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Analysis: Russian exports of polypropylene to EU set to continue to increase

Russia’s rising surplus of polypropylene amid growing local production is expected to boost exports to Europe, analysts told Platts over the past week.

The 2015 Russian share of homo-injection polypropylene imports into the European Union more than doubled to 6.9% in 2015 from 3% in 2014, according to Eurostat data released last week. Russian imports to the EU rose to 62,221 mt in 2015 from 22,669 mt in 2014. In total the EU imported 896,547 mt of homo-injection PP in 2015, risking 19.3% from 751,818 mt in 2014.

Russia stepped up its position as a PP producer in 2013.

Two PP plants were commissioned that year: Omsk-based Poliom plant (owned by the Titan Group, Sibur and Gazprom Neft), which was put into operation in February 2013, and Tobolsk-Polymer (Sibur) in the Tyumen Region, which was commissioned in October 2013.

Russia, became a net exporter of polypropylene in 2014, is expected to see current surpluses of around 200,000 mt rise to 500,000 mt by 2017, according to data from Platts Petrochemical Analytics.

The surplus could be even higher if the wave of new projects materialise post 2017, Platts managing analyst Hetain Mistry said. “This capacity is likely to be geared towards supplying the rest of Eastern Europe, Asia and potentially Western Europe, as the latter is expected to turn to a deficit market in the next five to seven years”

Sergey Goncharov, analyst at Russia’s Sberbank, said: “Sibur and Poliom have more than doubled the country’s capacity by launching two facilities in end-2013 and bringing them into full capacity a year later.”

The Omsk plant had an installed capacity of 180,000 mt (expanded to 210,000 mt in 2014), while Tobolsk had an installed capacity of 500,000 mt

“It sounds logical then [following the increase in production] that the country started exporting more to its nearest market — Europe, as well as certain CIS countries,” Goncharov told Platts Friday.

Production continued to increase the following year. In 2015 production of PP stood at 1.179 million mt up from 1 million mt in 2014, according to the latest Russian customs data.

RUSSIAN PP EXPANSIONS

About 1.7 million mt is planned to be added to existing PP capacity in Russia in period of 2016-2020. This includes a ,000 mt at the Angarsk PolymerPlant, 400,000 mt at Nizhnekamskneftekhim, 500,000 mt at Sibur-ZapSibNeftekhim and 600,000 mt at Rosneft. However, some of these projects could be subject to delay, which could push back additional capacity, according to Platts Mistry.

2015 PP IMPORT SPIKE ON EU FORCE MAJEURES, RUBLE

The steep increase in PP imports into Europe was also attributed to an unprecedented number of polymer plant outages seen in mid-2015 in the European market and a depreciation in the Russian currency.

An unprecedented number of outages hit European converters last summer. By the end of summer, over 50 declarations of force majeures had been declared across all polymers, Ron Marsh, chairman of Polymers for Europe Alliance told Platts in December. “At one stage earlier [in the] year there were 30 force majeures in place at the same time,” he said.

Evgenia Dyshlyu analyst at Gazprombank also told Platts Friday that the increase in Russian PP exports “may be attributable to firstly, to the Russian ruble devaluation against hard currencies (and, thus, lower selling prices in $/mt and Eur/mt terms) and secondly, higher production in Russia.”

The Russian ruble fell from 58.625 against the dollar in the beginning of 2015 to exit the year at 73.434. The ruble fell to its weakest level ever against the dollar on January 21 at 83.493.

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