BASF ready to react to potential takeover approach as market value declines, says CEO

MOSCOW (MRC) -- BASF, at virtual annual shareholders’ meeting, said it is alert to a possible risk of an unsolicited takeover approach or an attack from activist investors and was ready to react, as per Chemweek.

Speaking at the meeting, CEO Martin Brudermuller said he could not rule out unwanted attempts to take control of the company, given the decline in its market value. Brudermuller was responding to a question posed by Ulrich Hocker, president of DSW, a German association for private investors, who wanted to know whether BASF has a defense strategy against hostile takeovers, especially from China, and how BASF assesses the current market situation.

“The risk that BASF, given its current market capitalization, could become the target of a takeover or of activist investors cannot be ruled out. Consequently, we monitor market developments and prepare ourselves for such situations. A successful, transparent corporate strategy that highlights future potential and the associated correct reflection of our value on the capital markets are the most effective instruments against unwanted external influence. In addition, we ensure that we achieve the best performance in the respective market environment and implement the strategic measures to improve performance consistently and quickly. At the same time, we are in continuous dialogue with all interest groups in order to take their demands and expectations into account and explain our strategy,” Brudermuller says.

BASF’s market value has lost more than 20% this year to EUR49 billion (USD55 billion) as the COVID-19 pandemic reduced global demand for its products.

We remind that BASF has restarted its No. 1 steam cracker following a maintenance turnaround. 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.

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

MOSCOW (MRC) -- Environmental problems such as plastic pollution, global warming due to human population explosion, are getting severe in the world and especially the microplastic problem in the marine environment is becoming a devastating issue, said Chemweek.

It is predicted that the amount of plastic garbage will be more than that of fish in the world by 2050. There are also some scientific reports that these microplastics are already in our human body. Therefore, plastic recycling, reduction of plastic usage itself, and biodegradable plastic usage and development, have been intensively challenged and carried out.

In this regard, Dr. Ryohei Mori at Green Science Alliance Co., Ltd. has developed biodegradable Textile, fiber, yarn, film with cellulose based resin. They have also applied their nano cellulose composite technology into this cellulose based material, and made so to speak "cellulose + nano cellulose" material and products. Green Science Alliance had confirmed previously that mixed nano cellulose in the biodegradable resin can increase biodegradability. This "cellulose + nano cellulose" resin is a very interesting new type of biodegradable resin material. In addition, cellulose can be said to be a very environmentally friendly biodegradable resin since most of biodegradable resins are composed of either petroleum or edible biomass. Using edible biomass such as corn, sugarcane, potato, etc. as raw material can be risky since they compete with human nutritious food.

They will keep making an effort to improve resin properties such as mechanical properties, molding properties, etc., in order to create good biodegradable resin fiber, yarn, film, as well as non-woven.

As MRC informed earlier, Mitsui Chemicals, Inc. is collaborating with Kaisei Inc. on a project aimed at the development of bio-PP at commercial scale. The project has been adopted by Japan's Ministry of the Environment as part of its plans for a carbon-free society ambition. Mitsui Chemicals' bio-PP pilot project will aid in the country’s effort to reduce greenhouse gas emissions.

According to MRC's ScanPlast report, Russia's 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

MOSCOW (MRC) -- Johnson Matthey (JM), a global leader in sustainable technologies, is pleased to announce that its combined reforming methanol technology has been selected by JSC Technoleasing for the new Amur Oblast facility, located in Skovorodino, Russia, said Globenewswire.

JM will provide a license for the 3,000 mtpd plant and will include their new Advanced Series Loop technology, which utilises an innovative synthesis loop arrangement together with existing reactor technology to achieve a significant improvement in natural gas efficiency. The contract also includes the associated engineering, proprietary equipment and catalyst supply.

Pending a final investment decision (FID) by Technoleasing, this will be the first JM licenced methanol plant in Russia using the combined reforming and Advanced Series Loop technology. It represents JM’s commitment to providing its world class expertise and sustainable technologies to Russia’s growing petrochemical industry.

Johnson Matthey’s leading methanol technology has been licensed for more than 45 years with over 90 plant licenses granted in that time. Its world scale syngas generation technology options include steam methane reforming, combined reforming, autothermal reforming (ATR) and gas heated reforming that allow bespoke designs unique to each customer's project requirements.

“Johnson Matthey’s combined reforming methanol technology turned out to be the best available technology for the Skovorodino plant. We are very much focused on ecological issue as well as plant’s efficiency in consumption of natural resources. We are looking forward for cooperation with JM in building the plant and introducing this technology in Russia,” said Vadim Medvedev, Technoleasing General Director.

“We are delighted that Technoleasing has entrusted JM as their strategic partner and are proud to be a part of this ground-breaking project,” said John Gordon, Managing Director at JM. “This win demonstrates our unique ability to bring tailored solutions to our customers through our innovative methanol plant flowsheets, in-depth know-how and catalyst technologies. Our new Advanced Series Loop technology will provide energy efficiency and significant economic benefits in gas consumption per ton of methanol over conventional loops for the Amur facility for many years to come."

Johnson Matthey is a global leader in science that enables a cleaner and healthier world. With over 200 years of sustained commitment to innovation and technological breakthroughs, we improve the performance, function and safety of our customers’ products. Our science has a global impact in areas such as low emission transport, pharmaceuticals, chemical processing and making the most efficient use of the planet’s natural resources.

AS MRC imformed earlier, SIBUR Holdinghas resumed its polyethylene (PE) plants after planned maintenance, which had begun on 23 May 2020. Based in Russia, the turnaround includes both old and new PE plants of SIBUR which consists of Tomskneftekhim with 270,000 tons/year of low density polyethylene (LDPE) unit, as well as ZapSibNeftekhim with a 700,000 tons/year high density polyethylene (HDPE) unit and 800,000 tons/year linear low density polyethylene (LLDPE)/HDPE swing plant.

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) -- Crude oil futures were marginally lower in mid-morning trade in Asia June 16 amid persistent concerns over demand recovery, reported S&P Global.

At 10:17 am Singapore time, on 16 June, ICE Brent August crude futures was 26 cents/b (0.65%) lower from June 15's settle at USD39.46/b, while the NYMEX July light sweet crude contract was 25 cents/b (0.67%) lower at USD36.87/b.

Sentiment took a risk-off tone in Asia trading, despite prices settling higher on June 15 during the US trading hours, amid news of additional economic support by the Federal Reserve.

"A full recovery to early March levels will need continued supply discipline, demand recovery, and time to work off US inventories and spare capacity," Axicorp chief global markets strategist Stephen Innes said in a June 16 note.

Concerns over a second wave of COVID-19 infections amid easing lockdowns continued to cloud the demand outlook.

The market is also looking towards fresh US inventory data to be released later in the week. The data last showed a substantial build, which dampened sentiment.

"A tall order indeed that could be prone to less satisfactory results over the short term, but a draw in this week's inventory data will go a long way to soothe supply concerns," Innes said.

On the OPEC+ front, some bullish sentiment emerged from reports that Iraq is adhering to the accord. Baghdad had signaled that it would sharply cut back on oil exports in June, Platts reported.

There were also concerns as to whether US shale production will increase as prices get supported by the OPEC+ cuts.

Meanwhile, the ICE Brent crude futures market structure had remained largely steady at the prompt, amid a lack of fresh drivers at the moment.

"Whether it (ICE Brent) can reverse last week's bearishness and embark on another bullish run remains to be seen, given that the contango spread is still relatively flat now compared to last month," OCBC analysts said in a June 16 note.

As MRC wrote previously, 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

MOSCOW (MRC) -- South Africa's Sasol plans to cut jobs and end West African oil operations as part of a business revamp, the petrochemicals producer said on Thursday, adding it had also agreed a deal with lenders to relax borrowing rules, said Engineeringnews.

Sasol has been reviewing its business as it struggles with high debt levels, falling oil and chemical prices and lower global demand due to the Covid-19 pandemic.

The company, the world's top producer of motor fuel from coal, said the review had identified chemicals and energy as the focus areas for its future business.

"The revision of our strategy aims to have a greater focus on enhanced cash generation, value realisation for shareholders and business sustainability," it said in a statement.

Sasol said the revamp would affect its workforce, but did not say how many jobs might be lost. The company said it was seeking consultations with trade unions in South Africa and aimed to do the same in other countries.

It also said it had concluded discussions with lenders, adding they had agreed to waive a debt test due this month and relax one due in December 2020. That test will allow the firm to have net debt of four times earnings before interest, tax, depreciation and amortisation, up from three times previously.

The company added its liquidity headroom would remain well above USD1-billion.

As MRC wrote previously, in mid December 2019, Sasol announced that the LCCP Ethane Cracker was increasing production rates following the successful replacement of the acetylene reactor catalyst. Sasol’s Ethane Cracker with a nameplate capacity of 1.54 million tons per year achieved beneficial operation in August 2019 but has run approximately 50-60% of nameplate capacity due to underperformance of the plant’s acetylene removal system. The company stated that the issue had been resolved then.

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