Browse the complete Report on : Qatar Petrochemicals Report Q4 2010

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Qatar’s hopes of a sustained surge in petrochemicals capacities on the back of its competitive advantage in ethane feedstock have been dashed by the withdrawal of two foreign investors – ExxonMobil Chemical and Honam Petrochemical – from planned petrochemical mega-projects, putting into question the country’s petrochemicals output target of 30mn tpa by 2014, according to BMI’s latest Qatar Petrochemicals Report.
ExxonMobil is reportedly considering withdrawing from the next planned cracker project at Ras Laffan, while South Korea’s Honam Petrochemical has ended months of speculation and announced that it was indeed withdrawing from its joint venture (JV) with Qatar Petroleum (QP) due to a steep increase in costs, poor availability of project finance and the global economic crisis. The capacities envisaged by the Honam-backed complex were substantial, including 1.05mn tpa ethylene, 700,000tpa PP and 220,000tpa PS. Meanwhile, the status of a major Shell-QP cracker and derivatives complex in Ras Laffan is also unclear – five years after a letter of intent was signed, some reports suggest that start-up has been pushed forward as far as 2015, from earlier predictions of 2011-2012.
Coming onstream a year late due to the global economic crisis and a tight construction market, the Ras Laffan Olefins Company (RLOC) – made up of Q-Chem II (53.3%), Qatofin (45.7%) and QP (1%) – inaugurated a 1.3mn tpa ethylene plant in May 2010, the largest ethane cracker in the world. The Ras Laffan cracker supplies both the Q-Chem II petrochemical complex and Qatofin’s 450,000tpa LLDPE plant, both in Mesaieed, which was opened in November 2009. The cracker will also supply ethylene to HDPE and alpha-olefin plants being built by Q-Chem II that are due for completion in H210. Only 10% of RLOC’s output will be consumed on the domestic market, with around 35% of the HDPE output exported to Europe and Africa and 55% to Asia. In line with this investment, Qapco has launched an expansion project in Mesaieed Industrial City to set up its third PE production line, LDPE-3, adding 300,000tpa to Qapco’s output of LDPE, augmenting overall annual LDPE production to 700,000 tonnes by the end of 2011, reportedly a year behind the original schedule.
Qatari production will grow rapidly at a rate of 7.5% in 2010, compared with forecast global growth of 4.5%. However, the collapse of the Honam JV means that Qatar will remain without PP or PS facilities for the foreseeable future. While producers have reduced PS capacities globally due to its falling popularity, failure to proceed with production of PP means that Qatar will be unable to tap into the rapid growth in this segment. Qatar’s decision to press ahead with LDPE also appears to be misjudged, given the slow rate of growth in this segment as transformers switch to improved LLDPE and PP grades as alternatives. PVC is also absent from current expansion plans, which means the country will be unable to take full advantage of the expected recovery in the construction industry worldwide. For the time being, Qatar will export VCM and EDC to Asia.
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Browse the complete Report on: Poland Petrochemicals Report Q4 2010


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The revival of the Polish petrochemicals industry is being led by domestic consumption, with export markets of domestic plastics transformers set to remain in the doldrums, according to BMIs latest Poland Petrochemicals Report.
A return to solid growth in the construction sector, assisted by developments related to the Euro 2012 Championship, should ensure that Anwils VCM-PVC operations at Wloclawek sustain full capacity production. However, the continued lacklustre performance in consumer products and packaging could hamper polyethylene margins at Basell Orlen Polyolefins plant in Plock. While its 400,000tpa PP production facility will benefit from upward pressure on prices due to a tightening in supply  caused in part to a force majeure at the Plock PP plant in May as well as other European PP facilities  the restriction on propylene feedstock supply will continue to undermine PP margins. Added to this is the effect of the weakening of the European automotive market on domestic carmakers. With the end of scrappage schemes in most countries in Europe, sales have fallen back to lower levels, ending the short term increase created by the incentive packages and giving a bleak outlook for the market.
There are likely to be further challenges to the industry in the wake of the eurozone debt crisis, which will lead to fiscal austerity measures that should dampen consumer demand in major export markets, thereby depressing demand for moulded plastics used in consumer goods as well as engineering plastics used in the automotive industry. Nevertheless, as the only major CEE economy to avoid recession in 2009 (instead expanding by 1.7%), Poland is gearing up to post a healthy rate of growth in 2010 that should feed into an expansion of polymer resins demand.
The future of the Polish petrochemicals industry will be determined by the restructuring and divestment of local petrochemicals producer PKN Orlens assets. Burdened with debt, PKN Orlen is selling off several non-core subsidiaries as part of its strategy for the period up to 2013. As part of its restructuring plan, PKN Orlen has cut back on its annual investment plans and sought to increase its operating efficiency. However, it is pressing ahead with several major expansion schemes, including the construction of a 400,000tpa plant to produce paraxylene and purified terephthalic acid (PTA), scheduled for completion in H210.
In July 2010, reports surfaced that PKN Orlen may sell its Orlen Lietuva (formerly Maeikių Nafta) refinery in Maeikiai, Lithuania. The final decision is due to be made by Orlen’s management, in consultation with the Polish Treasury, in September, after the expiry of an ultimatum on rail infrastructure and freight charges by Poland. BMI believes it is likely Orlen will seek to sell the refinery, which would effectively end Orlens plans for expanding propylene production at the refinery. Meanwhile, PKN Orlens talks to sell Anwil to Polands Zakłady Azotowe Puławy (ZAP), the leading maker of fertilisers and a world-leader in the production of melamine, collapsed in June 2010. The parties decided to terminate discussions due to differences in views over price and non-price conditions of the proposed transaction, according to PKN Orlen which is now reported to be willing to consider selling off the Anwil business in two separate parts, based on its polymers division and the fertiliser operations. Polands score has risen by 0.1 points to 57.8 points due to a modest improvement in its country risk ratings, maintaining its second place position in our Central and Eastern European Petrochemicals Business Environment matrix. A significant improvement in its country risk profile now puts Poland just 0.3 points below regional leader Russia and 2.2 points ahead of Hungary. Meanwhile, petrochemicalsspecific scores remain unchanged, with BMI casting doubt on any major capacity additions over the medium-term. Diversification of market suppliers and increased feedstock availability could improve Polands score, although it stands little chance of exceeding Russia  which should retain its dominant position in Eastern Europe.

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Browse the complete Report on: Hungary Petrochemicals Report Q4 2010

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Fiscal austerity measures in the eurozone and the effects of the sovereign debt crisis have dashed hopes that exports will help revive the Hungarian petrochemicals industry, according to BMI’s latest Hungary Petrochemicals Report.
Retail sales data paint a particularly bleak picture on the outlook for private household consumption, suggesting a sharp slowdown in plastics end-markets. Investment activity also looks set to suffer through 2010, while construction output also continuing to fall.
Consequently, the decline in domestic demand for petrochemicals is likely to be broad-based affecting all product chains and will remain subdued well into 2011. This was confirmed by Q110 petrochemicals sales figures for petrochemicals producer MOL which showed that despite a 23% rise in HDPE output and a 5% rise in the value of total sales, its level of sales in Hungary fell 3% y-o-y. The LDPE segment was particularly weak, leading to a 9% decline in output. Consequently, the weak recovery observed in Q309 appeared be in reverse in the following two quarters and the effects of fiscal austerity packages and sovereign debt crises in Europe are likely to make matters more difficult in the months ahead.
On the upside, exports may be lifted by the weakness of the forint amid low investor confidence. This should help give the industry something of an edge against Czech and Romanian competitors in the important German market. The forint is forecast to depreciate against the euro by 7.4% in 2010 and 4.8% in 2011 helping to keep Hungarian export prices down in euros. While base effects will be a key factor mitigating the pace of the contraction in the country’s petrochemicals industry over the coming quarters, we maintain our core view that Hungary is set to enter a protracted period of low growth.
The domestic market, which absorbs around 30% of total petrochemicals output, is arguably in a worse state. Hungary's Central Statistical Office reported a 5.0% year-on-year (y-o-y) drop in retail sales in May on a calendar-adjusted basis compared with a 4.0% fall the previous month. This constitutes the 39th straight month in which retail sales have declined. The most recent data continues to support our view that household consumption will remain weak as the private sector continues to focus on deleveraging. We believe the current trend could continue through H210 with private consumption set to remain weak over the medium term. This will in turn impact badly on the Hungarian petrochemicals market. The construction industry is set to stagnate in 2010 after shrinking over 11% in 2009, thereby undermining domestic PVC and PE sales. Likewise, sales for local carmakers will be depressed well into 2010, impacting adversely on PP demand.

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Browse the complete Report on: Czech Republic Petrochemicals Report Q4 2010

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The uptick in Czech petrochemical production figures from Q409 is based largely on favourable base effects, and while there are other factors to push output higher in 2010 and into 2011, the industry remains vulnerable to a slowdown in car making brought on by decreased demand in Germany and the volatility of the Czech koruna against the euro, according to BMI’s latest Czech Republic Petrochemicals Report.
As a highly trade integrated economy, the Czech Republic is heavily exposed to fluctuations in final demand, with Germany's deep recession and concomitant collapse in industrial orders, having a substantial impact on the Czech petrochemicals industry. Key sectors determining output will be the construction, automotive, packaging and consumer goods industries. These are witnessing varying levels of demand as a result of weaknesses in the domestic and external markets for end-products. On the downside, the German consumer is going to remain very subdued. This will cast a shadow on hopes of reviving exports of Czech petrochemicals and products that utilise petrochemical products, forcing them to diversify markets.
A number of challenges across segments are likely to prevent an early return to pre-recession petrochemicals consumption rates. Growth in engineering plastics, particularly in the PP segment, will be highly influenced by growth in the car industry, with Czech carmaker Škoda Auto reporting 25% yearon- year (y-o-y) growth in sales. However, the tide could be turning for the sector with signs of a decline in sales in Q210. With the end of scrappage schemes in most countries in Europe, sales have fallen back to lower levels, ending the short term increase created by the incentive packages and giving a bleak outlook for the market. BMI is forecasting a fall of over 6% y-o-y in European car sales, to 15.5mn units this year. However, in the long term, the automotive industry will remain a key driver of demand for polymers in the Czech Republic. The packaging and consumer goods industries are likely to follow the same pattern as the automotive industry, although domestic demand is likely to fare less badly than exports. PVC is likely to come under pressure from continued weakness in construction. Following a strong start to 2010, the Czech construction industry has slumped again with quarterly figures showing a drop in industry value for the year. The industry is expected to shrink by 10% in 2010 as total capital investment falls 20%, although growth is expected from 2011.
The volatility of the koruna is also likely to add considerable uncertainty to the domestic petrochemicals producers as well as their customers in the Czech Republic, particularly in the export-oriented automotive sector. This will influence decisions by domestic petrochemicals consumers that can easily source from neighbouring Poland and Slovakia. Consequently, Czech plants will be under pressure to compete, while export markets – particularly in the Middle East – are seeing a sharp rise in domestic production capacities at a time of moderating demand growth.

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Browse the complete Report on: Azerbaijan Petrochemicals Report Q4 2010

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Azerbaijan’s petrochemical industry is expected to witness strong growth in 2010 from a very low base, according to BMI’s latest Azerbaijan Petrochemicals Report. But it is likely to be plagued by volatility and low capacity utilisation until the country’s leading producer Azerkimya undergoes restructuring and expansion.
Between January and April 2010, Azerbaijan exported 12,467 tonnes of polyethylene, up 50.5% year-onyear (y-o-y). Production was up 650% y-o-y, to 19,900 tonnes, according to the News.az website, which quoted quoting the Azerbaijan State Statistical Committee.
evertheless, it was still operating at around two-thirds capacity. Overall chemicals output grew 120% y-o-y in the first five months of 2010, with production worth AZN88.3mn (US$110mn). Meanwhile, the manufacture of rubber and products grew 15.2% y-o-y to AZN21.8mn. In 2009 Azerkimya produced chemical goods worth AZN163.1mn (US$203.11mn), down around 20% y-o-y. BMI has raised its 2010 chemicals output growth forecast from 25-30% to 30-35%, although most local demand will continue to be met by imports as the industry is unable to fulfil all domestic requirements. This will come after an estimated decline of around 35-40% in 2009, but close to the 35% growth reported in 2008.
While the company has heralded the results in 2010 as proof that restructuring is producing significant results, the level of output is still very small-scale and until production facilities are upgraded and expanded it is unlikely that Azerkimya will compete effectively against foreign rivals on both domestic and export markets. Rather, for the time being it owes its existence to state patronage and protection, while remaining plagued by major disruptions in output caused by periodic rapid rises in electricity and raw material costs. Azerkimya’s output has tended to be highly sensitive to changes in the non-oil economy with the rate of petrochemicals sales growth tending to be two or three times the rate of overall economic growth, amplifying the overall economic trends. While the strongly pro-cyclical nature of the industry is likely to result in high rates of growth with real GDP growth forecast at 11% in 2010, with low level of capacity it will not add much value and Azerbaijan will remain dependent on imports of chemical products. Moreover, with economic growth set to decline to 7.5% in 2011 and 5.0% by 2014, unless the industry is improved and restructured it will see yet further declines in the years ahead.
There are also some positive developments that should boost the industry, aside from the restructuring of the industry and plans for a new petrochemicals complex. The stabilisation of oil prices should help to bolster capital inflows, which in turn will filter through to the petrochemicals industry. However, domestic credit will be constrained by actions by the Central Bank of Azerbaijan, which has stipulated inflation targeting as its main monetary policy priority in 2010. We are currently pencilling in 500bps of rate hikes to the refinancing rate in 2010, taking it to 7.00% by the end of the year, thereby tempering household and corporate consumption and slowing growth in the domestic plastics and chemicals market. Stable oil prices will also stabilise feedstock prices, which in turn makes planning easier.
Azerbaijan is in 10th and last place in BMI’s proprietary Europe Petrochemicals Business Environment Rankings with a score of 33.1, unchanged since the previous quarter. Azerbaijan lies 4.3 points behind Ukraine. The score could rise if plans for a new petrochemicals complex come to fruition. Azerbaijan’s considerable energy reserves and rising gas output have been hampered from improving the petrochemicals capacity, largely owing to the poor business environment which has deterred investors. However, there are signs this is changing for the better as the government makes a concerted effort to restructure the sector.

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Browse the complete Report on : France Petrochemicals Report Q4 2010

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The recovery in French plastics consumption will be slow as the construction industry will continue to struggle with a contraction of -0.9% in 2010 and little sign of a revival in plastics demand from the automotive industry until 2011 at the earliest, according to BMI’s latest France Petrochemicals Report. While a modest revival was under way by mid-2010, it is a fragile one vulnerable to Europe-wide fiscal austerity and the possibility of a double-dip recession. The domestic market is also set to be sluggish, with French real GDP growth set to slow to 1.0% in 2011 from an expected 1.5% in 2010, and remain well below pre-crisis levels through the medium term. Fiscal cuts in the autumn will remove a key pillar of demand, while the bounce in exports through H110 will tail off as base effects become less favourable and the impact of austerity measures weighs on demand for French exports in developed states. Private consumption should provide some relief, but we do not expect a fundamental recovery in household spending to get under way until 2012 at the earliest.
BMI’s scenario is shared by the Union des Industries Chimiques (UIC, Chemical Industries Union), which expects growth to moderate from 15.4% y-o-y in Q110 to near zero by the end of the year. However, the strong rate of growth in H110 has prompted the UIC to revise up its growth forecast for the year to 9.0% from 5.5% it forecast in early 2010. BMI is slightly less optimistic, forecasting a sharper slowdown in Q410 to result in 8.0% annual growth as a result of the removal of government stimulus and higher base effects. In reality, the petrochemicals sector will remain in an historic slump, following a 20- 25% fall in output in 2009.
BMI believes that the industry’s lack of competitiveness both in the EU and beyond will lead to significant cut-backs in capacity. It will take until 2012 before the industry can return to pre-recession operating rates and by that time old, inefficient and smaller capacities are likely to be taken offline. Already, Total’s petrochemicals complex in Carling has seen a 220,000tpa reduction in ethylene capacity and the planned closure of the Dunkerque refinery will remove 90,000tpa of polymer-grade propylene as well as naphtha feedstock supply to downstream units. Many French plants are too small to compete against new world-scale facilities in the Middle East and Asia, which have an advantage in access to cheaper ethane feedstock and lower operating costs. The French petrochemicals market is also set to diminish as a proportion of the global market as China and other Asian markets increase in importance. France scores 73.7 points it BMI’s proprietary petrochemicals ratings, putting it in second place in our Western European Petrochemicals Rankings, 8.2 points behind Germany and 1.8 points ahead of Belgium. The country’s petrochemicals sector needs to overcome deterioration in external competitiveness and stagnation in domestic demand to hold on to the capacity it has and prevent closures. France’s score is in danger of being eroded by likely capacity shut-downs in coming years, although its situation is not unique in Western Europe.

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Browse the complete Report on: Ukraine Petrochemicals Report Q4 2010

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The weakness of the hryvnia will help sustain Ukrainian petrochemicals export growth, with the Russian market picking up pace, according to BMI’s latest Ukraine Petrochemicals Report. While production volumes are still below pre-crisis levels, the extent of the collapse in output throughout the 2009 crisis, combined with a tentative recovery in external demand, will help push growth levels higher in our view. However, continued poor performance in the Ukrainian automotive sector means it will operate well below maximum output capacity over the forecast period, leading to low levels of engineering plastics consumption by this crucial industrial sector. The country’s construction industry, a major consumer of PVC in Ukraine, is also plagued with lingering problems following a 40% contraction in 2009. It will take until 2014 at the earliest for plastics demand from the construction sector to return to 2008 levels.
Consequently, exports to Russia will feature strongly in the Ukrainian petrochemicals recovery. Exports will be encouraged by the warming relations between Russia and Ukraine following the election in February 2010 of pro-Russian candidate Viktor Yanukovych to the presidency. This prompted an immediate and positive response from Moscow towards trade and investment with Ukraine. The improved political relationship should prevent a return of the gas supply crises that have plagued the Russian petrochemicals industry over the past two years and has already prompted a downward revision in the cost of gas. However, the petrochemicals industry lacks competitive edge and is burdened by high costs and inefficiency. Unless the industry is modernised, there is a risk of permanent low capacity utilisation, loss-making and possible closure.
Notwithstanding plant closures, while Ukraine’s petrochemicals industry is not expected to contract any further, due to the depth of the decline, it will take until at least 2014 before it reaches 2008 levels, based on the slow recovery in the Ukrainian and Russian market. BMI forecasts plastics output of 365,000 tonnes in 2010, up by around 17.5% over 2009 levels. Although growth will be strong, it is largely due to base effects. Output will still be 16% down on 2008 levels, and Ukraine’s petrochemicals sector will be operating at around 70% capacity – which is well below the 80-85% level which BMI regards to be the break-even point for the industry. A diversification in markets and feedstock sourcing to remove the industry’s dependence on domestic and Russian demand would enhance Ukraine’s petrochemical prospects. With the kind of economic growth rates seen in 2000-2007 unlikely to be repeated, the petrochemicals industry will be more heavily reliant on export markets. The depreciation of the hryvnia may provide some slight relief in terms of competitiveness, but equally it raises the cost of feedstock; which has to be passed on to the consumer or simply absorbed by the industry – which is already financially precarious. This has, however, been mitigated by the Russian gas deal.
Ukraine is in 10th place in BMI’s Central and Eastern Europe Petrochemicals Business Environment matrix, with a score of 37.5, down 0.1 point since the previous quarter due to a decline in the country risk rating. This puts Ukraine 2.6 points behind Bulgaria and 4.3 points ahead of Azerbaijan. The score is the result of the imminent start of operations at a 300,000tpa PVC plant in Kalush and an improvement in market risk ratings due to a deal with Russia over cut-price gas supplies. The score has been strengthened by the election of a new Moscow-oriented government which provides some stability in the operating environment for the petrochemicals industry and trade relations with its largest market, Russia. However, the score is held back by very weak a long-term financial markets outlook, although this can get better in the event that IMF credit is sustained and the banking system revived. The overall petrochemicals rating score has plenty of upside potential.


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Browse the complete Report on: South Africa Petrochemicals Report Q4 2010

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South Africa’s petrochemicals industry is recovering at an uneven pace, with the expected slowdown in the construction sector set to reduce demand growth for polyvinyl chloride (PVC), while a resurgent car industry will boost sales of polypropylene (PP), according to BMI’s latest report.
GDP growth of around 3.0% in 2010 should provide some more optimism to the petrochemicals sector. Weakness persists in the consumer sector, but we believe that the worst is over. Over the short term, South African petrochemicals production will be more reliant on external demand, particularly from the rest of Africa, and price rises for growth in both volume and margins. This will be somewhat undermined by a surge in capacities in the Middle East and Asia coupled with high oil prices, which are fuelling growth in naphtha feedstock costs.
Construction is likely to remain weak in export markets, thereby dragging down PVC. The domestic market stimulus from the 2010 FIFA World Cup, which led to the construction of stadiums and hotels as well as investment into the country’s transport network, has also abated. As we expect construction activity to die down following the World Cup, we believe that construction industry growth will even out at 3-4% per year until the end of our forecast period. This compares with with average growth of 11.5% year-on-year (y-o-y) between 2005 and 2008. In the automotive sector, a major end-user of South African petrochemicals, an improvement in domestic demand, coupled with growth in exports, should also feed through to production, although carmakers have previously voiced concern regarding the competitiveness of the local industry as raw material prices and shipping costs rise. There has been no shortage of investment, however, despite concerns raised, with Ford and Volkswagen ramping up their South African production and plant capacity over the medium term. BMI expects such longer-term projects to result in total industry output growth of 40% by 2014, which should raise demand for engineering plastics, particularly in the PP segment.
Capacities are not expected to rise significantly or at a rate that will challenge competitors in the Middle East and Asia. By 2010, South African petrochemical capacities will include 650,000tpa ethylene, 330,000tpa propylene, 560,000tpa PE, 60,000tpa PTC, 200,000tpa VCC/PVC, 680,000tpa PP and 145,000tpa methanol. Sasol’s construction of an ethylene purification unit at its Sasol Polymers plant is et to come onstream by mid-2013. The company hopes it will raise production by around 48,000tpa by 2015 and supply PE production facilities, thereby reducing the import dependency of South African plastics converters. There are no further plans for significant expansion or new plants over the next five years, according to BMI research.
In BMI’s Middle East and Africa Petrochemicals Business Environment matrix, South Africa comes seventh with 53.1 points, 2.1 points behind Israel and 3.4 points ahead of Egypt. The South African petrochemical industry is the largest in Africa, although relatively small by international standards. It contributes about 5% of GDP and accounts for 25% of manufacturing sales. The industry is reshaping itself, striving to bring plant capacities closer to world production levels, exploiting niche markets, acquiring foreign assets and promoting foreign partnerships, although it will also face challenges from new capacities in the Middle East and Asia. South Africa has the second largest refining sector in Africa after Egypt, with a total refining/liquid fuels capacity of 695,000b/d. It controls a significant portion of the regional market for refined products.


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Browse the complete Report on - Russia Petrochemicals Report Q4 2010
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Growth Russian petrochemicals output is returning, albeit uneven, and some major integrated projects are being revived following postponements during the recession, ensuring that the country will remain the most dynamic producer in Europe, according to BMI’s latest Russia Petrochemicals Report. The Russian petrochemicals industry is staging a recovery, with results in H110 looking promising. Reports indicate that polymers have followed the broad economic trend with PE, PP, PVC and PS rising 25%, 21%, 16% and 21% y-o-y respectively. Ethylene was up by around 22%. However, declines were reported in the fertilizer and fibre segments, indicating that there were some sustained weaknesses. Overall Russian chemicals output was up around 10% y-o-y in H110, according to BMI estimates, close to the global average. However, the pace of growth is set to decline in H210 owing to reduced base effects and the end of restocking by buyers, leading to lower growth of around 6-7%, an upward revision from the 3.4% we previously forecast.
One key factor holding back the petrochemicals sector is lagging domestic demand, with the feed-through effects from the bounce in the oil export sector to domestic demand taking time to have an effect. Latest growth data for retail sales and industrial production highlight the dichotomy between the performance of sectors directly linked to oil and those reliant upon domestic demand. The Russian automotive sector, a key consumer of plastics, has been particularly affected is still suffering from the effects of the country's deep recession, though there are signs that recovery is within grasp. The construction industry as a whole will not recover as robustly as the car industry, because the steep decline in residential and commercial construction will weigh on the sector for longer. Moreover, problems of lacklustre Asian demand and weakening competitiveness due to the expected appreciation of the rouble will be compounded by the increase of substantial new low-cost capacity currently coming onstream in Asia and the Middle East.
In a sign that confidence is returning to the sector, Russian petrochemicals producers are pressing ahead with investments that were delayed by the recession. In Q210, Gazprom, Sibur and Dow Chemical signed an agreement reviving plans for a joint petrochemical complex. The complex would use mixed feedstock and produce both ethylene and propylene in a world scale cracker with capacity for about 1mn tpa ethylene. In previous plans announced by the three partners in December 2007, the complex would come onstream by around 2015. Other revived projects are beginning construction. In July 2010, RusVinyl, in which Sibur has a stake, began construction of a PVC complex at Kstovo, Nizhnii Novgorod region. Costing EUR800mn (US$983mn), it will be Russia’s largest fully integrated PVC plant and is set to be operational in 2013, delayed by up to two years due to the late revival of the Russian construction sector.
In 2014, we envisage ethylene capacities totalling 4.22mn tpa, representing a compound annual growth rate (CAGR) in capacity of 6.4%. We previously envisaged capacity growth lagging behind domestic needs, based on petrochemicals demand exceeding GDP growth rates of 6-8%. The impact of the recession, which led to a 10% decline in plastics production to around 4mn tonnes in 2009, combined with average GDP growth rates of around 4% over the next five years, means that overall capacity should rise broadly in line with demand trends. However, some segments will see little or no movement, notably styrenics and some intermediates such as EO/EG and ethylbenzene. Based on current plans, PE and PP capacities are set to rise by 77% and 150% respectively, while ethylene and propylene capacities should grow by 36% and 50% respectively.
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