Tikkurila announces preliminary earnings as bidding war intensifies

MOSCOW (MRC) -- Tikkurila has provided an update on the company’s financial performance in 2020 and says that adjusted operating profit increased 38%, to EUR64.0 million (USD77.6 million) on sales up 3% YOY, to EUR582.0 million, according to Chemweek.

The company says it provided the update, with preliminary and unaudited figures, to inform all shareholders amid an ongoing tender-offer process for Tikkurila. The company's board recommended on 14 January that shareholders accept a planned tender offer for Tikkurila from PPG Industries. Meanwhile, AkzoNobel submitted a binding offer to acquire Tikkurila, with a potential tender offer subject to customary conditions.

The announced figures are in line with Tikkurila’s previously announced guidance for 2020, the company says. “The strategic action plan delivered results in 2020: decisive actions to increase cost-efficiency in all functions led to a profitability improvement. Due to the pandemic the demand fluctuated in early 2020 but the revenue was strong in the second half of 2020,” says Elisa Markula, CEO of Tikkurila.

Tikkurila will publish full results on 12 February.

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.
MRC

Valero posts smaller-than-expected loss, pins recovery hopes on vaccine rollout

MOSCOW (MRC) -- US refiner Valero Energy Corp posted a much smaller quarterly loss than Wall Street expected and pinned hopes on widespread COVID-19 vaccinations to ease travel restrictions and improve demand for fuel, accoring to Hydrocarbonprocessing.

Crude prices have continued to climb after rallying more than 20% in the last quarter, driven by optimism over the development of coronavirus vaccines, even as refiners struggled with uneven demand due to renewed lockdown measures.

"We expect to see continued improvement in product demand with widespread vaccine distribution around the world," Chief Executive Officer Joe Gorder said, adding that the company expects a faster recovery in margins from the shuttering of smaller, uncompetitive refineries.

Valero, the first US refiner to post fourth-quarter results, said refining throughput, or the amount of crude it processed, rose about 1% to 2.6 million barrels per day from the third quarter.

Refining margin for the fourth quarter rose 14.2% to USD1.09 billion from the third, although it was 64.1% lower than from a year earlier.

Adjusted net loss attributable to Valero stockholders narrowed to USD429 million, or USD1.06 per share, in the three months ended Dec. 31, from USD472 million, or USD1.16 per share, in the third quarter.

Wall Street analysts expected a loss of USD1.42 per share, according to Refinitiv IBES.

The San Antonio, Texas-based company said quarterly revenue climbed 5% to USD16.60 billion from the previous quarter, above analysts' average estimate of USD16.21 billion.

As MRC reported before, Valero Energy Corp restarted the large crude distillation unit (CDU) at its 335,000-bpd Port Arthur, Texas, refinery the first week of September, 2020. The 268,000-bpd CDU was shut with all other units at the refinery on Aug. 25 because of the threat from Hurricane Laura.

We remind that in June 2020, Valero Energy Corp’s Memphis, Tennessee, crude oil refinery was operating at two-thirds of its 180,000 barrel-per-day (bpd) capacity because of low demand in the COVID-19 pandemic. The Memphis refinery cut production by as much as 50% in early April and has been raising production gradually since then.

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

Vopak styrene hub nears startup in Rotterdam

MOSCOW (MRC) -- Vopak (Rotterdam, Netherlands) says its new 63,000-cubic meter styrene storage hub at Botlek, Rotterdam, will be operational for customers in February 2021, reported Chemweek.

The project commissioning team is on track with testing of equipment and systems before the facility is officially handed over to the terminal organization, it says. Vopak’s expansion of the existing facility’s capacity at Botlek has included the addition of 15 stainless steel storage tanks of either 3,000 cu meters or 5,000 cu meters capacity.

The hub will connect seaborne trade flows via barges, block-trains, and trucks to the European hinterland, and is connected to multiple jetties and loading facilities, Vopak says. It also allows tank-to-tank transfers that will enable customers to benefit from the styrene trading hub, it adds.

As MRC wrote before, in November 2020, SABIC and Vopak Holding Terminals BV signed an agreement with the Jubail and Yanbu Industrial Cities Company (JYIC), owned by the Royal Commission for Jubail and Yanbu (RCJY). Under the agreement, JYIC will become a 20 percent stake partner in Jubail Chemical Storage and Services Company (Chemtank). The agreement aims to strengthen strategic integration among the three parties to scale up collaboration between local and international organizations. The deal will help achieve the goals of the National Industrial Development and Logistics Program, a key part of Saudi Vision 2030.

Styrene is the main feedstock for the production of polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 454,990 tonnes in the first eleven months of 2020, which corresponds to the last year's figure. November estimated consumption of PS and styrene plastics grew by 4% year on year to 45,830 tonnes.
MRC

COVID-19 - News digest as of 28.01.2021

1. Chinese Jan-Feb crude throughput may remain at high levels despite slow demand

MOSCOW (MRC) -- China's crude throughput will likely remain at relatively high levels over January-February despite the slowdown in domestic fuel consumption for the Lunar New Year due to the resurgence in COVID-19 spread, as refiners aim to clear their hefty feedstock stockpiles and make full use of the country's sufficient refined product storage space, reported S&P Global. "Sufficient oil product storage space and hefty crude imports in January/February allow and force Chinese refineries to boost throughput prior to maintenance season in March-May," a Beijing-based analyst said. S&P Global Platts' data showed that average run rate at 39 refineries under the four big state-owned oil barrels - Sinopec, PetroChina, CNOOC and Sinochem - is at 80.3% in January, up from 78.2% in December.



MRC

Saudi surprise output cut really helped stabilize oil market

MOSCOW (MRC) -- Saudi Arabia's "brilliant move" to unilaterally reduce oil output additionally by 1 million b/d has been a great contribution to the stabilization of the global oil market, reported S&P Global with reference to the statement of Kirill Dmitriev, the head of the Russian sovereign wealth fund RDIF, on Jan. 27.

Starting Feb. 1, Saudi Arabia is expected to severely lower its crude production to 8.119 million b/d instead of its OPEC+ quota of 9.119 million b/d. The pre-emptive cut was announced by energy minister Prince Abdulaziz bin Salman after the latest OPEC+ meeting on Jan. 4 in order to bring down oil inventories accumulated during the pandemic.

"The surprise cut that they have done recently is a really brilliant move that led to stabilization of the market joined by other OPEC members at the most critical time," Dmitriev, who has been leading Russia's diplomacy in Saudi Arabia alongside Deputy Prime Minister Alexander Novak, said at the Saudi Future Investment Initiative conference.

His comments come ahead of the group's next meeting on Feb. 3, where compliance with be monitored by the OPEC+ advisory committee.

Russia's own compliance with production quotas remains far from perfect, as the country seeks to gradually regain its market share.

Nevertheless, Dmitriev reiterated Russia's commitment to the OPEC+ agreement and applauded Saudi Arabia's leadership "in doing great things to producers and consumers."

"This partnership is an example of how we can also unite our efforts to address other issues that the world is facing. Energy is definitely something that we have done really well together," Dmitriev added.

His speech echoed Russian President Vladimir Putin's earlier address at the Davos forum. Putin deemed energy cooperation with Saudi Arabia and the US on energy productive "despite different and sometimes even opposite views on other global issues."

As MRC informed earlier, Saudi Aramco's shareholders may consider selling more shares of the company if market conditions are right. The Saudi government sold over 1.7% stake in Aramco in an initial public offering (IPO) in 2019 that raised a record USD29.4 billion.

We remind that in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.

Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.

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