PolyOne forecasts 20% second-quarter sales decline

MOSCOW (MRC) -- PolyOne says it expects second-quarter sales to be down 20% year-on-year (YOY), on big declines in automotive production and consumer discretionary spending due to the coronavirus disease 2019 (COVID-19) pandemic, said Chemweek.

Sales bottomed out in May, chairman and CEO Robert Patterson told investors during a conference call today. However, sales still declined on a YOY basis in June, despite a small sequential improvement.

The May sales trough stands in contrast to many chemical makers, who saw sales bottom out in April. Sales related to the automotive sector are expected to fall by 40% YOY in the second-quarter, although such sales represent only 10% of PolyOne’s total, according to Patterson. “The balance is mainly due to a decline in demand for consumer discretionary items,” particularly athletic apparel—for which PolyOne produces inks—and off-road vehicles, Patterson says. The industrial, construction, and oil and gas markets also experienced lower demand this quarter.

Packaging and healthcare related end markets were a bright spot for PolyOne. Sales into packaging applications were up 5% YOY, while sales into healthcare applications were up 8%.

Regionally, second-quarter sales are expected to be down by 27% YOY in Europe and by about 20% in the Americas. In Asia, sales are expected to rise 10% YOY, due mainly to reopening in China. While sales are improving in Europe and North America, Latin America has been a laggard, as the pandemic has grown worse in the region over the course of the quarter. “For PolyOne overall, we view May as the trough, but we’re not sure we can say that about Latin America,” Patterson says.

“North America and Europe are likely starting to rebound, but demand trends in Latin America and India have yet to stabilize,” notes Laurence Alexander, an analyst with Jefferies (New York, New York).

Second-quarter sales in PolyOne’s distribution segment are expected to fall by 23% YOY, with sales 18% in engineered materials and 16.5% in the colors, additives and inks segment. The larger decline in distribution sales in mainly due to that segment’s greater exposure to the automotive sector and consumer discretionary spending.

Adjusted earnings for the quarter are expected to total 26 cents/share, including the impact of new share issuance and new interest expenses, according to Patterson. This compares with adjusted earnings of 48 cents/share in the second-quarter of 2019.

As MRC informed earlier, in December 2019, Clariant (Muttenz, Switzerland) agreed to sell its entire Masterbatches business to PolyOne Corp. (Avon Lake, Ohio). The transaction values the Masterbatches business at USD1,560 million, representing about 12.2 times the last twelve months reported EBITDA (ending September 2019) on a cash and debt free basis.

Meanwhile, the USD1.45-billion acquisition of Clariant’s masterbatches and color additives business is on track to close on 1 July. The deal will expand PolyOne’s colors, additives, and inks segment.

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

Pilipinas Shell hydrogen project resumes as coronavirus curbs eased

MOSCOW (MRC) -- Pilipinas Shell Petroleum Corp said it has resumed construction of an integrated hydrogen manufacturing facility at its Tabangao refinery in the Philippines, after being hampered by the coronavirus lockdown, said Hydrocarbonprocessing.

Restrictions on movement have been eased in Philippine provinces and cities with low coronavirus cases to help restore business activity in the Southeast Asian economy.

The local unit of Shell had planned to complete the project this year in partnership with Air Liquide Philippines Inc.

"We intend to complete the project promptly,” a company spokesperson told Reuters. “However, we would need to consider, adopt and adapt to new labour safety restrictions, and assess the impact these would have on our completion timelines."

The facility, which will be the first of its kind in the country, will enable the 110,000-barrel-per-day Tabangao refinery in Batangas City, south of the capital Manila, to process more crude oil varieties into quality fuels.

Operations at the Tabangao refinery have been suspended indefinitely due to poor domestic fuel demand and refining margins caused by the lockdown.

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.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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.


MRC

Celanese raises July VAM prices in China

Celanese raises July VAM prices in China

MOSCOW (MRC) -- Celanese Corporation, a global specialty materials company, has increased July list and off-list selling prices for Vinyl Acetate Monomer (VAM) sold in China, as per the company's press release.

The price increase is effective for orders shipped on or after 1 July, 2020, or as contracts otherwise allow, and is incremental to any previously announced increases.

Thus, July VAM prices will rise for the Chinese region by RM700/mt.

As MRC reported earlier, the company last raised its VAM prices for China on 22 May, 2020, by RMB350/mt.

According to MRC's DataScope report, April EVA imports to Russia dropped by 5,85% year on year to 3,050 tonnes from 3,250 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation increased in January-April 2020 by 1,55% year on year to 12,540 tonnes (12,350 tonnes a year earlier).

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

PP imports to Belarus grew by 6.1% in Jan-Apr 2020

MOSCOW (MRC) - Imports of polypropylene (PP) into Belarus increased to about 36,200 tonnes in first five months of this year, up 6.1% year on year, compared to the same period of 2019. All grades of propylene polymers accounted for the increase in demand, according to a MRC's DataScope report.

April PP imports to Belarus amounted to about 9,200 tonnes, a month earlier, this figure exceeded 9,600 tonnes. Overall imports of propylene polymers reached 36,200 tonnes in January-April 2020, compared to 34,100 tonnes a year earlier, demand for all PP grades increased, with homopolymer of propylene (homopolymer PP) accounting for the greatest growth.

The structure of PP imports by grades looked the following way over the stated period.

April imports of homopolymer PP reached 6,200 tonnes versus 6,900 tonnes a month earlier, purchasing of injection moulding homopolymer PP decreased in Russia under the pressure of quarantine restrictions. Overall imports of homopolymer PP reached 25,600 tonnes in the first five months of 2020, up by 6.6% year on year.

April imports of propylene copolymers to Belarus were 3,000 tonnes versus 2,600 tonnes a month earlier, local companies increased their procurement of injection moulding PP PP block copolymers from Russian producers. Thus, overall imports of propylene copolymers reached 10,600 tonnes over the stated period, up by 4.9% year on year.

MRC

PE imports to Ukraine up by 1% in Jan-May 2020

MOSCOW (MRC) - Imports of polyethylene (PE) into Ukraine increased to about 112,700 tonnes in the first five months of 2020, up 1% compared to the same period of 2019. The greatest increase in demand occurred for high density polyethylene (HDPE), according to MRC DataScope.

Last month's PE imports to Ukraine shrank to 21,700 tonnes from 23,400 tonnes in April, local companies increased shipments of all ethylene polymers grades, including due to quarantine and the suspension of some converters. Thus, overall PE imports reached 112,700 tonnes in January-May 2020, compared to 111,300 tonnes a year earlier. HDPE imports increased mainly due to the forced shutdown of Karpatneftekhim in the first quarter of this year, for other types of polyethylene imports decreased.

The supply structure by PE grades looked the following way over the stated period.
Last month's high density polyethylene (HDPE) imports decreased to 7,900 tonnes from 11,100 tonnes, Ukrainian companies significantly decreased their purchasing of film grade PE due to the resumption of the domestic plant. Overall HDPE imports reached 46,600 tonnes in the first five months of 2020 versus 42,000 tonnes a year earlier.

May imports of low-density polyethylene (LDPE) increased to 6,000 tonnes against 5,000 tonnes a month earlier, local companies increased seasonally purchases of LDPE in Russia. Overall LDPE imports reached 31,400 tonnes over the stated period, compared to 31,600 tonnes a year earlier.


Last month's linear low density polyethylene (LLDPE) imports were 6,400 tonnes versus 6,400 tonnes in April, with stretch films producers accounting for a decrease in demand. Overall LLDPE imports reached 29,300 tonnes in January-May 2020, compared to 32,400 tonnes a year earlier.

Imports of other PE grades, including ethylene-vinyl-acetate (EVA), totalled 5,400 tonnes over the stated period, compared to 5,500 tonnes a year earlier.

MRC