Putin opens RusVinyl plant

Russian president Vladimir Putin officially opened the 330,000 tonnes a year (t/y) RusVinyl polyvinyl chloride (PVC) plant, in Kstovo,near Nizhny Novgorod, at a ceremony held on 19 September.

RusVinyl is a 50:50  joint venture between Russian petrochemicals firm Sibur and SolVin, a 75:25  joint venture between Belgium's Solvay and BASF. The greenfield plant at Kstovo, which required a total investment of €1.4 billion ($1.795 billion)and took four years to build, is currently the largest PVC producer in  Russia. The plant's has nameplate    capacities of 300,000 t/y of suspension  PVC, 30,000 t/y of emulsion-grade PVC and 225,000 t/y of caustic  soda.

Speaking ahead of the plant's opening Sibur chief  executive Dmitry Konov said production from RusVinyl will help meet demand in Russia and the Commonwealth of Independent States    (CIS), thus curbing the  need for imports. He said RusVinyl's production has the potential to capture about 30% of the domestic PVC market.

According to official data,PVC consumption in Russia in 2013 totalled about 1 million tonnes, almost half of which was imported. The country consumed 132,000 tonnes of  emulsion PVC last year, 87% of which was imported. Once RusVinyl is fully operational, it will help push Russia's total PVC production capacity to 1 million t/y. Sibur said it is confident RusVinyl will help reduce imports of  PVC by about half. At present, Russia sources additional PVC from China  and the US.

While Russian PVC demand slipped by about 4% in 2013  and is expected to drop a further 5% this year on the back of a weak ruble  and macroeconomic uncertainty, growth in the domestic construction industry  is expected to fuel a modest recovery in the PVC market, estimated at 3-5%  per annum, starting in 2015. Sibur believes there is room for growth in the  domestic PVC market, pointing out that consumption per capita is low, at around 7kg, compared with European consumption of around 12kg per capita.

RusVinyl also benefits from favourable economics. While the    joint venture declined to give a specific cost breakdown, it said it expects its production costs to be comparable with those in the US (US petrochemicals  companies are benefiting from lower feedstock prices thanks to booming  shale-gas production). RusVinyl sources its ethylene feedstock from Sibur,  under a long-term contract. Sibur has increased the capacity of its nearby  mixed feed liquid cracker from 240,000 t/y to 360,000 t/y to meet this contract.

The RusVinyl joint venture operates the facility and  will market production independently in Russia and the CIS and via Solvay/SolVin outside of Russia. The RusVinyl board consists of three Sibur-appointed members, and three SolVin-appointed members. Dividends will  be divided 50:50 between Sibur and SolVin shareholders.

Over the  past four to five years, Sibur, already a major petrochemicals player in  Russia, has been steadily strengthening its position. The company has  significantly increased its gas processing capability via its chain of seven gas processing plants in West and East Siberia. This has given it access to  competitively priced feedstocks for its   petrochemicals operations. Last year, Sibur opened the $2 billion Tobolsk-Polymer plant in West Siberia.  Tobolsk-Polymer is one of the world's largest polypropylene production  facilities, made up of two units: a 510,000 t/y propane  dehydrogenation  polypropylene production unit and a 500,000 t/y polypropylene production  plant.