kaucuk has
launched the columns for the separation of propane-propylene fractions in relation to the new polypropylene
plant, whilst Stavrolen increased production by 54% after a stoppage for maintenance in October. At the same
time SIBUR-Khimprom reduced production and was forced to purchase monomer on the market. From January
to November Russia produced 1.1 million tons of propylene which was about the same as in 2010.
For the period January-November 2011 Russia supplied 166,800 tons of propane-propylene fractions to
domestic consumers, which is 35,900 tons less than the same period in 2010. Reduced demand was due to the
launch of the propylene unit at LUKoil-NNOS at Kstovo in December 2010, which diverted some consumers of
propane-propylene fractions. The main suppliers of fractions include Slavneft-Yanos, Omsk oil refinery and TNK-
BP at Ryazan, whilst the main consumers include Samaranefteorgsintez and Moscow oil refinery for cumene and
Russian exports of propylene totalled 41,200 tons in January-November 2011, 15% higher than the same period
in 2010. During this period, Romania purchased 14,400 tons from Russia, Poland 13,300 tons, Belarus 12,000
tons, and Turkey 1.500 tons. Export availability has been helped by the start-up of the LUKoil propylene plant at
Kstovo, producing 91,200 tons of propylene in the period January-October 2011.
Stavrolen ethylene outage
The accident at Budyennovsk in mid-December was the third of its kind in the past seven years, and on each
occasion ethylene and propylene production was affected. This time the accident occurred at the facility for the
production of ethylene, which affected other parts of the Stavrolen complex. Production has been temporarily
halted and may not be fully resumed until April. Initially, it was thought that production could be resumed in a few
weeks thus impacting slightly on polymer markets and may actually helping towards reducing over-stocked
warehouses. However, the outage looks more significant now and looks likely to affect export activity in
polymers and tighten up benzene and propylene markets inside Russia.
The cause of the fire at Budyennovsk has been attributed to leaking fuel mixture, which occurred in one of the
shops for ethylene production. As a result of the incident nine people were injured. The total area of the fire
covered about a thousand metres. LUKoil is covered for damage for full replacement value by Kapital Insurance
and could cost in the range of $25 million to repair. In January 2008 n accident at Budyennovsk took place in the
reactor for polypropylene, leading to three fatalities, and another major incident took place in December 2004
leading to several workers being hospitalised,
Russian PVC market
PVC consumption in Russia rose at a much slower rate
in the second half of 2011 than in the first, a trend
which has created supply side bottlenecks as traders
attempt to reduce stocks in warehouses. In the first
four months of 2011, PVC imports into Russia doubled
against the same period in 2010, whilst domestic
production was up slightly due to stable ethylene
supply. The demand side changed started to change
in May 2011 when processors started to incur
problems with payments from consumers. This led to
a reduction in purchases which resulted in trader
In 2010 the Russian PVC market increased 35% over 2009, but growth in 2011 has proved to be much slower.
In the first three quarters of 2011 consumption rose 16% to 849,700 tons, but that includes a declining trend from
May onwards. To compensate for the lack of domestic production Imports rose 37% in the period January-
September 2011 to 441,300 tons of which 379,000 tons comprised suspension grade. Imports from the US
increased 2.2 times and totalled 186,200 tons in the first three quarters in 2011. The major suppliers from the US
included Oxy Vinyls with 68,790 tons against 10,000 tons in 2010, Shintech 52,960 tons against 24,280 tons in
2010, and Georgia Gulf with 23,180 tons against 10,200 tons.
Chemical Industry Trends in Eurasia 4
CIS Chemical Industry News 5 January 2012
Deliveries of PVC from South-East Asia to the Russian market for the first nine months of 2011 increased by 7%
over 2010 and amounted to 129,000 tons. China supplied 98,000 tons of this total against 93,600 tons in 2010.
Logistical difficulties in supplying product on time from South East Asia pushed traders towards buying more
product from the USA. The major suppliers from China and South Korea included Tianye Foreign Trade which
accounted for 45,700 tons of PVC against 48,400 tons in the same period in 2010; Xinjiang Zhongtai 38,500
against 31,000 tons in 2010) and LG Chem 13,000 tons against 21,000 tons.
Imports of PVC from West Europe dropped 2% to 99,000 tons in the period January-September 2011. The
leading supplier was Vinnolit which provided 33,400 tons against 28,800 tons in the same period in 2010. This
was followed by Ineos with 26,100 tons against 28,000 tons in 2010, whilst other suppliers included Solvin and
Vestolit. The start of production at Kalush in west Ukraine in June 2011 added to the competition for PVC sales
in the Russian market. Although well placed logistically, Karpatneftekhim at Kalush has developed its presence
slower than anticipated in the Russian market primarily due to less activity from the traders in the second half of
RusVinyl project update
The Nizhny Novgorod administration approved
benefits worth more than 5 billion roubles to the
RusVinyl project in late December, including the offset
of interest on commercial loans amounting to 274
million roubles for five years. The agreement on
granting of privileges must be approved by the
legislative assembly of Nizhny Novgorod region.
Other benefits include tax credits.
Towards the end of last year RusVinyl received the
first batch of large-scale equipment for the
construction of the PVC plant at Kstovo. Storage
tanks for VCM were transported by water, keeping in line with the project schedule. The new PVC plant
represents the most significant addition to Russian PVC capacity in the next three to four years.
Solvay is concerned over the infrastructure position for the RusVinyl project, and has had to incur additional costs
for railway connections. Russian Railways has refused to pay for the rail link to the plant under construction even
though it is to benefit from the transhipment of products for which the jv will have to pay normal transit rates. The
infrastructure needs to be expanded as the current Zeletsino station is thought to incapable of coping with the
additional flow of goods when the RusVinyl complex is completed. Russian Railways is unwilling to support the
costs directly and has referred to similar scenarios involving other companies where investments were made on
formula basis allowing repayment over a set period.
RusVinyl expects to see the emergence of a local cluster of processors after the PVC plant starts production in
2013, and could quite easily account for 45-50% of output. The cluster could conceivably comprise processors
involved in mouldings, pipes, waterproofing membranes, stretch films, etc. One large window profiler could be
capable of consuming in the range of 20-30,000 tpa of PVC, highlighting that the prospects for local consumption
are quite considerable and there may not be much availability for other parts of Russia.
Russian HDPE market
The Russian market for HDPE rose strongly in 2011
with demand met from a combination of domestic
production and imports. Consumption has been rising
quicker than domestic production resulting in a
continued inward flow of imports.
In the first nine months of 2011 Russian production of
HDPE increased by 5% versus the same period of
2010, whereas polymer consumption rose 18%. In
2010 production was helped by the introduction of a
new producer Gazprom Neftekhim Salavat but in 2011
higher volumes were down to higher utilisation at
Chemical Industry Trends in Eurasia 5
CIS Chemical Industry News 5 January 2012
Kazanorgsintez remains the leader in the domestic production of HDPE, although its share in the country’s total
output decreased to 41% in 2011 against 45% in 2010. The lack of ethane and ethylene is the main restriction
facing Kazanorgsintez, with the plant running at 67% last year. As a result, for the first nine months in 2011
Kazanorgsintez produced 10% less HDPE than during the same period of 2010.
Stavrolen, by contrast, achieved close to full utilisation in the first three quarters in 2011 before undergoing a
shutdown in October. The outage in December, which will take several months to repair, will impact the HDPE
market in Russia and prices have already started to rise. Nizhnekamskneftekhim ran at 80% from January to
September before taking a shutdown in October, but the plant alternates with LLDPE production. Gazprom
Neftekhim Salavat faced a number of outages in 2011 which restricted utilisation and production volumes.
In the first three quarters in 2011 Russian consumption of HDPE increased against 2010 by 21%, whilst
production rose only 5%. Exports declined in 2011 whilst imports increased 35%. The import share of total
consumption rose to 29% against 26% in 2010. The geographical origins of imports changed slightly in 2011,
with West Europe witnessing its share declining from 60% in 2010 to 47% whilst deliveries from Asia rose from
29% to 37%. Central and South East European sources rose from 9% to 10% whilst the Middle East (mainly
SABIC) increased its share from 2% to 5%.
In terms of application HDPE usage in pipe production rose 1.6 times in 2011, whilst blow-moulding usage
declined by 19%. Although the design capacity of Russian companies is sufficient to meet the full demand of
domestic consumers, in practice this is much harder to achieve due to planned and unplanned outages and the
lack of production of certain grades. Thus, imported HDPE is not expected to disappear from the domestic
market in the near term whilst processors require special grades which do not have Russian equivalents.
The impact of the Stavrolen outage could become
more noticeable if demand is strong in the early spring
and could result in more imports flowing into the
country. The Russian plastics converter Polyplastic
Group is reviewing its strategy and has identified a pool
of resources and suppliers that are able to compensate
for the supply of raw materials from Stavrolen. The
capacity of the HDPE plant at Budyennovsk is 300,000
tpa, and polypropylene 120,000 tpa. In January-
November 2011 Stavrolen produced 268,000 tons of
HDPE and 116,000 tons of polypropylene.
Novy Urengoy LDPE project
In the latter part of 2011 Novy Urengoy Gas Chemical Complex started talks to raise a five year club loan for
$270 million in order to complete the final stages of the ethylene-polyethylene plant. The deal involves the Bank
of America, Merrill Lynch, WestLB and HSBC. Funds have been sought to finance the remaining part of the
capital expenditure under the guarantee of Gazprom. The decision to build the gas-chemical complex was
adopted back in 1993, but has been disrupted on numerous occasions due to lack of funding.
Kuznetsk Steel continues to supply steel structures for Novy Urengoy Gas Chemical Complex and construction is
now well advanced. In part this is due to the loan obtained in September 2009 from the Russian bank VTB worth
$400 million. This was followed by two loans worth about $750 million from JP Morgan and Deutsche Bank. The
Novy Urengoy plant is expected to start production in
2013 with a capacity of 400,000 tpa of LDPE. The
second and larger stage of the complex is under
review, which could see polyethylene capacity rise to
1.2 million tpa.
SIBUR-Khimprom, 2nd EPS unit
Having been successful in its first EPS project SIBUR-
Khimprom now aims to launch a second line for the
production of expandable polystyrene in the second
quarter in 2012. The capacity of the new plant is
50,000 tpa, adding to the first unit of 50,000 tpa
introduced in 2011. The new plant gradually increased
production throughout 2011, producing 19,620 tons in the period January-October.
Chemical Industry Trends in Eurasia 6
CIS Chemical Industry News 5 January 2012
Despite the significant increase in the production of domestic polymer, the import share in total Russian
consumption of EPS remains at around 65%. The addition of the second line will, however, displace a significant
share of imports from the market of which the largest source is provided from South Korea. In the first ten
months of 2011 consumption of polystyrene in Russia amounted to 355,200 tons, an increase of 16% compared
to the same period in 2010. With the seasonal declines felt in November and December overall consumption
was 10% up on 2010.
Aromatics & derivatives
Russian toluene market 2011
Russian toluene shipments totalled 90,600 tons in
January-November 2011, 12% more than in the same
period in 2010. Production totalled 265,000 tons which
was 12% up on January-November 2010. Volumes of
consumption of toluene in Russia in 2011 increased
significantly due to demand from the fuel sector. From
June to October there was a significant shortage of
toluene, mainly due to the fuel crisis in Russia which led
to increased use of high-octane additives and demand
for toluene. The consumption of toluene in the fuel
sector increased by 43% in the period January-
November 2011 against the same period in 2010..
Extra demand for fuels has impacted on supply elsewhere causing a deficit, and prices rose sharply last year.
Toluene is produced in Russia at refineries and coking plants including Kirishinefteorgsintez, Ufaorgsintez, the
Omsk oil refinery, Gazprom Neftekhim Salavat, LUKoil-Permnefteorgsintez Chelyabinsk MC, Severstal, etc. All
of toluene produced in Russia is consumed in the country.
The main consumer of toluene in Russia is industrial explosive manufacturer Promsintez at Chapayevsk. The
second largest consumer of toluene is Nizhnekamskneftekhim using this product as a solvent for rubber, followed
by another manufacturer of explosives FSE Zavod Sverdlov and Zagorsk Paint Plant.
Russian benzene market, Jan-Nov 2011
The restart of the West Siberian Metallurgical Plant has
helped increase benzene availability on the domestic
market. In November, Russian producers shipped
63,000 tons to the domestic market which is 5,600 tons
more than in October. In addition, Koks at Kemerovo
increased shipments of the product by 4.7 times to
2,800 tons due to the repairs having been finished on
the benzene separation unit. Moreover, petrochemical
producers Stavrolen and Nizhnekamskneftekhim
restarted after October outages. Shipments from the
Omsk oil refinery dropped slightly offsetting the
additional production from other sources.
In the period January-November 2011 domestic merchant sales of benzene totalled 669,300 tons which was 3%
less than in 2010. The largest buyers included Kuibyshevazot (18% of gross consumption), Azot Kemerovo
(17%), Omsk Kaucuk (9%), Shchekinoazot (9%) and Samaraorgsintez (9%). In November, Kuibyshevazot
reduced purchases of benzene by 11%, to 12,160 tons of which 2,390 tons were imported from Ukraine and
Kazakhstan. The main suppliers of benzene to Kuibyshevazot were Stavrolen (4,510 tons), Yasinovsky Coke in
Ukraine (2,200 tons), Omsk oil refinery (2,170 tons) and Slavneft-Yanos (1,330 tons).
The unplanned shutdown of the Stavrolen cracker from mid December onwards is expected to tighten benzene
supply in January, February and March and maybe even later until the plant restarts production. After the
accident the last batch of benzene from Stavrolen was shipped by rail to Kuibyshevazot and SIBUR-Khimprom.
Given that the average monthly volume of shipments of benzene from Stavrolen on the Russian market amounts
to 6,500-8,000 tons the non-activity of the plant bears a direct influence on the market in terms of availability and
prices. The spot market showed signs at the end of December that prices were starting to climb upwards and
this trend is expected to continue in January.
Chemical Industry Trends in Eurasia 7
CIS Chemical Industry News 5 January 2012
Russian PET raw materials
From 1 January 2012, PTA imports into Russia will
operate at 0% as of the decision taken by the Customs
Union Commission on 18.10.2011. This duty will
remain in place for one year, but could be extended
depending on market conditions. In 2011, Russian
PET imports recorded gradual declines whilst at the
same time PTA imports rose. These trends were due
almost exclusively to the start-up of the Alko-Naphtha
PET plant at Kaliningrad.
In the MEG sector Russia’s orientation towards export
activity has altered significantly in the past two years.
Russ Previously large volumes of MEG were exported from ian PET market-possible limits on usage in beer
The Russia to Belarus, but now only constitute a small Russian Federal Antimonopoly Service (FAS) issued a
negative response in December to the government’s draft share of sales which are focused primarily on the
technical regulations which prohibit the sale of alcohol in domestic PET market. Aside PET production in Russia
PET containers. SIBUR has argued that to include increasing, some MEG producers such as
restrictions on PET for beer packaging would limit Kazanorgsintez and Petrokam have stopped
competition in the packaging sector. SIBUR also fears that operations due to ethylene shortages. In the case of
Russian consumers will be misled about the consumer Kazanorgsintez, all ethylene is targeted on
properties of PET packaging which might affect applications polyethylene production, whilst Petrokam at
in other areas such as milk, soft drinks, etc. The FAS has
w Nizhnekamsk is unable to secure ethylene from ritten to the government opposing the new law, and also
suppor Nizhnekamskneftekhim. ts SIBUR stating that to ban PET from beer would
give those packaging companies using glass and aluminium
a distinct advantage. Ethan- Kabardino-Balkaria
The proposed project for a PET plant in the North
Efforts are being made within the Customs Union including Caucasus being constructed by Ethan Polymers Plant
Russia, Belarus and Kazakhstan to impose these measures has received a major boost through financial support
against PET and the FAS does not have the authority to
from the local administration of Kabardino-Balkaria.
block the adoption of technical regulations. Currently beer
m The government of Kabardino-Balkaria has revised anufacturers in Russia sell nearly half of total output
upwards government guarantees of $1.8 billion to
through PET packaging, whilst beer accounts for around
30% Ethan for the construction of a PET plant in three of preform usage. Senezh estimates that the beer
market stages, with a final capacity of 486 000 tpa. is worth around $1.5 billion per annum to PET
producers. Both Belarus and Kazakhstan are looking into
the possibility of replacing PET with other forms of According government estimates the total cost of the
packaging. plant is 12.3 billion roubles, including VAT. Ethan will
invest 2.7 billion roubles of its own funds, with 8.1 billion
The argument against PET packaging for beer seems to be roubles being made available from loan funds. The
borne out partly due to environmental reasons and partly to project schedule covers the period 2011-2015, with the
social reasons in that the government believes it could
first phase of 162,000 tpa to start up in 2013. This will
restrict consumption of alcohol amongst the younger
e be followed by a second phase in 2014 with a capacity lements of the population. PET recycling is in its infant
s of 288,000 tpa and then lastly in 2015 a rise in capacity tages in Russia, and will almost certainly grow in time and
thus the env to 486,000 tpa. The plant will produce PET for the food ironmental argument is not very strong. The
notion that banning PET packaging will restrict beer and textile industries. Swiss company Buhler has
consumption seems to lack conviction as Russia possessed agreed to supply the equipment and technology.
problems in this sphere long before PET was used.
Ethan’s plant may face raw material difficulties when
The beer manufacturers are strongly opposed to this ban on the plant starts operations. At full capacity by 2015-
PET, partly as a switch in packaging could increase 2016, as planned, the plant would require around
packaging costs by 30-50% over current levels. Studies 400,000 tpa of PTA and 160,000 tpa of MEG. This
conducted by the chemical faculty of the Moscow State
Un logistically could provide challenges. It may be difficult iversity found no evidence of harm or danger to human
hea to source raw materials domestically. The main lth through using PET bottles. Not only is it an issue of
preference for non-p producer is SIBUR which already has interests in PET lastic packaging, but by banning PET
for beer would represent a serious one-off reduction in PET and may prefer to avoid supplying competitors
consumption in Russia. At a time when Russia is trying to irrespective of the huge distances involved. However,
develop its petrochemical industry by creating full product Ethan may decide to concentrate on fibres and film
chains, by imposing such a ban would affect PET and beer from PET rather than bottles which would limit the
producers alike whilst even leading to increased imports in degree of competition with existing producers.
alternative sources of packaging.
Chemical Industry Trends in Eurasia 8
CIS Chemical Industry News 5 January 2012
Theoretically, it could be possible to source raw materials from imports, but the most likely port of use would be
Novorossiysk on the Black Sea which is around 620 km from the proposed project site near Nalchik (capital of
On the other hand, imported MEG is now appears to be cheaper than domestic product which may make this
distance with Novorossiysk less of a problem. Overall though the project does seem dubious in terms of the
location and the dependency on long haul raw materials without direct access to ports.
Voronezhsintezkaucuk-new thermoplastic elastomer plant
Voronezhsintezkaucuk has established a target date for the first quarter of 2013 to launch its new
production unit for styrene-butadiene thermoplastic elastomer, a project worth in the range 4.7 billion
roubles. The project construction is expected to be completed by the end of 2012 adding 50,000 tpa to the
existing capacity of 35,000 tpa. Construction of the new thermoplastic elastomer unit began in the summer
of 2011. Aside the big drop in 2009, production has been relatively stable in recent years at Voronezh, with
the product categories illustrated in the graphic opposite. Other projects being undertaken by
Voronezhsintezkaucuk this year include the completion of the construction of an air separation plant. The
plant technology is being supplied by Air Products for the production of industrial gases.
Voronezhsintezkaucuk exported large volumes of
output to other CIS countries in 2011, producing in
the range of 223,000 tons for the whole year. An
estimated amount of 52% of production was sold
domestically whilst the rest was exported to West
and East Europe, CIS, and partly Asia. Most of the
production was focused on butadiene-based rubber
whilst the production of thermoplastic elastomers
amounted to 29,000 tons and latex 4,000 tons. The
main consumers of Voronezhsintezkaucuk include
the tyre industry (70% of rubber and latex 17%).
Other important sectors include rubber industry (20%
made of rubber), cable plants (10% of rubber
produced) and materials industry (92% of thermoplastic elastomers and 18% of latex). Road-building
organizations only accounted for 4% of thermoplastic elastomers produced but this is viewed as an area of
The company is considering the establishment of a Technopark in which three areas will be developed.
These could include scientific and technical activities, the supply of low-tonnage chemicals and the
provision of specialised services. SIBUR is considering the possibility of entering the Technopark in some
format as a consumer of products.
Togliattikaucuk is looking into various options of how
to expand business interests, including plans for a
chemical park based around the experiences of West
European chemical producers. By creating such a
park could provide customers next to the plant with a
number of possible synergies. Togliattikaucuk has
recognised that its needs to improve the infrastructure
of inward and outward shipments. Moreover, there
are certain types of transport opportunity such as river
transport of which the company has not made use
In terms of production, SIBUR Holding completed an optimisation control system last year at Togliattikaucuk.
Restructuring has also taken place inside Togliattikaucuk in order to improve the efficiency and to incorporate the
maintenance division Kaucukremstroy. In 2008, Togliattikaucuk closed two workshops for the production of
isoprene rubber SKI-3, using isoprene monomer supplied by Novokuibyshevsk Petrochemical Company.
Chemical Industry Trends in Eurasia 9
CIS Chemical Industry News 5 January 2012
The monomer plant at Novokuibyshevsk has closed which has seen production volumes of SKI at Togliatti
decline. The scheme of distribution of this rubber was unprofitable and significant losses were incurred.
The production of isoprene rubber was transferred to another department, which now shows good economic
results despite smaller volumes. At the same time, Togliattikaucuk has been able to create additional space
from moving the rubber plants to allow the possibility of establishing new production units.
Omsk Kaucuk, new styrene-butadiene grades
Omsk Kaucuk produced about 2,000 tons of styrene butadiene rubber grades SKMS-30-15 ARKM in
November under a new production process, designed for applications in oil-filled types of rubbers. This new
type of rubber has required the purchase of stearic acid and potassium alkali; the process was started in
September and October when Omsk Kaucuk underwent a shutdown. Aside new rubber production Omsk
Kaucuk aims to expand its capacities for other products and improving energy consumption in production.
In addition to synthetic rubber, Omsk Kaucuk has developed a process for producing isopropanol from
Russian tyre industry news
From January to November 2011 the volume of
imports of car tyres into Russia increased 53% against
the same period last year and amounted to 15.15
million units. The main suppliers of tyres for this
period included Japan (21% of total imports), South
Korea (15%), Finland (12%), Germany (9%), China
(8%) and Poland (7%).
SIBUR-Russian Tyres has been granted authority to
purchase Matador-Omskshina. The Omsk based tyre
plant was established in 1995 between the Slovak
company and Omskshina. Currently, SIBUR-Russian
Tyres owns 50% in Matador-Omskshina and wants to increase its stake closer to 100%.
Continental has started the construction of a tyre factory at Kaluga. The location was selected as it is not too
close or too far away from the main markets. Investment in plant construction in Kaluga is expected to amount to
around €240 million. Launching the first stage of the plant is scheduled for October 2013, and the design
capacity is expected to be 4 million tyres per annum.
Methanol & related chemicals
Russian methanol consumption rises in 2011
Supply of methanol to the domestic Russian market increased 21% in October over September and amounted to
about 113,000 tons. According to market players, increasing shipments of methanol in the domestic market in
October were due partly to the heating season and demand from gas companies. The largest domestic
suppliers of methanol to the domestic Russian market remain Metafrax, Sibmetahim and Togliattiazot which
accounted for 85% of total shipments in October. In the first ten months of 2011 shipments of methanol on the
domestic Russian market totalled 961,000 tons, 8% up on the same period last year.
Following the announcement of plans for an IPO
Metafrax has begun preparations for the restructuring
of the company’s assets in order to create one
operating company. This may also help to increase the
profitability of production, which will increase the
attractiveness of holding on the eve of an IPO in 2013.
This date conceivably could be pushed back
depending on the financial climate. The Metafrax
group of companies Metafrax brings together four
chemical companies including Metafrax, Karbolit
(Orekhovo-Zuyevo in the Moscow region), and the
Russian-Finnish jv MetaDynea and Karbodin. It also
includes several construction and transport companies.
Chemical Industry Trends in Eurasia 10
CIS Chemical Industry News 5 January 2012
Methanol production in January-November 2011 amounted to 879,000 tons, which was 5% lower in than the
same period in 2010 due to the stoppage in August. Despite the reduction Metafrax increased its net profit by
40% over the same period in 2010 to 1.2 billion roubles. Revenues rose to 8 billion roubles which was 16% up
on the previous year. Metafrax plans to initiate several major investment projects in 2012, and is considering the
possibility of attracting a strategic investor for a project to build a new production unit for ammonia and urea. By
attracting a strategic investor the aim is to reduce the financial burden on Metafrax. Russian banks Sberbank
and VTB have indicated interest in the project which could comprise a capacity of 600,000 tpa of urea and could
take five years to construct.
Shchekinoazot-new methanol increasing utilisation
Shchekinoazot is gradually increasing production volumes at its new 450,000 tpa methanol plant. Production in
October almost doubled against September, rising from 14,000 tons to 25,000 tons. Aside captive usage,
Shchekinoazot shipped 4,600 tons of methanol to the
domestic market which was seven times higher than in
September. In November, Shchekinoazot increased
production two-fold through operation of both new and
old plants, although it is not clear whether the company
intends to retain the latter.
Shchekinoazot has started the project of revamping the
formaldehyde and hexamine units. After completion of
the first stage modernisation, the company will begin
production of concentrated formaldehyde with low
methanol content to meet the needs of phenol resins in
the jv with Hexion. The upgrade is being carried out in
partnership with Industry & Project Engineering from Slovakia. Completion of construction and start-up is
scheduled for late 2012.
Togliattiazot-attacks on onwership
Minority shareholders are trying to increase their stake in Togliattiazot, and not only from one source. Dublin
based Eurotaz Limited is, owned by Uralkhim, is trying to secure control of Togliattiazot whilst IBE Trade Corp
has also shown interest. The minorities aim to get access to participation in the management of the company.
Uralkhim has applied to the investigative committee to institute criminal proceedings against the Director General
of Togliattiazot. According to the statement, the manager has not provided Uralkhim documents for the
extraordinary shareholders' meeting which took place at Togliattiazot on 13 September. Uralkhim believes that
the cause of failure may be an attempt to hide information about Togliattiazot.
Togliattiazot has entered into several agreements with the Swiss company Nitrochem Distribution AG for the
supply of urea at a price below market. This it is claimed causes material damage to Togliattiazot in addition to
affecting the amount of dividends to minority shareholders. In October 2010, Togliattiazot delivered urea to
Nitrochem at $200 per ton, while Uralchem delivered area for export at $270-355 per ton. According to Uralkhim
the damage to Togliattiazot is calculated at 19 million roubles, and reduced shareholder dividends by 1.5 million
roubles. Uralkhim owns 9.73% of shares in Togliattiazot. On the basis of 2010 data, Togliattiazot exported
67.8% of sales which amounted to 13.380 billion roubles from the total sales revenues of 19.735 billion roubles.
Revenues rose 39% in 2010 over 2009.
Vnesheconombank (VEB) has agreed to attract a loan worth around $1 billion for a period of 14.5 years with a
number of foreign banks to finance the Ammonium project at Mendeleevsk. The Ammonium project includes a
urea plant with a capacity of 717,500 tpa, in addition to ammonia and methanol and is forecast to start production
by 2015. Foreign financial institutions will serve as a source of long-term funds to finance the complex. Terms of
the credit agreement include the provision of financing from JBIC to VEB and the club of foreign banks led by
Sumitomo Mitsui Banking Corporation and the Bank of Tokyo-Mitsubishi. These banks are providing finance
under the cover of export insurance agency Nippon Export.
Uralmetanolgrup-construction to start in 2012
UralMetanolGroup plans to begin construction of the gas chemical complex at Nizhny Tagil in the second quarter
of 2012. The project to build a methanol plant, worth around €300 million, will be undertaken over a three year
period and is expected to start in 2015 rather than the earlier start-up target of 2013. The project documentation
for the methanol plant is being developed by Haldor Topsoe.
Chemical Industry Trends in Eurasia 11
CIS Chemical Industry News 5 January 2012
UralMetanolGroup was created on a parity basis by Itera and UCP Chemicals AG (the main shareholder of
Uralkhimplast). The project investors include the Czech Export Bank, which has already signed with a contract
for almost €200 million for the construction of gas chemical complex. The methanol plant's capacity is being
designed at 600,000 tpa and is being constructed on the Uralkhimplast site. Itera will supply the plant with
natural gas of around 600 million cubic metres per annum.
SIBUR sells SIBUR-Mineral Fertilisers
Siberian Business Union has acquired 100% shares in SIBUR-Mineral Fertilisers, which includes Azot at
Kemerovo and Angarsk Nitrogen Fertiliser Plant. SIBUR stated that Perm Mineral Fertilisers has not been
included in the deal. The transaction is subject to approval at the next board meeting of SIBUR Holding. Azot at
Kemerovo provides about 80% of the supply of ammonium nitrate to agricultural and industrial consumers in
Siberia and the Far East. Selling the assets is part of SIBUR’s restructuring programme and concentration on
main core petrochemicals. Siberian Business Union is Russia’s third-largest producer of coal for power stations.
Uralchem, Russia’s second-largest producer of nitrogen fertilisers is in talks with SIBUR to buy 51% of Perm
Mineral Fertiliser from SIBUR to help double urea production. Uralchem values the Perm unit in the range of
Organic chemicals & plastics
Russian DOP Market (unit-kilo tons) Russian plasticizer market
Jan The structure of the Russian plasticizer market -Sep 11 Jan-Sep 10 Jan-Dec 10 Jan-Dec 09
P has undergone changes in the last two years roduction 47.3 56.3 78.7 72.2
due largely to higher quality requirements and
Exports 0.3 1.4 1.5 5.8
the substitution of DOP with DINP and DIDF.
Imports 7.6 9.6 14.7 0.0 DOP remains the dominant plasticizer in
Market Balance 54.6 64.5 91.9 66.4 Russia mainly due to a good position on 2-EH.
O For other plasticizers, however, there is a shortage of raw rganic chemicals
D materials and it is easier to import DINP and other ue to disruptions in supply of raw materials, Russian
e products. In the first nine months of 2011 DOP sales in thyl acetate producer Asha stopped production in
Decembe Russia decreased by 16% against 2010 and amounted to r and aims to restart in after mid-January
2012. The p 47,300 tons. Only Roshalsky Plant of Plasticizers lant, located in Bashkortostan, exports part
of its ethyl acetate production to Finland. Domestic increased production and was 18% higher than in 2010,
prices in Russia for ethyl acetate have risen due to the but these figures were amplified by outages.
shortages in the Russian market.
In the first three quarters in January-September 2011
From January to November 2011 butanol production in Russia imported 7,500 tons of plasticizers, 21% lower than
Russia totalled 258,000 tons, which is 1% less than the
the same period last year. Deliveries of Russian DOP to
same period in 2010. The share of n-butanol in gross
foreign markets also fell five times and totalled only 279
output in the first 11 months of the year was 64%, and
tons. Whilst DOP imports have declined DINP imports
isobutanol 36%. The largest producer of butanols is
Gazp increased by 55% in the period January-September 2011 rom Neftekhim Salavat which accounted for about
51% of gross output and amounted to 32,400 tons. One main consumer in the first eleven months in 2011.
This was followed by SIBUR-Khimprom with 25%, Tarkett increased its purchase of DINP by 9,000 tons to
Angarsk Petrochemical Company with 17%, and Azot at 23,900 tons. The reduction in demand for DOP in Russia
Nevinomyssk 7%. was due to the fact that one of the largest Russian
consumers of plasticizers Tarkett stopped using DOP due
Russia exported 17,200 tons of butanols in November, to efforts to improve environmental performance in safety
48% more than in October. The share of normal products. At the same time, the company is significantly
butanols was 56% in November, whilst the largest boosting its usage of DINP.
amount of butanols were shipped to Finland (59% of
gross exports), followed by China (37%). The main
supp The main suppliers of DINP to the Russian market include lier of butanol to foreign markets in November was
Gazprom Neftekh Evonik, ExxonMobil, and BASF. The Russian market for im Salavat with 57% of gross exports.
This was followed by SIBUR-Khimprom with 26% and DINP is almost totally dependent on imports, with only a
Angarsk Petrochemical Company with 17%. Azot at small amount of production taking place at Roshalskom
Nevinomyssk did not export in November. In the period Plasticizers Plant. Overall, in the period January-
January-November 2011 Russia exported 187,700 tons September 2011 DINP and DIDF consumption increased
of butanols, 8% lower than for the same period in 2010. by 13,000 tons, whilst DOP dropped by 10,000 tons in the
The main destination was China with 51% of shipments same period. The advantage of DOP is its accessibility
followed by Finland with 42%. Gazprom Salavat
Ne and low cost which may preserve its position in the market. ftekhim accounted for 53% of total exports.
In the Russian market DOP is about 10-20% cheaper than
Chemical Industry Trends in Eurasia 12
CIS Chemical Industry News 5 January 2012
DINP shipped from Europe.
SIBUR-Neftekhim to merge with Akrilat
SIBUR plans to merge the assets of SIBUR-Neftekhim and Akrilat, the latter which was acquired by the group
last year. The decision to merge the assets, both located at Dzerzhinsk, follows the decision of the Russian
Federal Antimonopoly Service to grant SIBUR-Neftekhim the right to obtain the use of fixed assets belonging to
Akrilat. In July 2011 SIBUR announced that it had taken full control of 100% of Akrilat which is the sole Russian
producer of acrylic acid and its esters.
Akrilat possesses capacities of 25,000 tpa for acrylic acid, 36,000 tpa of heavy ethers (butyl acrylate) and 10,000
tpa of light esters (methyl and ethyl acrylate). The production site is located in the East industrial area of
Dzerzhinsk, and SIBUR provides propylene from the Kstovo complex. From July 2010, Akrilat switched to
operate on a processing scheme involving the full chain of propylene, alcohols, and acrylic acid. SIBUR-
Neftekhim aims to complete the full merger by the end of 2012. The production of acrylic acid and esters will
become the third unit of the expanded SIBUR-Neftekhim, after the chlorine-caustic division and ethylene oxide-
Inorganic & chlorine products
Russ Russian caustic soda market ian Caustic Soda Market (unit-kilo tons)
Caustic soda consumption in Russia was
Jan-Sep 11 Jan-Sep 10 Jan-Dec 10 Jan-Dec 09 almost the same in the first three quarters
Production 748.0 795.7 1050.6 1094.4 against the same period last year and
Expo amounted to 635,000 tons. Production was rts 146.0 192.1 242.8 240.4
down, however, by 57,700 tons to 748,000
Imports 33.3 33.0 49.2 15.3
tons. Exports were affected by the start-up of
Market Balance 635.3 636.6 857.0 869.3 production by Karpatneftekhim which reduced
purchases from Ukraine by roughly half to 40,450 tons. Even so 46% of total exports from Russia were bought
by Ukrainian consumers. Imports of caustic soda into Russia remained almost identical for the first nine months
of 2011 against 2010, most of which was solid and almost exclusively imported from China.
Another cartel case for caustic soda in Russia has recently been opened in which the purpose was preventing
competition and maintaining high prices for caustic soda. This follows the case in July 2011 when the Federal
Antimonopoly Service (FAS) initiated a case against a number of traders and producers of liquid caustic.
Amongst others the producers included Halopolymer Kirovo-Chipetsky, Kaustik (Volgograd), Kaustik
(Sterlitamak), Khimprom (Cheboksary) and Khimprom (Volgograd). The FAS found that the companies entered
into an agreement, and this in turn led to set prices for liquid caustic soda. The FAS has also reported to initiate
proceedings against the producers of chlorine, chlorinated paraffin, and PVC cables.
Kaustik at Sterlitamak shipped 17,450 tons of liquid caustic soda to the domestic market in October, 37% more
than in September. Major buyers included Volzhskiy Orgsintez which acquired 12% of shipments and
Nizhnekamskneftekhim 10%. In the period January-October 2011 Kaustik sold 121,560 tons of liquid caustic
soda on the Russian domestic market which was 37% more than in the same period last year.
Bashkhim seeks to combine assets at Sterlitamak and Berezniki
Bashkhim wants to combine Sterlitamak chemical companies Kaustik and Soda with Soda at Berezniki. It
has also proposed an investment programme for the planned merger of assets covering the period 2012-
2017 period. The main advantages of combining assets under Bashkhim include linking businesses,
optimising feedstock logistics, etc, and creating a single energy source based on the Sterlitamak sites.
Bashkhim aims to invest in the range of 25 billion to 35 billion roubles in the combined assets, including the
expansion of PVC capacity at Kaustik up to 350,000 tpa. This expansion would require in the range of 10
billion roubles and be completed by 2017. An even larger expansion is planned for 2019 up to 670,000 tpa,
but this seems slightly optimistic in view of unresolved ethylene issues.
Soda at Sterlitamak is scheduled to begin development of a new source of limestone, as well as build the
station office filtering distilled liquid for 0.5 billion roubles. The company plans also to increase heavy soda
ash capacity by 2014 to 1.3 million tpa. Bashkhim also intends to invest 5 billion roubles in 2017 to increase
production capacity of soda ash grade B at Berezniki to 1.2 million tpa, in addition to the construction of its
own energy source. Berezniki Soda Plant sold 349,300 tons to the domestic market from its total production in
Chemical Industry Trends in Eurasia 13
CIS Chemical Industry News 5 January 2012
January-October 2011 of 422,700 tons. The main consumers of the plant include Saratovstroisteklo and BAZ
Sual. Total production was expected to exceed 500,000 tons in 2011.
Belarussian feedstock costs
Belarussian prices in the chemical industry rose sharply last year, squeezing margins and placing pressure
Bela on producers. Caprolactam and ammonia prices increased russian Chemical Output (unit-kilo tons)
Fer two-fold, paraxylene by 49.2%, fibres by 41.4%, and tilisers Jan-Nov 11 Jan-Nov 10
P industrial gases by 39.5%. Belneftekhim increased prices for otassium Fertilisers 4945.2 4821.3
paraxylene by 95% in September 2011, the latter increase
Nitrogen Fertilisers 727.5 689.0 particularly harmful for Mogilevkhimvolokno.
Phosphate Fertilisers 172.5 173.9
Ammonia 955.7 1205.8 These higher prices follow measures in July by the
Sulphuric Acid 869.6 826.9 government to impose a 31.4% increase on import duties on
Petrochemicals Jan-Nov 11 Jan-Nov 10 naphtha and aromatic hydrocarbons. These increases are the
Ethylene 131.5 124.7 result of serious economic difficulties in the country and affect
Benzene 95.4 83.7 benzene, orthoxylene and paraxylene supplies.
Caprolactam 120.0 115.7 Mogilevkhimvolokno and Polymir expect to see costs rise in
Phtha 2012 for polyester and ethylene production respectively. lic Anhydride 18.3 16.5
Polyethylene 125.7 122.5
PET 198.6 200.7 Other Belarussian chemical markets
PET production in Belarus was down slightly in 2011 despite
aims of Mogilevkhimvolokno to exceed 2010 volumes. Raw material shortages have affected PET
production at Mogilevkhimvolokno in the past twelve months, with PTA and MEG difficulties from Russia
being the main cause. Belarus is now importing MEG from non-Russian sources.
Azot at Grodno increased exports 1.5 times in the period January-October 2011, with most of the company’s
units running at full capacity. Labour productivity increased by 1.8 times 2011. The company produced 65,600
tons of methanol in January-October 2011, 108,800 tons of caprolactam, and 16,900 tons of polyamide.
A total of 4,250 tons of phthalic anhydride was exported from Belarus to Russia in the period January-November
2011, 5% down on 2010. The main consumers included producers of paints and varnishes. From January to
November 2011 Lakokraska produced 18,300 tons of phthalic anhydride, which is the same as 2010.
Lakokraska at Lida is the largest foreign supplier of phthalic anhydride to the Russian market.
Ukrainian PVC market
The Ukrainian PVC market increased sharply in 2011
following the start-up of the new PVC plant at Kalush at
Karpatneftekhim. In the period January-October 2011
consumption of PVC in Ukraine increased by 38% over
the same period in 2010. From June to October
Karpatneftekhim produced 65,430 tons of PVC of which
there are six grades available. In order to support
Karpatneftekhim, the Ukrainian government has
decided to impose tariffs on imported PVC at a rate of
5% of customs value. The decree is designed to
support the domestic producer of PVC: as Ukrainian
production is more expensive than US imports and
Imports of PVC have declined since the start-up of the Karpatneftekhim as illustrated in the graphic above but still
remain an important part of the Ukrainian market. In the long term, Karpatneftehim will be able to capture more
of the domestic market at the expense of imported material. Imports of PVC resin from the US comprised 32% in
the period January-October 2011. Apart from the US, Poland and Germany were also important sources of
imports last year.
Chemical Industry Trends in Eurasia 14
CIS Chemical Industry News 5 January 2012
Ukrainian benzene market
The production of benzene in Ukraine amounted to 13,980 tons in November, 4,880 tons more than in
October. The increase was due to revived production after maintenance at plants belonging to Ukrtatnafta
and Karpatneftehim. The Kremenchug plant increased output by 2,220 tons to 2,720 tons. In the period
January-November 2011, Ukraine produced 131,098 tons of benzene with a purity of above 95%, nearly
21,000 tons more than during the same period in 2010. The increase in output was made possible by
Karpatneftekhim’s renewed production in September 2010.
Ukra In December, benzene availability in the Ukrainian market inian Chemical Production (unit-kilo tons)
P exceeded demand the main cause of which was the roduct Jan-Nov 11 Jan-Nov 10
reduction in supply of products to Russian consumers. In
Acetic Acid 131.9 75.4
the first half of December, Ukrainian producers did not
Ammonia 4299.5 3785.9 export benzene to Russia but this trend may be reversed in
Benzene (-95%) 165.8 190.5 January following the Stavrolen outage. It means that
Benzene (+95%) 131.098 110.7 Yasinovsky Coke and Zaporozhkoks can resume the supply
Caprolactam 55.1 18.0 of product to Russian companies, located in the Samara
Caustic Soda 144.5 65.5 region.
Ethylene 170.9 44.5
Formaldehyde 32.9 65.5 Karpatneftekhim-feedstock excise/import duties removed
Methanol 129.5 76.3 The Cabinet of Ministers of Ukraine has approved a decree
Polypropylene 85.0 73.9 which sets quotas on imports of light and heavy distillates for
Polystyrene 19.5 15.6 the production of ethylene by Karpatneftehim in 2012. This
Po means that excise and import duties have been abolished on lyvinyl Acetate 5.3 6.4
PVC petroleum products used in petrochemical production. In 2012 76.3 0
P the company will import around 225,000 tons of light distillates ropylene (merchant) 76.9 81.0
S without payment of customs taxes, and up to 170,000 tons of oda Ash 701.3 590.9
Titanium Dioxide 141.0 109.2
Toluene 5.3 4.9
Crimean Titan aims to increase capacity for TiO2
The DF Group has stated that the Crimean government has approved its plan to construct a third plant for
production of titanium dioxide. This will almost double capacity from 105,000 tpa at present up to 200,000 tpa.
By the end of March 2012 Crimean Titan is scheduled to complete the construction of a new plant for sulphuric
acid, which will have a capacity of 1 million tpa. Due to the construction of the plant and replacement of the
former unit from the Soviet era the impact on the environment will be much reduced. Prior to Dmitry Firtash
becoming the owner of Crimean Titan, the plant produced about 40,000 tpa of titanium dioxide.
Ukrainian titanium dioxide market
Ukrainian Titanium Dioxide Market (unit-kilo tons) Growth in demand both in the domestic market
Jan-Oct 11 Jan-Oct 10 Jan-Dec 10 Jan-Dec 09 and abroad has allowed the two Ukrainian
P producers of titanium dioxide in the past year. roduction 129.3 109.6 134.9 105.4
High demand in the global titanium dioxide
Exports 118.5 103.0 127.2 102.6 market and the lack of raw materials for its
Imports 6.4 5.2 6.7 5.7 production have contributed to the beginning of
Ma large-scale investments in titanium assets in rket Balance 17.2 11.7 14.4 8.5
Ukraine. Crimean Titan is expanding its
capacity to 200,000 tpa, although Sumykhimprom is only investing in maintenance and overhauls. The domestic
market remains small but rising. Exports will continue to play the important role for domestic producers of
titanium dioxide due to