Ferro beats estimates as quarterly demand improvement beats expectations

MOSCOW (MRC) -- Ferro has reported third-quarter net income up 12.9% year-on-year (YOY), to USD14.5 million, on net sales down 1.4%, to USD241.9 million, reported Chemweek.

Adjusted earnings totaled 19 cents/share, beating analysts’ consensus estimate of 15 cents/share, as reported by Refinitiv (New York, New York). Sales were up 18.1% on a sequential basis from the second-quarter, exceeding the company’s expectations.

“We currently expect the positive trends in demand for our products to continue in the coming months,” says Ferro CEO Peter Thomas. “Our customers do not appear to be de-stocking in the fourth quarter, as they have in more typical years, and we are seeing an uptick in demand for the new year as our customers’ markets continue to recover. We also believe that changes in consumer and other behavior resulting from the COVID pandemic will accelerate demand for Ferro products in multiple markets, including renewables, healthcare, and electronics.” The company does not anticipate a “significant impact” to demand from a second wave of the pandemic, Thomas adds.

Functional coatings segment sales declined 0.3% YOY, to USD154.2 million, while segment gross profit was down 11.4%, to USD41.6 million. Color solutions segment sales fell 3.2% YOY, to USD87.7 million, while segment gross profit declined 2.3%, to USD28.5 million.

As MRC informed before, on October 14, 2016, Ferro signed a definitive agreement to acquire 100% of the stock of Belgium-based Cappelle Pigments for EUR50.5 million (approximately USD56 million) on a cash-free and debt-free basis.

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 in the first nine months of 2020 by 6.1% year on year, 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. September production of primary polymers in Russia 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.

Ferro Corporation is a leading global functional coatings and color solutions company that supplies technology-based performance materials, including glass-based coatings, pigments and colors, and polishing materials. Ferro products are sold into the building and construction, automotive, appliances, electronics, household furnishings, and industrial products markets. Headquartered in Mayfield Heights, Ohio, the Company has approximately 4,900 employees globally.
MRC

Coronavirus accelerates oil refining shift to Asia

MOSCOW (MRC) -- Slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries, reported Rueters.

The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

Fuel consumption has been stagnant or falling across most of North America, Western Europe and Japan since 2007 as a result of efficiency improvements.

North American, European and Japanese refineries have been left battling to protect their share of a declining market, creating downward pressure on profitability.

The problem of overcapacity has been masked during periods of strong economic growth but exposed every time the business cycle turns down.

In contrast to Western Europe, North America and Japan, fuel consumption has grown rapidly across the rest of Asia over the last decade.

The region’s three sub-markets in West Asia (centered on the Gulf), South Asia (centered on India) and East Asia (China) have been responsible for more than two-thirds of worldwide oil consumption growth since 2009.

Asia has seen sustained growth in its refining capacity to match the growth in consumption; refineries are typically built near consumption centers since it is operationally simpler to transport crude than products.

Asia and the Middle East account for 43% of worldwide refining capacity, almost exactly matching their 44% share in global oil consumption, with both shares up from 33% in 1999.

Asia’s refineries are more competitive because they are nearer growing markets; process large volumes with better economies of scale; and are equipped with more modern and sophisticated equipment.

In the 1960s and 1970s, new refineries were built at a minimum efficient scale of 100,000-250,000 bpd of crude capacity, but refineries commissioned in the 2000s and 2010s are generally 300,000-400,000 bpd or more.

New mega-refineries are often built with integrated petrochemicals units, enabling them to produce a higher share of higher value-added chemicals as well as lower-value fuels.

As a result, the new mega-refineries can squeeze a higher share of valuable products from the same crude at lower cost, outcompeting rivals in North America and Europe.

Facing a shrinking fuel market at home, North American and European refiners have found it increasingly difficult to compensate by growing fuel exports profitably.

And as the average size and complexity of new oil refineries has increased, the oldest, smallest and least complex refineries have become uneconomic.

The result is a wave of refinery closures, with jetties, tank farms and pipelines repurposed to become import terminals.

Most closures have been in North America and Europe, but smaller, older and fuel-only refineries in other parts of the world, including in Australia and the Philippines, have also been hit.

As MRC informed before, in early November 2020, Royal Dutch Shell announced it was closing its refinery in Convent, Louisiana, the largest such US facility and first on the US Gulf Coast to shut down since the coronavirus pandemic devastated worldwide demand. The shutdown will occur this month after Shell failed to find a buyer. The refinery is the ninth in North America targeted for a shutdown or to be idled since the pandemic, which has dealt a heavy blow to fuel demand globally.

We remind that Royal Dutch Shell plc. said earlier this month that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

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

OMV Petrom investment increases Petrobrazi refinery bio-blending capacity

MOSCOW (MRC) -- OMV Petrom, the largest energy company in Southeastern Europe, has invested approximately EUR21 million at the Petrobrazi refinery in order to increase the bio-blending capacity and to improve the infrastructure for the transport, unloading and storage of bio-components within the refinery, according to Hydrocarbonprocessing.

OMV Petrom supplies fuels with a volumetric bio-content of 6.5% in diesel and 8% in gasoline.

Following investments of approximately EUR21 million allocated, starting in 2018, Petrobrazi has increased the blending capacity of bio-content in fuels from 200,000 t to ~350,000 tpy of biofuels.

As per European regulations, the renewable energy content in transportation fuels must increase from 10% in 2020 to 14% in 2030, in order to support the reduction targets of greenhouse gas emissions arising from transportation. Bio-quota targets are set as energetic substitution targets, whereby each fuel has a different energy content defined.

“We are an energy company and we want to be part of the solution for a cleaner energy. We are investing in obtaining fuels with a high level of biofuel content, as well as in alternative solutions for mobility and in various others sustainable projects. It is a combined effort at all levels across our company, as we aim to reduce our carbon emissions by 27% by 2025 versus 2010”, said Radu Caprau, member of OMV Petrom executive board, responsible for Downstream Oil.

Petrobrazi has a total crude oil processing capacity of 4.5 MMtpy and, starting 2005, OMV Petrom has invested approximately EUR1.8 billion in the refinery. One third of this investment contributed to the reduction of the environmental impact. Through sustained investments, OMV Petrom has reduced the carbon emissions of its operations by 22% in 2019 vs. 2010. OMV Petrom is one of the first companies in Romania to sign the UN Global Compact, since 2013.

As MRC reported earlier, on 12 March, 2020, Austria’s OMV OMV, the international integrated gas and oil company headquartered in Vienna, and Mubadala Investment Company, the Abu Dhabi-based strategic investment company, signed an agreement that will give OMV a controlling stake in Borealis, one of Europe’s leading petrochemical companies. OMV, which currently owns a 36% stake in Borealis, will acquire an additional 39% from Mubadala, increasing its stake to 75%. Mubadala will retain a 25% interest.

And in late October, 2020, OMV and Mubadala Investment Company completed the transaction for OMV to acquire an additional 39% stake in Borealis from Mubadala.

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

ccording 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.

Romanian group OMV Petrom has become part of Austrian company OMV since 2004.
MRC

Brenntag to sell products through B2B online chemicals marketplace

MOSCOW (MRC) -- Brenntag has announced an initial cooperation with CheMondis (Cologne, Germany), a B2B online marketplace for chemicals in Europe, said Chemweek.

Brenntag and CheMondis plan jointly to accelerate digital sales and marketing for the chemical industry. “Both companies recognize the increasing importance of online sales channels for the chemical industry and agreed to collaborate in this field,” Brenntag says.

The collaboration will start with making Brenntag’s portfolio for paints and coatings, and adhesives and sealants gradually available for online purchase on CheMondis in the German market.

"Over the last two years Brenntag has steadily built our Brenntag Connect e-commerce platform. The platform is now live in most of our mature markets. We see a strong upward trend in online business and with this complementary cooperation we extend our digital channels further,” says Maarten Stramrood, chief digital officer at Brenntag. “Our collaboration with CheMondis will provide our current and potential customers an even broader choice."

The collaboration “is a strong sign that online sales are becoming an increasingly important strategic component in the chemical industry,” says Sebastian Brenner, managing director of CheMondis. “Customers in our industry are demanding an online buying experience and CheMondis provides for that need."

CheMondis, founded in 2018 out of Lanxess as an independent start-up, says it has established “the leading open B2B marketplace for chemicals in Europe with more than 3,200 active companies and about 50,000 products listed.” Buyers have used CheMondis for several thousand digital transactions already, the company says.

As MRC informed earlier, Brenntag, the market leader in chemical and ingredients distribution, has reported a resilient third-quarter performance and says the impact from the COVID-19 pandemic on its business is “still limited". Net profit was down in the third quarter to EUR120.6 million (USD141.1 million) from a prior-year figure of EUR128.4 million on sales of EUR2.88 billion, down 7.7% year on year (YOY) on a constant currency basis. The company achieved YOY growth in operating EBITDA, up 4.9% to EUR264.4 million. The EMEA, APAC, and Latin America regions “showed a particularly good development,” but conditions in North America were tougher, Brenntag says. Group operating gross profit slipped 0.2% YOY to EUR690.6 million.

As MRC informed earlier, Brenntag Essentials and Brenntag Specialties. Each division will have a focus on customer- and supplier needs. The new operating model forms part of the company’s previously announced transformation program, Project Brenntag. Brenntag says that with the two new divisions it will better leverage on its strengths and sharpen its profile toward relevant industry segments.

In August 2020, Brenntag acquired the operating assets of Suffolk Solutions’ (Suffolk, Virginia) caustic soda distribution business. Financial terms of the deal have not been disclose.

We remind, Russia's September production of sodium hydroxide (caustic soda) were 108,000 tonnes (100% of the basic substance) versus 99,200 tonnes a month earlier. Overall output of caustic soda totalled 945,600 tonnes in the first nine months of 2020, down by 1.6% year on year.
MRC

Indorama Ventures reports lower profit on higher volume

MOSCOW (MRC) -- Indorama Ventures Public Company Limited (IVL), a global chemical producer, has announced its third quarter 2020 financial results, said the company.

Reported net profit is THB 380 million in 3Q20 and THB 1,104 million for 9M20. Our performance this year provided us significant insights into the growth of the future market, while the company remains on a path towards enhanced incremental performance progress, from 4% ROCE towards our target ROCE of 15% by 2023.

In 3Q20 we delivered record sales volume of 3.6 million tonnes, registering growth of 18% year-on-year (YoY). Sales volume grew to 3.2 million tonnes, or 4% YoY on a comparable basis. This continuous volume growth is a clear indication of the resilient nature of the company’s products and the global access we have to our customers.
IVL achieved an operating cash flow of USD 354 million in 3Q2020 while operating cash flow for 9M20 was USD994 million, thus providing us ample liquidity of USD 2.5 billion in cash and cash equivalents as well as unused credit lines.
Project Olympus (a business transformation and cost excellence project) delivered a savings of USD 21 million in 3Q20 and USD 64 million in 9M20. Our full year budget of USD 76 million in savings is expected to exceed targets by over 15% in 2020 with relentless focus on multiple initiatives.

IVL has embarked in 2020 on a transformation journey that will enhance its business excellence and aims to deliver US$ 582 million of additional, sustainable, EBITDA by 2023. This target has been expanded from the US$ 352 million announced at our Capital Markets Day at the start of 2020 after a rigorous analysis process and the support of relevant domain experts to validate our operating teams’ initiatives in all of our three major business segments globally.

We are making progress towards our ESG targets and our pledge to recycle 750,000 tonnes of post-consumer PET, with a commitment of USD 1.5 billion towards our ESG and recycling infrastructure globally by 2025.
We have strengthened our leadership and recruited both digital and Lean Six Sigma function leaders to support technological adaption across IVL.

IVL is well on its way to implement S4 Hana (ERP) across our global operations and introduced a Global Business Service (GBS) office which will hallmark the delivery of our transformation journey.

As MRC informed earlier, Indorama Ventures Sines, a subsidiary of the world leader in the production of polyethylene terephthalate (PET) - Indorama Ventures Company Ltd (IVL), plans to halt production at the refined terephthalic acid (TPA) plant in Sines (Sines, Portugal) in mid-November to conduct planned preventive measures. Repair work at this enterprise with a capacity of 700,000 tonnes/year of TPA per year will continue for one month. Thus, this plant should return to work in mid-December this year.

As per ICIS-MRC Price Report, buying activity has improved in the Russian market of PET chips this week. Most producers reported a limited volume of free PET in the spot market. Converters' opinions regarding November demand in the preforms market differed. Some of them reported good sales, while others reported that demand was low and they have to sell preforms at a price close to their cost.

Indorama Ventures Public Company Limited, listed in Thailand (Bloomberg ticker IVL.TB), is one of the world’s leading petrochemicals producers, with a global manufacturing footprint across Africa, Asia Pacific, Europe and Americas. The company’s portfolio comprises Integrated PET, Olefins, Fibers, Packaging and Specialty Chemicals. Indorama Ventures products serve major FMCG and automotive sectors, i.e. beverages, hygiene, personal care, tire and safety segments. Indorama Ventures has approx. 24,000 employees worldwide and consolidated revenue of US$ 11.4 billion in 2019. The Company is listed in the Dow Jones Emerging Markets and World Sustainability Indices (DJSI).
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