Drop in effect of EU price cap on Russian crude

The international price cap on Russian crude became much less effective in the third quarter and by September prices attained levels not far behind Brent numbers, and certainly no lower than $60 per barrel.   To prevent Russia from further expanding its shadow fleet, the EU Commission has put forward export controls on tankers to Russia.  The Commission aims to create a

and export bans, actions to tighten the oil price cap and to counter circumvention of EU sanctions.  Russia has been able to reduce the discount offered on its oil, from as much as $40 a barrel earlier this year, to less than $10 a barrel in October. 

Czech crude imports Jan-Sep 2023

Russia supplied 3.476 million tons to the Czech Republic in the first nine months at an average price of €522.6 per ton.  Whereas the average price of crude from Russia for the first eight months was €407.6 per ton, then jumped to €637.5 in September.  Irrespective of whether reimposing the price cap is successful, the Czech Republic is striving towards independence from Russia.  Tests undertaken in November by Unipetrol showed that the Litvinov refinery can cope with a full switch to non-Russian oil.  Unipetrol operates two refineries: the 5.8 million tpa Litvinov using Russian crude and 3.3 million tpa Kralupy using other blends.  Czech imports of crude totalled 5.534 million tons in the first three quarters in 2023 at an overall average price of €596.8 per ton. 

The key to ending reliance on Russian crude via the Druzhba pipeline is the capacity expansion of the TAL pipeline bringing oil from the Italian port of Trieste.  The second half of 2024 may be particularly difficult, when the capacity of the TAL pipeline will be temporarily limited due to modifications and expansion to 4.0 million tpa. 

Other CE oil imports

Orlen stated in the third quarter that its results had been affected by changing from cheaper Russian raw materials.  At the same time Orlen has achieved consistently higher refining margins than MOL despite MOL receiving some Russian discount.  Although MOL has already started transporting crude oil from its oil field in Azerbaijan to Slovnaft in Bratislava via the Adria oil pipeline, Hungary may continue to depend on Russia for the foreseeable future.    Hungary and Slovakia can import from Russia indefinitely as long as the percentage of exports does not exceed the percentage of crude of non-Russian origin (if blended with Russian crude as refinery feedstock.)

From the total of 19.291 million tons of crude imported into Poland in the first nine months, supplies from Saudi Arabia totalled 8.871 million tons at €559.4 per ton and from Norway 6.032 million tons at €545.2 per ton.   Further supplies from Norway have been ensured after the include Orlen Group agreement with BP providing for deliveries of up to 6 million tons.

Orlen Group third quarter and Jan-Sep 2023

The Orlen Group saw its net profit fall by 76% in the third quarter versus the same quarter in 2022, dropping to zl 3.46 billion (€777.941 million).  Orlen stated that the figures were distorted by the acquisition of the Lotos group and are in line with pre-report estimates.  Revenues for the group increased in the third quarter by 3% to zl 75.420 billion (€16.967 billion).

For the first three quarters sales revenues of the Orlen Group amounted to zl 260,315 million (€58.538 billion) and was higher by zl 84,149 million (€18.904 billion) than in the period January to September 2022.  The increase of sales revenues reflects both higher by 14% sales volumes in tons which itself was due mainly to an increase in the refining, upstream, gas and retail segments.  At the same time though there was decrease in petrochemical sales.

Orlen's refining business has been affected this year by ending purchases of Russian raw materials.  Orlen has gradually become more independent of Russian sources over the past decade.  Supplies from Russia ended in late February this year and the transference to Saudi and Norwegian crude impacted on refining margins. 

Orlen’s refineries in Poland, the Czech Republic and Lithuania operated at 94% in the first three quarters, processing 9.535 million tons of crude oil.

Orlen Group Petrochemicals Jan-Sep 2023

Orlen’s petrochemical sales revenues declined at a greater rate than the fall in energy and feedstock costs in the first three quarters in 2023.  This resulted in operating losses of €235 million against an operating profit of €427 million in the first three quarters in 2022.  

Petrochemical sales revenues for the Orlen Group dropped in the third quarter of 2023 to €1044 million from €1283 million in the same quarter in 2022, whilst costs dropped from €1542 million to €1158 million. 

For PTA, lower sales were recorded by 37% over the same period in 2022, whilst olefin sales dropped by 23%, polyolefins by 9% and fertilisers by 1%.  Orlen’s olefin margins for ethylene and propylene dropped to the lowest level in the third quarter since the outbreak of the war in Ukraine. 

Butadiene margins amounted to €115 per ton in the third quarter this year, after peaking at €614 in the third quarter in 2022.  In the aromatics sector benzene and paraxylene margins were somewhat suppressed but toluene margins remained strong at €519 per ton.  The main problem for Orlen Group’s petrochemical sales in 2023 has been lower sales due to weaker economic trends.  The third quarter did show some stability, but demand is down representing the main reason behind lower utilisation rates.

Orlen Group utilisation rates

The olefins complex at Plock recorded a utilisation rate of 67% in the third quarter against 70% in the second quarter and 78% in the first quarter.  Lower utilisation was seen in the third quarter due to deficit in feedstock (CDU VI and Hydrocracking shutdowns at the Refinery).  Basell Orlen Polyolefins at Plock recorded lower utilisation rates due to low demand.

Low demand also meant that Metathesis at Plock was kept idle in the third quarter after only operating on a  limited basis in the second quarter.  This impacted on propylene production for the Orlen Group which fell from 324,000 tons in the first three quarters in 2022 to 239,200 tons in the same period in 2023. 

Other Orlen Group plants in Poland reported lower utilisation rates in the third quarter due predominantly to demand side factors, including the PVC plant and PTA plant at Wloclawek.  Outside of Poland, Orlen Unipetrol achieved 82% utilisation at the Litvinov olefins complex after recovering from 49% in the second quarter.  In Lithuania Orlen Lietuva’s PPF splitter achieved an 82% recorded n the third quarter. 

Czech olefin monomer trade, Jan-Sep 2023

Orlen Unipetrol recorded an increase in ethylene and propylene imports in the first three quarters to meet demand largely at Litvinov.  Czech imports of ethylene amounted to 27,911 tons in January to September 2023, up from 16,034 tons in January to September 2022.  Ethylene exports from the Czech Republic amounted to 9,386 tons in January to September 2023 versus 10,298 tons in the same period last year. 

Propylene imports into the Czech Republic rose from 29,512 tons in January to September 2022 to 33,210 tons this year, with main suppliers including Germany, Romania and Poland.  Average prices for propylene imports dropped in the first nine months in 2023 to €943.7 per ton against €1436.5 per ton. 

Exports of propylene at the same increased to 18,073 tons in the first three quarters, up from only 31 tons last year.  The main destination for Czech propylene exports was Poland, taking 15,094 tons in January to September this year.

Czech imports of butadiene amounted to 52,351 tons in January to September 2023, all of which was supplied by Germany and Hungary.  Prices dropped dropping from €1178 per ton to €866 per ton.  Nearly all the butadiene went to Kralupy for conversion into synthetic rubber.   

Czech exports of ethylbenzene amounted to 96,210 tons against 79,271 tons in January to September 2022.  All the ethylbenzene was shipped from Kralupy to Oswiecim, all within the structures of the Synthos Group. 

MOL’s petrochemical division Jan-Sep 2023

MOL’s petrochemical margins decreased further in the third quarter due to weak economic activity in the region.  Despite the weakening trend in margins MOL’s ethylene production in Hungary and Slovakia rose to 501,000 tons in the first three quarters in 2023 against 490,000 tons in the same period in 2022.  Propylene production rose from 252,000 tons to 269,000 tons, whilst butadiene decreased from 55,000 tons to 43,000 tons.  

MOL Group's most significant commitments in Hungary relate to a polyol project of MOL Petrochemicals (€105.8 million), which aims to become a major producer of polyether polyols.  Another €106.9 million is being invested in the construction of the metathesis project, which is a greenfield investment providing propylene for the polyol complex.  For the expansion of the maleic anhydride plant at the Danube refinery, which is located at Szazhalombatta, €30.7 million has been allocated.  Other projects being undertaken by MOL in Hungary include a revamp of the PP3 unit and modernisation of the ethylene.  In Croatia the Rijeka refinery, belonging to MOL subsidiary INA is undergoing an upgrade project.

MOL’s petrochemical sales fell in the third quarter both for olefins and butadiene, with petrochemical margins dropping progressively since the second quarter in 2022. 

External olefin sales for MOL comprise ethylene shipments to BorsodChem for PVC production and internal group sales involve propylene to Slovnaft for polypropylene production.  Butadiene production fell in the third quarter thus restricting sales.  Ethylene production amounted to 163,000 tons in the third quarter against 167,000 tons in the same period last year whilst propylene production rose to 90,000 tons from 86,000 tons.  

Polish petrochemical production Jan-Sep 2023

Ethylene production in Poland dropped from 279,200 tons in January to September 2022 to 215,400 tons this year, whilst propylene fell from 324,000 tons to 239,200 tons. 

 Butadiene production at Plock dropped to 43,000 tons from 47,700 tons.  Due to these declines petrochemical production in Poland fell by 21% in the first three quarters in 2023.  Orlen undertook  another scheduled shutdown in the fourth quarter in October at the Olefin 11 plant at Plock. 

In the plastics sector polyethylene production dropped to 225,100 tons in January to September 2023 versus 243,000 tons in corresponding period last year.  Polypropylene dropped from 250,000 tons to 205,300 tons.   

Polish propylene & butadiene imports, Jan-Sep 2023

The contract prices of propylene in the third quarter fell on average 25% compared to the same period in 2022 and by 8% against the second quarter in 2023.

The decline in prices has been driven in part by lower average prices of crude oil as well as the demand and supply dynamics.  Polypropylene demand has proved relatively stable but other derivative areas such as oxo alcohols and propylene oxide for the polyol industry continue to experience lower consumption than normal.  European crackers and refineries operated at their minimum technical loads in the early part of the third quarter, which helped to minimise the oversupply of propylene.   

The contract price of propylene in Europe increased towards the end of the third quarter, while production in the downstream sectors improved.  The improvement has not been enough to eradicate the oversupply, meaning that prices have again come under pressure. 

Poland imported 94,973 tons of propylene in January to September against 91,902 tons in January to September 2022.  Market sources of propylene imports into Poland have changed significantly in the past year.   To replace imports from traditional suppliers Russia and Ukraine, imports this year apart from Germany have been sourced from Bulgaria, the Czech Republic, the Netherlands and Serbia. 

 Average prices dropped from €1277.6 per ton in January to September last year to €903.0 this year.  Prices for propylene started falling in the latter part of the 2022 following feedstock trends. 

Butadiene import prices for Poland dropped from €1369.9 per ton in January to September 2022 to €767.1 in January to September this year, with volumes declining from 73,904 tons to 59,816 tons.  Imports from Hungary dropped from 29,224 tons in January to September last year to 59,816 tons this year. 

Hungarian propylene exports Jan-Aug 2023

 Exports of propylene from Hungary dropped in the first eight months, amounting to 55,420 tons versus 69,543 tons in the same period in 2022.  Although MOL currently produces more propylene than it consumes it is currently building a new propylene plant with a capacity of 100,000 tpa which is targeted for conversion into propylene oxide.  

 Export prices from Hungary dropped from €1348.5 per ton to €911.2 per ton in 2023, following the trajectory in European pricing.   Exports to Slovakia from MOL to Slovnaft dropped from 58,139 tons to 54,401 tons in January to August 2023.  Slovnaft uses propylene for the production of polypropylene as its cracker is unable to meet full demand despite an increase in plant utilisation in the third quarter. 

Hungarian butadiene exports amounted to 30,909 tons in the first eight months in 2023 against 33,205 tons in the same period in 2022.  Shipments into Poland totalled 17,014 tons in January to August 2023 against 24,082 tons in the same period in 2022.  Exports to Germany dropped from 5,035 tons to 1,995 tons and to the Czech Republic rose from 4,088 tons to 11,900 tons.  Average prices for Hungarian butadiene exports fell to €856.9 per ton versus €1102.3 in 2022.

Central European styrene trade Jan-Sep 2023

Synthos in Poland imported 51,102 tons of styrene in January to September against 77,713 tons in January to September last year.  The Netherlands provided 44,168 tons in the first nine months versus 22,727 tons in the same period in 2022.  The Czech Republic has also been an important supplier this year, shipping from Kralupy to Oswiecim.  Styrene import costs into Poland dropped from €1582.0 per ton last year to €1124.7 in the first nine months in 2023. 

 Italy remains the dominant source of styrene imports into Hungary, supplied by Versalis to its polystyrene plant at Szazhalombatta.  Imports of styrene into Hungary totalled 45,122 tons in January to August 2023, down from 56,513 tons in the same period in 2022.  Prices for styrene imports into Hungary dropped from €1652.7 per ton in January to August 2022 to €1396.9 per ton in 2023.

Styrene imports into the Czech Republic increased from 13,019 tons to 26,007 tons in the first nine months in 2023.  The main consumer is Synthos at Kralupy for processing into synthetic rubber.  The Netherlands was the main supplier, shipping 12,779 tons versus 8,198 tons whilst shipments from Germany amounted to 8,932 tons in January to September 2023 against almost nothing in 2022. 

Styrene exports from the Czech Republic increased in the first three quarters last year from 6,188 tons to 10,235 tons in January to September 2023.  Exports have been allowed to increase this year due to lower SBR production at Kralupy.

Polish polyolefin production Jan-Sep 2023

Despite lower polyolefin production in the third quarter Orlen’s group's sales of polyethylene and polypropylene rose 13% in the third quarter this year to 179,000 tons.  The main reason for the increase was the acquisition of full control over the installation and production of LDPE at Plock.  Conversely, sales of PVC fell by 25% to 64,000 tons.  At the same time demand is under pressure, the construction of the Olefins III complex at the Plock refinery is already underway.

The Orlen Group is already the largest producer of plastics in the region, and its position will be strengthened due to a significant increase in production capacity as part of this investment.  However, the project has become very expensive, and its completion has already been postponed several times. Currently, it is valued at approximately zl 25 billion, and the date of commissioning is set for the first half of 2027. Orlen is also working on a concept for the expansion of its polyethylene unit and is analysing other petrochemical projects at Gdansk.

Central European polyolefin margins Q3 2023

Despite lower sales volumes polyethylene margins in Europe still averaged €345 per ton in the third quarter which tends to be in line with historical performance.   Most producers reported lower polyolefin sales in the first nine months due to recessionary trends affecting most of Europe.  Demand for LDPE and HDPE in Central Europe tended to stabilise in the third quarter  but at the same time only showing only slight signs of growth in certain applications.  Prices have been on a falling trajectory this year, and with lower feedstock costs and margins have started to level out. 

Orlen-LDPE management

On 1 January 2023 Orlen completed the transaction to acquire a part of the business related to the production and marketing of LDPE from Basell Orlen Polyolefins.  The business involves the production and marketing of LDPE, as well as customer service in the Polish market.  The acquired production capacity is 100,000 tpa which means that Orlen, will single-handedly cover about a third of the country’s overall demand.  After the transaction, Basell Orlen Polyolefins continue to focus the production and sale of HDPE and polypropylene.

Central European polyolefins production Jan-Sep 2023

Production of polyethylene in Poland fell from 243,000 tons in the first nine months in 2022 to 225,100 tons in the same period this year.  Production has been down this year partly due to lower demand. 

The MOL Group reduced polyethylene production from its plants in Hungary and Slovakia from 383,000 tons to 311,000 tons in the first three quarters this year.  The main reason behind the fall was HDPE production at Tiszaujvaros, which dropped from 222,000 tons to 152,000 tons.  Polyolefin sales from the MOL Group amounted to 248,000 tons in the third quarter against 251,000 tons in the second quarter and 255,000 tons in the same period last year.

Polypropylene production fell by a greater share in Poland than polyethylene in the first three quarters, falling from 250,000 tons in 2022 to 205,300 tons in January to September 2023.  Currently polypropylene production in Poland takes place at Plock, but in the near future production will start at the new Polimery Police plant.  This plant was expected to start in August or September, but problems with the equipment during the start-up phase has been the cause of the delay.   

At this stage according to Hyundai the earliest date the plant will start production is 13 February 2024.  Hyundai is requesting increased remuneration whilst Grupa Azoty Polyolefins may need to cover the higher costs for a subordinated loan of up to €105 million. 

Overall, for Central Europe polypropylene production amounted to 527,300 tons in the first three quarters in 2023 against 579,722 tons in the same period in 2022.  Hungary reduced production of polypropylene in the first nine months in 2023 to 127,000 tons against 186,000 tons in January to September 2022.  Slovakia produced 130,000 tons in the first three quarters this year and the Czech Republic 126,000 tons.

Czech polyethylene trade Jan-Sep 2023

Production of polyethylene at Litvinov amounted to 264,400 tons in the period January to September 2023 against 282,000 tons last year.  Consumption of polyethylene in the Czech Republic has mirrored other markets in Europe in the past two years, with quarterly volumes falling sharply in 2023.  Overall, for the first three quarters in 2023 Czech polyethylene consumption fell to 186,200 tons against 214,300 tons in the same period in 2022. 

Czech prices for both exports and imports of polyolefins were lower in the first nine months this year against the same period in 2022.  Polyethylene exports amounted to 320,128 tons in the first nine months of which HDPE comprised 277,538 tons.  Germany was the largest destination for Czech HDPE supplied from Litvinov this year, amounting to 111,167 tons in January to September for €132.827 million.  Other important markets for Czech polyethylene exports include Poland, Italy and Belgium. 

For imports of all forms of polyethylene, Czech inward shipments amounted to 224,692 tons in January to September against 240,228 tons in the same period in 2022, with prices dropping from €1958 per ton to €1620.0 per ton.  Germany was the largest source of polyethylene imports, amounting to 49,298 tons for €74.545 million, followed by Belgium with 28,850 tons for €44.166 million.

Polish polyethylene trade Jan-Sep 2023

Polish trade in polyethylene was down in the first nine months for both imports and exports, both in volume and value.  Economic conditions affected both demand and pricing.   Overall Poland carries a large deficit in polyethylene supply, which is part of the reason behind Orlen’s Olefiny 111 project at Plock now under construction.

Polish imports of polyethylene totalled 931,044 tons in January to September this year against 1003,601 tons in January to September 2022, with average prices falling from €1821.8 per ton to €1370.9 per ton.  Imports of polyolefins and all types of plastics from Russia into Poland saw a progressive decline in 2022, with other suppliers from Europe taking more market share. 

Total costs of polyethylene imports into Poland amounted to €1.286 million in the first nine months against €1.828 million in January to September last year.  HDPE is the largest category of imported polyethylene into Poland, amounting to 314,488 tons in January to September versus 347,691 tons in January to September 2022.  Germany was the largest supplier of HDPE to the Polish market in the first nine months this year.

Polish polyethylene exports amounted to 221,382 tons in the first nine months in 2023 against 259,606 tons in the first nine months in 2022.  Average prices for polyethylene exports from Poland declined to €1354.4 per ton against an average of €1681.8 per ton in the period January to September last year. 

Revenues from exports decreased from €355.060 million to €238.978 million in January to September 2023.  In the first nine months this year exports of HDPE from Poland amounted to 152,393 tons versus 176,530 tons in January to September 2022.  LDPE exports dropped from 46,114 tons to 39,116 tons.

Hungarian polyethylene trade Jan-Aug 2023

Hungarian polyethylene exports were similar in the first eight months this year to the same period last year, amounting to 227,508 tons versus 227,342 tons.  However, revenues fell from €370.926 million to €285.396 million in 2023, meaning that average prices dropped from €1631.6 per ton in 2022 to €1254.4 per ton. 

HDPE shipments from Hungary increased from 150,881 tons in January to August 2022 to 153,870 tons in the same eight months in 2023, whilst exports of LDPE increased from 56,968 tons to 60,670 tons.  Polish polypropylene trade Jan-Sep 2023.  

Hungary remains a net exporter of LDPE and HDPE and still a net importer of LLDPE and ethylene copolymers.  In the first eight months in 2023 imports of all grades of polyethylene into Hungary amounted to 145,425 tons against 150,563 tons in the same period in 2022.  Import costs for polyethylene fell to €222.664 million against €286.982 million in the same period last year. 

Hungarian import prices for polyethylene decreased on average from €1905.9 in January to August 2022 to €1531.1 in the first eight months in 2023 with gradual price declines since the start of the year. 

Polish PP Trade Jan-Sep 2023

Polish polypropylene imports, including homo grade and copolymers, fell in January to September 2023 to a total of 646,917 tons versus 713,099 tons in January to September 2022.  Average prices per ton decreased from €1849.5 to €1473.4 per ton.  Homo grade polypropylene imports specifically dropped from 467,892 tons in the first nine months in 2022 to 414,179 tons in the same period this year, whilst copolymer imports dropped from 226,598 tons to 214,765 tons. 

Germany supplied 61,531 tons of propylene copolymers to Poland in the first nine months for €98.881 million followed by the Netherlands with 34,109 tons for €52.461 million and Belgium supplying 30,852 tons for €51.305 million. 

Regarding export activity from Poland, shipments amounted to 164,532 tons against 201,837 tons in January to September 2022.  Homo polymer grades comprised the main category of Polish polypropylene exports, where Germany was the largest destination taking 27,152 tons in the first nine months for €36.573 million.  Germany was followed by the Czech Republic taking 22,660 tons from Poland for €27.022 million. 

Czech polypropylene production and trade Jan-Sep 2023

Production of polypropylene at Litvinov amounted to 154,000 tons in the period January to September 2023 against 195,000 tons in the same period last year.  Consumption of polypropylene in the Czech Republic has performed more steadily than polyethylene although quarterly volumes have been slightly down in 2023.  Overall, for the first three quarters in 2023 Czech polypropylene consumption fell to 329,800 tons against 338,000 tons in the same period in 2022. 

Exports of all forms of polypropylene from the Czech Republic amounted to 226,932 tons in January to September versus 226,225 tons in January to September 2022, with average prices dropping from €1758.4 per ton to €1530.7.  Homo-grade PP provides the main category of Czech polypropylene exports, amounting to 163,725 tons in January to September this year versus 185,845 tons in the same period in 2022.   For imports of all forms of polypropylene, Czech inward shipments increased from 385,432 tons in January to September 2022 to 394,691 tons in January to September this year, with average prices dropping from €1936.8 per ton to €1604.7 per ton.

Rompetrol Rafinare-polyolefin production and sales Jan-Sep 2023

Rompetrol Rafinare produced 28,000 tons of polymers in the third quarter this year against 42,000 tons in the same period in 2022.   Only polypropylene was produced in the third quarter whilst the LDPE plant remained idle due to unfavourable market conditions.  In total polypropylene production amounted to 89,000 tons against 90,000 tons in the same period in 2022, whilst polyethylene production fell from 55,000 tons to 14,000 tons.   In the first three quarters the company sold 91,000 tons of polymers versus 106,000 tons in the same period in 2022.  The most important distribution channels for polymers comprise the Romanian domestic market with 50%, and for export markets Bulgaria 19%, Italy 6% and Serbia 5%.

Hungarian polypropylene trade Jan-Aug 2023

MOL shipped 84,532 tons of homo grade polypropylene (valued at €113.980 million) in January to August 2023 which was up from 80,887 tons in the same period in 2022 (€142.004 million in value), whilst copolymer exports dropped from 65,914 tons (€124.623 million in value) tons to 60,193 tons (€84.939 million).    

Hungarian export revenues dropped for all grades of polypropylene from €279.371 million to €211.650 million, with average prices dropping from €1746.1 per ton to €1365.2.

Polypropylene imports into Hungary amounted to 127,572 tons in the first eight months in 2023 versus 38,090 tons in the same period in 2022, with costs falling in January-August 2023 to €205.520 million from €229.880 million last year.  Overall average prices dropped from €1759.9 per ton to €1611.0 per ton this year, whilst copolymer prices dropped from €1845.9 to €1624.1 per ton.  By category homo grade imports into Hungary comprised 76,289 tons in January to August 2023 against 73,914 tons whilst copolymers fell to 34,178 tons against 38,090 tons.

Czech synthetic rubber trade Jan-Sep 2023

Czech exports of synthetic rubber amounted to 115,913 tons in January to September this year versus 147,825 tons in the same nine months in 2022.  Imports declined from 122,911 tons to 98,084 tons in January to September 2023.  Natural rubber imports into the Czech Republic rose slightly from 61,995 tons to 62,319 tons.    

Exports of emulsion styrene butadiene rubber (ESBR) from the Czech Republic dropped in the first nine months to 22,350 tons against 54,445 tons in the same period last year.  The Kralupy plant includes capacities of 110,000 tpa of ESBR and its permanent closure will reduce Synthos’ total ESBR capacity to 320,000 tpa.  Despite the closure of the Kralupy plant, Synthos remains the largest producer of ESBR in Europe, with 190,000 tpa of ESBR capacity at its site at Oswiecim and 130,000 tpa at Schkopau. 

Czech butadiene rubber trade

The Czech Republic exported a total of 75,724 tons of butadiene rubber in the first nine months in 2023 against 83,480 tons in the same period in 2022. 

Average prices fell from €2162.3 per ton to €1729.4 per ton.  Czech exports of butadiene rubber to India amounted to 9,473 tons was shipped in January to September 2023 against 16,727 tons in the same period in 2022.  Other important markets included Poland where exports amounted to 10,539 tons in the first nine months this year against 10,347 tons in the same period in 2022, and South Korea rising from 4,209 tons to 9,927 tons.   

Besides exports the Czech Republic also imported 18,565 tons of butadiene rubber in the first three quarters in 2023 versus 22,849 tons in the same period in 2022. 

Hungarian synthetic rubber imports Jan-Aug 2023

Hungarian imports of synthetic rubber amounted to 90,471 tons in the first eight months versus 93,466 tons in January to August 2022, whilst values dropped from €210.610 million to €204.322 million.  Average prices rose slightly from €2253.3 per ton to €2258.4 in 2023.

Butadiene rubber imports rose from 29,841 tons to 32,590 tons, with costs dropping from €62.270 million to €59.107 million.  Imports from Russia dropped from 12,082 tons to 2,318 tons in January to August 2023 whilst imports from Indonesia rose from only 98 tons in the first eight months last year to 12,441 tons.  Effectively Indonesia replaced Russian imports in the first half of this year but has since declined.  Imports of halogenated butyl rubber dropped from 30,228 tons in the first eight months in 2022 to 12,376 tons and SBR imports rose from 26,162 tons to 34,825 tons.  

Polish rubber prices Jan-Sep 2023

Rubber import prices into Poland for both synthetic and natural have seen gradual declines from January to September this year as a combination of economic factors have taken effect.  Overall, synthetic rubber prices dropped from €2622.3 in the first nine months in 2022 to €2458.1 in 2023.

Polish rubber trade Jan-Sep 2023

Poland imported 197,885 tons of synthetic rubber in January to September this year against 220,445 tons in January to September 2022.  By category butadiene rubber was the largest, accounting for 40,770 tons in the first nine months in 2023 against 44,601 tons in 2022.

Russia supplied 9,609 tons of butadiene rubber to the Polish market in the first three quarters for €15.799 million.  Although much reduced than in previous years Russia is legally  able to export most grades of synthetic rubber up until June 2024.  Sanctions were first imposed on Russia in July 2022 but were amended in February 2023 under pressure from European tyre manufacturers.  This concession was made in order to allow enough time to adjust to new suppliers.  Synthos from the Kralupy plant has been able to increase its butadiene rubber exports to Poland this year, amounting to 8,639 tons in the first nine months for €15.235 million.  Saudi Arabia is a new supplier of butadiene rubber to Poland this year, replacing some Russian imports, after shipping 6,442 tons in January to September for €9.008 million. 

Imports of halogenated butyl rubber from Russia amounted to 3,572 tons from the total of 7,334 tons in the period January to September 2023.  The US and UK have started supplying Poland this year to replace some of the Russian imports.   

Synthetic rubber exports from Poland amounted to 199,186 tons in the first nine months against 230,684 tons in January to September 2022.   Exports of butadiene rubber from Poland amounted to 34,518 tons in January to September versus 35,324 tons last year.   Major destinations for Polish butadiene exports were led by Belgium which took 7,438 tons in the first three quarters for €11.293 million.  Exports of butadiene to the Czech Republic amounted to 3.546 tons for €6.002 million and to Brazil 4,838 tons for €7.268 million. 

Poland exported 3,410 tons of halogenated butyl rubber in the first three quarters against 5,470 tons in the same period in 2022.  Halogenated butyl rubber is not produced in Poland and was previously imported from Russia.  Hungary was the largest destination for Polish exports of HBR in the period January to September 2023, accounting for 2,116 tons for €4.838 million.

Polish synthetic rubber production and domestic market Jan-Sep 2023

Synthetic rubber production at Oswiecim for Synthos amounted to 150,300 tons in January to September 2023 from 208,000 tons in the same period in 2022.  Production has been affected this year by demand side factors. 

In the first half of 2023, tyre sales to the market declined in all segments except motorcycles.  Passenger car tyres fell by 21%, SUV tyres by 8%, commercial vehicles by 24%, agricultural machinery by 51%, industrial tyres by 35% and truck tyres by 39%.  For the first three quarters rubber consumption in tyre manufacture dropped by around 70,000 tons versus 2022. 

Despite the weakness of the tyre market in Poland and Europe in general, Polish tyre manufacturers reported reasonable results for the first three quarters.  Due to a fire in August Debica made an operating loss of zl 23.76 million in the third quarter compared to a profit of zl 3.28 million a year earlier.

Polish benzene exports Jan-Sep 2023

Polish exports of benzene totalled 119,319 tons in January to September against 119,908 tons in the same period last year.  Despite similar volumes, average prices dropped to €857.8 per ton from €1178.8 per ton last year.  Germany purchased 79,209 tons from Poland in the first nine months and the Czech Republic 12,006 tons. 

Benzene exports from Poland were lower in the first quarter in 2023 due to the problems for Petrochemia Blachownia in receiving coal based raw materials from Ukraine.  Petrochemia Blachownia is part of the Czech Agrofert group.

Polish-Czech aromatic imports Jan-Sep 2023

Phenol imports into Poland amounted to 59,569 tons in January to September 2023 which was down from 79,440 tons in the same period in 2022.  In January to September this year Germany was the dominant supplier of phenol to Poland, shipping 32,231 tons for €30.553 million.

Phthalic anhydride imports into Poland dropped from 24,427 tons in January to September 2022 to 23,314 tons in the same period in 2023.  Imports from South Korea amounted to 11,722 tons in the first nine months for €13.005 million, followed by the Czech Republic which supplied 2,683 tons from the Deza plant for a value of €3.929 million. 

In other product areas, styrene imports amounted to 47,535 tons in the period January to September 2023 versus 80,257 tons in the same period in 2022 whilst ethylbenzene imports rose from 84,053 tons to 96,420 tons.  Nearly all of the ethylbenzene imports come from the Czech Republic. 

Czech benzene imports dropped in the first nine months to 19,366 tons against 55,135 tons in the same period in 2022, whilst toluene imports dropped to 5,263 tons and styrene rose to 25,051 tons up from 13,020 tons.  Imports of bisphenol A dropped from 24,100 tons to 20,683 tons. 

There are two producers of benzene in the Czech Republic including Unipetrol at Litvinov and Deza at Valasske Mezirici.  Deza is owned by Agrofert and intends to increase the production capacity of benzene to 160,000 tpa in addition to toluene to 25,000 tpa. 

Czech exports of ethylbenzene amounted to 96,210 tons against 79,271tons in January to September 2022.  All the ethylbenzene was shipped from Kralupy to Oswiecim, all within the structures of the Synthos Group. 

Bisphenol A imports into Central Europe

Bisphenol A imports into the Czech Republic totalled 20,683 tons in the first three quarters in 2023 against 24,100 tons in the same period in 2022.  Poland increased imports from 10,900 tons to 12,350 tons.  The largest user of bisphenol A in the Czech Republic is Spolchemie at Ust nad Labem, where epoxy resins are produced.  The main source of imports is South Korea which supplied 9,728 tons to the Czech Republic in the first three quarters, almost half of total imports, whilst Poland imported 10,695 tons amounting to 80% of total imports. 

Spolchemie’s capacity for epoxy resin production amounts to 100,000 tpa making it one of the largest producers in Europe.  In Poland production takes place at Lerg (formerly Ciech Zywice) which is the sixth largest producer in Europe at 30,000 tpa.  Aside domestic production the most serious competitors in Poland include resin suppliers from Germany, the Czech Republic and Italy.

Although bisphenol A production continues to rise, increasing regulation may ultimately determine the future of the product.  Despite being a key component of epoxy resins and polycarbonates, and an additive for unsaturated polyester resins stronger and resistant to impact and heat, bisphenol A’s use is becoming increasingly restricted.   The growth of BPA-free technology and innovation and increasingly anti-BPA sentiment can mean that marketplaces and companies will seek alternatives to meet consumer demand for safer and more sustainable products.

French company Roquette has successfully tested a biobased biodegradable BPA alternative designated Polysorb which Is obtained via the dehydration of the sugar alcohol sorbitol.  Mitsubishi Chemical Corporation has included a plant-based BPA-free polycarbonate within its engineering plastics portfolio. Similarly, to Roquette’s BPA alternative, Mitsubishi’s polycarbonate Durabio is derived mainly from isosorbide.  A group including Solvay and Westlake are exploring the potential for lignin-based epoxy resins to match the thermo-mechanical properties of fossil-based varieties.

Hungarian aromatic imports Jan-Aug 2023

Hungarian benzene imports In the first eight months in 2023 amounted to 8,051 tons for total costs of €7.595 million, against very little imports in the same period in 2022.  The largest supplier of shipments into Hungary was the Czech Republic which provided 3,296 tons in the first eight months, followed by 2,790 tons from Slovakia.

Toluene imports into Hungary amounted to 18,136 tons in the first eight months for €20.184 million in value.  This compares against 25,591 tons in the first eight months in 2023 for a total value of €26.951 million.  Toluene imports this year have been lower in correlation with lower TDI production.  Germany was the largest supplier of toluene providing 7,172 tons to the Hungarian market versus 13,913 tons in the same period in 2022.  Other suppliers to Hungary included the Netherlands, Poland, Belgium and Romania. 

Central European caprolactam market

Over the course of 2023 the European caprolactam and PA6 markets were affected by reduced consumer demand. At the beginning of the third quarter, demand for both products remained low.  Many processors reduced their stocks of raw materials and finished products, accelerating or extending pre-planned repair and maintenance shutdowns.  Cheaper imports of PA6 products from Asia continued.

At the end of the third quarter the local supply of caprolactam and PA6 in Europe continued to be limited as the market remained balanced. Caprolactam supply constraints in Europe resulted from maintenance shutdowns, including the declaration of force majeure at more than one European plant.  Due to market dynamics the average contract price of liquid caprolactam fell 41% in the third quarter against the same period in 2022 and by 11% against the third quarter.  At the same time the average price of polyamide 6 in Europe went down 39% and 10% respectively. 

Poland produced 67,200 tons of caprolactam in the first nine months against 107,100 tons in January to September last year and 93,800 tons produced in January to September 2021.  Since the second half of 2022 caprolactam production by Grupa Azoty at its two plants at Tarnow and Pulawy has been affected higher energy costs, combined with continuous weak demand for polyamide.  In the first nine months caprolactam imports amounted to 7,771 tons, nearly all of which was supplied from Germany.  Overall, the consumption of caprolactam in Poland dropped to 75,000 tons in the first three quarters in 2023 against 115,600 tons in the same period in 2022.

The Czech Republic exported 14,973 tons of caprolactam in January to September down from 27,826 tons in the same period last year.  Average prices dropped from €2623.6 per ton to €1691.6 in 2023.  All of the exports were shipped to European countries.  Italy was the largest destination for Spolana’s exports, reducing shipments from 11,497 tons in January to September 2022 to 8,560 tons this year.

Polish PTA exports Jan-Sep 2023

In the first nine months in 2023 the Orlen Group undertook extended downtime at the PTA unit at Wloclawek, partly due technical needs and partly due to weak demand.  Revenues from PTA sales for Orlen, whether export or domestic, amounted to €248.9 million against €307.6 million in the same period last year.  By volume sales dropped from 452,000 tons in January to September 2022 to 412,000 tons in January to September 2023.  Production at Wloclawek totalled 309,000 tons in the first three quarters against 449,000 tons.

The significant drop in production meant that PTA exports from Poland amounted to only 177,601 tons in January to September this year against 308,023 tons in January to September 2022.  Average prices fell in the respective periods from €991.8 per ton to €854.8 per ton.  Lower production impacted on exports to the traditional main destination Germany where deliveries fell from 257,054 tons in January to September 2022 to 140,597 tons.   Turkey was the second largest destination for PTA export shipments, taking 7,452 tons versus 5,984 tons in the first nine months in 2022. 

European contract prices of PTA in the third quarter fell on average 27% and by 0.3% against the second quarter.  Due to weak demand the rise in the price of paraxylene in the third quarter had a limited impact on the PTA price and was not passed on in full.  This was mainly due to pressure from buyers in the downstream sectors, which were faced with imports of more affordable raw materials and finished goods from Asia.   PTA producers anticipate that supply will remain limited into 2024, the prices of the raw material will be under pressure due to rising oil prices and downstream processors’ efforts to contain price hikes.

Hungarian TDI-MDI exports Jan-Aug 2023

Hungarian TDI exports dropped in the first eight months this year to 141,395 tons against 167,420 tons in January to August 2022.  Average prices dropped from €2726.8 per ton to €2654.4 in 2023.  Although prices overall were higher in the first half this year the trend has been falling gradually.  Prices have dropped from a peak of €3255.4 per ton in January to €1978.8 per ton in August which measured against €2714.5 per ton in August 2022. 

Lower volume sales have been recorded in 2023 due predominantly  to weaker economic performance throughout Europe.  Exports of TDI to Belgium rose from 19,082 tons in the first eight months last year to 21,941 tons in January to August 2023 whilst volumes to Italy fell from 23,317 tons to 17,894 tons. 

Elsewhere in West Europe exports to Portugal dropped from 8,509 tons to 6,700 tons, and to Spain from 6,953 tons to 6,950 tons.  In Central Europe shipments to Poland fell from 19,077 tons to 16,888 tons and Romania from 9,421 tons to 9,153 tons.

MDI exports from Hungary dropped in the first eight months to 105,106 tons from 132,675 tons in the same period last year.  The most significant drop in sales was the US where no shipments were made in the first eight months against 22,122tons in January to August 2022.  MDI export prices underwent a different cycle to TDI, dropping from €2603.1 per ton in January to August 2022 to €2070.8 per ton this year.

Poland was the largest destination for Hungarian MDI exports, shipping 21,888 tons in the first eight months in 2023 versus 24,989 tons in the same period in 2022.  Romania is the second largest market in Central and South East Europe, taking 11,443 tons in the first eight months this year which was down from 13,174 tons. 

BorsodChem-annual TDI shutdown and MDI expansion

BorsodChem’s MDI plant (350,000 tpa) started maintenance on 18 July and was completed in November with normal production being resumed.  The shutdown involved modernisation and the expansion of the MDI capacity to 400,000 tpa.  

At the end of June 2023 BorsodChem opened new units for nitrobenzene and aniline for the MDI production chain.  In addition to the aniline and nitrobenzene projects, the second new cogeneration power plant was put into use, doubling the company's generation capacity to meet the company's growing demand for heat and electricity while assisting the transition to green energy.

Central European isocyanate trade Jan-Sep 2023

MDI imports into the Czech Republic totalled 27,753 tons in January to September 2023 against 27,414 tons in the same period in 2022.  Average prices dropped from €2687.1 per ton to €2266.6.    The leading supplier was Hungary which shipped 7,879 tons in the first nine months against 5,898 tons in the same period last year.  TDI imports into the Czech Republic amounted to 5,282 tons in January to September this year versus 5,671 tons in January to September 2022.   

MDI imports into Poland totalled 109,256 tons in January to September 2023 against 112,736 tons in January to September last year.  Average prices dropped from €2619.0 per ton to €2193.7 in January to September 2023.  Germany reduced shipments to 29,708 tons against 30,225 tons in January to September 2022, whilst imports from Hungary amounted to 26,314 tons against 28,314 tons.

TDI imports into Poland amounted to 50,953 tons in January to September against 56,856 tons in the same period in January to September 2022.  Prices this year averaged €2690.5 per ton in the first nine months against €2706.4 per ton in 2022.  The cost of toluene was one of the factors behind the rise in TDI prices in the first half of the year but then slowed down in the third quarter allowing TDI prices to move downwards.  Besides imports, Poland exported 3,709 tons of TDI in the first three quarters in 2023, of which 716 tons was shipped to Russia.

European polyol market prices 2023 vs 2022

Polyol prices came under significant pressure in the first half of 2023 due primarily to an influx of product from Asia and in the Middle East.  This trend changed in the third quarter reducing the impact of non-European polyols on the European market. 

Despite some stabilisation as regards non-European competition, the market has still been influenced by weak demand.  As a result profitability for European polyol producers has been severely restricted this year.  Most polyester polyols, intended to a large extent for the production of rigid foams recorded declines.

European prices for flexible polyols dropped from €2455 per ton in June 2022 to €1525 per ton in June this year, whilst rigid grade polyols fell from €2800 per ton to €2150 per ton.

MOL currently hopes to complete the 200,000 tpa polyol project in the second half of 2023.  The completion will take place simultaneously as the propylene glycol and propylene oxide plants are finished.  The project schedule overall is around 97% completed.  The polyol project at Tiszaujvaros was originally scheduled to start in mid-2021 but the pandemic slowed the progress down sharply which has been followed by the impact of the war in Ukraine. 

Czech polyol imports Jan-Sep 2023

Czech polyol imports increased in the first nine months to 33,781 tons against 31,918 tons in the same period in 2022, with average prices dropping from €2248.3 per ton last year to €1310.8 in the first nine months in 2023.  The leading supplier to the Czech market was Belgium which shipped 10,348 tons in the period January to September 2023 against 8,315 tons last year, followed by Germany which exported 5,937 tons down from 6,485 tons. 

Hungary imported 28,049 tons of polyols in the first eight months this year against 21,617 tons in the same period in 2022.  The largest source of imports came from Belgium in the first eight months, amounting to 12,388 tons against 1,345 tons in the same period in 2022.

Polish polyol trade Jan-Sep 2023

Polish polyol imports amounted to 109,744 tons in the first nine months in 2023 against 109,441 tons in the same period in 2022.  The major sources of imports came from Belgium, Germany and the Netherlands.  Polyol import prices dropped from €2378.5 per ton to €2069.5 per ton.  The largest source of imports came from Germany in the first nine months, amounting to 24,730 tons against 19,877 tons in the same period in 2022.

Exports of polyols from Poland in the first nine months amounted to 41,734 tons against 45,831 tons in the same period in 2022.  Destinations for deliveries were focused mostly on Europe in 2023, led by Germany taking 4,126 tons in the first nine months followed by Italy taking 3,805 tons.  Due to lower prices this year export revenues dropped from €118.631 million to €95.127 million. 

In Poland the production of polyurethanes is carried out by Ciech Pianki from Bydgoszcz.  This company has a production capacity of about 30,000 tpa and is one of the largest domestic producers in its industry.  In the first three quarters Ciech Pianki reduced revenues from polyurethane sales from zl 248.9 million to zl 195.8 million.  The PCC Rokita Group is the largest polyol producer for the production of polyurethanes used in the automotive, furniture and construction industries.

Hungarian maleic anhydride exports Jan-Aug 2023

Hungary exported 12,133 tons of maleic anhydride in the first eight months this year against 16,166 tons in the same period in 2022, with average prices dropping from €2267.8 per ton to €1216.9 per ton.  Export shipments to Italy and Austria amounted to 2,110 tons and 2,012 tons in the first eight months this year.  Exports to Poland from Hungary dropped from 4,024 tons in January to August 2022 to 1,862 tons.  Expansion of the maleic anhydride plant at Szazhalombatta represents one of MOL’s current investment priorities.    

Hungarian acrylonitrile imports Jan-Aug 2023

Hungary imported 14,691 tons of acrylonitrile in the first eight months in 2023 against 41,599 tons last year.  The Netherlands was the main source of imports in both years, shipping 8,008 tons in January to August 2023 versus 28,584 tons in the same period in 2022.  Acrylonitrile prices dropped on average from €2404.3 per ton in the first eight months last year to €2203.5 per ton in 2023. 

Hungarian aniline imports Jan-Aug 2023

Aniline imports into Hungary increased from 61,160 tons in the first eight months in 2022 to 72,588 tons in the same period in 2023.  Inward shipments from BorsodChem-MCHZ in the Czech Republic amounted to 42,871 tons against 58,885 tons in the same period last year. 

Belgium supplied 18,650 tons in the first eight months this year against only 988 tons in the same period in 2022.  Cost prices of aniline imports dropped from €1946.9 per ton to €1467.5 in 2023.

BorsodChem opened its new plants for nitrobenzene and aniline at the start of July.  The nitrobenzene plant consists of a capacity of 240,000 tpa and aniline at 200,000 tpa, in addition to a plant for concentrated nitric acid plant with a capacity of 1,000 tpa. 

Polish organic chemical trade Jan-Sep 2023

Exports of organic chemicals from Poland fell from 1.757 million tons in January to September last year to 1.121 million tons this year, whilst imports dropped from 3.907 million tons to 2.956 million tons.    High energy prices played a key role in driving up values last year which are still impacting on production and trade. 

In the third quarter of 2023, the prices of all oxo alcohols in Europe were on average down 36% by against the third quarter last year and 13% lower than in the second quarter.  The declines were mainly driven by weak demand, supported by lower prices of propylene.  At the end of the third quarter, supply in Europe remained limited due to the shutdown of the oxo plant at Grupa Azoty Kedzierzyn, as well as the other units operating below their full capacity.

Methanol imports into Poland totalled 447,391 tons in January to September this year against 694,697 tons in the same period in 2022.  For other organic chemical imports Poland imported 26,834 tons of acetic acid in January to September against 34,432 tons in January to September 2022.  The US was the leading supplier, shipping 12,236 tons followed by the UK with 5,930 tons. 

Ethyl acetate imports into Poland amounted to 15,010 tons in January to September this year against 12,291 tons in January to September 2022.  Belgium provided the largest share of imports.  VAM imports amounted to 12,072 tons in the first three quarters versus 13,468 tons last year.

Ethylene oxide imports into Poland totalled 13,387 tons in January to September versus 10,084 tons in January to September 2022.   Poland stopped importing ethylene oxide from Russia in May last year and Germany currently represents the main source of inward shipments.  Ethylene oxide is used in Poland mostly by PCC Rokita and PCC Exol.

Ethylene glycol imports increased in the first nine months to 81,110 tons versus 40,007 tons in the same period last year.  Belgium supplied the largest volume of glycols to the Polish market, shipping 68,413 tons in the first nine months. 

Regarding export activity in organic chemicals, Polish shipments of monochloroacetic acid (MCAA) rose sharply in the first nine months to 27,105 tons against only a few hundred tons in the same period in 2022. MCAA production is undertaken by the PCC Group at Brzeg Dolny.  The destinations for Polish MCAA exports are spread throughout Europe including Germany, Italy, France and Spain.

Other organic chemical exports from Poland include acetone where shipments amounted to 9,908 tons in the first nine months this year versus 12,548 tons in January to September 2022.   Normal butyl acetate exports dropped from 11,161 tons to 7,490 tons in January to September 2023.  The largest destination for Polish butyl acetate exports is Germany, accounting for 3,604 tons in the first three quarters for a value of €5.991 million. 

Central European methanol trade Jan-Sep 2023

Czech imports of methanol amounted to 54,770 tons in the first nine months this year against 57,233 tons in the same period in 2022.  Russia accounted for 6,237 tons against 23,014 tons in January to September last year whilst imports from Poland increased from 27,618 tons to 38,597 tons.  Prices per ton for methanol imports into the Czech Republic dropped from €478.3 in the first nine months last year to €384.1 in January to September 2023. 

Methanol imports into Poland totalled 447,391 tons in January to September this year against 694,697 tons in the same period in 2022.  Average prices amounted to €291.6 per ton against €382.1 per ton last year. 

Poland has been developing alternative sources to Russian methanol before the full embargo took full effect in June.   Apart from Venezuela and Belgium, other new sources arrived this year from the US and Trinidad.  

Norway supplied 92,687 tons of methanol to Poland in the first three quarters in 2023 versus 16,787 tons in the same period in 2022, whilst imports from Russia dropped from 543,816 tons to 187,661 tons.

Exports of methanol from Poland amounted to 215,123 tons in January to September against 335,749 tons in January to September 2022.  Revenues from Polish exports of methanol dropped from €144.705 million to €79.681 million in January to September 2023, with export prices dropping from €429.5 per ton to €362.4 per ton.  Ukraine imported 17,792 tons of methanol from Poland in the first nine months against 11,460 tons in the same period in 2022.

Methanol imports into Hungary in the first eight months in 2023 dropped to 59,508 tons against 92,044 tons in the same period in 2022.  Imports from Russia dropped from 21,526 tons to zero and from Slovakia from 18,347 tons to 4,591 tons.  Imports from Poland declined due to the embargo on Russian methanol, but still amounted to 10,234 tons.  The largest suppliers to the Hungarian market this year include Germany which provided 19,605 tons and the Netherlands which supplied 18,366 tons. 

Grupa Azoty Jan-Sep 2023

Grupa Azoty’s financial performance improved in the third quarter, but the group still could only report weak results for the first three quarters in 2023.  Production volumes for fertilisers increased in the third quarter whilst inventories decreased, but average prices were lower than in the same period in 2022 and margins were tight.  Consolidated sales revenues for Grupa Azoty amounted to €2058.5 million in the first three quarters, with an operating EBIT of minus €426.116 million and EBITDA margin of minus 13.0%.

Aside fertilisers, both the chemicals and plastics divisions recorded much lower revenues in the first three quarters in 2023.  Both divisions were partly affected by imports from outside Europe.  In the third quarter, the chemical division recorded an increase in sales by 14% over the second quarter, including an almost 50% increase in sales of sulphur and urea.  However, the segment's EBITDA margin generated in the third quarter of 2023 was minus 28.6%.  The plastics segment was affected by the decline in polyamide 6 sales which was caused by lower demand in all key segments engineering plastics, carpet fibres and packaging films.  

Grupa Azoty’s energy costs have been the main factor behind the group’s significant losses.  The group has restricted the losses through lower production last year, but this represents only a short-term solution.  Whilst raw material costs dropped by almost zl 6 billion in the first three quarters this year, energy costs recorded an almost twofold increase from zl 1.07 billion to zl 1.96 billion.

PCC Exol Jan-Sep 2023

PCC Exol’s net profit in Q1-Q3 2023 amounted to zl 42.73 million compared to zl 96.75 million in January to September 2022.  Sales of surfactants for detergents and cosmetics rose slightly from 49,500 tons to 50,000 tons in the first three quarters, whilst due to lower prices revenues dropped from €85.3 million to €65.9 million.  Industrial surfactant sales dropped from 25,900 tons to 25,500 tons, but with prices falling from €2847 per ton to €2309 per ton it meant that revenues fell to €58.9 million from €73.7 million. 

Lower revenues were driven partly by lower operating costs which involved reduced prices for the company’s main raw material ethylene oxide.  Market demand also contributed to lower prices, although some improvement was seen in the third quarter.  This translated into an increase in sales volume and an improvement in the group's results compared to the second quarter of this year.

PCC Exol is currently engaged in the construction of the second line of the Ethoxylates II plant at Plock which should be finished in 2024.  At the same time, PCC Exol is carrying out the construction of a new plant for the production of alkoxylates and other chemical compounds at Brzeg Dolny. The project is being carried out by PCC BD, a joint company controlled by PCC Exol and PCC Rokita.  

PCC Rokita Jan-Sep 2023

Due predominantly to the weakness in the polyurethane sector and polyol sales, PCC Rokita reported much lower profits in the first three quarters. 

Consolidated sales revenues amounted to zl 512.27 million in the third quarter compared to zl 802.48 million in the same period in 2022, which was attributed to a combination of lower operating costs and reduced sales.  In 2023 the predominance of supply over demand resulted in a decline in the market prices of polyols for PCC Rokita. 

Profitability in the European polyol sector has reached its lowest levels in many years, despite the improvement in the third quarter.  Margins for PCC Rokita’s polyurethanes dropped from 13.4% in January to September 2022 to only 4.2% in 2023, although the chlorine sector’s margins only dropped from 26.1% against 33.4%.  The current level of margins in the polyurethane sector is seen as insufficient for long-term investment.  The company believes that it probably has not lost any share in the polyurethane market segment and volume should recover in time.   Overall, the focus strategy of PCC Rokita on polyols for higher quality foams provides the basis for future performance.    

Operating costs for PCC Rokita amounted to zl 595.2 million in the first three quarters in 2023 which was 14.7% lower than in the same period in 2022.  This was partly attributed to lower costs for propylene oxide purchases. 

Chimcomplex Jan-Sep 2023

Chimcomplex’s turnover totalled €217.262 million in the first three quarters, decreasing from €350.861 million in the same period in 2022.   The net profit amounted to €11.020 million, decreasing from €23.160 million last year.  The drop in turnover was caused by lower quantities sold by the company, which was due to a reduction in demand in the European market combined with lower sales prices. 

Chimcomplex operated at a reduced capacity pver the three quarters.  Costs declined for raw materials and energy, with average propylene prices reduced from €1241 per ton to €701 per ton.  Despite lower costs margins have been restricted by lower prices for polyols.  Chloralkali sales helped offset the weakness in polyol sales and allowed the company to attain a 9% margin between January and September 2023.   Energy costs were significantly lower this year for both natural gas and electricity.

In the medium and long term Chimcomplex intends to focus on increasing the production of polyols, whilst developing projects to obtain methanol, ethylene oxide, and monoethylene glycol, glycols.  Some plans include modernising the existing idle PVC plant, but this may not be economically viable.  Generally the diversification of production by including new chemical products that Romania currently imports is a strategic objective of Chimcomplex.  Regarding energy investments the construction of the cogeneration plant at Ramnicu Valcea forms a major plank of its strategy with aims to reduce CO2 emissions.

Russian base chemical and fertiliser production Jan-Sep 2023

Russian chemical production is relatively stable even if most producers reported much lower profits in the first three quarters in 2023.  Russian ammonia production totalled 12.6 million tons in January to September 2023 against 12.7 million tons in the same period in 2022, whilst caustic soda dropped from 966,000 tons to 913,100 tons.  Ethylene production slightly exceeded production numbers in the first nine months last year, rising from 3.275 million tons to 3.286 million tons.   Methanol recorded a fall in production from 3.323 million tons to 2.828 million tons, due primarily to the loss of EU trade.   

SIBUR Jan-Sep 2023

SIBUR Holding's net profit for nine months of 2023 amounted to 85.9 billion roubles against 226.4 billion roubles for the same period in 2022 (2.6 times lower).  Revenue increased by 5.5% to 745.4 billion roubles, but costs of sales increased by the higher rate of 12% to 495.7 billion roubles. As a result, gross profit decreased by 7% to almost 250 billion roubles.  Due to a significant increase in selling expenses (by 57%), the company's profit from sales decreased by 16% to 189.5 billion roubles.  SIBUR's profit before tax in amounted to 102.8 billion roubles against 280 billion roubles a year earlier.

Russian rubber & polymer production Jan-Sep 2023

The production of plastics in Russia totalled 8.013 million tons in the first nine months this year against 7.760 million tons in the same period in 2022.   The largest Russian producer SIBUR reported significant falls in net profit in the first three quarter this year despite a rise in revenues.  One of the main causes of lower profits includes higher transport costs for shipments to China. 

 Russian production of polyethylene rose from 2.579 million tons to 2.672 million tons in the first nine months in 2023.  This market has been particularly helped by the increased consumption in pipe manufacture for water and gas pipelines. 

Polystyrene production amounted to 429,500 tons in January to September against 431,400 tons in the same period in 2022.  PVC is the bulk polymer which has seen the largest fall in production, declining from 764,300 tons in the first three quarters in 2022 to 724,100 tons.  The production of formaldehyde resins has seen a revival this year, exceeding production in the first three quarters from 2022 by 5.2%.  September was the key month where production exceeded volumes in September 2022 by 32.6%, totalling 113,000 tons. 

The production of polyamide in Russia fell from 127,500 tons in the first three quarters last year to 99,500 tons.  Russian production of synthetic rubbers amounted to 1.038 million tons in the period January to September 2023 compared to 1.142 million tons in January to September 2022.

Russian plastics production Jan-Sep 2023

Russian bulk plastics production amounted to 8.013 million tons in January to September this year against 7.760 million tons in the same period in 2022 and 8.191 million tons in 2021. 

Although the production of plastics increased to record levels in 2023, not all products have seen strong demand.   Polyethylene has been the leading product, whilst polyamide production has been affected by lower tyre consumption and also exports.  PVC production has been in particular affected lower construction in the domestic market. 

Polyethylene production amounted to 2.672 million tons in the first nine months, up from 2.579 million tons in the same period in 2022.  This year the polyethylene market has recovered somewhat after recording a decline in sales of 8.2% in 2022 over 2021. 

Russian polyethylene trade Jan-Sep 2023

Russian polyethylene exports to China dropped from 378,965 tons in January to September last year to 156,535 tons, with values dropping from $313.1 million to $170.1 million.   Export grades from Russia to China comprise mostly HDPE and LDPE.  Export shipments peaked in August and September last year when a combined total of 165,800 tons were delivered which dropped to 31,000 tons in the same two months in 2023.

By contrast inward shipments of polyethylene from China into Russia increased by value in the first nine months to 77,210 tons versus 28,273 tons in 2022 and 16.584 tons in 2021.   The most expensive grades of polyethylene included ethylene-vinyl acetate and ethylene-hexene copolymers.  Average prices fell in the first three months to $1177.1 to $1675.9 in the same period in 2022 and $1542.4 in 2021.

In terms of trade balance Russia is still a net exporter of polyethylene to China both in volume and value, but the gap is narrowing.  Imports from China amounted to $131.4 million in the first three quarters this year versus $61.1 million in the same period in 2022, thus reducing the positive trade balance from $252.0 million to $40.0 million.  Overall, since the start of the war polyethylene trade has been adversely affected by sanctions and isolation from European markets.  In 2022, polyethylene exports from Russia decreased by 17.6%, which was due to the introduction of a sanctions ban on the import of ethylene polymers from Russia to the EU countries.

Russian polypropylene production Jan-Sep 2023

Whilst the demand for polypropylene in new car construction was affected in Russia last year from the economic fallout from sanctions, there has been increase in demand for automotive components in the secondary market.  The aging car fleet in Russia and the sharp rise in car prices have influenced buyers to postpone the purchase of new vehicles and concentrate on repairing existing models.   Although China has sold large volumes of cars to Russia in the past two years, helped by the exit of Western companies, quality problems have meant that many consumers would prefer to repair an older but more reliable brand. 

In addition to the growing demand for automotive components, the demand for polypropylene gas been supported by infrastructure projects and projects to modernise the housing and utilities sector, carried out with the support of the state.

Production of polypropylene in Russia in the first three quarters this year amounted to 1.535 million tons against 1.530 million tons the same period in 2022.  The forecast for 2023 is a total of 2.167 million tons.  In the first three quarters this year ZapSibNeftekhim accounted for 52.1% of polypropylene production, whilst Nizhnekamskneftekhim took 17.9%.   

Russian polypropylene production totalled 1.994 million tons in 2022, with the highest monthly volume reported in January at 191,048 tons and the lowest in October at 138,944 tons.   Last year’s decline in production was influenced by a decrease in sales of polypropylene within the country, as well as a decrease in export supplies.  

Russian-Chinese polypropylene trade Jan-Sep 2023

China increased export sales of polypropylene to Russia to 44,735 tons in the first nine months against 22,590 tons in the same period in 2022.  Import costs increased from $49.446 million to $86.372 million.  Average prices amounted to $1898.5 per ton in January to September this year against $2045.6 in the corresponding periods in 2022 and $1675.7 in 2021.   Exports of polypropylene from Russia to China amounted to 126,477 tons in the first nine months in 2023 against 41,361 tons in the same period in 2022.  Average prices fell from $1158.4 per ton to $813.8 per ton.

In 2022, polypropylene exports decreased by 12.4% under the influence of the imposed ban on the import of Russian polypropylene to the EU countries. In 2022, supplies to Poland and Ukraine, as well as to Vietnam, decreased the largest amount.  At the same time an increase in supplies to Turkey, China and Uzbekistan helped to avoid a more significant drop in exports.

Russian PTA imports Jan-Sep 23

Russian PTA imports from China increased in the first nine months to 188,200 tons versus 142,300 tons in the same period last year and 187,000 tons imported in January to September 2021.  This year values of imports amounted to $146.7 million in the first nine months against respectively $125.7 million in 2022 and $111.6 million in 2021.  Nearly all of the PTA imports from China were shipped to Ekopet at Kaliningrad by rail.  PTA import prices averaged $779.6 in the first nine months this year, down from $883.1 in 2022 and up from $596.7 in 2021.

Russian PET trade Jan-Sep 23

In the first nine months Russian import costs of PET from China amounted to $161.209 million against $223.712 million in January to September 2022 and $120.884 million in 2021.  By volume imports dropped from 199,856 tons to 174,488 tons in January to September 2023.  Average prices dropped this year in line with lower feedstocks costs, amounting to $922.3 per ton against $1119.0 per ton in the first nine months last year.  However, they were higher than the comparative period in 2021 when numbers amounted to $839.5 per ton.

Russian PET imports from China in the whole of 2022 amounted to a total of 238,000 tons, which is 34.7% more than in 2021.  As a result, the share of Chinese PET in total Russian imports increased from 84% to 95%.  Russia imported 194,260 tons of PET from China in 2021 for $194.690 million, whilst Import values rose to $296.478 million.

Tatneft-PTA project

The Investment Council of Tatarstan has approved the project for the production of PTA at Nizhnekamsk.  The total investment will amount to about 91.2 billion roubles ($1.031 billion at current exchange rates), with a project construction period lasting five years.  At the moment, there is only one PTA production facility in Russia at the Polief plant (part of SIBUR).   In December 2022, Taneko launched the production of aromatic hydrocarbons in the mode of comprehensive testing. Eight units have been commissioned in stages since 2018, including one unit that can produce 150,000 tpa of paraxylene.  In addition to this plant Tatneft announced additional plans in June this year to build another combined aromatics unit at Taneko which would increase the capacity for paraxylene and enable the switch to the production of PTA.  PTA from Tatneft is planned to be supplied to the Kaliningrad petrochemical plant Ekopet (part of the Tatneft Group).  Currently Ekopet is forced to buy import PTA from China.  

Previous plans to construct PTA and PET facilities in Tatarstan were considered in 2016 under SafPet, but were cancelled due to a lack of financial backing.  Tatneft revived the concept in 2021 with plans to construct a plant with a capacity of 600,000 tpa.  in 2022 the project appeared to have stalled but this year it has returned to the investment table.  In addition to meeting Ekopet’s demand for PTA Tatneft wants to use PTA for producing polyester fibre in Tatarstan.  In June 2023 a Russian polyester fibre plant started at Shakhty near Rostov with a capacity of 72,000 tpa.  This plant has already started using PTA and MEG. 

Polief-raw materials supply

Polief increased MEG purchases of MEG in the first nine months in 2023 to 46,300 tons versus 38,100 tons in the same period in 2022. 

Nizhnekamskneftekhim is the main supplier to Polief, shipping 40,600 tons in the period January to September.  The capacity of the plant at Blagoveshchensk is currently estimated at 374,000 tpa of PTA and 264,000 tpa of PET.   Polief produces a small surplus of PTA which is sent normally to SIBUR-PETF at Tver. 

Russian synthetic rubber production Jan-Sep  2023

Synthetic rubber production in Russia amounted to 1.038 million tons in January to September 2023 against 1.142 tons in the same period in 2022 and 1.260 million tons in 2021.  Tyre manufacturing remains suppressed by weak demand and concerns over how many drivers will be able to purchase new winter tyres.

Regarding C4 supplies, Togliattikaucuk increased purchases from 113,700 tons in the first three quarters in 2022 to 119,300 tons in the same period in 2023 whilst Nizhnekamskneftekhim increased purchases from 77,400 tons to 119,300 tons.  Overall merchant sales of C4s on the Russian domestic market amounted to 295,800 tons in the first three quarters against 323,200 tons in January to September 2022.  C4 merchant sales have fallen this year due mainly to lower production by the rubber producers.   SIBUR-Kstovo increased shipments from 69,500 tons to 82,800 tons whilst Gazprom neftekhim Salavat reduced shipments from 59,000 tons to 6,900 tons.

Russian butadiene production totalled 119,372 tons in the first nine months in 2023 against 172,003 tons in the same period in 2022.  The largest producers ZapSibNeftekhim and Nizhnekamskneftekhim both showed lower production as 2022 progressed.  ZapSibNeftekhim produces butadiene only for merchant market sales whilst Nizhnekamskneftekhim processes most of its butadiene into rubber SKD-N and SKD-L are butadiene rubbers based on neodymium and lithium catalysts. 

Russian Chinese rubber trade Jan-Sep 2023

Russian exports of synthetic rubber to China totalled $519.68 million in the period January to September 2023 against $423.611 million in 2022.  By volume Russian shipments amounted to 371,043 tons in the first nine months versus 239,519 tons last year.

By volume butyl rubber exports from Russia to China increased from 65,187 tons in January to September 2022 to 71,267 tons in the same period this year.  Butadiene rubber exports increased from 32,523 tons to 78,887 tons whilst SBS grade SBRs increased from 19,975 tons to 65,726 tons.  Only halogenated butyl rubber exports recorded a significant fall, dropping from 53,193 tons to 41,741 tons.  Nitrile-butadiene rubber shipments increased from 9,084 tons to 24,290 tons.

By value butyl rubber exports from Russia to China dropped slightly from $109.303 million in January to September 2022 to $108.097 million in the same period this year.  Butadiene rubber exports increased from $55.376 million to $99.247 million whilst SBS grade SBRs increased from $29.070 million to $77.529 million.  Halogenated butyl rubber exports recorded a significant fall, dropping from $130.137 million to $84.093 million.  Nitrile-butadiene rubber shipments increased from $9,359 million to $34.161 million.

Voronezsintezkaucuk starts catalyst plant

Voronezhsintezkaucuk intends to build Russia's first plant for the production of n-BuLi catalyst for the creation of synthetic rubbers.  N-BuLi is required to produce a solution of N-butyllithium in nefras (petroleum solvent), which is an important component in the production of synthetic rubbers and SBS polymers.  N-butyllithium is currently not produced in Russia, and was imported previously from European countries and the US.   Since 2022 it has been supplied from the countries of the Asia-Pacific region.

To meet SIBUR's own needs, it will build its own catalyst plant at the holding's Voronezh site, and n-BuLi will also be supplied to other segments, in particular for the pharmaceutical industry.  The design production capacity will be 350 tons per annum for pure N-butyllithium. It is planned to build three production lines for synthesis and filtration. 

Voronezhsintezkaucuk’s capacity comprises 226,000 tpa of synthetic rubber and 135,000 tpa of SBS polymers.  The company's products are in demand in many areas of industrial production: rubbers are widely used in the production of rubber for car tyres and rubber products; SBS polymers are used to improve the quality of road surfaces and roofing materials.  In 2021 Voronezhsintezkaucuk produced 221,000 tons of synthetic rubber and 125,000 tons of SBS polymers.

Nizhnekamskneftekhim-expansion of halogenated butyl rubber

Nizhnekamskneftekhim had set a target of raising synthetic rubber capacity by 2025 to 1 million tpa, but due to external events such as the pandemic and now sanctions capacity remains around the current 800,000 tpa.  Rubbers have traditionally provided 35-40% of all proceeds for Nizhnekamskneftekhim and 80% of the company’s foreign exchange earnings.

Nizhnekamskneftekhim is close to completing the expansion of capacity for halogenated butyl rubber (HBR) from 150,000 tpa to 200,000 tpa.  This product has been expanded due to its high margin attractiveness and strong demand.  The start of production of halogenated butyl rubber at Nizhnekamskneftekhim first took place in March 2004.  The initial capacity of HBR production at Nizhnekamskneftekhim was 40,000 tpa.  In 2012, production increased to 100,000 tpa and then later increased to 150,000 tpa.  

The company’s production of butyl rubber will remain unchanged after the HBR expansion, or possibly be reduced to accommodate higher production of rubber derivatives.  The increase in the production of HBR involves the additional construction of six new units which have already passed the necessary//y examinations.  HBRs are used as a sealing layer in the manufacture of tubeless automobile tyres.  Due to this component, they become not only more environmentally friendly, but also economical, allowing to reduce fuel consumption. 

Nizhnekamskneftekhim’s rubber caapcities 

Until Russia invaded Ukraine Nizhnekamskneftekhim sold nearly of its synthetic rubber exports in the European market, shared with other players.  Since the second half of 2022 the company has been redirecting exports largely to China.  After the acquisition of Nizhnekamskneftekhim in 2021, SIBUR became the largest producer of synthetic rubber in Europe but is largely excluded from European markets.  Before sanctions Nizhnekamskneftekhim sold rubber under long-term contracts to tyre manufacturers such as Goodyear, Michelin, Pirelli, Continental, Bridgestone, etc.  Most of these contracts came with zero margins or at a loss in order to fulfil the terms of supply, even if sales themselves brought decent revenue.  As a result, the total revenues for the company rose sharply even if total profitability only hovered around 10%.

Russian methanol production Jan-Sep 2023

Russia produced 2.828 million tons of methanol in the first nine months in 2023 against 3.323 million tons in the same period in 2022.  All producers reported lower production volumes with Azot at Novomoskovsk recording a drop from 170,520 tons in January to September 2022 to 9,320 tons in the same period this year.  Azot at Nevinnomyssk reduced production from 85,650 tons to 82,803 tons whilst Ammoni in Tatarstan reduced production from 74,670 tons to 55,843 tons. 

Gazprom Methanol reduced production from 530,380 tons in the period January to September 2022 to 518,820 tons whilst Metafrax reported a fall from 854,025 tons to 821,690 tons. 

Russia’s largest producer Shchekinoazot reduced production from 1.142 million tons to 936,674 tons.  At Togliatti Tomet produced 320,203 tons of methanol in January to September 2023 versus 372,355 tons last year. 

Gazprom Methanol shutdown

Gazprom Methanol stopped for planned maintenance on 11 September.  Officially this was scheduled, but unofficially market concerns and lower prices helped the decision to undertake maintenance.  No precise restart date has yet been confirmed.  Irrespective of the reasons, the company will take the opportunity to conduct key maintenance and repair of equipment, replacing process pipelines, and repairing thermal insulation and cover layer on pipelines and equipment. 

One of the planned tasks include the modernisation of the synthesis gas compressor turbine will be undertaken.  Other tasks include the modernisation of the water circulation cycle and replacement of switchboard equipment. During the repair, the catalysts for desulphurisation and methanol reforming, as well as methanol synthesis, will be replaced.  It is not clear how long the outage will last. 

Russian methanol exports Jan-Sep 2023

Russian methanol exports amounted to 1.206 million tons in the first nine months in 2023 versus 1.599 million tons in the same period in 2022.  China accounted for 50.3% of Russian exports in January to September, amounting to 606,605 tons, against 3.4% in 2022 when exports amounted to 53,992 tons.

The third quarter was particularly slow for Russian exports, with volumes amounting to 314,162 tons against 444,089 tons in the second quarter and 447,587 tons in the first quarter.  In September volumes amounted to 99,548 tons which was the first time that numbers had fallen below the 100,000-ton threshold since June 2017.  Part of the reason for the lower shipments in September was the maintenance outage at the Gazprom Methanol plant at Tomsk, starting on 11 September.  China accounted for 72.2% of Russian exports in September, with Turkey accounting for 15.9%.

Russian methanol exports to Belarus decreased to 108,975 tons in January to September 2023 against 175,818 tons in January to September 2022.  Exports to Kazakhstan in the first nine months in 2023 increased to 35,175 tons from 28,399 tons last year whilst more significantly shipments to Poland dropped from 333,099 tons to 126,002 tons. 

China’s imports from Russia were valued at $159.165 million for shipments in the first nine months.  In terms of product pricing Russian shipments to China averaged $276.893 per ton over the period January to September 2023.  These prices test profit margins for Russian producers which are facing much higher logistics costs to China than to European markets. 

By overall volumes Tomet exported only 92,410 tons of methanol in the first nine months this year versus 120,098 tons in the same period last year.  Gazprom Methanol increased exports slightly in the first nine months from 226,232 tons to 286,325 tons.  

The export of methanol to the east is hampered by the shortage of carrying capacity of the Eastern railway range, which market participants estimate at 95 million tons, and it is expected that it will only increase. There are also difficulties with the carrying capacity to the ports of the Southern Basin: both because of the increased cargo traffic in this direction, and because of the priority for special cargo.

Most of the exports to China are conducted through the port of Nakhodka-Vostochny, accounting for 96% of shipments in the first nine months in 2023.  The other route used by Russian producers is Zabaikalsk which is located on the border with China.  Tomet appears to favour exports using this rail connection.

Russian methanol domestic sales, Jan-Sep 2023

Domestic merchant market sales in Russia have been steady in recent months enabling producers to operate at reasonable levels of utilisation.    In the first nine months in 2023 Metafrax Chemicals increased domestic merchant sales to 353,578 tons against 301,423 tons in the same period in 2022.  Metafrax Chemicals reduced its revenue by 15% in 2022 compared to 2021 to 27 billion roubles, whilst the net profit decreased by 22.6% and amounted to 10.6 billion roubles.

Gazprom Methanol reduced domestic shipments of methanol from 270,477 tons in January to September last year to 226,521 tons in January to September 2023.  Previously formaldehyde was produced by Gazprom Methanol, but the assets were sold in 2021.  The largest domestic consumer for Tomet is Togliattiazot where methanol is used for the production of urea-formaldehyde concentrate.  In the first three quarters sales to Togliattiazot enabled Tomet to sell 217,574 tons on the domestic market which was down from 253,205 tons last year.

Shchekinoazot increased domestic methanol sales from 218,307 tons in the first nine months in 2022 to 291,831 tons in January to September 2023.  This partly offset the loss of export volumes.  Overall, the company faces the largest challenges amongst the Russian producers having expanded its capacity to 1.45 million tpa in September 2021. 

Nakhodka terminal for methanol and fertilisers

The Nakhodka Mineral Fertiliser Plant (NFP) has reported the start of construction of the offshore part of the terminal intended for export deliveries of methanol and fertilisers.  The terminal, which is to be connected with the new methanol and fertiliser complex, is being designed to receive up to 105 vessels annually.  The configuration of the terminal comprises 424 meters in length with a water area of 38,300 square meters.

The terminal includes a methanol loading capacity of 1400 tons per hour, from the 1.8 million tpa plant where construction is reported to have started but wwhich is yet to be constructed.  However, information about the project itself remains vague.  The design framework is being established to allow methanol to flow from the tank through a pipeline directly to the vessel, which excludes its entry into the water area.  The criteria involves a terminal which will ensure safe and uninterrupted supplies of methanol and fertilisers to the countries in the Asia-Pacific region. 

Construction of the methanol plant (1.8 million tpa) represents the first part of the project being undertaken by Nakhodka Mineral Fertiliser Plant, with the second stage comprising urea with a capacity of 3 million tpa.  The first stage is currently scheduled to reach its design capacity in 2025, several years later than originally planned, but news on the project status remains vague.    For the entire complex the volume of gas processing per annum required by NFP amounts to around 3.15 billion cubic metres.

Ruskhim methanol project-port development

Whilst most Russian methanol projects have been either scrapped or simply postponed, Ruskhim continues with its preparation for the infrastructure to support the construction of its methanol plant in the Yamal region of West Siberia. 

The marine infrastructure facilities, which will become a link in the development of the Arctic zone and the Northern Sea Route (NSR), are being built with the participation of Rosmorport. The site of the gas chemical complex of Ruskhim Gas LLC is located in the village of Krasnoye in the Zapolyarny District of the Nenets Autonomous Okrug (NAO) and is part of the promising part of the development of the port of Naryan-Mar.

Ruskhim intends to build a gas chemical complex (formerly the Pechora LNG project) to process natural gas into methanol by 2028, although this date remains provisional.  The plant’s capacity is estimated at 1.8 million tpa. The products are planned to be shipped along the Northern Sea Route (NSR) to Europe and Asia through the future port near the village of Indiga. 

The main problem is technology in that the license agreement with Air Liquide is rendered void owing to sanctions.  Thus, it is not clear if any alternative technology is available.   The total investment is estimated at more than 200 billion roubles ($2.4 billion).

Akron Jan-Sep 2023

Akron's net profit for the first nine months of 2023 decreased by 2.9 times, to 25.86 billion roubles.  Akron's revenue decreased by 29% compared to the same period in 2022, to 94.4 billion roubles. Gross profit almost halved, to 45.4 billion roubles, and profit before taxes dropped threefold, to 30.9 billion roubles.  

Akron’s ammonia production in January-September increased by 3.1% to 2.186 million tons, whilst urea production rose 5.1% to 1.450 million tons.  By volume Akron's production of mineral fertilisers in the first nine months increased by 0.2% compared to the same period last year to 5.678 million tons.  At the same time, methanol production dropped by 19.6% to 63,900 tons, formalin to 98,500 tons, and urea-formaldehyde resins by 2.2% to 115,000 tons.

Russian exports of organic chemicals to China Jan-Sep 2023

Russian exports of organic chemicals to China increased in the first nine months in a number of product areas. 

Methanol saw the largest volumes, but also oxo alcohol exports were higher this year in addition to acrylates from the Salavat plant.  Other products included propylene and caprolactam.  The loss of EU markets has been a major factor in leading to more Sino-Russian trade in chemicals, despite the high logistics costs.  This year has seen in a rise in butanol imports from Russia, including an increase in isobutanol shipments from 1,627 tons in January to September 2022 to 10,243 tons, and for normal butanol from 1,812 tons to 6,946 tons.

Russian maleic anhydride market

The share of domestic production of maleic anhydride in the Russian market accounted for around 80% of consumption in the first three quarters in 2023, rising from 33% in 2022.   Total consumption this year is forecast to total 11,000 tons, up from 9,000 tons in 2022.  The only maleic plant in Russia operates on the territory of the ZapSibNeftekhim plant and was launched in 2022.  Previously maleic anhydride was produced at Tambov and Novomoskovsk, but both plants used old technology based on benzene feedstocks.  Both plants stopped producing more than twenty years ago and since then the country’s consumption has been based on entirely on imports. 

China has been the main supplier of maleic to the Russian market in the past few years, shipping 4,583 tons in 2022 for revenues of $7.156 million.  This year due to the availability of domestic production imports from China amounted to only 1,104 tons in the first nine months. 

The most promising segments of maleic consumption in Russia comprise additives for lubricants and fuels, additives for concrete and for the food industry (tartaric acid, malic acid), pulp and paper mills.  Other areas include reagents for the oil and gas industry, and the BDO sector (1,4 butanediol, N-methylpyrrolidone and gamma-butyrolactone).

Russian PU market

Almost all polyurethane production in Russia is based on imported material, and industrial facilities are located in general production facilities and in Russian factories.  After encountering multiple challenges following the course of Western sanctions, the Nizhnekamsk polyurethane producer Elastokam plans to launch the production of all types of polyurethane materials by 2025-2026.   Elastokam was set up originally as a jv between Nizhnekamskneftekhim and BASF two decades ago, but BASF has since been replaced by SIBUR.  The main restrictions on undertaking investment plans are linked to the lack of domestic isocyanate production.

Isocyanate/polyol imports from China into Russia

Due to sanctions, Elastokam lost some of its foreign partners in 2022, whilst access to isocyanates and low-tonnage chemistry was lost.   However, with the help of SIBUR, it was possible to find suppliers in China and elsewhere in Asia.  

TDI imports from China into Russia increased from 20,903 tons in January to September 2022 to 21,184 tons in the same period in 2023 whilst MDI imports increased from 54,331 tons to 95,940 tons.  TDI prices fell from $2654.5 per ton in January to September 2022 to $2622.3 per ton in 2023 whilst MDI prices fell from $2622.8 per ton to $1966.7.

Polyol imports into Russia increased from 39,952 tons in the first nine months in 2022 to 90,731 tons in the same period in 2023.  Import costs rose from $67.938 million in the first three quarters last year to $138.557 million.  Average prices fell from $2288.4 per ton to $1538.0 in 2023.  The general perception of instability in the industry remains, but although market participants are gradually returning to discussing prospects and investment projects. The company looks at the third and fourth quarters of 2023 with cautious optimism, expecting growth of 4-5%.

Volzhsky Peroxide-hydrogen peroxide plant start-up

Volzhsky Peroxide (part of the Orgsintez Group) has launched the production of hydrogen peroxide. The design capacity is 50,000 tpa in terms of 100% concentration and is the first anthraquinone peroxide plant to be opened in Russia.   The production unit is located at Novocheboksarsk at the industrial site of Khimprom and will make it possible to completely replace imports.  Currently, the share of imports in Russian peroxide consumption is estimated at 60%.    The company Volzhsky Peroxide was created specifically for the new project. At the end of 2019, Volga Peroxide entered into an agreement with the Swedish company Chematur Engineering AB for the transfer of technology for the production of hydrogen peroxide using anthraquinone technology and the supply of the main process equipment.  Construction began in 2020.  The Orgsintez Group unites several chemical enterprises, including the companies Volzhsky Peroxide, Khimprom, and Percarbonate. 49% of the Orgsintez Group belongs to the Renova Group of Companies.

Gas separation plant Tengiz to provide ethane for Silleno polyethylene plant

Ethane production at the future gas separation complex at the Tengiz field may amount to 1.6 million tpa.  The ethane will be sent to polyethylene production.  This will be the first Kazakh project with such a processing capacity of 9.1 billion cubic metres of dry gas per annum. The ethane pipeline will allow transporting ethane from the gas separation complex to the future polyethylene production plant which is intended to be constructed under the jv Silleno.

KPI starts BOPP film production in Kazakhstan

Kazakhstan Petrochemical Industries Inc. (KPI) has started production of a new grade of polypropylene PP H031 BF/7, which is intended for the production of BOPP film.  Kazakhstan Petrochemical Industries Inc has been producing polypropylene from gas from the Tengiz field since 2022.  The design capacity of the enterprise is 500,000 tpa. 

Butadiene and rubber project Kazakhstan

The construction of a Kazakh-Russian jv butadiene and rubber plant with Tatneft has now started.  The plant of Butadien LLP will launch the production of styrene-butadiene-styrene, divinyl-styrene synthetic rubber, 120,000 tpa of butadiene, 85,120 tpa of isobutane-isobutylene fraction, as well as 40,000 tpa of MTBE.  Tengizchevroil will supply around 380,000 tpa of butane at Atyrau to the new plant when operational. 

The volume of rubber production will be about 100,000 tpa which will be sent to the KamaTyresKz tyre plant.  These include styrene-butadiene-styrene-rubber (SBSR), which is used in road surfaces, divinyl-styrene synthetic rubber, which is used in the tyre industry, isobutane-isobutylene fraction, which is designed to produce MTBE, butyl rubber, isoprene and alkylate. 

The first phase of the project is expected to be launched in 2025.  Investments in the project are estimated at $1 billion. The future plant will produce five different types of products. 

Lummus Technology is providing the C4 technologies combining with BASF’s butadiene extraction technology for units at the new petrochemical plant at Atyrau.  In addition to the licensed technologies, Butadiene LLP will have access to Lummus portfolio of lifecycle services during the construction period and operation stages of this project, such as advanced operator training simulators, extended technical support and digitalisation services.

SOCAR Methanol Jan-Sep 2023

SOCAR Methanol produced 350,100 tons of methanol in January-September 2023, which is 13% lower than in the first nine months in 2022.  SOCAR Methanol exported 343,682 tons of methanol in January-September (a decline of 6.8% vs 2022).  The drop in values was more significant, falling by 36.8% to $65.719 million as prices dropped to an average of $191.2 per ton.  In 2022, SOCAR exported 504,335 tons of methanol for total revenues of $131.933 million, thus at an average of $261.6 per ton.  SOCAR Methanol produced 534,500 tons of methanol in 2022 which was 41.4% higher than in 2021 when an extended shutdown took place.   

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