CIA says majority of UK chemical companies expect improved stability, sales in third quarter

MOSCOW (MRC) -- A survey of UK chemical companies has revealed that 80% expect improved stability and a rise in domestic and international export sales over the next three months, with over 70% also seeing the same upward trend for exports to the EU, despite significant uncertainty remaining, said Chemweek.

The survey of its member companies by the Chemical Industries Association (CIA; London, UK) shows the majority also expect to see an improvement in capital expenditure, although around 10% of companies expect job losses and a reduction in R&D expenditure. The decline in industry sales came to a halt in the second quarter of 2020, with half of the companies surveyed now reporting “stability or improvement,” the CIA says. Exports to the EU and the rest of the world remained at current levels or improved during the quarter for half of those surveyed, as did capex and business utilization, it says. Stability and growth in employee numbers during the quarter, as well as spending on R&D, was reported by 80% of companies contacted, it adds.

"Given the huge challenges earlier in the year, it is good to see some stability has been reached. Our member data also confirms what we’ve seen in the official figures from the ONS [Office for National Statistics] for the first 5 months of the year,” says CIA chief executive Steve Elliott. “We cannot say yet that we are on an economic path to growth—the next quarter looks OK, but that is building on a very challenging second quarter and we can all see that sustained economic recovery is unlikely to be smooth or predictable."

For the next 12 months “some optimism remains but it is very hard to be clear,” Elliott says. While the majority of businesses are predicting a stronger export performance, stability, and a ramping up of new orders, production levels, and capacity utilization, “the uncertain outcome of the Brexit talks and any COVID-19 spike means the tremendous hard work shown by businesses in the sector could be at risk,” he says.

Elliott called for the UK government to deliver an autumn demand stimulus package for those manufacturing industries hit hardest by the pandemic and a successful conclusion to the trade talks between the UK and EU, including “tariff-free frictionless trade and regulatory consistency; taxation reform through a reduction in corporation tax; improved incentives for R&D, and a new green energy deal with a serious review of energy costs."

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

MOSCOW (MRC) -- According to the American Chemistry Council (ACC), the U.S. Chemical Production Regional Index (U.S. CPRI), fell by 1.1 percent in June on a three-month moving average (3MMA) basis following a 2.0 percent decline in May and a 3.0 percent decline in April, said Americanchemistry.

During June, chemical output fell across all regions, with the steepest declines in the Gulf Coast, Midwest and West Coast regions.

Deemed an essential industry by the U.S. Department of Homeland Security, chemical production eased on a 3MMA basis, with declines in segments except chlor-alkali, industrial gases, other basic inorganic chemicals, and consumer products, which were slightly higher. Within several major segments, production of some chemical materials increased, including supply chains tied to PPE and disinfection products.

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

MOSCOW (MRC) -- Brenntag says it has acquired the operating assets of Suffolk Solutions’ (Suffolk, Virginia) caustic soda distribution business. Financial terms of the deal have not been disclosed, said Chemweek.

"The business and the related terminals of Suffolk Solutions fit seamlessly into our ambitions to further link Brenntag’s caustic soda network in the eastern United States. There is great potential to strengthen our supply chain and expand our customer base in this geography,” says Steven Terwindt, Brenntag board member/North America.

Suffolk Solutions has access to a bulk terminal as well as to a rail transloading facility in Virginia. The acquired business generated sales of approximately $15.6 million in the 12 months ended 30 April 2020.

“Suffolk Solutions will strengthen Brenntag’s footprint in the Virginia market and thus will enable us to improve our logistical infrastructure throughout the region,” Anthony Gerace, managing director/mergers and acquisitions at Brenntag says. "It will provide us with greater supply flexibility, manoeuvrability, and additional storage capacity on the east coast of the United States."

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

1. Borealis net earnings decline, major project schedules to suffer slippage

MOSCOW (MRC) -- Borealis (Vienna, Austria) has reported a net profit of EUR64 million (USD76 million) for the second quarter of 2020, down 80% year on year (YOY), and says its major growth investment projects will suffer delays of between “a couple of weeks and a few months” due to the COVID-19 pandemic, reported Chemweek. The company’s 625,000-metric tons/year steam cracker at Stenungsund, Sweden, is also expected to remain offline until the fourth quarter of this year, it says, following a fire in May that saw the unit shut down and force majeure declared.





MRC

MOSCOW (MRC) -- Westlake reported second-quarter net income of USD15 million, down 87.4% year-on-year (YOY), on net sales down 20.3%, to USD1.71 billion. Earnings totaled 11 cents/share, beating analysts’ consensus estimate of 0 cents/share, as reported by Refinitiv (New York, New York), said Chemweek.

Demand declined in the quarter, as did prices, for caustic soda and downstream vinyl products, as a result of the COVID-19 pandemic and the drop in oil prices. "The second quarter of 2020 was challenging as we navigated the global COVID-19 pandemic, which significantly reduced global demand for our products, as well as a sharp decline in global oil prices,” says Westlake president and CEO Albert Chao.

Vinyls segment sales declined 19.1% YOY, to USD1.35 billion, while segment operating income was down 84.5%, to $20 million. “This decrease in income from operations versus the prior-year period was primarily due to the continued impact of COVID-19 and a sharp drop in global oil prices, which led to lower global sales prices for our major products and lower sales volumes for caustic soda and downstream vinyl products,” Westlake says.

Olefins segment sales fell 24.3% YOY, to $361 million, while segment operating income was down 69.5%, to USD25 million. “This decrease in income from operations versus the prior-year period was primarily due to lower sales prices for polyethylene resulting from the impact of COVID-19 and the drop in global oil prices, which were partially offset by higher polyethylene sales volumes and lower feedstock and fuel costs,” Westlake says.

Partially offsetting the lower prices and volumes were lower ethane feedstock and fuel costs, reduced operating and selling, general and administrative expenses as well as lower costs associated with planned turnarounds. “We are confident that Westlake is well positioned to continue to serve the needs of our customers while managing working capital, lowering our operating costs and reducing capital expenditures,” said CEO Albert Chao.

The improvement was due to higher earnings on ethylene sold to Westlake Chemical from Westlake Chemical OpCo LP (OpCo) and lower manufacturing and selling, general and administration costs, partially offset by lower ethylene production. Westlake Chemical Partners owns a 22.8% interest in OpCo, which has three ethylene production facilities in Calvert City, Kentucky, and Lake Charles, Louisiana and an ethylene pipeline.

In February 2018, as MRC informed before, Westlake Chemical announced plans to expand its capacities for the production of PVC and VCM at three of its chemical facilities. Two of the plants are located in Germany (Burghausen, Gendorf) and one is located in Geismar, Louisiana. The expansions in Burghausen and Geismar are expected to be completed in 2019. The Gendorf expansions are expected to be completed in 2020 and 2021.

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