Moody changes CNPC outlook to stable

MOSCOW (MRC) -- Moody's Investors Service has changed the outlook of China National Petroleum Corporation's (CNPC) from positive to stable, reported Moody's on its site.

At the same time, Moody's has affirmed the Aa3 issuer rating of CNPC.

"Given CNPC's position as a government-related issuer (GRI) and its strategic importance in the national oil & gas sector, its Aa3 rating, which is on par with the sovereign, incorporates a very high level of support from the Chinese government, its 100% shareholder. Accordingly, a change in the sovereign rating or its outlook will lead to a corresponding rating or outlook change for the company," says Simon Wong, a Moody's Vice President and Senior Analyst.

CNPC's Aa3 rating combines 1) the company's baseline credit assessment (BCA) of a1, and 2) the very high level of support the government is likely provide in a distress situation.

CNPC's BCA of a1 rating is underpinned by 1) its large reserve base and strong operational profile; 2) its dominant position in China; and 3) its solid financial metrics and liquidity profile.

These strengths are counter-balanced by 1) the geopolitical and event risks associated with its fast pace of expansion overseas; and 2) the social and political responsibilities it bears -- as a pivotal state-owned enterprise.

The BCA of a1 also reflects structural subordination risk, given CNPC's holding company status.

An upgrade of China's sovereign ratings would result in a upgrade of CNPC. A downgrade of China's ratings would trigger a downgrade of CNPC. Downward rating pressure would also emerge if there is a material deterioration in CNPC's BCA, which is unlikely in the near to medium term, given its solid financial profile and strong market position.

Moody's says that its decision on 16 April to change the outlook of China's sovereign rating to stable from positive has no impact on the ratings of most of the country's non-financial government-related issuers, or state-owned enterprises.

As MRC informed previously, Moody's had recently changed China's outlook to stable from positive. Meantime, the rating agency affirmed China's government's bond rating of Aa3.

China National Petroleum Corporation (CNPC) is the largest oil & gas company in China in terms of reserves and production. It is wholly owned by the government, and is the largest state-owned enterprise in terms of assets, and second-largest in terms of revenue. Its oil & gas reserves of 23 billion boe and production of 1.67 billion boe also position it among the top five integrated oil & gas companies in the world. Its revenue in 2012 totaled RMB2,683 billion.
MRC

Sabic to cut about 1,050 jobs and close some assets in Europe

MOSCOW (MRC) -- Saudi Basic Industries Corp., (SABIC) the world’s biggest petrochemicals maker, plans to cut about 1,050 positions and close some assets in Europe as the company responds to diminished demand, said Bloomberg.

Saudi Basic Industries, also known as Sabic, has started talks with works councils and trade unions on the plan, it said in a statement today. The job cuts will take place across Europe, a third of which will be contracting staff and two- thirds Sabic employees, it said.

"The European market is facing structural changes that are likely to set a new course for future competitive challenges,” Sabic said. “Our industry continues to face slow growth."

Sabic joins peers including Akzo Nobel NV (AKZA) and BASF SE (BAS) in slimming down operations that are taking the brunt of a prolonged slump affecting construction and infrastructure as well as consumer spending on cars and appliances. The company in 2007 bought General Electric Co. (GE)’s plastics unit for USD11.6 billion as part of a global expansion drive.

The company, based in Riyadh, also faces stiffer competition from a revived U.S. chemical and plastics industry that’s benefiting from shale gas supplies, as well as increased production among Asian peers seeking to satisfy their demand locally.

BASF earlier this year announced 400 jobcuts at its construction chemicals operation, along with plans to reduce capacity at paper-ingredient plants in Europe.

Sabic, controlled by the Saudi government, may report a 10% decline in first-quarter profit, according to the average estimate of eight analysts surveyed by Bloomberg.

"We have stronger ambitions in terms of revenue, market position and innovation," Koos van Haasteren, vice-president Sabic in Europe, said in the statement.
MRC

PVC plant likely to be restarted by Sinopec Qilu in early May

MOSCOW (MRC) -- Sinopec Qilu is in plans to restart a polyvinyl chloride (PVC) plant following maintenance turnaround, said Apic-online.

A source in China informed that the plant is likely to restart operaions in first half of May, 2013. It was shut on April 8, 2013 for maintenance.

Located at Zibo, Shandong province in China, the PP plant has a production capacity of 120,000 mt/year.

Sinopec Qilu Company, located in Zibo city, Shandong province, with 24.8 square kilometers area, is a super large scale refining, chemical, chemical fiber enterprise of petroleum,salt,coal,natural gas chemical.

Established in 1965 as state enterprise Sinopec Qilu produces petro-chemicals like PVC, PP, HDPE, LDPE, SBR, PA, DOP.
MRC

Bosch predicts gas-powered autos boom

MOSCOW (MRC) -- Discoveries of shale gas could lead to a surge in US demand for gas-powered vehicles, according to Bosch, the world’s biggest car parts supplier, said Financial Times.

But new, bountiful supplies of cheap natural gas in the US raise a tantalising third possibility – that cars and trucks could one day criss-cross the US using natural gas instead of petrol.

"The discovery of new gas deposits could mean that the US will become an emerging market for compressed natural gas powertrains," Bernd Bohr, head of automotive at Bosch, said.

Vehicles powered by compressed natural gas are not new but currently more than half of the world’s gas-powered vehicles are found in the Asia-Pacific region. In contrast, in the US and much of western Europe natural gas is most familiar through its occasional use in urban bus transport.

Gas prices in the US have fallen to about a quarter of the level seen in Europe, meaning gas vehicles could be more economical to drive and reduce US dependence on imported oil. Gas-powered vehicles also emit about 25%less carbon dioxide.

As MRC wrote earlier, favorable oil-to-gas price ratios driven by the production of natural gas from shale will drive a renewed US competitiveness that will boost exports and fuel greater domestic investment and economic growth within the business of chemistry.

The US-based Natural Petroleum Council said in a report last year that the competitiveness of gas-powered vehicles would depend on a sustained lower price of natural gas against petrol and diesel.

Bosch, one of the world’s largest private industrial groups, produces injectors for compressed natural gas powered vehicles and flexible control units that enable both gasoline and CNG injection. The Stuttgart-based company believes one of the first new uses of compressed natural gas could be in heavy trucks that cross the US.
These tend to use established freight corridors, which would therefore enable the relatively easy development of natural gas fuelling infrastructure.

Bosch also sees further potential for gas-powered cars as the technology advances. Still, Bosch is preparing for a difficult year as demand stagnates in Europe, which accounts for 57% of sales.

It is running the rule over its European production locations, and does not rule out jobs cuts if measures to improve competitiveness are unsuccessful.

MRC

Russian market participants expect PS prices to decline

MOSCOW (MRC) -- Although the contract price of styrene monomer (SM) in Europe in April decreased by EUR64/tonne to EUR1,411/tonne, FOB ARA, Russian producers have not significantly changed their price quotation, according to ICIS-MRC Price Report.

Participants of the PS market are waiting for the price reductions from Russian producers due to the ongoing SM price cuts in Europe.

Thus, in the beginning of April, spot prices of SM were at USD1,560-1, 580/tonne, and in the mid-April the price has fallen to USD1,530-1,540/tonne.

Buyers of polystyrene in the Russian market on the back of sliding SM prices are waiting for the price adjustments from Russian producers.

Russia's imports of general purpose polystyrene (GPPS) and high impact polystyrene (HIPS), which is mostly supplied from Europe, have been growing since the beginning of 2013 and the first quarter amounted to 13,000 tonnes and 7,700 tonnes respectively.

A similar opinion is shared by export buyers for whom the cost of the material in April has not change. Foreign consumers focus their attention on reducing the quotations of SM from USD1,650/tonne in March to USD1,550/tonne in April, having hope to get price reduction by USD100/tonne for May shipments.
MRC