Sinopec suspends top officials at trading arm

MOSCOW (MRC) -- Sinopec has suspended two top officials at its trading arm Unipec and is evaluating the details related to certain crude oil transactions that have incurred some losses, reported Reuters with reference to the Chinese state oil company.

Unipec’s President Chen Bo, an industry veteran who helped the company become one of the world’s largest oil traders, has been suspended along with the senior Communist Party representative at the company, Zhan Qi, Sinopec said in a filing to the Hong Kong stock exchange.

"The Company was informed that Unipec incurred some losses during certain crude oil transactions due to the oil price drop. The Company is currently in the process of evaluating the details of such circumstance," Sinopec said.

Reuters earlier reported Chen Bo and Zhan Qi had been suspended after Unipec suffered losses, citing five sources. Neither Chen nor Zhan could immediately be reached for comment.

Vice president Chen Gang has been appointed to handle the company’s administrative work, Sinopec added in the filing.

"The government inspectors were looking into the company’s operations for the past few years ... one of the problems they found was the severe trading losses in the second half of this year because of wrong market judgment," one of the sources said.

The sources did not refer to any wrongdoing on the part of the two men.

Benchmark Brent and West Texas Intermediate (WTI) oil prices have fallen by about 40 percent since hitting their highest in four years in October, amid oversupply concerns as major producers ramped up output while the United States unexpectedly issued waivers that allowed countries to continue importing Iranian oil despite sanctions.

A sudden widening of WTI’s spread with Brent earlier this year also led to hefty losses at major traders.

Chen Bo, who rose through the ranks to take on Unipec’s top role, started the company’s liquefied natural gas (LNG) trading desk.

He also advocated boosting China’s crude oil imports from the Americas to help the world’s largest oil importing country to diversify its suppliers.

Oil traders said Chen’s removal could create uncertainty at Unipec.

"He’s been a key man in the oil trading industry in the past decade," said a veteran oil trader in Asia.

Shares in Sinopec closed at 5.25 yuan (USD0.76) on the Shanghai Stock Exchange, the lowest in two years and down 6.7 percent from 26 December 2018.

"Sinopec’s stock has been performing badly in the fourth quarter," said a Beijing-based equity analyst who cannot be named due to local stock exchange rules. The news today caused "a selloff and decline in prices," the analyst added.

In October, Sinopec reported that third-quarter net profit fell from the previous quarter, after rising for five consecutive quarters.

For the first nine months of 2018, the company reported a loss of 5.47 billion yuan (USD794 million) from foreign exchange rate changes and holdings in derivative financial instruments, according to financial reports issued in October.

In the first nine months of 2017, the company reported a gain of 1.13 billion yuan.

Of the 2018 losses, 4 billion yuan occurred in third quarter, according to Reuters calculations based on the financial reports.

Sinopec does not provide a breakdown for revenues at its trading unit.

As MRC informed previously, in September 2018, Sinopec Corp joined a group planning to build an oil refinery in Alberta, an enterprise that would strengthen demand for the Canadian province's heavily discounted crude. State-owned Sinopec, formally known as China Petroleum & Chemical Corp, along with an Alberta indigenous group, China State Construction Engineering Corp and Alberta management company Teedrum, plan to build a refinery to process 167,000 barrels per day of crude into gasoline and other products, the project's consulting firm Stantec Inc said in its statement.

Sinopec Corp. is one of the largest scale integrated energy and chemical company with upstream, midstream and downstream operations. Its principal business includes: exploring, developing, producing and trading crude oil and natural gas; producing, storing, transporting and distributing and marketing petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products. Its refining capacity and ethylene capacity rank No.2 and No.4 globally. Sinopec listed in Hong Kong, New York, London and Shanghai in August 2001. Sinopec Group, the parent company of Sinopec Corp., is ranked the 5th in Fortune Global 500 in 2012.
MRC

Lanxess strengthens flame retardants production

MOSCOW (MRC) -- Lanxess has announced that it is planning to invest approximately EUR200 million until 2021 to expand its global asset base for flame retardant additives, according to GV.

The company operates a strongly backward integrated production network for bromine and phosphorous based flame retardants with plants in the USA (Charleston, El Dorado, Greensboro), Germany (Leverkusen, Krefeld-Uerdingen), France (Epierre) and the United Kingdom (Manchester).

"With the acquisition of the US company Chemtura in spring 2017 we became one of the world’s leading suppliers of flame retardant additives. With the investment package we will further strenghten our strong position in this growing market," said Karsten Job, head of the Polymer Additives Business at Lanxess.

The company has significantly expanded its market position for flame retardant additives after integrating the former Chemtura businesses with brominated flame retardant additives, bromine and bromine derivatives, which complement Lanxess' existing business with phosphorus-based flame retardant additives.

In addition to the production network for flame retardants, Lanxess is running two technical development centres for these products in Naugatuck/USA and Leverkusen/Germany. "Out of Leverkusen and Naugatuck, we are driving global innovations like reactive and polymeric flame retardants," said Job. According to the company, its reactive and polymeric flame retardants, like Emerald Innovation 3000, enjoy a constant rise in demand as they offer a much better sustainability profile than standard flame retardants.

As MRC reported earlier, in December 2017, Lanxess announced the expansion of its Additives segment and plans to acquire the phosphorus chemicals business with a US production site from Belgian chemical group Solvay. Both companies signed an agreement to this effect.

Besides, Lanxess A.G. is expanding production of high-performance plastics at its Krefeld-Uerdingen site in Germany by building a new compounding facility at the North Rhine-Westphalia site. The Cologne-based specialty chemicals company said Sept. 19, 2018, that it was investing a "mid-double-digit million euro" amount in the new facility, which is scheduled to start operation in the second half of 2019.

Lanxess is a leading specialty chemicals company with about 19,200 employees in 25 countries. The company is currently represented at 74 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. Through Arlanxeo, the joint venture with Saudi Aramco, Lanxess is also a leading supplier of synthetic rubber.
MRC

Gulf moves sideways early on, petchems support Saudi

MOSCOW (MRC) -- Most Gulf stock markets moved sideways in thin trading with petrochemicals supporting Saudi Arabia and real estate shares remaining soft in Dubai, as per Hydrocarbonprocessing.

The Saudi stock index was up 0.5 percent after half an hour of trade with 11 of 14 petrochemical stocks higher and only two lower. The biggest, Saudi Basic Industries, added 0.7 percent.

Institutional investor appeared less active because of global holiday season, leaving an unusually high proportion of volume focused on second- or third-tier stocks. Home furnishings company Al Sorayai Trading and Industrial was the most heavily traded stock, rising 0.9 percent.

In Qatar, the index edged up 0.1 percent as United Development gained 1.4 percent in active trade; it has been rising for three days after saying it had sold a plot in its Pearl real estate project to a strategic Qatari investor.

Widam Food added 3.4 percent to 69.00 riyals in unusually heavy trade, rising above technical resistance on the early December peaks of 68.50 riyals.
MRC

Indorama Ventures to acquire Invista HVA Polymer Asset in Germany

MOSCOW (MRC) -- Indorama Ventures Public Company Limited (IVL), a global chemical producer, has announced that it has entered into an agreement to acquire INVISTA Resins & Fibers GmbH, which owns a high value-added PET manufacturing facility located in Gersthofen, Germany, as per the company's press relase.

The Gersthofen site has a combined capacity of 282,000 tonnes/ annum, and employs approximately 140 employees.

The transaction is expected to be completed in the 1st quarter 2019, subject to regulatory approvals.

Invista Gersthofen is a strong strategic fit with IVL and is aligned with our strategy to grow and support our customer’s needs with differentiated solutions in both packaging and in industrial fibers. IVL will own the intellectual property rights of POLYSHIELD PET and OXYCLEAR Barrier PET, Invista’s barrier technology, in all markets globally. POLYSHIELD PET and OXYCLEAR Barrier PET brands are well-anchored in oxygen barrier packaging i.e. Ketchup. Together with IVL’s HVA polymer business in America’s, Gersthofen will open new opportunities in several new markets and attractive segments.

PET packaging with an oxygen barrier is mainly used by the food and beverage industry to protect oxygen-sensitive products, such as juice, wine, beer, dairy as well as ketchup, sauces and other condiments throughout their entire shelf life. Demand for barrier resins is expected to grow at a strong pace, driven by the improved shelf life of packaged food products, the increasing health and hygiene concerns and the emergence of new recyclable PET applications over traditional materials such as glass and aluminum cans. Currently, IVL has a leading market share in the North America oxygen barrier PET market.

Commenting on the acquisition, Mr. Aloke Lohia, Group CEO of Indorama Ventures said, "This is very exciting development for IVL. With our strong foundation in the PET market and IVL’s geographic reach, we see vast opportunities to grow the POLYSHIELD PET and OXYCLEAR Barrier PET brands to their full potential, and reach existing and new customers around the world.

We are already capitalizing on the opportunities in the US market, one of the largest barrier resins markets in the world - through our existing OXYCLEAR Barrier PET license in America’s. This strategic acquisition will evolve IVL to the next level of success by taking advantage of opportunities in global markets. With this acquisition, we reinforce our commitment to deliver the highest value to our customers and create sustainable long-term value for our shareholders."

As MRC wrote before, in October 2017, global chemical manufacturer IVL completed its purchase of DuraFiber Technologies Mexico Operations, S. A. DE C. V. (Durafiber). Durafiber is a leading Mexican producer of durable technical textiles for industrial, tyre reinforcement, and specialty applications globally.

Indorama Ventures Public Company Limited, listed in Thailand, is one of the world's leading petrochemicals producers, a global manufacturing footprint with 59 sites in 20 countries across Africa, Asia, Europe and North America. The company's portfolio is comprises necessities and high value-added (HVA) categories of polymers, fibers, and packaging. Indorama Ventures has approx. 15,000 employees worldwide and consolidated revenue of USD 8.4 billion in 2017. The company is listed in the Dow Jones Sustainability Index (DJSI).
MRC

Rising use of plastics to drive oil demand to 2050

MOSCOW (MRC) -- Plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel, the International Energy Agency (IEA) said, said Reuters.

Despite government efforts to cut pollution and carbon emissions from oil and gas, the Paris-based agency said it expected the rapid growth of emerging economies, such as India and China, to propel demand for petrochemical products.

Petrochemicals that are derived from oil and gas feedstocks form the building blocks for products that range from plastic bottles and beauty products to fertilisers and explosives.

Oil demand for transport is expected to slow by 2050 due to the rise of electric vehicles and more-efficient combustion engines, but that would be offset by rising demand for petrochemicals, the IEA said in a report.

“The petrochemical sector is one of the blind spots of the global energy debate and there is no question that it will be the key driver of oil demand growth for many years to come,” IEA Executive Director Fatih Birol told Reuters.

Petrochemicals are expected to account for more than a third of global oil demand growth by 2030 and nearly half of demand growth by 2050, according to the world’s energy watchdog.

Global demand for petrochemical feedstock accounted for 12 million barrels per day (bpd), or roughly 12 percent of total demand for oil in 2017. The figure is forecast to grow to almost 18 million bpd in 2050.

Most demand growth will take place in the Middle East and China, where big petrochemical plants are being built.

Oil companies such as Exxon Mobil and Royal Dutch Shell plan to invest in new petrochemical plants in the coming decades, betting on the rising demand for plastics in emerging economies.

In the Middle East, major producers such as Saudi Arabia and Kuwait are also investing in large petrochemical plants because in some cases they can make more money by converting crude oil directly into plastics rather than oil products such as gasoline and diesel, Birol said.

Plastics use has come under increased scrutiny as waste makes its way into the oceans where it harms marine life, prompting several countries to ban, partly ban or tax single-use plastic bags.

But the IEA report said government efforts to encourage recycling in order to curb carbon emissions would have only a minor impact on petrochemical growth.

“Although substantial increases in recycling and efforts to curb single-use plastics take place, especially led by Europe, Japan and Korea, these efforts will be far outweighed by the sharp increase in developing economies of plastic consumption,” it said.

Under the IEA’s most aggressive scenario, recycling could hit around 5 percent of high-value chemical demand.

Petrochemical plants mainly run on light oil products such as naphtha and liquefied petroleum gas (LPG). But natural gas is becoming an increasingly favored feedstock, particularly in the United States where shale gas production has risen.
MRC