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2012 4/ Market Review for Thermoplastic Polyurethane in CISProduction and Market for Butanol and Isobutanol in CIS Modern Promising Fileds of Application of Titanium and its Alloys Alkylcellosolves in CIS: Production and MarketRussian Petrochemical Industry Faces WTO: Protectionism or Fair Trade

2012 5/ Plan for the development of the Russian Petrochemical Industry through 2030 Strategic Trends in the Development of the Russian Petrochemical Industry CIS Hydroquinone Market CIS Liquid Chlorine Market International Exhibition Interlakokraska–2012The Chemical Industry of the Former Yugoslav Republic of Macedonia

6/2012 PLASTPOL. A powerful experience... Production and Market for Naphthalene in CIS. Production and Market for White Carbon in Russia. AVISMA Oil & Gas Shelf Development: Limits and Solutions. Creative Thinking in Promoting Innovations in Chemical Clusters.

7/2012 Production and Market of Calcium and Sodium Hypochlorites in CIS. Calcium Carbide Production and Market in Russia/CIS. Russian and Ukrainian Market for Styrene-Acrylic Dispersions. Chemical Industry of Albania: Relying on Mineral Resources

8/2012 CIS Vinyl Acetate Market. Global Market for Cobalt and its Salts. Production of Natural and Synthetic Zeolites in the CIS Countries. Surfactants and Raw Materials for Cosmetics on the Agenda. Under the Double Cross: Chemical Industry of Slovakia

9/2012 Overview of Foamed Polystyrene Market in CISAutomotive Plastics in RussiaReview of Russian Polybutadiene Rubber MarketMarket for Acetonitrile in Russia/CISUltramarine in CIS : Production and Market

10/2012 Market Perspectives for Biodegradable Plastics in CIS Ukraine's Position at CIS Polyolefins MarketThe Russian and Ukrainian Toluene MarketsTargeting Black Coldmine: The Current State of the Global and the CIS Coal Tar MarketsLanolin: Production and Applications

11/2012 Russia's Market for Polyisoprene RubberRussian Market for Adipic AcidRussian and Ukrainian Acetone Market Russian Market for PVC Impact Strength ModifiersFacilitating Efficient Equipment Cleaning Chemical Exhibitions in China and India

12/2012 Russian Market for Ethylene Glycol Production and Global Market of AnilineThe CIS 2-Ethylhexanol Production and MarketRussian Market of PVC Plasticisers

01/2013 Thermoplastic Elastomers in Russia: Production and MarketEuropean and Russian Market of EthanolamineGlobal Production and Market of Tungsten CompoundsPaints and Coatings in CIS : problems and perspectives

A monthly publicationFirst issued in January 2007

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Contents#2(74) February 2013

2

Polymers

Prospects of Global PET MarketPlastics in Building Industries of CIS Countries

Rubbers & tyres

Thinking ahead : Novel Rubber Products Patented in Russia

Organics

A Quick Glance at Asian Market of Melamine in 2012

Inorganics

Production of Sulphur in Russia/CIS in 2012

A Brief Outlook for Production and Market of Hydrogen Peroxide in Russia

Agrochemistry

Ammophos Production in Russia, Ukraine and Uzbekistan in 2012

Specialty chemicals

Manufacture and Market of Basalt in CIS

Global and Russian Market for Surfactants

Paints & coatings

Ukrainian P&C Market : Yesterday, Today, and Tomorrow

Pharmaceuticals

The CIS Pharma Producers Show Performance Results for 2012

Chemistry and energy

Honeywell’s UOP Technology Selected to Modernize Refinery in Kazakhstan

Chemistry and ecology

An Effective System of Cleaning Large Volumes of Waste Gases from Urea Prilling Towers

Chemistry and business

EuroChem Reports IFRS Financial Information for 2012

Chemical equipment

A Closer Look at Expansion Joints Made of Special Plastics

Countries and regions

Russian Chemical Industry at the Crossroads

Special topic

LANXESS: High-tech Innovations from the Test Tube

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Dr. Vadim Mirejevvadim.mirejev@chemmarket.info

Victor Dorofeev

Dr. Boris Gaevskijboris.gaevskij@chemmarket.info

Sergej VorobejDmitrij KiselElmira Sapozhnikova

Galina Mirejeva

Elvira SharipovaIrina Dolgikh

Alexandr Mitskevich

Svetlana Shishkina svetlana.shishkina@chemmarket.infoTatyana Hohlovatatyana.hohlova@chemmarket.info

Jevgenija Levshatevgenija.levsha@chemmarket.info

Dr. Vladimir KurjanovDr. Michael BajevskijDr. Vladimir Krishtal

EDITOR-IN-CHIEF

DEPUTY EDITOR

ANALYTICS

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GRAPHIC DESIGNER

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EDITORIAL ADVISORYBOARD

40 Eurasian chemical market ¹ 2(74) February 2013

www.chemmarket.infoInnorganics

Production of Sulphurin Russia/CIS in 2012

Sulphur storage at Gazprom dobycha Astrakhan gas-processing plant

Russian sulphur production is notable forits stability: both in 2011 and in 2012, thecountry's annual output made up 6.4m tonnes.In Figure 1, sulphur production in Russia isbroken down by raw materials source andproduct form.

The main sulphur suppliers in Russia aregas processing companies accounting for89.2% of the whole market, whereas theshares of oil refineries and metallurgicalplants constitute 8.1% and 2.7%respectively. The market is still dominatedby the Russian gas giant Gazprom. The basicproducers of sulphur in the country are

subsidiaries of Gazprom: Gazprom dobychaAstrakhan LLC (Astrakhan) and Gazpromdobycha Orenburg LLC (Orenburg) with an80% combined share in the total Russianoutput. The main volumes of sulphurproduced by Gazprom dobycha AstrakhanLLC are exported through Gazprom exportLLC - the sole exporter of sulphur producedby the Gazprom Group to Morocco (43% in2011), Tunisia (24%), Brazil (9%), Belarus(6%), Israel (5%), Lithuania (3%), Lebanon(3%), Senegal, Jordan, USA, Italy, China,Egypt, Ukraine, Spain, Finland and others(7% in total) , while these ones originated

from Gazprom dobycha Orenburg LLC aresold at the domestic market with assistanceof Gazprom sulphur LLC - the specialisedagent of Gazprom majoring in domesticsulphur supplies.

The Russian production of sulphur fromnatural gas, oil, and metallurgical waste gasesis displayed in Figure 2 and that of nativesulphur - in Figure 3.

It should be noted that shipments ofsulphur are subject to seasonal changes. Theyincrease during navigation (April throughNovember) and decrease in winter to raildeliveries only (see Figure 4).

41¹ 2(74) February 2013 Eurasian chemical market

www.chemmarket.info Innorganics

According to estimates, the excess ofsulphur produced will remain at the level of3-6m tonnes per year till 2030. Moreover,provided that gas production at licensedblocks of the Astrakhan gas condensate fieldgrows, the oversupply of sulphur in theRussian market may reach as large as 9-15mtonnes annually. Despite the sulphur surplusin the domestic market, new productionfacilities are still being constructed in Russia.For instance, the Antipinsky Oil Refinery(Tyumen) will put into operation an elementalsulphur plant together with a pelletising unitby Q4, 2014. This will be the 2rd constructionphase of the Antipinsky Oil Refinery.

The key consumers of sulphur in theRussian Federation in decreasing size aresulphuric acid production (89.8%), the pulpand paper industry (6%), metallurgy (2.7%),and other sectors (about 4%). The biggestconsumers of sulphur in Russia are BalakovoMineral Fertlisers LCC, Voskresensk MineralFertlisers OJSC, Shchekinoazot OJSC,Eurochem-Belorechensk Mineral FertilisersOJSC, Fosforit LLC (Kingisepp), Apatit OJSC(Apatity), Meleuz Mineral Fertilisers OJSC(Meleur, Rebublic of Bashkotarstan),Volkhov-based Metakhim CJSC (Volknov,Leningrad region), Azot OJSC (Kemerovo),Bor mining and chemical CJSC (Primorskykrai), Biysk oleum plant (Altay territory),PPGHO CJSC (Krasnokamensk).

Due to the glut in the Russian market, newuses of sulphur are of particular interest forthe country.

Innovative road building materials on thebasis of sulphur will enable one to expandthe capacity of the sales market and, amongother things, make a significant contributionto solving the timeless Russian problem: badroads. In 2010 no more than 30 tonnes ofsulphur were used for road constructionpurposes. However, for the past two yearsthe consumption has increased up to 500tonnes, and this figure relates only todevelopment works. In the case that sulphuris utilised on a commercial basis, the volumeswill immensely grow. An average future plantis expected to have capacity to turn out30,000 tpy of modified sulphur, 30,000 tpyof sulphur asphalt concrete and 60,000 tpyof sulphur concrete.

The main barrier hampering thedevelopment of this sector is the absence of a

relevant legislation framework. Nonetheless,it is expected that the required State Standards(GOST) will be developed and adopted withinthe nearest couple of years. According to anoptimistic scenario, the capacity of the Russianmarket in sulphur-based products by 2030 willamount to 1.5m tonnes. Apart from Russia,commercial sulphur in the former SovietRepublics is produced in Kazakhstan,Turkmenistan, Uzbekistan and Ukraine.

According to data of the Ministry of theOil and Gas Industry and Mineral Resourcesof Turkmenistan, Turkmenbashi Refinery(Turkmenbasy, Balkan province) produced2.9m tonnes of sulphur following the resultsof 2012.

In Uzbekistan, the sulphur is extracted atShurtan gas chemical complex, Farg'ona,Buxoro, Altyaryq and Jarqo'rg'an oil refineries.

The Ukrainian sulphur market still heavily

depends upon import deliveries. Evenoperating at full capacity, the country'sproducers can satisfy only 10% of the domesticdemand for sulphur. Inspite of this fact, sulphurproduction in the country has been on declinerecently. The significant reduction is mainlydue to shut-down of oil refineries in Odesaand Lisichansk (Luhansk region). However,Dobromyl-Yavoriv Ltd (Lviv region), whosesulphur production remains quite stable, is anexception to the rule. The company makes99.9% crushed sulphur of tyre / rubber andagricultural grades. Kazakhstan is the keysupplier of sulphur to Ukraine. Sulphuric acidmanufacturers are the main consumers of thechemical in the country. Only five productionplants turns out H2SO4 as a by-product fromsulphur. Their combined output makes up nomore than 7% from the country's totalproduction.

Figure 2. Russian production of sulphur obtained from natural gas andmetallurgical waste gases in January-November, 2012, thousand tonnes

Figure 1. The sulphur production in Russia broken downby raw materials source and product form

42 Eurasian chemical market ¹ 2(74) February 2013

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As for short-term and mid-term prospectsfor the sulphur sector in Russia, Kazakhstanand Turkmenistan, it is anticipated to growas mining operations increase in size.

Because of the sulphur surplus in theabove-mentioned countries, expandingexport supplies turns out to be of crucialimportance. Sulphur is not an expensiveproduct, therefore, in economic terms, seatransportation is the only suitable means ofits delivery to customers. At the same time,export logistics depends upon the form of theproduct. Liquid sulphur, as a rule, is shippedto the home market, which, in turn, iseconomically viable. Besides that, there is notransshipment points for the liquid productin Russia. However, lump and pelletisedsulphur can be delivered in big bags,containers or in bulk. Exporting packagedsulphur is also possible, but this means ofdelivery substantially makes prices much

higher. The most optimum way of exportingis sea transportation of bulk sulphur. A bigtransshipment point is based in the sea portUst-Luga (the Gulf of Finland) where the“European Northern Terminal” is alsolocated. But, it is pretty far from the mainsales markets as compared to the south seaports of Russia and Ukraine. On top of that,it is quite remote from the basic sulphurproduction plants. The sea ports Buzan andUst-Donetsk (both in Russia) haveconvenient geographical location and are wellequipped. Apart from them, there are largeUkrainian transportation hubs: in Illichivsk(Odesa region) and in Mykolaiv. The mainsulphur export routes not only from Russiabut also from Kazakhstan go throughIllichivsk and Ust-Luga. In particular, the seaport of Illichivsk shipped 1,375,000 tonnesof sulphur for 2012. Among upcomingprojects, building a specialised sulphur

terminal at the sea port of Taman (Krasnodarterritory, Russia) on the Azov Sea is of greatinterest. This port has great potential, and itsconstruction will be completed in 2017. Theproject developed under RussianGovernment’s supervision, anticipatesinvestments of over USD 1.5bn. Sulphurtransshipment here will reach up to 5m tpy.

We would like to emphasise that the CIScountries hold leading positions in the globalsulphur production. Nowadays, theiraggregated share makes up approximately20% from the world's total output. Accordingto the CRU Group, in 2012, the globalproduction of sulphur and related products(sulphur, sulphuric acid and pyrite) amountedto 85.4m tonnes, 50m tonnes of which fellon sulphur proper.

In 2012, the supply-demand balance in theglobal market completely altered. Whereasin 2010-2011, there was a deficit of theproduct on the market, the year 2012 wasmarked by the escalating oversupply of thechemical. Therefore, sulphur prices wentdown and finally settled at about USD 170per tonne. This trend will remain in thecoming five years. The current year, however,may be an exception. In 2013, it is expecteda balance between supply and demand withthe possible small deficit. Demand forsulphur for phosphate fertilisers productionis forecast to rise. Also, the product will beextensively used for manufacturing sulphuricacid for nickel leaching. However, the growthof the consumption in this segment will bepretty limited. According to estimates of theCRU Group, the geography of sulphurproduction and consumption will not undergoany fundamental change in the nearest fiveyears. The key oil & gas players in the MiddleEast, the CIS, Eastern Asia and North Americawill remain the biggest sulphur producers.Worldwide sulphur overproduction stimulatesthem (including the two mentioned aboveGazprom subsidiaries) to consider differentalternative ways to use sulphur, including itsburial ground disposal.

When preparing this article,some datafrom the report by Andrey Kremnev(Gazprom Export LLC ) ''The Status ofRussian Sulphur in the Global Market''presented at Sulphur World Symposium inNew York in April, 2011 were used.

Figure 3. Russian production of sulphur obtainedfrom salt domes in January-November, 2012, tonnes

Figure 4. The exports of sulphur are performed by means of rail and watertransportation through sea and river ports using diversified logistics schemes

Innorganics