Venator loss deepens YOY on volumes, utilization

MOSCOW (MRC) -- Venator (Wynard, UK) reports a third-quarter net loss of USD42 million, down from a loss of USD19 million in the year-ago quarter on lower volumes and utilization. Revenue totaled USD474 million, down 10% year-over-year (YOY) from USD526 million, said Chemweek.

Adjusted earnings per share came to a 17-cent loss, down from profit of 8 cents in the year-ago period and short of the average analyst estimate of a 12-cent loss as compiled by Refinitiv (New York). "I am pleased by the gradual recovery in demand for most of our products,” says Simon Turner, president and CEO. “We saw broad improvement in sales volumes resulting in an increase of 3% compared to the second quarter, notwithstanding a seasonally weaker third quarter and the impact of Hurricane Laura on our TiO2 [titanium dioxide] joint venture facility in Louisiana. Notably, our color pigments and timber treatment businesses continue to demonstrate resilience during the current challenging macro-economic environment."

Venator reported revenue of USD456 million for the second quarter and a net loss of USD19 million. TiO2 volumes increased 2% sequentially. "We continue to optimize our controllable cost structure and by year end will have completed the actions necessary to deliver the full benefits of our 2019 business improvement program," says Turner. "In addition, we implemented non-recurring COVID-19 related cost saving initiatives of approximately $30 million in 2020. We have also identified cost saving and operational improvements from which we expect to deliver annual savings greater than USD55 million in 2022 compared to 2019."

The titanium dioxide segment turned in sales of USD343 million, down 13% YOY. Venator attributes the result mainly to an 11% decline in TiO2 sales volumes across all product categories and regions, most notably in Europe on the impact of COVID-19, and in North America owing to the impact of Hurricane Laura. Adjusted EBITDA totaled $21 million, down 59% YOY, mainly on lower revenue as well as lower plant utilization, which resulted in higher production costs.

The performance additives segment had revenues of USD131 million, up 1% YOY as the benefits of local currency selling price, mix, and currency translation offset a 4% decrease in sales volumes. Volumes dropped on lower demand for functional additives, a consequence of the COVID-19 pandemic. Adjusted EBITDA totaled $5 million, down 62% YOY on lower plant utilization.

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.

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MOSCOW (MRC) -- German chemicals maker BASF said on Thursday it had put a project to build a petrochemicals complex in India worth up to USD4 billion on hold due to the economic uncertainty caused by the COVID-19 pandemic, said Reuters.

BASF signed a memorandum of understanding with Abu Dhabi National Oil Company (ADNOC), Adani Group and Borealis AG in October 2019 to evaluate a collaboration to build the chemical site in Mundra, in India’s Gujarat state.

“The global economic uncertainties caused by the pandemic have led the partners to review the timing for undertaking this investment,” BASF said in a statement. “Despite all attempts to optimize the scope and the configuration, the project has been put on hold."

Under the plan, the partners wanted to build a plant to produce propylene from propane gas to be supplied by ADNOC. It would have been the first plant in the world to be fully powered by renewable energy and BASF’s biggest investment so far in India.

BASF said the partners remained convinced that India was a good place to invest and had agreed to periodically explore market conditions and discuss any opportunity that might arise over time.

As MRC informed earlier, BASF 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.
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MOSCOW (MRC) -- Consumption of acrylonitrile-butadiene-styrene (ABS) has surged as a result of home quarantines imposed by the spread of COVID-19, with producers’ cash margin in excess of USD500/metric ton in 2020 and expected to rise above $600/metric ton in 2021, said Daniel Siow, IHS Markit director/styrenics on Thursday at the eighth Asia Chemical Conference, being held by IHS Markit in a virtual format, as per Chemweek.

The global economy was plunged into despair when COVID-19 first hit in early 2020 and a second wave is now recurring in major European countries and the US. This has meant that cities have to be locked down and working or schooling from home has become the norm until an effective vaccine can be discovered and large populations inoculated.

This disruption to daily live has turned out to be a boon for ABS, used widely in appliances and electronics, said Siow. The shift to home schools and offices means that computers and the peripherals such as monitors, mouses, and keyboards are now essential products, and being cooped up at home has led to rising demand for television sets and refrigerators, he added.

"Asian ABS producers, particularly those in mainland China, have benefited from the surge in demand and several producers have already sold out their cargoes in recent months to meet orders from end-product manufacturers,” said Siow. China’s refrigerator output for September was 9.36 million units, up 27% year on year (YOY) and washing machine output was 7.99 million units, up 11% YOY.

Based on IHS Markit’s assessment, the pent-up demand for computers and home appliances may take a longer time to pan out as millions of people globally are expected to continue “flexible work arrangements or telecommuting,” resulting in more demand for computers and computer peripherals.

In the automotive sector, China has also seen a strong rebound, registering September output at 2.46 million units, up 10.9% YOY and passenger vehicle sales for the month rose 12.9% YOY to 2.57 million units. “There is a possibility that China may become the first country globally to see production bounce back to 2019 levels sometime in 2022 or perhaps later,” said Siow.

With world consumption of ABS at 9 million metric tons/year (MMt/y) and concentrated mainly in Asia, it is critical that this region does not go through another massive COVID-19 lockdown that will impede its road to recovery, he added. There are 800 million middle-class consumers in Asia who are ready to spend and more than 80% of the new middle class will be in Asia in the next decade. So, products will still be made in Asia for Asia, and the region’s dominance in manufacturing will endure.

Meanwhile, the ABS average cash-cost margin of more than $500/metric ton in 2020 is unprecedented and the last time the industry benefited this handsomely was more than 30 years ago when supply was tight. “In 2020, the outbreak of COVID-19 caused serious disruptions in industrial activity, supply chain, and workforce arrangements. Asian ABS producers benefited from pent-up demand and the industry obtained record cash cost margins in excess of USD700/metric ton in the third quarter of 2020 and in October,” said Siow.

However, rapid ABS capacity expansion in China could put a dent in margins. IHS Markit indicates that about 3 MMt/y of new capacities may emerge in China as early as the fourth quarter of 2021. While these companies may be in a rush to start their plants because of huge cash-cost margins, there are currently technical, logistical, and perhaps even financial limitations. For Asian ABS producers, the solution to avoid overcapacity is to hope for demand growth to match or perhaps outpace supply growth, said Siow. Fortunately, China's average annual demand growth rate of about 7% translates to slightly more than 7.5 MMt/y of new demand expected by 2025. In that sense, perhaps when demand growth catches up with capacity growth after 2025, cash-cost margins will improve again for Asian ABS producers, Siow said.

According to the ICIS-MRC Price Report, January-September ABS imports to Russia increased by 3% compared to the same period last year and amounted to 25,300 tonnes against 24,500 tonnes. The share of South Korean supplies amounted to 63% (16,000 tonnes) against 56% (13,600 tonnes) in January-September 2019.
MRC

MOSCOW (MRC) -- The UK government has recently confirmed that the country’s plastic carrier bag charge will be extended to all retailers from April 2021 and doubled to 10 pence (13 cents), reported Chemweek.

The current 5 pence charge was introduced in 2015 and applies to any retailer employing 250 or more people.

The government cites statistics showing that the charge has led to a 95% cut in plastic bag sales in major supermarkets in the UK. Extending and doubling the charge will take the country closer to its previously announced ambition to eliminate avoidable plastic waste over 25 years and “build back greener” after COVID-19, it says.

“Our carrier bag charge has been hugely successful in taking billions of harmful plastic bags out of circulation,” UK environment secretary George Eustice says.

The government says that as a result of the carrier bag charge, the average person in England now buys just four bags a year from the main supermarkets, compared with 140 in 2014. “By extending the charge to all retailers, ministers want to see bag usage cut significantly in small shops as well, with customers incentivized to use long-life bags made from more sustainable and environmentally-friendly materials,” it says.

As MRC wrote previously,due to protection measures against coronavirus, consumers no longer bring their durable bags to supermarkets, said Turkish Plastic Industrialists Research, Development and Education Association (PAGEV) in April 2020. According to Yavuz Eroglu, the president of PAGEV, consumers increasingly prefer single-use plastic bags during these pandemic days.

In the early days of the pandemic, Turkish Trade Ministry announced a new decision on the mandatory use of plastic bags in groceries and bakeries. Last year, Turkey issued a regulation in order to reduce to consumption of plastic bags. According to this, single-use plastic bags are subject to a fee of 0,25 Turkish Lira (0,03 Euro). However, this could be a burden on some people, Eroglu contends.

Turkey is the second largest producer in Europe following Italy. "Turkey is the third largest exporter in the world after China and Italy. Factories continue to produce single-use plastic materials and meet both domestic and global demands," said Eroglu. Turkey's top export market for single-use plastics is Israel with a share of 25%. Israel is followed by France, UK and the US.

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.
MRC

MOSCOW (MRC) -- Axalta said that it will realign its business structure to fold most organizational functions into its two global business units, transportation coatings and performance coatings, according to Chemweek.

The two global business units will have full profit-and-loss (P&L) responsibility, a shift from the previously existing matrix organization in which regional business leaders had “primary financial responsibility,” Axalta says.

The plan follows earlier restructuring moves announced over the summer, and will involve the closure of Axalta’s offices in Center City, Philadelphia. Employees at those offices will be transferred to Glen Mills, Pennsylvania, a Philadelphia suburb that will become the site of Axalta’s headquarters, or to an office at the Philadelphia Navy Yard.

“With today's announcement, primary decision-making authority will reside with business unit leadership, supported by regional leadership and our global functions,” says Axalta chairman and CEO Robert Bryant. “Axalta's strategic review completed in March provided us with valuable insights into areas where we had the opportunity to simplify and streamline our decision-making processes. Aligning our organization more directly with our businesses will enable us to focus on our customers and better support our growth objectives in each of our markets.”

Axalta’s regional headquarters at Basel, Switzerland and Shanghai, China will remain open and regional leaders will continue to play an important role in the organization, the company says.

The reorganization will become effective 1 January 2021, and the office closures and shifts in the Philadelphia area will occur in the middle of next year.

As MRC reported earlier, in July 2017, Axalta Coating Systems completed its previously announced acquisition of the Spencer Coatings Group (UK), a leading manufacturer of high performance industrial coatings for heavy-duty equipment, general industrial, oil and gas, and glass coatings segments.

We remind that Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year.
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