Bayer sells 9.4% stake in Covestro for EUR1.2 billion

MOSCOW (MRC) -- German drugs and pesticides group Bayer has further reduced its holding in Covestro to 31.5% from 40.9% by selling 19 million shares in the plastics business for a total of EUR1.2 billion (USD1.4 billion), as per the company's press release.

It said on Wednesday that it placed the stock at EUR63.25 each, a 3.7% discount to Tuesday’s closing share price, which DZ Bank analyst Peter Spengler said indicated healthy demand for the stock.

Bayer, which is trying to wrap up the USD66 billion takeover of U.S. seeds giant Monsanto by the end of the year, had announced the accelerated book building late on Tuesday, part of its plan to fully sever ties with Covestro over the medium-term.

It has agreed to hold off for 90 days on placing more shares in Covestro, which it spun off as a listed company two years ago. Bayer’s pension trust separately holds 8.9 percent of Covestro.

Barclays and Citigroup acted as joint bookrunners for the placement, which was aimed at institutional investors.

As MRC reported earlier, on 1 September, 2015, Bayer MaterialScience became known as Covestro. The plans for the carve-out of Bayer MaterialScience were announced in September 2014.

Bayer is a global enterprise with core competencies in the fields of health care, agriculture and high-tech polymer materials. As an innovation company, it sets trends in research-intensive areas. Bayer's products and services are designed to benefit people and improve their quality of life. At the same time, the Group aims to create value through innovation, growth and high earning power. Bayer is committed to the principles of sustainable development and to its social and ethical responsibilities as a corporate citizen.

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc.

MRC

MOSCOW (MRC) — CB&I announced it has been awarded a contract valued at approximately USD50 MM for a storage project in Central Asia, said Hydrocarbonprocessing.

CB&I's scope of work includes the engineering, fabrication and construction of nine flat bottom tanks.

"CB&I has provided storage tanks to this customer for many years," said Luke V. Scorsone, Executive Vice President of CB&I's Fabrication Services operating group. "With extensive international experience and knowledge of local standards and practices, we can offer a complete single-source storage solution."

In 2016, CB&I announced it had been awarded a contract by Naftna Industrija Srbije (NIS) for the engineering, procurement and construction management of a delayed coker unit in Pancevo, Serbia.
MRC

MOSCOW (MRC) — China's already soaring plastic demand may rise even further as the government plans to ban waste-plastic imports by the end of this year, which will curb domestic plastic recycling, said Reuters.

The expected increase in plastic demand highlights the consequences of China's pollution fight and its efforts to modernize its industry. As part of this drive, the world's top importer of rubbish said in July that it would stop importing garbage by the end of this year.

To make up for the loss of recycled plastic, petrochemical producers and exporters to China from the Middle East, South Korea, Thailand and Singapore are expected to receive more orders for products including polyethylene, a thermoplastic found in almost everything from grocery bags to bubble wraps, pipes, medical devices and even bulletproof vests.

"From next year, demand for polyethylene would get even better as the impact of the ban would be felt," said a source from a Chinese firm that produces and markets petroleum and petrochemical products. China imported 7.3 MMt of waste plastics last year, taking in over half the world's leftover plastic.

Of the 7.3 MMt, polyethylene made up about 2.53 MMt in 2016, and this is expected to fall to between 1.7 MMt and 1.8 MMt this year, data from IHS Markit Chemical showed. IHS Markit expects China's polyethylene demand to grow by 6.6% from 2017 to 2018, outpacing Asia's overall growth of 5.5%.

"The ban of scrap/waste plastics is definitely positive for polyethylene producers as there will be a shift of consumption from recycled polyethylene to prime virgins polyethylene," said J.P. Nah, director of polyolefins at IHS Markit Chemical.

Nah said Asia's 2017 total polyethylene demand would be around 41.5 MMt, with China accounting for some two-thirds of total demand. China's position as a key Asian producer of disposable medical devices will add to the country's demand for polyethylene, said Nikhil Vallabhan, a senior consultant at Frost & Sullivan for Asia Pacific.

Polyethylene makes up only about 9% of the total plastics used in medical devices because of its higher cost over competing plastic polyvinyl chloride. However, polyethylene demand for the devices is expected to increase in absolute terms, said Vallabhan.

"With countries and regions such as India and Southeast Asia being labelled as destinations for medical tourism, we could expect the demand for high quality medical devices to grow at a robust pace in the region," he said. "The usage of (polyethylene) in containers, syringe plungers and tubes will continue to grow."
MRC

MOSCOW (MRC) -- PTT Global Chemical Pcl, Thailand’s largest petrochemical producer, on Tuesday announced a USD4 B investment plan over the next 5 yr in an industrial development on the eastern seaboard, as per Hydrocarbonprocessing.

It includes a polyols joint venture between PTTGC, Sanyo Chemical Industries and Toyota Tsusho Corp in Thailand’s eastern province of Rayong, it said.

The investment plan also includes a naphtha cracker plant at the existing PTTGC facility in Map Ta Phut which will put production capacity at 500,000 tpy for ethylene and 250,000 tpy for propylene.

PTTGC also signed an agreement with Japanese Kuraray Co and Sumitomo Corp to study the possibility of producing High-Heat Resistant Polyamide-9T and Hydrogenated Styenic Block Copolymer.

As MRC informed before, PTT is on track to start commercial operations at its new 400,000 mt/year metallocene C6 linear low density polyethylene (MLLDPE) plant at Map Ta Phut, Thailand, in the first quarter of 2018. PTT will start up the plant by the end of this year.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC

MOSCOW (MRC) — China's bold plan to blend renewable fuels into its gasoline supply within 3 yr will revolutionize its fledging biofuels industry, industry players said, likely spurring billions of dollars in investment in ethanol factories, said Hydrocarbonprocessing.

On Wednesday, state media reported Beijing plans to roll out the use of a gasoline known as 'E10'—containing 10% ethanol—across the world's largest car market by 2020. It's the first formal timeline in a radical push that's part of a broader drive to clean up the environment.

The move doubles up as part of the government's effort to boost industrial demand for corn. Beijing must find a way to work off a stockpile of 200 MMt—so big it could feed China's 1.4 B people for more than a year—after decades of buying the crop to support farmers in a country haunted by post World War II famine.

"More money will now flow in, including from private and foreign investors," said Li Qiang, chairman of consultancy JC Intelligence Ltd, predicting boom times for ethanol. More than 10 new ethanol plants are planned in the northeastern cornbelt, according to JC Intelligence.

Most of those will go on line next year, adding 3 MMt of capacity, the consultancy predicts. Reuters estimates, based on industry officials' calculations, suggest an ethanol plant of average capacity—about 300,000 tpy—costs about USD153 MM to build.

While sceptics may question the feasibility of such a rapid rollout, Wednesday's news also comes days after Beijing said it is studying when to ban production and sale of cars using fossil fuels. It adds to potential headaches for the oil industry, which could lose a sizeable portion of the 150-MMt gasoline market worth 26.2 B yuan at current retail prices.
MRC