RusVinyl partner Solvay adopts regional strategy for PVC

(recasts, amending 11th paragraph to clarify capacity detail)

Interview article by Will Beacham

LONDON (ICIS)–Belgium’s Solvay, a joint venture partner in the RusVinyl polyvinyl chloride (PVC) plant which officially opened on Friday, says it remains committed to the product in Russia despite reducing exposure to the commodity in western Europe and Brazil.

With strong long-term growth prospects, the Russian PVC market is quite different to western Europe where Solvay is putting its PVC activities into a JV with INEOS, and Brazil where it sold its stake in Solvay Indupa to Braskem, Jacques van Rijckevorsel, member of Solvay’s executive committee said.

Rijckevorsel, who has been involved in the RusVinyl project since its inception, said: “PVC is a rather regional market. If you look at the realities, western Europe is a very expensive place for power and ethylene and the market is not growing any more.”

He pointed out that it is also oversupplied, witnessing a 30% drop in demand since 2007. Competition is tough and the industry is in survival mode, being forced to export a lot of product.

“For us the best scenario was the combination of our European chlor vinyl operations with another European player to increase competitiveness. INEOS could bring the extra advantage of being connected with the US ethane feedstocks.”

He added: “We never said PVC as a whole is not part of our global strategy anymore, just in western Europe and South America. There Brazil also suffers from very expensive power and ethylene. For Thailand, we also never made any strategic statement. Solvay has adopted a regional strategy for its PVC business.”

In Thailand, Solvay operates the VinyThai joint venture with PTT Global Chemical.

He said the situation in Russia is completely different where PVC is important for building and infrastructure and where Russia/CIS has huge potential. The Russian market is under-supplied by 35-40% so there is room for a world scale competitive up-to-date plant, he said.

“European PVC producers cannot export successfully to Russia as they are much less competitive than Russian suppliers because of their production costs as well as logistics and import duties,” he added.

Asked about the impact of the Ukraine crisis on Solvay’s business, he said: “It has had no major impact on our business but we do need to monitor the situation. We don’t exclude a possible impact in the future.”

Van Rijckevorsel said the plant is currently in ramp up phase, with capacity expected to reach about 80% soon.

“If things proceed smoothly, the operating rate could be close to nominal in about 6 months,” he added.

RusVinyl is a 50/50 joint venture between Sibur and SolVin, a 75/25 JV between Solvay and BASF.

“BASF were very helpful, especially at the beginning when they helped us with high level contacts and access to networks,” said van Rijckevorsel.