Moody's upgrades Nizhnekamskneftekhim rating outlook from stable to positive

MOSCOW (MRC) - Moody's Investors Service has changed its outlook from "stable" to "positive" on the corporate rating (CFR) and probability of default rating (PDR) of Nizhnekamskneftekhim, the rating agency said.

At the same time, Moody's confirmed the company's CFR at 'B1' and PDR at 'B1-PD'. The outlook was changed to "positive" following the approval by the FAS of Russia of the proposed acquisition by SIBUR (Baa3 stable) of 100% of the voting shares of TAIF, which includes NKNKH, Kazanorgsintez and TGK-16. The combined enterprise will account for about 70% of all petrochemical production in Russia, and it will be one of the five largest world producers of polyolefins and rubbers.

The change in outlook to positive reflects Moody's expectation that the acquisition by SIUBR of a controlling stake in the company through TAIF will, over time, improve NKNK's credit profile through the integration of the two entities and lending support from a stronger parent company. The amount of credit ties and rating support will ultimately depend on the future organizational structure of the larger group, financial policy and the level of minority interests in the company.

As MRC informed earlier, PJSC "Nizhnekamskneftekhim" (NKNKh, part of TAIF) received 27.6 billion rubles in the first half of the year. net profit under the international financial system (IFRS) against 4.6 billion rubles. a year earlier. This is six times more than the same period last year. Revenue in the reporting period increased 1.7 times - up to Rb121.5 bn. Income from operating activities amounted to Rb30.3 bn against Rb10 a year earlier. Profit before tax rose to Rb34.6 bn against Rb5.8 bn in the same period last year.

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.

PJSC "Nizhnekamskneftekhim" (NKNKH) is one of the largest Russian producers of petrochemical products. The production complex of the company includes ten factories of the main production and ten departments (railway transport, main ethylene pipelines, etc.). NKNKh produces over 120 types of chemical products, including synthetic rubber, polyethylene, polypropylene, polystyrene, surfactants. Nizhnekamskneftekhim is part of TAIF Group.
MRC

MOSCOW (MRC) -- Epsilyte (The Woodlands, Texas), a leading North American producer of expandable polystyrene (EPS), has announced an increase in its prices for all EPS grades for September shipments on higher feedstock costs, said the company.

Thus, the price of the company's EPS grades will go up by 5 cents/pound (cts/lb) or USD110/tonne, effective 1 September, 2021 or as contracts allow.

Higher operational and supply chain costs, along with current EPS supply and demand dynamics, necessitate this adjustment.

As MRC reported earlier, Epsilyte increased its August EPS prices in the region by the same amount.

EPS is a rigid form of polystyrene (PS) used in insulation foams for the construction industry as well as for packaging.

According to ICIS-MRC Price report, in Russia, August prices for SIBUR-Khimprom and Plastk, Uzlobaya's material were in the range of Rb185,000-195,000/tonne CPT Moscow, including VAT. Russian plants' September prices still remained under negotiation, producers plan to announce them to market participants this week.

Epsilyte is owned by private equity firm Balmoral Funds (Los Angeles, California). Epsilyte is one of North America’s leading producers of expandable polystyrene resin. The company is focused on solving customer needs for efficient, high-R value EPS. This includes reducing energy usage in buildings, ensuring safe and healthy food through innovative packaging technology, and participating in infrastructure investment both in the United States and abroad.

1. Phillips 66 refinery sale offers test of investors views on pace of transition to electric vehicles

MOSCOW (MRC) -- US refiner Phillips 66's decision to market a Louisiana oil processing plant offers a key test of investors' views on the pace of the transition to electric vehicles, reported Reuters with reference to refinery industry experts. Phillips 66, the fourth largest US refiner, on Tuesday said it has put its 255,600 barrel per day (bpd) Alliance plant on the market, citing "the evolving energy landscape." The 50-year-old plant makes gasoline, diesel and jet fuel for US and Latin American markets. Reuters on Tuesday reported Phillips 66 is in talks with a potential buyer. A spokesman declined to comment, calling any talks confidential. Analysts said potential buyers may be willing to make a contrarian bet on motor fuel demand, pointing to private equity firms and rival Gulf Coast refiners Motiva Enterprises, Valero Energy Corp and PBF Energy.


MRC

MOSCOW (MRC) -- Crude oil futures were higher in mid-morning trade in Asia Sept. 1 amid the tightening of US inventories and bullish demand conditions in China, reported S&P Global.

At 11:15 am Singapore time (0315 GMT), the ICE November Brent futures contract was up 57 cents/b (0.79%) from the previous close at SD72.20/b, while the NYMEX October light sweet crude contract was 52 cents/b (0.75%) higher at USD69.02/b.

"The market is starting to digest the fact that the oil production outage is probably going to take some time in resuming, which will cause a tightening of crude inventory along with the rising demand, resulting in bullishness in the market," said Vandana Hari, CEO of Vanda Insights on Sept. 1, adding that China's appetite for crude oil seems to be recovering after successfully curbing the resurgence of delta variant.

Edward Moya, senior market analyst from OANDA noted there was optimism for crude demand across Europe as 70% of the adults in the EU are fully vaccinated.

In the offshore Gulf of Mexico, or GOM, roughly 1.7 million b/d of crude production remained offline Aug. 31, which is 94% of the total GOM output, the US Bureau of Safety and Environmental Enforcement noted. That was down slightly from 1.72 million b/d a day prior.

Meanwhile, the OPEC+ alliance is scheduled to meet Sept. 1 to decide whether to press on with plans to hike crude production by 400,000 b/d every month, as it is looking to eventually remove its output cuts implemented at the start of the pandemic.

As MRC informed previously, crude oil stockpiles fell modestly in early August, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC

MOSCOW (MRC) -- Polypropylene (PP) imports into Russia rose in the first seven month of 2021 by 19% year on year to 145,400 tonnes. Propylene copolymers accounted for the main increase in imports, according to MRC's DataScope report.

Last month, Russian companies virtually maintained June quantities of PP purchases in foreign markets, imports were 23,200 tonnes. Thus, overall PP imports into Russia reached 145,400 tonnes in January-July 2021, compared to 122,000 tonnes a year earlier. Procurement of propylene copolymers in foreign markets increased, whereas imports of propylene homopolymers (homopolymer PP) decreased.

Overall, the structure of PP imports by grades looked the following way over the stated period.

July imports of homopolymer PP were slightly over 9,600 tonnes versus 7,500 tonnes a month earlier, shipments of injection moulding homopolymer PP from Azerbaijan grew significantly. Thus, overall imports of homopolymer PP totalled 54,500 tonnes in the first eleven months of 2021, compared to 51,100 tonnes a year earlier.

Last month's imports of block-copolymers of propylene (PP block copolymers) were 6,600 tonnes versus 7,600 tonnes in June, demand for European injection moulding Psubsideed from Russian companies. Imports of PP block copolymers into Russia reached 42,800 tonnes in January-July 2021, compared to 33,300 tonnes a year earlier.

July imports of statistical copolymers of propylene (PP random copolymer) dropped to 3,400 tonnes from 5,000 tonnes a month earlier, with pipes producers accounting for the main reduction in shipments due to an increase in supply of domestic material. Overall imports of this grade of propylene copolymers were 24,700 tonnes in January-July 2021, compared to 19,400 tonnes a year earlier.

Imports of other propylene polymers totalled 23,400 tonnes over the stated period versus 18,200 tonnes a year earlier.

MRC