BASF maintains good business performance in H1 2013

MOSCOW (MRC) -- BASF increased sales by 3% in the second quarter of 2013 to just under EUR18.4 billion thanks to higher sales volumes in all segments, according to the company's report.

Income from operations (EBIT) before special items decreased by 5% to around EUR1.8 billion. In the first half of 2013, sales reached around EUR38.1 billion, surpassing the level of the previous first half by 4%. EBIT before special items increased by 3% to more than EUR4 billion.

"In light of the challenging conditions, our business performed well in the first half of 2013. Our business with crop protection products contributed substantially to sales and earnings growth. Earnings rose considerably in the Functional Materials & Solutions segment. Higher volumes in the Oil & Gas segment also boosted sales and earnings development," said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE at the company’s half-year press conference.

Based on the economic development of the first six months of 2013, the company’s estimates for the economic environment are more conservative than they were previously. BASF now forecasts the following for the global economy in 2013 (previous forecast in parentheses): Growth of gross domestic product: 2.0% (2.4%); growth in industrial production: 2.7% (3.4%); growth in chemical production: 3.1% (3.6%).

Worldwide economic growth and demand for chemicals are not expected to accelerate in the second half of 2013. An uneven development marked by economic uncertainty is anticipated. Bock: "Despite this, we still aim to exceed the 2012 levels in sales and EBIT before special items. Achieving our earnings target is significantly more challenging today than we had expected at the beginning of the year."

In the second quarter of 2013 as in the previous quarter, cash provided by operating activities amounted to around EUR2.0 billion. Thus, it totaled EUR4.0 billion in the first half of 2013, up by EUR619 million year-on-year. Net debt rose to EUR12.5 billion as of the end of the second quarter of 2013, compared with EUR11.2 billion as of December 31, 2012.

In the Chemicals segment, sales decreased by 4% in a weak environment. Sales prices declined due to lower raw material costs. Sales volumes rose slightly. Compared with the second quarter of 2012, EBIT before special items declined by EUR106 million to EUR495 million. This was mainly the result of weaker margins for caprolactam and polyamides.

As MRC wrote previously, German chemicals company BASF, a leading global manufacturer of petrochemicals, increased its sales and income from operations (EBIT) before special items in the first quarter of 2013. At EUR19.7 billion, sales exceeded the level of the previous first quarter by 5%. Sales volumes grew particularly as a result of intensified demand for crop protection products and increased volumes in the Oil & Gas segment. EBIT before special items rose by 10% to EUR2.2 billion.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC

MOSCOW (MRC) -- The Indonesian government expects to begin work next year on a USD4-billion fertilizer and petrochemical complex in Bintuni Bay, West Papua, which is intended to help the country shift from being a net importer to a net exporter, said Apic-online.

Panggah Susanto, the Industry Ministry's director general for manufacturing-based industry, said the integrated complex will produce urea and ammonia-based fertilizers and a range of petrochemicals including methanol, polyethylene and polypropylene. Commercial production is expected to begin in 2016.

The project has not yet been assured of gas allocations, which are expected to come from the Tangguh liquefied natural gas field in West Papua.

Panggah noted that several investors, both domestic and foreign, have expressed interest in participating in the complex. He cited Chandra Asri and Ferrostaal, who have agreed to study the feasibility of developing a methanol-based olefin project in Bintuni to produce up to 175,000 t/y of ethylene and 400,000 t/y of polypropylene.

As MRC wrote before, Pertamina has requested an Indonesian government guarantee of protection that would restrict other companies from building petrochemical refineries capable of producing 1 million tpa in the country. Pertamina, citing petrochemicals as one of its "core growth pillars," has disclosed plans to invest about USD5 billion in an integrated refinery and petrochemical complex on Java Island.
MRC

MOSCOW (MRC) - Kazakh imports of high-density polyethylene (HDPE) in the first half of 2013 grew only by 2% on the back of a weaker demand from the main consuming sectors, according to MRC analysts.

Imports of HDPE to Kazakhstan in June 2013 exceeded 8,500 tonnes, while in May it was 7,400 tonnes. In general, HDPE imports in the first half of the year 2013 to Kazakhstan totalled about 48,000 tonnes, from 47,200 tonnes year on year.

Such a small increase in demand for HDPE in the first half of the year resulted from a sluggish demand for polyethylene from the producers of pipes (the share of pipe HDPE in the total consumption of the country accounts for more than 70%) and overall situation in the industry (production of polymers and rubber have risen in the first half of the year only by 1 , 2%).

Russian polyethylene prevails in the structure of HDPE imports to Kazakhstan, with about 43% in the total imports.
A significant share of the Kazakh market also accounts for South Korean and Thai HDPE.
MRC

MOSCOW (MRC) -- Imports of suspension polyvinyl chloride (PVC-S) to Kazakhstan in the first six months of 2013 rose by 20%, according to MRC DataScope.

Kazakh companies in June increased imports of PVC-S up to 4,000 tonnes from 1,500 tonnes in May.

Overall, imports of PVC to Kazakhstan in the first half of the year totalled 12,900 tonnes, whereas last year this index amounted to 10,800 tonnes.

The growth in demand for PVC in the Kazakh market took place despite cuts in construction works (in the first half of 2013 commissioning of residential buildings decreased by 4%).
MRC

MOSCOW (MRC) -- Chinese producers of acetylene polyvinyl chloride (PVC) again raised the export price for the Russian market by USD20/tonne, according to ICIS-MRC Price Report.

After a prolonged stable pricing Chinese producers of acetylene PVC firstly increased exports prices in mid-July by USD20/tonne. The second price increase was announced last week and also made USD20/tonne. As a result, export prices of Chinese acetylene PVC for the Russian market grew to USD930-960/tonne DAP Dostyk. Chinese producers explained the necessity of price increase by the uptrend in the domestic market.

Russian companies significantly reduced their purchases of Chinese resin in May and June because of the weaker prices and oversupply in the Russian PVC market. In July they continued to cut PVC purchases.

Thus, the imports of Chinese PVC in June totalled about 11,200 tonnes, and over the three weeks of July this figure fell to just 5,000 tonnes.
MRC