Solvay Completes Sale of its Stake in RusVinyl Joint Venture to Sibur
Solvay intends to sell its 50% ownership in the Rusvinyl joint venture to its joint venture partner, Sibur. The corporation is exiting its cyclical worldwide polyvinyl chloride activities with this action.
Solvay recently stated that it has reached an agreement with its joint venture partner Sibur to sell its 50% ownership in the Rusvinyl joint venture. When completed, the divestiture will represent another significant milestone in Solvay's portfolio restructuring and the final phase in the Company's objective to leave its cyclical worldwide polyvinyl chloride (PVC) business.
The transaction is predicated on a purchase price of roughly 430 million euros for Solvay's 50% ownership. On completion, a capital loss of approximately 175 million euros will be realised, primarily representing the crystallisation of prior currency translation balances.
The transaction is expected to be completed by the end of the first quarter of 2023.
About the Company
RusVinyl LLC is a SIBUR PVC Integrated Factory in Kstovo, Nizhniy Novgorod area. The RusVinyl PVC facility employs cutting-edge technology (BAT - Best Available Techniques) to ensure the required range of PVC with minimal process costs, while also meeting the Russian Federation's most stringent environmental criteria.
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The factory has 300 kilotons of PVC suspension capacity, 30 kilotons of PVC emulsion capacity, and 225 kilotons of caustic soda capacity.
The Nizhniy Novgorod regional government granted the Project Priority Status due to its vast scale and innovative nature, and it is one of the significant investment projects included in the Russian Federation's State Plan for the Development of the Oil and Petrochemical Industries until 2030.
PVC: Price Trend and Forecast
North America
PVC (Poly Vinyl Chloride) prices fell steadily throughout the quarter ending December 2022, owing to quiet downstream offers from the building sector amid a dip in the US real estate market and constant international inquiries. Increased mortgage rates weighed on buyer attitudes, causing production activities in the region to be halted.
With low demand and abundant supplies, Formosa Plastics went on a ten-day maintenance closure in Baton Rouge (USA) in December and November of this quarter.
The possible recession and low consumer confidence had a significant impact on the PVC market in the fourth quarter of 2022.
APAC
Due to market uncertainty and dampened consumer demand from the downstream construction sector, PVC prices in the APAC area were low in the fourth quarter of 2022. PVC prices fell in the South Korean market as local downstream building offers fell and overseas inquiries dwindled.
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Meanwhile, cheaper imports into the region and lower feedstock Ethylene costs influenced the product's pricing patterns.
The poor demand and plentiful stockpiles caused maintenance shutdowns in South Korean companies Hanwa Chemical and LG Chem in November and December of this year.
Europe
The PVC price fell overall in the fourth quarter of 2022, owing to excessive supply availability and weak demand fundamentals in the region. Meanwhile, the fluctuation in upstream crude oil prices caused by the European energy crisis put input pressure on the PVC-producing businesses in this quarter.
Furthermore, the region's developing recession and pessimistic market sentiments for PVC in the regional market pushed manufacturers to reduce regional profit margins and destock piled-up stocks at lower prices in the market in the quarter ending December 2022. The commodity's price movement was also influenced by the stability of the feedstock Ethylene and VCM prices.
As per Procurement Resource, Solvay recently announced an agreement with its joint venture partner Sibur to sell its 50% stake in the Rusvinyl joint venture. When finalised, the divestiture will mark another key milestone in Solvay's portfolio restructuring and the final stage in the Company's goal of exiting its cyclical global polyvinyl chloride (PVC) production business.
The deal is based on a purchase price of around 430 million euros for Solvay's 50% shareholding. A capital loss of about 175 million euros will be realised upon completion, principally due to the crystallisation of earlier currency translation balances.
