LONDON—Petrochemicals major Sibur increased production of synthetic rubber in the first quarter of 2015 following a better-than-expected start to the year, according to the Russian group's CEO Dmitry Konov.
The move partly reversed a trend from last year, when Sibur significantly cut back synthetic rubber production in response to low margins in the business, Konov said at a press conference in London.
Sibur, last year, reduced synthetic rubber production by 15.5 percent—from 0.40 million tons to 0.35 million tons – the CEO's' conference presentation showed. Revenues from the rubber business, which represents around 8 percent of Sibur group 2014 sales, fell 14.1 percent to about $569.1 million.
The cutbacks in production, said Konov, mainly affected the company's polyisoprene production, though there was also a “slight reduction” in nitrile rubber output. Sibur's butyl rubber production, however, increased due to the commissioning of an upgrade to its facilities.
“Production rates are being increased now in rubber,” said Konov. “At the beginning of [2015] we had this strong development in the [rubber market], mostly because of the rouble devaluation and global oil prices which means lower feedstock prices.”
However, the current recovery at Sibur's SR business could well be short-lived, Konov said. “The trend is reversing in the rouble/dollar rate and we still have to see how the market development progresses.”
Sibur has flexibility to decide its SR capacity utilisation rates on a month-by-month basis: using a model that takes account of logistics costs, feedstock costs, demand curves and consumption to maximise margins.
Based on these estimations, explained Konov “we either feed some of the downstream plants to full capacity or we don't feed them and send the byproducts into the market.
“We can, for example, send butadiene for rubber production, sell butadiene as butadiene or ship butadiene to some other process capacity. This [guides] the decision on whether we have 100-percent capacity on a rubber plant or 20-percent capacity.”