Olin swings to loss on weak demand, falling prices

MOSCOW (MRC) -- Olin (Clayton, Missouri) reports a fourth-quarter net loss of USD77 million, swinging from a profit of USD53 million in the year-ago period on weak demand and falling prices, according to Chemweek.

Sales totaled USD1.387 billion, down 15% year over year (YOY) from USD1.635 billion. Earnings per share came to a 49 cent loss, missing the average analyst estimate of an 11 cent loss as compiled by Refinitiv (New York).

Olin’s chairman, president, and CEO John E. Fischer says 2019 as a whole was difficult for the company. The chlor-alkali products and vinyls business reported weaker demand from urethane, agricultural, refrigerant, alumina, and pulp and paper customers, while the epoxy business saw weaker demand from automotive, electrical laminate, and industrial coatings customers. Olin’s caustic soda pricing during 2019 declined about 24% from 2018, while ethylene dichloride pricing declined about 30% and hydrochloric acid pricing about 40%. Epoxy resin prices dropped roughly 20% globally.

"Olin continues to face a challenging pricing environment as we enter 2020," says Fischer. "As an example, Olin’s caustic soda and ethylene dichloride pricing in January 2020 is expected to be approximately 15% lower than the average 2019 price. We expect the cost containment and productivity initiatives from 2019, coupled with ongoing efforts in 2020, to provide a partial offset to this challenging product pricing environment."

Sales in the chlor-alkali products and vinyls segment totaled USD762 million, down 22% YOY from USD981 million. Earnings came to USD33 million, down 77% from USD146 million. Olin cites lower caustic soda and ethylene dichloride pricing for most of the decline.

Sales in the epoxy segment totaled USD470 million, down 8% YOY from USD509 million. Segment earnings came to USD15 million, down 21% from USD19 million. Lower product prices were only partially offset by higher resin volumes and lower feedstock benzene and propylene costs.

Sales in the Winchester ammunition segment totaled USD155 million, up 6% YOY from USD146 million, and earnings came to USD7 million, up 63% from USD4.3 million.

As MRC informed before, Olin Corporation announced in December 2019 that it plans to permanently shut down a chlor alkali plant with a capacity of 230,000 tons and its Vinylidene Chloride (VDC) production facility, both in Freeport, Texas. These closures are expected to be completed before the end of 2020.

According to MRC's ScanPlast report, Russia's consumption of caustic soda increased to 1,071,500 tonnes in 2019, up by 10% year on year (975,600 tonnes). Imports of caustic soda into Russia were 32,300 tonnes in 2019, up by 61% year on year (20,000 tonnes). Exports of caustic soda from Russia decreased to 245,400 tonnes in 2019, down by 7% year on year (263,600 tonnes). Production of caustic soda in the country totalled 1,289,400 tonnes in 2019, up by 1% year on year (1,278,900 tonnes).

Olin Corporation is a leading vertically-integrated global manufacturer and distributor of chemical products and a leading US manufacturer of ammunition. The chemical products produced include chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach and hydrochloric acid. Winchester's principal manufacturing facilities produce and distribute sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.
MRC

MOSCOW (MRC) -- The European Investment Bank (EIB) has granted Cepsa EUR60m to develop a petrochemical sustainability reserach and development (R&D) initiative, said the company.

This investment will be used to install a technology system created by Cepsa and to create a specialised technology company called Universal Oil Products to produce linear alkylbenzene (LAB).

The EIB-financed investment will be used to install the Detal system, a state-of-the-art technology created by Cepsa and specialised technology company UOP (Universal Oil Products) to produce linear alkylbenzene (LAB), the most commonly used raw material for the production of biodegradable detergents internationally. This technology improves the efficiency of the manufacturing process and cuts CO2 emissions and water and electricity use. It also optimises the production process as it both reduces waste and enables much of it to be reused. Lastly, this technology delivers major safety improvements.

The EIB will monitor the implementation of this project, which Cepsa plans to complete in mid-2020, as part of its goal to move towards a more efficient and sustainable productive model.

The agreement was made possible by the Investment Plan for Europe, which enables the EIB to support investments fostering innovation, economic growth and employment. During the implementation phase, Cepsa estimates that this project will create around 250 (mostly local) jobs, peaking at 400 jobs, and will help to safeguard Cepsa's 3 600 direct and 2 600 indirect positions in Andalusia.

LAB is the most common raw material used to produce biodegradable detergents and cuts emissions as less water and electricity is used, while in the production stage waste is reduced and much of it can be reused.

Cepsa anticipates that the project will be completed by mid-2020.

The grant – signed in Madrid by EIB vice president Emma Navarro and Cepsa's CEO Philippe Boisseau ­– was provided as part of the Investment Plan for Europe, which enables the EIB to support investments fostering innovation, economic growth, and employment.

Phenol is the main raw material component for the production of bisphenol A (BPA), which, in turn, is used to produce polycarbonate (PC).

As MRC informed earlier, Cepsa Quimica (Shanghai), a joint venture between Spanish petrochemical company CEPSA and Japanese Sumitomo Corp, resumed production at a phenol and acetone plant in Shanghai (Shanghai, China) on December 16. This enterprise with a capacity of 250 thousand tons of phenol and 150 thousand tons of acetone per year was closed on December 10 due to repair work on the gas pipeline in Shanghai Caojing Chemical Industry Park, where this plant is located.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to\\from Belarus) fell in January-November 2019 by 14% year on year to 70,700 tonnes (62,000 tonnes a year earlier).
MRC

MOSCOW (MRC) -- Freight rates for supertankers on the Mideast Gulf and U.S. Gulf routes to Asia have fallen to their lowest since mid-September as the coronavirus outbreak hit Chinese oil demand, ship brokers told Reuters.

China’s Sinopec Corp, Asia’s largest refiner, and so-called "teapot" independent refineries have reined in operations in the face of plunging consumption.

"The market has gone back to what it was before the COSCO sanctions came in," one ship broker said, referring to U.S. sanctions on subsidiaries of the state-owned Chinese shipping company.

"All the other variables have gone away, such as IMO 2020 congestion at ports, movement of low-sulphur fuel and industrial action in Europe."

Freight rates shot up in late September on the back of the COSCO sanctions and again in December because of logistics snags related to the switch to cleaner shipping fuels with the introduction of the new IMO 2020 regulations.

The United States partially lifted sanctions on COSCO last Friday.

Ship broker Braemar on Monday said that the rate for a very large crude carrier (VLCC) from the U.S. Gulf to Asia had fallen to USD8 million, the lowest since Sept. 19. Another broker said a similar voyage was quoted at USD7.5 million.

Riverlake, another ship broker, said the world scale rate for the Middle East route was at its lowest since Sept. 16.

Sinopec is cutting throughput this month by about 12%, or 600,000 barrels per day, in its steepest cut in more than a decade.

The company’s Unipec trading arm has stopped buying West African crude and is re-selling at least five cargoes of Angolan crude.

Separately, major independent refineries in east China’s Shandong province, which collectively make up a fifth of China’s oil imports, have cut operations by 30-50% to less than half of their capacity, a level not seen since at least 2015.

As MRC informed before, Sinopec Qilu Petrochemical, the subsidiary of one of the world's largest energy and chemical companies, Sinopec, plans to shut the cracker unit in Tianjin in northeast China for scheduled repairs on 15 June, 2020. This cracking unit with a capacity of 900,000 tonnes of ethylene per year and 480,000 tonnes of propylene tons per year will be closed for scheduled repairs until 24 June, 2020.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

Sinopec corp. is one of the world's largest integrated energy and chemical companies. Business Sinopec Corp. includes oil and gas exploration, production and transportation of oil and gas, oil refining, petrochemical production, production of mineral fertilizers and other chemical products. In terms of refining capacity, Sinopec Corp. ranks second in the world, in terms of ethylene capacity - fourth.
MRC

MOSCOW (MRC) -- Clearlake Capital Group LP is purchasing Innovative XCessories & Services LLC from private equity peer Olympus Partners, said Spglobal.

The target company operates through its Ground Effects and IXS Coatings divisions. It offers coating solutions and vehicle upfitting services to original equipment manufacturers, the automotive aftermarket and diversified industrial end markets. CEO Jim Scott, alongside the current management team, will continue to run the business.

The acquisition is expected to be finalized in the first quarter.

It has more than 20 company-operated facilities across the Americas, Asia-Pacific and Europe.

UBS was financial adviser to Clearlake. Jefferies LLC and Harris Williams & Co. were financial advisers to Innovative XCessories.

As MRC informed earlier, Clearlake Capital Group, L.P. (together with its affiliates, "Clearlake") in partnership with management announced that it has acquired Pretium Packaging ("Pretium" or the "Company") from Genstar Capital.

As MRC informed earlier, Russia's output of chemical products rose in December 2018 by 1.2% month on month.
Production of basic chemicals increased by 3.4% in 2019. According to the Federal State Statistics Service of the Russian Federation, the largest increase in production volumes on an annualized basis accounted for polymers in primary form. Thus, 264 ,000 tonnes of ethylene were produced in December, compared to 255,000 tonnes a month earlier. Thus, 2,984,000 tonnes of this olefin were produced in January-December 2019, down by 0.2% year on year. December production of benzene was 132,000 tonnes, compared to 134,000 tonnes a month earlier. Overall output of this product reached 1,470,000 tonnes over the stated period, down by 4.2%year on year.

Clearlake Capital Group, L.P. is a leading private investment firm founded in 2006. With a sector-focused approach, the firm seeks to partner with world-class management teams by providing patient, long-term capital to dynamic businesses that can benefit from Clearlake's operational improvement approach, O.P.S.® The firm's core target sectors are industrials and energy; software and technology-enabled services; and consumer. Clearlake has managed over USD16 billion of institutional capital since inception and its senior investment principals have led or co-led over 200 investments.
MRC

MOSCOW (MRC) -- UK compounder Polystar Plastics has developed a new post-consumer waste polyethylene material containing up to 100% recycled materials, said Sustainableplastics.

PCWflexTM films incorporate UK sourced post-consumer waste (pcw), which is used to create the middle layers of a co-extruded film structure.

The company said it uses recipes that contain varying amounts of the recycled polymer to deliver the same robust performance, optical clarity and line efficiency as virgin grade PE.

The new grades can be applied across much of Polystar’s product range and are 100% recyclable.

Non-shrink films start at 30% but can contain up to 100% PCW polymers, while shrink film recipes can include up to 50% PCW polymers without losing any functionality.

"Our PCWflexTM films are some of the greenest products on the market. The development of this new material has been driven by customers who are under increasing pressure to reduce their carbon footprint and future tax liabilities," said Suchin Talwar, Polystar’s commercial director, commenting on the new product.

The materials, he said, significantly reduce the requirement for virgin grade PE.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
MRC