Development banks make landmark climate pledge, but no fossil fuel phase out

MOSCOW (MRC) -- The world's public development banks have pledged to align their financial firepower with the Paris Agreement on climate change, but avoided a firm commitment to phase out fossil fuel financing, said Hydrocarbonprocessing.

As a source of funding for many large infrastructure projects, including in the energy sector, public development institutions are key to efforts to steer finance away from fossil fuels and into low-carbon projects. Together, such institutions invest around USD2.3 trillion each year - equivalent to 10% of all global investments from public and private sources.

At a green finance summit organized by the French government, the world's 450 public development banks said they would "increase the pace and coverage" of investment in renewable energy, energy efficiency and clean technologies. However, the group stopped short of pledging to phase out fossil fuel investments, a step announced last week by a smaller group of European development banks, while the Asian Development Bank (ADB) refrained from signing the declaration.

The group said it would work towards adopting a tougher stance on the narrower issue of investment in coal - responsible for a large share of the world's carbon emissions - in time for the next round of global climate talks in Scotland in 2021. "We will consider the range of fossil fuel investments in our portfolios, avoid stranded assets, and work towards applying more stringent investment criteria, such as explicit policies to exit from coal financing in the perspective of COP26," the group said in its declaration, seen by Reuters.

Remy Rioux, chief executive of the French Development Agency (AFD), told Reuters the final declaration - the first-ever such joint statement by the world's development banks - should prove a springboard for more action. "We pushed for the most ambitious text and I think the results are fantastic," Rioux told Reuters. Despite the prospect for the pledge to be toughened over time, sources spoken to by Reuters said it had been watered down, compared with a previous draft dated July.

That had included a clearer commitment to "develop explicit policies to exit from or reduce fossil fuels investments." This would have covered all fossil fuels - including oil and gas - while the final version only explicitly targets coal.

Two sources told Reuters the weaker wording was partly the result of pressure from Asian lenders. Some, including the Japan International Cooperation Agency (JICA), were even concerned about the language in the agreed declaration, they added. A spokeswoman for JICA declined to address that point, but said it had negotiated in line with the country's recent pledge to be carbon neutral by 2050 and would sign the declaration.

The ADB said it would not sign it at all. "ADB supports many of the elements of the Summit Declaration but will not be signing it, as it contains policy commitments that have not yet been deliberated by the ADB Board," said Woochong Um, the director general of its Sustainable Development and Climate Change Department.

As MRC informed earlier, 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.

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

MOSCOW (MRC) -- K+S (Kassel, Germany) has reported an adjusted group net loss of EUR1.97 billion (USD2.33 billion) for the third quarter, plunging year on year (YOY) from a loss of EUR41.8 million, due mainly to a EUR2.0-billion write-down of the company's potash assets after it lowered assumptions for long-term global potash prices, said Chemweek.

The company says its adjusted earnings were “strongly negative” due to the extraordinary non-cash impairment of its potash assets and a higher cost of capital rate. EBITDA, however, rose 19% YOY to EUR96.0 million for the third quarter despite a 9% decline in sales to EUR821.7 million.

K+S says it expects a “slight recovery” in potassium chloride (KCl) prices for the rest of this year compared with the third quarter, with prices for fertilizer specialties to remain “largely stable.” It has reaffirmed its full-year guidance for EBITDA of about EUR480 million, down from EUR640 million in 2019. Adjusted net earnings will fall to a “significantly negative figure” as a result of the EUR2.0-billion impairment, it says.

The USD3.2-billion sale of the K+S Americas salt business to Stone Canyon Industries Holdings and affiliates, announced in October, is expected to complete in the summer of 2021, according to the company. “With the proceeds from the sale of the American salt business and the consistent implementation of our package of measures, we will significantly reduce the company’s debt and secure financing for the coming years,” says K+S chairman Burkhard Lohr. “With the impairment in the third quarter, we have now also adjusted the balance sheet. All this increases our flexibility for developing the company further."

The company’s Americas operating unit saw increased earnings contributions in its industry and consumers customer segments, which together with strict cost discipline almost completely offset the effects of lower early de-icing salt fills, it says. EBITDA of EUR24.4 million for the third quarter was down EUR1.0 million YOY on sales almost 9% lower at EUR257.7 million. A higher KCl price level could not compensate for lower volumes and an unfavorable exchange rate, it says.

The Europe+ operating unit saw operating earnings rise 26% YOY to EUR84.8 million despite a decline of more than 9% in revenue to EUR562.6 million, mainly attributable to the weaker KCl price as well as currency effects.

The ongoing restructuring of administrative functions within K+S in Germany is expected to be completed by the end of this year and reduce annualized costs by EUR60.0-140.0 million from 2021, it says.

As MRC informed earlier, in September, 2.014 million tons of mineral fertilizers were produced (in terms of 100% nutrients) against 1.993 million tons a month earlier. In general, in January - September 2020, Russian enterprises produced just over 18.5 million tons of fertilizers, which is 3.5% more than in 2019.

Also, in 2019, Russian enterprises produced 23.588 million tons of fertilizers, which is 3.2% more than in 2018.
MRC

MOSCOW (MRC) -- Evonik Industries and Linde say that their joint membrane-based technology for natural-gas processing can efficiently separate hydrogen from natural gas blend at the point of extraction, according to Chemweek.

The companies say that a demo plant at Linde's Dormagen, Germany, site will act as a showcase for the efficiency and cost effectiveness of their joint technology. Further details have not been disclosed.

“The economic viability of extracting hydrogen from the current natural gas infrastructure depends largely on the efficiency of the gas separation technology. Membrane selectivity is a key success factor,” says Harald Schwager, deputy chairman of Evonik.

The technology, jointly developed by the two companies through a partnership announced in 2018, combines various technologies to separate the hydrogen, such as Linde’s pressure swing adsorption technology and Evonik’s HISELECT membranes, to deliver hydrogen at purity rates of up to 99.99%, they say.

“This high-purity stream of hydrogen could then be delivered to fueling stations, for example, to power fuel-cell vehicles. But it’s not just a source of energy; it’s also a valuable feedstock especially for the chemicals industry,” says Jurgen Nowicki, executive vice president at Linde and CEO of the Linde Engineering business.

As MRC reported earlier, in mid-October, 2020, Linde GmbH and Shell announced an exclusive collaboration agreement on ethane-oxidative dehydrogenation (E-ODH) technology for ethylene production. The catalytic process is an alternative route to ethane steam cracking, offering the potential of economic advantages, acetic acid co-production and significantly lower overall carbon footprint through electrification of power input.

Ethylene is the main feedstock for the production of polyethylene (PE).

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.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.
MRC

MOSCOW (MRC) -- Braskem (Sao Paulo, Brazil) reports a net loss for the third quarter of 1.413 billion Brazilian reais (USD258 million), down from a loss of RD888 million (USD222 million) in the year-ago quarter, reporter Chemweek.

The company attributes the loss mainly to RD1.413 billion in additional costs related to mining damage in Alagoas and to depreciation of the reais versus the US dollar. Revenue totaled R15.992 billion (USD2.972 billion), up 20% year-over-year (YOY) from RD13.368 billion (USD3.370 billion). Resin sales volume increased both sequentially and YOY.

“In the third quarter, in line with the company’s strategy of prioritizing sales to the Brazilian market, the company surpassed 1,050,000 (metric) tons of resins sold, a historical sales record in Brazil,” says Braskem. “In the United States, sales normalized and in the quarter, the company recorded a sales volume in excess of 400,000 tons of (polypropylene (PP)in the North American market.”

Recurring EBITDA was USD699 million, 126% higher sequentially owing to a better spreads for PE in Brazil and Mexico and PP in the US, and increased sales volume in Brazil and the US. The figures increased 69% YOY on better spreads for polyethylene (PE) and polyvinyl chloride (PVC) in Brazil, PP in Europe, and PE in Mexico, as well as higher sales volume in Brazil, the US, and Mexico.

In Brazil, EBITDA was USD529 million, up 148% sequentially and 94% YOY, the result mainly of higher resins and chemicals sales volumes better spreads in PE. Resin sales volume increased 47% sequentially and 20% YOY. “Due to the recovery in demand for resins in the Brazilian market, the utilization rate of the crackers in Brazil normalized and, in the third quarter, was 87%, which represented an increase compared to 2Q20 (17%) and 3Q19 (2%),” says Braskem.

EBITDA in the US and Europe totaled USD133 million, up 223% sequentially and 47% YOY. Braskem cites higher sales volume in the US, noting that its production units in the US operated at 99% during the quarter - up 9% sequentially and 8% YOY. PP demand in Europe was down on depressed demand into automotive. Combined resin sales volume increased 10% sequentially and 8% YOY.

Mexico’s EBITDA came to USD97 million, “in line” sequentially and YOY. The Braskem Idesa joint venture imported 42,000 metric tons (8,000 b/d) of ethane from the US to complement supply from Pemex, allowing it to lift PE utilization to 84% in the quarter. Resin sales volume dropped 2% sequentially on inventory replenishment while increasing 12% YOY on improved availability of product for sale.

We remind that production at Braskem's new PP plant in the US was at 36,000 tonnes in October, close to the monthly production capacity of the plant of around 38,000 tonnes.

As MRC reported previously, Brazilian petrochemical producer Braskem's 450,000 mt/year PP plant in LaPorte, Texas, along the Houston Ship Channel completed its initial commercial production, as per the company's statement as of Sept. 10. "The launch of commercial production at our new world-class PP production line in La Porte clearly affirms Braskem's position as the North American polypropylene market leader," Braskem America CEO Mark Nikolich said in a statement. With a USD750 million investment, the new PP plant's construction started in October 2017 and was completed in June, 2020.

Braskem operates five other US PP plants in Texas, Pennsylvania, and West Virginia, with a cumulative capacity of 1.57 million mt/year that the company acquired. The new plant in La Porte, Texas, is Braskem America's first PP new build.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 880,130 tonnes in the first 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.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
MRC

MOSCOW (MRC) -- Permanent refining capacity closures expected for 2020-2021 have risen to about 1.7 million bpd as the COVID-19 pandemic hammers demand for oil products, the International Energy Agency said, said Hydrocarbonprocessing.

About a dozen refinery closures have been announced in the past few months, the IEA said, with the bulk of capacity closures - over 1 million bpd - happening in the United States. “There were capacity shutdowns planned for 2020-2021 prior to COVID-19, but the bulk of the new announcements reflect pessimism about refining economics in a world suffering from temporary demand collapse and structural refining overcapacity,” the IEA said in its monthly report.

In 2019, global crude refining capacity stood at 102 million bpd, catering for 84 million bpd of refined oil products demand. That shrank to 76 million bpd in 2020 and is expected to be 80 million bpd in 2021, the IEA said. This week, Royal Dutch Shell said it will halve crude processing capacity and cut jobs at its 500,000 bpd Pulau Bukom oil refinery in Singapore.

In Europe, Petroineos plans to mothball nearly half of its 200,000 bpd refinery at Grangemouth in Scotland, and Gunvor will shutter its 110,000 bpd Antwerp oil refinery in Belgium. The outlook for refining remains mixed, with traditionally low-value naphtha and fuel oil possible bright spots in the new year, Vitol chief executive Russell Hardy told the Reuters Commodity Trading Summit this week.

He said the 1.6-1.7 million bpd of capacity closures already announced to take place by the end of 2021 to early 2022 could grow by a further 1 million bpd. Plateauing fuel demand, tightening environmental rules and overseas competition have prompted several European and U.S. refiners to opt for converting plants to produce biofuels.

As MRC informed earlier, Chemical railcar traffic in North America continues to make up the year-to-date deficit with 2019 while holding firm versus 2018. Volume for the year through 7 November was down 3.8% from 2019 and down 5.5% from 2018, compared to declines of 4.0% and 5.5%, respectively, for the year through 31 October. On a four-week basis, volume was up 0.4% from 2019 and down 4.4% from 2018 (chart), weakening slightly from the previous week, when the respective figures were up 0.8% and down 3.2%.

As MRC informed earlier, 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.

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