Petrobras says major divestments nearing finish line

MOSCOW (MRC) -- Petrobras is in the advanced stages of several major divestments, executives said, indicating that the company’s ambitious deleveraging program may quicken after a pause during the worst of the coronavirus outbreak in Brazil, said Hydrocarbonprocessing.

Speaking to analysts following the company's third-quarter results, executives at Petroleo Brasileiro SA, as the state-run oil firm is formally known, said it hopes to finalize negotiations to sell its RLAM refinery by the end of the year and has recently received binding offers for its REMAN refinery, in the Amazonian city of Manaus. The company expects to receive binding offers for its REPAR refinery in southern Brazil in December, they added.

Petrobras has been working to sell dozens of non-core assets in recent years in a bid to reduce debt and sharpen its focus on offshore oil production and exploration. Among those divestments are the sale of nine refineries that are expected to rake in well over USD10 billion cumulatively for the company.

But the divestment process had ground to a crawl in recent months amid the crash in crude prices and a more general slowdown in the global economy. The company expects Brazilian antitrust authorities to approve the sale of gas distribution unit Liquigas in November, Chief Financial Officer Andrea Almeida said.

The firm also continues to examine an initial public offering for a collection of offshore midstream assets, she added. Executives were not as sanguine about some other divestments. Chief Executive Roberto Castello Branco said a planned sale of its stake in the TBG gas pipeline unit, which connects Brazil and Bolivia, was being held up by regulatory issues.

The company will not sell its stake in petrochemical company Braskem SA until that firm makes significant improvements related to governance and environmental liabilities, he added. Brazil-listed preferred shares in Petrobras were up 2.3% in late afternoon trade, after the company beat margin estimates on Wednesday evening, even as profit missed expectations due to one-off charges.

Brazil's benchmark Bovespa equities index was up 1.2%. In terms of production, executives flagged a modest decrease in fourth quarter output and increase in lifting costs due to scheduled maintenance. Still, they said, a number of new wells had come online in some of the company’s most promising offshore fields in the fourth quarter.

The company has noticed a short-term decrease in demand for its products in Europe due to the resurgence of COVID-19 there, said Andre Chiarini, the company’s head of logistics and trading. However, demand for Petrobras fuel in China remains strong, he added.

We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem"s back burner for several years.

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.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras" activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

AdvanSix swings to loss on lower prices, but nylon volume rebounds

MOSCOW (MRC0 -- AdvanSix today reported a third-quarter net loss of about USD700,000, compared with a net profit of USD7.9 million in the year-ago quarter. Net sales fell 9% year on year (YOY), to USD281.9 million, reported Chemweek.

Adjusted earnings amounted to a 2 cents/share loss, ahead of analysts’ consensus estimate of a 5 cents/share loss, as reported by Refinitiv (New York, New York). Volumes increased 5% YOY, but this was more than offset by a 13% decline in volumes.

“Our diverse product portfolio and global low-cost position continue to serve us well as we navigate through the current environment,” says Erin Kane, president and CEO of AdvanSix. “We have seen nylon volume returning to pre-COVID(-19) levels and we continue to optimize our mix across end uses, applications and geographies through the recovery. The performance of the remainder of our portfolio, including ammonium sulfate, acetone and other high-value intermediates, remains resilient complementing ongoing benefits from our focused cost management and high-return capital investments."

As MRC wrote before, in October 2016, Honeywell International Inc.'s shareholders received a stake in AdvanSix, as part of Honeywell's spinoff of the USD1.3 billion resins and chemicals business. The New Jersey-based industrial conglomerate, best known as a maker of thermostats, has been expanding its industrial software business. Under the terms of the dividend tied to the AvanSix spinoff, Honeywell shareholders of record as of 5 p.m. ET on Sept. 16 received 25 AdvanSix shares on Oct. 1, 2016.

We remind that AdvanSix, a new resin and chemical division of Honeywell, completed a planned turnaround at its phenol and acetone plant in Frankford, PA, USA. The maintenance works at the plant with a capacity of 1.1 billion pounds of phenol per year (about 500,000 tons per year) and 608 million pounds of acetone per year (308,400 tons per year) began at the end of March 2017 and was expected to take 2 -3 weeks. This plant is the third largest producer of phenol and acetone in North America. AdvanSix uses cumene derived from benzene and propylene to produce phenol and acetone.

Phenol is the main feedstock component for the production of bisphenol A (BPA), which, in its turn, is used to produce polycarbonate (PC).

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to/from Belarus) rose in the first three quarters of 2020 by 32% year on year to 75,600 tonnes (57,200 tonnes a year earlier).
MRC

LyondellBasell earnings lower on weak margins as volumes recover

MOSCOW (MRC) -- LyondellBasell Industries posted third-quarter net income of USD114 million compared with USD965 million in the year-ago quarter. The combination of an impairment charge on its Houston refinery and an inventory valuation benefit overall reduced net income by USD313 million. Net sales of USD6.8 billion were down 23% year-on-year (YOY), said Chemweek.

Volumes recovered to prior-year levels, led by continued growth in polyethylene (PE), but pricing and margin was lower. Reported adjusted earnings of USD1.27/share were down 55% YOY but 17 cts/share above consensus estimates as reported by Zacks Investment Research.

"Demand for LyondellBasell products improved with increasing global economic activity,” said Bob Patel, LyondellBasell CEO. “Our year-over-year results reflect strong global volumes while margins are still recovering. Sequentially, third-quarter volumes and margins rebounded for most of our businesses. Strong demand for polyethylene in North America and Asia and hurricane-related production constraints on the U.S. Gulf Coast led to tight markets that drove USD420/ton of North American PE contract pricing improvement since June."

Volumes improved in the propylene oxide and derivatives business and advanced polymer solutions segment as automotive manufacturing and other durable goods markets recovered. Reduced demand for transportation fuels continued to pressure refining results, the company said.

LyondellBasell said markets continue to strengthen in the fourth quarter. “Recovery in global economies should continue to benefit the petrochemical industry,” Patel said. “Despite the backdrop of both the pandemic and a recession, we expect global polyethylene demand to grow for the full year. China continues to have a 40% polyethylene trade deficit which supports North American exports and tightens the U.S. domestic market.” The company expects continued strength in North American integrated polyethylene margins during the fourth quarter, perhaps with some seasonal moderation by the end of the year.” Our order books show increased demand from automotive manufacturing and other durable goods markets that should continue to propel further improvement for our Advanced Polymer Solutions segment," Patel said.

Olefins & polyolefins – Americas segment operating income was USD309 million, down 41% YOY. Olefins results decreased about USD135 million driven by decreases in margins partially offset by an increase in volumes. Ethylene margin decreased primarily due to lower co-product prices. Polyolefin results decreased approximately USD60 million due to lower margins as a result of reduced spreads, LyondellBasell said.

Olefins & polyolefins - Europe, Asia, international operating income was USD52 million, down 74% YOY. Olefins results decreased approximately USD115 million YOY due to lower margin driven by declining ethylene prices. Combined polyolefins results decreased about USD45 million primarily driven by a lower polypropylene price spread over propylene.

Intermediates & derivatives segment operating income of USD180 million was down 43% YOY. Propylene oxide & derivatives and intermediate chemicals results were relatively unchanged offset sharply lower oxyfuels results driven by weaker margins due to lower gasoline prices and higher feedstock prices. Compounding & solutions results were relatively unchanged with higher margins offset by lower volumes. Advanced polymers results decreased approximately USD15 million due to lower margins and volumes driven by reduced demand.

Refining segment posted a net loss of USD733 million reflecting a USD582 million impairment charge. The segment posted a loss of USD6 million in the year-ago quarter. Income was lower on weaker margins and volumes in response to lower demand for fuels. Technology segment net income was USD101 million, up 38% driven by higher licensing revenue.

Advanced polymer solutions operating income of USD116 million was up 73% YOY on favorable inventory benefits. Compared with the prior period, compounding & solutions results were relatively unchanged with higher margins offset by lower volumes. Advanced polymers results decreased approximately USD15 million due to lower margins and volumes driven by reduced demand.

As MRC informed earlier, LyondellBasell (Rotterdam, the Netherlands) announced that Duqm Refinery and Petrochemical Industries Company LLC (DRPIC) has selected LyondellBasell’s world-leading polypropylene (PP) and high-density polyethylene (HDPE) technologies for a new facility. The new plants will comprise of a PP plant that will utilize LyondellBasell’s Spheripol PP process technology to produce 280,000 metric tons per year (m.t./yr) of PP and a 480-m.t./yr HDPE plant which will utilize LyondellBasell’s Hostalen ACP process technology and will be built in Al Duqm, Oman.

Propylene is the main feedstock for the production of 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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

Lubrizol, Grasim Industries Partner for India’s Largest CPVC Resin Plant

MOSCOW (MRC) -- Lubrizol Advanced Materials, a global specialty chemical leader and the market leader for CPVC, and Grasim Industries Limited have entered into a definitive agreement to manufacture and supply CPVC resin in India to meet growing demand for chlorinated polyvinyl chloride (CPVC) pipe and fittings, according to Kemicalinfo.

Once commissioned, this near 100,000 metric-ton state-of-the-art CPVC plant at Grasim’s site in Vilayat, Gujarat, will be the largest single-site capacity for CPVC resin production globally.

The project will take part in two phases, with the first phase of production expected to be operational in late 2022. The CPVC resin produced at Vilayat will enable product sold under Lubrizol’s FlowGuard Plus, Corzan and BlazeMaster® brands.

To further support the local market, Lubrizol will make additional investments in the coming years to expand its existing CPVC compound plant in Dahej, Gujarat and establish a local innovation center as demand continues to grow.

India is amongst the largest consumers of CPVC, primarily in the form of plumbing pipe and fittings, and growing needs for clean water in all residential and commercial buildings will drive continued growth. Lubrizol is the inventor and largest manufacturer of CPVC resin and CPVC compounds worldwide.

To-date, Lubrizol products have been instrumental in delivering safer water to some 200 million citizens in South Asia. Lubrizol has plans to introduce other advanced water management solutions in India in the future.

With this investment to supply resin to its existing compounding plant in Dahej, Gujarat, Lubrizol becomes the only company in India with end-to-end CPVC capability.

In addition to its regional manufacturing capabilities, Lubrizol continues to strengthen its customer network, collaborating with local leaders like Ashirvad Pipes, an Aliaxis company, and Prince Pipes to ensure robust distribution in India and South Asia.

“This alliance will help Lubrizol better serve our customers in India and South Asia, as well as support the Indian economy,” said Arnau Pano, Vice President, Lubrizol Advanced Materials, South Asia.

“Connecting with Grasim Industries Limited, a reputable global conglomerate, who share our commitment to sustainable chemical production, will allow us to provide our customers with increased, reliable CPVC supply and further our goal of improving access to clean, safe drinking water for millions of global citizens through the advantages offered by FlowGuard Plus plumbing solutions,” Arnau added.

“This collaboration with Lubrizol Advanced Materials is part of our long-term direction to bring in world-class technologies to India and additionally complements our growth strategy in Chlor-Alkali and Derivatives platform,” said Kalyan Ram Madabhushi, CEO-Global Chemicals & Group Business Head-Fertilisers & Insulators, Aditya Birla Group.

This collaboration also will enable Aditya Birla Group and The Lubrizol Corporation to explore collaboration opportunities across additional segments, such as water management, construction, textiles, automotive and piping by leveraging the technologies and market channels of both groups.

As MRC reported previously, in February 2016, speciality chemicals major Lubrizol Corporation announced the commencement of its USD50 million CPVC compounding plant in Dahej. This was the company's first CPVC compounding plant in the country, and it claimed that it is the first such in India by any global major.

According to MRC's ScanPlast report, Russia's overall PVC production totalled 718,500 tonnes in January-September 2020, down by 0.3% year on year. At the same time, only two producers managed to increase their PVC output.

The Lubrizol Corporation, a Berkshire Hathaway company, is an innovative specialty chemical company that apart from its production develops and supplies technologies to customers in the global transportation, industrial and consumer markets. Lubrizol is providing innovative solutions for its customers high-performance application needs and remains committed to ongoing investment in its CPVC capabilities that support future growth. With headquarters in Wickliffe, Ohio, Lubrizol owns and operates manufacturing facilities in 17 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 8,000 employees worldwide.
MRC

Reliance reports YOY fall in petchem profit, revenue; sequential improvement

MOSCOW (MRC) -- Reliance Industries says that EBDITA dropped 33% year on year (YOY) at its petrochemicals business to 59.64 billion Indian rupees (USD802.79 million) in the fiscal second quarter ended 30 September. Quarterly sales for this sector were Rs296.6 billion, down 23% YOY, said Chemweek.

The company says, however, that compared with the preceding quarter, prices of polypropylene (PP), polyethylene (PE), and polyvinyl chloride (PVC) strengthened by 13%, 17%, and 25%, respectively, due to tight supply with regional turnarounds and an improvement in demand. With increased feedstock prices, para-xylene (p-xylene) prices firmed 10% quarter on quarter (QOQ) and purified terephthalic acid (PTA) and ethylene glycol prices increased by 4% and 10%, respectively. Naphtha prices increased by 56% QOQ because of healthy demand.

Reliance says that its steam-cracker margins improved QOQ due to the feedstock mix and “favorable economics for ethane cracking.” Its crackers operated at near 100% utilization during the quarter. The company recorded higher QOQ production volume and higher volume placement in the domestic market.

"Domestic demand has sharply recovered across our oil-to-chemicals business and is now near pre-COVID levels for most products,” says Mukesh Ambani, chairman and managing director at Reliance.

PP margins declined 21% QOQ to USD126/metric ton due to higher feedstock prices despite robust demand from health and hygiene applications. PE margins remained stable with firm demand from the packaging sector. PVC margins improved by 14% to USD546/metric ton led by a strong demand recovery in agriculture and the construction sector.

Reliance says that PTA margins declined by 14% QOQ to USD107/metric ton “in well-supplied markets.” P-xylene and PTA markets were also hurt by the start-up of new capacities in China, it adds.

Domestic polymer and polyester demand improved with the easing of lockdown and revival of downstream operations with improved labor availability. The company says it achieved its highest-ever quarterly polymer sales in India through leveraging the domestic supply chain, multimodal logistics, and a nationwide warehousing facility. Reliance placed higher volumes of polyester products in the domestic market with improved operating rates for spinning and texturizing units, it adds.

The company’s other business units include refining, oil and gas, retail, digital services, financial services, and others. Reliance's second-quarter group net profit was Rs95.67 billion, down 15% YOY, on 22% lower sales of Rs1.2 trillion.

As per 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. 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.

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