Chemical activity barometer falls in October in USA

MOSCOW (MRC) -- The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), fell 0.4 percent in October on a three-month moving average (3MMA) basis following stable activity during the third quarter. On a year-over-year (Y/Y) basis, the barometer was off 0.5 percent (3MMA), said Americanchemistry.

The unadjusted measure of the CAB for October showed a 0.7 percent decline. The diffusion index fell to 47 percent in October – the first time since May 2016 that it was below 50 percent. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for September was revised downward by 0.44 points and that for August by 0.25 points.

“The CAB signals a pronounced slowdown in U.S. commerce through the second quarter of 2020,” said Kevin Swift, chief economist at ACC.

The CAB has four main components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.

Production-related indicators in October were mixed. Trends in construction-related resins, pigments and related performance chemistry were slightly positive and suggest slow gains in housing activity. Plastic resins used in packaging and for consumer and institutional applications were mixed, suggesting headwinds for the consumer. Performance chemistry eased, reflecting the global manufacturing slowdown. U.S. exports were mixed, equity prices slumped and product and input prices fell. Inventory and other indicators were positive.

The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the U.S. economy’s business cycle, and this barometer can be used to determine turning points and likely trends in the broader economy. Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.

As MRC informed earlier, Russia's output of products from polymers rose in September by 5.2% year on year. However, this figure increased by 1.7% year on year in the first nine months of 2019. According to the Russian Federal State Statistics Service, September production of unreinforced and non-combined films was slightly over 107,300 tonnes, compared to 110,000 tonnes a month earlier. Output of films products grew in January-September 2019 by 9.1% year on year to 893,000 tonnes.

Last month's production of non-porous boards, sheets and films rose to 32,900 tonnes from 33,100 tonnes in August. Thus, overall output of these products reached 284,100 tonnes over the stated period, up by 11.3% year on year.
MRC

MOSCOW (MRC) - SK Innovation, the owner of South Korea's top refiner SK Energy, said that a recovery in refining margins is expected in the fourth quarter ahead of the implementation of new shipping fuel rules from 2020, said Reuters.

As the International Maritime Organization (IMO)'s global sulphur cap on marine fuels comes into force from 2020, demand for low-sulphur fuel oil and marine gas oil is expected to pick up, the company said. The IMO's new shipping fuel mandate will limit the sulphur content of fuels to 0.5%, from 3.5% currently.

"Refining margins are expected to improve led by middle distillates demand as the International Maritime Organization (IMO)'s shipping fuel rules set to take effect from 2020," the company said in an earnings statement.

Ahead of the IMO's stricter marine fuel regulation, Kim Ji-yong, a senior official at SK Energy, said in a call with analysts that the company is in talks with shippers about long-term contracts to supply low-sulphur fuel oil or marine gas oil.

Kim added that the company's vacuum residue desulfurisation unit (VRDS), which can produce 40,000 barrels per day (bpd) of low-sulphur fuel oil, would start commercial operations in March or April next year.

A week ago, S-Oil, South Korea's third-biggest refiner, also said inventory build-up ahead of the IMO 2020 and seasonal demand for heating were expected to help refining margins increase in the fourth quarter.

SK Innovation saw a 60.5% drop in operating profit for the July-September period to 330 billion won (USD284.31 million) because of inventory-related losses on a drop in oil prices, compared with 836 billion won over the same period a year earlier, according to the company statement.

SK Innovation, which has a total refining capacity of 1.115 MMbpd in Ulsan and Incheon, ran at 90% capacity on average in the third quarter, slightly down from 92% during the same period a year earlier, the statement noted.

In the fourth quarter, some of SK Energy's facilities will undergo maintenance, said Kim Jang-woo, head of finance at SK Innovation. In mid-September, SK Incheon Petrochem, a petrochemical unit of SK Innovation, suspended its production for planned maintenance and will resume operations on Nov.3.

Shares of SK Innovation edged up 0.9% by 0218 GMT, while the broader market was 0.8% higher.

As it was written earlier, SK Innovation would build a second electric vehicle (EV) battery plant at its site in Komarom, Hungary, where it already has a 7.5 GWh/year EV battery plant under construction.

As it was written earlier, SK Global Chemical (SKGC) lowered Operating rates at the plant at No 1 cracker on downstream turnaround from october to December to 85%.

Ethylene is a feedstock for producing polyethylene (PE).

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.

SK Global Chemical is a pioneering petrochemical company in Korea, being the first in the country to build a naphtha cracking facility in 1972. Through continuous facility investment, R&D and technological improvement, the company has maintained its position as the leader of the petrochemical industry in Korea.
MRC

MOSCOW (MRC) - The U.S. Chemical Safety Board (CSB) said a fuel leak, possibly due to open valves and a running pump, set off a massive blaze at a Mitsui & Co Ltd petrochemical storage operation along the Houston Ship Channel in March, said Reuters.

The fire that began on March 17 at Intercontinental Terminals Co (ITC) spread black smoke across Houston, shut the ship channel, slowed production at local oil refineries and closed roadways and schools as it spread from one giant storage tank to 10 others before being extinguished on March 20.

"ITC has been cooperating with the CSB and other federal, state and local regulatory authorities in their respective investigations of the March fire at the Deer Park facility," said a company spokesman. "These investigations continue, and ITC is working with the government agencies to identify potential causes and take appropriate steps to ensure safe operation."

The safety board said investigators believe the fire started in piping next to a 80,000-barrel tank containing naphtha, a flammable liquid used in motor fuel production. A pump connected to the piping was left running for several hours beginning the night before to mix the naphtha with another fuel and prepare it for export on March 17, it said.

The board's lead investigator noted that valves on the piping had to be operated manually, preventing emergency workers from being able to shut the piping system as the fire spread. "The leaks could not be controlled once the fire started," said CSB lead investigator Crystal Thomas in a presentation on Wednesday.

The safety board plans to pursue the piping and other possible ignition sources for the blaze. Its review could answer "why the fuel release was not detected before ignition, why the release was not isolated, and why prolonged emergency response efforts were necessary to control and ultimately extinguish the fire," according to an initial report released on Wednesday.

No injuries were reported from fire.

The CSB investigates chemical plant explosions and fires to determine root causes to improve plant safety, but has no regulatory or enforcement power.

Mitsui faces criminal charges for spilling chemicals into waterways around the ITC terminal in the Houston suburb of Deer Park, Texas, after the fire was put out.

Vopak, which operates a storage terminal adjacent to ITC, sued in May for at least $1 million in lost business and damages.

As it was written earlier, Mitsui Chemicals is investing in additional capacity at its Grand Siam Composites production plants in Thailand in response to rising demand for PP compounds in global markets. The company operates eight manufacturing sites worldwide, including Grand Siam, as well as five RandD facilities.

According to MRC's ScanPlast report, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Mitsui Chemicals is a leading manufacturer and supplier of value added specialty chemicals, plastics and materials for the automotive, healthcare, packaging, agricultural, building, and semiconductor and electronics markets. Mitsui Chemicals is a Japanese Chemicals company, a part of the Mitsui conglomerate. The company has a turnover of around 15 billion USD and has business interests in Japan, Europe, China, Southeast Asia and the USA. The company mainly deals in performance materials, petro and basic chemicals and functional polymeric materials.

MRC

MOSCOW (MRC) -- Indian Oil Corporation (IOC), the country’s largest fuel retailer, has posted an 83 per cent dip in net profit at Rs 563 crore for the second quarter ended September on the back of decreased revenue and fall in gross refinery margins, according to Energy EconomicTimes.

The company had posted a net profit of Rs 3,247 crore for the corresponding quarter ended September 2018.

IOC’s revenue from operations declined 13 per cent to Rs 1,32,376 crore during the September quarter.

The fuel retailer’s gross refining margin dropped to USD2.96 per barrel for the first six months (April-September) of 2019, as compared to $8.45 per barrel posted in the corresponding period a year ago.

Its refinery throughput declined marginally to 17.53 million tonnes (MT) in the second quarter of the current financial year from 17.81 MT posted in the corresponding quarter a year ago.

Domestic sales in the second quarter increased marginally to 20.17 MT, as compared to 19.82 MT posted in the corresponding quarter last fiscal.

As MRC reported earlier, Indian Oil Corp restarted operation at its naphtha cracker in India in early-October, 2019, after completing maintenance works. The cracker was shut in early-September, 2019 for a maintenance turnaround. Located in Panipat, in the northern Indian state of Haryana, the cracker has an ethylene production capacity of 857,000 mt/year and propylene capacity of 425,000 mt/year.

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.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.
MRC

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