Sibur earnings, revenue down on currency effects, lower margins

MOSCOW (MRC) -- Sibur (Moscow), Russia’s largest petrochemicals producer, today announced its financial and operational results covering the first quarter, said the company.

The company reported a loss of 52.281 billion Russian ruble (USD704.1 million) compared with a profit of RR46.02 billion in the year-earlier quarter. It attributes the loss to currency effects. Adjusted EBITDA was down 16.5% to RR39.823 billion due to lower margins for most product groups. EBITDA margin slipped from 33.7% in the first quarter of 2019 to 31.0% in the latest quarter but remains consistently high against the industry average.

Revenue declined 7.8% to RR120.67 billion due to negative pricing dynamics in ruble terms in the midstream and the plastics, elastomers, and intermediates segments. This was partially offset by revenue growth of 30.4% year on year (YOY) in the olefins and polyolefins segment, driven by higher sales of polypropylene (PP) and polyethylene (PE).

The company has completed the start-up and commissioning work at key production facilities at ZapSibNeftekhim (ZapSib), its flagship petrochemical complex at Tobolsk. ZapSib in the first quarter of 2020 produced 115,000 metric tons of PP and 259,000 metric tons of PE, part of which is en route to clients and was not reflected in the sales volumes for the reporting period. Sales of PP grew by 87.3% to 243,000 metric tons and of PE by more than 100% to 132,000 metric tons. In January 2020, Sibur completed construction of its new thermoplastic elastomers production facility at Voronezh and launched trial production.

In its update on the next large investment project, the Amur gas chemical project at Blagoveshchensk on the Chinese border, Sibur says that Sinopec received all the necessary corporate approvals to enter into a joint venture for the project with Sibur. The company also has more clarity about the regulatory regime for the recoverable excise duty on ethane and liquefied petroleum gas (LPG) for all petrochemical projects in Russia. The Ministry of Finance has finalized and just submitted draft amendments to the Russian Tax Code for the parliament's approval. The two developments could pave the way for the project to proceed. All the technologies have now been selected and engineering companies appointed.

Ethylene and propylene are feedstocks for producing PE and PP.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

MRC

MOSCOW (MRC) -- The sharp decline in global refining activity has continued in May, the International Energy Agency said in its monthly oil market report, as refiners face the double whammy of rising crude prices and falling diesel profits, said Hydrocarbonprocessing.

The agency now sees global crude refining throughput at 66.2 million barrels-per-day, unchanged from April, and more than 14 million bpd lower from a year ago. Gradual recovery could start appearing in June, it added.

“If crude supply adjusts more quickly to the oversupply than forecast, this will support crude prices and depress refinery margins, resulting in lower refining throughput than anticipated,” the IEA said in its monthly oil market report.

“On the other hand, a quicker demand recovery could boost margins and accelerate a recovery in refining activity,” it added. Oil demand in April slumped by around 25%, or more than 25 million bpd, IEA figures showed, in reaction to global lockdowns to stem the spread of the new coronavirus.

While the easing of some lockdown restrictions in places like the United States, China and Europe this month is expected to boost demand for oil products, refiners are still facing big headwinds and more are shutting down until margins improve.

Refiners across the globe have been curbing output in recent months in the face of falling demand and filling storage tanks, but until recently they had some incentive to continue running. As the price war between key producers like Saudi Arabia and Russia hit its peak in April, physical crude grades were trading at historic lows, a boon for refiners, which coupled with healthy diesel margins, allowed many to keep running.

But in recent weeks the physical crude market has bounced back, adding pressure on refiners. “Crude market strength is exerting more and more pressure on refining economics, with our assessed global weighted average margin having fallen solidly into negative territory for the first time since Q2-2014,” JBC Energy said.

While diesel margins in Europe LGOc1-LCOc1 traded in double digits throughout April, in the past week they have slumped to their lowest since mid-2009 below USD5 a barrel. Refiners in Europe are already feeling the pain.

Spain’s Petronor is the latest to announce economic run cuts, saying it had shut one of its crude units from May 9 at its 220,000 bpd Bilbao oil refinery due to slow demand and storage saturation.

A middle distillate trader said they already see tightening high-sulphur gasoil in the Mediterranean region, and offers of jet fuel were falling. “These are signs of run cuts,” he said.

Ethylene and propylene are feedstocks for producing PE and PP.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- U.S. crude oil stockpiles surprisingly fell last week, including at the Cushing, Oklahoma, storage hub, the first time supply has dropped since the coronavirus pandemic choked off fuel demand in the United States, reported Reuters.

Crude inventories USOILC=ECI fell 745,000 barrels in the week to May 8 to 531.5 million barrels, the U.S. Energy Information Administration said, compared with expectations in a Reuters poll for a 4.1 million-barrel rise. That was the first decline after 15 weeks of builds.

U.S. crude stockpiles have risen by more than 100 million barrels since mid-January, with builds accelerating in March as the coronavirus pandemic took hold and during a brief price war between Saudi Arabia and Russia. The drawdown this week was in part because imports fell to a record low at less than 2 million barrels per day, and U.S. production dropped.

Stocks in Cushing USOICC=ECI fell by 3 million barrels in the last week, EIA said. The hub, coming into this week’s data, is more than 80% full, as producers find themselves with fewer places to store oil.

Crude oil production dropped 300,000 bpd to 11.6 million bpd, its lowest since December 2018.

Fuel demand rebounded in the most recent week, though over the past four weeks still remains 23% below the year-ago average.

“The pretty desperate picture we’ve seen because of the drop in demand, maybe we are seeing signs it’s beginning to thaw,” said Gene McGillian, vice president of market research at Tradition Energy.

“The market should take some heart from the numbers but we need to see more than one week of data.”

Oil prices rallied briefly before returning to levels seen prior to the report. U.S. crude CLc1 futures were down 39 cents, or 1.5%, to USD25.38 a barrel while Brent dropped 2.1%, or 64 cents, to USD29.34 a barrel.

Net U.S. crude imports fell last week by 300,000 bpd in the last week, EIA said, to 1.9 million bpd - the lowest ever.

Refinery crude runs fell by 593,000 bpd in the last week, EIA said. Refinery utilization rates fell by 2.6 percentage points in the week to 67.9% of total capacity, not far from an all-time low.

U.S. gasoline stocks fell by 3.5 million barrels to 252.9 million barrels, the EIA said, compared with forecasts for a 2.2 million-barrel drop. Gasoline inventories have declined in recent weeks due to reduced refining activity.

“While inventories of gasoline remain at or near the top of their five-year range, if this dynamic persists, I would expect the gasoline supply glut to diminish,” said David Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in Washington.

Distillate stockpiles, which include diesel and heating oil, rose by 3.5 million barrels in the week to 155 million barrels, versus expectations for a 2.9 million-barrel rise, the EIA data showed.

As MRC informed previously, global oil consumption cut by up to a third. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Japanese producer Mitsui Chemicals on Thursday reported a 50.1% fall in its full-year net profit as sales dropped following the spread of the coronavirus, said Chemweek.

Sales prices fell due to the fall in naphtha and other raw materials as well as fuel prices.
Operating income fell due to unfavourable terms of trade in addition to decrease in sales resulting from the spread of the coronavirus and increase in fixed costs.

"In the chemical industry, the extremely harsh economic environment in countries worldwide will result in a decrease in demand and fluctuations in naphtha prices and other chemical products," the company said in a statement.

The company expects net income to drop to Y20bn in the full-year ending 31 March 2021 with sales falling to Y1,145bn.

Ethylene and propylene are feedstocks for producing PE and PP.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

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.

(USD1 = Y106.9)

MRC

MOSCOW (MRC) -- ExxonMobil Corp completed the restart of the gasoline-producing fluidic catalytic cracker (FCC) at its 369,024-barrel-per-day (bpd) refinery in Beaumont, Texas, sources familiar with plant operations said, said Hydrocarbonprocessing.

The 120,000-bpd FCC and a 75,000-bpd reformer were shut on Monday by a power outage that hit several units on the north side of the refinery, the sources said. Exxon began restarting the FCC on Tuesday.

Exxon spokesman Jeremy Eikenberry declined to comment. In addition to the FCC and reformer, two hydrotreaters, another reformer and a power plant were knocked out of production by the power outage, the sources said.

Reformers convert refining byproducts into components that boost octane in gasoline. Hydrotreaters use hydrogen to remove sulfur from gasoline in compliance with U.S. environmental laws.

FCCs use a fine powder catalyst to convert gas oil into gasoline. There is only one FCC at the Beaumont refinery.

As MRC informed before, in September 2019, ExxonMobil announced plans to spend GBP140 million over the next two years in an additional investment program at its Fife ethylene plant, which has a capacity of more than 800,000 t/y.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC