S-Oil expects fourth quarter refining margins to improve on demand for winter season

MOSCOW (MRC) -- South Korea’s S-Oil Corp said on Wednesday refining margins are expected to improve in the fourth quarter, supported by increased demand for kerosene and diesel ahead of the winter season, said Reuters.

“However, the rebound would be limited due to re-spread of COVID-19,” said the country’s third-largest refiner, whose main shareholder is Saudi Aramco, in an earnings statement. It had conducted an unplanned maintenance for its No. 2 residue fluid catalytic cracker, with 76,000 barrels per day (bpd) capacity, impacted by a typhoon in September, the company said in a conference call.

Sources had previously told Reuters the unit’s outage following typhoon Haishen had briefly lifted petrol margins. Opportunity cost lost by the shutdown was about 20 billion won, an executive said. The company plans to maintain run rate of around 80% for petrochemicals in the current quarter, while staying at the near-maximum level for the refining sector.

S-Oil expects its capital expenditure in 2021 to be at or below this year’s level as the company cannot predict its performance next year. S-Oil reported an operating loss of 9.3 billion won (USD8.25 million) for the third quarter, compared with a 231 billion won profit a year earlier but improving from a 164 billion won loss in the second quarter due to gradual demand recovery.

This was its third consecutive quarter of operating loss. Inventory-related gain was 133 billion won in July-September quarter, compared with a loss of 171 billion won in the previous quarter, it said. The company said it operated its 669,000 bpd CDUs in the southeastern city of Ulsan at 90.7% capacity on average in the July-September period, down from 99.8% in the second quarter. Shares of S-Oil were trading down 0.4% as of 0238 GMT, while the wider market was trading 0.2% lower.

As MRC informed earlier, on 4 October 4, S-Oil resumed propylene production at its Catcracking Unit N2 in Onsan (Onsan, South Korea). This plant with a capacity of 705,000 tonnes of propylene per year was closed on 7 September this year due to Typhoon Haishen (Super Typhoon Haishen).

Ethylene and propylene are feedstocks for producing 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

PE imports to Russia down by 15% in Jan-Sep 2020

MOSCOW (MRC) -- Imports of polyethylene (PE) into Russia fell by 15% year on year to 475,100 tonnes in January-September 2020. High density polyethylene (HDPE) accounted for the greatest decrease in imports, according to MRC's DataScope report.

September PE imports dropped to 46,100 tonnes from 49,500 tonnes a month earlier, with low density polyethylene (LDPE) accounting for the main decrease in imports. Overall imports of ethylene polymers totalled 475,100 tonnes in the first nine months of 2020, compared to 562,100 tonnes a year earlier. Shipments of LDPE and other ethylene copolymers increased, whereas imports of other grades of ethylene polymers decreased.

The structure of PE imports to Russia by grades looked the following way over the stated period.


September HDPE imports were 18,600 tonnes, which corresponds to the figure a month earlier. Overall imports of this PE grade totalled 202,500 tonnes in January-September 2020, down by 27% year on year. The largest decrease in supplies was due to film and pipe HDPE.

Last month's LDPE imports fell to 8,900 tonnes from 11,400 tonnes in August. Overall LDPE imports to Russia reached 83,300 tonnes in the first nine months of 2020, up by 8% year on year.

September linear low density polyethylene (LLDPE) imports reached 10,700 tonnes versus 11,300 tonnes a month earlier, local films producers reduces their purchases from the USA. Overall LLDPE imports totalled 118,300 tonnes in the first nine months of 2020, down by 13% year on year.

Last month's imports of other ethylene polymers, including ethylene-vinyl-acetate (EVA), were 7,900 tonnes, compared to 8,100 tonnes in August. Overall imports of other ethylene polymers reached 71,100 tonnes over the stated period versus 70,600 tonnes a year earlier.

MRC

BASF confirms third-quarter net loss, sequential improvement in operating profit

MOSCOW (MRC) -- BASF has announced third-quarter results in line with the preliminary figures it published on 9 October, said the company.

The company swung to a net loss of EUR2.1 billion (USD2.5 billion), compared with a net profit of EUR911 million in the prior-year quarter, on impairments totaling EUR2.8 billion due to the impacts of COVID-19 and restructuring, as previously reported. BASF group sales of EUR13.8 billion were down 5% year on year (YOY).

BASF also confirmed that third-quarter EBIT before special items (operating profit) rose sharply compared with the previous quarter, to €581 million, up by EUR355 million and beating analysts’ consensus estimate by 47%. On a YOY basis, EBIT before special items dropped 45%, due mainly to a much lower contribution from the chemicals segment.

The big sequential improvement in EBIT before special items “was mainly driven by good business development in September,” says Martin Brudermuller, chairman of BASF. EBIT including special items was minus EUR2.6 billion, swinging from EUR1.3 billion in the year-earlier quarter due to the impairments. EBITDA before special items decreased by 22% YOY to EUR1.5 billion and EBITDA dropped 54% to EUR1 billion.

The YOY decline in sales was mainly driven by negative currency effects in all segments, but especially in the agricultural solutions and surface technologies segments. Revenue fell 27% YOY in the chemicals segment due mainly to an unplanned outage at the steam cracker at Port Arthur, Texas. Higher price levels overall, primarily due to higher precious metal prices in the surface technologies segment—where sales increased 25% YOY—had an offsetting effect. Portfolio effects, especially in the materials segment from the acquisition of Solvay’s nylon business, also had a positive impact on sales. Sales of the materials business decreased 8% YOY and revenue from industrial solutions dropped 13%. BASF’s third-quarter group sales increased sequentially and were EUR1.1 billion higher than in the previous quarter.

EBIT before special items dropped in the nutrition and care segment, and materials and agricultural solutions segments. The industrial solutions and surface technologies segments posted slight decreases. Sales at BASF companies based in Europe declined by 12% YOY, primarily due to lower volumes, especially in the materials and Other segments. Compared with the prior-year quarter, sales in North America declined by 6%. This was mainly driven by lower volumes, especially in chemicals due to the cracker outage at Port Arthur. BASF’s sales in APAC improved 10% YOY. This was largely attributable to higher volumes in almost all segments. In the region South America, Africa, Middle East, sales were down 9% YOY on negative currency effects in all segments, especially agricultural solutions.

BASF notes that in the third quarter, the global industrial economy recovered from the sharp downturn in the second quarter. However, global production levels were still about 3% lower than in the prior-year quarter. The automotive industry, which was particularly strongly affected by production closures in the second quarter, was still down about 2% from the prior-year period. Demand for durable consumer goods picked up with demand for consumables such as food and care products, some of which saw stronger demand as a result of the pandemic, gradually returning to normal. However, “following the dynamic recovery effects in the third quarter, momentum is expected to slow in the remaining months of the year,” BASF says.

BASF expects in full-year 2020 a 5% decline in worldwide GDP and in industrial production, as well as a 2.5% decrease in worldwide chemical production. BASF’s forecast assumes that severe restrictions on economic activity to contain the pandemic, such as lockdowns, are not reintroduced.

The company anticipates another sequential improvement in its EBIT before special items in the fourth quarter. BASF, meanwhile, has reconfirmed its full-year forecast, made on 9 October, of a slight decline in sales to EUR57-58 billion, mainly due to weaker demand as a consequence of COVID-19. BASF also anticipates a big decrease in 2020 EBIT before special items to EUR3.0-3.3 billion. As well as weaker demand, the company expects pressure on margins to continue, especially for basic chemicals, which will be partially offset by fixed-cost savings.

As MRC informed earlier, ASF is planning to restart its 300,000-metric ton/year toluene diisocyanate (TDI) plant in Ludwigshafen, Germany, by the end of October. The company declared force majeure on 31 August after experiencing technical problems.

We remind that Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.

BASF-YPC Company Limited (BASF-YPC) is a 50-50 joint venture between BASF and Sinopec, founded in 2000, with a total investment of approximately USD5.5 billion. The integrated petrochemical site produces about three million tons of high-quality chemicals and polymers for the Chinese market annually. The products serve the rapid-growing demand in multiple industries, including agriculture, construction, electronics, pharmaceutical, hygiene, automotive and chemical manufacturing. All BASF-YPC plants are interconnected in order to use products, by-products and energy in the most efficient way, to save cost and to minimize the environmental impact. BASF-YPC posted sales of approximately CNY 19.6 billion in 2019 and employed 1,942 people as of the end of the year.
MRC

Azelis to acquire personal care products distributor in China

MOSCOW (MRC) -- Azelis is delighted to announce that it has signed an agreement to acquire 100% of the shares of Ixom’s Bronson and Jacobs Hong Kong Ltd business and its fully owned subsidiary in Shanghai (Bronson and Jacobs China), said the company.

Bronson and Jacobs China, specialized in the distribution of personal care ingredients and predominantly for skin care, represents many global principals, and has offices in Hong Kong, Shanghai and Guangzhou. The office in Guangzhou houses a personal care lab.

The acquisition of Bronson and Jacobs China, following on the acquisition of CosBond in April 2020, will additionally strengthen Azelis’ footprint in the Chinese personal care market. It will also enable Azelis to better serve several key multinational customers in China. Growth in China, the second largest economy worldwide, is a prime strategic objective for Azelis. The transaction, consistent with Azelis' corporate strategy of complementing organic growth with strategic acquisitions, is expected to close within two months.

The acquisition of Bronson and Jacobs China illustrates the support provided by EQT since the initial acquisition of Azelis. EQT is confident that the expanded range of services and global reach provided by this acquisition will continue to bring benefits to customers and principals of the combined group.

As MRC informed earlier, Azelis has opened a new application and training center in Istanbul, Turkey. This center will service the Turkish food, personal care and pharma markets and will offer product advice, formulation development and technical research. Next to that, it will host customer meetings, interactive formulation workshops, supplier meetings and internal technical trainings.

We remind that Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.
MRC

Reliance to complete maintenance at PP plant in Indian

MOSCOW (MRC) -- Reliance Industries (RIL) is on track to restart its polypropylene (PP) unit in Jamnagar, India as the company is completing the 20 days maintenance works, reported CommoPlast.

The unit was taken offline on 15 October and would come back online on 5 November 2020.

The plant has an annual capacity of 480,000 tons/year.

As MRC informed earlier, in September 2020, RIL released a detailed plan to carve out its oil-to-chemicals business into a separate entity for a potential stake sale. As per the scheme, RIL’s oil-to-chemicals (O2C) assets, including its refining, petrochemicals, fuel retail (majority interest only) and bulk wholesale marketing businesses, along with its assets and liabilities, will be transferred to a new unit. The new unit will include the refining and petrochemical plants and manufacturing assets at RIL’s Jamnagar, Dahej, Hazira, Nagothane, Vadodara, Patalganga, Silvassa, Barabanki and Hosiarpur locations.

It will also include all assets relating to RIL’s ongoing refinery and petrochemical projects that are being commissioned or near completion, the company said. RIL had officially announced its proposal to transfer its oil-to-chemicals (O2C) business to a separate entity in April.

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.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
MRC