Unscheduled shutdown of Khimprom (Volgograd) continues to put pressure on Russian EPVC prices

MOSCOW (MRC) -- Spot prices of emulsion polyvinyl chloride (EPVC) in the Russian market continued to rise on the back of unscheduled shutdown of Khimprom (Volgograd), according to ICIS-MRC Price Report.

Unscheduled shutdown of EPVC facilities at Khimprom (Volgograd) amid limited quotas from European producers resulted in the shortage of the resin in the market, which boosted prices.

Spot prices of European and Russian EPVC in mid August rose to Rb69,000-71,000/tonne CPT Moscow, including VAT, CPT Moscow, and the situation is unlikely to change till the end of the month.

Khimprom plans to begin resumption of PVC production in the next few days. However, taking into account the contractual obligations of the plant and long-term shutdown, Khimprom is unlikely to balance the situation until September.

As MRC wrote earlier, Khimprom (Volgograd) stopped its polyvinyl chloride (PVC) production on 15 July after the falling of the roof at its PVC workshop. The production capacity of emulsion PVC at Khimprom (Volgograd) is 27,000 tonnes/year.

Evonik revises outlook for 2013

MOSCOW (MRC) -- Evonik, one of the world leaders in specialty chemicals, has revised its outlook for 2013 in far more challenging market conditions, reported the company on its site.

Klaus Engel, Chairman of the Executive Board: "We are stepping up cost discipline but sticking to our growth plans."

Operating performance in H1 2013 below very good prior-period result: Group sales of EUR6.5 billion reflect slight organic decline on price grounds despite continued good volume trend. Operating results well below very high levels of H1 2012. Adjusted EBITDA margin slipped to 16.5 percent. Net income down 10 percent at EUR481 million in H1 2013.

Action to raise efficiency and cut costs stepped up.

Outlook for 2013 revised: sales around the previous year's level; operating results below the very good year-back level.

"In a challenging global economic environment, Evonik's business performance in the second quarter was weaker than expected. While volumes increased slightly, earnings were lower, mainly due to declining prices," explained Klaus Engel, Chairman of the Executive Board of Evonik Industries AG. "We are sticking to our growth plans despite the present development. In the short term, growth will be supported by increased cost discipline and continued systematic implementation of the On Track 2.0 efficiency program."

Looking ahead to the second half of the year, the company assumes that prices will stabilize at the present level, while sales volumes should be slightly higher than in the prior-year period.

Overall, Evonik expects sales in 2013 to be around the same level as in 2012 at about EUR13 billion, and to report adjusted EBITDA of around EUR2.0 billion (2012: EUR2.4 billion).

We remind that, as MRC informed previously, Evonik Industries plans to expand its capacities for precipitated silicas worldwide by about 30 % by 2014. Besides, Evonik's new polyamide 12 line is planned to be built in Singapore by 2014 to increase the availability of this specialty plastic. The company invested over EUR100m (GBR131m) in a new hydrogen peroxide plant in Jilin, China. The plant is scheduled to be completed by the end of 2013 where it will annually produce 230,000 tons of hydrogen peroxide, which is mostly used as a bleaching agent in the textile and pulp industry. As part of the company"s strategic portfolio expansion, Evonik plans to launch a new generation of PVC plasticizers. Evonik started construction of the production facilities with the estimated production capacity of 40,000 tpa at the Marl Chemical Park this summer.

Evonik, the creative industrial group from Germany, is one of the world leaders in specialty chemicals. Its activities focus on the key megatrends health, nutrition, resource efficiency and globalization. Evonik benefits specifically from its innovative prowess and integrated technology platforms. Evonik is active in over 100 countries around the world. In fiscal 2012, the company generated sales of around EUR13.6 billion and an operating profit (adjusted EBITDA) of about EUR2.6 billion.

Saltigo to relocate its corporate headquarters to Leverkusen

MOSCOW (MRC) -- Saltigo GmbH, LANXESS' subsidiary, is relocating its corporate headquarters from Langenfeld to Leverkusen, according to Lanxess' press release.

The relocation of Saltigo’s corporate headquarters is part of a series of knock-on moves following the transfer of LANXESS’ headquarters to Cologne. In Leverkusen alone, business units and group functions from 11 different office buildings will have moved into just four buildings belonging to LANXESS by the end of January 2014.

In September, the company’s workforce of over 100 will be moving into what used to be LANXESS’s headquarters (K 10) at the CHEMPARK site.

"The arrival of our fine chemicals specialist Saltigo will strengthen and further expand the Leverkusen site as LANXESS’ most important location worldwide for the megatrend of agriculture," says Werner Breuers, member of the Board of Management of LANXESS AG.

"Saltigo’s headquarters needs to offer the best possible conditions to enable the company to continue efficiently steering its growth trajectory," he adds, explaining the reasons behind the move. "We will create these conditions by having the new main administrative center in the immediate vicinity of research and production operations," Breuers continues. Saltigo GmbH is one of the leading suppliers in the field of custom synthesis and operates production facilities in Leverkusen and Dormagen. In future, 1,100 of its some 1,200 staff worldwide will work at the new headquarters in Leverkusen.

"Targeted investments will also ensure that Saltigo continues to enjoy an optimal position in the dynamic custom manufacturing market," explains Wolfgang Schmitz, Managing Director of Saltigo GmbH. The company plans to invest a total of up to EUR 100 million in its business with agricultural active ingredients in Leverkusen through 2015. Saltigo will be spending around one fifth of this amount on creating additional capacities for solids isolation at four facilities.

We remind that, as MRC informed previously, German specialty chemicals company LANXESS has just started piling for a premium iron oxide red pigments facility in Ningbo. LANXESS is investing EUR55 million in the plant, which will have an initial capacity of 25,000 metric tons annually. With the start of the piling process, the construction work is proceeding right on schedule. New red iron oxide pigments will be introduced to the global market in the first quarter of 2015. Through its new plant, LANXESS will create 150 new, jobs in Ningbo.

LANXESS is a leading specialty chemicals company with sales of EUR 9.1 billion in 2012 and roughly 17,400 employees in 31 countries. The company is currently represented at 50 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals.

Pena Nieto proposes sweeping oil reform in Mexico

MOSCOW (MRC) -- Mexico's president has proposed an ambitious overhaul of Mexico's energy industry that would change the constitution to offer private companies profit-sharing contracts, according to Upstreamonline.

However, investors said the proposal might be too cautious, prompting a selloff of some Mexican assets, Reuters reported.

President Enrique Pena Nieto's proposal calls for changes to key constitutional rules that make oil and gas exploitation the sole preserve of the state. The changes are aimed at attracting new investment to stem sliding oil output.

If enacted, the reform would mark the largest private sector opening in decades for Mexico's oil and gas industry, which was nationalised in 1938 and is controlled by state monopoly Pemex.

The proposals will be sent to Congress this week and they are expected to pass because the government has backed away from more aggressive reform that would have faced bitter opposition from the left.

The government would also offer permits in association with Pemex to refine, transport and store hydrocarbons and petrochemicals.

Under the proposal, the state would also retain control of electricity transmission and distribution currently controlled by state monopoly CFE, while strengthening electricity regulator CRE and the energy ministry. But it would further open electricity generation to more private investment.

The reform would ease the financial burden on Pemex, lessening the amount it props up the government and using the leftover money to reinvest in the company, or to be paid out as a dividend for the government to invest in public spending.

Pena Nieto said the reforms would allow Mexico to boost oil output to 3 million bpd by 2018 and to 3.5 million bpd by 2025.

As MRC reported earlier, in early 2013, Mexichem announced that Pemex's Management Board authorized the co-investment between Pemex Petroquimica and Mexichem, seeking to bring viability and generate value in the country's VCM chain.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world"s second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).

Lanxess expects 2013 to remain challenging

MOSCOW (MRC) -- German specialty chemicals company LANXESS expects the business year 2013 to remain challenging after the German specialty chemicals company posted a decline in second quarter sales and earnings, reported the company on its site.

Compared to the strong second quarter of the previous year, sales were down by roughly 12 percent to EUR 2.1 billion in the second quarter of 2013. EBITDA pre exceptionals declined by 45 percent against the prior-year period to EUR 198 million and was in the middle of the guided range of EUR 174-220 million. Net income declined by 95 percent year-on-year to EUR 9 million.

In contrast to expectations in May, LANXESS does not see an improvement in business conditions in the second half of the year. Customers continue to destock their inventories, noticeably in Asia, and overall consumer sentiment remains weak.

For the year 2013, the company has substantiated its outlook given in May of EBITDA pre exceptionals of less than EUR one billion. LANXESS now anticipates EBITDA pre exceptionals of EUR 700-800 million, excluding potential inventory devaluations.

Against the background of the continuing weak demand in the current business year, the target of EUR 1.4 billion EBITDA pre exceptionals in 2014 is no longer realistic, even taking into account an expected upturn in demand next year.

Despite the difficult conditions, LANXESS is maintaining its mid-term target of EUR 1.8 billion EBITDA pre exceptionals in 2018, although it has become more challenging to reach it.

We remind that, as MRC wrote previously, in July 2013, LANXESS celebrated the opening of its first production facility in Russia. In the new plant at the Lipetsk site, LANXESS subsidiary Rhein Chemie manufactures polymer-bound rubber additives for the markets in Russia and the Commonwealth of Independent States (CIS), primarily for the automotive and tire industries. A production facility for the bladders used in tire production is to be added in 2016. The overall investment volume in euros amounts to a seven-digit figure and 40 new jobs will be created at the new plant in the medium term.

LANXESS is a leading specialty chemicals company with sales of EUR 9.1 billion in 2012. The company is currently represented at 50 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals. The Butyl Rubber business unit is part of LANXESS’ Performance Polymers segment, which recorded sales of EUR 5.2 billion in 2012.