Levima Advanced to bring on-stream EVA plant in China after maintenance

MOSCOW (MRC) -- Levima Advanced Materials Technology Corp has planned to restart an Ethylene vinyl acetate (EVA) plant following a brief maintenance, as per Apic-online.

A Polymerupdate source in China informed that the company is likely to resume operations at the plant this weekend. The plant was shut on December 17, 2019.

Located at Tengzhou in Shandong provinces of China the EVA plant has a production capacity of 100,000 mt/year.

As MRC informed before, Shandong Levima New Material took its methanol-to-olefin (MTO) plant off-stream for maintenance in early-October, 2017. The plant remained off-line for around 6 weeks. Located in Shandong, China, the MTO plant has an ethylene capacity of 170,000 mt/year and a propylene capacity of 200,000 mt/year.

According to MRC's DataScope report, November EVA imports to Russia dropped by 8,9% year on year to 3,440 tonnes from 3,780 tonnes in November 2018, and overall imports of this grade of ethylene copolymer into the Russian Federation decreased in January-November 2019 by 18,9% year on year to 35,95 tonnes (44,330 tonnes in the first eleven months of 2018).
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Showa Denko to acquire Hitachi Chemical

MOSCOW (MRC) -- Showa Denko has agreed to acquire Hitachi Chemical for yen (Y) 964bn (USD8.8bn), said Chemengonline.

Showa has formed a special-purpose company, HC Holdings KK, which “by around” February is expected to begin a Y4630/share tender offer for Hitachi’s shares.

The merged Showa-Hitachi would create a new leading materials producer in an age of increased competition, especially from China, and market changes because of digitalisation and the trend towards lightweight and composite materials in autos, Showa said.

Through its integration with Hitachi Chemical, Showa aims to become a one-stop, advanced materials partner, it said.

Showa’s move to acquire Hitachi had been expected. Last month a Japanese newspaper reported that the companies were in close talks about a deal.

Hitachi Chemical provides functional materials for the electronics sector as well as advanced components and systems for energy storage and life science industries.

As it was written earlier, in March, Hitachi sold its car navigation unit Clarion Co. to French auto parts maker Faurecia SA.

Hitachi and Honda Motor Co. said last month they will merge four auto parts suppliers under a new company to boost competitiveness.

Hitachi Chemical is currently engaged in the manufacturing, processing, and sale of functional materials, as well as advanced components and systems.

Showa Denko Group, which engages in the petrochemical, chemicals, electronics, inorganics, and aluminum businesses in Japan and overseas, pursuing business model innovation in order to become a solution provider beyond the manufacturing industry.
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Asian oil refiners shipping fuel profits grow on IMO 2020 demand

MOSCOW (MRC) -- Asia’s oil refiners are starting to see a surge in demand for cleaner fuels that is pushing up processing profits for very low sulfur fuel oil (VLSFO) and gasoil just weeks before new rules take effect for fuel products burned in ships, reported Reuters.

Most ships have to switch from high-sulfur fuel oil (HSFO) to cleaner fuels such as VLSFO and marine gasoil (MGO) when new sulfur emissions rules set by the International Maritime Organization (IMO), known as IMO 2020, start on Jan. 1.

Ships will have to use fuels containing not more than 0.5% sulfur, compared with 3.5% now, unless they are equipped with exhaust-cleaning "scrubbers".

The oil industry stocked up on IMO-compliant fuel, expecting high demand and a big boost in profits ahead of the rules taking effect, but ship owners kept their purchases to a minimum until this month, delaying a run-up in demand that refiners had expected earlier in the fourth quarter.

"Although the improvement (in margins) would not offset (overall) concerns in the fourth quarter, it could be a silver lining. It gives a stronger positive sign for next year," said a spokesman from SK Innovation, owner of South Korea’s top refiner SK Energy.

Refining margins or cracks for VLSFO rose above USD20 a barrel this month, while cracks for gasoil with a sulfur content of 10 parts per million (ppm) for January delivery were about USD1 higher than those for December, encouraging refiners such as South Korea’s Hyundai Oilbank to increase output in January.

A Singapore-based marine fuels trader estimated that VLSFO supplies may be enough to meet only half to 70% of the near-term demand, based on sales of about 8 million to 9 million tonnes of marine fuels in Asia and the Middle East per month.

The shortfall would have to be filled in with marine gasoil, boosting refiner profits for both fuels, the trader said.

Besides slower-than-expected demand for IMO-compliant fuels, weak domestic demand for gasoil in India and China pushed up export volumes, battering the fuel’s margins, which have shed 18% over the past couple of months.

But gasoil profits could rebound to about USD20 a barrel in the next few months as more ships switch to MGO and as simple refineries cut output on low HSFO margins, according to Goldman Sachs and energy consultancy FGE.

"Despite the ample availability of VLSFO, we still expect MGO demand to receive support in the coming weeks, when more vessels start switching to use compliant fuels," said Sri Paravaikkarasu, FGE’s director for Asia oil.

The new demand from ships could boost gasoil consumption by 1 million to 1.35 million barrels per day next year, according to Wood Mackenzie and Energy Aspects.

As MRC wrote previously, South Korea’s leading LPG supplier SK Gas Ltd. (part of SK Corporation) will spend KRW 2.02 trillion (~ USD 1.8 billion) to build a combined-cycle power plant and polypropylene (PP) plant in the southeastern industrial city of Ulsan, South Korea. The project will help provide stable electricity to Ulsan, one of Korea’s largest industrial clusters for automotive, shipbuilding and petrochemical industries. The port city is also home to SK Gas' LPG storage terminals, which are the world’s largest rock cavern storage facilities with a combined capacity of 270,000 tons. The company said it expects the new plants to play a central role in bolstering its gas chemical business. The PP manufacturing unit, with a projected capacity of 400,000 t/y, is to be set up in the nearby Yongyeon-dong area on a site of 150,000 square meters.

According to MRC's ScanPlast report, the estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.
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China announces new tariff exemptions for US chemical and oil products, including PE

MOSCOW (MRC) -- China on Thursday unveiled a new list of import tariff exemptions for six chemical and oil products from the United States, days after the world’s two largest economies announced a phase one trade deal, reported CNBC.

The exemptions will be for one year from Dec. 26, the Finance Ministry said, without providing a value for the imports excluded from duties.

Duties already imposed on US products would not be refunded, the ministry added.

The tariff waivers will apply to four chemical products, such as metallocene high-density polyethylene (HDPE) and a special grade of linear low-density polyethylene (LLDPE), and refined oil products that include white oil and food-grade petroleum wax.

Kelly Cui, principal analyst with consultancy Wood Mackenzie, said the exemptions on the chemical products would benefit companies such as Dow Chemical, Exxon Mobil, and Chevron Phillips Chemical, which have since 2017 been adding shale-based ethylene production facilities and targeting China as the prime export market.

Cui also pointed out that the listed products, metallocene HDPE and LLDPE, were high-end special grade plastic raw materials used for packaging and pipes. China is the world’s largest importer of polyethylene.

"The exemptions could see China resume buying more HDPE and LLDPE from the US, reversing the trade flow, as the US supplies have been diverted to Latin America and Europe while China has been importing mostly from the Middle East," said Cui.

In 2018, China imported some 6.86 million tonnes of HDPE and 4.46 million tonnes of LLDPE, according to Cui, who cited Chinese customs data. The data does not provide a breakdown for different grades of each polymer.

These imports had a combined total value of about USD14 billion, according to Reuters calculations based on the delivered cost for these two products.

For petroleum wax, China imported from the US 1,108 tonnes or worth only USD3.2 million in the first 10 months of 2019, one-tenth of China’s total imports of the product, according to Chinese customs data and consultancy JLC Network Technology.

White oil imports from the US were 3,490 metric tons or worth only USD8.7 million during the same period, roughly 6% of China’s total imports.

China waived import tariffs for some soybeans and pork shipments from the United States on Dec. 6, before the two sides reached a Phase 1 trade deal to cancel tariffs that were planned to take effect on Dec. 15.

China said it will continue to work on the product exemptions and release the second batch of waivers at an appropriate time.

The Sino-US trade war has been a major headache for global policymakers as it slowed economic growth worldwide and chilled business investment and confidence.

US Trade Representative Robert Lighthizer last week acknowledged there remained hard work ahead in the next phase of negotiations.

He gave no specific timetable, but said U.S. President Donald Trump did not want to wait until after the 2020 presidential election to wrap up a more comprehensive agreement.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased.
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Clariant ro sell its Masterbatches business to PolyOne

MOSCOW (MRC) -- Clariant (Muttenz, Switzerland) agreed to sell its entire Masterbatches business to PolyOne Corp. (Avon Lake, Ohio), said the company.

The transaction values the Masterbatches business at USD1,560 million, representing about 12.2 times the last twelve months reported EBITDA (ending September 2019) on a cash and debt free basis. This amount is payable at closing, which is expected by Q3 2020.

"This announcement is a significant milestone on our path to focusing on businesses with above-market growth, higher profitability and stronger cash generation. After the successful divestment of Healthcare Packaging in October 2019 the agreement to sell Masterbatches is an important step in delivering on our strategy defined in 2015 to concentrate on our three core Business Areas Care Chemicals, Catalysis and Natural Resources”, says Hariolf Kottmann, executive chairman of Clariant. “As announced, we are confident that we will execute the remaining divestment of our Pigments business in 2020 in order to build the new, more focused and stronger Clariant by 2021," he adds.

As previously communicated, the proceeds from the intended divestments of Clariant’s non-core businesses will be used to invest in innovations and technological applications within the core Business Areas, to strengthen Clariant’s balance sheet and to return capital to shareholders.

As a consequence of the divestment of the Masterbatches business, as well as the anticipated divestment of the Pigments business by the end of 2020, Clariant’s Board of Directors is proposing an extraordinary cash distribution of CHF 3.00 per share to the Clariant Annual General Meeting to be held on March 30, 2020. Subject to a positive vote of Clariant’s shareholders, the extraordinary distribution of approx. CHF 1 billion will be paid out post the closing of the divestment of the Masterbatches business.

The deal with PolyOne comprises two separate transactions. The global Masterbatches business is sold in a deal valued at USD1,500 million, representing c. 12.1 times the last twelve months reported EBITDA (ending September 2019).

As MRC informed earlier, Clariant announced that it has been awarded a contract by Dongguan Grand Resource Science & Technology Co. Ltd. to develop a new propane dehydrogenation unit in cooperation with CB&I. The Dongguan plant will be one of the largest single-train dehydrogenation units in the world. Clariant's technology partner CB&I will base the plant's design on its Catofin® catalytic dehydrogenation technology, which uses Clariant's tailor-made Catofin catalyst and Heat Generating Material (HGM).

Propylene is the main feedstock for producing polyprolypele (PP).

According to MRC's ScanPlast report, the estimated consumption of PP in the Russian market totalled 694,210 tonnes in January-June 2019, up by 14% year on year. The supply of propylene block copolymers (PP-block) and propylene homopolymers (PP-homo) increased.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints. Clariant India has local masterbatch production activities at Rania, Kalol and Nandesari (Gujarat) and Vashere (Maharashtra) sites in India.
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