Dow posts slight loss as results improve from pandemic lows

MOSCOW (MRC) -- Dow reported a loss of USD1 million in the third quarter as results rebounded significantly from second-quarter pandemic lows. The company reported earnings of USD347 million the same year-ago quarter and a loss of USD217 million in the second quarter, said Chemweek.

Net sales were USD9.7 billion, down 9.8% YOY and up 16% sequentially from the second quarter. Reported adjusted earnings were 50 cts/share, down 46% YOY but well above analyst estimates of 33 cts/share on resilient demand in plastics and home care, improved demand in durables, and expense reductions, which were offset by lower price and margin compression. “We increased our operating rates to match rising demand as the recovery gained momentum,” said Dow CEO Jim Fitterling. “In polyethylene, we achieved pricing gains of 12% over the prior quarter as demand for packaging remained resilient, and in polyurethanes, we delivered higher volumes and margins underpinned by improving consumer durable demand."

Volume declined 1% YOY. Sequentially, volume increased 9% from the second quarter with all operating segments and regions delivering gains on improved demand across furniture & bedding, appliances, packaging, construction and automotive end markets.

Recovery is expected to continue in the fourth quarter with typical seasonality as economic indicators signal momentum broadening, said Dow president and CFO Howard Ungerleider. Significant capacity remains offline from US storm impacts and other unplanned outages and tight market conditions should support upward pricing and margins, Dow said.

"We enter the fourth quarter with sequential momentum, improved financial flexibility, and a consistent focus on cash," said Fitterling. "Although the third quarter rebound was significant, the recovery has been uneven across markets, and we expect this will continue in the near term."

Packaging and specialty plastics segment revenue was USD4.6 billion in the third quarter, down 10% on weaker prices. Segment volume was up 1% YOY on plastics demand growth. Operating EBIT was USD647 million, down 19% YOY as cost savings and volume gains were more than offset by margin compression.

Industrial intermediates and infrastructure segment revenue was USD3.1 billion, down 9% YOY. Volumes were down 3% YOY on reduced demand in automotive, industrial and energy. Segment operating EBIT of USD104 million was down 46% YOY on weaker demand and margin compression.

Performance materials and coatings segment sales was USD2 billion, down 11% YOY. Volume was down 5% as home care and DIY coatings growth was more than offset by declines in automotive, construction, and oil and gas markets. Operating EBIT of USD75 million was down 63% on margin compression in siloxanes and reduced demand.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.




MRC

Crude futures fall as US gasoline stock build overshadows crude drawdown

MOSCOW (MRC) -- Crude futures dipped during mid-morning Asian trade Oct. 22 as data from the Energy Information Association indicated that the US' downstream demand remains weak and on persistent concerns over the the ramp-up in Libyan oil production, reported S&P Gllobal.

At 10.41 am Singapore time (0241 GMT), ICE Brent December crude futures were down 21 cents/b (0.5%) from the Oct. 21 settle to USD41.52/b, while the NYMEX December light sweet crude contract was down 25 cents/b (0.62%) at USD39.78/b. Both international crude markets had plunged 3.31% and 4.00% to settle at USD41.73/b and USD40.03/b, respectively, on Oct. 21.

Market analysts attributed the falling prices to worse-than-expected Oct. 21 data from the EIA, with a 1.9 million-barrel climb in US gasoline inventories in the week ended Oct. 16 grabbing headlines. According to the EIA, US gasoline stocks stand at 227.02 million barrels, 1.6% above the five-year average.

In contrast, the American Petroleum Institute had reported on Oct. 20 a 1.6 million-barrel draw in gasoline inventories for the week ended Oct. 16, in line with analysts' forecasts in a poll by S&P Global Platts.

Furthermore, EIA's proxy for demand -- total refined product supplied -- dropped 1.36 million b/d to 18.11 million b/d, driven by lowered demand across all product categories.

Total gasoline demand fell 290,000 b/d on the week to 8.29 million b/d, the lowest since the week ended June 12, while distillate demand shrank 590,000 b/d to 3.59 million b/d, a five-week low.

"The most devastating read for oil prices was that gasoline consumption is weakening, which then fuses with the sum of all fears that COVID-19 is again starting to impact consumer behavior at the pump negatively," Stephen Innes, chief market strategist at AXI, said in an Oct. 22 note.

At 10.41 am Singapore time, the NYMEX November RBOB contract was trading 0.72 cents/gal (0.63%) lower than the Oct. 21 settle at USD1.1331/gal and November ULSD contract was down by 0.68 cents/gal (0.59%) at USD1.1335/gal.

Meanwhile, the EIA's report of a 1 million-barrel fall in US commercial crude inventories to 488.11 million barrels did little to assuage the markets, as the draw did not necessarily indicate improved fundamentals and could instead be attributed to lingering effects of Hurricane Delta, which had shuttered almost 92% of the US Gulf Coast's offshore production.

The drawdown in crude inventories also fell short of analyst expectations, who had forecast a weekly decline of 1.9 million barrels.

Edward Moya, senior market analyst at OANDA, surmised in an Oct. 22 note: "A somewhat bullish EIA crude oil inventory report couldn't help oil prices at all."

Meanwhile, supply side concerns persisted after Platts reported on Oct. 20 that the 70,000 b/d Abu Abttifel oil field in Libya had resumed production and that output at the Sharara oil field, the country's largest, had climbed to 160,000 b/d since it restarted production on Oct. 11.

ANZ said in an Oct. 22 note: "The oil market is also having to contend with rising supply. Libya's crude output will rise to 560,000 b/d by the end of the month and reach 1 million b/d by year-end, according to [Libyan] deputy premier (Ahmed Maiteeq)."

The rapid recovery in Libyan production raises concerns of a supply glut, especially considering that demand is subdued amid the coronavirus pandemic, and that OPEC+ has made no definite comments yet over whether the alliance will proceed with the 2 million b/d relaxation in production cuts scheduled for 2021 onwards.

As MRC informed earlier, global oil demand is forecast to peak by around 2040 because transport-fuel demand will decline steeply and economic growth will slow in the post-coronavirus world, the Institute of Energy Economics, Japan, said in its annual IEEJ Outlook 2021 on Oct. 15.

We remind that global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

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 ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

Evonik profit, sales fall in third quarter, beats consensus

MOSCOW (MRC) -- Evonik Industries has reported preliminary adjusted net profit in the third quarter of EUR186.0 million (USD217.7 million), a decline of 4.6% year on year (YOY) but beating analysts' consensus estimates by EUR18 million, reported Chemweek.

Sales totaled EUR2.92 billion, down 9.6% YOY, while adjusted EBITDA was EUR519 million, EUR24 million or 4.4% less than in the prior-year period, but €48 million higher than the consensus estimate of EUR471 million, as compiled by Vara Research. "This result is clearly above market expectations and is therefore pre-released today," it says.

During the third quarter, an improving month-on-month trend became apparent, which further accelerated in September and produced the better-than-expected results, according to Evonik. The main drivers were the specialty additives and smart materials divisions, it says. Specialty additive sales fell by 10% YOY to EUR777 million, while adjusted EBITDA declined by 8% to EUR214 million, but beating consensus. Sales of smart materials declined 5% YOY to EUR790 million, with adjusted EBITDA dropping 13% to EUR137 million, also beating analysts' consensus expectations.

Evonik’s nutrition and care business recorded sales that were 2% lower YOY at EUR715 million, but with an 18% increase in adjusted EBITDA to EUR140 million, slightly below consensus. Sales of its performance materials decreased 27% YOY to EUR444 million, with adjusted EBITDA down 43% to EUR28 million, beating consensus.

The company has also provided an updated outlook for 2020, saying it now expects adjusted EBITDA to be in the range EUR1.8–2.0 billion, compared with EUR2.15 billion in 2019. The sales outlook remains unchanged at EUR11.5–13.0 billion, compared with EUR13.1 billion in 2019, it says.

Free cash flow for the first nine months of 2020 is expected to be at least on a level with the prior-year period at around EUR417 million, despite lower earnings. For the full year, it has also increased its forecast and expects free cash flow to be around EUR700 million. This is attributed to structural cost savings implemented by the company, lower bonus and tax payments over the course of the year, and a positive development in net working capital expected for the remainder of the year, Evonik says.

The company is scheduled to publish its third-quarter financials on 3 November.

The results so far this year reflect "the benefits from the structural changes and strategic measures implemented over the last years,” says Christian Kullmann, Evonik's chairman.

As MRC reported before, Dow and Evonik have recently entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.

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

According to MRC's ScanPlast report, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.
MRC

SABIC and Schwarz Group embark on pilot project for vegetable bags made from certified circular polyethylene

MOSCOW (MRC) -- SABIC, a global leader in the chemicals industry, has embarked on a pilot project with Schwarz Group, Europe’s largest retail store operator, for the use of transparent film bags made from certified circular polyethylene (PE) in vegetable packaging, said the company.

The project will include various different PE technologies from SABIC’s TRUCIRCLE™ portfolio based on materials produced via feedstock recycling of mixed and used plastic. Through this project 1 kg bags for organic carrots, made of flexible film using SABIC’s certified circular polyethylene, will be introduced between October and December 2020 by the retail group into selected stores operating under the Lidl and Kaufland brands in Germany.

SABIC’s TRUCIRCLE certified circular polymers in the pilot project include both low-density and linear low-density polyethylene (LDPE/LLDPE), high-density polyethylene (HDPE), and SUPEER™ metallocene polyethylene (mPE) resins.

"Our comprehensive strategy is to make all Lidl and Kaufland brand plastic packaging as recyclable as possible by 2025, thereby reducing overall plastic consumption by 20 percent,” states Dietmar Bohm, Managing Director of GreenCycle, which serves as a waste management and recycling service provider for Schwarz Group and other companies. “We strive to close material cycles and save resources.

"We have taken a big step forward on our journey towards building a truly circular plastics economy since we produced the first virgin-quality polymer materials from mixed used plastic back at the start of 2019,” explains Stephan Eltink, Director Polyethylene Europe at SABIC. “Our certified circular polymers are produced as part of our TRUCIRCLE portfolio that includes a wide range of polyethylene and polypropylene material grades, that can be drop-in solutions for applications in a variety of industries, including the food packaging industry. We are happy to welcome Schwarz Group among the growing number of downstream customers seeking to capture value from material sources that have traditionally been ignored or discarded."

SABIC’s advanced feedstock recycling process recovers the material value of mixed and used plastic, including previously difficult to recycle post-consumer plastics, which could otherwise be lost to landfill or incineration. The waste is converted into an oil, which then enters the production chain just like fossil-based feedstock to deliver new materials without compromising on quality.

SABIC’s TRUCIRCLE portfolio, which showcases the company’s circular innovations and can help to provide manufacturers with access to more sustainable materials, spans design for recyclability, mechanically recycled products, certified circular products from feedstock recycling of used plastic and certified renewables products from bio-based feedstock.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE).
MRC

CNOOC successfully completes performance test for DuPont IsoTherming hydrotreating unit

MOSCOW (MRC) -- DuPont Clean Technologies (DuPont) has announced that an IsoTherming hydrotreating unit installed at the CNOOC Huizhou Refinery in Guangdong Province, China has successfully completed its performance test, certifying that the unit is meeting performance guarantees, according to Hydrocarbonprocessing.

The IsoTherming® VGO hydrotreater at CNOOC is designed to process 51,419 bpsd (2,600 kmta) of a vacuum gasoil feedstock as feed for the FCC unit. The IsoTherming® hydrotreater was designed for output of <1000 wppm sulfur and <600 wppm nitrogen.

The VGO hydrotreater was initially commissioned in late September 2017 but, due to the market-driven, reduced refinery throughput, the IsoTherming VGO hydrotreater ran at various lower rates until recently. The performance test results highlight the IsoTherming technology’s ability to sustain catalyst activity over a long period of time with the unit still satisfying performance guarantees.

CNOOC has indicated the IsoTherming VGO hydrotreater had a lower investment cost and offered greater than USD4,000,000 per year savings in utility costs compared to conventional trickle bed technology. This, along with sustained catalyst performance, has provided CNOOC both an economic and social benefit.

Operating costs savings in the form of reduced consumption of utilities, as well as capital cost advantages when compared to conventional technologies were key drivers for CNOOC to select the IsoTherming® technology for this project. CNOOC also chose the IsoTherming® technology for a 71,637 bpsd (3,400 kmta) ULSD hydrotreating unit (again at the Huizhou refinery) which was also commissioned in September 2017 after passing its performance test in 2018.

It’s great to see how the IsoTherming technology showcased sustained catalyst performance over the past few years with the unit still able to achieve start-of-run performance guarantees,” said Kevin Bockwinkel, global business manager, IsoTherming® hydroprocessing technology.

IsoTherming® hydroprocessing technology utilizes a novel liquid phase reactor system that is superior to conventional hydroprocessing technologies, as it uses the hydrogen and catalyst more efficiently. It also offers lower capital and operating costs compared to conventional hydroprocessing technologies in achieving the desired product quality. This technology is suitable for a wide range of applications, including kerosene hydrotreating, transmix hydrotreating, diesel hydrotreating, FCC feed hydrotreating (VGO hydrotreating), mild hydrocracking, dewaxing, gas-to-liquid (GTL) upgrading, and heavy oil upgrading for both grassroots and revamp configurations.

To date, DuPont has 27 IsoTherming® hydroprocessing technology licenses globally, of which 15 are in commercial operation. These licensed units include a diverse set of applications ranging from 100 percent kerosene to 100 percent light-cycle oil (LCO), and various mixtures of distillates and heavy gas oils, including coker blends, with capacities ranging from 1,500 bpsd to 80,000 bpsd.

Growing global demand for cleaner transportation fuel continues to drive refiners toward operations that maximize hydroprocessing capacity and capability through unit debottlenecks or new unit construction. More stringent environmental regulations and the processing of cost-advantaged sour and heavy feed stocks make meeting this demand even more challenging. Licensed and marketed by DuPont, as part of its Clean Technologies portfolio in Overland Park, Kansas, USA, IsoTherming® hydroprocessing technology provides a proven solution to meet this growing global demand.

As MRC informed earlier, China's top offshore producer CNOOC Ltd reported record-high oil and gas output of 257.9 million barrels of oil equivalent, or 1.42 million boe/d, in the first half of 2020, despite the COVID-19 pandemic dampening global energy demand.

We remind that CNOOC will trim annual investment by 10% to 15% in 2020, while maintaining its goal of increasing domestic crude oil and natural gas production for the year, according to the company's statement in May, 2020.

We also remind that in early May, 2018, China National Offshore Oil Corporation (CNOOC) and Shell Nanhai B.V. (Shell) announced the official start-up of the second ethylene cracker at their Nanhai petrochemicals complex in Huizhou, Guangdong Province, China.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

China National Offshore Oil Corporation (CNOOC), the largest offshore oil & gas producer in China. CNOOC businesses cover the main segments of oil & gas exploration and development, engineering & technical services, refining and marketing, natural gas and power generation, and financial services.
MRC