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Global Sanctions on Russia Likely to Shake Up Resin Trade Flow
03/04/2022
The resin industry could see a major change in global trade flow in and out of Eastern Europe as many major producers and logistics companies look to end their business relationships or impose certain restrictions on Russia due to its invasion of Ukraine.
The US has asked energy producers to help increase production to stabilize supply, and said it is imposing restrictions on Russia through export controls on oil and gas extraction equipment, while the US Commerce Department will impose restrictions on technology exports that would support Russia's refining capacity over the long term.
Since the conflict began in late February, major oil firms Shell, BP, and ExxonMobil, which have roughly $21 billion worth of investments and assets combined in Russia, announced intentions to discontinue business with the country.
Key global resin companies have also announced intentions to discontinue business in Russia, joining ExxonMobil and Shell, which are also major resin producers.
LyondellBasell said this week, effective immediately it will not enter into any new business transactions or relationships with Russian state-owned entities, and it also intends to discontinue business relationships with Russian state-owned entities to the extent legally possible.
"We are in the process of assessing how this will affect our operations, including feedstocks, utilities, supply chain providers, and customers," said LyondellBasell interim CEO Ken Lane. "Additionally, we are complying with all US and international sanctions which have been put into place as a result of this crisis."
In Europe, resin producer TotalEnergies said it supports the scope and strength of the sanctions put in place by Europe and will implement them regardless of the consequences on its activities in Russia. TotalEnergies added that it will no longer provide capital for new projects in Russia.
Meanwhile, on the logistics front, three of the world's biggest shipping companies, Maersk, MSC and CMA CGM said this week they would not book delivery of goods from Russia and were suspending most deliveries to the country.
This comes some countries consider potential bans on Russian vessels from entering their ports. In Europe and North America, the UK and Canada have already announced they would deny Russian ships entry. No other nations have formally followed the UK and Canada's lead. The US said its allies and partners do not have a strategic interest in reducing the global supply of energy.
By Brian Balboa for The Plastics Exchange.
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