OCI NV net loss narrows as higher volumes boost revenue

MOSCOW (MRC) -- Methanol and nitrogen fertilizer producer OCI NV (Amsterdam, Netherlands) reports an adjusted net loss of USD67 million for the third quarter compared with an adjusted net loss of USD120 million in the same period last year. Revenue increased 19% year on year (YOY) to USD752 million and adjusted EBITDA jumped 79% to USD192 million, reported Chemweek.

A 30% YOY rise in sales volume to 2.8 million metric tons boosted revenue, the company says.

Industrial end markets for methanol strengthened significantly through the third quarter and into the fourth quarter, the company says. Nitrogen fertilizer prices have also improved, but the US nitrogen market remains challenged with prices at steep discounts to global benchmarks due to intense price-based competition for urea ammonium nitrate (UAN), and urea imports into the US priced below the point of origin, OCI says.

“We reported another quarter of healthy volume growth in both our methanol and nitrogen segments, driving a material increase in adjusted EBITDA year over year,” says CEO Ahmed el-Hoshy. “We remain on track to deliver robust volume growth in 2020 and, as we reach run-rate production, we expect to benefit from a further step-up in volumes in 2021.”

Hoshy confirms that the COVID-19 pandemic has not had a direct impact on OCI’s operations, “but our results were held back by significantly lower nitrogen and methanol prices compared to a year ago. However, we have recently started to benefit from an improving price environment, as global nitrogen markets enjoy positive tailwinds for the remainder of this year and into 2021 and the outlook for our methanol end markets has strengthened significantly,” he says.

Worldwide urea prices have rebounded since reaching “a trough” in the second quarter and ammonia started to recover in October, according to Hoshy. “However, US nitrogen prices are trading at severely discounted prices relative to global benchmarks. Despite being a deficit market, US urea imports continue to be priced below the point of origin in the Arab Gulf, a situation which could trigger antidumping investigations. UAN has been impacted by increased domestic volumes contributing to intense price-based competition in the US Gulf. Since July, it has been more favorable for Russia and Trinidad to export UAN to Europe inclusive of duties than to the US Gulf,” he says.

OCI expects nitrogen fertilizer demand in importing countries to remain healthy, supported by rising corn prices. Ammonia prices have lagged urea, but have started to benefit from a recovery in industrial markets, high-cost capacity shutdowns, and higher feedstock prices, the company says.

Meanwhile, US methanol spot prices have roughly doubled since reaching a bottom below USD150/metric ton in June, OCI says. Rising utilization rates of methanol-to-olefin (MTO) plants in China on the back of healthy MTO economics versus naphtha crackers have been a key driver of a rebound in methanol demand, it says.

The outlook for downstream demand for methanol has improved, with fuel consumption picking up, and a gradual return of industrial and construction activity worldwide, it says. Following record methanol production for OCI in the third quarter of 2020, normalization of production and improved onstream efficiency is expected to drive volume growth in the second half of 2020 and in 2021, the company says.

Separately, OCI’s board has formally ratified a decade-long group policy to not produce, sell, or trade solid ammonium nitrate (AN) and has committed not to do so in any future partnerships or transactions. “Given the increasing concerns surrounding the explosive nature of AN, the product is easily substituted by much safer other nitrogen products,” the company says.

As MRC informed earlier, worldwide demand for methanol is forecast to expand at rates below GDP growth for the first time, said Mike Nash, vice president/syngas chemicals at IHS Markit. Speaking last Tuesday in a panel session at the 38th World Methanol Conference, being held by IHS Markit in a virtual format, Nash said that global methanol demand is predicted to grow on average 2.8%/year during the next 10 years, lagging world GDP growth of 3.2%/year. The methanol market is “at a turning point,” Nash said. The current and forecast lower crude oil price means less demand for methanol from the fuels industry, according to Nash. Meanwhile, low crude prices are helping to weaken the economics of methanol-to-olefins (MTO) production. Growth in MTO capacity in China has kept methanol demand growth above GDP growth in recent years, Nash said. MTO plants have operated at high rates and generated high margins in 2020, but there is “a challenging time to come,” he said.

We remind that in early September 2020, Ningxia Baofeng Energy Group Co. (Baofeng Energy) selected KBR's proprietary cracker technology for its new methanol-to-olefins (MTO) project to be built in Ningxia, China. Under the contracts, KBR will provide process technology licensing and process design packages for Baofeng Energy's 500,000-t/y coal-to-olefins facility and its 500,000-t/y C2-C5 comprehensive utilization project. Once complete, the complex will be the "largest" single-train MTO plant in the world, KBR noted.

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

LLDPE prices in Russia rise in November under pressure of situation in foreign markets

MOSCOW (MRC) -- Many Russian converters expected cuts in December low density polyethylene (LDPE) prices under the pressure from seasonal factors. But the situation in foreign markets led to the opposite effect, polyethylene (PE) prices went up in the last month of autumn, according to ICIS-MRC Price report.

By mid-October, a series of shutdowns for maintenance at Russian LDPE plants had come to an end. Some converters said the increased supply from domestic producers and a seasonal drop in demand for finished products should have led to lower LDPE prices, as it was the case in the previous years. But the situation in foreign markets has been unfolding exactly the opposite. High prices in Asia allowed Russian producers to export PE at higher prices than prices in the domestic market. And, as a result, domestic LDPE prices were moving up to the export level.

In the third decade of August-the first half of October, three Russian producers simultaneously shut their production capacities for repairs: Ufaorgsintez, Tomskneftekhim and Kazanorgsintez. Outages of the key producers led to a shortage of LDPE in the market and a price rise. By the second half of October, the last shutdowns for turnarounds in Ufa and Kazan were finished, which should have led to an increase in supply of PE in the market.

But there was still no oversupply of LDPE in November. Kazanorgsintez operated with incomplete capacity utilisation during the month, there were also restrictions on capacity utilisation at some of Ufaorgsintez's production capacities, and the Angarsk Polymers Plant shut its production for several days because of technical issues.

Demand for LDPE has been strong as for November since the beginning of the month, however, this was mostly typical for polyethylene (PE) at its lower price range. And by the middle of the month, many small-size sellers said they had sold out all their monthly quantities. PE prices have begun to go up gradually since the middle of the month, and in some cases, prices of 108 grade LDPE have reached Rb98,000/tonne CPT Moscow, including VAT, by late November, whereas by end-November 2019, prices of this PE grade had dropped below Rb80,000/tonne CPT Moscow, including VAT.

In Asia, LDPE prices has been dynamically rising since mid-summer, and last week's prices in China exceeded USD1,230/tonne CFR. On the back of this, some Russian producers reporter good export contracts, and deals were done in the range of USD1,100-1,170/tonne FCA, which even with the current strengthening of the rouble exchange rate, including taxes, exceeded Rb100,000/tonne FCA, including VAT.

Good export contracts allowed Russian producers to speak about a proportional increase in LDPE prices in the domestic market. This week, Tomskneftekhim virtually already announced a rise of Rb4,000/tonne in spot December prices.
MRC

Iranian president inaugurates petrochemical plant

MOSCOW (MRC) -- Iranian President Hassan Rouhani on Thursday inaugurated Lordegan Petrochemical Company in the southwest of the country, according to XINHUANet.

The plant, which is located in Chaharmahal and Bakhtiari province, has the capacity to produce 677,000 tons of ammonia and 1,075 tons of urea annually.

Rouhani said during the opening ceremony that the products of the facility will be exported and Iran is ready to supply the international market at lower prices, official IRNA news agency reported.

He also welcomed foreign investments in the country's development projects.

According to Tasnim news agency, 800 million U.S. dollars has been invested in the plant so far.

As MRC reported earlier, Iran will launch 42 petrochemical projects by the end of next year.

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, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

KT - Kinetics Technology S.p.A. has been awarded an EP contract in Mexico

MOSCOW (MRC) -- KT - Kinetics Technology, a subsidiary of Maire Tecnimont S.p.A., has been awarded an EP contract by a global engineering and construction company, consisting in the detailed engineering, procurement and delivery of three, large-scale Delayed Coker Furnaces, to be installed in a new oil refinery in Mexico, said Hydrocarbonprocessing.

The three massive coking furnaces will be delivered fully modularized and ready for site installation, and once completed, will represent one of the world’s largest delayed coking units.

With this new achievement, KT strengthens its track record in refining and confirms its capabilities in supplying highly complex equipment, through the implementation of state-of-the-art technologies and modularization methodologies.

Pierroberto Folgiero, Maire Tecnimont Group CEO, commented: "These awards further consolidate Maire Tecnimont’s positioning in its core business and provide sound evidence of the resilience of our technology-driven development strategy, despite Covid-19 times".

As MRC informed earlier, Maire Tecnimont S.P.A. and Hera Group signed of a strategic agreement between Aliplast, Hera Group’s subsidiary, for the collection, recycling and conversion of plastics, and NextChem, Maire Tecnimont Group’s company, for the development of projects and technologies for the energy transition.

As MRC informed earlier, Maire Tecnimont S.p.A. signed a EUR1.2 billion contract for engineering, procurement and on-site services (EPSS) for the planned Amur Gas Chemical Complex (Amur Gas Chemical Complex) of SIBUR, the largest petrochemical holding in Russia and Eastern Europe. The agreement was signed with the Amurskiy GCC, a subsidiary of SIBUR.

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.

Maire Tecnimont S.p.A., a company listed on the Milan Stock Exchange, leading an international industrial group which is a leader in the transformation of natural resources (plant engineering in downstream oil & gas, with technological and execution competences). Through its subsidiary NextChem it operates in the field of green chemistry and the technologies to support the energy transition. Maire Tecnimont Group operates in about 45 countries, through 50 operative companies and a workforce of approximately 6,300 employees, along with approximately 3,000 professionals in the electro-instrumental division.
MRC

CureVac and Wacker sign manufacturing contract for COVID-19 vaccine candidate

MOSCOW (MRC) -- Wacker will support production of CureVac’s COVID-19 mRNA-based vaccine candidate at its biotech site in Amsterdam, with production scheduled to start in the first half of 2021, as per BioPharm.

On Nov. 23, 2020, biopharmaceutical company CureVac and contract development and manufacturing organization Wacker Chemie jointly announced that they have signed a contract for the manufacture of CureVac’s COVID-19 mRNA-based vaccine candidate, CVnCoV. Under terms of the initial agreement, Wacker will ramp up good manufacturing practice (GMP) production of the mRNA drug substance for the vaccine at its biotech site in Amsterdam in the first half of 2021.

Preparations for the start of production, technology transfers, and test runs are already underway, the companies reported in a press release. Wacker plans to produce more than 100 million doses of the CureVac vaccine per year at its Amsterdam site. The site can also be further expanded to meet rising demand in the future.

The Amsterdam site has a history of producing vaccines for clinical development and commercial supply, with a portfolio that ranges from conventional live and killed vaccines to protein-based, polysaccharide and glycoconjugate vaccines. Wacker has invested in the site in recent months to extend production to include mRNA-based vaccines.

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