Evonik to build additional combined cycle gas and steam turbine plant at Marl

MOSCOW (MRC) -- Evonik Industries says it has signed an agreement with Siemens to construct an additional combined cycle gas and steam turbine plant at the Marl, Germany, chemical park, reported Chemweek.

This is an important step toward ending coal-fired generation of electricity and gas throughout Evonik, the company says. Construction will start before the end of summer 2020 and the plant is expected onstream in 2022.

“We intend to cut our absolute greenhouse gas emissions in half by 2025 - that’s Evonik’s key climate goal. The new construction project in this agreement is another important step in that direction,” says Thomas Wessel, board member/sustainability issues at Evonik.

The new power plant will replace a reserve gas-fired power plant at the site and complement the other new power plant that Evonik recently began building at Marl, the company says. “At a total capacity utilization rate of over 90%, the two new plants will generate up to 270 megawatts of electricity, which is enough to power roughly 750,000 households, and up to 660 metric tons of steam per hour,” Evonik says.

The new plant also contributes to Germany’s energy-transition efforts, because its “highly flexible load management can also play a role in balancing input variability from renewable energy sources,” Evonik says.

As MRC informed before, Dow and Evonik have recently entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.

We remind that Dow plans to install a new furnace in its steam cracker at Fort Saskatchewan, Alberta, Canada, increasing its ethylene capacity, currently 1.42 million metric tons/year (MMt/y), by 130,000 metric tons/year. Dow will split the cost of the project and the incremental volume equally with an unnamed regional customer, according to CEO Jim Fitterling, who announced the news during the company's fourth-quarter earnings call. Start-up is slated for the first half of 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 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.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.
MRC

Moodys downgrades BASF to A3, stable outlook

MOSCOW (MRC) -- Moody’s today published a downgrade of BASF’s long-term and short-term credit ratings from “A2/P-1/review for downgrade” to “A3/P-2/outlook stable”, reported Chemweek.

The reasons for these changes include the economic impact of the COVID-19 pandemic and related uncertainty. “We have taken note of Moody’s decision, and we will strive to come back to a solid A rating at Moody’s. At S&P and Fitch, BASF continues to have a solid A rating. Despite the downgrade by one notch at Moody’s, BASF enjoys good credit ratings, especially compared with competitors in the chemical industry,” BASF says in a statement.

Moody’s says the downgrade reflects BASF's rating ratios that had already been weak for the A2 rating when entering the COVID-19 outbreak, which also limits the potential for improvement in case of a recovery in 2021. “With expected 2021 numbers the company would not be in line with requirements to maintain an A2 rating, such as a Moody's-adjusted EBITDA margin that Moody's expects to reach levels of only around 13% in 2021; high gross leverage with debt/EBITDA of 3.7 times (x) in 2021, even though this is still a considerable improvement from the expected 4.5x in 2020; and the emerging negative free-cash-flow (FCF) profile that Moody's expects will become a feature of BASF as the company embarks on a large capital spending program in Asia and in the area of battery materials coupled with an expectation of continued high dividend payouts. Moody's estimates negative FCF of about EUR1.0 billion in 2020, around €2.0 billion in 2021, and EUR2.8 billion in 2022.”

The peak investments for BASF's planned seventh Verbund site in southern China, on which the company will spend up to USD10 billion until 2030, will occur between 2022 and 2024. Moody's expects that the gap to cover negative FCF will be funded primarily with divestment proceeds. These will largely stem from the IPO proceeds and subsequent disposals of stakes in Wintershall Dea, in which BASF holds a 72.7% stake.

Moody’s says that BASF's liquidity remains solid. The company has taken the decision of holding extra cash in excess of its usual cash balance in the magnitude of EUR2.0-3.0 billion to bolster liquidity in the wake of the COVID-19 outbreak. As the uncertainty from the outbreak recedes and the economy normalizes, BASF will over time reduce its excess cash balance toward levels of EUR2.0 billion and EUR2.5 billion. The company signed additional short-term EUR3.0 billion credit facilities maturing in 2021 and accessed the European commercial paper market. In May, BASF issued EUR2.0 billion of long-term bonds including its first green bond, to refinance short-term debt. “The next bond matures in November 2020 and we expect BASF to repay the EUR1.0-billion bond. The company at its June 2020 AGM ruled out any share buybacks for 2020,” Moody’s says.

The A3 rating also takes into account BASF's exposure to more volatile petrochemicals and intermediates as well as its plastics and monomers businesses, which in 2019 together accounted for about 36% of group sales. These segments were the main contributor to declining earnings in 2019 and the first quarter of 2020 when earnings before interest and tax before special items of these two segments fell by 43% and 35% year on year, respectively. The contribution from more resilient end markets such as agriculture, consumer goods, and health and nutrition has not been sufficient to offset the decline in BASF's commodity business. BASF's exposure to the transportation end market, which includes the automotive sector, ranges between 10% and 20%. Moody's does not assume a recovery to 2019 levels in the worldwide automotive market before 2023, which it says will structurally weigh on BASF.

As MRC informed earlier, an unexpected outage occurred at BASF Total Petrochemical’s joint-venture (JV) olefins unit at Port Arthur, Texas, last Thursday afternoon. The cause of the outage is being investigated, with a compressor shutdown cited as a possible factor, according to a Texas Commission on Environmental Quality filing. Total’s refinery near the olefins plant has also drastically reduced rates. The outage had little effect on Friday’s US spot ethylene market.

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.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of EUR59 billion in 2019.
MRC

Ineos Styrolution announces CEO change

MOSCOW (MRC) -- Ineos Styrolution, the global leader in styrenics, said today that Kevin McQuade, who has led the company as CEO since 1 January 2015, has been appointed chairman of Ineos Styrolution, said the company.

Steve Harrington, currently president of global styrene monomer and APAC for Ineos Styrolution, has been appointed CEO, reporting to McQuade.

The change will be effective from 1 July 2020. Harrington has a 30-year career in the chemical industry, the last 19 years working for Ineos in commercial and senior management roles. He has prior experience with ICI and Unilever.

As MRC informed earlier, INEOS is enacting a series of ‘social distancing’ measures in order to protect its employees who play a vital role in the production of essential products. INEOS has announced a series of measures to protect employees and thereby ensure the continued operation of its plants and businesses through the coming weeks and months. As the manufacturer of essential materials that are vital to life, the company is taking immediate action to limit the spread of the virus.

As MRC informed before, in January 2019, INEOS announced Antwerp as the location for its new petrochemical investment. The EUR3 billion investment will be the biggest ever made by INEOS and is first cracker to be built in Europe in 20 years. The investment is a game changer for the chemical sectors and will bring huge benefits to the Belgium and wider European economies.

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

US commercial crude stocks swell to all-time high as refinery demand sputters

MOSCOW (MRC) -- US commercial crude stocks notched a fresh all-time high last week amid still-weak refinery demand and flagging exports, US Energy Information Administration data showed June 17, reported S&P Global.

Commercial crude stocks climbed 1.22 million barrels to 539.28 million barrels in the week ended June 12, US Energy Information Administration data showed. Inventories are now 14.5% above the five-year average for this time of year.

An additional 1.73 million barrels entered storage at the Strategic Petroleum Reserve, pushing stockpiles there to 65.17 million barrels.

In a pattern echoing recent weekly reports, the commercial crude build was again concentrated on the US Gulf Coast. Stockpiles there pushed 3.81 million barrels higher on the week to a fresh all-time high of 307.49 million barrels.

In contrast, inventories at the NYMEX delivery hub of Cushing, Oklahoma, fell for a sixth consecutive week, drawing 2.61 million barrels down to 46.84 million barrels. Cushing stocks are now down 18.61 million barrels from their late-April peak, a slide of more than 28%.

Refinery net crude inputs were up 120,000 b/d on the week at 13.6 million b/d, but despite climbing for five consecutive weeks inputs remain nearly 20% behind the five year average. Crude inputs were as much as 25% behind the five-year average in early May, but rising refinery demand has only slightly outpaced the typical late-spring uptick, leaving runs well behind normal.

USGC refinery crude inputs were 14.4% behind the five-year average last week, in from more than 22% in early May, but runs on the US Atlantic Coast and West Coast were still, respectively, 51% and 31% below normal.

US crude exports averaged at 2.46 million b/d, up slightly from 2.44 million b/d the week prior but down over 28% from year-ago levels.

While tight arbitrage economics due to a particularly narrow Brent/WTI spread has impacted US export volumes, low freight rates—particularly for Trans-Atlantic Aframaxes - have been more supportive.

However, a global glut of crude in floating storage continues to present headwinds to stepped-up US exports. Global floating storage stood at a record-high 199.49 million barrels on June 17, according to data from Kpler, going back to January 2016.

Commercial crude inventories climbed despite production dropping 600,000 b/d to 10.5 million b/d. Production realized its biggest one-week decline since late-March and was at the weakest since March 2018.

Notably, the bulk of this production decline is likely temporary and the result of Gulf of Mexico production shut-ins ahead of Tropical Storm Cristobal, which made landfall at Louisiana on June 6.

At its peak June 7, Gulf of Mexico operators reduced output by 636,000 b/d. By June 12, just 120,079 b/d of crude output remained down, according to the US Bureau of Safety and Environmental Enforcement.

Nationwide distillate inventories saw their first weekly decline since late March, falling 1.36 million barrels to 174.47 million barrels last week, as demand climbed nearly 8% on the week to 3.56 million b/d.

Jet demand rose 11% last week to reach 788,000 b/d, and is now more than double its all-time record-low 352,000 b/d reported the week ended May 8.

Rising demand has contributed to an improvement in cracks for both jet and ultra-low sulfur diesel. Consequently, refiners have for the most part stopped using jet fuel to blend into with ULSD as seen earlier in the year. This blending activity had been a major contributor to the massive build in distillate stocks seen in recent weeks.

Total US gasoline stocks dipped 1.67 million barrels last week to around 257 million barrels, but stocks are still ample at around 9.8% above the five year average.

Total gasoline demand edged 30,000 b/d lower to 7.87 million b/d. The outlook for gasoline demand remains uncertain. On the one hand, major USAC cities, which were among the hardest hit by the COVID-19 pandemic this spring, have just started their reopening in recent days, however, nine states that eased restrictions on non-essential travel and trade in recent weeks are now reporting record numbers of cases.

USAC gasoline stocks saw the first weekly draw since the week ended May 1, dropping 970,000 barrels to 74.14 million barrels.

As MRC informed before, global oil consumption cut by up to a third in Q1 2020. 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 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

Sasol prioritizes sale of stake in Lake Charles chemicals project

MOSCOW (MRC) -- Sasol (Johannesburg) has accelerated an ongoing asset disposal program that could eliminate more than half of the South African company’s debt, with the proposed sale of a stake in its Lake Charles Chemicals Project (LCCP) in Louisiana of the “highest priority”, reported Chemweek.

The company is trying to raise cash amid cost overruns and lower oil prices, with the overall process to be completed possibly within one year and generating up to USD5 billion, which would help prevent a last-resort rights offering, according to a report by Bloomberg.

“The best possible value and the highest possible chance of a divestment, they go first,” says Paul Victor, Sasol’s chief financial officer in an interview. While each asset has its own timeline for disposal, the company intends to complete all sales by June 2021. A decision on the rights offer is due in the next few months.

Sasol’s “highest priority” in the sales process is a stake in its Lake Charles petrochemical complex, which has increased in cost to almost USD13 billion, Victor says. The company has received multiple bids and aims to have that sale “at a well-developed stage by the end of December,” he says. Specialties chemical production is considered part of Sasol’s core business, while base chemicals take a lot of volume to stay competitive and the preference is to sell a portion of that, he adds.

Sasol is still evaluating whether to sell its share in the Natref crude oil refinery in South Africa, a joint venture in which it owns 64%, with Total holding the remainder. Keeping the plant, where production has been suspended since April, could require investing in upgrades to produce cleaner fuel. The company’s West African oil assets will be sold, while natural gas operations in Mozambique will be retained. “Mozambique is part of our future - it helps us to decarbonize our footprint,” Victor says. Sasol’s shale gas assets in Canada were on the block earlier than anything else and a buyer could take them “at value,” he says.

Sasol has reportedly received offers for a large stake in its LCCP from companies including CPChem, LyondellBasell, and Ineos, with these and other companies now moving into a second round of bidding. The stake sale could raise more than 29 billion South African rand ($1.69 billion) for Sasol. The cost of the Lake Charles project has soared from original estimates of $8.9 billion to USD12.9 billion.

Earlier this week Sasol announced a 30,000-metric tons/year Guerbet alcohol unit at the LCCP had achieved beneficial operations, following on from beneficial operations starting at its Ziegler alcohol unit on the same site a few days before. The only remaining unit to be brought online at the complex is a 420,000-metric tons/year low-density polyethylene (LDPE) plant, which was damaged by an explosion earlier this year while in the final stages of commissioning. The plant is expected to be online by the end of September.

As MRC reported earlier, Sasol's world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol’s new cracker, the heart of LCCP, is the third and most significant of the seven LCCP facilities to come online and will provide feedstock to our six new derivative units at the company's Lake Charles multi-asset site.

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.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC