Russia Petrochemicals Report Q4 2013: New research report available at Fast Market Research

From: Fast Market Research, Inc.
Published: Mon Nov 04 2013

Russian petrochemicals capacity expansion over the medium term will be stimulated by expansion of nonoil industrial sectors and domestic market growth. BMI believes that a structural change in the economy towards domestic demand-led growth should benefit the petrochemicals industry, which is expected to see polymers capacity exceed 10mn tonnes per annum (tpa) by 2017 - a three-fold increase from that seen in 2008. Domestically-driven growth should ensure expansion does not lead to an imbalance between supply and demand, although in some segments there is the prospect of exports.

We are revising down our 2013 real GDP forecast for Russia to 2.6%, from a previous forecast of 3.6%, on the back of signals that President Vladimir Putin is willing to let headline growth drop below the 3.0% level over 2013. However, most petrochemicals-consuming segments are set to outstrip GDP growth, with industrial growth anticipated to rebound to 6.8%, from the 5.2% contraction seen in 2012. While economic activity may be slowing, the output of key products from polymers grew 10% year-on-year (y-o-y) in H113.

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Russian per capita consumer spending is forecast to increase by 59% between 2013 and 2017, compared with a regional growth average of 42%, which should boost the polyethene segment.

* Key forecasts for Russia's petrochemicals sector: Russia is set to transform from a net PP importer to exporter in 2013 as new domestic capacity comes on stream. The most significant development is Sibur's 500,000tpa PP Tobolsk Polymer plant, which began trial production in May 2013 and is set for commercial production by the end of 2013. Meanwhile, Titan Group, based in Omsk, western Siberia, started operations at its new 180,000tpa PP plant in May 2013.Surging growth in the automotive industry will be broad-based, as it will benefit domestic carmakers and help develop the solid local supply chain, which in turn will boost demand for synthetic rubber and engineering plastics. BMI's core scenario for the autos sector in Russia envisages a more than three times increase in production, to 2.93mn units by 2017, compared with the level seen in 2009; output is set to grow 7.1% in 2013.
* PVC will receive a boost from growth in the construction sector, which is forecast to come in at 4.9% in 2013, but falling to an average of around 4.0% over the medium term.
* Sibur is pressing ahead with the EUR40mn PET polymer production project being built by Polief, in which it has a controlling stake. By July 2013, all production equipment required to expand PET capacity at the Polief complex in Blagoveshchensk by 110,000tpa to 250,000tpa had been installed. Commercial output is scheduled to begin in H114. The 'PET-210' project will replace PET imports in some Russian market segments. Russian per capita consumption rate of food-grade PET is 4.1 kg, compared with 9.5 kg in the US, according to Sibur.

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