Bayer sued by shareholders over Monsanto acquisition

MOSCOW (MRC) -- German law firms representing Bayer shareholders are suing the company for what it claims was a failure to warn shareholders adequately of the risks from pending lawsuits against Bayer’s acquisition target Monsanto, said Chemweek.

The share price of the Bayer group including the Crop Science and pharma divisions has almost halved since the takeover of Monsanto in June 2018 in the wake of lost lawsuits and mounting litigation against Monsanto for alleged health risks from the legacy business’s herbicide, Roundup (glyphosate). Bayer rejects the lawsuits as “unfounded”.

Business weekly WirtschaftsWoche reports that two firms are seeking compensation in a pilot lawsuit before a Cologne court on behalf of various investors.

They accuse the company of “breaches of duty under capital market law”, claiming that the “risks of the purchase were not adequately presented to the shareholders”. One of the firms believes that the case before the court could develop into a “model investor proceeding”, citing a previous trial involving the car manufacturer, Volkswagen (VW). “One lawsuit then becomes representative of all others negotiated.” That firm was reportedly involved in the VW proceedings. The second firm is representing shareholder Kingstown Capital Management, which seeks EUR37 million (USD45 million at the current rate) in compensation from Bayer, according to the WirtschaftsWoche report.

Bayer says that it will defend itself against what it perceives as unfounded allegations. "We believe that our company and its leaders have at all times acted in accordance with the obligations and applicable laws regarding the allegations made in the lawsuits, and that Bayer conducted appropriate due diligence regarding the acquisition process," it says. “This has also been confirmed by the studies of independent experts."

Bayer lost three cases brought against the legacy business, starting shortly after it had acquired Monsanto.

In August 2018, a California jury awarded a former school groundskeeper some USD279 million in a similar case. The state judge overseeing that trial reduced the award to some USD78 million. That case has gone to an appeal in which the plaintiff is seeking the reintroduction of the original penalty, while Bayer is counter-suing for the case to be dismissed. In March 2019, a federal jury convened by the US District Court for the Northern District of California awarded another California resident some USD80 million. The following July, a federal judge cut that award to just above USD25 million.

As of October last year, lawsuits from approximately 60,300 plaintiffs claiming to have been exposed to glyphosate-based products manufactured by Monsanto had been served upon the Bayer business in the US. Plaintiffs allege personal injuries resulting from exposure to those products, including non-Hodgkin lymphoma (NHL) and multiple myeloma, and seek compensatory and punitive damages. By the same date, nine Canadian lawsuits relating to Roundup seeking class action certification had been served against Bayer.

Bayer has moved to settle the bulk of outstanding lawsuits for some USD10.9 billion and that settlement is pending before US District Judge Vince Chhabria. The company reached a settlement deal in June 2020 involving most of the total approximately 125,000 known filed and unfiled claims, and to put in place a mechanism to resolve potential future claims. As of last October, the company had an agreement covering some 88,500 claimants with ongoing discussions over deals with thousands more.

As MRC informed earlier, Bayer’s supervisory board has announced the appointment of Sarena Lin to the company’s management board as chief transformation and talent officer, effective 1 February. She will be responsible for human resources, strategy, and business consulting and “drive the accelerated transformation of Bayer,” the company says. She will also serve as labor director. Lin will be based at Bayer’s Leverkusen, Germany, headquarters.

As MRC reported earlier, Covestro closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to\\from Belarus) rose in January-November 2020 by 18% year on year to 83,600 tonnes (70,600 tonnes a year earlier).
MRC

MOSCOW (MRC) -- Evonik Industries says that its venture capital arm, Evonik Venture Capital, has invested in chembid (Oldenburg, Germany), an internet and big data start-up that has developed a search and market intelligence platform for chemicals, to strengthen the company’s e-commerce activities and online customer interactions, reported Chemweek.

The investment supports the development of an independent digital sales platform for the chemical industry, Evonik says. Financial terms have not been disclosed.

The start-up company has developed a meta-search engine that connects buyers with suppliers, and it provides a dashboard of market intelligence such as price trends and demand patterns by analyzing the search data with intelligent algorithms, Evonik says.

“As sales platforms gain traction in the chemical industry, it’s important to be a driver in the digital service space,” says Bernhard Mohr, head of Evonik Venture Capital. “A strong, comprehensive, and independent platform is desirable for the chemical industry as a whole. This investment supports that idea by accelerating the development of the industry’s biggest meta-search engine.”

Evonik says it will contribute to chembid the knowledge gained from developing and operating its OneTwoChem digital marketplace, and discontinue its own platform. Evonik is also enhancing chembid’s offerings by making its digital laboratory assistant, COATINO, available on the platform.

“Supporting the development of chembid is an intelligent way to develop our e-commerce activities further and reach a broader customer base,” says Henrik Hahn, chief digital officer at Evonik. “OneTwoChem taught us much about digital customer experience, which is the quality of the online interactions that a customer has with our brand.”

As MRC informed earlier, in February, 2020, Dow and Evonik entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.

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

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.
MRC

MOSCOW (MRC) -- South Korea's S-Oil Corp expects refining margins to improve gradually this year, boosted by a continuing recovery in demand as coronavirus vaccines are rolled out, amid limited capacity additions, reported The Economic Times.

The country's third-largest refiner, whose major shareholder is Saudi Aramco, on Thursday posted operating profit of 93 billion won (USD83.19 million) for the quarter to December, up from 9.5 billion in the corresponding year-ago period.

It was S-Oil's first operating profit since the fourth quarter of 2019.

The company's revenue in the fourth quarter was 4.3 trillion won, down 34 per cent from the previous year.

Full-year operating loss was 1.1 trillion won and revenue was 16.8 trillion won.

S-Oil, which has a 669,000 barrel-per-day (bpd) refinery near Ulsan, operated its crude distillate units at 100.8 per cent on average in the fourth quarter, higher than 96.1 per cent for the entirety of 2020, according to the company's statement.

The company said its planned 2021 capital expenditure was 252 billion won, down from 397 billion won in 2020.

Shares of S-Oil closed down 0.9 per cent after the earnings announcement, while the wider market declined 1.7 per cent.

As MRC reported earlier, S-Oil, South Korean petrochemical major, took off-stream its residue fluid catalytic cracker (RFCC) unit for a turnaround in June, 2020. The company undertook a planned shutdown at the unit by early-July, 2020. The unit remained off-line for about two weeks. Located at Onsan, South Korea, the RFCC unit has a propylene capacity of 705,000 mt/year.

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

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).
MRC

MOSCOW (MRC) -- Oxy Low Carbon Ventures (OLCV), a division of Occidental announced the delivery of two million barrels of carbon-neutral oil1 to Reliance Industries in India, according to Hydrocarbonprocessing.

This transaction, which was arranged in conjunction with Macquarie Group’s Commodities and Global Markets group (Macquarie), is the energy industry’s first major petroleum shipment for which greenhouse gas (GHG) emissions associated with the entire crude lifecycle, well head through combustion of end products, have been offset.

This transaction is a first step in the creation of a new market for climate-differentiated crude oil. It is also a bridge to the development of a further differentiated petroleum product, net-zero oil2, which Occidental intends to eventually produce through the capture and sequestration of atmospheric CO2 via industrial-scale direct air capture (DAC) facilities and geological sequestration. The transaction is an example of Macquarie’s commitment to innovation in the environmental products space and to being a leader in energy transition.

The oil was produced in the U.S. Permian Basin by Occidental and delivered to Reliance in India. Macquarie arranged and structured the bundled offset supply and retirement. The offsets were sourced from a variety of projects verified under the Verra Verified Carbon Standard meeting eligibility criteria for the UN’s International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The volume of offsets applied against the cargo are sufficient to cover the expected GHG emissions from the entire crude lifecycle including oil extraction, transport, storage, shipping, refining, subsequent use, and combustion.

This type of transaction, which involves the bundling of high-quality carbon offsets with crude oil, is an immediate executable solution that helps promote investments in longer-term, industrial-scale decarbonization strategies. It is also a step in the furtherance of Occidental’s net-zero ambitions and commitment to addressing climate change today.

Occidental, the first US based international energy company to announce an ambition to achieve net-zero GHG emissions associated with the use of its products by 2050, has been using carbon-dioxide in its enhanced oil recovery operations in the Permian for over 40 years. During this time, it has developed market-leading expertise in carbon capture, utilization and storage (CCUS). In 2019, OLCV made an investment in Carbon Engineering’s Direct Air Capture (DAC) technology and announced plans, through its development company 1PointFive, to proceed with engineering the world’s largest DAC and sequestration plant. This project will utilize Occidental’s existing Permian Basin enhanced oil recovery infrastructure and its market-leading carbon management expertise to permanently sequester captured atmospheric carbon-dioxide. OLCV expects net-zero oil from DAC to be available to customers in 2024.

The two companies also recognize that technology will play an important role in decarbonization of the industry. Occidental and Macquarie both invested last year in Xpansiv, a technology-based environmental commodities platform and exchange, which was leveraged in this transaction. At the same time, Occidental is working with Carbon Finance Labs who has supported this transaction and is developing a differentiated, distributed ledger-based carbon accounting platform for tracking end-to-end lifecycle carbon emissions through commodities supply chains.

“We are taking important initial steps to work with our customers in hard-to-decarbonize industries to offer carbon-neutral and other low-carbon products that will leverage our expertise in carbon management to lower their total carbon impact and address Scope 3 emissions,” said Richard Jackson, President Oxy Low Carbon Ventures.

"Macquarie is delighted to have worked with Occidental in developing this innovative solution. We look forward to continued collaboration with the company on realizing their ambitious carbon-neutral goals.” said Ozzie Pagan, Senior Managing Director for Macquarie in the Americas. “Macquarie is working to lead the energy transition through innovation and investments focused on advancing de-carbonization. We seek to develop, along with our clients, actionable strategies today and sustainable innovations for the future.”

The Very Large Crude Carrier (VLCC) Sea Pearl containing the carbon-neutral oil finished unloading in India today.

As MRC wrote previously, in January 2021, Reliance Industries Ltd completed spin-off of the firm's oil-to-chemical business into a new unit that will help it pursue growth opportunities with strategic partnerships. The oil-to-chemical (O2C) business unit holds Reliance's oil refinery and petrochemical assets and retail fuel business but not upstream oil and gas producing fields such as KG-D6 and textiles business.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).

Reliance Industries is one of the world"s largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
MRC

MOSCOW (MRC) -- Northwest European LPG trade in December rose marginally month on month to an estimated 715,000 metric tons, up from 675,000 metric tons in November, according to Chemweek with reference to OPIS records.

Imports into the region from the US were 165,000 metric tons in December, up from 95,000 metric tons in the prior month, but down from a record 400,000 metric tons in October.

Main LPG imports into northwest Europe are earmarked typically as feedstock for the petrochemical sector, which had seen favorable economics for cracking propane early in December compared to naphtha. However, the propane/naphtha spread swung positive mid-December, after opening the month at minus USD19/metric ton, led by a strengthening propane price. The spread moved considerably further into positive territory by the end of the month, to USD44/metric ton, leaving propane much less attractive for feedstock end-users.

Imports of LPG from the US also slowed during December as the freight rate for the Houston-to-Flushing route for very large gas carriers (VLGCs) rose by nearly 30% in one month to USD90/metric ton from USD70/metric ton, according to shipbroker data. Delays for vessels waiting to transit the Panama Canal, combined with winter heating demand for LPG in Asia, led to a surprise jump in freight rates.

CIF ARA propane prices in northwest Europe rose by USD141/metric ton through December, topping USD507/metric ton by year-end. By comparison, CIF northwest European naphtha prices were up by 50% in the same month, increasing by USD69/metric ton to end 2020 at USD459.75/metric ton.

During December, local North Sea supplies of LPG entering the petchems feedstock pool totaled 248,000 metric tons, equivalent to 58% of total feedstock intake, and down from 290,000 metric tons in November. The remainder of intake from the sector in December consisted of 23% from the US East Coast, up from 13% in November, while imports from the US Gulf Coast made up 16% of intake, up from 11% in November. The retail and refining sector saw LPG intake slightly softer month on month at 165,000 metric tons for December.

Exports out of northwest Europe increased to 125,000 metric tons in December from 95,000 metric tons in November, with cargoes moving to the Baltic, eastern Mediterranean, and US east coast. Several of the US-Europe transit cargoes moved via the back-haul route, as some shippers looked to take advantage of the high market rates in the month. Exports of LPG from port of Ust-Luga in the Russian Baltic to northwest Europe were an estimated 12,000 metric tons.

OPIS is an IHS Markit company.

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 ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).
MRC