Sibur cool about rubber prospects

Article published in May/June issue of ERJ

London - Despite higher sales in 2015, synthetic rubber (SR) seems to have lost, at least, some of its shine for Sibur, which is now focused on huge expansions of its petrochemicals and plastics capacities.

Sibur posted a 26-percent, year-on-year rise in sales of SR to RR35 billion, (E458 million), on volumes 14-percent higher at 411 kilotonnes (kt) – rubber grew to represent 9 percent of group sales overall, up from around 8 percent in 2014.

Processing and production volumes, consequently, rose 16 percent to 409kt, as Sibur ramped up capacity utilisation – for IIR and NBR in particular. Lower raw materials costs and a weaker rouble improved margins on both commodity and speciality rubbers.

Export volumes of general purpose rubbers and specialty rubbers grew by 12 percent and 4 percent respectively. Total exports grew more than 24 percent – helped by a doubling in export volumes of thermoplastic elastomers – styrene-butadiene block copolymers.

Domestically, Sibur noted increased competition from local producers, as a 28-percent fall in the Russian automotive market impacted demand for tire rubber. But new opportunities emerged with international tire-makers expanding in Russia: production tests recently started at Bridgestone’s tire plant in Ulyanovsk, and Continental plans to develop its plant in Kaluga.

Business outlook

At a 20 April press conference in London, however, Sibur executive director Sergey Komyshan struck a decidedly downbeat note about the prospects for the rubber business, which has recently been merged into a new Plastics, Elastomers and Organic Synthesis division.

Pointing out that the gains in 2015 were mostly due to the weakened rouble, Komyshan said: “Lower prices [and] smaller margins have made this business much less significant for us.”

And, with the exception of TPEs, the Sibur boss did not see signs of a turnaround in the rubber business overall: “Margins have recovered a little bit and, if anything, they may increase somewhat. But this growth will be subdued by the overcapacity.”

Little surprise so that there will be no new SR capacity at Sibur’s €8.4-billion Zapsib-2 project at Tobolsk – an under-construction, steam cracker-based facility designed to produce 1,500ktpa of ethylene, around 500ktpa of propylene, along with units with a total polyethylene capacity of 1,500ktpa and 500ktpa of polypropylene.

Butadiene from a 100ktpa C4 operation at the site, though, could be supplied to Sibur rubber plants or to the market, Sibur’s executive director pointed out.

In a follow-up statement, though, a Sibur spokeswoman insisted the group was not “minimising the importance” of its SR business.

Existing facilities

“In the currently oversupplied market, Sibur is not planning any capacity expansion and is ready to accommodate extra demand using its existing facilities,” she explained. “At the same time the company remains focused on improving process technologies and product quality and expanding the product range. Our strategy is to implement investment projects through JVs…”

In London, Komyshan reported that Sibur’s butyl rubber JV with Reliance Industries in India was progressing “reasonably well.” With the schedule for the 120ktpa project tied to that of the Indian group’s J3 petrochemicals complex in Jamnagar, Gujarat. In China, he said, Sibur and Sinopec are still awaiting permits for their plan to jointly establish a 50ktpa nitrile rubber plant in Shanghai.

Sibur rubber plant capacities

Togliattikauchuk (Togliatti, Samara Region)

IR – 82 kilotonnes per annum (ktpa)

ESBR – 60 ktpa

IIR – 65 ktpa

Isoprene – 90 ktpa

Voronezhsintezkauchuk (Voronezh)

BR – 91 ktpa

PBR-Nd – 30 ktpa

ESBR – 80 ktpa

SSBR – 26.8 ktpa

SBS – 85 ktpa

Krasnoyarsk SR plant (JV with Sinopec)

NBR – 42.5 ktpa