PTT moves closer to decision on Ohio petrochemical plant with storage deal

MOSCOW (MRC) -- State-owned Thai oil and gas company PTT Pcl said its U.S. unit took a step forward on its proposed chemical plant in Ohio that will turn ethane into plastics with an agreement to develop a natural gas liquids storage facility, reported Reuters.

PTT Global Chemical America (PTTGCA) signed an agreement with Energy Storage Ventures LLC to build a facility to store and transport natural gas liquids (NGL) for PTTGCA's proposed complex.

“Our impending partnership ... brings us one step closer to a final investment decision," PTTGCA President and Chief Executive Toasaporn Boonyapipat said in a statement on Wednesday.

In June, PTTGCA said it delayed making a final investment decision to build the ethane cracker, which analysts estimate will cost USD5.7 billion, from the first half of 2020 to the first half of 2021 due to the coronavirus.

Analysts said the pandemic reduced expected growth in global demand for plastics.

Energy Storage Ventures' Mountaineer NGL Storage subsidiary will develop the underground salt caverns on a 200-acre (80-hectare) site in Ohio’s Monroe County about 8 miles (13 kilometers) from the PTTGCA site.

PTTGCA said it is working with Mountaineer on 1 million barrels of ethane storage and a pipeline linking the storage facility to the project.

PTTGCA said Mountaineer will develop the USD250 million storage facility in two phases by creating multiple caverns in the existing underground salt formation. Each phase will be able to hold about 1.5 million barrels.

PTTGCA said it is seeking new partners for its ethane cracker project after South Korea's Daelim Industrial Co Ltd pulled out earlier this month.

The ethane cracker is designed to produce about 1.5 million metric tons of ethylene per year and will take 4-6 years to build.

In addition, to PTTGCA's project, Royal Dutch Shell PLC is building an ethane cracker nearby in western Pennsylvania.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

Dow swings to loss, announces 6% workforce cut

MOSCOW (MRC) -- Dow reports a second-quarter net loss of USD217 million, down from income of USD90 million in the year-ago period, reported Chemweek.

Sales totaled USD8.354 billion, down 24% year-over-year (YOY) from USD11.014 billion. COVID-19 lockdowns cut into demand and low energy values weighed on prices, says the company. Citing the prospect of a gradual and irregular recovery, Dow says it will soon begin a restructuring program aimed at USD300 million in annualized EBITDA benefit by the end of 2021. Measures include a 6% reduction in the company’s global workforce and plans to exit uncompetitive assets.

An adjusted loss of 26 cents/share beat the average analyst estimate of a 30 cent/share loss as compiled by Refinitiv (New York, New York).

“We captured solid demand growth in packaging, health and hygiene, home care and pharma end-markets, which partially offset weakness in consumer durable goods,” says CEO Jim Fitterling. “Extended economic lockdowns shifted the inflection point for demand recovery in key markets and geographies into June, where we began to see gradual improvements across most industries. The growing recovery in China and early signs of improvement in Western Europe are positive indicators for the United States and Latin America.”

Fitterling says the company prioritized cash and maintaining financial strength. “We electively lowered our operating rates to meet demand, reduced inventory, and focused on cash to deliver on our priority. Importantly, we generated USD1.6 billion in cash flow from operations, up more than USD600 million year over year, and free cash flow of USD1.3 billion, up more than $800 million year over year.”

Dow has improved cash flow conversion every quarter since the spin out from DowDuPont, delivering 110% conversion on a trailing 12-month basis, notes CFO Howard Ungerleider. “Cash flow conversion was about 45% one year ago, and when we spun out, we talked about getting the best in class, which was 90%,” he says.

Dow continues to expect a “gradual and uneven recovery,” says Fitterling. “For that reason, we will upsize our 2020 operating expense reduction target from USD350 million to USD500 million through additional structural cost interventions. We will also initiate a restructuring program during the quarter, targeting more than USD300 million in annualized EBITDA benefit by the end of 2021. This program includes a 6% reduction in Dow’s global workforce as well as actions to exit uncompetitive assets. While these are difficult decisions, they are necessary to maintain competitiveness while the economic recovery gains traction.”

The packaging & specialty plastics segment recorded net sales of USD4 billion, down 23% YOY. Overall volume was flat. Strong gains in flexible food and specialty packaging, industrial and consumer packaging, and health and hygiene applications were offset by declines in durables, particularly automotive, infrastructure, and construction. Demand for cracker by-products also declined. Regionally, gains in Asia-Pacific and the Europe/Middle East/Africa/India were offset by declines in the US and Canada. Latin America was flat. Local price declined 22% owing to lower global energy prices, and currency decreased net sales by 1%. Operating EBIT was USD318 million, down YOY from USD768 million as targeted expense reductions, increased volume, and improved incremental integrated margin in packaging were more than offset by lower demand and integrated margins in durables.

The industrial intermediates & infrastructure segment recorded net sales of USD2.4 billion, down 28% YOY. Volume declined 18% on reduced demand into durables, primarily in polyurethanes & construction chemicals. Local price decreased 9%, and currency decreased net sales by 1%. Volume growth in Asia Pacific was more than offset by declines in other regions. Operating EBIT was a USD220 million loss, down from earnings of USD154 million in the year-ago period owing to much weaker demand, margin compression, and increased equity losses.

Performance materials & coatings net sales totaled USD1.9 billion, down 21% YOY. Volume declined 14% as growth in home care products and DIY architectural coatings in the US and Canada was more than offset by a decline in siloxanes reflecting weakness in automotive, construction, and personal care end-markets. Local price decreased 6%, and currency decreased net sales by 1%. Operating EBIT was USD27 million, down from USD214 million in the year-ago period, mainly on margin compression in siloxanes and lower demand. Acrylic monomers pricing remained under pressure globally on weaker supply/demand fundamentals.

As MRC informed before, as part of the company’s current slate of low capital intensity, high-return incremental growth investments, Dow announced in August 2019 that it will retrofit proprietary fluidized catalytic dehydrogenation (FCDh) technology into one of its mixed-feed crackers in Plaquemine, Louisiana, to produce on-purpose propylene.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

Indian Oil to start maintenance at PP plant in Paradip

MOSCOW (MRC) -- Indian Oil Corporation Ltd (IOCL) is in plans to undertake a planned shutdown at its polypropylene (PP) plant in Paradip, as per Apic-online.

A domestic Polymerupdate source informed that state owned Indian Oil Corporation Ltd (IOCL) is likely to start turnaround at the plant by this weekend. The plant is expected to remain under maintenance for about two weeks.

Located at Paradip in the India state of Odisha, the PP plant comprises of two lines with a production capacity of 340,000 mt/year each.

As MRC wrote earlier, Indian Oil Corp restarted operation at its naphtha cracker in India in early-October, 2019, after completing maintenance works. The cracker was shut in early-September, 2019 for a maintenance turnaround. Located in Panipat, in the northern Indian state of Haryana, the cracker has an ethylene production capacity of 857,000 mt/year and propylene capacity of 425,000 mt/year.

According to MRC's DataScope report, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

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

COVID-19 - News digest as of 24.07.2020

1. Sasol flags yet another delay at Lake Charles project after fire

MOSCOW (MRC) -- Sasol Ltd. warned of a further delay at its giant US chemicals project, pushing back the startup of the final unit by a couple of months, reported Bloomberg. The Lake Charles complex in Louisiana has been dogged by mismanagement and cost overruns, forcing the South African company to accelerate asset sales to reduce debt. The latest holdup follows a fire that damaged the site’s low-density polyethylene (LDPE) unit back in January. “The unit is expected to achieve beneficial operation before the end of October,” rather than “before September” as previously planned, Sasol said Thursday. “Challenges were experienced in the completion of the restoration process, resulting in a slight delay.” The company has piled on debt to develop the Lake Charles site, whose cost has risen sharply from early estimates to almost USD13 billion. Setbacks at the development, coupled with oil’s crash amid the coronavirus pandemic, have dragged Sasol’s shares down more than 50% this year. The stock slipped 1.5% on Thursday at 10:53 a.m. in Johannesburg.




MRC

Dow Chemical sees recovery starting for durable plastics amid pandemic

MOSCOW (MRC) -- Dow Chemical is seeing early signs of recovering demand in automotive, construction, furniture and bedding markets as economies worldwide emerge from widespread coronavirus pandemic-related shutdowns during the second quarter of 2020, reported S&P Global with reference to company executives' statement July 23.

The company has restarted two polyethylene plants in Texas and a third in Argentina that were shut in April to keep inventories in check amid low demand. Operating rates for the company's ethylene and PE facilities have rebounded to year-ago levels, CEO Jim Fitterling said during the company's second-quarter 2020 earnings call.

"If you go back to the beginning of the year, January, February, we were off to a rocking start," he said. "Then it was the economic shutdowns that really locked everything in during the months of March and April and May; April and May being the two worst. I would say operating rates, for us, on ethylene, polyethylene, right now, are pretty much like they were last year and the volumes are continuing to build."

However, Dow will deepen its cost reductions and slash 6% of its global workforce amid expectations of a gradual recovery. Dow reported a USD225 million net loss for Q2, compared with a USD75 million profit in the year-ago period.

Fitterling said the company continued to see strong demand in packaging and other single-use plastics, but such gains were overshadowed by weak demand for durable plastics in big-ticket items like vehicles and homes, as well as lower margins during Q2. Total volumes for packaging and specialty plastics were flat as gains in some regions could not offset excess supply and weak demand in the US and Canada, he said.

Chief Financial Officer Howard Ungerleider said the company expects continued robust demand from consumers for resins that make plastics used for food packaging, hygiene and health care items as well as the beginnings of a recovery in demand for more durable plastics.

A combination of industry planned and unplanned outages plus PE inventories hovering near five-year lows should tighten the market and support a 5 cents/lb price increase for domestic US material in July and August, Ungerleider said.

Fitterling also noted that recent economic indicators show that in June, US industrial production rose 5.4% and retail sales increased 7.5% from May. US housing starts also rose 17.3%,and were 4% under the June 2019 rate.

He said China's Q2 GDP was up 3.2% year over year, and Dow's China volumes rose 13% compared with the year-ago quarter.

"European and North American economies have been slower to recover, but began improving in June," he said. "Latin America remains challenged, but we expect them to follow a similar recovery pattern in the second half of the year."

As MRC informed before, as part of the company’s current slate of low capital intensity, high-return incremental growth investments, Dow announced in August 2019 that it will retrofit proprietary fluidized catalytic dehydrogenation (FCDh) technology into one of its mixed-feed crackers in Plaquemine, Louisiana, to produce on-purpose propylene.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC