LyondellBasell earnings surge YOY on polyolefin volumes and margins

MOSCOW (MRC) - LyondellBasell (Houston, Texas), one of the largest plastics, chemicals and refining companies in the world, reports fourth-quarter net income of USD855 million, up 40% year-over-year (YOY) from USD612 million on higher polyolefin volumes and margins, reported Chemweek.

A USD147 million non-cash, lower-of-cost-or-market (LCM) inventory valuation benefit increased net income by USD119 million, or USD0.36 per share. Sales totaled USD7.937 billion, down 3.0% YOY from USD8.179 billion. Adjusted earnings per share of USD2.19 increased 15% YOY from USD1.91 and beat the consensus of USD1.31 as compiled by Zacks Investment Research.

"During the fourth quarter, strong and persistent consumer-driven demand, industry supply constraints and continued recovery in durable goods markets reduced the impact of typical end-of-year slowdowns for our businesses,” says CEO Bob Patel. “During this period, we operated well and met robust demand for polyolefins used in consumer packaging and healthcare applications. Margins improved for olefins and polyolefins, propylene oxide & derivatives and intermediate chemicals businesses driven by higher demand and tight markets. Rebounding automotive manufacturing drove increased volumes for our advanced polymer solutions businesses. The refining and oxyfuels & related products businesses continued to face headwinds from low global mobility resulting in stagnant demand for transportation fuels."

Patel says improvement seen in late December have continued into the first quarter.

"Elevated export demand to China and Latin America, combined with tight markets, are supporting strong margins for our olefins and polyolefins businesses. Increased demand from automotive and construction markets has pushed the January order book for our advanced polymer solutions segment to higher levels than the fourth-quarter 2020 average. With wider deployment of coronavirus vaccines, we anticipate that increasing mobility and transportation fuel demand could provide significant upside for our oxyfuels and refining businesses during the latter half of this year."

The olefins & polyolefins (O&P) - Americas segment turned in EBITDA of USD722 million, up 45% YOY from $498 million. Revenue totaled USD2.21 billion, up 6.6% YOY. Olefins results increased USD65 million on higher ethylene volumes from increased demand, partially offset by lower margins. Polyolefin results increased USD140 million driven by increased demand. Margin improved due to an increase in the price of polyethylene and an increase in polyolefin volumes.

The O&P - Europe, Asia, International segment turned in EBITDA of USD304 million, up 591% YOY from USD44 million, on revenue of USD2.459 billion, up 14% YOY. Olefins results increased USD25 million driven primarily by increased margins and volumes. Margins were higher driven by lower feedstock prices partially offset by lower ethylene prices. Combined polyolefins results increased more than USD20 million on higher polyolefin volumes and polyethylene margin, partially offset by a lower polypropylene spread. Joint venture equity income increased USD65 million, driven by Bora.

The intermediates and derivatives segment turned in EBITDA of USD262 million, down 20% YOY from USD329 million, on revenue of USD1.804 billion, down 1.5% YOY. Results decreased approximately USD55 million YOY owing to LIFO inventory changes. Propylene oxide & derivatives results increased approximately USD40 million as margins and volumes increased on strong Asia demand and market tightness. Intermediate chemicals results increased about $50 million driven by improved volumes and higher margins, primarily in styrene. Volumes increased due to higher demand for most products. Oxyfuels & related products results decreased USD175 million as reduced gasoline prices and lower octane blend premiums cut into margins.

Advanced polymer solutions turned in EBITDA of USD152 million, up 181% YOY from USD54 million, on revenue of USD1.108 billion, up 3.8% YOY. Compounding & solutions results were relatively unchanged as higher volumes tied to automotive recovery were offset by lower margins. Advanced polymers results were flat.

Refining EBITDA came to a USD72 million loss, down from a gain of USD22 million in the year-ago period, on revenue of USD1.259 billion, down 39% YOY. Technology EBITDA totaled USD45 million, down 67% YOY, on revenue of USD167 million, down 18% YOY.

As MRC informed before, in late January, 2021, LyondellBasell and the China Petroleum & Chemical Corporation (Sinopec), one of the largest integrated energy companies in China, announced the signing of an agreement to form a 50:50 joint venture (JV) which will produce propylene oxide (PO) and styrene monomer (SM) in China's domestic market. First announced on December 23, 2019, the JV will operate under the name Ningbo ZRCC LyondellBasell New Material Company Limited.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges, like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances. LyondellBasell sells products into more than 100 countries and is the world's largest producer of polymer compounds and the largest licensor of polyolefin technologies. In 2020, LyondellBasell was named to Fortune Magazine's list of the "World's Most Admired Companies" for the third consecutive year.
MRC

Crude falls on fears vaccine shortages, uneven rollout may hinder global growth

MOSCOW (MRC) -- Crude oil futures declined in mid-morning trade in Asia Jan. 28, despite a fall in US inventories, as worries over global growth recovery came back to the fore after the International Monetary Fund warned on financial stability risk from vaccine shortages, reported S&P Global.

Now At 11:36 am Singapore time (0336 GMT), the ICE Brent March contract was down 27 cents/b (0.48%) from the Jan. 27 settle to USD55.54/b, while the March NYMEX light sweet crude contract dropped 22 cents/b (0.42%) to USD52.63/b.

The oil market participants grew concerned over slow vaccine distribution and vaccine shortages, which a report by the IMF warned could threaten financial stability. Fears of insufficient supply also exacerbated, as AstraZeneca's coronavirus vaccine shortage caused by production delays was met with insistence by the European Union to honor delivery commitments.

"Oil is down today as fears of the slow pace of vaccine distribution and a shortage in vaccines have exacerbated coronavirus concerns, and have cast a dark cloud over economic recovery," Vandana Hari, CEO of Vanda Insights, told S&P Global Platts on Jan. 28.

"The IMF financial stability report on Wednesday, warning of the risks posed by an inequitable distribution of vaccines, combined with escalating tensions between the EU and AstraZeneca over vaccine delays, has rattled the markets," Hari added.

Meanwhile, on Jan. 27, the Energy Information Administration reported a 9.91 million barrels draw in US crude inventories in the week ended Jan. 22. It was the largest one-week draw since the week ended July 24 and left inventories just 6% above the five-year average, the narrowest supply overhang since early April.

The EIA draw was about 90% larger than the draw reported by the American Petroleum Institute a day earlier and surpassed analyst expectations of a 1.7 million-barrel draw.

The US crude draw, however, failed to significantly lift market sentiment, as the EIA report was not all bullish, showing a 2.47 million-barrel build in US gasoline inventories, with distillate inventories also declining only by a meager 820,000 barrels.

To this, Hari said: "The EIA crude draw did not elicit a significant reaction from the market as it did not necessarily point to improved fundamentals in the market. Rather the draw seems to have partly been caused by a combination of an increase in US exports and a decrease in US imports."

According to data from the EIA, weekly US crude exports jumped 1.1 million b/d over the week ended Jan. 22, while imports declined 981,000 b/d.

Analysts, however, noted that despite uncertainties over the progression of the pandemic and vaccine distribution, the oil market showed remarkable resistance.

"I think 'risk markets' can thank their lucky stars that Saudi Arabia crystal ball outlook was clear as a whistle, and their proactive production cut measure buttressed investors from a more significant meltdown," Stephen Innes, chief global market strategist, said in a Jan. 28 note.

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

Lukoil unit to remove crude stored at idled Come-by-Chance refinery

MOSCOW (MRC) -- The trading unit of Russia’s Lukoil plans to remove crude oil it has stored at the idled Come-by-Chance refinery in Newfoundland, Canada, reported Reuters with reference to three sources familiar with the matter.

The Canadian refinery has been idled since last year, a casualty of coronavirus-induced demand destruction. Lukoil’s Litasco unit is its primary crude supplier, and currently is storing between 2 and 3 million barrels of oil there that it plans on re-exporting to sell elsewhere, the sources said.

Numerous North American refineries have had to shut as coronavirus restrictions sapped fuel demand. The refinery, operated by North Atlantic Refinery Limited (NARL) and New York-based investment firm Silverpeak, has been closed since March, and is actively searching for a new owner.

Lukoil was not immediately available for comment. NARL declined to comment.

The crude supply deal NARL inked with Lukoil in 2016 is still in place for now, according to the sources. Lukoil also has an agreement to finance the products for sale at its retail units.

Lukoil had been storing its crude oil for free at the refinery while the market was in contango, where later-dated prices are higher than current ones. Now, though, current prices are higher, giving Lukoil the opportunity to sell the oil soon, the sources said.

Some of the oil could be shipped out as early as February, the sources said, adding that other options were also in consideration.

Earlier this month, the Canadian province Newfoundland and Labrador agreed to give NARL a total of CD16.6 million (USD13.05 million) to keep the 135,000 barrel-per-day plant idled as the owner seeks a new capital partner.

Come-by-Chance has been looking for a new owner after Irving Oil backed away from a purchase and share agreement in October.

As MRC informed earlier, Russian energy major Lukoil (Moscow) is studying several potential petrochemical projects in Russia and Bulgaria, with investment decisions expected to be made on two of them in 2021.

Thus, Lukoil announced an investment decision in June, 2019, to proceed with a 500,000-metric tons/year PP plant at its Kstovo refinery. In September this year it selected Lummus Technology’s Novolen PP technology and basic design engineering for the facility’s production unit. Kstovo is one of Lukoil’s largest crude refineries in Russia with a throughput of 17 million metric tons/year, with the company recently adding a catalytic cracking unit that almost doubled the refinery’s production of propylene feedstock to 300,000 metric tons/year.

At Budennovsk in Russia’s far south west, the company’s Stavrolen petchems complex currently has the capacity to produce 350,000 metric tons/year of ethylene, 300,000 metric tons of polyethylene (PE), 120,000 metric tons/year of PP, and 80,000 metric tons of benzene. Lukoil has for several years been considering construction of a new gas chemicals plant at Stavrolen to crack more ethane extracted from associated petroleum gas produced by its oil and gas fields in the north of the Caspian Sea. The potential new plant would raise Stavrolen’s ethylene and PE output to around 600,000 metric tons/year each, and increase PP production to 200,000 metric tons/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.

Lukoil is one of the leading vertically integrated oil companies in Russia. The main activities of the company include exploration and production of oil and gas, production and sale of petroleum products. Lukoil is the second largest privately-owned oil company in the world in terms of proven hydrocarbon reserves. Lukoil's production capacities include polyethylene polypropylene. The structure of Lukoil includes one of the largest petrochemical plant in Russia - Stavrolen.
MRC

UPM progresses plans for biofuels, biochemicals plants in Europe

MOSCOW (MRC) -- UPM (Helsinki, Finland) says it has started basic engineering and commercial studies for a potential 500,000-metric tons/year biofuels refinery, to be located in either Finland or the Netherlands, and is also under way with construction of a previously announced EUR550-million (USD667 million) biochemicals plant in Leuna, Germany, said Chemweek.

The new biorefinery would manufacture products to “significantly reduce carbon footprint in road transport and aviation, as well as replace fossil raw materials with renewable alternatives in chemicals and bioplastics,” it says. UPM’s solid wood biomass-based residues and side streams will play a substantial role in the feedstock pool for the facility, if it proceeds. The studies will define the business case, select technology options, and estimate investment needs, with the technology concept to include the use of green hydrogen in the production process. The two locations being considered are in Kotka, Finland, and Rotterdam, Netherlands. UPM estimates the base engineering phase will take a minimum of one year.

Construction of the biochemical plant in Leuna began during the fourth quarter of 2020 and is on track, with the company simultaneously setting up the business for eventual market entry, it says. The facility is scheduled to come online by the end of 2022, producing 220,000 metric tons/year of bio–monoethylene glycol (bio-MEG) and lignin-based renewable functional fillers.

As per MRC, UPM (Helsinki, Finland) says it has agreed to buy the entire annual lignin production of Domtar Paper Co.’s plant at Plymouth Mill, North Carolina, starting in January 2021. The 20,000-metric tons/year of lignin will enable UPM to increase its existing supplies and expand its role in the growing lignin business and different application segments, it says. Part of the additional lignin supply will be used to complement UPM’s BioPiva products brand.

As MRC informed earlier, PTT Global Chemical (PTTGC) has announced that Auria Biochemicals Co., a joint venture of PTTGC and Myriant Corp. On 12 Apr. 2018, at a general meeting of Auria shareholders, a resolution was passed to dissolve the joint venture, which was established in 2013 to conduct research and development of bio-based chemicals in order to enhance Myriant's technology. Myriant is a wholly-owned subsidiary of PTTGC.

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

Honeywell performance materials business reports fourth-quarter profits down 25.7% YOY

MOSCOW (MRC) -- Honeywell’s performance materials and technologies segment reports fourth-quarter profits down 25.7% YOY, to USD478 million, on sales down 10.5%, to USD2.5 billion, according to Chemweek.

Sales declined to on continued delays in Process Solutions automation projects as well as volume declines in smart energy and thermal solutions, and lower gas processing projects, catalyst shipments, licensing, and engineering due to softness in the oil and gas sector in UOP, partially offset by return to growth in Advanced Materials driven by demand for fluorine products. Segment margin contracted 380 basis points to 18.7% driven by the impact of lower sales volumes and mix, partially offset by productivity actions.

Honeywell’s net income declined 13.3% YOY, to USD1.4 billion. Adjusted earnings per share of USD2.07 was a penny higher YOY and beat the analysts’ consensus estimate of USD2.00, as reported by Refinitiv (New York). Net sales were down 6.3% YOY, to USD8.9 billion.

As MRC reported earlier, in May, 2020, Honeywell announced that Enterprise Products Partners L.P. will use Honeywell UOP’s C3 Oleflex technology in its second propane dehydrogenation plant, called "PDH 2". Located near Mont Belvieu, Texas, PDH 2 will produce 750,000 metric tons per year of polymer-grade propylene as part of Enterprise’s expansion of propylene manufacturing capacity.

We remind that in November, 2020, Honeywell announced Zhenhua Petrochemical Co. Ltd will use Honeywell UOP’s C3 Oleflex technology for propane dehydrogenation to process 1 million metric tons per year of polymer-grade propylene for a proposed plant in Dongying City, Shandong Province, China.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's DataScope report, PP imports into Russia increased by 23% year on year to about 224,000 tonnes in 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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