04 January 2010 14:04 [Source: ICIS news]
By Sergei Blagov
MOSCOW (ICIS news)--The downturn in Russia's chemical and petrochemical industry is expected to continue in 2010 with rising domestic gas prices making the situation worse in some sectors, according to the country's economic development ministry.
Its forecast for chemicals in 2010-2012, which was issued on 14 December, looked at two different scenarios.
According to the pessimistic view, ?xml:namespace>
The optimistic scenario involved 6% growth in plastic and resin output between 2008 and 2012, while total chemical production would still be down by 4%.
The ministry expected fibres and yarns production to go down by 50-55% between 2008 and 2012 as the country's producers become increasingly uncompetitive due to continued use of obsolete equipment.
The forecast also estimated that the country's overall chemical output in 2009 would be 12% down year on year, while plastics and resin production would be 10% down.
In addition to the general downturn, the ministry said that increasing gas prices would adversely affect
Domestic gas prices for industrial consumers are expected to go up by some 15-20% in 2010, by 20% in 2011 and by 15% in 2012. However, domestic gas prices are still estimated to remain well below export prices by 2012.
The proposed gas price hike was expected to deal a blow to the country's petrochemical and chemical sectors.
As many Russian companies reduced production volumes and were forced to accept lower prices in 2009, their ability to deliver on their earlier investment pledges became limited. For example, there has been no mention of Lukoil's planned $3.5bn gas-chemical complex in s
However, Gazprom-controlled petrochemical major Sibur is still pursuing a project to build new facilities for the production of 500,000 tonnes/year of polypropylene (PP) at the premises of its subsidiary, Tobolsk-Neftekhim.
The project is due on stream in 2012.
The country's major PE producer, Kazanorgsintez, reportedly remained on the brink of bankruptcy and was seeking a bailout from the government.
In 2010, Russian petrochemical companies are expected to struggle to achieve profitability and serve their sizeable debts. Growing feedstock costs, notably higher domestic gas prices, could deal their balance sheets yet another blow.
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