Operating profit of German chemical giant BASF down 23% in 2020

MOSCOW (MRC) -- BASF's net income surged to EUR1.01bn in the fourth quarter amid stronger prices and higher volumes, the German chemicals major said in its press release.

Sales in the fourth quarter of 2020 increased by 8 percent to EUR15.9 billion. Volumes were up by 7%. Prices also increased by 7%, driven mainly by the Surface Technologies, Agricultural Solutions and Materials segments. Portfolio effects contributed 1 percent and resulted from the acquisition of the polyamide business from Solvay. Currency effects had a negative impact of 7 percent on sales.

EBITDA before special items rose by 15 percent in the fourth quarter to EUR2.1 billion. EBITDA amounted to EUR2.0 billion, compared with EUR1.6 billion in the fourth quarter of 2019. EBIT before special items rose in the fourth quarter by 32 percent to EUR1.1 billion. This increase was primarily due to significantly higher earnings in the Materials, Chemicals and Industrial Solutions segments. This more than offset lower contributions from the other segments as well as from Other. Special items in EBIT amounted to minus EUR181 million, as compared with minus EUR263 million in the fourth quarter of 2019. EBIT in the fourth quarter of 2020 rose by 61 percent to EUR932 million.

Sales of EUR59.1 billion in the full year 2020 were almost stable. Negative currency and volume effects were nearly offset by higher prices and positive portfolio effects.

EBITDA before special items was EUR7.4 billion, down by 11 percent versus the prior-year level. EBITDA came in at EUR6.5 billion, compared with EUR8.2 billion in 2019. EBIT before special items was EUR3.6 billion in the full year 2020, down by 23 percent compared with the previous year. Owing to the effects of the pandemic, all segments posted lower earnings – with one exception: The Industrial Solutions segment achieved EBIT before special items on a level with the year 2019. The earnings decline at the BASF Group level was attributable in particular to significantly lower contributions from the upstream businesses in the Chemicals and Materials segments. The sharp drop in demand from the automotive industry especially weighed on earnings development in the Surface Technologies segment.

We remind that German chemicals maker BASF said in early November it had put a project to build a petrochemicals complex in India worth up to USD4 billion on hold due to the economic uncertainty caused by the COVID-19 pandemic. BASF signed a memorandum of understanding with Abu Dhabi National Oil Company (ADNOC), Adani Group and Borealis AG in October 2019 to evaluate a collaboration to build the chemical site in Mundra, in India’s Gujarat state.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

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

MOSCOW (MRC) -- Shell has appointed Andrew Mackenzie, former CEO of mining giant BHP and a former senior leader at BP to take over as chairman starting May, as the Anglo-Dutch major pursues a new transition strategy, reported S&P Global with reference to the company's statement on March 11.

Mackenzie takes over from Chad Holliday and will be the first British chair of Shell since a scandal over mis-statement of reserves rocked the company in the early 2000s.

Holder of a doctorate in organic chemistry, Mackenzie worked in senior roles for BP for 22 years. He went on to become head of industrial minerals and diamonds at Anglo-Australian minor Rio Tinto from 2004-2007, before becoming CEO of rival BHP, from 2013-2019.

He joined Shell's board in October 2020.

"In addition to proven experience of leading a large, complex international organization, the requirement was for someone with significant experience in capital discipline and with the ability to balance, and judge the timing, of the transformational changes that Shell needs to make," Shell said in a statement.

Holliday, who is stepping down after six years, said Mackenzie "brings a wealth of leadership and sustainability experience, scientific curiosity and commercial acumen that ideally equip him to help Shell navigate the energy transition and deliver on the far-reaching Powering Progress strategy."

The appointment comes after Shell unveiled a new strategy last month in the wake of last year's price collapse, the coronavirus crisis, and rising pressures to transition away from fossil fuels.

Shell expects its oil production to decrease by 1%-2% annually as it holds upstream investment close to 2020 levels and prioritizes transition areas such as LNG, renewables and electricity provision.

Mackenzie said: "I believe Shell has an exceptional portfolio of future-facing assets and I look forward to working with (CEO) Ben van Beurden and the board to profitably accelerate Shell's transition into a net-zero emissions energy business that continues to generate substantial value for shareholders, customers and communities alike."

The change of roles is scheduled for the company's AGM on May 18.

As MRC informed before, Royal Dutch Shell Plc pushed back the restart of its 318,000 bpd joint-venture Deer Park, Texas, refinery to March 13. Shell had planned to restart the 270,000-bpd DU-2 crude distillation unit (CDU), the largest at the refinery, by early this week. Shell is continuing repairs at the refinery to enable it to restart from the Feb. 15 shutdown because of cold weather. Repairs could last until April.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Packaging supplier Amcor has broken new ground in the Argentine dairy market by developing the first fresh milk bottle made of transparent post-consumer recycled (PCR) PET resin, said Canplastics.

The custom-designed one-litre container for leading dairy maker Mastellone Hnos SA, headquartered in Buenos Aires, supports the positioning of the La Serenisima Original milk brand as a natural product while also delivering optimum shelf life and increased sustainability benefits.

Latin American dairy companies are increasingly using clear PET bottles to showcase freshness and premium quality. The cold-fill bottle contains 20 per cent PCR content. "In a market that has remained stagnant for several years, we’ve broken the rules by developing an entirely new format offering for fresh milk,” Martin Darmandrail, Amcor’s specialty containers director for Argentina, said. “We’ve shaken things up with a unique fresh milk package with the durability, freshness, performance, and sustainability benefits of PET."

The container includes a 38-mm finish and a HDPE screw cap from Bericap North America. A key technical challenge was limiting light exposure and preventing damage to the product. To preserve the contents, a special barrier was developed to help extend shelf life. The project builds on Amcor’s existing partnership with Mastellone Hnos – in October 2019, Amcor Rigid Packaging’s LATAM team worked with the brand to launch a shelf-stable, ultra-high temperature (UHT) white milk in aseptic, white-coloured PET bottles.

In the midst of today’s hygiene concerns, Amcor officials said, capped and sealed PET bottles keep beverages protected from pathogens, Amcor officials said. They’re also sealed to combat contamination and are re-sealable.

In Argentina, the new fresh milk product will be available in select metropolitan areas with broader distribution later.

As per MRC, Amcor retained the highest sustainability rating in the packaging sector and the second highest score possible from MSCI ESG. In 2020, Amcor a leading packaging company received a rating of AA in the MSCI ESG Ratings assessment. This rating is the highest in the packaging industry and is the second highest rating available. 2020 is the 4th year in a row that Amcor has achieved an AA rating - MSCI describes AA rated companies as ‘a company leading its industry in managing the most significant ESG risks and opportunities’.

According to ICIS-MRC Price Report, March formular prices of Russian PET were in the range of Rb90,000-105,000/tonne CPT Moscow, including VAT.

Amcor works with leading companies around the world to protect their products differentiate brands, besides improving value chains through a range of flexible and rigid packaging including specialty cartons, closures, and services. The company is focused on making packaging that is increasingly light-weighted, recyclable and reusable, and is made by using a rising amount of recycled content. Presently, Amcor has operations at 250 locations in 40-plus countries.
MRC

MOSCOW (MRC) -- Crude oil futures rose during mid-morning trade in Asia March 11 as bullish US products data from the Energy Information Administration negated a large build in US crude inventories, with the market also gaining support from the US Congress' approval for fiscal relief and the depreciation of the dollar, reported S&P Global.

At 11:08 am Singapore time (0308 GMT), the ICE Brent May contract was up by 53 cents/b (0.78%) from the March 10 settle to USD68.43/b, while the April NYMEX light sweet crude contract was up by 54 cents/b (0.84%) to USD64.98/b.

Data released by the EIA late March 10 showed a massive 13.8 million-barrel build in US crude inventories in the week ended March 5. The build pushed stocks to 498.4 million barrels, and at 6%, opened up the widest surplus to the five-year average since mid-January.

The build was larger than expected, as analysts surveyed by S&P Global Platts had forecast crude stocks to increase by only 2.7 million barrels. Regardless, the market barely flinched, and instead chose to focus its attention on the bullish products data.

According to the EIA, US gasoline inventories and distillate inventories plummeted, falling 11.8 million barrels and 5.5 million barrels, respectively.

The market was particularly reassured by indications of a rise in gasoline and distillate demand. Implied gasoline demand jumped by more than 7% on the week to 8.73 million b/d, the strongest since early November 2020, whereas implied distillate demand surged by more than 18% on the week to 4.49 million b/d, the strongest since November 2019.

"Overall (gasoline) demand was stronger, with apparent consumption hitting over 8 million b/d as vaccinations and better weather boosted road travel. In fact, congestion in New York is rising, while toll route traffic has risen the fastest since November 2019," ANZ analysts said in a March 11 note.

Sentiment in the market also received a boost after the US House of Representatives approved a USD1.9 trillion stimulus package on March 10, after the US Senate had voted in favor of the package on March 6.

The stimulus package is expected to increase oil and energy demand by expediting global economic recovery, according to Laurence Boone, the OECD's chief economist, who told the Financial Times that it will add 1% to global economic growth.

During the March 11 morning trade, oil prices were also buoyed by the depreciation in the US dollar, which analysts said was the result of muted US inflation data bringing stability to US bond yields, and improving risk sentiment in the market. At 10:54 am, the March contract for the US dollar index was down 0.184% from the March 10 close at 91.795.

"A weaker dollar on Wednesday (March 10) supported energy prices along with better (economic) data," Avtar Sandu, Philips Futures' senior commodities manager said in a March 11 note. Sandu said that strong February credit growth in China and a robust increase in January manufacturing in France constituted the economic data supporting oil.

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 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC

MOSCOW (MRC) -- Stamicarbon, the innovation and license company of Maire Tecnimont Group and Henan Xinlianxin Chemicals Group Co. Ltd. in China, have signed licensing and equipment supply contracts for a second Ultra-Low Energy grass root urea plant, said Hydrocarbonprocessing.

The virtual signing event had all the spirit of a traditional ceremony, despite participants connecting from different countries via videoconferencing.

The first plant ever designed with Stamicarbon’s innovative LAUNCH MELT™ Ultra-Low Energy design, is also licensed to this customer and is currently in commissioning at the site of their subsidiary Jiujiang Xinlianxin Fertilizer Co. Ltd. in Jiangxi province. This new contract, was signed even before the scheduled start-up of the first plant in February. It represents the third licensing project in five years between Henan Xinlianxin Chemicals Group and Stamicarbon. It started with a revamping project signed in 2016, followed by the first Ultra-Low Energy grass root plant in 2017 and this latest contract for their second Ultra-Low Energy plant in the final days of 2020.

Stamicarbon will deliver the Process Design Package and the proprietary high pressure equipment in Safurex® and associated services for both the urea melt plant and finishing by prilling. The urea plant with a Pool Reactor will have a capacity of 2334 mtpd and is expected to start up in 2023.

The urea melt plant will feature Stamicarbon’s innovative Ultra-Low Energy design, allowing for heat to be used three times (instead of two), bringing energy savings currently unrivalled by any competitor. Thus, showing Stamicarbon’s commitment towards innovation and technology development to realize sustainable fertilizer solutions. By significantly reducing both steam and cooling water consumption, the design also substantially reduces plant operating costs (OPEX). The Ultra-Low design is not only suitable for new plants, it can also be used as a powerful revamp tool for both CO2 stripping and conventional urea plants.

As per MRC, With effect from January 1, 2011, Stamicarbon, the licensing and IP Center of Maire Tecnimont S.p.A., acquired the Italian engineering company Noy Engineering from Tecnimont. With this acquisition the extensive licensing, innovation and customer service experience of Stamicarbon is combined with the polyester and polymerization technologies of Noy Engineering. Noy Engineering designs and builds plants worldwide, based on proprietary technologies. It has developed an extensive portfolio of Polymer technologies PA6.6 & PA6, PET and Acrylic. There are more than 100 plants already designed, constructed and in operation with Noy's technologies, which is equivalent to more than 1 million metric tons per year production installed worldwide.

As per MRC, Maire Tecnimont S.p.A. announced that its subsidiaries Tecnimont S.p.A. and KT - Kinetics Technology S.p.A. have signed with SOCAR’s subsidiary Heydar Aliyev Oil Refinery two Engineering, Procurement and Construction contracts, as part of the Modernization and Reconstruction of Heydar Aliyev Oil Refinery in Baku, Azerbaijan. SOCAR is the State Oil Company of Azerbaijan Republic. The overall contracts’ value equals to approximately USD 160 million.

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