AkzoNobel targets growth in Pakistan as new site takes root

A new €26 million manufacturing plant with its own forest has been opened by AkzoNobel in Faisalabad – the company’s largest investment in Pakistan to date, said the company.

The 25-acre site, which has facilities for making decorative paint, wood finishes, automotive and specialty coatings, coil coatings and protective coatings, will help to meet increasing customer demand across a variety of markets.

Also incorporated into the Faisalabad location is a forest spanning an area of 5,450 square feet. More than 1,400 native trees and shrubs – planted using the Japanese Miyawaki gardening technique – are expected to grow into a flourishing self-sustaining ecosystem over the next two years.

“Our investment in this greenfield site reaffirms our commitment to grow in Pakistan,” says Mubbasher Omar, CEO of Akzo Nobel Pakistan Limited. “It will fuel our ambition to diversify with sustainable innovations and enter new segments in the domestic market, while also providing new opportunities to delight customers beyond Pakistan.”

The site, which employs nearly 200 people, has been constructed to comply with the company’s strict environmental standards and includes a series of sustainability features, such as renewable energy generation and energy efficient design.

“We’ve also integrated agile manufacturing to accommodate future expansion in production volumes, thereby allowing AkzoNobel to be more competitive in the market,” continues Omar. “It’s the next step in continuing to build on the company’s 60-year track record of delighting paints and coatings customers in Pakistan with world class solutions.”

The inauguration ceremony was attended by several guests of honor, including Ms. Henny de Vries, Ambassador of the Kingdom of the Netherlands in Pakistan.

We remind, AkzoNobel completes expansion of its largest powder coatings plant. A major capacity expansion has been completed at AkzoNobel’s Powder Coatings site in Como, Italy, which will help secure supply to customers across Europe, Middle East and Africa (EMEA), said the company. Four new manufacturing lines are now operational following the €21 million project – two of them dedicated to automotive primers and two to architectural coatings. New bonding equipment lines have also been added, ensuring that the products meet and exceed industry standards.

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The European Union is set to call for the fossil fuel industry to help pay for fighting climate change in poorer countries under a United Nations target, a draft document shows, as nations prepare for talks this year on a global finance goal, said Hydrocarbonprocessing.

This year's U.N. climate negotiations in Baku, Azerbaijan, in November, are the deadline for countries to agree a new goal of how much wealthy, industrialized nations should pay poorer ones to adjust to the most severe impacts of a hotter world.

Given the spiraling costs of deadly heatwaves, droughts and rising sea levels, the new climate finance target is expected to be far larger than the existing U.N. commitment of rich countries to spend $100 billion per year from 2020, a target they failed to meet on time.

A draft statement for a meeting of EU foreign ministers later this month showed the 27-nation country bloc will argue the oil and gas sector should also contribute.

The draft EU statement, which sets out the bloc's priorities for climate diplomacy this year, could change before foreign ministers are due to adopt it later this month.

"Recognizing that public finance alone cannot provide the quantum necessary for the new goal, additional, new and innovative sources of finance from a wide variety of sources, including from the fossil fuel sector, should be identified and utilized," the draft statement, seen by Reuters, said.

Countries must decide in Baku whether the new climate finance goal will comprise only public funding, or also pull in the private sector and international institutions, to try to reach developing nations' fast-growing needs. The OECD has said poor nations' actual climate investment needs could total $1 trillion per year by 2025.

EU climate policy chief Wopke Hoekstra has said he will try to rally support for international fossil fuel taxes. But the road to any such agreement is steep, given the broad support needed for a global measure. Talks at the International Maritime Organization (IMO) last year on a CO2 emissions levy for shipping were opposed by countries including China. IMO negotiations will continue this month.

The draft document also said the EU will continue to demand that large emerging economies and those with high CO2 emissions and per-capita wealth - like China and Middle Eastern states - should pay towards the new U.N. climate finance goal. Beijing has staunchly opposed this in past U.N. climate talks. The question of which countries must pay is expected to be a core issue at this year's COP29 climate summit.

We remind, the European Chemical Industry Council (Cefic) said it sees the European Commission’s Strategy on Advanced Materials for Industrial Leadership as a pivotal step toward addressing the challenges posed by the green and digital transition, adding that the chemical industry has an important role to play as the primary source of advanced materials’ value chains.

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The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending February 24, 2024, according to the Association of American Railroads.

For this week, total U.S. weekly rail traffic was 483,656 carloads and intermodal units, up 7.7 percent compared with the same week last year.

Total carloads for the week ending February 24 were 224,251 carloads, up 2.6 percent compared with the same week in 2023, while U.S. weekly intermodal volume was 259,405 containers and trailers, up 12.6 percent compared to 2023.

Seven of the 10 carload commodity groups posted an increase compared with the same week in 2023. They included chemicals, up 2,776 carloads, to 33,454; grain, up 2,470 carloads, to 21,698; and motor vehicles and parts, up 2,196 carloads, to 15,931. Commodity groups that posted decreases compared with the same week in 2023 were coal, down 2,561 carloads, to 61,556; nonmetallic minerals, down 1,968 carloads, to 27,533; and forest products, down 150 carloads, to 8,460.

For the first eight weeks of 2024, U.S. railroads reported cumulative volume of 1,690,310 carloads, down 4.6 percent from the same point last year; and 1,983,594 intermodal units, up 7.4 percent from last year. Total combined U.S. traffic for the first eight weeks of 2024 was 3,673,904 carloads and intermodal units, an increase of 1.5 percent compared to last year.

North American rail volume for the week ending February 24, 2024, on 12 reporting U.S., Canadian and Mexican railroads totaled 336,833 carloads, up 3.5 percent compared with the same week last year, and 341,906 intermodal units, up 10.8 percent compared with last year. Total combined weekly rail traffic in North America was 678,739 carloads and intermodal units, up 7.1 percent. North American rail volume for the first eight weeks of 2024 was 5,122,636 carloads and intermodal units, up 0.7 percent compared with 2023.

Canadian railroads reported 94,066 carloads for the week, up 5.8 percent, and 69,511 intermodal units, up 4.3 percent compared with the same week in 2023. For the first eight weeks of 2024, Canadian railroads reported cumulative rail traffic volume of 1,233,049 carloads, containers and trailers, down 2.8 percent.

Mexican railroads reported 18,516 carloads for the week, up 3.2 percent compared with the same week last year, and 12,990 intermodal units, up 14.0 percent. Cumulative volume on Mexican railroads for the first eight weeks of 2024 was 215,683 carloads and intermodal containers and trailers, up 6.8 percent from the same point last year.

We remind, North American chemical rail traffic rose for an eighth consecutive week, with railcar loadings for the last week of 2023 rising 24.3% year on year to 44,162, according to the Association of American Railroads. Loadings rose in all three countries: the US, Canada and Mexico. For the full year, chemical railcar loadings were up 1.0% from 2022 to 2,364,975 in 2023 as increases in Canada and Mexico more than offset an 0.3% decline in the US.

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Evonik Industries AG has announced up to 2,000 job cuts worldwide as a response to the challenges posed by the anticipated continuation of the economic downturn this year, said the company.

The planned cuts include a “disproportionate” number of management positions, while around 1,500 of the affected jobs will be in Germany, the company said, adding that it expects cost reductions of around €400 million per year after the program’s completion in 2026. Around 80% of these savings will be personnel reductions, the rest will come from lower non-personnel costs, it said.

Thomas Wessel, chief human resources officer and labor director of Evonik, said during a press conference earlier today that around 20,000, of the company’s 33,000 employees worldwide, are based in Germany, meaning that there is a disproportionate representation of support and control functions in the country. That is why Germany is the focus of the program, he said. The spread of the job cuts among the different locations and group of employees will be clarified in the future, he added.

The planned job cuts form part of the “Evonik Tailor Made” program that was launched in October 2023 and aims to design and establish a new organizational structure by the end of 2026 that will “significantly” reduce all administrative activities that do not directly support the company’s operating businesses. The number of hierarchical levels below Evonik’s board will be reduced to a maximum of six, from ten, the company said. First effects of the program should materialize in the current year, Evonik said.

"We must not delude ourselves, even if there are slight signs of a recovery, what we are currently experiencing are not cyclical fluctuations, but massive, consequential changes of our economic environment. We are addressing this challenge with the 'Evonik Tailor Made' program which will change our organizational structure for good," said Christian Kullmann, chairman of Evonik.

In addition, Kullmann said during the press conference today that the program is also the result of Evonik’s structure becoming “too complex” in the past few years. The first phase of the program that started in October 2023, analyzed “extensively” all company’s structures and processes, Evonik said.

For the full year 2024, Evonik expects an increase in adjusted EBITDA to a range between €1.7 billion and €2.0 billion, compared with €1.66 billion in 2023. Sales are forecast to be between €15 billion and €17 billion, compared with €15.3 billion the previous year. Capital expenditures will be limited to around €750 million.

Kullmann added that the company will focus on improving its efficiencies and effectiveness in 2024. “We will actually focus on strict cost management,” he said. Evonik also expects its methionine business to perform better this year, and this will make “the difference,” Kullmann added.

Evonik’s net loss narrowed in the fourth quarter of 2023, to €146 million, from €284 million in the same period of 2022, on sales 17% down year over year, to €3.60 billion, due to lower volumes and prices, the company said.

Evonik’s adjusted EBITDA declined 24% year over year, to €312 million, missing analysts’ consensus estimate of €317 million provided by S&P Capital IQ, as it was negatively impacted by exceptional headwinds of approximately €50 million, related to Argentinian Peso devaluation and hyperinflation accounting as well as inventory devaluation in the company’s performance materials business, Evonik said. Adjusted EBIT was €32 million, down 60% year over year, missing a consensus of €40 million.

The company’s specialty additives business posted a 10% year-over-year decline in sales, to €811 million, while the business’ adjusted EBITDA was €134 million, 29% down compared with fourth quarter of 2023.

The nutrition and care business of the company saw sales drop 18%, to €908 million. The business’ adjusted EBITDA was 6% lower year over year, at €115 million.

Evonik’s smart materials business reported a 16% decrease in sales, to €1.05 billion, while its adjusted EBITDA was €119 million, 4% down year over year.

The company’s performance materials business recorded a 20% drop in sales, to €532 million. The business recorded a negative adjusted EBITDA of €4 million, compared with a positive adjusted EBITDA of €63 million, the prior-year period.

Evonik’s technology and infrastructure business reported a decrease in sales of 26%, to €286 million. The business’ adjusted EBITDA was €42 million, 91% higher than the €22 million in the fourth quarter of 2022.

We remind, Evonik Industries AG, headquartered in Essen, Germany, has entered into a significant license agreement with the University of Mainz, which is paving the way for the commercialization of a groundbreaking class of polyethylene glycols (PEGs) known as randomized polyethylene glycols (rPEGs). This collaboration signifies Evonik's commitment to expanding its platform of specialized lipids by incorporating rPEGs, with a focus on meeting the evolving needs of customers and the broader market. The company aims to leverage this innovative development to enhance its excipients, ultimately bringing technical grade rPEG-lipids to market by the second half of 2024.

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Indorama Ventures Public Company Limited, a global sustainable chemical producer, unveiled a significant evolution in its business strategy and outlined how major structural shifts are re-shaping the chemical industry, creating opportunities for the company to emerge stronger from the current downturn and benefit from its unique global model in the longer term, said the company.

Ahead of the company’s annual Capital Markets Day (CMD) in Bangkok on 5 March, Mr Aloke Lohia, Group CEO of Indorama Ventures, pointed to industry mega-trends that are forging fundamental long-term changes in global chemical markets, prompting a significant review of the company’s strategy. He described how subdued local demand in China is driving overcapacity and fueling cheap exports, while low feedstock prices in North America are adding to supply due to increased competitiveness. At the same time, unprecedented macroeconomic and geopolitical headwinds are weighing on global consumption, impacting Indorama Ventures’ margins and volumes in FY23, and leading to a 53% decline in earnings. Mr Lohia said feedstock prices in Western markets will increase over time as peak oil demand draws closer and refineries shut down, while the reverse will occur in emerging Asian markets as capacity rises, driving feedstock costs lower. Indorama Ventures’ unique integrated manufacturing model allows it to benefit from lower feedstock prices through ‘make or buy’ strategies that reduce working capital and interest costs.

At its CMD, the company will outline details of its new IVL 2.0 strategy to adapt to the unprecedented industry conditions. It will deleverage its business in a prolonged environment of higher interest rates, while right sizing its operations and optimizing competitiveness to improve shareholder returns over the next three years and emerge stronger as demand normalizes in the longer term. Indorama Ventures is accelerating the transformation programs it started in 2021, including implementing new data management tools and intelligent dashboards that allow its experienced managers to predict market changes in real time and respond to shifts more effectively.

We remind, Ineos revealed the acquisition of LyondellBasell's Ethylene Oxide & Derivatives business, including the production facility in Bayport, Texas, for a sum of $700 million. The deal encompasses a 420kt Ethylene Oxide plant, a 375kt Ethylene Glycols plant, and a 165kt Glycol Ethers plant, along with associated third-party operations at the site. The target completion for this transaction is set for the second quarter of 2024, subject to regulatory and third-party approvals.

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