DuPont sales down in Q3 on higher product prices, lower costs

MOSCOW (MRC) -- DuPont recorded a 5% decrease in net sales year on year in the third quarter, continuing the downward trajectory from the second quarter, said Reuters.

Sales in China, which accounted for about 15% of total revenue, were driven by higher demand for a film used in newer smartphones and helped offset weakness in its electronic and automotive sectors.

A protracted trade dispute between the United States and China as well as fears of a global economic slowdown have been weighing on DuPont and rivals Germany’s BASF and Dow inc.

Chief Executive Officer Marc Doyle said destocking in semiconductors, used in everything from consumer electronics to data centers, was now behind and there were indications of demand stabilizing in the automotive sector.

To offset the weak macro environment, chemical companies have been relying on costs cuts to boost profits. Dupont said it slashed USD145 million in costs in the third quarter and was on track to deliver more than USD500 million for the full year.

The company’s core operating margins improved 20 basis points, while cost of sales declined 4.5%.

Shares of DuPont, which makes everything from adhesives and resins to probiotics, rose as much as 3.3% to $67.75 in morning trading. Net sales fell 4.5% to USD5.43 billion, with volumes impacted by a slowdown in both the automotive and semiconductor end markets.

Sales in China declined only 2% in the third quarter from a year earlier, compared with a 3% fall in the second quarter and 10% in the first. Net income from continuing operations available for DuPont shareholders stood at USD367 million, or 49 cents per share, for the three months ended Sept. 30.

On a proforma basis, the company earned USD73 million, or 9 cents per share, in the same period last year.

Excluding items, the company earned 96 cents per share, above analysts’ average estimate of 95 cents per share, according to IBES data from Refinitiv. Dupont, which had raised its full-year profit forecast in August, also narrowed its estimate for proforma adjusted earnings per share to between USD3.77 and USD3.82, from its prior forecast of USD3.75 and USD3.85 per share.

As it was written earlier, BASF and DuPont Safety and Construction declared that the companies inked an agreement wherein BASF will sell its ultrafiltration membrane business to DuPont.

As MRC informed earlier, DuPont Teijin Films has launched a new depolymerisation process which upcycles post-consumer PET waste into technically-advanced BOPET films suitable for use in various applications.

As per MRC' DataScope, import deliveries of Chinese injection moulded PET chips to the Russian market decreased in September this year by 72% compared to the same month last year - to 4,430 tonnes. The same indicator in August 2018 amounted to 15,640 tonnes. Shipments from China increased by 15% to 100,000 tonnes in the nine months of this year. The share of imports from China amounted to 90% against 86% for the same period last year. The leading Chinese suppliers to the Russian market were producers Yisheng, Wankai and Sinopec.

DuPont Teijin Films is a joint venture between DuPont and Teijin Ltd and supplies polyester films and related services to a wide range of industries, including healthcare, alternative energy, electronics and packaging.

DuPont makes a broad array of industrial chemicals, synthetic fibres, petroleum-based fuels and lubricants, pharmaceuticals, building materials, sterile and specialty packaging materials, cosmetics ingredients, and agricultural chemicals. It has plants, subsidiaries, and affiliates worldwide.
MRC

MOSCOW (MRC) -- Saudi Arabia's Aramco trading has won a term tender to buy around 550,000 tonnes of naphtha throughout 2020 from Greek refiner Motor Oil Hellas, three trading sources told Reuters on Tuesday.

Under the terms of the tender, Aramco would lift a 60,000 tonne cargo of naphtha roughly every month and a half, one of the traders said.

As MRC wrote before, the initial public offering of Saudi Aramco - the company that is preparing to sell up to a 5% stake - will happen soon, reported the country's energy minister's statement on Wednesday. The Aramco IPO is "going to come soon. It will come at the right time with the right approach and definitely with the right decision, and it will be a Saudi decision, specifically by (Crown) Prince Mohammed," Prince Abdulaziz bin Salman told delegates attending the Future Investment Initiative conference in Riyadh. He didn't provide further details.

Saudi-owned Al Arabiya TV channel reported on Tuesday that the local listing of Aramco will take place on December 11, with a final flotation price set to be announced on December 4.

We also remind that Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, is running its local refineries at full capacity and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia next year. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.

The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,436,390 tonnes in the first eight months of 2019, up by 9% year on year. Shipments of all PE grades increased. At the same time, the PP consumption in the Russian market was 909,260 tonnes in January-August 2019, up by 10% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
MRC

MOSCOW (MRC) -- Zhejiang Petrochemical is expected to start production at its new PP plant in November, reported NCT with reference to a source close to the company.

Located in Zhejiang, China, the new plant will have a production capacity of 900,000 tons/year of PP.

As MRC wrote previously, China's greenfield Zhejiang Petrochemical will use a range of process technology from Honeywell UOP for the second phase of its integrated refining and petrochemical complex in Zhoushan, Zhejiang province. The second phase of the complex by itself will process 20 million tons per year of crude oil and produce another six million tons per year of aromatics when completed. With an overall project cost of Yuan 160 billion (USD25.8 billion), Zhejiang Petrochemical plans to ultimately build up 40 million mt/year of crude processing capacity on Yushan Island of Zhoushan city in eastern China's Zhejiang province.

Phase I, revolving around 20 million mt/year of primarily crude processing capacity, will be able to produce 4 million mt/year of paraxylene, along with 8.5 million mt/year of gasoline, gasoil and jet fuel. Zhejiang Petrochemical has plans to start trial operations in February on its crude distillation unit and vacuum distillation unit at the phase I project, a source close to the company said this week. Construction of the second phase will begin after the full start-up of phase I.

According to MRC's ScanPlast report, the PP consumption in the Russian market was 909,260 tonnes in January-August 2019, up by 10% year on year. Shipments of PP block copolymer and homopolymer PP increased.
MRC

MOSCOW (MRC) -- Negotiations over November shipments of suspension polyvinyl chloride (SPVC) began in the Russian market this week. Some producers significantly decreased prices, in some cases up to roubles (Rb) 4,000/tonne, according to the ICIS-MRC Price Report.

Strong demand from the domestic market and a decline in imports helped Russian producers to keep a sufficiently high level of PVC prices in the domestic market in October. However, producers had to cut prices for November delivery, both under the pressure of a seasonal decline in demand and under the pressure of lower prices in foreign markets.

Some producers discussed reduction in PVC prices by Rb4,000/tonne, compared with the level of October.
Demand for finished PVC products in October was at a good level, which also affected the volumes of PVC purchases from the domestic market.

Although some of the converters nevertheless reduced the volume of PVC procurement, starting the process of optimising the stock of finished goods and raw materials. And, as a result, some producers increased export sales in order to balance the domestic market.

The seasonal factor traditionally has a greater affect on demand in November, and most converters plan to reduce purchases further. At the same time, some converters reported that they planned to keep the October level of PVC purchases or to go on a slight decrease in purchases.

Also, import has put pressure on prices of Russian producers in recent months. PVC prices in October in foreign markets in some areas, taking into account delivery and tax burden, were slightly lower than prices of Russian producers.

Some external suppliers announced price cuts for November delivery, and this factor could not go unnoticed by Russian producers.

November deals for K64/67 PVC were negotiated in the range of Rb72,000-74,000/tonne CPT Moscow, including VAT, for lots of less than 500 tonnes. K70 PVC was contracted at the prices, which were by on average of Rb1,000/tonnes higher.
MRC

MOSCOW (MRC) -- Participants of the Russian polystyrene (PS) market continued to report a shortage of domestic PS in October, according to ICIS-MRC Price report.

The shortage was not as acute in the general purpose polystyrene (GPPS) segment, as in the high impact polystyrene (HIPS) market.

Converters reported other market participants' requests to resell HIPS. A major XPS boards producer also reported strong demand for GPPS in the market and absence of available quantities of material.

On the other hand, large converters were provided with material according to their needs, and the fact that demand exceeded supply was not critical for the market as a whole. On the back of this, small-sized buyers were forced to search for free quantities of material and to pay a higher price for them.

As reported earlier, October is traditionally a season of stronger demand for PS and finished products in Russia. In mid-October, Penoplex and Gazprom neftekhim Salavat did not have available quantities for shipping material to the market.
MRC