Nouryon cuts production in China as coronavirus dampens demand

MOSCOW (MRC) -- All Nouryon's (Amsterdam, Netherlandsб formerly known as AkzoNobel Specialty Chemicals) production plants in China except one are back in operation following the extended Lunar New Year holiday, but the facilities are running well below capacity because of the impact of the coronavirus outbreak, reported Chemweek with reference to Nouryon CEO Charlie Shaver's statement.

Speaking to CW on Wednesday, Shaver said the company's biggest plants in the country, including its Ningbo facility, are operating at 30–50% of capacity. This is in response to a fall demand in China for the company's products, which is currently at 30–50% of normal levels, he says.

Nouryon's China operations generate about EUR700 million (USD756 million) of the company's approximately EUR5 billion/year in sales. "Most of the products we make in China are sold in China," Shaver says.

Shaver expects the "demand constraints" to continue through March and April. "We may see some rolling effect for a few months," he says. "Supply chains are limiting our operations because we have customers in China whose plants are still down (after the holiday)." Nouryon customers that export from other countries to China are also impacted, Shaver says. Demand for the company's bleaching chemicals has weakened because pulp demand is falling with lower production in China of consumer products such as white goods.

Nouryon, meanwhile, is receiving offers of raw-material products elsewhere in the world from companies that would normally ship those items to China. "There's some downward pressure on pricing of raw materials across the board," Shaver says. "We have noticed in the last week or two that people are offering us products for sale. Some suppliers are offering us lower prices." He sees this as a "temporary dislocation," however. Shaver expects a "hit" from the coronavirus to the company's first-quarter results, but "no material impact" to its full-year earnings.

Nouryon's organic peroxides plant at Tianjin is the faciity that has not restarted. The company is relocating its Tianjin organic peroxides production to a new plant in an industrial park in a EUR90-million project. These plans have been delayed by several months because of the late return of construction workers to the site due to government restrictions, Shaver says. The new plant had originally been due to start up in the second quarter of 2020 with a capacity expansion of 30–70%. The company has not adjusted its overall capital expenditure plans, however, he says.

Nouryon makes organic peroxides at Ningbo as well as Tianjin. The company's other Chinese production sites are at Boxing; Guangzhou; Jiaxing; Songjiang, near Shanghai; Suzhou; and Taixing.

As MRC wrote previously, in February 2019, Nouryon (formerly AkzoNobel Specialty Chemicals) announced that it would license its innovative continuous initiator dosing (CiD) technology to Karpatnaftochim, Ukraine’s largest polyvinyl chloride (PVC) producer. Nouryon’s patented CiD technology allows PVC producers to increase reactor output by up to 40 percent, improve product quality, and make the production process intrinsically safer - all with minimum capital expenditure.

Karpatneftekhim is one of the largest enterprises of Ukraine's petrochemical complex. Currently, the plant can produce annually 300,000 tonnes of PVC, 200,000 tonnes of caustic soda, about 180,000 tonnes of chlorine, as well as 250,000 tonnes of ethylene and 100,000 tonnes of polyethylene.

According to ICIS-MRC Price report, Karpatneftekhim increased capacity utilisation in December, total PVC production had increased to 23,550 tonnes against 21,700 tonnes in November. Overall PVC production in the country was 240,400 tonnes in January-December 2019, up by 15% year on year.

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

MOSCOW (MRC) -- Russia's output of products from polymers grew in January 2020 by 7.3% year on year.
But at the same time, compared to December, it fell by 15.9%, MRC analysts said.

According to the Russian Federal State Statistics Service, January production of unreinforced and non-combined films was 85,500 tonnes, compared to 72,000 tonnes and 100,000 tonnes in January and December a year earlier.
Last year's output of film products was 205,000 tonnes.

Last month's production of boards, sheets and non-porous films rose to 28,400 tonnes versus 24,900 tonnes and 34,400 tonnes in January and December 2019. This figure for the entire 2019 was about 387,000 tonnes.

Last month's production of boards, sheets and non-porous films rose to 18,600 tonnes versus 19,700 tonnes and 24,900 tonnes in January and December 2019. This figure for the entire 2019 was about 277,000 tonnes.

The January production of plastic bottles and bottles fell to 1,551,000 tonnes units, compared to 1,595,000 tonnes units and 1,688,000 tonnes units in January and December 2019. Overall output of these plastic products totalled 20,140,000,000 units last year.

January production of plastic pipes, hoses and fittings reached 40,900 tonnes, compared to 31,700 tonnes and 47,930 tonnes in January 2019 and December 2019, respectively. Overall production of these products totalled 618,000 tonnes in 2019.

The January production of sacks and bags made of ethylene polymers reached the level of 1,883,000 tonnes units against 1,926,000,000 units and 2,210,000,000 units in January and December a year earlier. Overall output of these plastic products totalled 25,628,000,000 units last year.

Last month's production of linoleum and floor coverings was 8,770,000 square metres, compared to 8,720,000 square metres and 8,890,000 square metres in January and December 2019. Overall output of these plastic products totalled 147,360,000 units last year.

The January production of window and door blocks made of plastic reached the level of 2,154 square meters and 62,800 square meters, respectively, against 1,080 square meters and 65,400 square meters in January and 1,956 square meters and 98,900 tonnes square meters in December a year earlier. In 2019, the total volume of production of these plastic products amounted to 24,825 square meters and 1,049 square meters, respectively.
MRC

MOSCOW (MRC) -- Saudi Aramco has received regulatory approval for the development of the Jafurah shale gas field in Saudi Arabia's Eastern Province, reported S&P Global.

The announcement was made on Friday at a meeting chaired by Crown Prince Mohammad bin Salman (MBS). Aramco will invest 412 billion Saudi riyals (USD110 billion) to develop the field, the largest unconventional nonassociated gas field in the country, with a length of 170 kilometers (km) and a width of 100 km. The volume of gas resources in the field is estimated at 200 trillion cubic feet of wet gas, which contains gas liquids that can be used in the petrochemical industry.

Staged development will gradually increase the field's production to reach approximately 2.2 billion standard cubic feet/day of gas by 2036, representing 25% of the country's current production, MBS pointed out. Production will begin in 2024, Aramco says. Because of the field's characteristics, it will be able to produce about 130,000 b/d of ethane, accounting for about 40% of current production. The company also expects the field to produce approximately 550,000 b/d of gas liquids and condensates required by the petrochemical industry, representing about 34% of current production. Petrochemical development in Saudi Arabia has been held back in recent years by a shortage of ethane, which has led producers to focus their attention on mixed-feed steam crackers and crude oil-to-chemicals projects. The Jafurah project could help rebalance this trend.

The news heralds a major expansion of hydraulic fracturing in Saudi Arabia. Aramco already uses the technique on a small scale to produce around 190 million cubic feet of gas per day from its remote North Arabia gas basin, where production began in 2018. The company has worked with international oil service companies Halliburton, Schlumberger, and Baker Hughes on the Jafurah field and the development of fracking technology to exploit it. Previously the lack of fresh water was a major inhibitor to shale development, but Amin Nasser, CEO of Aramco, said the company now has a process using seawater, which will be used in the Jafurah project. The company is also considering construction of a desalination plant.

Aramco chairman Yasir bin Othman al-Rumayyan says that the Jafurah development is expected to enhance the company’s leading position in the worldwide energy sector and help achieve its goal of being the world’s preeminent integrated energy and chemicals company. Baker Hughes in 2018 estimated that the country had recoverable shale gas reserves of 645 trillion cubic feet, which would give it the fifth-largest shale gas deposits in the world. If Aramco meets its targets for the Jafurah field, Saudi Arabia would become the world's third-largest producer, after the US and Russia, by 2030. MBS said that the development would earn, within 22 years, a net income for the government of about USD8.6 billion/year and provide an estimated gross domestic product of USD20 billion/year. It will make Saudi Arabia one of the most important gas producers in the world, in addition to being the most important oil producer. It is envisaged that, after satisfying domestic demand, Jafurah gas could be supplied to neighboring countries and could also help lead Saudi Arabia into the LNG export market.

We remind that, as MRC informed earlier, in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.

Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.

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).

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) -- PTT Global Chemical (PTTGC), in its management discussion analysis for 2019, said a new olefins plant being built at its complex in Map Ta Phut, Rayong, Thailand, is expected to start commercial operation this year, reported Apic-online.

The USD985-million project includes a 500,000-t/y ethylene plant, based on CB&I's technology, and a 250,000-t/y propylene unit. It will increase the company's total nameplate olefins capacity to 3.7-million t/y from nearly 3-million t/y currently.

In 2018, Samsung Engineering awarded a contract to CB&I for the license and basic engineering of the ethylene facility and a pyrolysis gasoline hydrogenation unit. The contract also included detailed engineering and material supply of Short Resistance Time pyrolysis heaters.

As MRC informed earlier, this month, PTT Global Chemical (PTTGC) and ALPLA established a new joint venture, named Envicco, to build and operate a recycled plastics resin plant at the Asia Industrial Estate in Rayong Province, Thailand.

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).

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC

MOSCOW (MRC) -- Sika announced on 25th, Feb that the company has joined the ‘Together for Sustainability’ (TfS) initiative as a new member, reported Kemicalinfo.

The organization, founded in 2011, aims to improve sustainability practice within the supply chain of the chemicals industry.

According to Sika, sustainability is a key feature and a central element of its growth strategy.

"With this membership, Sika sets clear targets for compliance with sustainability and quality standards in procurement and within the supply chain," the company stated.

Sika is the 25th member and will apply global standards for environmental, social and governance performance of supply chains. The TfS program is based on the UN Global Compact and Responsible Care principles, and allows Sika to assess and evaluate the performance of its suppliers in various aspects. This includes environmental, labor & human rights, ethical and sustainable procurement performance in order to achieve measurable improvements and its own sustainability performance.

Marcos Vazquez, Head of Sika Group Procurement said, "Joining TfS will allow Sika to learn and exchange with its members best practices in sustainability, and to actively participate in the improvement of sustainability practices within the supply chains of the chemical industry."

Bertrand Conqueret, TfS President said, "By joining TfS, Sika will benefit from the TfS framework, collaborative mindset and robust tools to assess and improve the sustainability performance of its supplying companies while at the same time increase its own responsible sourcing program. Sika together with the other 24 TfS member companies, will contribute to shaping the future of the chemical industry and its customers. "

Sika’s overriding goal is to reduce CO2 emissions per ton manufactured by 12% until 2023. Climate Performance is one of the target areas of Sika’s Growth Strategy 2023. Due to the importance of the topic, Sika is processing CO2 reduction programs covering all regions and countries.

As MRC reported earlier, in August 2015, Swiss specialty chemicals company Sika opened its forth production site in Russia. A new mortar factory and a plant to produce concrete admixtures were opened in Volgograd, in southern Russia. Thus, at the existing site in Lobnya, 30 km north of Moscow, a new production facility, which manufactures polymers for concrete admixtures, came on stream.

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).

Sika is a specialty chemicals company with a leading position in the development and production of systems and products for bonding, sealing, damping, reinforcing, and protecting in the building sector and motor vehicle industry. Sika has subsidiaries in 101 countries around the world and manufactures in over 200 factories. Its more than 20,000 employees generated annual sales of CHF 7.09 billion in 2018.
MRC