Fitch and Moodys affirm SIBUR credit ratings at investment grade BBB- and Baa3, outlook stable

MOSCOW (MRC) -- SIBUR Holding (Moscow), Russia’s largest integrated petrochemicals company, today announced that Fitch and Moody's rating agencies have affirmed its long-term issuer default ratings at investment grade BBB- and Baa3, with a stable outlook, said Chemweek.

This means that the company now enjoys investment grade credit ratings from all three key rating agencies.
In its rating commentary, Fitch notes that a stable outlook for the company reflects the higher utilization rate at its recently built ZapSibNeftekhim complex at Tobolsk, Russia, a fall in 2020–2021 capital expenditure due to the completion of large investments, and overall economic recovery after the downturn caused by the coronavirus pandemic.

The agency’s expectation is that in 2020 a slump in demand for Sibur’s key products--polypropylene and polyethylene--will not be as heavy as the global GDP decline, and over a longer horizon, demand for these products will keep growing above the global GDP growth rate.

Moody's expects SIBUR to be in a sufficiently strong position going forward thanks to its business resilience, an accumulated liquidity cushion, and successful completion of the active investment phase early in 2020, which will help drive its EBITDA growth.

"We have consistently focused on transforming Sibur into a highly resilient business prepared to navigate the uncertainty in global markets. The polymer capacities of our recently completed ZapSibNeftekhim project already contribute to EBITDA generation and help us to offset negative effects thanks to higher internal consumption of gas processing products and increased polymer output,” said Alexander Petrov, Sibur CFO. During the pandemic, Sibur has maintained utilization rates at all key production facilities by redirecting output to alternative markets, achieving significant cost optimization, and increasing liquidity reserves. “Our affirmed investment-grade ratings reflect the fundamental resilience of Sibur’s business and our commitment to stringent financial discipline," Petrov said.

As MRC informed earlier, in February 2020, Linde PLC recieved a contract to provide technology for PJSC SIBUR Holding’s cracker at Amur gas chemical complex (GCC). GCC is an integrated 1.5 million tons per year polyethylene and polypropylene production complex to be built near Svobodny in Russia’s far-east Amur region. The contract was awarded to Linde under a consortium with SIBUR subsidiary and project contractor NIPIgazpererabota (Nipigaz).

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.

SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.

MRC

MOSCOW (MRC) -- BASF signed a strategic cooperation agreement with Shanghai Zhengming Modern Logistics Co., Ltd. (Zhengming) to develop insulating polyurethane (PU) sandwich panels, for use in the construction of refrigerated storages for the cold chain industry in China, said the company.

Under the agreement, BASF will support information and technology exchange as well as market development while Zhengming will designate BASF as its PU supplier for all joint cold storage projects. The two parties will also explore joint marketing and promotion opportunities for PU sandwich panels.

Huang Zhengming, CEO of Zhengming said, "Today, living standards are constantly improving and food safety standards are also becoming stricter. In addition, China’s cold chain industry is also developing rapidly. By using BASF's Elastopir solutions with excellent fire insulation performance in our products, we strive to protect the cold chain ecosystem and ensure our customers can enjoy high-quality goods produced by an integrated supplier."

BASF’s Elastopir is used in the core of insulated sandwich panels. In addition to being energy-efficient and safe, Elastopir also offers customers a more sustainable solution as fewer flame retardants and no bromine are needed for production.

"We have typically collaborated with various partners along the cold chain, such as panel producers, to develop PU sandwich panels. This new collaboration marks a significant milestone for BASF, as we are collaborating directly with a cold storage owner,” said Desmond Long, Vice President, Business Management, Performance Materials Greater China, BASF. “We would like to thank Zhengming for this exciting opportunity and look forward to enhancing the cold chain supply in China together."

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.

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) -- Indian Oil Corporation posted a consolidated net loss of Rs 7,782 crore for the quarter ended March 31 on a one-time loss of Rs 11,304.64 crore. It is the refiner's first quarterly loss in more than four years, said Economictimes.

The company had posted a net profit of Rs 6,004.88 crore in the corresponding quarter last year. On the other hand, the revenue of the company declined 3.35 per cent year-on-year (YoY) to Rs 1,42,371.85 crore during the quarter under review.

“The holding company is consistently valuing its inventories at cost or net realizable value (NRV) whichever is lower. For this purpose, NRV is derived based on the actual realisation in the specified subsequent period as per regular practice,” IOCNSE -2.01 % said in a regulatory filing.

It further added that due to the coronavirus pandemic and changes in oil market scenarios there was a significant fall in oil prices which led to write-down in valuation of inventories below cost for the specified period of Rs 6,855.35 crore.

However, on account of the unprecedented situation of lockdown from March 25 in the country precipitated by the outbreak of Covid-19 pandemic and consequent significant decline in demand for petroleum products, as a one-time measure, a longer time period is considered for better estimation of NRV.

As MRC informed earlier, LyondellBasell, the world’s largest licensor of polyolefin technologies, today announced that Indian Oil Corporation Ltd. (IOCL) will use the LyondellBasell Spheripol technology for a new facility. The process technology will be used for a 450 KTA polypropylene plant to be built in Panipat, Haryana State, India.

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.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.
MRC

MOSCOW (MRC) -- Clariant says that it is doubling the R&D capacity of the Palo Alto, California, facility of the company's catalysts business. The investment includes extending the facility’s high-throughput equipment and expanding the team of technical experts, Clariant says, said Chemweek.

The upgrade is expected to accelerate catalyst discovery and development, and overall time-to-market by 3-4 years, the company says.

“Increasing our capacity allows us to boost both productivity and innovation, which will result in faster development of catalysts for our customers. We are also accelerating our work to advance the state-of-the-art in high-throughput technologies, especially in supporting catalyst scale-up and production,” says Anthony Volpe, head of Clariant’s Palo Alto R&D center.

Clariant’s center at Palo Alto was established in 2009 and focuses exclusively on high-throughput catalyst R&D. The investment enhances the ability to experiment up to 100 times faster than traditional practices, through the addition of hardware, robotics, automated procedures, and specialized software, including machine learning and other artificial intelligence tools, the company says.

As MRC reported earlier, in June 2020, TechnipFMC and Clariant Catalysts entered into a joint development agreement for the demonstration and commercialisation of Clariant’s new state-of-the-art AcryloMax propylene ammoxidation catalyst for the production of acrylonitrile (ACN).

Besides, in May 2020, Clariant’s CATOFIN catalysts was selected by Advanced Global Investment Co. (AGIC), a joint venture between Advanced Petrochemical Company (APC) and SK Group, to build a PDH facility in the Middle East.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, 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.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.

MRC

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