Despite pandemic: what 2020 was like for Kazanorgsintez
Fluctuation of oil prices, a fall in demand and delayed supplies — this is what polymer producers remembered 2020 for. The situation remained complicated throughout 12 months but not as critical as it was in the rest of the segments of the economy. One of Russia’s largest ethylene polymer and co-polymer manufacturers Kazanorgsintez managed to carry on its modernisation in plants and enter new markets. While prices for plastics stabilised in general by the end of the year, which inspired their producers to hope for a gradual recovery of pre-pandemic demand.
How it all began
Petrochemistry felt the pandemic’s consequences as early as March 2020. Some of its segments plummeted by 70% — a failed OPEC+ deal and quarantine measures taken because of the virus favour it. Demand for feedstock collapsed by half together with oil prices. It was especially though for polymer manufacturers whose products are in low demand during the pandemic. These products include synthetic rubbers — tyres are made of them — and accompanying polymer types. According to Russia’s Federal Statistics Service, the production of cars reduced by 79,2% compared to the previous year.
“A halt in construction, a critical situation in the automotive industry, a decline in sales of consumer goods led to an abrupt decrease of demand for polymers. The market of PVC and ABS plastics especially enormously suffered,” explains leading expert of Higher School of Economics National Research University’s Development Centre Anna Volkova.
But soon after the spring lockdown, the market started to come to life: the price for key polymer types rose in summer. Dollar prices for high-density polyethylenes increased by 37% from June to October while prices for low-density polyethylenes did by 17%. The situation unfolded especially well for medical goods. Russian enterprises augmented polypropylene production by 26% during the first months of 2020, while demand for polymer packaging went 15% and 20% up.
Influence of the pandemic
After the tough year, petrochemical companies had to readjust their business, strategies and approach to long-term planning. Projects were considered not for the next 10 days but a couple of months. There appeared the necessity of becoming more flexible and adapting to the suddenly changing market.
At the same time, the fall in demand for oil products became a reason to strengthen the integration of oil refining and petrochemistry. Such a tendency will help if feedstock prices go up and down and guarantee that a part of products will be purchased.
“The market turned out to be significantly backed by demand from China where there was still a deficit of ethylene despite a rise of its own production, which was covered by imports. Of course, average prices decreased due to a collapse of prices during the first half of the year. However, the market started to recover in the third quarter, which notably accelerated during the fourth quarter last year and the first quarter this year. Prices for standard thermoplastics are now near record highs. We can see this in the dynamics of the basic polymer index, which is developed by Plastinfo Russian portal. The index demonstrated the general dynamics of changes in prices for nine large-tonnage polymers in Russia. So this year the petrochemical sector has good prospects,” FINAM GC’s analyst Alexey Kalachev commented on the situation.
Modernisation during the pandemic
Despite all the difficulties, some companies didn’t refuse their projects and continued production modernisation. The reconstruction of an isopropylbenzene unit with the launch of cumene production via zeolite catalyst went on in Bisphenol A plant. The implementation of the project will allow decreasing the production of by-products and contaminated sewage.
Neither did Kazanorgsintez refuse the second modernisation stage of Polycarbonates plant. KOS completed the first equipment replacement stage in 2019. There was done huge work to replace the technology, modernise phenol, cumene, bisphenol A units. The second stage entered an active phase in autumn 2020.
“During the second modernisation stage of the plant, pumps and heat exchangers were replaced. Construction works took place only for the foundation of new pumps,” Director of Polycarbonates plant Andrey Presnyakov told Realnoe Vremya. A thorough examination of processes and understanding of capabilities of the equipment allowed nearly doubling the effectiveness of the existing production. Moreover, the expansion of capacities didn’t augment the environmental impact.
The reconstruction of warehouses for feedstock and end products went on in the plant of organic products and process gases. It is aimed to upgrade the fleet of reservoirs by replacing them with more modern equipment — this will enable to reduce emergency risks and prevent the product from ending up in the environment.
KOS recently announced the construction of another plant. By 2025, the enterprise plans to launch polyethylene-vinyl acetate production with a capacity of 100,000 tonnes a year. The project will allow substituting obsolete equipment and increase production. So ethylene-vinyl acetate production will grow 7,5 times. If needed, the production of polyethylene-vinyl acetate will enable to not only replace imports in the domestic market but also enter foreign markets.
KOS will also have its own 250 MW power plant. The project will optimise costs on the end product and reduce the environmental impact. It will also expand its own energy capacity for the chemical giant’s further development. Germany’s Siemens concern is responsible for using state-of-the-art technology in the construction.
Siemens Energy will put all its effort, and everything will be done to keep to the deadline, said President of the company Dr Christian Bruch during the last teleconference with the management of TAIF Group.
“We plan to save around 2 billion rubles every year by reducing the prime cost of electrical energy. Of course, the unit is necessary to provide energy and safety of the activity. The enterprise will uninterruptedly get electrical energy,” said Director General of Kazanorgsintez PJSC Farid Minigulov.
They will obtain the effect thanks to using synthetic gas as fuel for the gas turbine. It is a by-product at Kazanorgsintez PJSC. So by sending it to the gas turbine, the enterprise will perform two tasks at once: provide the gas turbine with fuel and get rid of by-products and simultaneously reduce emissions into the atmosphere.
State of affairs in the sector and environment
Kazanorgsintez annually produces and sells over 170 types of chemicals: ethylene, polyethylene, polycarbonate, polyethylene pipes, bisphenol A, phenol, acetone, ethylene glycol, ethanolamine and much more.
In 2020, the company manufactured over a million tonnes of commodities. In 2020, Kazanorgsintez exported products to consumers from 35 countries of the world. Algeria, Morocco, Vietnam and others became new outlets. KOS sold products for a total of 63 billion rubles. Ethylene polymers and co-polymers account for the biggest share of revenue — 71%, polycarbonates for 16%. Kazanorgsintez’s production capacities in 2020 amounted to 1,782 tonnes of products.
At the same time, the enterprise pays huge attention to reducing the environmental impact. Last year, it took 37 measures to protect the atmosphere, water bodies, soil and land. The company sent 234,219 rubles. Current environmental production expenditure in 2020 reached 481,546 rubles, which is more than in 2019.
Kazanorgsintez constantly works on improving the efficiency of reused water with the help of the latest technology of water treatment and reconstruction of cooling towers. 98,1% of water is reused.
All the sewage the chemical giant discharges into the Volga goes through mechanical and biological treatment. The established discharge norm is 14,217 cubic metres a year. Last year, KOS discharged 11,634 cubic metres of water into the river.
The company developed a plan of measures designed to improve the environmental state of the Volga through 2025.
Moreover, the enterprise decreased emissions of harmful substances into the atmosphere. In 2020, they were equal to 10,023 tonnes, in 2019, they had totalled 10,944 tonnes.
Social responsibility
The tough year for the sector didn’t impede Kazanorgsintez from meeting all its social responsibilities. In 2020, the company completely made all payments as well as provided preferences envisaged in its Collective Agreement. It was adopted by KOS for two years.
The enterprise keeps following a socially responsible policy. It includes keeping its workers healthy, providing them with food and transport, organising the leisure time and holidays of the workers’ children, providing veterans going on holiday with a pension, implementing a programme designed to support motherhood and childhood, wellness projects and programmes on social preferences for the employees.