Eastman Chemical sales fall 8.7%, volumes improve sequentially

MOSCOW (MRC) -- Eastman Chemical reports third-quarter net earnings of USD165 million, down 38% year on year (YOY), as volumes remained lower YOY due to the COVID-19 pandemic but improved sequentially, reported Chemweek.

Adjusted earnings of USD1.57/share was down 19.1% YOY but beat the analysts’ consensus estimate of USD1.37/share, as reported by Refinitiv (New York). Net sales fell 8.7%, to USD2.1 billion. Volumes fell 5% YOY, but in end markets hit hardest by the pandemic, such as transportation, building and construction, and consumer durables, showed signs of improvement over the second quarter.

“Demand across most of our end markets improved in the third quarter resulting in 10% higher sales revenue and almost 60% higher adjusted earnings sequentially,” says Mark Costa, Eastman chair and CEO. “This performance continues to demonstrate the value of having a diverse set of end markets and the benefit of our innovation-driven growth model. We also are continuing to aggressively manage costs, enabling us to significantly mitigate the financial impact of COVID-19.”

Additives and functional products earnings before interest and taxes (EBIT) fell 25.7% YOY, to USD107 million, on sales down 10.8% US742 million. Sales revenue decreased primarily due to lower sales volume, lower selling prices, and less favorable product mix. The negative impact of COVID-19 on demand resulted in lower sales volume of products sold in transportation end markets, particularly aviation fluids and certain coatings additives. Lower selling prices were attributed primarily to increased competition in tire additives. Cost pass-through contracts also contributed to lower selling prices.

Advanced materials EBIT declined 18.9% YOY, to USD129 million, on sales down 4.2%, to USD668 million. Sales revenue decreased due to lower sales volume, less favorable product mix, and lower selling prices. Sales volume recovered to 2% below third quarter 2019 due to strong recovery in auto demand and innovation and market development, particularly for product lines in Performance Films. Specialty Plastics also continued with strong and steady performance. Lower selling prices were attributed to lower raw material prices, particularly for paraxylene used in copolyester products.

Chemical intermediates posted EBIT down 8.8% YOY, to USD31 million, on sales down 12.6%, to USD506 million. Sales revenue decreased due to lower selling prices and lower sales volume across the segment. Lower selling prices were attributed to lower raw material prices. Lower sales volume was due to planned maintenance shutdowns and also attributed to the negative impact of COVID-19 on demand.

Fibers EBIT fell 19.6% YOY, to $41 million, on sales down 5.1%, to USD206 million. Sales revenue benefited from stable acetate tow sales volume but declined due to lower textile products sales volume attributed to the impact of COVID-19 and lower acetate tow selling prices, primarily due to previously negotiated multiyear contracts.

Assuming current economic conditions continue, Eastman expects fourth-quarter adjusted earnings similar to the prior year quarter of USD1.42/share. "With demand having improved throughout the third quarter and into October, we entered the fourth quarter with solid momentum,” Costa says. “However, the resurgence of COVID-19 is increasing uncertainty in the global economic outlook, further limiting visibility for the back half of the fourth quarter.”

As MRC informed previously, Air Liquide plans to invest over USD160 million in new capacity and upgrades to support a long-term agreement under which the company will supply additional gaseous oxygen, nitrogen, and syngas to Eastman Chemical’s Longview, Texas, facility.

We remind that in 2016, Eastman Chemical's chief executive Mark Costa announced that the company wanted to reduce its surplus ethylene and commodity intermediates, but did not intend to sell its cracker in Longview, Texas.

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

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Eastman is a global specialty chemical company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in more than 100 countries. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 14,500 people around the world.
MRC

European chlorine output decline continues, caustic soda stocks shrink

MOSCOW (MRC) -- Monthly chlorine production in Europe has declined 2.2% year on year (YOY) in September to 731,111 metric tons, with the daily average output of 24,370 metric tons also slipping by 1.7% from the daily average in August this year, according to latest figures from Euro Chlor, the European chlor-alkali industry association, said Chemweek.

The monthly figure for September makes it seven months in a row that European chlorine production has fallen compared with the equivalent period last year. Production has fallen in eight out of the first nine months of 2020, apart from February.

Chlorine production capacity utilization in Europe during September fell to 77.0% from 79.4% in the prior-year period, and was 1.1% down on August’s utilization rate, it says.

Caustic soda stocks in Europe were 13.4% lower in September compared with August at 227,330 metric tons, and also down 26,737 metric tons on the prior-year monthly total of 254,067 metric tons.

Euro Chlor’s figures are drawn from the EU-27 countries plus Norway, Switzerland, and the UK. The association represents 38 companies producing chlorine in 19 countries.

Chlorine, obtained by electrolysis of sodium chloride solution, and ethylene are the main raw materials for PVC production.

According to ICIS-MRC Price report, a shortage of PVC has remained in many regions of the world for the past few months because of scheduled and unscheduled shutdowns of the plants amid strong demand, and prices have broken records for the past few years. And this situation is reflected in the Russian market. In the autumn months, Russian producers virtually maintained their prices of suspension in dollars the same for the domestic market, whereas the weakening of the rouble against the dollar boosted prices for domestic consumers. Russian producers announced a price increase of on average of Rb3,000/tonne for November deliveries.
MRC

Celanese extends terminal service contract with Dragon Crown for Nanjing integrated chemical complex

MOSCOW (MRC) -- Celanese Corporation, a global chemical and specialty materials company, has announced that its subsidiary, Celanese (Nanjing) Chemical Co. Ltd., has recently extended its long-term contract with Nanjing Dragon Crown Liquid Chemical Terminal Co. Ltd., for providing terminal services to its integrated chemical facility in the Nanjing Chemical Industrial Park, Nanjing City, in eastern China (Jiangsu Province), as per the company's press release.

Financial details of the contract were not disclosed.

Reliable terminal services are a key component of a highly efficient end-to-end supply chain. Extending this critical contract will provide Celanese’s Nanjing manufacturing facility with ongoing and reliable terminal services for the company’s acetyls chemical products.

“Dragon Crown has consistently provided Celanese with safe, compliant and reliable terminal services in China for more than a decade,” said John Fotheringham, Celanese Senior Vice President, Acetyls. “The renewal of this contract is a representation of the collaboration between the two parties and further strengthens our long-term business relationship.”

With manufacturing and distribution in all regions of the world, Celanese is a leading producer of acetic acid and other acetyl intermediate products, which are basic chemicals used in the manufacture of paints and coatings, adhesives, plastics, food packaging and construction materials.

As MRC informed earlier, Celanese has recently announced plans to add a 15,000-metric tons/year line for the production of GUR ultra-high molecular weight polyethylene (UHMWPE) at its facility in Bishop, Texas. Startup is expected by.the beginning of 2022.

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased.

Dragon Crown is an integrated terminal service provider in the PRC specialized in the storage and handling of liquid chemical products. Dragon Crown offers a comprehensive range of high-quality terminal and storage of liquid chemical services ranging from loading and discharging of liquid chemical products at Dragon Crown jetties and storage of liquid chemical products at Dragon Crown’s tank farm and delivery of such products by utilizing Dragon Crown’s dedicated pipelines and other basic terminal infrastructure. Nanjing Dragon Crown (NJDC) was incorporated April 26, 2004.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

Elkem signs three cooperation agreements with Chinese firms

MOSCOW (MRC) -- Elkem, one of the world's leading suppliers of silicon-based advanced materials, is showcasing its wide range of innovative technologies and solutions at the 3rd China International Import Expo (CIIE) 2020 in Shanghai, China. The company is signing letters of intent with three Chinese customers, said Chemweek.

“China is the most important market for Elkem Silicones. After the initial impact of Covid-19, we now see demand recovering strongly. More than 50 percent of Elkem's employees are based in China. While ensuring the safety of our employees, we have made every effort to ensure the smooth supply of products to customers, and the revenue has also grown steadily," says Frederic Jacquin, Senior Vice President of Elkem Silicones.

"We are the largest silicones producer in China and our strategy is to continue to grow and develop high-end products supporting the dual circulation strategy which is to create products and solutions with a personal touch for our Chinese customers, but also for the rest of the world", says Jacquin.

During the CIIE 2020, Elkem Silicones has signed letters of intent with three Chinese customers, with a potential total contract value of more than NOK 1,3 billion (CNY 1 billion). "Elkem Silicones has enormous confidence in the development of the Chinese market. The three new partners have signed a cooperation agreement with us, which fully reflects their trust in Elkem. We are looking forward to working with Chinese customers on advanced materials shaping the future", says Larry Zhang, Vice President of Elkem Silicones and Director of the Asia-Pacific region.

As MRC informed before, Elkem (Oslo, Norway) says it will invest 180.0 million Norwegian krone (USD19.7 million) in a new plant in Canada to pilot an industrial biocarbon process specifically for silicon and ferrosilicon production. The plant will be constructed near Elkem’s production site at Chicoutimi, Quebec, with start of construction planned for the second half of 2020, the company says. The project has received financial support from the Canadian government, the Quebec government, and the city of Saguenay, reducing Elkem’s net investment to NKr60 million.

We remind that the COVID-19 pandemic has interrupted the development of Norway's offshore oil and gas projects, pushing up costs and postponing startups, the government and oil company Equinor announced. The costs of ongoing projects rose by 13.2 billion Norwegian crowns (USD1.4 billion) from a year ago on an inflation-adjusted basis, government documents showed, as COVID-19 restrictions stalled construction at several fields. "The COVID-19 pandemic and weakened Norwegian (currency) have negatively impacted some of the projects, but the combined project portfolio is still very resilient," Equinor said in a separate statement.

We also remind that BP and Equinor confirmed they are shutting in production on their platforms, while Chevron, BHP and others said they are evacuating some personnel and considering decisions on production reductions.

As reported earlier, Chevron Phillips Chemical, part of Chevron Corporation, still has not lifted force majeure on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations. The force majeure circumstances were declared on 1 September, 2020. CP Chem operates a 420,000 mt/year high-density polyethylene (HDPE) plant in Orange, Texas, and an 855,000 mt/year cracker in Port Arthur. The company plans to minimize the impact of the event and return to full PE deliveries as soon as possible.

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

SABIC and Vopak sell minority stake in Chemtank Jubail storage terminal JV

MOSCOW (MRC) -- SABIC and Vopak Holding Terminals BV have signed an agreement with the Jubail and Yanbu Industrial Cities Company (JYIC), owned by the Royal Commission for Jubail and Yanbu (RCJY), reported Chemweek.

Under the agreement, JYIC will become a 20 percent stake partner in Jubail Chemical Storage and Services Company (Chemtank).

The agreement aims to strengthen strategic integration among the three parties to scale up collaboration between local and international organizations. The deal will help achieve the goals of the National Industrial Development and Logistics Program, a key part of Saudi Vision 2030.

Abdullah Al-Saadan, president of the Royal Commission for Jubail and Yanbu, said that JYIC enables the commission to make optimal use of its assets and achieve sustainability and efficiency.

“It invests in the development of the industrial investor logistical services sector, which plays an active logistical role in serving industries, especially petrochemicals. This will help create an attractive environment and enhance the capabilities of the business sector,” he said.

Yousef Al-Benyan, vice-chairman and CEO of SABIC, said the agreement builds on the historical partnership between SABIC and RCJY.

“It is an extension of our continuous coordination in support of the industrial sector in the Kingdom to create an appropriate environment to lay the foundation for future investment,” he said.

Al-Benyan praised the contribution of Vopak as a global player in the field.

Eelco Hoekstra, CEO of Royal Vopak, said: “The entry of JYIC cements a partnership in which the Royal Commission, SABIC and Vopak have jointly collaborated over the past 20 years to create a world-class supply chain infrastructure in Jubail and Yanbu. This sets a great platform to deliver further growth and efficiency in the Kingdom.”

We remind that, as MRC wrote before, SABIC Europe declared a force majeure on its low density polyethylene (LDPE) supplies from Wilton, the UK on November 3. The company had shut its LDPE plant for a maintenance work in the first half of October. The Wilton unit is able to produce 400,000 tons/year of LDPE.

According to MRC's ScanPlast report, September estimated LDPE consumption in Russia fell to 23,930 tonnes from 47,610 tonnes a month earlier. Russian producers reduced their domestic LDPE shipments due to shutdowns for maintenance at production capacities in Ufa, Tomsk and Kazan. Russia's estimated LDPE consumption totalled about 406,500 tonnes in January-September 2020, which virtually corresponded to the last year's figure.

SABIC is a global diversified chemical company headquartered in Riyadh. The company manufactures on a global scale in the Americas, Europe, the Middle East and Asia Pacific, producing different kinds of products including chemicals, commodities, high-performance plastics, agri-nutrients and metals. The company supports customers by identifying and developing opportunities in key end-use applications such as construction, medical devices, packaging, agri-nutrients, electronics, transportation and clean energy. Production in 2019 measured 72.6 million metric tons. SABIC has more than 33,000 employees worldwide and operates in about 50 countries. Fostering innovation and a spirit of ingenuity, SABIC has 12,540 global patent filings and has significant research resources, with innovation hubs in five key regions - the US, Europe, the Middle East, South Asia and North Asia.
MRC