Orbia puts on hold plans to divest Vestolit vinyls business

MOSCOW (MRC) -- Orbia Advance Corp., formerly Mexichem (Mexico City) says that in view of the COVID-19 pandemic and its impact on the global economy and capital markets, it has decided to pause its efforts to divest or seek an alternative strategy for its Vestolit vinyls business, reported Chemweek.

Orbia says it is "prepared to wait for the right environment to maximize shareholder value in any transaction involving its Vestolit business". The company adds that Vestolit is a "fundamentally strong business, with a unique global footprint and strong cash generation, and will continue to focus on driving sustainable, profitable growth."

Orbia announced on 10 January 2020 that it is in the process of analyzing potential divestment or strategic alliances for the vinyls business. The announcement was made in response to a report on Bloomberg, which said that Apollo Management, Ineos, and Westlake Chemical were among the bidders. The Bloomberg article estimated the price tag on Orbia’s vinyls business at up to USD4 billion.

The Vestolit vinyls business has 1.84 million metric tons/year of polyvinyl chloride (PVC) capacity divided among sites in Germany, the US, Mexico, and Columbia. The company has a single 400,000 metric tons/year unit for feedstock vinyl chloride monomer Marl, Germany. Orbia has chlor-alkali plants in Germany and Mexico, and it has a 50% share of Ingleside Ethylene, a joint venture ethane cracker at Ingleside, Texas.

As MRC wrote before, in August 2019, Mexican plastic pipe and chemicals company Mexichem changed its name to Orbia Advance Corporation under a restructuring and reorganization plan.

We also remind that in 2014, Mexichem SAB de CV agreed to buy German PVC paste producer Vestolit GmbH from investment company Strategic Value Partners LLC (SVP Global) for EUR219 million (USD293 million).

According to MRC's ScanPlast report, Russian producers of unmixed PVC decreased capacity utilisation in April. However, Russia's overall PVC output totalled 351,000 tonnes in January-April 2020, up by 2% year on year.

Oriba, of Tlalnepantla, an industrial municipality close to Mexico City, is Latin America’s largest manufacturer of PVC pipe, vinyl resins and compounds.
MRC

ALPLA to buy Spanish plastic packaging company Bopla

MOSCOW (MRC) -- Austrian packaging solutions and recycling solutions provider ALPLA has agreed to purchase Spanish plastic packaging company Bopla, said Packaging-gateway.

The acquisition is part of an asset deal. Both the parties have not disclosed the purchase price, or any further details involved with the acquisition. Financial or other terms were not disclosed.

ALPLA is planning to bolster its own portfolio by making use of the Spanish company’s single-stage manufacturing technologies expertise.

It will also strengthen ALPLA’s presence in the cosmetics and household care markets sectors.

Bopla, with a staff of 50, uses extrusion blow moulding (EBM) and injection stretch blow moulding (ISBM) to produces plastics packaging for customers in the cosmetics, personal and household care sectors.

ALPLA intends to use Bopla’s expertise in single-stage manufacturing technologies to expand its own product portfolio, it said. The Austria-based company has existing production at Les Franqueses which it will seek to integrate with Bopla’s site.

As MRC informed earlier, ALPLA strengthened its recycling operations and entered into the high density polyethylene recycling market with the acquisition of two Spanish businesses. The company said it signed the purchase agreements for the acquisition of Suminco SA in Montcada, near Barcelona, and Replacal SL in Palencia, north of Madrid, in October, 2019.

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.
MRC

Sale of shut Philly refinery to real estate developer delayed

MOSCOW (MRC) -- The closing of a USD252 million sale of the Philadelphia Energy Solutions (PES) oil refinery to a Chicago-based real estate developer has been delayed, reported Hydrocarbonprocessing with reference to a city official and source with knowledge of the agreement.

Hilco Redevelopment Partners won an auction in January to purchase the 1,300-acre site along the Schuylkill River in south Philadelphia. The companies were scheduled to close on the purchase agreement by the end of this month.

City of Philadelphia officials were told the closing was delayed, a city spokesman said by email. He did not offer additional details. Another source with knowledge of the deal said it was postponed this week.

Hilco and PES did not respond to requests for comment about the cause and duration of the delay.

The 335,000 barrel-per-day oil refinery shut last summer after a fire destroyed a section of the plant and released toxic chemicals into the air.

PES filed for Chapter 11 bankruptcy in July and put its refinery, which was the largest and oldest on the US East Coast, up for sale. More than 1,000 full-time workers were laid off, including 640 United Steelworkers.

The United States Bankruptcy Court for the District of Delaware in February approved the transaction with Hilco, whose plan has been to transform the site into a mixed-use industrial park, and seemingly secured the permanent end to operations at the plant.

The bankruptcy judge also signed off on a backup bidder, developer Industrial Realty Group, LLC, in case the deal with Hilco fell through.

PES’ unsecured creditors and union representatives initially opposed the sale to Hilco and pushed for Industrial Realty Group, which had entertained the possibility of leasing part of the site for refining.

Whoever purchases PES will face liabilities tied to cleaning the deeply-contaminated site, an issue that scared away potential buyers earlier in the sale process.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

Petrobras CEO says oil storage not an issue for company

MOSCOW (MRC) -- Oil stocks held by Brazilian state-run oil firm Petroleo Brasileiro SA are “paradoxically” very low, Chief Executive Roberto Castello Branco said, as the company has strong demand for its products overseas, reported Reuters.

During the event hosted by Rio de Janeiro think tank Fundacao Getulio Vargas, Castello Branco said Petrobras had invested heavily in its overseas trading arm since he took over in January 2019, which was paying off in the form of increased oil and fuel exports.

As MRC informed earlier, the chief executive of Brazilian state-run oil firm Petroleo Brasileiro said in December 2019 he wants to sell the company's stake in petrochemical company Braskem within 12 months.

Besides, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

Divergent forward pricing hints at brighter prospects for US olefins

MOSCOW (MRC) -- Backwardation in the forward price curves of natural gas liquid (NGL) feedstocks and carries in the price curves of olefin products may signal an inflection point for the US Gulf Coast (USGC) market, OPIS data show, said Chemweek.

The front month–next month spread for ethylene has been in contango for much of May, while the same spread for feedstock ethane has consistently been backwardated. Further out, ethane's shape is largely flat, with backwardation resurfacing in early 2021. Ethylene, however, shows a relatively pronounced contango shape.

However, ethane's backwardation might be more the result of a contraction in current supply—driven by field shut-ins—than of any prospective increase in feedstock demand. Gulf Coast steam cracker operating rates are struggling at 80–85%, versus peak levels of 90–95%, and this is estimated to have crimped demand for ethane feedstock by around 300,000 barrels per day (b/d).

Therefore, ethylene's ability to capitalize on ethane's backwardation might ultimately come down to how fast world economies recover and/or cracker utilization improves, and competition from other feedstocks.

This implies that indicative early 2021 margins for ethylene improved even further toward the end of May compared with what forward curves suggested earlier in the month. Regardless of the time frame, this also suggests an advantage to petrochemical operators, in the sense that forward prices for the end product appear more favorable than those for the feedstock. However, if cracker rates fail to improve, ethane's backwardation may get more pronounced, but this is unlikely to benefit ethylene producers in the absence of stronger demand.

A similar case can be seen in feedstock propane and product propylene, although the relationship is fundamentally not as tight, propane having many alternative uses and propylene being less dependent on production from propane.

Both propane and propylene's forward curves were in full contango throughout the 2020 market during the first half of May, but the trends diverged, propane flattening with pockets of backwardation while propylene’s contango grew steeper.

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