Venator swings to loss on COVID-19 volume decline

MOSCOW (MRC) -- Venator (Wynard, UK) reports a second-quarter loss of USD19 million, down from USD21 million in the year-ago period. Sales totaled USD456 million, down 21% year-over-year (YOY) from USD578 million, said Chemweek.

Economic disruption created by the COVID-19 pandemic cut into volume, but the company was able to keep average pricing stable in the titanium dioxide segment and to increase it in the performance additives segment.

Adjusted earnings per share came to a 3-cent loss, down from a 13-cent profit in the year-ago period and ahead of the average analyst estimate of an 8-cent loss as compiled by Refinitiv (New York).

"Our business performed well in the second quarter notwithstanding the severe headwinds due to the COVID-19 pandemic,” says Simon Turner, president and CEO. “TiO2 volumes declined 16% sequentially, in-line with our expectations. Our average TiO2 price remained stable, consistent with our customer-tailored approach, and our decisive cost actions helped mitigate the acute impact of lower demand."

Titanium dioxide segment revenue totaled USD338 million, down 23% YOY, mostly the result of a 21% decline in TiO2 sales volume, says Venator, while average selling price was stable. Volume declined in all product categories and regions owing to the impact of COVID-19. Adjusted EBITDA came to USD35 million, down 36% YOY on lower sales volume, partially offset by lower costs.

The performance additives segment turned in revenue of USD118 million, down 15% YOY. A 16% decrease in sales volumes and the unfavorable impacts of product mix and currency translation were partially offset by a 3% increase in average selling price. Venator attributes the volume decline mainly to the effect of COVID-19 on demand in the color pigments and functional additives businesses. Average selling price increased mainly on favorable mix within the color pigments and timber treatment businesses. Adjusted EBITDA was USD13 million, down 19% on lower volume, partially offset by lower costs.

As MRC informed earlier, Venator Materials PLC announced the completion of the strategic review of its Pori, Finland TiO2 manufacturing facility. As a result of unanticipated cost escalation and extended timeline now understood to be associated with the reconstruction of the Pori, Finland TiO2 facility, Venator will transfer certain technology, and the production of select product grades, to other facilities within its current manufacturing network, which will become more efficient with greater flexibility. The Pori, Finland facility will continue to operate at reduced rates through the transition period, which is expected to last through 2021.

As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six 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-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.
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Lubrizol acquires Avid Product Development

MOSCOW (MRC) -- US lubricant additives and specialties producer Lubrizol has acquired 3D printing company Avid Product Development for an undisclosed sum, said the company.

The 3D printing industry continues to rapidly grow, creating an immense opportunity for companies leveraging 3D printing services as part of their portfolios. Today, OEMs (original equipment manufacturers) interested in 3D printing are seeking partners who can assist in their efforts to integrate this new technology into their processes. Lubrizol’s materials, application and testing expertise coupled with Avid’s 3D printing design, prototyping and post-processing know-how will enable development of differentiated solutions for customers? and accelerate adoption of 3D printing in key industries.

"Lubrizol continues to invest in opportunities that bring new differentiated solutions to our customers,” says Gert-Jan Nijhuis, General Manager, 3D Printing Solutions, Lubrizol Engineered Materials. “The acquisition of Avid Product Development greatly enhances our ability as a 3D printing solution provider, offering complete product solutions from material development to printing and post processing services, delivering end-use products for our key markets."

“As a result of this acquisition, we will have vast opportunities to demonstrate our capabilities in engineering, design and manufacturing with the support of an industry leader in materials development, applications and testing,” added Doug Collins, founder of Avid Product Development.

Avid is headquartered in Loveland, Colorado and serves customers in the footwear, consumer goods, industrial and medical markets. Avid won the 2019 Colorado Company to Watch award, and continues to create innovative solutions, including designing and 3D printing of critical personal protection equipment (PPE) to meet the urgent needs of healthcare workers and essential businesses during the COVID-19 pandemic.

As MRC informed previously, in February 2016, speciality chemicals major Lubrizol Corporation announced the commencement of its USD50 million chlorinated polyvinyl chloride (CPVC) compounding plant in Dahej. This was the company's first CPVC compounding plant in the country, and it claimed that it is the first such in India by any global major.

According to ICIS-MRC Price report, negotiations over August shipments of suspension polyvinyl chloride (SPVC) to the domestic market began in the Russian market on Wednesday. Local producers announced a further price increase. Last month, amid a major rise in polyvinyl chloride (PVC) prices in foreign markets and a significant fall in supply due to scheduled outages for maintenance, Russian producers achieved a price increase of Rb6,000/tonne and higher. Russian producers also intend to raise their August prices by Rb1,500-2,000/tonne partially because of the weakening of the rouble against the dollar and high prices in Asia and Europe.

The Lubrizol Corporation, a Berkshire Hathaway company, is an innovative specialty chemical company that apart from its production develops and supplies technologies to customers in the global transportation, industrial and consumer markets. Lubrizol is providing innovative solutions for its customers high-performance application needs and remains committed to ongoing investment in its CPVC capabilities that support future growth. With headquarters in Wickliffe, Ohio, Lubrizol owns and operates manufacturing facilities in 17 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 8,000 employees worldwide.
MRC

Global сhemicals output rebounds in June

MOSCOW (MRC) -- Data collected and tabulated by the American Chemistry Council (ACC) show that due to growth in China, global chemicals production rose by 0.6 percent in June, an improvement from the 0.5 percent decline in May, said Americanchemistry.

Production has been declining throughout this year, with the last monthly gain occurring in December 2019. During June, chemical production fell in major regions except Asia-Pacific. Headline global production was off 7.2 percent year-over-year (Y/Y) on a three-month moving average (3MMA) basis and was off 7.4 percent from the peak December level. Global output stood at 109.8 percent of its average 2012 levels.

During June, global capacity was stable and was up 2.6 percent Y/Y. With improving production, capacity utilization in the global chemical industry increased by 0.5 points to 75.3 percent. This is down from 83.2 percent last June and below the long-term (1987-2017) average of 86.5 percent.

Among chemical industry segments, June results were generally positive, with gains in segments except bulk petrochemicals and organics and coatings providing support. Compared with a year earlier, growth was absent in all segments, with a strong decline in coatings.

ACC’s Global Chemical Production Regional Index (Global CPRI) measures the production volume of the chemical industry for 33 key nations, sub-regions, and regions, all aggregated to the world total. The index is comparable to the Federal Reserve Board (FRB) production indices and features a similar base year where 2012=100. This index is developed from government industrial production indices for chemicals from more than 65 nations accounting for about 98 percent of the total global chemical industry. This data set is the only timely source of market trends for the global chemical industry and is comparable to the U.S. CPRI data, a timely source of U.S. regional chemical production.

As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six 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-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.
MRC

SIBUR reports H1 2020 IFRS results

MOSCOW (MRC) -- PJSC SIBUR Holding, the largest integrated petrochemicals company in Russia, today publishes its operational and financial results for the three and six months ended 30 June 2020 in accordance with International Financial Reporting Standards (IFRS), said the company.

ZapSibNeftekhim continues to increase production volumes. In the first half of 2020, the complex produced 206 thousand tonnes of polypropylene and 507 thousand tonnes of polyethylene. Sales of polypropylene grew by 81.6% compared to the first half of 2019, and sales of polyethylene increased by more than 100%.

Revenue decreased by 11.6% year-on-year on the back of negative price dynamics in most product groups, which was partially offset by a 58.2% increase in the Olefins & Polyolefins segment due to increased sales of polypropylene and polyethylene.

EBITDA decreased by 14.2% year-on-year as the spreads of most product groups narrowed due to negative price dynamics. The EBITDA of Olefins & Polyolefins segment increased by 37.2% as a result of growth in sales volumes of polypropylene and polyethylene from ZapSibNeftekhim which was partially offset by lower prices in the period.

EBITDA margin was 31.4%, remaining at a consistently high level relative to the industry average.

Net cash flow from operating activities amounted to RUB 60.1 billion, up 8.9% compared to the first half of 2019 due to a significant reduction in income tax expenses as a result of a loss on exchange differences stemming from the weakening of the RUB exchange rate.

As it was written earlier, SIBUR diversified its export supplies of polypropylene and polyethylene to China by leveraging Russia’s rail transportation infrastructure. Until 2020, the Company mainly relied on sea transportation to ship its products to the region.

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

BP petchem earnings decline, sale to Ineos on schedule for completion before end of year

MOSCOW (MRC) -- BP reports a 43% year-on-year (YOY) decline to USD47 million in second quarter earnings for its petrochemicals business, which remains on schedule to be sold to Ineos for USD5 billion before the end of the year, reported Chemweek.

BP says it received proceeds from divestments and other disposals in the quarter of USD1.1 billion, including “the first payment from the agreed sale of BP’s petrochemicals business to Ineos.”

The oil and gas major reports a group net loss of USD16.8 billion for the second quarter, compared with a profit of USD1.8 billion in the prior-year period, including a net post-tax charge of USD10.9 billion for non-operating items. This includes USD9.2 billion in post-tax non-cash impairments, arising mainly from revisions to its long-term oil and gas price assumptions, and USD1.7 billion of post-tax non-cash exploration write-offs, according to the company. Group sales plunged to USD31.67 billion, down from USD72.68 billion a year earlier.

Underlying replacement cost profit before interest and tax of USD47 million for its petchems segment in the quarter reflected a weaker margin environment and the impact of COVID-19, partly offset by lower turnaround activity, according to BP. For the first six months of 2020, the petchems business reported earnings of USD112 million, down 55% YOY. BP does not include results from its Gelsenkirchen and Mulheim sites in Germany in its petchems earnings and is not selling these facilities.

BP announced the sale of its petchems business to Ineos in June, with the net assets now classified as held for sale in the group balance sheet and the transaction expected to complete before the end of the year, subject to approvals, it says.

The company’s total petchems production declined slightly YOY in the second quarter to 2.93 million metric tons. BP’s US petchems output fell to 410,000 metric tons from 584,000 metric tons a year earlier, while its European production rose slightly to 1.25 million metric tons. Petchems output in its other facilities worldwide also increased marginally to 1.27 million metric tons.

In BP’s downstream segment, which includes its petchems business, it says the second quarter “saw the weakest industry refining environment in over 15 years, and an unprecedented fall in product demand driven by COVID-19.” While refining operations in the quarter were strong, with BP-operated refining availability of 95.6%, demand destruction resulted in lower utilization, it says. Downstream replacement cost profits before interest and tax for the quarter and half year were $594 million and USD1,258 million, respectively, down from USD1.29 billion and USD3.05 billion for the equivalent periods last year.

“Looking to the third quarter of 2020, we expect higher product demand, albeit still significantly below last year’s levels. We also expect significant continued pressure on industry refining margins into the third quarter,” BP says.

BP’s CEO, Bernard Looney, says the company aims to pivot to a low-carbon energy and customer focus, with a 10-fold increase in low-carbon investments to about USD5 billion by 2030. It will reduce its oil and gas production by 40% (about 1 million boe/d) to 1.5 million boe/d by 2030 through active portfolio management, with refining throughput expected to fall from 1.7 million b/d in 2019 to about 1.2 million b/d. No upstream exploration will be carried out in new areas and it will reduce its operations emissions by up to 35% by the end of the decade.

“Energy markets are fundamentally changing, shifting towards low carbon, driven by societal expectations, technology and changes in consumer preferences,” says BP chairman, Helge Lund.

As MRC wrote previously 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.

And 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 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