Ashland to acquire Schulke & Mayr personal care business

MOSCOW (MRC) -- Ashland says it has agreed to acquire the personal care business of Schulke & Mayr GmbH for EUR262.5 million (USD317 million) in an all-cash deal, reported Chemweek.

Schulke & Mayr is owned by private equity firm EQT (Stockholm, Sweden). The deal will be financed with available cash and bank financing, and is expected to be immediately accretive to Ashland’s earnings.

The acquired business makes additives for personal care products, with a particular focus on preservatives. The deal bolsters Ashland’s efforts in its specialty additives business, and “is an excellent example of the type of bolt-on acquisition opportunities that will help advance our strategy and support the profitable growth of our core businesses,” says Ashland chairman and CEO Guillermo Novo.

The deal also improves Ashland’s environment, social, and governance (ESG) positioning in the personal and household care markets, the company says. “This acquisition further aligns our portfolio with the ‘clean beauty’ trend in the personal care industry and helps us solve for a new generation of consumers who are shifting to products with milder and safer ingredients,” Novo says. “Our combined biotechnology competencies further strengthen our ability to create new sustainable solutions in broader fields of application.”

One analyst estimates that Ashland paid an EBITDA multiple of about 11.3 times for the business. “We estimate an additional EUR83-96m in sales and EUR20–23m in EBITDA absent any synergies,” says Laurence Alexander, an analyst with Jefferies (New York, New York). The deal boosts personal care to about 26% of Ashland’s 2020 sales, Alexander adds.

Ashland appears likely to continue to pursue bolt-on acquisitions, according to Alexander. “The company has previously indicated that M&A activity will likely continue in the personal care, life sciences, and architectural coatings markets,” he notes.

Citi is Ashland’s financial advisor on the deal, with Squire Patton Boggs acting as legal advisor. The transaction is expected to close by 30 June 2021.

EQT acquired Schulke & Mayr from Air Liquide last year in a deal valued at up to EUR1 billion, subject to the results of an earn-out provision.

As MRC informed previously, on 3 September 2019, INEOS Enterprises announced the completion of the acquisition of the entire composites business from Ashland Global Holdings Inc. The acquisition also included a BDO facility in Germany. The businesses included in the transaction have combined sales of more than USD1.1 billion per year. They employ 1,250 employees across 19 sites in Europe, North and South America, Asia and Middle East.

We remind that in mid-January 2019, INEOS announced Antwerp as the location for its new petrochemical investment. The EUR3 billion investment will be the biggest ever made by INEOS and is first cracker to be built in Europe in 20 years. The investment is a game changer for the chemical sectors and will bring huge benefits to the Belgium and wider European economies.

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

Ashland Global Holdings Inc. is global specialty chemicals company serving customers in a wide range of consumer and industrial markets, including adhesives, architectural coatings, automotive, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical.
MRC

Ultrapar leads negotiation for Petrobras refinery Refap

MOSCOW (MRC) -- Brazilian group Ultrapar Participacoes SA offered the highest price for Petrobras’ refinery Refap and is leading talks to acquire the facility in the southern state of Rio Grande do Sul, reported Reuters with reference to three people close to the matter.

Brazil has been trying sell eight refineries, which would end Petrobras’s virtual monopoly in the country’s refining sector and open one of the world’s largest fuel markets to private investors. Petrobras is currently negotiating five of them with the highest bidders.

Petroleo Brasileiro SA, as the state-controlled producer is known, is trying to get Ultrapar to boost its offer before agreeing to exclusive talks, three of the people said. Offers below Petrobras’s initial price range have made the company miss its internal deadline to sign a deal by the end of 2020.

Petrobras and Ultra declined to comment.

Raizen, a joint venture between Royal Dutch Shell PLC and Brazilian ethanol producer Cosan SA, has also bid for Refap, two of the people said. A second round of offers hasn’t been ruled out, the people said.

Raizen declined to comment.

Indian conglomerate Essar Group, which had pre-qualified for the binding phase, dropped out of the competition, the people said.

Ultrapar and Raizen have also bid for refinery Repar, which supplies the relatively affluent states of Parana, Santa Catarina, Sao Paulo and Mato Grosso. Petrobras has hesitated to designate a winning bidder because it considers the prices too low, three of the people said.

Refap and Repar are located in Brazil’s southern region and have a production capacity of 200,000 barrels per day each, or about 18% of the country’s capacity.

Antitrust rules would bar Petrobras from selling the units to the same firm.

Elsewhere, Petrobras is in exclusive talks with Abu Dhabi investor Mubadala Investment Co to sell its Bahia unit RLAM. Those talks, at a more advanced stage, could bring a deal as soon as this month, two of the people said.

The producer is also negotiating the sale of its REMAN, LUBNOR and SIX refining units, one of the people said. No exclusivity was set, which allows rebids, the person said.

Petrobras has been trying to sell refineries for almost a decade with no success, facing resistance from politicians, union workers and local contractors. A history of government fuel price intervention has also scared away investors in the past.

Chief Executive Roberto Castello Branco, who took office in January 2019 appointed by president Jair Bolsonaro, relaunched the process as part of a plan to focus on deep-water exploration and cut debt.

On December 2019, Petrobras signed an agreement with antitrust watchdog Cade to privatize eight refineries, or about half of Brazil’s fuel production capacity, by Dec. 2021. Petrobras has told potential buyers it is not obliged to sell the plants if offers fall below its internal price range.

A decrease in fuel demand accelerated by the Covid-19 pandemic is a key reason behind the price gap between Petrobras and potential buyers, three of the people said.

The sales will also allow Petrobras to raise fresh money and reduce debt.

As MRC informed before, Brazil’s state-run oil company Petrobras is seeking 800 million reais (USD152 million) in compensation from engineering group Odebrecht in arbitration proceedings over its alleged violation of the shareholders agreement in petrochemical company Braskem.

We remind that Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July, 2020. She said during the company's recent webinar that Petrobras plans to give more time for potential investors to make offers for the company"s assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras's stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the company's stake in Braskem within a year. Petrobras owns 32.15% of Braskem.

We also remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras" activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

Essar, Progressive to partner on GBP750-million low-carbon hydrogen project in UK

MOSCOW (MRC) -- Essar Oil (Mumbai, India) and clean energy specialist Progressive Energy (Stonehouse, UK) say they have agreed to partner on the development of two low-carbon hydrogen production plants at Essar’s Stanlow refinery in Cheshire, UK, that will supply Progressive’s planned HyNet low-carbon regional distribution network, accoring to Chemweek.

The companies have signed a memorandum of understanding to jointly invest GBP750 million (USD1.02 billion) to build two hydrogen production hubs, they say. The first hub will initially produce 3 terawatt-hours (TWh) of low-carbon hydrogen each year from 2025, converting natural gas and fuel gases from the refinery. This will be followed by a facility twice as large, enabling a total capacity of over 9 TWh of hydrogen/year. Carbon dioxide (CO2) from the process will be captured and injected using existing pipelines into subsurface geological reservoirs offshore in Liverpool Bay on the UK’s west coast.

The Stanlow refinery produces 16% of UK road transport fuels and processes 10 million metric tonnes/year of crude oil and other feedstocks.

The new plants will provide Essar with low-carbon hydrogen to decarbonize its own energy demand, in addition to creating a regional hydrogen economy, Essar says. The hydrogen supplied into Progressive’s HyNet North West system will be used for both industrial and domestic purposes, it says.

The plants will utilize Johnson Matthey’s Low Carbon Hydrogen (LCH) technology, with engineering in partnership SNC-Lavalin well advanced, Essar says. An initial GBP7.5 million in funding for early engineering work on the hydrogen project was provided by the UK government in February last year.

The hydrogen development will set the Stanlow refinery “on a journey to be the UK’s first net-zero emission refinery,” says Stein Ivar Bye, CEO of Essar’s UK energy business. The project has the potential to remove over 2 million metric tonnes/year of CO2 emissions current being produced, he says.

Essar acquired Stanlow refinery from Shell in 2011.

As MRC reported earlier, in late September 2019, Essar resumed operations at its cracker in Stanlow, UK with the capacity of 45,000 mt/year of ethylene and 165,000 mt/year of propylene. It was shut on 11 September, 2019, due to the power outage at the site.

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

BASF operates No. 2 steam cracker in Ludwigshafen, Germany normally

MOSCOW (MRC) -- BASF says its 420,000-metric ton/year steam cracker in Ludwigshafen, Germany is continuously running and has not caused any interruption of supply to its customers, according to a letter received by MRC from the company's press office.

Earlier several media outlets reported that unscheduled flaring started on 13 January at the northern part of the Ludwigshafen site and was expected to last until 17 January and that an unspecified unit was shut, which "was not the case", as per the company's letter.

BASF operates another steam cracker at the northern part of Ludwigshafen with a capacity of 240,000 metric tons/year. Crackers No. 1 and 2 mostly function independently of each other. The two crackers process around 2 million metric tons/year of feedstock naphtha.

As MRC informed earlier, BASF has restarted its No. 1 steam cracker following a maintenance turnaround. Thus, the company resumed operations at the plant 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 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.

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

Oil above USD56 on US stimulus hopes ahead of Biden inauguration

MOSCOW (MRC) -- Oil rose above USD56 a barrel on Wednesday, supported by expectations that the new US administration will deliver massive stimulus spending that would lift demand, as well as by OPEC curbs and forecasts for a drop in US crude inventories, reported Reuters.

US Treasury Secretary nominee Janet Yellen on Tuesday urged lawmakers to "act big" on pandemic relief spending. A fall in the dollar after the comments helped oil to rally, analysts said.

"This provided a good backdrop for oil and other risk assets," said Stephen Brennock of broker PVM. "While the near-term demand environment continues to be gripped by weakness and uncertainty, the future is brightening."

Brent crude was up 61 cents, or 1.1%, at USD56.51 a barrel at 1435 GMT, having gained 2.1% on Tuesday. U.S. West Texas Intermediate (WTI) crude climbed 66 cents, or 1.3%, to USD53.64.

President-elect Joe Biden's inauguration is on Wednesday.

"Increased fiscal support means more growth and higher U.S. oil demand," said Eugen Weinberg of Commerzbank. "What is more, the oil market is likely to remain in supply deficit both in the first quarter and in the year as a whole."

A record output cut by OPEC and its allies, a group known as OPEC+, last year helped to lift prices from historic lows.

This month Brent hit an 11-month high of USD57.42, helped by Saudi Arabia pledging to make additional, voluntarily cuts and most OPEC+ members agreeing to keep output steady in February.

Oil drew more support from expectations of lower US crude inventories. Analysts estimate crude stocks fell by 300,000 barrels in the week to Jan. 15. The first of the week's two supply reports is due on Wednesday from the American Petroleum Institute.

Gains were limited by concern about near-term demand as COVID-19 infections rise.

China's capital, Beijing, on Wednesday announced stricter COVID-19 control measures. Germany on Tuesday extended a lockdown for most shops and schools.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency"s (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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