Hanwha loses to Chevron in a bid to acquire 50% stake in US-based ethane cracker

MOSCOW (MRC) -- Hanwha Group has lost to US-based chemical company Chevron Phillips in a bid to acquire a 50% stake in global chemical company Sasol’s ethane cracking center (ECC) located in Louisiana, for which the South Korean conglomerate offered more than USD3 billion, according to Korean Investors.

Hanwha’s offer was believed to be much lower than Chevron’s bidding price in the competition which attracted other energy giants such as ExxonMobil, LyondellBasell, and Ineos. The heated rivalry eventually hiked up the price to 4 trillion won (USD3.3 billion), double the initial projection.

“Not only was there a significant price gap between Hanwha and Chevron, but the tables turned for good when Chevron eagerly accepted selling terms,” explained a source familiar with the deal on August 6.

Hanwha Solutions, the chemical arm of Hanwha Group, was one of the final and the only Korean bidder in the official tender. Other local bidders including LG Chem and private equity firm SJL Partners dropped out after the preliminary bid.

Hanwha was quite active in its efforts, creating a consortium with Daishin PE to raise about 2 trillion won. The company had planned to raise the remaining 2 trillion won in acquisition financing from multiple commercial banks.

Sasol has actively invested in the Lake Charles ECC complex in the US since 2014, injecting over USD12 billion in the development process which significantly increased the company’s debt.

Earlier in March, Sasol announced that it would consider selling some of its assets as part of the company’s measures to address financial challenges intensified by the global pandemic and the decline in oil and chemical prices.

This offered an attractive opportunity for industry peers to acquire a valuable asset at a modest price given that the 50% stake was valued around late 2 trillion at an early stage.

Hanwha was keen on acquiring a stake in Sasol to diversify its business structure. The Korean conglomerate operates a naphtha cracking center (NCC) which distills crude oil to extract the naphtha required for ethylene. The company had taken a growing interest in ECC because it uses shale gas to make ethylene which is cheaper and less volatile in production costs compared to naphtha.

Meanwhile, there had been concerns regarding the deal as it posed burdensome conditions for local players. When determining assets for sale, Sasol decided to sell mostly general products such as ethylene instead of high-value-added products within the ECC complex which prompted LG Chem to drop out of the bid.

There were also concerns about post-merger integration given that it would be difficult for domestic companies to control local staffing compared to global chemical companies that have more resources.

As MRC reported earlier, Sasol's world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. SasolпїЅs new cracker, the heart of LCCP, is the third and most significant of the seven LCCP facilities to come online and will provide feedstock to our six new derivative units at the company"s Lake Charles multi-asset site.

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.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.

Hanwha Group is one of the largest business conglomerate in South Korea. Founded in 1952 as Korea Explosives Inc., the group has grown into a large multi-profile business conglomerate, with diversified holdings stretching from explosives, their original business, to retail to financial services.
MRC

Sinopec Zhongyuan to resume production at its cracker in Henan

MOSCOW (MRC) -- Sinopec Zhongyuan Petrochemical, part of Sinopec Group, is in plans to bring on-stream its cracker following a maintenance turnaround, according to Apic-online.

A Polymerupdate source in China informed that, the company is likely to resume operations at the cracker by mid-September, 2020. The cracker was shut for maintenance on August 1, 2020.

Located at Henan in China, the cracker has a ethylene capacity of 220,000 mt/year and propylene capacity of 95,000 mt/year.

Zhongyuan Petrochemical also has polyethylene (PE) production capacity of 260,000 tonnes per year and polypropylene (PP) capacity of 160,000 tonnes per year at the same site. Besides, the company also plans to carry out maintenance on its 600,000-tonnes-per-year methanol to olefins (MTO) unit during the period of July 24 to Oct. 22.

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.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

Crude runs rate in Japan at 71.8%, highest in 16 weeks

MOSCOW (MRC) -- Japan's crude run rates in the week of Aug. 8-15 shot up to 71.8%, the highest in 16 weeks during the country's peak summer holiday season, supported by the rise in gasoline and jet fuel demand for travel, reported S&P Global.

The Aug. 8-15 crude throughput was up from 64.4% over August 2-8 as Japanese refiners boosted their crude throughput volume by 11.6% week on week to 2.53 million b/d in the week to Aug. 15, data released Aug. 19 by the Petroleum Association of Japan showed.

The crude run rates were the highest since the week of April 19-25 when it stood at 70.1%.

The higher crude throughput and run rates came as Japan's estimated gasoline shipments jumped 23% week on week to 5.47 million barrels, with jet fuel shipments surging 82.7% week on week to 489,809 barrels, according to S&P Global Platts calculations based on the PAJ data.

Japan's largest refiner, Eneos, also restarted its sole 145,000 b/d crude distillation unit at the Sendai refinery in the northeast on Aug. 12, following a recent shutdown as a result of glitches at secondary units.

On Aug. 19, PAJ released two sets of weekly petroleum statistics for August 2-8 and August 9-15 after the country's summer holiday season.

As MRC wrote previously, Eneos Corporation (formerly known as JXTG Nippon Oil & Energy) restarted its fluid catalytic cracker (FCC) unit in Japan on 14 August, 2020. Initially it was scheduled to resume operations on 10 August. The company halted operations at this unit on July 28, 2020. Located at Sendai, Japan, the FCC unit has a propylene capacity of 100,000 mt/year.

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

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.
MRC

Mitsubishi Gas Chemical to start maintenance at MMA plant in Japan

MOSCOW (MRC) -- Mitsubishi Gas Chemical Cos (MGC), is likely to take off-stream its methyl methacrylate (MMA) plant for a turnaround, as per Apic-online.

A Polymerupdate source in Japan informed that, the company is likely to halt operations at the plant on August 24, 2020. The plant is expected to remain off-line for about two months.

Located at Niigata in Japan, the MMA plant has a production capacity of 40,000 mt/year.

We remind that, as MRC reported before, Rohm (Darmstadt, Germany) says it will shut down its MMA plant at Worms, Germany, for over three weeks in September for planned maintenance. The plant will be closed on 7–30 September. Located in Worms, Germany, the plant has a production capacity of 225,000 mt/year.

The principal application, consuming approximately 75% of the MMA, is the manufacture of polymethyl methacrylate acrylic plastics (PMMA). Methyl methacrylate is also used for the production of the co-polymer methyl methacrylate-butadiene-styrene (MBS), used as a modifier for polyvinyl chloride (PVC).

According to MRC's ScanPlast report, Russia's overall PVC production reached 557,000 tonnes in the first seven months of 2020, up by 1% year on year. Only three Russian producers managed to increase their output.

Mitsubishi Chemical, a Japanese integrated chemical company, was formed on October 1, 1990 through the merger of Mitsubishi Kasei and Mitsubishi Petrochemical Co. Due to its wide range of activities, it is one of the ten leading chemical companies in the world.
MRC

Lummus technology announces successful start-up of CDTaee Bio-ethers unit

MOSCOW (MRC) -- Lummus Technology announced the successful start-up of its CDTaee unit for Hellenic Petroleum’s refinery in Aspropyrgos, Greece. For this start-up, the existing CDTame unit was revamped to the latest generation of CDTaee technology for bio-ethers production, said Hydrocarbonprocessing.

The new CDTaee unit will not only help Hellenic meet its biofuel requirements in Greece, but also resolve blending constraints and produce a high-octane gasoline-blending component, TAEE (Tertiary Amyl Ethyl Ether). Hellenic Petroleum has now started to use the TAEE product in their gasoline blends that it sells in their respective markets.

"The start-up of our latest generation CDTaee technology is an excellent example of how Lummus offers innovative sustainability solutions to our customers,” said Leon de Bruyn, President and Chief Executive Officer of Lummus Technology. “We help our customers such as Hellenic Petroleum produce cleaner fuels that are more efficient and perform at a higher level to meet stringent environmental standards."

The latest generation of the CDTaee process is part of Lummus’ etherification technology portfolio, where the company has a leading position with over 140 references. In the CDTaee process, TAEE is formed by the reaction of isoamylenes, which are present in light FCC naphtha, with bio-ethanol. The CDTaee process is unique in that extremely high isoamylene conversion can be achieved through a proven, novel process design.

As MRC informed earlier. Haldia Petrochemicals (HPL), a flagship company of The Chatt­erjee Group (TCG), alo­ng with its international partner Rhone Capital has acquired US-based Lummus Technology at an enterprise value (EV) of USD2.725 billion (around Rs 20,590 crore) from McDermott International. In the joint acquisition, HPL’s share is at 57 per cent, the balance would be held by Rhone Capital. Under the new dispensation, Lummus Technology wou­ld function as a ‘standalone’ autonomous entity.

As MRC informed earlier, in late March 2020, India's private-sector Haldia Petrochemicals (HPL) shut its naphtha cracker after ports in the country declared force majeure to prevent the spread of the coronavirus.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC