COVID-19 - News digest as of 29.06.2020

1. Dow expects lower EBITDA due to slow recovery in consumer, automotive sectors

MOSCOW (MRC) -- Dow says it expects a USD350-million headwind to second-quarter EBITDA, mostly due to a slower-than-expected demand recovery in the automotive and consumer durables end markets, reported Chemweek. The demand decline will particularly impact Dow’s polyurethanes business, where second-quarter demand is expected to decline by about 25–30% year on year (YOY). Dow had previously expected a 15–20% YOY demand decline for polyurethanes in the second quarter. About two-thirds of the EBITDA impact “can be attributed to the delayed and slower recovery in the automotive, construction, appliance, and furniture sectors,” Dow president and CFO Howard Ungerleider said in a virtual conference presentation this morning. The rest “is being driven by margin pressure due to lower demand, which is negatively impacting pricing power, along with MEG softness,” he added.


MRC

MOSCOW (MRC) -- Huntsman (The Woodlands, Texas) has reaffirmed its second-quarter guidance that overall sales will be down 30-35% year-over-year (YOY). However, the company saw sales improve between April and May, and it expects the trend to continue in June, said Chemweek.

Results in the polyurethanes division are expected to be modestly better than forecast, mainly on stronger performance in China and in US construction. Results in the textiles effects division have been weaker than expected, largely owing to prolonged mandatory shutdowns in key textile manufacturing regions, says the company. Huntsman expects adjusted EBITDA in the textiles effects division will likely be slightly negative for the second quarter.

Results in the performance products division are likely to be in-line with the prior guidance, while results in the advanced materials division may fall slightly short because of a deeper-than-expected trough in aerospace, Europe, and India.

As MRC reported previously, in April 2020, to further aid in the fight against the COVID-19 pandemic, LyondellBasell (LBI) donated a key ingredient to Huntsman Corporation to produce hand sanitizer for US first responders.

We remind that, in January 2020, Indorama Ventures Public Company Limited (IVL), a global chemical producer, completed its acquisition of Huntsman’s world-class integrated oxides and derivative businesses, including a large flagship site on the US Gulf Coast (USGC) at Port Neches, as well as Chocolate Bayou and Dayton in Texas, Ankleshwar in India, and Botany in Australia, as per IVL's press release.

The acquisition is a profitable and growing end applications business along with unique products and geographical profile among the crowded olefins space. It has a well-integrated assets base with an extensive infrastructure and future expansion possibilities. The area is adjacent to many USGC feedstock suppliers. The cash value of USD2.0 billion makes it the largest acquisition by Indorama Ventures ever and now our capital employed is nicely spread over plastic, chemicals and fibers. The transaction value translates to an EV/EBITDA of ~5.7x and is expected to add substantial synergies to Indorama’s existing 450kta Ethane/Propane Cracker and our 550kta EO/EG. IVL will now be integrated from Ethane to PET as well as the high-margin EO and PO derivative businesses.

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) -- Evonik appointed Andrea Fischer as its new chief innovation officer effective from 1 July, said the company.

Andreas Fischer has been named Evonik's new chief innovation officer, effective July 1st. He takes over from Ulrich Kusthardt, who has held this position since 2015 and is now taking early retirement. Fischer plans to further strengthen the link between innovative capability and customer focus, and make it an unmistakable hallmark of Evonik: “We want to be leading in innovation. To achieve that, we are bundling our competencies, and bringing together our scientific expertise and our proximity to our markets and customers so we can come up with solutions and applications faster."

Fischer holds a degree in industrial engineering and began his career with a world-leading producer of industrial cleaning agents and hygiene products. From 1997 he held a number of positions at Evonik's predecessor companies, initially in sales and subsequently as head of various business entities. From 2012 he was head of the Silica business line. Since 2019 he has been a member of the board of management of Evonik Resource Efficiency GmbH.

Fischer wants to manage the innovation activities in a focused manner, without centralizing them. Innovation growth fields with focused leadership remain the core of this approach. Here, he is building on the successful strategy of his predecessor, Ulrich Kusthardt. As well as reinforcing Evonik's open innovation culture, Kusthardt concentrated in particular on six innovation growth fields. By 2025, Evonik plans to generate additional sales of over €1 billion with products and solutions in the fields of Sustainable Nutrition, Healthcare Solutions, Advanced Food Ingredients, Membranes, Cosmetic Solutions, and Additive Manufacturing.

Evonik hopes to reinforce its position as an innovator in the field, strengthening the relation between innovative capacity and customer focus.

This is part of the company’s goal to generate additional sales of EUR1bn by 2025 through its operations in sustainable nutrition, healthcare solutions, advanced food ingredients, membranes, cosmetic solutions and additive manufacturing.

As MRC informed earlier, Russia's output of chemical products rose by 4.4% year on year in May 2020 . Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May. Production of benzene was 110,000 tonnes in May 2020, which equalled the figure a month earlier. Overall output of this product reached 615,000 tonnes over the stated period, up by 1.7% year on year.

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

MOSCOW (MRC) -- Hanbang Petrochemical has brought on-line its No. 2 purified terephthalic acid (PTA) unit , according to S&P Global.

The company halted operations at this unit on May 19, 2020, for unspecified reason. The unit, which initially was slated to remain off-line for about two weeks, resumed operations on 21 June, 2020.

Located in Jiangyin, China, the No. 2 PTA plant comprising of two units, with a production capacity of 2.2 million mt/year each.

As MRC informed previously, in March 2016, Hanbang Petrochemical successfully started up its second PTA at Jiangyin, Jiangsu. The plant has two production lines, each with an annual capacity of 1.1 million mt/year.

PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, March estimated PET consumption in Russia was 65,3700 tonnes, up by 1% year on year. Russia's estimated PET consumption decreased in January-March 2020 by 3% year on year to 175,170 tonnes.

Hanbang Petrochemical, also known as China Prosperity Jiangyin Petrochemical, is situated in Jiangyin city within China's Jiangsu province.
MRC

MOSCOW (MRC) -- Hengli started its new purified terephthalic acid (PTA) No. 5 PTA line at Dalian on June 28, a company source told S&P Global on June 29.

The new line's production capacity is 2.5 million tonnes per year. It is running at 50% capacity at the moment, the source added.

As MRC reported earlier, Hengli Petrochemical (Dalian) Co. reached full rate at its No. 4 PTA line in Dalian City in mid-March, 2020. The 2.5-million-t/y PTA line, which came online in January 2020, utilizes Invista's P8 PTA technology. The line also produces benzoic acid, using Invista's RP2PR technology.

PTA is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

As per MRC's ScanPlast report, April total estimated PET consumption in Russia virtually did not change year on year, totalling 60,840 tonnes (in April 2019 - 60,980 tonnes). 235,160 tonnes of PET chips were processed in Russia in January-April 2020.

Hengli Petrochemical Co., Ltd. manufactures chemical fibers. The Company researches, produces, and sells polyester filament and chips for consumer and industry products. Hengli Petrochemical markets it products worldwide.
MRC