Ineos confirms big sequential improvement in third-quarter earnings

MOSCOW (MRC) -- Ineos has provided a trading update and says that, based on unaudited management information, its third-quarter EBITDA was EUR431 million (USD509 million), down from EUR514 million in the third quarter of 2019 but significantly up from EUR260 million in the second quarter of 2020, according to Chemweek.

“Overall core market conditions for all of the businesses are now improving from the lows seen in the second quarter,” the company says. “The second quarter of 2020 was the low point of the current crisis. Since then countries across the world have opened up their economies after lockdown and market conditions have gradually improved during the third quarter. The automotive and durables sectors are still weak, but are now slowly improving, and there are encouraging signs from the construction sector.”

Ineos’s olefins and polymers (O&P) North America business reported third-quarter EBITDA of EUR123 million, down from EUR215 million a year earlier. Ethylene markets remained stable, although margins reduced in the quarter due to lower spreads over raw material costs and the impact of increased industry capacity on supply/demand balances, Ineos says. Polymer demand was generally solid and continued to strengthen during the quarter, aided by strong consumables demand and improving automotive and durables markets. Margins remained relatively weak as the business continued to recover from the crisis, the company says.

The O&P Europe business reported EBITDA of EUR135 million, down from EUR159 million in the prior-year period. Demand in the ethylene market remained stable in the quarter, although demand for butadiene was weak as a result of the general slowdown in the automotive sector, Ineos says. Margins were lower due to weak demand, particularly for butadiene and benzene, and reduced prices in the quarter. European polymer demand was relatively balanced, with strong food and packaging markets and gradual improvements in the construction and automotive sectors, the company says.

The chemical intermediates business reported an increase in third-quarter EBITDA to EUR173 million from EUR140 million a year earlier. All the businesses in the chemical intermediates segment saw an improvement in performance as the quarter progressed, Ineos says.

Ineos says it has “implemented a number of measures to conserve cash during this uncertain period.” These include policies to control all discretionary fixed costs. The company has also reviewed all capital projects in each of the businesses and taken decisions to defer or reduce discretionary expenditure and scheduled turnarounds where it is safe to do so. Further details have not been disclosed.

All Ineos sites have continued to operate fully during the pandemic and supply chains have operated without significant disruption, the company says.

As MRC informed previously, Ineos, one of the world’s largest manufacturing companies halted operations at its No. 1 olefins unit at Texas cracker for maintenance on September 18, 2020 owing to technical issues. Further details on duration of the shutdown could not be ascertained. Located at Chocolate Bayou in Texas, the No. 1 olefins unit has an ethylene production capacity of 1.07 million mt/year and propylene production capacity of 235,000 mt/year.

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.

Ineos is a global manufacturer of petrochemicals, specialty chemicals and oil products employing 22,000 people. It has 34 businesses, with a production network spanning 183 manufacturing facilities in 26 countries.
MRC

Synthomer to close SBR plant in Finland

MOSCOW (MRC) -- Synthomer (Harlow, UK) says it has decided to close its styrene-butadiene-rubber (SBR) production site at Oulu, Finland, by the end of the first quarter of 2021, said Chemweek.

The company confirmed in August that it was in a consultation process with employees at Oulu concerning future options for the facility. Meanwhile, consultations are continuing at Synthomer’s Marl, Germany, SBR site with an outcome expected in the fourth quarter. Synthomer earlier launched a review of its SBR business. The company says it “remains committed” to the SBR market in Europe and is “confident of being able to service customers from its Central European asset base."

Synthomer also says that its new 60,000-metric tons/year nitrile butadiene latex capacity at Pasir Gudang, Malaysia, is on schedule for start-up in the fourth quarter of 2021. The plant’s current capacity is 90,000 metric tons/year. Synthomer made the announcements as part of a recent third-quarter update that it says shows “strong trading momentum across all three business divisions.” As a result, the company has raised its full-year EBITDA guidance by 10%.

Volumes and margins at the company’s performance elastomers business are ahead of the prior-year period reflecting strong demand in nitrile butadiene latex following the COVID-19 pandemic and improved conditions in SBR through the third quarter, the company says. The functional solutions business continued to benefit from the integration of Omnova Solutions and is trading ahead of the year-earlier period although some market sectors are demonstrating stronger resilience than others, Synthomer says. The performance of the industrial specialties business continued to improve in the third quarter following a weaker second quarter impacted by COVID-19. Current run-rate volumes and margins are on or above prior-year levels, the company says.

Synthomer’s revised guidance is for 2020 EBITDA of about GBP232 million (USD302 million), 10% higher than the forecast made in August of GBP211 million, which was at the time broadly in line with analysts’ consensus estimate.

The company says that the integration of Omnova is proceeding ahead of schedule. Synthomer confirms expected synergies leading to annualized cost cuts of USD20 million by the end of this year, up from a previous assumption of USD15 million, and USD40 million by the end of 2022, up from USD30 million.

"This is a very encouraging performance with all business divisions performing ahead of prior year,” says Calum MacLean, CEO of Synthomer. “Alongside this strong momentum, we have made significant strategic progress, with a decision to close our site in Oulu and the integration of Omnova continuing ahead of our initial expectations. This underpins our confidence for the remainder of this year and beyond."

According to MRC's ScanPlast report, September total production of unmixed PVC grew to 86,000 tonnes from 75,500 tonnes a month earlier, SayanskKhimPlast and RusVinyl increased their capacity utilisation. Overall output of polymer were 718,500 tonnes in the first nine months of 2020 versus 720,500 tonnes a year earlier, only two producers raised their production volumes, and RusVinyl cut its output.
MRC

West Virginia Methanol announced USD350 million investment for new plant

MOSCOW (MRC) -- West Virginia Methanol has selected a site in Pleasants County in northern West Virginia, USA for a USD350 million methanol plant, according to Kemicalinfo with reference to Washington Times.

The plant will produce 900 metric tons per day of high-purity methanol from natural gas in the Appalachian Basin.

West Virginia Methanol, with headquarters in Charleston, West Virginia, is working on permitting and final design details.

It expects to make a final investment decision on the project near Parkersburg, West Virginia, in the first half of 2021. Operations could begin as early as mid-2023, officials said.

The company said it will use a technology developed by Haldor Topsoe to produce methanol in three units at the plant.

The plant site has access to roads, railroad and river transportation and is near a major natural gas pipeline. Other required utilities are on site or nearby, the statement said.

Methanol is used in chemical industry production and is a mainstay in the automotive industry as a fuel blend. Its diverse use also includes the making of plastics and plywood.

As MRC reported earlier, in late April, 2020, the first phase of Connell Chemical Industry Ltd.'s 600 KTA MTO complex, a 300 KTA MTO plant, successfully started up and produced on-spec ethylene and propylene. This project is the first large-size chemical project brought online during period when China was in the process of restarting the economy while fighting COVID-19 pandemic. The MTO plant started feed-in at 8:18 AM on April 15, produced on-spec propylene at 7:00 AM on April 18, and produced on-spec ethylene at 4:00 AM on April 20.

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

US oil refineries slow as gasoline demand softens

MOSCOW (MRC) -- By restricting crude processing and focusing on making gasoline, US petroleum refiners have made progress in reducing excess stocks of middle distillates such as diesel and heating oil, reported Reuters.

In the first half of October, however, the strategy has been challenged by softening domestic gasoline consumption, forcing them to make even deeper cuts in crude processing in an effort to stay on track.

The volume of gasoline supplied to domestic users fell in both the two most recent weeks, interrupting the previous recovery, according to estimates from the US Energy Information Administration.

Gasoline supplied to domestic users is now 9% below the previous five-year average, from a deficit of 4% at the start of the month.

In a sign of weak consumption, inventories increased by 2 million barrels last week, the largest one-week increase since the end of May, reversing the previous downward trend.

Gasoline refining margins have fallen to USD7 per barrel, from USD9 earlier in the month, reversing the previous upward trend, based on futures prices for deliveries in December.

Refiners have attempted to limit the build up in gasoline inventories by making even deeper reductions in crude throughput and gasoline production.

Crude processing was 16% below the five-year seasonal average last week, down from a deficit of 13% the previous week, and again reversing an improving trend.

The refiners' strategy has proved broadly successful, bringing gasoline stocks down to the five-year average, and gradually reducing the surplus of both crude and distillates.

But progress has been slow and total stocks outside the strategic petroleum reserve are still 113 million barrels or nearly 9% above the five-year average.

Globally, oil consumption has not recovered fast enough to absorb the increase of 2 million barrels per day in crude oil production scheduled by OPEC+ for the start of next year.

Saudi Arabia, Russia and their OPEC+ partners will almost certainly have to postpone the increase for at least three months until the start of April, or risk increasing stocks again.

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

Indian Oil broadens scope of Gujarat refinery expansion plans

Indian Oil broadens scope of Gujarat refinery expansion plans

MOSCOW (MRC) -- Indian Oil Corp. Ltd. (IOC) has approved the addition of a petrochemical and lube integration component to its previously announced and long-planned project that will expand crude oil processing capacity of its 13.7 million-tonne/year Koyali refinery at Vadodara in India’s western state of Gujarat, said OGJ.

Approved by the company’s board in late September, the revised 178.25-billion rupee expansion and petrochemical-lube integration project will increase crude processing capacity of the refinery by 4.3 million tpy to 18 million tpy as well as result in proposed production of 500,000 tpy of polypropylene and 235,000 tpy of lube oil base stock at the site, IOC said in filings to India’s National Stock Exchange Ltd. and BSE Ltd.

Inclusion of the petrochemical-lube integration component comes as part of IOC’s strategy to create a building block for future production of niche chemicals with a potential to increase petrochemical and specialty products integration index on incremental crude throughput to improve margins, according to the operator.

Previously slated for completion by yearend 2022, and aimed at improving the refinery’s energy performance as well as its ability to meet growing regional demand for finished products, the expansion and reconfiguration project also aims to equip the plant with greater flexibility to weather future disruptions in the supply-demand scenario and more closely integrate its production with downstream petrochemical units).

IOC—which during the last year completed its Bharat Stage (BS) 4 and BS 6-grade (equivalent to Euro 5 and Euro 6-quality) fuels to enable Gujarat to produce Bharat Stage (BS) 4 and BS 6-grade (equivalent to Euro 5 and Euro 6-quality) fuels in line with the Indian government’s Auto Fuel Policy 2025 calling for 100% BS 6-quality fuel production—now plans to fully commission the long-awaited expansion and accompanying BS 6 fuel upgrading projects at the refinery during 2024-25, the operator said in its recent 2019-20 annual report to investors.

The linked table presents an overview of the Gujarat refinery’s proposed major unit capacities—including additions and revamps—following the planned expansion.

As MRC informed earlier, IOC is expanding its petrochemical capacity by more than 70 per cent from its current 3.2 million tonnes a year. It is also on new technologies that reduces the cost of producing petrochemicals.

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.

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