Sibur looks to Europe and China to broaden its business

By David Eldridge, Plastics and Rubber Weekly, a Crain publication

Posted 28 October 2010

Duesseldorf, Germany - Russian petrochemicals, plastics and rubber producer Sibur is looking to international markets after consolidating its dominance of its home market, company executives said at the K 2010 exhibition on Wednesday, 26 Oct. The firm also indicated that its tyre-making business is still up for sale

Speaking via a teleconference link from Moscow, Dimitry Konov, Sibur's president told journalists that the group had spent the last five years “securing an advantageous position for petrochemical feedstock” based on Russia's gas reserves.

Now it has turned its focus on to export markets, particularly in China and Europe, he said. Sibur has its sights on Europe as an area for expansion, particularly in PP.

“As for China, we have had a presence there for quite a long time. Of our annual sales of more than $7bn, exports to China account for about $650m,” said Konov.

Sibur has opened a trading house in China to grow its sales in the country. It also wants to move to sales in Yuan to get closer to the processors.

Sibur has also made contact with companies in other countries. In India, it has signed a co-operation agreement with petrochemicals and polymers group Reliance Industries. Asked about a possible co-operation agreement in Iran, Konov confirmed he had visited for talks, but played down their significance.

“We are not actively moving forward. We meet occasionally but there is nothing active today,” said Konov.

In 2009, Sibur produced 597,000 tonnes of polymers and 339,000 tonnes of rubbers. Its exports account for 45% of all the group's sales, but executives stressed Russia as an ongoing priority.

In Russia, Sibur has a market share ranging from 30% to 50% depending on the product, said Vladimir Razumov, senior executive vice president. But the potential for further growth was illustrated by the low per capita consumption rate of styrenics which is well below the European average. So one goal for Sibur is to displace imports of ABS from Europe and China.

Asked in the press conference about Sibur's tyre business, Konov said the group's long-term plan is to sell the business. But he said it was unlikely to be sold as a whole unit, due to its large size. Sibur makes 7.6 million tyres each year.

Executives also said financing for expansion projects in PS and SBS had remained secure through the economic crisis. A joint PVC project with Solvin had been briefly delayed due to a changed outlook for the PVC market. But this project is now in the final stages of financing and should be commissioned in 2013.