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.
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