Dow Chemical Q4 net income down 24%

MOSCOW (MRC) -- Dow Chemical Co. reported stronger-than-expected fourth-quarter earnings, as higher volumes across the board offset price declines in Western Europe related to the impact of the strong dollar, said The Wall Street Journal.

Falling oil prices have sparked investor concerns about Dow and other petrochemical manufacturers in the U.S. Profit margins are bolstered in North America by cheap natural gas and other fuels that Dow and its peers use to make plastics and consumer goods, while foreign competitors tend to run plants on higher-priced oil-based feedstocks. Now that oil prices have fallen, some analysts have questioned whether Dow’s competitive edge may be fading.

But Chief Executive Andrew N. Liveris said falling prices are good for the company. "We believe lower oil prices are a relative positive for Dow and a boost for the global economy," he said. He said the company’s global-cost positions helps it use assets more effectively and sell into higher-value sectors. In addition, the company’s differentiated technologies help it maximize returns in sectors less susceptible to pricing volatility.

Overall, Dow’s profit fell to USD819 million, or 63 cents a share from USD1.05 billion, or 79 cents a share, a year earlier. Revenue was flat at USD14.38 billion, as volume gains in emerging areas were offset by a 14% price declines in Western Europe, including currency headwinds.

The company had expanded volume in most segments, led by a 9% increase in agriculture sciences. Performance materials saw a 7% increase while performance plastics was up 3%.

In recent quarters, Dow has been trying to sell lower-margin business lines to raise USD3.2 billion to USD4.7 billion by the end of this year.

Due to these restructuring efforts, selling and administrative expenses, together with research and development expenses, fell by USD64 million from the year before.

Dow recently faced pressure from activist investor Daniel Loeb of hedge fund Third Point LLC to split off its petrochemicals business from its specialty-chemicals business. In November, Dow agreed to add two directors proposed by Third Point to its board to appease the activist investor.

As MRC wrote before, Dow Chemical signed a long-term ethylene off-take agreement with a new Japanese joint venture that will allow the chemical producer to enhance its performance plastics franchise. The joint venture is being formed between Japanese companies Idemitsu Kosan and Mitsui & Co. to construct and operate a Linear Alpha Olefins unit on the U.S. Gulf Coast.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene (PE), polypropylene (PP), and synthetic rubber.
MRC

MOSCOW (MRC) -- BASF, the world's petrochemical major, is further strengthening its production footprint in Asia Pacific with the start-up of its first production plant for polymer dispersions in Pasir Gudang, Malaysia, as per the company's press release.

This production plant is built at the existing BASF production site, located in the Pasir Gudang Industrial Park of the Johor Free Trade Zone. The plant is BASF’s third polymer dispersions plant in ASEAN, complementing the existing dispersions plants in Jakarta and Merak, Indonesia.

This wholly-owned BASF production plant will benefit from close proximity to raw materials such as the acrylic monomer complex at BASF PETRONAS Chemicals in Gebeng, Kuantan. Local production in Malaysia will enable BASF to better respond to the fast-changing market situation in Asia Pacific.

"The plant is built with BASF’s advanced production technology, which can accommodate a broad spectrum of acrylic products that are being developed in our Asia Technical Center in Shanghai, China. These cutting edge products with tailored properties can be made in this versatile production facility, addressing the increased customers’ requirement," said Jeff Knight, Senior Vice President, Dispersions and Pigments, Asia Pacific.

The new plant will focus on the production of a variety of acrylic base polymer dispersions for decorative coatings, construction and adhesive industries, serving the entire Asia Pacific region, especially for South East Asia. Commercial production started at the beginning of 2015.

This investment represents another milestone in the implementation of BASF’s Asia Pacific strategy. By 2020, BASF aims for local production of approximately 75% of the products it sells in the Asia Pacific region in order to intensify its collaboration with and strengthen its supply position to customers in Asia Pacific. To achieve this, BASF is investing EUR10 billion together with its partners from 2013 to 2020 to further develop its local production footprint in Asia Pacific.

As MRC reported earlier, in june 2014, BASF undertook three key capacity expansion projects for performance materials at its Pudong site in Shanghai (China). The capacity expansion projects includes Ultramid (polyamide, PA), Ultradur (polybutylene terephthalate, PBT), Elastollan thermoplastics polyurethane elastomers (TPU), and Technical Center and capacity expansion of Cellasto (microcellular polyurethane components).

BASF is the world’s leading chemical company. Its portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas. BASF had sales of about EUR74 billion in 2013 and over 112,000 employees as of the end of the year.
MRC

MOSCOW (MRC) -- Royal Dutch Shell has signed a deal with Iraq worth USD11 billion to build a petrochemicals plant in the southern oil hub of Basra, boosting the country's aim to become a major regional energy player and diversify its income, reported Reuters.

Industry Minister Nasser al-Esawi told a news conference the Nibras complex, which is expected to come online within five to six years, would make his country the largest petrochemical producer in the Middle East.

Iraq, which relies on oil for more than 90% of its revenue, has been hit hard by the steep fall in global oil prices since June, with Brent crude now hovering around USD50 a barrel.

"The Nibras complex will be one of the largest (foreign) investments (in Iraq) and the most important in the petrochemical sector in the Middle East," Esawi said.

He said the factory would produce 1.8 million tonnes of petrochemical products per year.

A Shell spokesman told Reuters Iraq's cabinet had authorised the project on Jan 13. Company officials declined to confirm the size or types of output expected from the facility.

We remind that, as MRC wrote before, Shell restarted its ethylene cracker in Bukom, Singapore, last week following a three-month maintenance and expansion works to raise the unit's capacity. Shell said the expansion work would increase the capacity of the cracker by 20%. The cracker originally had a capacity of 800,000 tonnes per year (tpy) of ethylene. The cracker uses a range of feedstock including naphtha and liquefied petroleum gas (LPG) to produce ethylene, a building block for plastics.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Energy group Royal Dutch Shell has announced an eight-per cent drop in annual net profits owing to a slump in global oil prices and said it would accelerate spending cuts, said Digitalook.

Profit after tax dropped to US15.05 billion (A18.99 billion) in 2014 compared with the Anglo-Dutch company's performance one year earlier, dragged down by plunging earnings in the fourth quarter as the cost of crude tumbled.

"Compared with the fourth quarter 2013, earnings... were impacted by the significant decline in (the price of) oil," Shell said in a statement.

Fourth-quarter net profit plunged 57 per cent to US773 million compared with the final three months of 2013.

Shell said it would slash spending by more than US15.0 billion over the next three years.

"The agenda we set out in early 2014 to balance growth and returns has positioned us well for the current oil market downturn," said Shell chief executive Ben van Beurden.

"We are taking a prudent approach here and we must be careful not to over-react to the recent fall in oil prices. Shell is taking structured decisions to balance growth and returns," he added in the results statement.

Shell noted that lower prices created opportunities for the group to cut costs.

It added that deferring spending in many areas and driving costs down in the supply chain "should result in reduction of potential capital investment for 2015-17 of over US15 billion".

As MRC wrote before, Shell restarted its ethylene cracker in Bukom, Singapore, this week following a three-month maintenance and expansion works to raise the unit's capacity. Shell said the expansion work would increase the capacity of the cracker by 20%. The cracker originally had a capacity of 800,000 tonnes per year (tpy) of ethylene.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Last year's imports of high density polyethylene (HDPE) to the Russian market grew by 6%. September - a month of shutdowns at Tatar producers - accounted for the peak of imports, whereas the extrusion moulding sector accounted for the largest increase, according to MRC DataScope report.

December HDPE imports to Russia rose to 25,400 tonnes from 21,000 tonnes in November. The overall imports of this polyethylene (PE) grade into Russia increased to 300,600 tonnes in 2014 versus 284,600 tonnes a year earlier. September - the period of outages for maintenance at Kazanorgsintez and Nizhnekamskneftekhim - accounted for the peak imports. Extrusion grade HDPE for blow moulding accounted for the largest increase in imports.

The supply structure by consumption sectors looks the following way over the said period.

Last month's imports of pipe grade HDPE fell below 4,000 tonnes under the pressure of seasonal factors from 5,200 tonnes in November. The overall imports of pipe grade PE to Russia totalled 83,900 tonnes, up by 24% year on year.

December imports of HDPE for extrusion coating of large-diameter steel pipes rose to 9,600 tonnes (5,500 tonnes in November). PE shipments to this processing sector dropped by 13% over the stated period and reached 64,000 tonnes. Lower imports of this HDPE grade was caused, among other, by the increased domestic production (Metakley launched a similar PE production in the middle of the year). Nizhnekamskneftekhim also intends to enter this segment

Last month's imports of blow moulding HDPE grew to 3,700 tonnes from 3,300 tonnes in November. Last year's imports of this PE grade surged by 40% and came close to 53,000 tonnes.

December imports of injection moulding HDPE rose to 4,900 tonnes (3,600 tonnes in November). The overall imports of this HDPE grade to Russia grew by 9% to 47,900 tonnes.

September accounted for the peak imports of film grade HDPE - 7,800 tonnes, after which they began to rapidly decline. Last month's figure was 2,600 tonnes (2,000 tonnes in November). Last year's imports of film grade PE totalled 38,100 tonnes, down by 15% year on year.

HDPE imports to other consumption sectors (cable extrusion, rotational moulding, etc.) fell to 13,700 tonnes in 2014 versus 16,300 tonnes a year earlier.

MRC