BASF swings to net loss in Q2 on Wintershall Dea impairment

MOSCOW (MRC) -- In line with estimates, BASF SE recorded a second-quarter net loss of EUR878 million, or a loss of 95 cents per share, compared with a net income of EUR5.95 billion, or EUR6.48 per share, a year earlier, according to S&P Global.

The German chemical giant attributed the loss to a noncash-effective impairment of its Wintershall Dea shareholding amounting to EUR819 million due to a weaker outlook for oil and gas prices and revised reserve estimates.

Adjusted EPS fell to 25 cents from 83 cents a year ago. Second-quarter EBIT before special items plunged to EUR226 million from EUR995 million a year ago, with the chemicals and materials segments accounting for 70% of the decline.

Sales fell 12% to EUR12.68 billion as global lockdown measures to contain the coronavirus resulted in lower sales volumes, particularly in surface technologies, and materials and industrial solutions segments.

Cash flows from operating activities rose to EUR2.24 billion from EUR1.95 billion due to cash released from net working capital. Free cash flow increased to EUR1.52 billion from EUR965 million a year ago.

"Given the continued high level of uncertainty and low visibility surrounding economic developments, BASF still does not make any concrete statements on the development of sales and earnings for the full year 2020," the company said.

It added that third-quarter EBIT before special items is not expected to show a significant recovery from the prior three-month period due to lower demand in August and seasonal factors related to the agriculture business.

As MRC reported previously, BASF will increase its alkoxylate capacity in Asia Pacific, with its latest investment in Jinshan, China. The company has acquired land, buildings and assets of SPC, related to alkoxylates production, adjoining the BASF Jinshan site, in order to fulfil the growing demand from customers across Asia Pacific, especially China. With the current alkoxylate line in the Care Chemicals Jinshan plant running at full capacity, this acquisition will help double the capacity at Jinshan from end 2020.

We remind that BASF-YPC, a 50-50 joint venture of BASF and Sinopec, undertook a planned shutdown at its naphtha cracker on 30 April 2020. The company initially planned to start turnaround at the cracker on April 5, 2020. The plant remained under maintenance unitl 18 June, 2020. Located in Jiangsu, China, the cracker has an ethylene capacity of 750,000 mt/year and propylene capacity of 400,000 mt/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.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of EUR59 billion in 2019.
MRC

MOSCOW (MRC) -- Protective packaging maker Klockner Pentaplast Group (KP) has announced plans for a “multimillion-dollar investment” to expand its post-consumer recycled PET (rPET) extrusion capacity in North America, said Canplastics.

In an Aug. 19 statement, the company said it is still deciding on the precise location for the expansion, and will announce at a later date which of its eight North American sites is best situation for the project to serve KP’s thermoformed protein and sustainable consumer packaging customers.

"The 17,500-tonne extrusion expansion supports the increased consumer demand for curb-side recyclable options, supporting closed loop packaging, and a circular economy," KP’s statement said.

"As major brands announce robust, sustainability initiatives that includes post-consumer and recyclable packaging, KP will be positioned to service those market needs for the foreseeable future,” said KP CEO Scott Tracey. “The extra capacity will also go a long way in supporting our company’s goals for product innovations and sustainability."

Globally, this is the fourth major expansion for KP. In March, the company announced a 30 per cent capacity expansion at their Cotia, Brazil location, and in June KP broke ground at their central Virginia location that increased it pharmaceutical films capacity by 6,000 metric tonnes.

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.

Founded in 1965, KP has 32 plants in 18 countries and employs over 5,900 people.
MRC

MOSCOW (MRC) -- Crude oil futures were higher in mid-morning trade in Asia on Aug.17 as sentiment remained buoyed ahead of a key OPEC+ production review meeting on Aug.19 despite a postponement in the US-China trade deal review over the weekend amid expectations of a continued uptick in China's US crude import, reported S&P Global.

At 11:33 am Singapore time (0333 GMT), the ICE Brent October crude futures were up 31 cents/b (0.69%) from the previous settle at USD45.11/b, while NYMEX September light sweet crude contract was up 35 cents/b (0.83%) at USD42.36/b.

"Oil remains buoyed by optimism that a sustained recovery in energy demand is underway boosted by US government data showing crude oil, gasoline, and distillate inventories all declined the week-ending Aug.7," AxiCorp chief global markets strategist Stephen Innes said in a note Aug. 17.

A delay in the meeting between US and China, which was to occur over the weekend, to review its trade agreement did not dampen investors' sentiment on expectations that China plans to continue shipping large volumes of US crude in the near-term.

"China increasing US oil imports is the most apparent trade deal reaffirmation," Innes said. "From a trade talk risk perspective, wiping down the last remnants of escalation risk is favorable for oil prices."

China's independent refineries ramped up US crude imports in July, picking up 1.37 million mt in the month, according to market information collected by S&P Global Platts earlier this month.

In addition, at least 965,000 mt of North American crude cargoes are waiting to be discharged for the private companies in August.

China's total crude imports from US, meanwhile, had jumped to an eight-month high of 143,452 b/d, or 587,118 mt, in June with expectations that US imports could rise further in July and August, analysts and traders said last month.

Oil prices moved higher ahead of a meeting this week to review OPEC+ cut agreement. The Joint Ministerial Monitoring Committee (JMCC), which is co-chaired by Saudi Arabia and Russia, is set to meet on Aug. 19 to assess compliance with quotas and recommend any adjustments to the cuts if needed.

"The OPEC+ meeting this week is expected to yield little surprises, with production curbs expected to continue as outlined in April," OCBC Bank researchers wrote in a note on Aug. 17.

OPEC and 10 allies, including Russia, had implemented the largest coordinated production cut in history of 9.7 million b/d, equivalent to about 10% of pre-pandemic demand.

The cuts have been scaled back to 7.7 million b/d from August through the end of the year and will relax even further to 5.8 million b/d from January 2021 through April 2022.

Members that exceeded their production quotas will have to make compensatory cuts in the coming months, moderating the full impact of relaxing the OPEC+ deal, ministers have said.

"Russia's Energy Minister Alexander Novak said the global oil market is stabilizing gradually, so [there is] no need to ease OPEC+ output cuts ahead of schedule," Innes said on Aug. 17.

Meanwhile, OPEC+ member Oman has reported a 13.5% month-on-month decline in its crude oil exports in July to around 778,012 b/d.

China accounted for 88.81% of the total exports in July, while India took the remaining 11.19%, the oil and gas ministry said Aug.16.

Oman's crude oil production averaged 671,275 b/d in July, down 1.85% on the month, and lower than the 682,000 b/d quota under the OPEC+ agreement for May-July. Its quota for will rise to 722,000 b/d from August through the end of the year.

As MRC informed before, Navigator Holdings (London, UK) says US ethylene exports are back on the rise, driven by recovering Asian demand and a continuing arbitrage. The company shared its assessment in preliminary second-quarter financial results released on 13 August. Ethylene shipments slowed late in the first quarter as COVID-19 lockdowns and the related global economic downturn weighed on demand, says Navigator. “However, as Asian economies restarted during the latter half of the second quarter, so too did the demand for ethylene. An upsurge in US ethylene export capacity from our([Morgan’s Point) marine export terminal, drove an uptake in cargo liftings from the second half of May onwards, positively impacting handysize ethylene tonnage.”

We remind that Enterprise Products Partners (Houston, Texas) co-loaded olefins and natural gas liquids (NGLs) twice in July, the first time such cargoes have been loaded for export from the US. A VLGC (very large gas carrier) received propane and polymer-grade propylene (PGP) simultaneously into separate compartments at the Enterprise Houston Ship Channel terminal. Another vessel took on ethane and ethylene simultaneously at the company’s Morgan’s Point facility in Houston.

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

MOSCOW (MRC) -- Indian Oil Corporation Ltd, the country’s top refiner, will restart all units at its 300,000 barrels per day (bpd) Paradip refinery in Odisha by Saturday, reported Reuters with reference to a government official.

The refinery’s maintenance shutdown has been extended by a few days due to shortage of laborers amid the COVID-19 pandemic.

“Out of about 1,400 workers and supervisors mobilized for shutdown jobs from outside, less than 400 are there,” said Sangram Keshari Mohapatra, the top bureaucrat in the district of Jagatsinghpur, where the refinery is located.

He said only two of the nine major units that had undergone shutdown have started.

“Remaining seven are being started in sequence as all are connected and start up will complete over the next two days,” Mohapatra told Reuters.

Separately, an IOC official said some secondary units have resumed operations using feedstock available with the plant, while others including the crude unit will start by Saturday.

The company did not immediately respond to a Reuters request for comment.

As MRC infromed before, Indian Oil Corp will continue to operate its refineries below capacity in 2020/21 as it sees local and overseas fuel demand remaining subdued.

We remind that 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, 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.

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

MOSCOW (MRC) -- Siam Cement Group’s (SCG) proposed flexible-feed cracker project in Vietnam is being configured to take as much as 80% propane as feedstock for production, said Vir.

The USD5.4bn Long Son Petrochemical (LSP) Complex in Vietnam’s Ba Ria-Vung Tao province “is designed to use up to 20% - 80% propane”, SCG stated in a July presentation to investors, citing low cost of this feedstock during the summer and winter seasons.

SCG’s Vietnam project progress rate was at 34% as of the first quarter and is on track to start up in 2023, SCG said. Construction stared in the fourth quarter of 2018. Under a 15-year contract signed in the second quarter of 2018 with Qatar Petroleum, an annual feedstock supply of 2m tonnes of propane + naphtha was secured for the project.

SCG’s configuration of the Vietnam cracker provide it with options to adjust feedstock based on cost advantage.

SCG expects its chemical production capacity to increase by 70% in 2023, largely on account of the Vietnam project. Apart from olefins, the project is expected to produce 1.3m tonnes/year of polyethylene (PE) and polypropylene (PP). The project is proceeding as planned and was not a casualty in SCG’s decision to expunge capital expenditures (capex) this year.

As MRC wrote previously, SCG Plastics, part of SCG, took its high density polyethylene (HDPE) plant off-stream for a maintenance turnaround on November 26, 2019. It remained under maintenance until December 14, 2019. Located in Map Ta Phut, Thailand, the plant has a production capacity of 200,000 mt/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