Huhtamaki acquires Turkish plastic packaging manufacturer Elif Holding

Huhtamaki acquires Turkish plastic packaging manufacturer Elif Holding

MOSCOW (MRC) - Huhtamaki (Finland) has signed an agreement to acquire Turkey's Elif Holding A.S., a major supplier of environmentally friendly flexible packaging, for EUR412 mn (USD483 mn), the company said in a statement.

In a press release, the company notes that the acquisition is in line with the Finnish packaging manufacturer's growth strategy to 2030 in terms of geographic reach, technological capabilities and product mix. This allows Huhtamaki to expand its flexible packaging production capacity in Turkey, which the company considers to be one of the countries with the greatest growth in the future.

The Elif business will become part of the company's Flexible Packaging business segment. Bridging financing for the USD500 mn acquisition of Elif is supported by Citibank, which also acted as a consultant on the transaction.

In addition, the two companies share similar commitments in three areas: environmental, social and corporate, and in supporting their clients to achieve their sustainability goals.

The deal is subject to Turkish antitrust approval and is expected to close after regulatory approval. Both companies will continue to operate as usual until the closure.

Earlier it was reported that Finnish Huhtamaki Flexible Packaging Europe received approval from the European industry group RecyClass (Belgium) for its three new laminated polyethylene tube technologies, developed in collaboration with Czech company Zalesi and toolmaker Plastuni Lisses, part of the Somater Group. Tubes made with this technology from HDPE with easy to apply direct printing have been tested in an independent laboratory.

Founded in 1972, Elif has set a goal by 2025 to develop packaging that is 100% recyclable, recyclable or compostable. The company specializes in high quality environmentally friendly flexible packaging based on recycled polymers in both the post-industrial and consumer sectors.

Elif operates a state-of-the-art system for the collection and disposal of industrial plastic scrap at both its own and customers' premises, and over 90% of the company's current product portfolio is recyclable and the product range also includes compostable films.

In Russia, Khukhtamaki has two production sites - in Ivanteevka (Moscow region) and in Alabuga (Tatarstan), where it produces packaging for the catering sector and packaging for eggs.
MRC

US refinery and chemical plant workers to press for more pay in coming union contract talks as virus roils oil firms

US refinery and chemical plant workers to press for more pay in coming union contract talks as virus roils oil firms

MOSCOW (MRC) -- US refinery and chemical plant workers agreed to focus on pay and health insurance in coming union contract talks, said people familiar with United Steelworkers (USW) union deliberations, setting up a conflict with refiners struggling to throw off losses from weak demand, reported Reuters.

Proposals setting an agenda for pay increases, improved health insurance and severance pay were adopted at the union's national oil bargaining policy conference conducted online. The national agenda must still be approved by local union members.

Three-quarters of the 30,000 oil and chemical plant workers represented by the USW must approve the plan before it can be used in negotiations that begin in January between the union and Marathon Petroleum Corp, which is the lead negotiator for oil companies.

The current three-year agreement expires at 12:01 a.m. on Feb. 1, 2022.

The talks with refinery and chemical plant owners will get underway as the Delta variant of the coronavirus is threatening to reduce petroleum demand more than a year after the initial outbreak of the COVID-19 disease forced lockdowns and work-from-home policies.

The pandemic cut gasoline consumption 13% last year, forcing some refiners to shut production lines and take on new debt to finance operations.

This will be the second round of negotiations since a nationwide strike in 2015 saw 7,000 workers from 12 refineries and three chemical plants join picket lines. It was the first nationwide strike in 35 years.

As MRC informed before, earlier this month, the international president of the United Steelworkers (USW) union, Thomas Conway, called for refinery and chemical plant workers to include decarbonization as part of contract proposals to be made to US oil companies in January. In remarks to the USW national oil bargaining policy conference, Conway said decarbonization projects should be viewed as necessary capital investment programs.

We remind that Marathon, the nation’s largest refiner, was chosen to replace Shell Oil Co, the US arm of Royal Dutch Shell, which was the lead negotiator for the oil companies from the late 1990s through 2019. Shell has reduced the number of the refineries it operates in the United States and by the end of this year will operate only one plant. The 2022 contract talks will come after national refining capacity fell 4.5% in the COVID-19 pandemic.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC

Citgo posts first profit in seven quarters as higher fuel exports helped offset weak margins

Citgo posts first profit in seven quarters as higher fuel exports helped offset weak margins

MOSCOW (MRC) -- Citgo Petroleum reported a slim, second-quarter profit, its first in seven quarters, as higher fuel exports helped offset weak margins and the impact of a fuel pipeline shutdown, reported Reuters.

Earnings at the US refining arm of Venezuela's state oil company Petroleos de Venezuela have been under pressure since it lost access to Venezuelan oil due to US sanctions. Citgo is also battling possible seizure by creditors seeking to collect on unpaid debts incurred by PDVSA and Venezuela.

The eighth-largest US refiner posted a USD3 million profit, its first since the third quarter of 2019, for the three months ended June 30 as exports rose and the utilization rate at its plant in Lemont, Illinois hit 97%. It suffered a $5 million net loss in the second quarter a year ago.

"Given the multiple challenges we have faced during 2020 and the first half of 2021, this return to profitability is particularly satisfying," Citgo Chief Executive Carlos Jorda said in a statement. Citgo fell deep into the red last year as the COVID-19 pandemic slashed demand for motor fuel.

In May, it reduced production at its 418,000 barrel per day (bpd) Lake Charles, Louisiana, refinery, the largest of its three facilities, after the Colonial fuel pipeline was taken out of commission for a week following a cyberattack.

Total refinery throughput was 732,000 bpd, from 575,000 bpd a year earlier. Exports rose to 130,000 bpd, from 87,000 bpd a year earlier. However, its Corpus Christi, Texas plant ran at a weak 78% utilization rate, hurt by operational and third-party outages.

A planned overhaul at Corpus Christi will be pushed back to the first quarter of next year, helping reduce expenses and lift production this year.

As MRC wrote before, in September 2020, Citgo Petroleum Corp said it did not plan to idle its 418,000 barrel-per-day (bpd) Lake Charles, Louisiana, refinery damaged by Hurricane Laura. Rumors have circulated since Laura’s passage over the Lake Charles area on Aug. 27 that Citgo was considering shutting the refinery for an indefinite period because of the extent of the damage and continuing low demand for motor fuels in the COVID-19 pandemic.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC

SIBUR plans to fully repay the NWF loan for the construction of Zapsibneftekhim

SIBUR plans to fully repay the NWF loan for the construction of Zapsibneftekhim

MOSCOW (MRC) -- After the launch of Zapsibneftekhim at full capacity, SIBUR decided to use the significantly increased free cash flow to reduce debt, according to the Kommersant.

After the launch of Zapsibneftekhim at full capacity, SIBUR decided to use the significantly increased free cash flow to reduce debt, according to the Kommersant newspaper.

According to the newspaper, the company is going to fully repay the loan of the National Wealth Fund (NWF), which was attracted in 2015 for the construction of Zapsibneftekhim. The company borrowed USD1.75 billion (at that time - 118.6 billion rubles) at the rate (inflation in the United States plus 1 percentage point) maturing in 2030.

The Izvestia newspaper notes that the reason for the early repayment of the debt could have been the high efficiency of the complex already in the early days of its operation.

Thus, Zapsibneftekhim had a positive impact on the implementation of the international cooperation and export national project. According to analysts, the contribution of production in Tobolsk to the growth of non-resource exports of Russia exceeded 16%. In addition, according to Sibur itself, products manufactured at Zapsibneftekhim can make a significant contribution to solving the problem of import substitution. For various categories, the volume reaches 85–95% of the total market. For example, in the production of stretch films, pipes and cable insulation, this figure can exceed more than 90%.

According to the Kommersant newspaper, during the period of using the loan, SIBUR paid USD290.5 million (17.8 billion rubles) of coupon income to the state budget. SIBUR has already informed the government of its intention to pay off its debt to the NWF.

As per MRC, On 10 August, the Central Bank registered an additional issue of ordinary shares of PJSC SIBUR Holding, the largest petrochemical holding in Russia and Eastern Europe, reported BusinessOnline. Now the authorized capital of PJSC SIBUR Holding is Rb21,784, 791. There are 2,178,479.1 ordinary shares in circulation with a par value of Rb10 each one. In accordance with the decision on the additional issue, the issuer is placing 384,437,000.489 new ordinary shares by private subscription.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

SIBUR manufactures and sells petrochemical products in the Russian and international markets in two business segments: olefins and polyolefins (polypropylene, polyethylene, BOPP, etc.), as well as plastics, elastomers and intermediate products (synthetic rubbers, expanded polystyrene, PET, etc.).
MRC

COVID-19 - News digest as of 17.08.2021

1. Westlake earnings increased in Q2 on post-pandemic recovery

MOSCOW (MRC) -- Westlake Chemical Corporation reported record quarterly earnings in the second quarter 2021 compared to the previous year, as strong demand encouraged higher sales prices and margins, said the company. The vinyls segment made record income, driven by higher sales prices, margins and sales volumes for polyvinyl chloride (PVC) resin market on regaining strength in the building and construction materials business. Olefins also tracked record income from operations in the second quarter on higher sales prices and margins across the portfolio, on the back of good global demand, and tight supply, partially offset by lower polyethylene (PE) sales volumes.


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