Petronas Chemicals profits plunge on lower product prices, weakening currency

MOSCOW (MRC) -- Petronas Chemicals Group (Kuala Lumpur, Malaysia) has reported a massive drop in third-quarter profits and significantly lower sales, reported Chemweek.

Net profit declined to 558 million Malaysian ringgit (USD134.37 million) from RM1.332 billion in the year-earlier quarter. EBITDA decreased by 44% to RM915 million largely due to compressed margins, and sales were down 24.0% to RM3.67 billion. Commenting on the results, CEO Sazali Hamzah said, “Petrochemical product prices have stabilized but market outlook remains soft due to lower global GDP growth and expected additional capacities coming onstream, resulting in a long market. However, market fundamentals remain strong in the Asia Pacific region."

Sazali said that construction on PCG’s new plants at the Pengerang Integrated Complex (PIC) is nearing completion and the company remains on track to commence commercial operations by the end of the year. "We are now in the process of stabilizing the plants to deliver additional capacity of a new product range to meet our customers’ requirements." Saudi Aramco holds a 50% stake in PCG’s polyolefins complex within PIC and it also has a 50% stake in the upstream steam cracker, a joint venture with PCG’s parent, Petronas.

All PCG’s segments reported lower sales and profits. The olefins and derivatives business recorded net profit of RM232 million compared with RM762 million in the third quarter of 2018. Revenue in the segment was down 28% to RM2.281 billion. Fertilizers and methanol net profit declined from RM427 million to RM315 million, and revenue was 18% lower at RM1.381 billion.

PCG recorded plant utilization rates of 81%, an improvement from 79% in the corresponding quarter of 2018. Production and sales volumes were higher but product prices declined in tandem with declining crude oil price and softer market demand. The olefins and derivatives segment recorded plant utilization rates of 78% compared with 96% in the corresponding quarter, primarily due to higher statutory turnaround activities. Sales volume was lower in line with lower production.

The fertilizers and methanol business recorded an improvement in plant utilization rates to an average of 83%, up from 69% in the corresponding quarter mainly due to better plant performance and lower statutory turnaround activities.

PCG anticipates product prices for olefins and derivatives to stabilize in the fourth quarter on the back of supply limitation following planned regional turnarounds. The company also forecasts stabilization in fertilizers and methanol prices due to limited supply amid soft demand from the end products.

As MRC informed earlier, in early November 2019, Saudi Aramco approached Malaysian state energy company Petronas to participate in Aramco’s IPO, Petronas said, as the Middle Eastern oil giant seeks cornerstone investors for the listing.

Besides, we 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 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% 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

Formosa Plastics to expand Baton Rouge manufacturing site

MOSCOW (MRC) -- Formosa Plastics Corp. Louisiana, a subsidiary of Formosa Plastics Corp. USA, is investing USD332 million to expand its production of polyvinyl chloride (PVC) resin and add production equipment in two other units at the company’s industrial manufacturing site in Baton Rouge, La., on the east bank of the Mississippi River, reported Oil&Gas Journal.

The project will include installation of new machinery and equipment for the expansion of the PVC resin production unit, expected to result in a 20% increase in production capacity and sales; installation of new machinery and equipment for a halogenated acid production unit for internal use in the production of vinyl chloride monomer; and installation of utilities equipment needed for operations, the Louisiana Economic Development (LED) said.

Launch of the new operations is scheduled for late 2021 or early 2022, LED said.

The expansion of the existing PVC unit will result in an additional 300 million lb/year of resin production, said Paul Heurtevant, plant manager of Formosa’s Baton Rouge site.

LED estimates the project will create 15 direct jobs and 66 indirect jobs. Formosa also will retain 230 existing jobs.

The expansion project is slated to create 500 construction jobs beginning in early 2020, LED said.

LED said it began discussing potential expansion plans with Formosa in March, and the company considered a Texas location before committing to Louisiana.

To secure the project, LED offered Formosa a competitive incentive package that includes a performance-based grant of up to USD500,000. The company also will have access to the Louisiana’s Quality Jobs and Industrial Tax Exemption programs, LED said.

Formosa’s Baton Rouge site currently includes three operating units to produce PVC, a synthetic plastic polymer with a variety of uses in the construction industry, including as insulation on electrical wires, in flooring for buildings needing a sterile environment, and as piping and siding.

As MRC informed before, Formosa Petrochemical Corp reduced its October average run rate at the 540,000-barrel-per-day (bpd) Mailiao refinery in October to about 70% from more than 87% last month due to maintenance. Formosa, Asia’s sixth-largest standalone refinery by capacity, took an 80,000-bpd residue desulphurizer down for a planned maintenance.

According to MRC's ScanPlast report, Russia's overall production of polyvinyl chloride (PVC) reached 809,000 tonnes in the first ten months of 2019, up by 3% year on year. At the same time, not all Russian producers raised their output,

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC

US crude stockpiles rise as production hits record high

MOSCOW (MRC) -- US crude oil stockpiles rose last week for the third consecutive week as production hit a record high, while distillate inventories, which include heating oil, fell for the eighth week in a row, reported Reuters with reference to the Energy Information Administration's statement.

Crude inventories rose by 2.2 million barrels in the week to Nov. 8, compared with analysts’ expectations in a Reuters poll for a 1.6 million-barrel rise.

"Further drawdowns in ... distillate fuels were supportive, but the rebound in refining utilization works against those data points," said John Kilduff, a partner at Again Capital LLC in New York.

"Both imports and exports of crude oil were quite low on the week, but the rise in domestic production shows that there is no slowdown in the oil patch, despite the falling rig count."

Crude production rose by 200,000 barrels per day (bpd) to a weekly record of 12.8 million bpd, the data showed.

Commercial crude imports fell 327,000 bpd to about 5.8 million bpd, the lowest level since February 1996. Net US crude imports fell by 589,000 bpd, EIA said.

Oil prices pared gains after the data was released. US crude traded up 14 cents a barrel at USD57.28 by 11:13 a.m. EST (1613 GMT). Brent crude traded up 34 cents a barrel at USD62.72.

Stocks at the Cushing, Oklahoma, delivery hub for US crude futures fell 1.2 million barrels, their first fall after five weeks of builds, the EIA said, after the main artery for Canadian crude imports, the Keystone pipeline, was forced to shut due to an oil spill.

Refinery crude runs rose by 155,000 bpd and utilization rates increased by 1.8 percentage points to 87.8% of total capacity, EIA data showed.

Distillate stockpiles, which include diesel and heating oil, fell by 2.5 million barrels in the week, versus analysts’ expectations in a Reuters poll for a 950,000-barrel drop, the EIA data showed.

US gasoline stocks rose after six weeks of drawdowns, building by 1.9 million barrels, the EIA said, compared with expectations for by 1.2 million-barrel drop.
MRC

AkzoNobel share buyback

MOSCOW (MRC) -- AkzoNobel has repurchased 108,726 of its own ordinary shares in the period from November 4, 2019 up to and including November 8, 2019, at an average price of EUR83.25 per share, said the producer.

The consideration of the repurchase was EUR9.05 million.

This is part of a repurchase program announced on February 13, 2019. The total number of shares repurchased under this program to date is 29,072,111 ordinary shares for a total consideration of EUR2,301.35 million.

AkzoNobel intends to repurchase common shares up to a value of €2.5 billion as part of a total EUR6.5 billion being distributed to shareholders following the sale of the Specialty Chemicals business. The share buyback is due to be completed by the end of 2019.

In accordance with regulations, AkzoNobel will inform the market about the progress made in the execution of this program through weekly updates on the share buyback overview page.

As it was written before, AkzoNobel finalized the acquisition of BASF’s global Industrial Coatings business, which supplies a range of products for industries including construction, domestic appliances, wind energy and commercial transport, strengthening its position as the global number one supplier in coil coatings.

As MRC informed earlier, BASF would expand the capacity of ethylene oxide and ethylene oxide derivatives at its Verbund site in Antwerp, Belgium. The total investment adds about 400 000 tpy to BASF’s production capacity for the corresponding products with an expected investment amount exceeding EUR500 million.

Ethylene is a feedstock for producing polyethylene (PE).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased.

Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people.
MRC

Israel Oil Refineries Q3 profit falls on lower refining margin

MOSCOW (MRC) -- Israel’s Oil Refineries (ORL) reported a 56% drop in quarterly net profit on weakness in its polymers business and as refining margins fell, said Hydrocarbonprocessing.

ORL, Israel’s largest refining and petrochemicals group, earned USD7 million in the third quarter, down from USD16 million a year earlier.

Its adjusted refining margin was USD6.3 a barrel in the quarter, compared with Reuters’ quoted Mediterranean Ural Cracking Margin of USD3.3 a barrel and USD8.1 a year earlier.

Revenue rose 5% to USD1.62 billion.

The company said it will pay a USD50 million dividend, the same as the second quarter. ORL is controlled by Israel Corp, which holds a 33.1 percent stake.

As MRC informed earlier, Israel’s Oil Refineries (ORL) reported lower quarterly net profit, saying timing differences on the value of its inventory offset higher refining margins. ORL, Israel’s largest refining and petrochemicals group, earned USD63 million in the third quarter, down from USD74 million a year earlier.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.

ORL, Israel’s largest refining and petrochemicals group, said at this stage it was unable to predict the results of the investigation and its implications for ORL and Gadiv.
MRC