Covestro increases 2021 forecasts due to higher margin

MOSCOW (MRC) -- German plastics group Covestro AG (formerly Bayer MaterialScience) has raised the outlook for its profit, cash flow and return on capital this year on the back of an improvement in margins at its core operating business, reported Reuters.

Covestro released its revised forecast under stock exchange rules requiring listed companies to update the market when performance diverges from expectations.

Earnings before interest, taxation, depreciation and amortization (EBITDA) are now expected to be between EUR2.2 billion and EUR2.7 billion (USD2.6-USD3.2 billion) in fiscal 2021, up from an earlier forecast of EUR1.7-2.2 billion.

The improved outlook reflects higher product prices and margins, mainly in its main businesses - transparent polycarbonate (PC) plastics as well as chemicals for insulation foams and upholstery foams.

Free operating cash flow was forecast at EUR1.3-1.8 billion, up from an earlier view of EUR900 million to EUR1.4 billion, while return on capital employed is now seen at 12%-17% compared to 7%-12% previously.

The company reported preliminary first-quarter EBITDA at EUR740 million and forecast EBITDA in the second quarter at EUR730-870 million.

It will report full first-quarter results on April 28.

As MRC informed previously, earlier this month, DSM completed the sale of the resins & functional materials businesses to Covestro for EUR1.6 billion (USD1.9 billion), including EUR1.4 billion in cash.

We remind that 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.

According to MRC's ScanPlast report, Russia's overall consumption of PC granules (excluding exports from Belarus) totalled 8,100 tonnes in January 2021, up by 20% year on year (6,800 tonnes a year earlier).

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. With 2020 sales of EUR 10.7 billion, Covestro has 33 production sites worldwide and employs approximately 16,500 people (calculated as full-time equivalents).
MRC

MOSCOW (MRC) -- SK Advanced managed to produce on-specification polypropylene (PP) at its new plant in Ulsan, South Korea in the week ending 9 April, reported S&P Global.

The construction works were nearly completed in late January 2021. The initial start-up date was 20 March, but the company delayed tha launch of the new plant by 3 days until 23 March, 2021.

The PP unit is a joint venture between PolyMirae and SK Advanced, using the “Spheripol” process of LyondellBasell, and have an annual output of 400,000 tons/year.

The unit will be utilizing the propylene output from SK’s 600,000 tons/year propane dehydrogenation (PDH) unit at the same complex. It is expected that SK Advanced would have a smaller propylene allocation for export once the new PP line comes online.

As MRC wrote previously, in October, 2020, Advanced Petrochemical signed an amendment to the partnership agreement between its subsidiary, Advanced Global Investment Co. (AGIC), and SK Gas Petrochemical Pte. Ltd. (SKGP), a unit of SK Gas Co. Ltd.. Under the amendment, an isopropanol (IPA) plant with a capacity of 70,000 tons per annum will be added, along with the Propane Dehydrogenation (PDH) and Polypropylene (PP) plants that were already announced earlier. The company said in a bourse statement that by adding the IPA plant with an estimated cost of SAR 300 million (USD80 million), the total cost of the project for the three factories is currently estimated to be approximately SAR 7.05 billion (USD1.88 billion).

According to MRC's ScanPlast report, 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.

Advanced Petrochemical Company (before Advanced Polypropylene) is a Saudi Joint Stock Company, established in October 2005. The company was initially launched by National Polypropylene Limited, jointly owned by Mr. Khalifa Al Mulhim, the chief executive officer of Advanced, and Mr. Monther Laheeq, who negotiated all the main deals related to the project, either before or after the establishment of Advanced Petrochemical. Currently, National Polypropylene Limited controls 7.9% of Advanced Petrochemical. Advanced Petrochemical started the construction of its plants in May 2005. The company produces 455,000 tons per year of propylene and 450,000 tons per year of polypropylene from its production facility located in Jubail Industrial City, in the Eastern coast of the Kingdom of Saudi Arabia.
MRC

MOSCOW (MRC) -- Polynt Composites, which specializes in the manufacture of unsaturated polyester resins, vinyl esters, gelcoats, and derivatives, has announced a further price increase for its entire range of its composite products, according to MaterialsToday.

The nominated price increase of EUR250/metric ton (USD297/metric ton) is effective as of 10 April 2021 or as contracts allow.

‘The escalation of the prices of the main raw materials in Europe is continuing as a consequence of the production and logistical disruptions recorded in recent weeks,’ the company said. ‘Polynt Composites will continue to make every effort to limit the impact of these rising costs upon product pricing.’

Polynt has announced a series of price increases in the first three months of 2021 due primarily to rising raw material costs.

As MRC informed previously, in early March, 2020, Polynt announced that all its sites and activities in Italy were running smoothly and according to plan, despite the news about the Italian situation related to the spreading of the coronavirus in the country.

Polynt runs two maleic anhydride (MA) plants in northern Italy, including Bergamo’s 36,000 tonne unit in Lombardy and Ravenna’s 60,000 tonne plant on the east coast. The bigger production line at Ravenna had been operating at a reduced rate since March 2019 due to technical issues, the firm previously said. A new reactor ordered is expected to be operational in 2021. Polynt also produces phthalic anhydride at Bergamo and its San Giovanni Valdarno site, as well as plasticizers at San Giovanni Valdarno.

Maleic anhydride is a feedstock for the production of tetrahydrofuran, tetrahydrophthalic anhydride, films and synthetic fibers, pharmaceuticals, detergents, plasticizers, maleic, succinic, fumaric and malic acids and a number of chemicals for agriculture.

Plasticizers are substances introduced into a polymeric material to give it elasticity and plasticity during processing and operation. In particular, plasticizers are used to produce polyvinyl chloride (PVC). The share of plasticizers used for the production of PVC products is about 80%.

According to MRC's ScanPlast report, Russia's estimated consumption of polyethylene terephthalate (PET) increased in January 2021 by 3% year on year. Thus, January estimated PET consumption in Russia totalled 57,420 tonnes.
MRC

MOSCOW (MRC) -- AOC Resins (Collierville, Tennessee) says that it has made a price increase for its entire unsaturated polyester resin (UPR) and epoxy vinyl ester (VE) range sold in Europe, Middle East and Africa (EMEA) on tight supply of key feedstocks and higher delivery and packaging costs, according to MaterialsToday.

The price increase of EUR300 per ton will take immediate effect for all new orders or as soon as contracts allow and is in addition to the increases that were previously announced.

‘The availability of key raw materials from our contract suppliers has been severely hampered and we are continuing to have to resort to other, more expensive, sources,’ said Fons Harbers, vice president. ‘Also logistics and packaging costs have been increasing steadily. This leaves us no choice but to raise the prices of our products further as a result, realizing that supply can continue to be somewhat irregular given these additional supply routes.’

As MRC informed earlier, in October 2020, AOC, Kaprain and Spolchemie announced they had reached agreement on AOC acquiring the Unsaturated Polyester Resin (UPR) manufacturing operations located at the Spolchemie site in Usti nad Labem (Czech Republic). This footprint extension will allow AOC to further improve service and logistics to its customers in Central/ Eastern Europe as well as in Germany, and will make new products (e.g. based on recycled PET) available for customers around Europe.

According to MRC's ScanPlast report, Russia's estimated consumption of polyethylene terephthalate (PET) increased in January 2021 by 3% year on year. Thus, January estimated PET consumption in Russia totalled 57,420 tonnes.
MRC

MOSCOW (MRC) -- INOVYN has announced the proposed closure of its sulphur chemicals plant at Runcorn Site, and its withdrawal from the UK sulphur chemicals market, as per the company's press release.

The decision follows a detailed management review of the business in light of recent unforeseen events.

In October 2020, an unexpected interruption to the third-party power supply to Runcorn Site resulted in the sulphur chemicals plant being taken offline. During a carefully controlled restart, it was identified that a number of critical plant components had suffered significant damage. As a result, to ensure the safety and integrity of the plant it was taken back offline.

Since then, and despite significant effort and investment to rectify these issues, it has become clear that it will not be possible to safely restart the plant for at least a further 18-24 months.

This extended outage affects INOVYN’s ability to supply its customers and means that it will not be in a position to continue to produce sulphur chemicals for the UK chemicals market. Regrettably, the Company is therefore left with no option but to keep the plant offline and effect a permanent closure of the sulphur chemicals business.

There is no impact on other operations at Runcorn Site.

Inovyn’s operations at Runcorn are focused mainly on the production of chlorine, caustic soda, and chlorinated derivatives, according to its website. The site has one of the largest membrane electrolysis units in Europe. Chemicals produced there are sold into a variety of industrial applications across sectors including water, building and construction, electronics, and pharmaceuticals, it says.

As MRC reported earlier, in October 2019, INOVYN conducted maintenance works at its polyvinyl chloride (PVC) plant at its Jemeppe Site, Belgium. According to the company’s website, the Jemeppe site is one of the largest PVC production capacities in Europe with 420,000 tons/year of material supplied to key sectors including building, automotive and piping.

According to MRC's ScanPlast report, Russia's overall PVC production reached 259,400 tonnes in the first three months of 2021, down 3% year on year. All producers reduced their output over the stated period.

Headquartered in London, INOVYN is Europe’s leading producer of vinyls and in the top three worldwide. With an annual turnover of EUR3.1 billion, INOVYN has circa 4,200 employees and manufacturing, sales and marketing operations in 8 countries across Europe.