Bank of England gave loan 53 companies USD20.6 billion to cope with COVID-19

MOSCOW (MRC) -- The Bank of England (BoE) says that as of 3 June, 53 companies had used the CCFF and a total of GBP16.2 billion (USD20.6 billion) had been loaned to cope with the impacts of COVID-19, said Chemweek.

BASF is the biggest beneficiary of a UK government emergency loan scheme to help the biggest companies operating in the country cope with the impacts of COVID-19, Bayer is also one of the biggest recipients of the emergency funding, which takes the form of cheap government loans, under the Covid Corporate Financing Facility (CCFF).

The Bank of England (BoE) says that as of 3 June, 53 companies had used the CCFF and a total of GBP16.2 billion (USD20.6 billion) had been loaned. BASF was the biggest beneficiary, receiving GBP1 billion, the maximum amount allowed by the BoE to one company under the CCFF, and Bayer had received GBP600 million. The other chemical industry participant is AkzoNobel, which had received GBP30 million of loans under the scheme.

The CCFF was announced in March and is run by the BoE on behalf of the UK government. To qualify for funding under the scheme, companies must be deemed to make a "material contribution" to the UK economy and be investment-grade rated as of 1 March.

BASF says it has eight production sites in the UK and employs about 850 people there. Bayer says it has 880 employees in the UK.

We remind that BASF has restarted its No. 1 steam cracker following a maintenance turnaorund. Thus, the company resumed operations at the plant on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

Ethylene and propylene are feedstocks for producing 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) -- Oil prices have quickly climbed to levels that raise the risk of price falls as demand is fragile, Morgan Stanley said, as benchmark crude hit its highest in three months, said Hydrocarbonprocessing.

Oil climbed on Monday after major producers agreed to extend a deal on record output cuts to the end of July and as China’s crude imports hit an all-time high in May.

The bank said its base case expectation remained that oil markets will be progressively under-supplied in the second half of this year and inventories will shrink in the fourth quarter and first quarter next year.

But it said in a note the rally “appears mostly supply- rather than demand-driven, and it is questionable how strong refinery runs can increase against this backdrop”.

Refining margins are historically low and inventories of oil products remain elevated relative to crude oil inventories, suggesting the demand recovery is relatively fragile.

Consumption is unlikely to return fully to pre-coronavirus levels until the end of 2021, Morgan Stanley said, adding that inventories are unusually high after the increases in April.

Growth from U.S. shale could return to levels that are too high, if the U.S. benchmark WTI trades too far above the low-USD40s, it added.

The bank also sees a risk to OPEC’s compliance with supply cuts that have led to unusually high levels of spare capacity. “When the cuts are eventually unwound, production could rise sharply,” it said.

As MRC infomed earlier, the fall in Russia's GDP in non-working April 2020 is estimated at 12% in annual terms after growth, according to updated data, by 0.8% in March, 2.6% in February and 1.6% in January. As a result, in January-April 2020, according to the ministry, the RF GDP decreased by 1.9% in annual terms after an increase of 1.6% in January-March.

As MRC informed earlier, Russia's output of products from polymers grew in April 2020 by 11.2% year on year due to quarantine restrictions. However, this figure increased by 3.4% year on year in the first four months of 2020. According to the Russian Federal State Statistics Service, April production of unreinforced and non-combined films decreased to 107,000 tonnes from 110,400 tonnes a month earlier. Output of films products grew in the first four months of 2020 by 12.5% year on year to 402,800 tonnes.
MRC

MOSCOW (MRC) -- ExxonMobil Corp’s and PBF Energy’s refineries in Louisiana remained in operation during storm Cristobal’s passage across the southeast part of the state on Sunday and on Monday, sources familiar with operations said, said Reuters.

The 502,500 barrel-per-day (bpd) Exxon Baton Rouge, Louisiana refinery and PBF’s 190,000 bpd Chalmette, Louisiana refinery continued to operate normally on Monday as Cristobal weakened to a tropical depression and was moving across northern Louisiana, the sources said.

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 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.

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

MOSCOW (MRC) -- On June 5, 2020, Covestro successfully placed a Eurobond with a total volume of EUR 1.0 billion in the capital markets, said the company.

The bond was issued in two tranches maturing February 2026 and June 2030 and pays a coupon of 0.875% and 1.375% respectively. Investor demand was exceptionally high with the orderbook being more than 10 times oversubscribed.

The transaction allows Covestro to extend the average maturity of its bonds substantially. Proceeds of the bond placement will be used to further strengthen Covestro's liquidity in the current macroeconomic environment with the impact of the coronvirus pandemic, as well as providing funds for the 2021 bond maturity.

“The exceptional demand from investors for our bond clearly demonstrates that even in these challenging times, the capital market has continued confidence in Covestro and our robust financial policies”, said CFO Dr. Thomas Toepfer. “The placement of EUR 1.0 billion Eurobond with long-dated maturities is part of our program to build substantial liquidity reserves whilst capturing attractive terms and pricing.”

Covestro was supported on this issuance by BNP Paribas, Bank of America, Commerzbank, and UniCredit as bookrunners.

As MRC informed earlier, Covestro has closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

According to MRC's ScanPlast report, overall estimated consumption of PC granules totalled 12,600 tonnes in the Russian market in January-February 2020 (excluding imports and exports to/from Belarus), compared to 9,600 tonnes a year earlier. Demand increased by 31%.

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc. With 2018 sales of EUR 14.6 billion, Covestro has 30 production sites worldwide and employs approximately 16,800 people (calculated as full-time equivalents) at the end of 2018.
MRC