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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. |
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