SABIC and Vopak sell minority stake in Chemtank Jubail storage terminal JV

MOSCOW (MRC) -- SABIC and Vopak Holding Terminals BV have signed an agreement with the Jubail and Yanbu Industrial Cities Company (JYIC), owned by the Royal Commission for Jubail and Yanbu (RCJY), reported Chemweek.

Under the agreement, JYIC will become a 20 percent stake partner in Jubail Chemical Storage and Services Company (Chemtank).

The agreement aims to strengthen strategic integration among the three parties to scale up collaboration between local and international organizations. The deal will help achieve the goals of the National Industrial Development and Logistics Program, a key part of Saudi Vision 2030.

Abdullah Al-Saadan, president of the Royal Commission for Jubail and Yanbu, said that JYIC enables the commission to make optimal use of its assets and achieve sustainability and efficiency.

“It invests in the development of the industrial investor logistical services sector, which plays an active logistical role in serving industries, especially petrochemicals. This will help create an attractive environment and enhance the capabilities of the business sector,” he said.

Yousef Al-Benyan, vice-chairman and CEO of SABIC, said the agreement builds on the historical partnership between SABIC and RCJY.

“It is an extension of our continuous coordination in support of the industrial sector in the Kingdom to create an appropriate environment to lay the foundation for future investment,” he said.

Al-Benyan praised the contribution of Vopak as a global player in the field.

Eelco Hoekstra, CEO of Royal Vopak, said: “The entry of JYIC cements a partnership in which the Royal Commission, SABIC and Vopak have jointly collaborated over the past 20 years to create a world-class supply chain infrastructure in Jubail and Yanbu. This sets a great platform to deliver further growth and efficiency in the Kingdom.”

We remind that, as MRC wrote before, SABIC Europe declared a force majeure on its low density polyethylene (LDPE) supplies from Wilton, the UK on November 3. The company had shut its LDPE plant for a maintenance work in the first half of October. The Wilton unit is able to produce 400,000 tons/year of LDPE.

According to MRC's ScanPlast report, September estimated LDPE consumption in Russia fell to 23,930 tonnes from 47,610 tonnes a month earlier. Russian producers reduced their domestic LDPE shipments due to shutdowns for maintenance at production capacities in Ufa, Tomsk and Kazan. Russia's estimated LDPE consumption totalled about 406,500 tonnes in January-September 2020, which virtually corresponded to the last year's figure.

SABIC is a global diversified chemical company headquartered in Riyadh. The company manufactures on a global scale in the Americas, Europe, the Middle East and Asia Pacific, producing different kinds of products including chemicals, commodities, high-performance plastics, agri-nutrients and metals. The company supports customers by identifying and developing opportunities in key end-use applications such as construction, medical devices, packaging, agri-nutrients, electronics, transportation and clean energy. Production in 2019 measured 72.6 million metric tons. SABIC has more than 33,000 employees worldwide and operates in about 50 countries. Fostering innovation and a spirit of ingenuity, SABIC has 12,540 global patent filings and has significant research resources, with innovation hubs in five key regions - the US, Europe, the Middle East, South Asia and North Asia.
MRC

COVID-19 - News digest as of 09.11.2020

1. HollyFrontier posts smaller-than-expected loss as fuel demand recovers

MOSCOW (MRC) -- U.S. refiner HollyFrontier Corp has posted a smaller-than-expected quarterly loss on the back of cost cuts and a recovery in fuel prices, said Hedocarbonprocessing. Oil refiners have been forced to cut production and slash spending as they struggle with months of sluggish demand as coronavirus-led lockdowns wrecked the need for travel. While demand for fuel has gradually picked up with the reopening of economies, a resurgence in coronavirus infections has threatened the recovery. The refiner said the amount of crude it processed rose 11.5% to 421,100 bpd in the third-quarter from the second, but was still 17% lower than a year earlier. It expects to run 360,000 bpd to 380,000 bpd of crude at its refineries in the current quarter.





MRC

Lotte Chemical records lower profit as olefins, aromatics earnings, sales decline

MOSCOW (MRC) -- Lotte Chemical reports third-quarter net profit of 148 billion South Korean won (USD131.7 million), down 30.8% year on year (YOY) from W214 billion, according to Chemweek.

The company recorded operating profit of W194 billion, up 20.4% YOY. Sales were W3 trillion, a drop of 21% YOY.

Lotte Chemical says its olefin segment's operating profit of W79 billion was down 62% YOY. Revenue decreased by 36.6% YOY to W1.2 trillion for this segment owing to a decline in product prices. An explosion at the company's petrochemical complex at Daesan, South Korea, reduced group profit. The complex at Daesan, based on a naphtha cracker, accounts for 21.8% of Lotte Chemical’s sales. It says there was stable demand for hygiene-related products such as masks, hand sanitizers, and transparent partitions. The company projects demand in the fourth quarter to improve because of economic recovery despite the off season at the end of the year. It also forecasts profit to improve after the restart of operations at the Daesan plant within the year.

Operating profit at Lotte Chemical’s aromatics division declined 20% YOY to W6 billion. Sales plunged 43.7% YOY to 376 billion. Sales were pressured by a decrease in product prices caused by declining oil prices and operating-rate adjustments at overseas subsidiaries. Aromatics profit decreased due to oversupply caused by China’s new large-scale para-xylene (p-xylene) and purified terephthalic acid (PTA) plants starting operation, despite improved demand during the polyester peak season.

Operating profit for the polyester unit dropped 65% to W31 billion. Polyester demand in China is weak due to COVID-19, but this was partially offset by a rise in demand for sanitation and disposable items since February. The company projects profit to improve gradually in the onshore polyester peak season despite continued oversupply. For the current quarter, it expects profit for polyethylene terephthalate (PET) to decline due to the off season. Lotte expects spreads of purified isophthalic acid (PIA) to improve because of tight supply.

Operating profit for Lotte's advanced materials unit increased 81.8% YOY to W100 billion. Sales grew by 13.2% YOY to W863 billion. Market conditions improved and sales volume increased due to growing demand for no-contact lifestyle/home appliances, it adds. Market conditions for acrylonitrile-butadiene-styrene (ABS) remained strong due to tight supply in China and its neighboring region. For the polycarbonate (PC) business, compounding products’ profitability stayed stable notwithstanding oversupply in the market.

The company’s Lotte Chemical USA business unit swung to an operating loss of W22 billion, versus an operating profit of W35 billion a year earlier. Sales plunged 54.6% YOY to W64 billion. The company says that profit was depressed by Hurricane Delta in October. Lotte projects operating losses to narrow in the fourth quarter as the plant resumes operations. It expects ethylene glycol market conditions to improve due to some competitors cutting production and polyester demand recovering despite worldwide supply expansions.

Its other business unit, Lotte Chemical Titan Holding, achieved third-quarter net profit of 78.8 million ringgit (USD18.9 million), down 14.7% YOY. Revenue was down 10.4% YOY to RM1.9 billion due to lower selling prices.

As MRC reported before, in H2 October, 2020, Lotte Chemical USA, a joint venture (40:60) of the Malaysian company Lotte Chemical Titan and its parent company Lotte Chemical Corporation, restarted its cracker in Lake Charles in the aftermath of Hurricane Delta's Oct. 9 landfall. This cracker with the production capacity of 1 million mt/year is nearly half-owned by Westlake Chemical. Lotte also restarted its associated 700,000 mt/year monoethylene glycol plant (MEG), market sources said.

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

Wacker to cut 1,200 job by end of 2022

MOSCOW (MRC) -- Wacker Chemie AG is moving forward with “Shape the Future,” its efficiency program initiated last November. The Munich-based chemical company has recenly announced that company management and employee representatives have agreed on a framework for the planned job cutbacks, as per the company's press release.

In this regard, some 1,000 jobs in total will go in Germany by the end of 2022. The job cuts will affect mainly Wacker’s administrative departments and the indirect and non-operational functions of its business divisions. In addition, 200 jobs will be cut back at international sites.

The layoffs in Germany are to be implemented exclusively with socially responsible and voluntary measures. These include retirement, phased retirement or severance agreements. The recently reached agreement excludes forced layoffs.

Moreover, it was decided that qualified trainees will continue to be taken over. The company is thereby making an important contribution toward offering young people an attractive career perspective after they have completed their training. This policy also secures Wacker’s access to well-qualified young professionals in future.

The company confirmed that by reducing non-personnel costs and the scope of internal services, and slimming down the organization, it will achieve its annual savings goal of EUR250 million by the end of 2022. Half the total amount is accounted for by non-personnel costs and the other half by personnel costs. WACKER is expecting non-personnel-cost savings of over EUR50 million this year. In 2021, the amount saved is likely to exceed EUR100 million. Significant savings in personnel costs are not expected before next year.

“The main purpose of “Shape the Future” is to support the company’s profitable growth by keeping WACKER’s organization aligned with customers’ needs and requirements,” said CEO Rudolf Staudigl, explaining the focus of the program. “In both our polysilicon business and our chemical divisions, we are preparing ourselves for a harsher competitive environment. We not only want to achieve significant cost-savings, but also to decisively strengthen WACKER for tomorrow’s challenges and secure a long-term competitive-edge,” added Staudigl.

“With the agreements we have just concluded, we have created the framework that will enable us to go ahead quickly with the implementation phase of the planned organizational changes. Together with the employee council, we will now work out the personnel measures in detail,” said Executive Board member Christian Hartel. “We are very satisfied that we have succeeded in achieving our goals with good and fair solutions with this agreement,” emphasized Hartel.

As MRC reported earlier, Wacker Chemie operates a 90 ktpa EVA compounding plant at the Ulsan site, consisting of two lines. The second line with a capacity of 40 thousand tons of products per year was launched in 2013.

According to MRC's DataScope, September EVA imports to Russia fell by 30,32% year on year to 2,38 tonnes from 3,420 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-September 2020 by 9,85% year on year to 26,340 tonnes (29,220 tonnes a year earlier).

Wacker Chemie manufactures and markets EVA dispersions under the VINNAPAS brand name. VINNAPAS polymer dispersions are used in a wide range of industries: for the production of complex thermal insulation systems, building and tile adhesives, plaster, building mixtures and mortars, cement sealing slurries and nonwovens.
MRC

Trump administration asks court for extension

MOSCOW (MRC) -- The Trump administration has asked the U.S. Supreme Court for an extension to respond to a petition from oil refiners requesting that the court review a decision that cast doubt on a program exempting refiners from biofuel blending obligations, said Reuters.

The government’s request would push their response deadline to Dec. 14 from Nov. 12, according to a letter to the court. The request comes as the Trump administration has delayed a slew of decisions related to U.S. biofuel laws, choosing to wait until after the U.S. presidential election to decide on politically sensitive matters.

Under the U.S. Renewable Fuel Standard, refiners must blend billions of gallons of biofuels into their fuel, or buy credits from those that do. If refiners can prove the obligations would cause them financial harm, they can get waivers from their requirements.

The Trump administration has about quadrupled the number of exemptions it grants to refiners, angering farmers and ethanol producers, who say the waivers hurt demand for their products. The oil industry says the exemptions help against the too-pricey obligations.

In January, an appeals court handling a case initiated by the biofuel industry, ruled that waivers granted to small refineries after 2010 should only be approved as extensions. Because most recipients of waivers in recent years have not continuously received them year after year, the decision threatened to upend the waiver program.

Then in September, oil refiners petitioned the Supreme Court to review the decision. The administration’s request for an extension could postpone already delayed decisions around the RFS. The Trump administration has not decided how to handle exemptions for the 2019 compliance year. It also has yet to set volumes for next year’s biofuel blending mandates under the RFS ahead of a looming Nov. 30 deadline.

And in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

Ethylene and propylene are feedstocks for producing polyethylene (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