ACC: Chemicals on recovery path after pandemic shock

MOSCOW (MRC) -- Chemical production is rebuilding momentum after shocks linked to the global COVID-19 pandemic, according to Chemweek with reference to the American Chemistry Council’s (ACC) Year-End 2020 Chemical Industry Situation and Outlook.

US chemical production volume excluding pharmaceuticals is expected to fall by 3.6% in 2020 followed by growth of 3.9% in 2021. The US decline is the sharpest since 2008 and 2009, during the financial crisis.

Global chemical volumes are expected to fall 2.6% in 2020, the largest drop in at least 40 years, followed by a 3.9% rebound next year. ACC estimates a 7.8% drop in activity from peak-to-trough in headline global production, from December 2019 lasting until roughly June 2020. “China was the first nation to emerge from the downturn and by September this year, had fully recovered and entered an expansion stage of the cycle,” says ACC chief economist Kevin Swift. “Other nations have not fared as well, but at a global level, a trough was reached in June and a recovery emerged. As of mid-November, nearly all nations and regions are participating in recovery.”

The year has been difficult but industry is well into recovery, says Martha Moore, senior director of policy analysis and economics at ACC. “We’re maybe even ahead of some of our manufacturing peers,” Moore says. “Long-term prospects continue to be very positive because of the energy advantage that we have in the United States. We really need this health crisis to abate, however, and we expect that to happen in 2021. Once that health crisis abates we’re going to see that the recovery gains some traction and domestic and use markets are going to recover.” ACC expects the highest growth to be in basic chemicals, followed by consumer products and specialties.

ACC’s Chemical Activity Barometer, a leading indicator of broader industrial activity, rose for a seventh straight month in November. “Key indicators were mixed (in November), but remain largely positive,” said Swift. CAB readings are consistent with continued economic recovery into 2021.

US GDP tumbled 3.8% during 2020, down from a 2.3% gain in 2019. US growth is expected to rebound 3.7% in 2021, led by stronger consumer spending. Industrial production fell 6.9% in 2020 with declines occurring in nearly every sector. Industrial production is expected to rise 3.7% in 2021. Growth is anticipated for nearly all sectors in 2021, with the largest gains in motor vehicles, aerospace, appliances, iron and steel, petroleum refining, and plastic and rubber products.

“The post-pandemic outlook is for broad-based growth in chemicals supported by solid fundamentals,” Moore says. “Growing customer demand, stabilizing export markets, and a competitive edge linked to domestic supplies of shale gas and natural gas liquids (NGLs) are among the factors pointing to continued gains in US chemistry.”

US basic chemicals demand fell 1.3% in 2020, helped a bit by continued growth in plastic resins, one of the areas to maintain positive growth, up 0.9%, this year. Basic chemicals should rebound with 5.0% growth in 2021, led by 6.9% growth for plastic resins. US specialties volumes were down 10.8% in 2020 as lockdowns were especially negative for the oilfield chemicals, rubber processing, foundry chemicals, and printing ink sectors. Specialty volumes are forecast to improve 2.4% in 2021, led by recovery in rubber processing, antioxidants, plastic compounding, catalysts, plastic additives, and lubricant additives.

US chemicals trade was notably lower in 2020, and it will be a year or two before total trade flows return to pre-COVID-19 levels, Swift says. Total chemicals trade is projected to shrink 7%, to USD220.8 billion, in 2020. Exports will fall 9%, to USD124.0 billion, in 2020 before expanding 8% 2021. Imports will fall 5%, to USD96.8 billion, in 2020, then recover 9% 2021. Potential changes in global supply chains could affect trade levels longer term. “Concern about supply chain disruptions will lead to near and on-shoring, accelerating any such decisions already in consideration prior to the pandemic,” Swift says.

The US will remain a preferred destination for chemical investment thanks to advantaged energy and feedstock access. ACC estimated a nearly 40% gain in basic olefins capacity during the 2010s. Basic olefins capacity could expand another 20% over the next decade. During recent years, the chemical industry accounted for nearly one-half of total construction spending by the US manufacturing sector even though it accounts for about 15% of manufacturing value-added. Some 345 new chemical production projects, valued at more than $207 billion altogether, have been announced through late November 2020. The rate of increase will slow from the 2010s boom, but ACC still forecasts average annual gains of over 4%/year in US chemical industry capital spending in the 2021–25 period.

As MRC reported earlier, the ACC's Chemical Activity Barometer (CAB) for November showed continued economic recovery in the US, with the three-month moving average (3MMA) rising 0.8% sequentially, versus a 1.0% gain in October and a 1.5% gain in September. The figure last declined in May. Year-over-year (YOY), the October 3MMA CAB declined 2.4%.

We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% 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-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.
MRC

BASF targetsnot only to produce more, but also to produce better

MOSCOW (MRC) -- BASF Agricultural Solution’s senior vice-president for regulatory, sustainability and public affairs, Dirk Voeste, talks with Sanjiv Rana, editor-in-chief at IHS Markit's Crop Science News Reporting (formerly Agrow), to discuss the company’s outlook on sustainable solutions, digital agriculture and stewardship, said Chemweek.

BASF recently set itself “clear and measurable” targets to boost sustainable agriculture by 2030. That includes its Agricultural Solutions division increasing its sales share of “Accelerator” products – those with a “substantial sustainability contribution” – by 7% annually. The targets also include BASF bringing digital technologies to more than 400 million ha of farmland and helping farmers achieve a 30% reduction in CO2 emissions per tonne of crop produced.

Dirk Voeste (DV): I believe that agriculture will see one of the most accelerated transformations over the next ten years. Let me take the example of two recent Nobel Prizes to highlight my point. One is the Nobel Prize in Chemistry this year, which recognised the CRISPR/Cas9 genome editing technology. It symbolises the need for innovation to cope with all the challenges facing modern agriculture. The Nobel Prize in Peace to the UN’s World Food Programme reaffirms the need for affordable and sustainable food supply to the world’s population.

The challenges faced by agriculture are likely to increase manifold because of climate change. This prompts us to save resources and use them gently, while embedding available technologies to deliver on societal expectations. Farmers also have to cope with several uncertainties such as unpredictable weather events, and, in recent past, the trade war between the US and China. The core of our activities is to ascertain how best to mitigate the impacts. The target for us is not only to produce more, but also to produce better, while ensuring a smaller footprint from our activities.

The "better yield" concept can mean different things. In terms of the Green Deal in Europe, this will be about optimised use of resources and ensuring better biodiversity through targeted application of crop protection products and enhanced digitalisation of farm activities. In the African and Asian context, this will most likely be about the accelerated production of carbohydrates.

Taking these into account, sustainability for us means finding the right balance between value creation and meeting societal expectations. We focus on two aspects: ensuring our activities protect the environment and scarce resources while enabling farmers to economically.

NBTs are widely recognised and the public debate on the topic is now marked by more openness for technologies such as genome editing. But I think the Nobel Prize will not have a significant impact in terms of the European society’s acceptance of NBTs. However, other factors, such as the drought in northern Europe and France last year, along with severe weather anomalies in the UK, may influence the decision on adoption of NBTs.

With the scale of transformation and the magnitude of the task in front of us, we must admit that it cannot be done alone. So, it is not only collaboration among crop protection companies, but also collaboration across the value chain and among stakeholders. What we are seeing is a more open debate from all perspectives in terms of the understanding of agriculture, particularly in the context of Europe. You often see organic farming being pitted against conventional agriculture. But it is not about choosing one against the other. It is about determining what is right for producing a better yield under a particular set of conditions.

Each product is assigned to one of four categories: Accelerator (substantial sustainability contribution); Performer (meet basic sustainability standards in the market), Transitioner (has specific sustainability issues that are being addressed) or Challenged (significant sustainability concern identified and action plan being developed or implemented). Across BASF’s entire portfolio, 28.9% of products are Accelerators, 61.9% are Performers, 9.1% are Transitioners, and 0.1% are Challenged.

BASF has set itself a target of increasing the sales of Accelerator solutions from EUR15 billion (USD17.9 billion) in 2019 to EUR22 billion (USD26.2 billion) by 2025.

As MRC informed previously, BASF restarted its No. 1 steam cracker following a maintenance turnaround on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/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 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC

BASF appoints new head for specialty chemicals trading division BTC Europe

MOSCOW (MRC) -- Jose Carlos Corral Montilla has succeeded Dr. Marko Grozdanovic to become BTC Europe’s new Managing Director and Vice President. The company is BASF’s European sales organisation which focuses on specialty chemicals, reported Process Worldwie.

Thus, as of November 1, 2020, Jose Carlos Corral Montilla has become the new Managing Director and Vice President of BTC Europe.

Montilla joined BASF in 1998. He started his career in Leather and Textile Chemicals at BASF Spain in Barcelona, where he held different positions in supply chain, sales and product management. In 2005, he moved to Germany to take over a role in Global Strategic Marketing for Leather Chemicals and became Head of Product Management for Leather Chemicals in North America and EMEA two years later.

After having transferred to Business Management Leather Chemicals in North America and EMEA in 2008, he became Director Global Marketing Leather Chemicals in Singapore in 2013. In his latest position, before assuming responsibility as Managing Director at BTC Europe, he worked as Director Global Product Management Plastic Additives, BASF East Asia, in Hong Kong.

“I am delighted to become a part of the BTC Europe team,” says Montilla. “The ability to connect with our customers, understand their needs and create value for them with passion and industry expertise is what drives us at BTC Europe. I am very much looking forward to grow and develop this business further at BTC Europe.”

Montilla studied Business Administration, Market Research and Advanced Industrial Marketing in Barcelona, Spain and Fontainebleau, France.

Montilla succeeds Dr. Marko Grozdanovic, who after four years at BTC Europe was appointed to Head of the Personal Care Europe regional business unit and new Managing Director of BASF Personal Care and Nutrition, effective October 1, 2020.

As MRC informed previously, German chemicals maker BASF said in early November it had put a project to build a petrochemicals complex in India worth up to USD4 billion on hold due to the economic uncertainty caused by the COVID-19 pandemic. BASF signed a memorandum of understanding with Abu Dhabi National Oil Company (ADNOC), Adani Group and Borealis AG in October 2019 to evaluate a collaboration to build the chemical site in Mundra, in India’s Gujarat state.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC

U.S. crude stocks soar 15 MMbbls amid record surge in net imports

MOSCOW (MRC) - U.S. crude oil stockpiles last week surged the most since April, jumping more than 15 million barrels, as imports rose and exports plunged, the Energy Information Administration said Reuters.

The unexpected supply build and record rise in net imports stunned the oil market, which has been weighed down by low demand due to the coronavirus pandemic. "It defies the math that is in the market, for sure," said Bob Yawger, director of Energy Futures at Mizuho in New York. "Do U.S. refiners, at a time when they're closing refineries, need to increase imports by a million barrels a day? That's ridiculous."

Crude inventories rose by 15.2 million barrels in the week to Dec. 4 to 503.2 million barrels, the EIA said, compared with analysts' expectations in a Reuters poll for a 1.4 million-barrel drop. Net crude imports rose by a record high of 2.7 million barrels per day, the EIA said. That boosted U.S. Gulf Coast stocks by 11.8 million barrels, the most in one week ever, according to EIA data.

U.S. crude exports plunged by 1.6 million bpd to just 1.8 million bpd, the lowest since 2018, while imports rose 1.08 million bpd. Crude markets gave up early gains on the news, with U.S. crude and global benchmark Brent changing course to trade lower. U.S. crude settled 8 cents lower at $45.52 a barrel, after touching a session low of $44.95 a barrel.

Gasoline and distillate stocks were also higher, causing U.S. gasoline futures to pare gains as heating oil futures turned negative. Gasoline stockpiles rose by 4.2 million barrels in the week to 237.9 million barrels, the EIA said, compared with expectations for a 2.3 million-barrel rise.

Distillate stockpiles, which include diesel and heating oil, rose by 5.2 million barrels in the week to 151.1 million barrels, versus expectations for a 1.4 million-barrel rise, the EIA data showed. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.4 million barrels in the last week, EIA said. Refinery crude runs rose by 424,000 bpd, as refinery utilization rates rose by 1.7 percentage points, the EIA said.

As MRC informed previously, global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40% in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

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 PE and PP.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
MRC

Huntsman ups Q4 guidance on broad gains

MOSCOW (MRC) -- Huntsman (The Woodlands, Texas) has updated its fourth-quarter outlook citing gains in all segments. The company now expects fourth-quarter adjusted EBITDA to increase 20–25% year-over-year (YOY), exceeding previous guidance, as per Chemweek.

Huntsman’s fourth-quarter 2019 adjusted EBITDA totaled USD182 million, down 12% YOY from USD207 million.

At the time of its third-quarter earnings release, Huntsman forecast fourth-quarter adjusted EBITDA in the polyurethanes segment “in line” with the third quarter’s USD156 million. The company now expects an increase of at least 20% owing to stronger than expected overall demand as well as higher methylene di-para-phenylene diisocyanate (MDI) component margins, particularly in Asia.

For the performance products segment, Huntsman has increased its adjusted EBITDA forecast from “near flat” versus the third quarter’s USD36 million to an increase of at least 15%, and for the advanced materials segment, from a slight decline from the third quarter’s USD25 million to “approximately in-line.”

Huntsman expects adjusted EBITDA in the textile effects segment to be “flat” versus the USD18 million turned in during the fourth quarter of 2019. That would represent a 125% increase over the 2020 third quarter’s USD$8 million.

As MRC reported earlier, Nanjing Jinling Huntsman, a joint venture between Huntsman and Sinopec Jinling, shut its propylene oxide plant in Nanjing (Nanjing, Jiangsu Province, China) on November 1 for scheduled maintenance. This plant with a capacity of 240,000 tonnes/year of propylene oxide was closed until approximately 25 November.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2019 revenues of approximately USD7 billion. The company's chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. The company operates more than 70 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 9,000 associates within our four distinct business divisions.
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