Sika sales declined in 2020 on negative currency effects

MOSCOW (MRC) -- Sika has provided a financial update and says that its sales decreased 2.9% in 2020 to 7.88 billion Swiss francs (USD8.85 billion), mainly due to strong negative currency effects, said Chemweek.

Sales in local currencies increased 3.4% with a strong acquisition effect of 7.2% offsetting a 3.8% organic decline in sales. Meanwhile, sales in local currencies in the fourth quarter went up 5.5% year on year, of which 4.1% was organic growth, the company says.

"The 2020 fiscal year was overshadowed by the global coronavirus pandemic, which had a number of serious repercussions for the construction and automotive sectors. Thanks to the strong motivation of our employees and their pronounced customer focus, Sika managed to perform successfully in this highly challenging market environment and achieve above-average results,” says Paul Schuler, CEO of Sika.

Despite the “significant restrictions on construction activity” caused by COVID-19 in most of the countries where the company operates, Sika says it grew more strongly than the market in all regions. Sika posted 12.6% growth in sales in local currencies in the APAC region in 2020, 4.4% growth in EMEA, and an 1% increase in the Americas. The company’s global business recorded an 11.2% decrease in sales in local currencies in 2020.

Sika anticipates an over-proportional increase in EBIT and an EBIT margin of about 14% for 2020. The company has also confirmed its 2023 targets, including annual growth of 6%-8% in local currencies through 2023. The company is aiming for a higher EBIT margin of 15%–18% from 2021. It also estimates that projects in the areas of operations, logistics, procurement, and product formulation should result in an annual improvement in operating costs equivalent to 0.5% of sales.

Sika is scheduled to release its full results on 19 February.

As MRC informed earlier, Sika commissioned a manufacturing facility in Dubai, United Arab Emirates (UAE), which produces epoxy resins aimed at flooring solutions. Sika has decided to invest in the expansion of its manufacturing facilities at the Dubai site in order to increase flexibility in production, shorten delivery times, optimize cost structures, and reduce inventories.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% 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-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1% year on year.

Sika is a specialty chemicals company with a leading position in the development and production of systems and products for bonding, sealing, damping, reinforcing, and protecting in the building sector and motor vehicle industry. Sika has subsidiaries in 101 countries around the world and manufactures in over 200 factories. Its more than 20,000 employees generated annual sales of CHF 7.09 billion in 2018.
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MOSCOW (MRC) -- The crude price rally stumbled Jan. 11, with futures settling mostly lower amid fresh pandemic demand growth concerns following the imposition of new lockdowns in Asia, reported S&P Global.

NYMEX February WTI settled up 1 cent at USD52.25/b, while ICE March Brent finished down 33 cents at USD55.66/b.

A fresh outbreak of coronavirus infections in Hebei province, near Beijing, has led to lockdowns in provincial capital Shijiazhuang and Xingtai, China's National Health Commission said Jan. 8, adding the epidemiological origin of the outbreak has not been identified. Residents have been barred from leaving, and public transport has been halted.

On Jan. 11, the NHC reported 103 new cases of infections in China, the highest daily rise since late July, with 82 out of the 85 local cases from Hebei.

"The rally with oil was getting out of hand and prices needed to pullback as the uncertainty over short-term crude demand remains elevated," OANDA senior market analyst Edward Moya said in a note. "Chinese crude demand has been a bright spot for the oil market, but that could quickly end if China steadily sees new clusters."

NYMEX February ULSD settled down 60 points at USD1.5735/gal, and February RBBO was down 2.15 cents at USD1.5208/gal.

Pandemic-related demand concerns weighed on gasoline cracks. The ICE New York Harbor RBOB crack against Brent edged down to USD8.28/b in afternoon trading, retreating from more than five-month highs reach Jan. 8.

The Platts northwest Europe gasoline Eurobob crack against Brent fell back to USD3.15/b, down from a 10-week high Jan. 8.

Total US gasoline inventories are expected to have climbed 3.2 million barrels higher in the week ended Jan. 8, analysts surveyed by S&P Global Platts said Jan. 11, putting stocks at around 244.3 million barrels.

US driving activity edged 0.2% higher in the week ended Jan. 8, according to Apple mobility data, remaining near levels last seen in late May and likely portending a weaker-than-normal post-holiday demand rebound. The five-year average of US Energy Information Administration data shows implied demand for gasoline is up around 2% in early January, as workers return from the end-of-year holiday.

Recent economic data also suggests that a second wave of pandemic lockdowns in the US is impacting labor markets fast than anticipated, likely weighing further on gasoline demand. December non-farm payrolls contracted by 140,000 jobs, US Bureau of Labor Statistics data showed Jan. 8, below market expectations of a slight increase in jobs.

A rising US dollar added to oil price headwinds. The ICE US Dollar Index rallied up to 90.48 in afternoon trading, on pace for the strongest close since Dec. 22.

As MRC informed previously, global oil demand may have already peaked, according to BP's latest long-term energy outlook issued in September 2020, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

Earlier last 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 polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- US polymer producer Total Petrochemicals & Refining USA announced an update to its Dec. 17 force majeure on copolymer polypropylene (PP) products from its La Porte, Texas, petrochemical complex, reported S&P Global with reference to the company's statement Jan. 12.

"Repairs at our site in La Porte, Texas, continue to go extremely well and according to plan," Total Petrochemicals said in a Jan. 12 letter obtained by S&P Global Platts.

The restart of the unit is on schedule for Feb. 6, "with initial shipments beginning the following week," the company said.

In addition, Total Petrochemicals "expects to be back to normal production in early April," the letter said.

The plant has a total nameplate capacity of 1.15 million mt/year of polypropylene, according to S&P Global Platts Analytics data. The letter indicated that only the copolymer grade was affected.

The company was not available for comment Jan. 12.

As MRC wrote earlier, within the framework of its net zero strategy, Total will convert its Grandpuits refinery (Seine-et-Marne) into a zero-crude platform and will invest more then EUR500 mln into this project. By 2024 the platform will focus on four new industrial activities: production of renewable diesel primarily intended for the aviation industry, production of bioplastics, plastics recycling and operation of two photovoltaic solar power plants.

We remind that in November 2019, Total disclosed that itis evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

According to MRC's DataScope report, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
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MOSCOW (MRC) -- A decision by OPEC and allied countries to cut crude production through March delivered a late Christmas present for US shale firms that have slashed costs, but any rise in prices spurred by the unexpected move may be just a modest stocking stuffer, reported Reuters.

US crude oil production has fallen 2 million barrels per day in the last year as low prices and demand forced shale producers to cut their losses. Investors had already been pressuring the industry to curb spending and boost returns before the pandemic hit. Shale output was quickly cut, but might return quickly if prices keep rising.

Last Tuesday, Saudi Arabia, the world’s biggest oil exporter, said it would voluntarily reduce its production by 1 million barrels per day (bpd) in February and March, after Russia pushed to increase output, worried about US shale capitalizing on the group’s cuts.

Russia and Kazakhstan will increase their output, reluctant to cede market share to the United States. Overall, OPEC+ had been due to restore 500,000 bpd in each of the two months. Saudi officials were concerned new increases would outpace demand during new coronavirus lockdowns.

Prices for West Texas Intermediate on Friday topped USD52 per barrel, and the 12-month futures’ price, which producers use to plan spending on new wells, hit USD51.37 a barrel, up from USD44.63 at the start of December.

Higher crude prices will fall directly to US producers’ bottom lines given recent cost cuts and commitments to keeping output flat. Companies pledged to keep production flat and use any price increases to boost investor returns or pay down debt.

Rising prices in recent years have “tended to be a bit of a mirage,” said Thomas Jorden, chief executive of Cimarex Energy. “We’re going to be highly disciplined in setting a budget,” he added at a Goldman Sachs conference on Thursday.

In top two US shale fields, oil and gas companies are profitable in the USD30 per barrel to low $40s per barrel range, according to data firm Rystad Energy. This year’s higher prices could push the shale group’s cash from operations up by 32%, Rystad said.

Another factor that will benefit producers is low oilfield service costs. Excess capacity at the companies that provide fracking sand and services cut fees and have not been able to raise them.

“Margins are terrible,” said Chris Wright, chief executive of Liberty Oilfield Services, the second-biggest fracking company in North America. “They’re slightly better now then they were six months ago, but they’re still terrible.”

Liberty has kept existing customers through the pandemic, but pricing remains so low it has not made sense to go after new clients. Demand for fracking services is improving but falls short of levels that would boost US shale production, he said.

Shale producers historically lifted production budgets with rising oil prices, said Linda Htein, senior research manager at consultancy Wood Mackenzie. But “this time is maybe a little bit different” because global demand remains uncertain, she said.

Oil would have to hit $60 to USD65 per barrel to restore U.S. output by 1 million barrels per day while improving investor returns, said Raoul LeBlanc, a vice president at data provider IHS Markit.

Energy executives in Colorado, Oklahoma, Wyoming and northern New Mexico in a Federal Reserve Bank of Kansas City poll released Friday the said oil prices would have to average USD56 per barrel for them to substantial increase drilling.

The industry pulled back activity so much last year that oilfield work this year will mean “mitigation of declines rather than growth,” said Sarp Ozkan, a senior director at analytics firm Enverus.

As MRC informed previously, global oil demand may have already peaked, according to BP's latest long-term energy outlook issued in September 2020, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

Earlier last 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 polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Celanese intends to build a world-scale, multi-phase liquid crystal polymer (LCP) polymerisation plant in China, said Chemweek.

A first phase of the 20,000 tonne/year plant is expected to come online in 2024. Site selection is underway, with Celanese considering both existing and greenfield locations. The plant would support Celanese’s family of halogen-free, high-performance polymers, it said.

"5G, ‘Internet of Things’ and vehicle electrification are just a few of the macrotrends driving demand for materials that support device miniaturisation, improved signal integrity and circuit densification,” said Stefan Kutta, Celanese vice president, engineered materials.

"LCP is uniquely qualified to solve these challenging requirements, and this investment will support a reliable supply of LCP to a growing customer base and enable Celanese to capture additional growth in these exciting end-uses,” Kutta said.

The addition of LCP polymerisation capacity in China would make Celanese the only LCP producer with assets in both Asia and the western hemisphere, giving it the ability to work closely with customers in multiple regions, the company stated.

Celanese currently has LCP polymerisation capability at Shelby, North Carolina, and LCP compounding in North America, Europe and China. Details about the new LCP project’s expected costs were not disclosed.

As MRC informed earlier, Mitsubishi Chemical has acquired a greenfield property at a large integrated site in Geismar, Louisiana, and plans to advance its feasibility study for the design and construction of a 350,000-metric tons/year methyl methacrylate (MMA) plant. The plant will be the third and largest to employ the Alpha production technology developed by subsidiary Lucite. The company earlier in March this year announced its intent to build the plant.

The main application, consuming approximately 75% MMA, is in the production of polymethyl methacrylate acrylic plastics (PMMA). Methyl methacrylate is also used to produce methyl methacrylate-butadiene-styrene copolymer (MBS), used as a modifier for polyvinyl chloride (PVC).

According to MRC's ScanPlast report, October total production of unmixed PVC grew to 86,600 tonnes from 86,000 tonnes a month earlier, SayanskKhimPlast and Bashkir Soda Company increased their capacity utilisation. Overall output of polymer was 805,100 tonnes in the first ten months of 2020, which virtually corresponds to the last year"s figure. Two producers increased their production, whereas two other manufacturers reduced their output.
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