Saudi Aramco downstream segment swings to loss, includes Sabic results for first time

MOSCOW (MRC) -- Saudi Aramco’s downstream business, which includes the company’s refining and chemicals segments, has swung to an EBIT loss of 2.98 billion Saudi riyals (USD795 million) in the third quarter from a profit of SR3.00 billion in the prior-year period, according to Chemweek.

The year-on-year (YOY) decline “reflects a challenging market environment that continues to weaken refining and chemicals margins,” it says. The negative result also widens from an EBIT loss in the second quarter of SR1.29 billion.

Aramco, which does not break out its chemicals earnings separately, says the downstream result for the first time incorporates a full quarter of earnings from Sabic, following the closing of its USD69.1-billion acquisition of a controlling 70% ownership stake in June. “Integration with Sabic continues to progress and drives forward the downstream strategy of creating value from integration across the hydrocarbon value chain,” Aramco says. Sabic last week reported a net profit of SR1.09 billion for the third quarter, up 47% YOY.

Downstream capital expenditures (capex) for the third quarter totaled SR6.16 billion, down from SR6.44 billion a year earlier, with the decrease partially offset by the inclusion of Sabic’s capex. Aramco’s gross refining capacity in the quarter was 6.4 million b/d of crude, up 1.0 million b/d YOY.

Group net income for the third quarter was down over 44% YOY to SR44.21 billion (USD11.8 billion), beating the company-provided analyst consensus estimate of USD10.6 billion, but up on Aramco’s second-quarter group net income of SR24.62 billion. The company’s nine-month net income declined over 48% YOY to SR131.31 billion. For the first nine months of the year, Aramco’s downstream segment consumed 39.5% of the company’s crude oil production, slightly up compared with the prior-year period.

The company “saw early signs of a recovery in the third quarter due to improved economic activity, despite the headwinds facing global energy markets,” says president and CEO Amin Nasser. “Aramco’s integration with Sabic is proceeding as planned.” The company will continue to adopt a “disciplined and flexible approach to capital allocation in the face of market volatility. We are confident in Aramco’s ability to manage through these challenging times and deliver on our objectives,” he says.

Aramco also says it will maintain its commitment to its shareholders by declaring a dividend of USD18.75 billion for the third quarter, matching what it paid in the second quarter.

As MRC wrote before, Saudi Aramco and Saudi Basic Industries Corporation (SABIC) have decided to reevaluate their crude-oil-to-chemicals project in Yanbu on the kingdom's west coast, according to an Oct. 18 statement on the Tadawul stock exchange, as they slash spending due to low prices. The USD20 billion project may be downsized to use Aramco's existing facilities in the port city, instead of building a new plant, the statement posted by SABIC said.

We remind that in June, Aramco said it had completed the share acquisition of a 70% stake in SABIC from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyals 259.125 billion (USD69.1 billion). Combined, in 2019 Aramco and SABIC recorded petrochemicals production volume of nearly 90 million mt, including agri-nutrient and specialty products.

Ethylene and propylene are feedstocks for producing 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.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC

Borealis net profit dips, flags sequential upturn despite low prices, margins

MOSCOW (MRC) -- Borealis (Vienna, Austria) reports a 21% decline year on year (YOY) in net profit to EUR163 million (USD191 million) for the third quarter of 2020, but flags a sequential rise in earnings of EUR99 million compared to the second quarter, said the company.

The result is a “clear improvement” sequentially despite continued low prices and margins, reflecting solid demand in many sectors, says CEO Alfred Stern, talking exclusively to CW today. Net sales fell 16% to EUR1.63 billion compared to the prior-year period, but again were up on the second quarter’s figure of EUR1.53 billion.

The lower result YOY was achieved “in the face of difficult market conditions, characterized by low product prices and reduced demand in some sectors due to the coronavirus pandemic,” according to the company. A lower integrated polyolefins margin and less favorable fertilizer environment drove the decline in profit compared to last year, it says. This was despite a YOY rise in polyolefins sales volumes, it adds.

Performance at its Borouge joint venture (JV) with Abu Dhabi National Oil Co. (Adnoc) also showed improvement over the second quarter, but was down on the prior-year period due to lower polyolefins prices and the weaker market environment, Borealis says.

Significant progress was made during the third quarter at the company’s strategic growth projects despite the impact of the COVID-19 pandemic, including its Baystar 50/50 JV with Total in Texas, its propane dehydrogenation (PDH) plant in Kallo, Belgium, and its Borouge polypropylene Borstar PP5 plant, which is part of its Borouge 3 complex at Ruwais, UAE. The 750,000-metric tons/year PDH plant at Kallo is due online towards the end of 2022, while the Baystar steam cracker and the 500,000-metric tons/year Borstar-process plants are expected online in the first and third quarters of 2021, respectively, according to Stern.

The proposed Borouge 4 project at Ruwais, meanwhile, is still scheduled for completion before the end of 2025, with the front end engineering and design (FEED) phase to be finished by the end of 2021 when a final investment decision (FID) will then be made, Stern says. The complex will include a mixed-feed cracker with an estimated capacity for 1.8 million metric tons/year (MMt/y) of ethylene, and a total production capacity of 3.3 MMt/y of olefins and aromatics, using feedstock supplied by Adnoc. The project, if it proceeds to completion, would more than double Borouge’s current polyolefins capacity to over 10 MMt/y.

Looking ahead, Stern says that although Borealis does see “some price improvements, particularly in Asia and the US,” the outlook remains uncertain due to volatile feedstock prices and rising numbers of COVID-19 cases, “especially in Europe.” Stern remains “optimistic” about the future demand outlook globally, although growth rates for polyolefins “will come down,” he notes.

As MRC informed earlier, OMV, the international integrated oil and gas company headquartered in Vienna and Mubadala Investment Company, the Abu Dhabi-based strategic investment company, have today completed the transaction for OMV to acquire an additional 39% stake in Borealis, a leading, global chemicals company, from Mubadala.

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.
MRC

Mars and Huhtamaki join SABIC nitiative for pet food packaging based on certified circular polypropylene

MOSCOW (MRC) -- SABIC announced that biaxially oriented polypropylene (BOPP) film based on the company’s certified circular PP from feedstock recycling of used plastics will be introduced in primary pet food brand packaging by Mars, said the company.

The BOPP film structures are manufactured by Huhtamaki, a key supplier of sustainable packaging solutions to customers around the world. The joint initiative will help the partners implement their ambitious targets of reducing the volume of fossil-sourced plastics and accelerate the transition to a more circular plastics economy.

Following a successful pilot phase in 2020, Mars will incorporate certified circular PP polymer from SABIC’s TRUCIRCLE™ portfolio in the primary packaging of some of its popular pet food brands. The certified circular PP food-grade material is produced through the feedstock recycling of low quality, used mixed plastic that could otherwise be destined for incineration or landfill. It takes difficult to recycle used plastic back to the molecular level through a process called pyrolysis. This technology breaks down used plastic by heating it at a very high temperature in an oxygen-free environment, producing pyrolysis oil. SABIC uses pyrolysis oil coming from UK-based Plastic Energy’s proprietary advanced recycling technology that enters the production chain just like fossil-based feedstock to deliver new materials that can address strict quality requirements, such as certain hygiene standards for food packaging. The resulting PP polymer is verified and authenticated under the International Sustainability and Carbon Certification (ISCC PLUS) scheme, which uses a mass balance approach. SABIC’s certified circular products from our TRUCIRCLE portfolio offer a carbon footprint reduction of 2kgs of CO2 for every kilogram of polymer produced based on the diversion of post-consumer used plastic from incineration.

Likewise, while Mars is piloting the use of SABIC recycled content in Europe in 2020, the company plans to increase volumes used in 2021 with ambitions to other brands. Mars sees this as a major step in the company’s sustainability strategy, which is targeting the use of 30 percent recycled content across their packaging portfolio and a 25 percent reduction of virgin plastic by 2025.

With its TRUCIRCLE portfolio, SABIC is capturing great value from sources like animal-free bio-based feedstock and post-consumer recycle, which have traditionally been ignored or discarded. The ISCC PLUS accredited materials offer drop-in solutions for replacing fossil-based plastics in the packaging industry without compromising product purity and food safety. Moreover, BOPP film using certified circular PP polymer from SABIC offers an excellent balance of stiffness and toughness as well as barrier and hot-fill properties. It can be used for a wide range of flexible applications, from labels and tape to packaging pouches and bags in areas such as confectionery, snacks, baked goods, dried fruits, pasta, fresh food, and pet care products.

SABIC’s TRUCIRCLE offering spans from design for recyclability services and mechanically recycled materials to certified circular products from feedstock recycling of used plastics as well as certified renewable polymers from bio-based feedstock. Third-party ISCC PLUS certification ensures that the mass balance accounting of the company’s circular polymer products follows predefined and transparent rules. In addition, it provides traceability along the entire supply chain from the feedstock to the final product.

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.
MRC

Linde and Samsung Electronics sign second long-term agreement

MOSCOW (MRC) -- Linde has entered into a long-term agreement with Samsung Electronics to supply ultra-high purity industrial gases for the South Korean tech giant’s latest semiconductor facilities in Pyeongtaek, South Korea, said the company.

Currently the main supplier of industrial gases to Samsung’s existing facilities in Pyeongtaek, Linde said this second agreement will see the company build, own and operate air separation plants in Samsung’s latest world-class manufacturing complex.

Once the project is commissioned, the Pyeongtaek complex will be Linde’s single largest gases supply site in the world for an electronics customer.

Samsung’s new facility will deploy state-of-the-art technologies to accelerate the company’s next-generation chip design and production, in order to meet the rising demand for semiconductors around the world.

"We are proud to have been selected yet again to supply Samsung’s world-class semiconductor facilities, shortly after the safe and on-time delivery of our previous project,” said B.S. Sung, Head of South Korea, Linde.

“Our successful partnership spans more than 42 years and we look forward to continue providing Samsung with a safe, reliable and cost-effective supply of industrial gases and innovative technologies well into the future."

As MRC informed earlier, Linde GmbH and Shell have announced an exclusive collaboration agreement on ethane-oxidative dehydrogenation (E-ODH) technology for ethylene production. The catalytic process is an alternative route to ethane steam cracking, offering the potential of economic advantages, acetic acid co-production and significantly lower overall carbon footprint through electrification of power input.

Ethylene and propylene are feedstocks for producing 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.
MRC

Polynt hikes composite prices on rising raw material costs, logistics

Polynt hikes composite prices on rising raw material costs, logistics

MOSCOW (MRC) -- Polynt-Reichhold, an Intalian petrochemical producer, says it has increased prices in Europe by EUR80/metric ton (USD93/metric ton) for all its composite products range due to rising raw material and logistical costs, effective as of 1 November or as agreements allow, according to Chemweek.

The price hike covers the company’s complete line of unsaturated polyester resins, vinyl esters, and gelcoats in Europe, the Middle East, and Africa, it says.

The higher raw material costs are due to limited availability, it adds. Polynt-Reichhold’s composites business develops and produces thermoset products and derivatives.

As MRC reported previously, in early March, 2020, Polynt announced that all its sites and activities in Italy were running smoothly and according to plan, despite the news about the Italian situation related to the spreading of the coronavirus in the country.

Polynt runs two maleic anhydride (MA) plants in northern Italy, including Bergamo’s 36,000 tonne unit in Lombardy and Ravenna’s 60,000 tonne plant on the east coast. The bigger production line at Ravenna had been operating at a reduced rate since March 2019 due to technical issues, the firm previously said. A new reactor ordered is expected to be operational in 2021. Polynt also produces phthalic anhydride at Bergamo and its San Giovanni Valdarno site, as well as plasticizers at San Giovanni Valdarno.

Maleic anhydride is a feedstock for the production of tetrahydrofuran, tetrahydrophthalic anhydride, films and synthetic fibers, pharmaceuticals, detergents, plasticizers, maleic, succinic, fumaric and malic acids and a number of chemicals for agriculture.

Plasticizers are substances introduced into a polymeric material to give it elasticity and plasticity during processing and operation. In particular, plasticizers are used to produce polyvinyl chloride (PVC). The share of plasticizers used for the production of PVC products is about 80%.

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.
MRC