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2.3. HYDROCHLORIC ACID

2.3.1 Estimated production capacities

Hydrochloric acid,depending on technology of production,is produced in the RF

as synthetic HCl and also as HCl byproduct ; HCl is defined by Russian GOST as :

- technical synthetic HCl with HCl content of 31,5- 33,% as well as with a

concentration of 35%.

- by-product HCl with HCl content of 27,5- 30% ;

- so called inhibited HCl with HCl content 20-25% containing 0,3-1,2 % of

inhibitor and produced according to the pending standards of the manufacturer ;

Besides, at various producers there are produced higher grade HCl with HClcontent of 35-38% ;

The production of synthetic HCl accounts for cca. 35% of the total HCl produced.

Most of HCl in the RF is produced/generated/as by-product HCl/so called abgaznaya

kyslota/.

The table below shows the very recent production of synthetic and by-product

HCl.

ble 2.3.1.1.Production of synthetic and by-product HCl/as 31,5% HCl/,000mtpa

Region and company/producer 2002 2003

RUSSIAN FEDERATION TOTAL 839,3 851,6

Including

Central Region 47,0 41,9

K Azot Novomoskovsk 43,3 36,1

Syntez Moskva 3,7 5,8

Southern 264,1 288,5

Kaustik Volgograd 148,2 179,0 Khimprom Volgograd 115,9 109,5

Volga /basin/ 492,5 487,8

Z Kaustik Sterlitamak 143,4 148,9

Ufakhimprom 50,4 39,6

Khimprom Novocheboksarsk 76,7 84,5

Kirovo-Chepetskiy Khimkombinat 152,6 135,9

Aviabor Dzerzhinsk 1,7 2,1

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Region and company/producer 2002 2003

Sibur-Neftekhim Dzerzhinsk 41,8 43,0

Halogen Perm 23,6 31,6

Volgokhimprom Chapaevsk 2,2 2,2

Siberia 35,7 33,4

Altaykhimprom Yarovoe 0,3 0,4 Khimsoda Sayansk/also known as Sayanskkhimplast/. 6,0 4,7

Khimpromusolye 8,0 8,2

Khimprom Kemerovo 21,4 20,1

The overall production of HCl/synthetic as well as byproduct/ across the RF

remained steady, some 1,5% increase in 2003 in comparison with 2002.

Major producers are usually also caustic soda producers , as for instance Kaustik

and Khimprom Volgograd, ZAO Kaustik Sterlitamak ant the Kirovo-Chepetskiy KhK.

Production capacities of HCl are estimated cca. 106,7 ktpa as 31,5% product as of

1.01.2004..

The table below shows the estimated HCl production capacities

ble 2.3.1.2. HCl estimated production capacities/as 31,5% solution/

Company Capacity as of1.01.2004

000mt

Capacity as of

1.01.2004

000mt

Operating rate /%/

2002 . 2003 .

RF TOTAL 1035,2 1062,7 81,1 80,1

Including

K Azot Novomoskovsk 49,8 49,8 86,9 72,5

Syntez Moskva 20,7 16,5 17,9 35,2

Khimprom Volgograd 132,2 133,1 87,7 82,8

Kaustik Volgograd 148,2 179,0 100,0 100,0

Z Kaustik Sterlitamak 135,2 135,2 Over 100,0

Over100,0

Ufakhimprom 118,3 118,3 42,6 33,5

Khimprom Novocheboksarsk 142,8 142,8 53,7 59,2

Kirovo-Cheptskiy

Khimkombinat

60,1 60,1 Over

100,0

Over

100,0

Sibur-Neftekhim Dzerzhinsk 72,3 72,3 57,7 59,5

Volgokhimprom Chapaevsk 28,7 28,7 7,7 7,7

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Company Capacity as of1.01.2004

Capacity as of

1.01.2004Operating rate /%/

2002 . 2003 .

Z Khimsoda Sayansk 31,1 31,1 19,3 15,1

Khimpromusolye 26,0 26,0 30,8 31,5

Khimprom Kemerovo 45,0 45,0 47,6 44,7

In 2003 the RF HCl capacity has increased by 27,5 kt, due to capacities

expansions at OAO Kaustik Volgograd.

During the discussed period of 2002-2003 the overall operating rate remaind

practically unchanged .

2.3.2.The Russian Federation HCl market

The basic characteristics of the RF HCl market is described in the table 2.3.2.1

ble 2.3.2.1. Basic characteristics of the RF HCl market/as31,5% solution/

000mtpa

ITEM 2002 2003

DEMAND 839,3 851,6

HOME MARKET 818,5 830,6

EXPORTED QUANTITIES 20,8 21,0

SUPPLY TOTAL 839,3 851,6

PRODUCTION 839,3 851,6

IMPORTED QUANTITIES - -

Export share in production % 2,5 2,5

Import share in connsumption % - -

HCl demand in 2003 increased by 1,5% in comparison with 2002 due to the

domestic market expansion .

Hydrochloric acid has a steady consumption demand basically due top the

chemical industry, /wellover60%of the total consumption/ as the chlorine subsector

where hydrochloric acid is used to produce chlorides of metals,, and also in the synthesis

of chloroorganic compounds. (see table 2.3.2.2.).

Besides,HCl is used for metal pickling in the metallurgy as well as carbonates

removal from appropriate surfaces, metal treatment in non-ferrous metallurgy ,food

processing industry civil engineering, it has some medical uses ,

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ble 2.3.2.2. Russian HCl market segmentation /000mtpa/ as 31,5% solution

SEGMENT OF CONSUMPTION 2002 . 2003 .

Total 818,5 830,6

Including

Chemical and petrochemical industry 530,1 534,2

Crude oil exploiting industry 69,3 70,8

Refinery sector 8,3 9,0

Steel metallurgy 21,7 23,0

Non-ferrous metallurgy 48,0 50,0

Civil engineering 29,6 30,0

Food processing sector 66,2 68,0

edical uses 16,4 16,6

Other 28,9 29,0

Within the chemical industry major HCl consumption end-uses are: Calcium

chloride production /about 40% of the chemical industry consumption/,

coagulants/14%/,caustic soda/8%/,barium chloride production/5%/ ,calcium hypochlorite

production /5%/.

From amongst the other sectors: crude oil exploiting industry- 8,5%, metallurgy-

9%,food processing sector 8,2% -- in 2003.

97,5% of the HCl produced is sold on the domestic market.

2.3.3.Foreign trade HCl

HCl export accounts for 2,5% ofthe total production and is exported mostly to

CIS countries

In 2002-2003 exports have stabilized around 21 ktpa as 31,5% solution HCl (tble

2.3.3.1).

ble 2.2.3.1. RF HCl trade (as 31,5% HCl), mtExported quantities/mt/

2002 2003 .

EXPORTS TOTAL 20799,1 20982,4

Including

Belarus 6222,3 4637,5

Kazakhstan 13948,7 15907,6

Kyrgizstan 522,1 400,0

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Exported quantities/mt/

Latvia 55,3 -

Lithuania 5,6 7,0

urkmenistan - 0,1

Usbegistan 14,7 0,2

Ukraine 30,3 30,0IMPORT TOTAL 6,5 4,7

Including

Belarus 1,7 0,4

UK 1,7 -

Germany - 1,8

Netherlands 0,1 0,1

Ukraine - 2,4

Czech Republic 3,0 -

Major importers are the CIS countries ,namely Kazakhstan and Belarus (taking

cca 97,6% of the total exports in 2003 ).

HCl export shares by companies in 2002-2003 are given below 2003 -. Table

2.3.3.2.

ble 2.3.3.2. Major producers-exporters of HCl /as 31,5% solution/

Exports total 000mt Export shares in %

2002 2003 2002 2003

TOTAL 20,9 21,0 100 100Including

Kaustik Volgograd 4,3 3,5 20,6 16,7

Khimprom Volgograd 0,1 0,5 0,5 2,4

Z Kaustik Sterlitamak 1,6 0,8 7,7 3,8

Ufakhimprom 6,0 7,1 28,7 33,8

KhimpromNovocheboksarsk

1,1 1,7 5,3 8,1

Khimprom Kemerovo 5,9 5,3 28,2 25,2

Kirovo-Chepetskiy KhK 0,5 0,2 2,4 1,0

Other exporters 1,4 1,9 6,6 9,0

Major exporeters were Ufakhimprom and Khimprom Kemerovo 57

and 59% of total export shares 2002 and 2003 ,respectively.

Average export prices for the scrutinized period were about 71USD ./mt in 2002

with a subsequent rise in 2003 up to 91 USD/mt in 2003 .

HCl imports were extremely low /10mtpa/. .

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2.3.4. Domestic prices

HCl average domestic prices rosse from453 Rubl/mt in 2002 to 758 Rubl/mt in

2003Generally the price was dependent on the quality of the product as well as on the

source of technology produced by mostly by-product as well as synthetic HCl. ,

Price levels and dynamics for the scrutinized periofd of 2002-2003 by producers

is given below in the table 2.3.4.1.

ble 2.3.4.1. Market prices of various producers of HCl/Rubl/mt/

PRODUCER2002 2003

February November February November

Sibur-Neftekhim Dzerzhinsk

By-product grade 1 180 210 210 500

Inhibited sort 600 1000 1000 1200Reactive grade 5500 5500 5500 No

production

Synthetic 850 500 700 800 Kaustik Volgograd

Synthetic 600/720 1200 1400 2300

Khimprom VolgogradBy-product 300 350 350 350

Inhibited HCl 500 700 850 850Z Kaustik SterlitamakBy-product 167 195 200 250

Inhibited 900 1000 1100 1400

Reactive 1020 1500 1900 3200

SyntheticGrade A 700 800 900 1100

Grade B 700 750 800 1000

UfakhimpromByproduct 170 185 212 250

Inhibited 600 860 1350 1400

SyntheticGrade A 600 720 1000 1050

Grade B 650 685 900 1000

Khimprom Kemerovo

Synthetic 1000 1000 1100 1800Reactive

Grade Pure 1500 1650 1800 2200

GRADE Chemically pure 1800 1800 2000 2500

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PRODUCER2002 2003

February November February November

Comparison of average mrket prices of producers in USD equivalent with average export

prices is shown in the table 2.3.4.2.

ble 2.3.4.2.Average HCl prices , USD/mt

2002 2003

Domestic market prices 15 25

Export prices 71 91

Import prices - -

Average export prices are well over the average domestic price levels