Covestro continues growth path – innovation and sustainability as growth drivers

MOSCOW (MRC) -- Covestro had an outstanding fiscal year 2017. Driven by a high demand for high-performance plastics and significantly higher margins, Covestro increased Group sales over the past fiscal year and net income more than doubled, as per GV.

"Compared with our first year as an independent company, we have once again clearly improved and demonstrated that our success is sustainable", said CEO Patrick Thomas.

For 2018, Covestro expects solid growth in the main customer industries including the automotive, furniture, construction, and electrical and electronics industries. Within these industries, Covestro considers in particular the social trend toward greater sustainability as a driver of growth. "In more and more industries, customers are increasingly looking for sustainable solutions and that is exactly what we offer," said Patrick Thomas. He further mentioned areas of growth such as e-mobility, energy-efficient construction and energy-saving LED lamps.

True to Covestro’s purpose to make the world a brighter place, sustainability has always been firmly anchored in its strategy. In addition to this commitment, Covestro has integrated the Sustainable Development Goals of the United Nations in its strategy. "Sustainability is and remains a key driver of innovation,” explained Dr. Markus Steilemann, Chief Commercial Officer and future CEO of Covestro. “By 2025, we want to spend 80 % of our research and development expenditure in areas that contribute to the Sustainable Development Goals."

Steilemann considers digitalization as a further driver of innovation: "With our comprehensive program, we are taking advantage of the opportunities that digitalization provides, making it a key focus in our company. As part of this focus, we will set new standards of collaboration with our customers." An example of this is a soon-to-be-launched digital marketplace that will simplify access to basic products and connect customers with Covestro and other providers. By the end of 2019, new digital business models such as the digital marketplace are expected to generate cumulative sales of up to one billion euros.

In the Polyurethanes segment, Covestro increased its core volumes over the previous year in all three regions – an overall increase of 3.4 %. Meanwhile, EBITDA rose by 151.1 % to EUR 2,212 million. This growth was primarily the result of significant improvements in margins in the MDI and TDI product groups. Moreover, the increased sales volume, gains from the sale of a systems house in North America, and an insurance reimbursement all had a positive effect. Furthermore, the decision to continue production in Tarragona (Spain) led to a reversal of provisions.

Core volumes in the Polycarbonates segment rose by 5.0 %. Here, too, all three regions contributed to growth. This segment’s EBITDA rose 21.2 % to EUR 853 million. Higher core volumes and increased selling prices had a positive effect on earnings, while sales were mainly driven by increased demand in the automotive, and electrical and electronics industries.

In 2017 as a whole, core volumes in the Coatings, Adhesives, Specialties segment saw virtually no change (-0.3%) amidst a challenging competitive environment. EBITDA was down 9.4 % from the previous year’s figure, dropping to EUR 453 million. Increased selling prices on average were not able to fully offset the higher cost of goods sold.

Meanwhile, expanded production of polyurethane dispersions commenced in Dormagen (Germany) and Barcelona (Spain) to meet the increasing demand from the coatings and adhesive industry. Covestro also began operations at a new production facility in Dormagen for high-quality, multi-layer flat films used in security cards or automotive interiors.

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

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.
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MOSCOW (MRC) -- Negotiations on prices of European polyvinyl chloride (PVC) for March shipments to the CIS countries started last week. With the decrease in the cost of ethylene, European producers on the contrary have increased export PVC prices this month, according to the ICIS-MRC Price Report.

The March contract price of ethylene was agreed up by EUR20/tonne from February, which presupposes the decrease in PVC production costs by, at least, EUR10/tonne. Nevertheless, despite the decline in the prices of the feedstock, many European producers announced an increase in export prices for supplies to CIS markets by EUR10-25/tonne.

Demand for PVC from main consumers is still quite low due to the seasonal factor, while European producers do not activate their sales in this direction for the past two months. One of the producers has deliberately kept the higher price level since February to limit or completely cut off their sales to the CIS.

Negotiations on March deliveries of suspension polyvinyl chloride (SPVC) for the CIS markets were done in the range of EUR750-810/tonne FCA, while the February deals were done in the range of EUR725-800/tonne FCA. One of the producers has kept prices since February at the level of EUR850-870/tonne FCA, but no deals were reported at such prices.
MRC

MOSCOW (MRC) -- Arlanxeo has signed an agreement with Saudi Aramco Products Trading company, headquartered in Dhahran, the Kingdom of Saudi Arabia, pertaining to the marketing and sales of EPDM rubber, reported GV.

Arlanxeo will start to supply the new EPDM grades within the first half of 2018 under its own Keltan trademark with the extension KSA, that represents the Kingdom of Saudi Arabia. The EPDM Keltan KSA grades will be produced in Rabigh, the Kingdom of Saudi Arabia. The EPDM plant in Rabigh is part of a fully integrated chemical complex which operates under the name Petro Rabigh with Saudi Aramco as a shareholder.

"Saudi Aramco Products Trading Company is pleased to partner with Arlanxeo to introduce Keltan KSA, a combination of Petro Rabigh manufacturing strength and Arlanxeo’s global market expertise. This partnership between Saudi Aramco Products Trading Company and Arlanxeo will leverage the highest value for all stakeholders." underlines Muhammad Al-Arfaj, Vice President of Saudi Aramco Products Trading Company.

Christian Widdershoven, member of Arlanxeo’s executive board and Head of the High Performance Elastomers division highlights Through this agreement, we are further strengthening Arlanxeo’s position as the global supplier for synthetic rubbers in the world market."

As MRC informed before, in September 2017, Arlanxeo announced the expansion of applications development capability for adhesive production and testing by continually improving its methods, among other means. Current innovations in this area include endurance tests, so-called tensile tests, as well as different procedures for the production of adhesives and for the determination of the processing time. With these new application technologies, Arlanxeo can now support its customers with technical challenges in an even better, more efficient manner.

Arlanxeo was established in April 2016 as a joint venture of Lanxess - a world-leading specialty chemicals company based in Cologne, Germany - and Saudi Aramco - a major global energy and chemicals enterprise headquartered in Dhahran, Saudi Arabia. The two partners each hold a 50-percent interest in the joint venture. The business operations of ARLANXEO are assigned to the High Performance Elastomers and Tire & Specialty Rubbers business units.
MRC

MOSCOW (MRC) -- Dow Polyurethanes, a business division of Dow Chemical Company, is launching two new soling systems, to serve the "athleisure" and protective footwear markets, as per GV.

According to the company, the Enerlyte polyurethane elastomer is a system designed for the active consumer, bringing lightweight, durable, high “energy-return” and soft-touch soles to the "athleisure" market. Furthermore, with the new Voralast H2, the company broadens its footwear portfolio with a polyurethane soling system specifically designed for protective shoes requiring a combination of comfort and protection in a variety of working conditions and addressing the needs of the industrial, agriculture, cold store, trekking and wellington professional shoe manufacturers.

"If you’re asking whether to focus on comfort or performance, you’re asking the wrong question. End customers expect both to be taken into account,” said Akil Sahiwala, Marketing Manager - Footwear, Dow Polyurethanes. “Enerlyte and Voralast H2 are designed with both in mind. Enerlyte outperforms EVA and standard PU foams when it comes to ball rebound and energy return, delivering high sole resilience and elasticity at very low density. And Voralast H2 brings comfort, flex fatigue and elasticity, while also offering enhanced hydrolysis resistance, abrasion endurance, and excellent anti-static and grip properties."

Dow Polyurethanes has launched these two new products at Simac in Milan, Italy, on 20-22 February 2018.

"From polyolefin elastomers and olefin block copolymers, to high performance polyurethanes, Dow takes pride in delivering products designed so our customers can make the best possible soles and midsoles. Expanding our range of polyurethane soling solutions to include Enerlyte and Voralast H2 shows our dedication to ensuring our customers have the ingredients they need for a winning formula," commented Jon Penrice, Vice President Dow Polyurethanes Europe, Middle East, Africa and India (EMEAI).

As MRC wrote before, Dow Polyurethanes, in July 2017, a business unit of The Dow Chemical Company announced the opening of a new Polyurethanes Service Center in Romania, expanding its network of more than 20 sites for production, development and technical service across the EMEAI region.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

MOSCOW (MRC) -- Neste is rebuilding the wastewater treatment plant at its refinery in Porvoo, Finland. The project involves renewing the chemical and biological treatment systems of the wastewater plant, and the entire project is scheduled for completion in 2020, as per Hydrocarbonprocessing.

The changes will improve the efficiency of wastewater treatment and ensure the processing capacity. The investment, which will cost EUR 50 million, is being carried out in cooperation with Borealis Polymers Oy, the other user of the plant.

"Wastewater plant operations play a key role in minimizing refinery emissions because water is discharged into waterways after treatment. Thanks to the plant, the amount of oil emissions into the sea is already very low, about 10% of the amount permitted for wastewater treatment plants under refinery's environmental permit," says Vice President of Production Marko Pekkola and continues: "Our goal in accordance with our principles of responsibility is to ensure that all our operations are safe for the local area, for our customers and for the environment."

Every year, Neste invests significantly in its plants with regard to the environment, resource efficiency, safety, and improved competitiveness. The solvent deasphalting unit that came into operation at the Porvoo refinery last summer has made it possible to reduce the production of heavy fuel oils. At the same time, we will be able to increase the production of diesel and comply with the International Maritime Organization's (IMO) global sulfur regulation, which enters into force in 2020. This imposes a global sulfur cap of 0.5 percent for marine fuels. This will reduce sulfur and particulate emissions when using Neste fuels.

The asphaltene recovered in the pretreatment unit can later be used as a fuel at the new power plant in Kilpilahti, Porvoo. This contributes to the area's circular economy.

"In 2017 we made improvements in many areas, for example, to better ensure uninterrupted production. We focused in particular on safeguarding the local environment at each of our production sites. For example, the air quality at the Porvoo refinery was generally good in 2017, and complies with all the guidelines and is below all the limits set by Finland and the European Union. Most of the time it also meets the World Health Organization's stringent recommendations. The implementation of noise barrier investments was also completed last year, reducing noise near the refinery," Pekkola says.

As MRC informed before, in October 2016, technology, engineering and project management company Neste Jacobs and Borealis signed an agreement for Neste Jacobs to perform an energy screening for all production units at Borealis’ site in Porvoo, Finland.
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