Russia approves Sinopec participation in Sibur Amur gas chemical mega-project

MOSCOW (MRC) -- Russia’s government commission on foreign investment has formally approved Sinopec’s proposed acquisition of a 40% ownership stake in the USD10-billion Amur gas chemicals complex being developed by Sibur (Moscow) in Russia’s Far East, said Chemweek.

The approval was announced in a formal statement by the Russian government. Sibur began foundation construction activity for the Amur project in Blagoveshchensk, Russia, in August this year. The complex, near Russia’s border with China, is planned to produce 2.3 million metric tons/year of polyethylene (PE) and 400,000 metric tons/year of polypropylene (PP), with commissioning scheduled in 2025. The facility’s steam cracker will be supplied with 2 MMt/y of ethane and 1.5-MMt/y of liquefied petroleum gas (LPG) as feedstock under a supply agreement with Gazprom (Moscow), which is building a 42-billion cubic meters/year gas processing plant at the same location.

Sibur said in August that Sinopec was expected to become its partner in the project and that China “remains the key driver behind global polymer consumption growth and is a target market for Amur.” The two companies signed a shareholder agreement in June.

As MRC informed earlier, LyondellBasell, the world’s leading licensor of polyolefin technologies, announced that the Amur Gas Chemical Complex project, being implemented by SIBUR Holding PJSC, the largest integrated petrochemicals company in Russia, has selected LyondellBasell’s Spheripol technology for a new facility. The process technology will be used for a 400 KTA polypropylene unit to be built in Svobodny, Amur region, Russia.

According to MRC's DataScope report, Russian companies increased external purchases of polypropylene in November, imports reached 20,400 tonnes against 17,900 tonnes a month earlier. Thus, overall PP imports into Russia reached 202,000 tonnes in January-November 2020, compared to 167,400 tonnes a year earlier. Purchasing of all grades of propylene polymers in foreign markets increased, with homopolymer PP imports accounting for the most noticeable rise.
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MOSCOW (MRC) -- Sinopec Corp's Qilu refinery has resumed operations after a more than three-month overhaul of its 160,000 barrels per day (bpd) crude processing facility, reported Reuters with reference to the company's statement on Thursday.

The refinery, based in China's oil refining hub Shandong province, has total crude oil processing capacity of 13 million tonnes per year, or 260,000 bpd.

"With only half-month left before the year-end, the refinery will increase operational rates at all production facilities to meet the output targets for 2020," Sinopec said.

As MRC informed earlier, SKGC's joint venture Sinopec-SK Wuhan Petrochemical plans to restart its naphtha-fed steam cracker in Wuhan in the second-half of December as scheduled after the turnaround and debottlenecking. The cracker was shut down in October, 2020.

SK Wuhan's steam cracker is able to produce 800,000 mt/year of ethylene and 400,000 mt/year of propylene.After the debottlenecking, the cracker's ethylene production capacity will be increased to 1.1 million mt/year and propylene capacity to 550,000 mt/year. The company will add a new 60,000 mt/year butadiene unit at the plant.

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.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
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1. VCI sees return to growth in Germany next year

MOSCOW (MRC) -- Production of chemicals, including pharmaceuticals, will increase 1.5% in Germany in 2021, and sales generated by the German chemical-pharmaceutical industry will rise 2.5%, according to industry association VCI (Frankfurt), said Chemweek. Demand for chemical products is largely stable at the end of 2020, it says. "Business sentiment is now confident in most of our companies,” says VCI president and Evonik Industries CEO Christian Kullmann. "More than half of them expect sales to go up next year both in Germany and abroad." The industry in Germany has had a “difficult year” in 2020 due to COVID-19, VCI says. The period has been “characterized by marked ups and downs in the four quarters,” it says. Due to weaker demand, chemical production including pharmaceuticals has decreased by 3% overall in 2020, with all sectors recording losses, VCI says. The decline is in line with VCI’s latest forecast. Losses by sector ranged from a minor slip in the output of pharmaceuticals of 0.5% to a slump of 6.5% in polymers production. Total output of chemicals excluding pharmaceuticals has decreased 4% in Germany this year, VCI says.


MRC

MOSCOW (MRC) -- The supervisory board of Brenntag has appointed Ewout van Jarwaarde to the company’s management board as chief transformation officer, reported Chemweek.

Van Jarwaarde, a Dutch national, will take over the newly created position as of 1 January 2021. He will be responsible for the execution of the company’s global transformation program Project Brenntag.

Van Jarwaarde will also, among other responsibilities, be in charge of driving functional excellence, realizing digital- and data-driven business opportunities, as well as developing the group-wide IT and indirect procurement functions. His appointment increases the number of Brenntag management board members to five.

Van Jarwaarde was most recently CEO of CarNext.com, a marketplace for used cars that forms part of LeasePlan (Amsterdam, Netherlands), which has operations across Europe. He was previously a partner at McKinsey & Co. in Amsterdam.

As MRC informed earlier, in April 2020, Brenntag sai it had acquired the operating assets of Suffolk Solutions’ (Suffolk, Virginia) caustic soda distribution business. Financial terms of the deal have not been disclosed.

We also remind that Brenntag said earlier this month that it had signed a deal with Elementis under which Brenntag will distribute the company’s products in coatings, adhesives, sealants, inks and construction materials in Canada.

We remind that October production of sodium hydroxide (caustic soda) in Russia were 109,000 tonnes (100% of the basic substance) versus 108,000 tonnes a month earlier. Russia's overall output of caustic soda totalled 1,054,600 tonnes in the first ten months of 2020, down by 1.6% year on year.
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MOSCOW (MRC) -- Business conditions for chemical manufacturers are expected to improve in 2021, albeit with some first-half difficulties due to the resurgence in COVID-19 cases in much of the world, reported Chemweek with reference to an outlook report from Moody’s Investors Service (New York, New York), a credit ratings agency.

Demand growth is expected to be strongest in Asia, where the pandemic has been brought under control more quickly than in Europe and the US in most countries.

Moody’s characterizes the outlook for credit quality as ‘stable,’ reflecting an improving operating environment but “sustained recovery in the global economy (that) is delayed until 2022,” the ratings agency says.

Commodity chemical makers saw the sharpest declines this year, and are expected to see the strongest bounceback next year, Moody’s says. “However, we do not expect that EBITDA for most commodity producers will return to 2019 levels,” Moody’s adds. “We view (second-quarter) 2020 as the trough with a number of companies benefitting from higher commodity prices and volumes in the third and fourth quarters as several sectors rebounded, including autos, construction and housing.” Continued strong demand for packaging will also prop up polyethylene prices.

For specialties producers, the rebound will be less pronounced, as the downturn was less severe. The demand outlook is strong for coatings, cleaning and sanitizing chemicals, food and nutrition, and pharmaceutical ingredients, all of which showed resilience this year. “Most specialty chemical producers will return towards or even exceed their pre-COVID EBITDA levels in 2021,” Moody’s says. However, companies with major exposure to the automotive, energy and aerospace sectors, which will see weaker recoveries, are the exception, although automotive production is expected to gradually increase.

Regionally, APAC is expected to outperform the rest of the world, with China leading the way. China’s recovery has been ‘v-shaped’ according to Moody’s, while other countries have been more varied, although the general trend is positive. Europe has the weakest outlook, due to a very large increase in COVID-19 cases, a strengthening euro, and uncertainty related to Brexit.

Longer-term, environment, social and governance (ESG) will weigh more heavily on chemical makers, as challenges around climate change and recycling cut into demand in some sectors and factor into investor risk assessments. “The impact over the next 12-18 months is focused mainly on corporate decision-making for major capital investments and M&A,” Moody’s says. “Over a longer horizon, we expect that ESG-related factors will undercut demand growth for certain chemical products, especially single-use plastics.”

As MRC wrote previously, chemical production is rebuilding momentum after shocks linked to the global COVID-19 pandemic, according 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.

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.
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