Moody raises outlook for Indonesiaan Chandra Asri to stable

MOSCOW (MRC) -- Moody's Investors Service, has changed the outlook of Chandra Asri Petrochemical Tbk (CAP), the country’s largest petrochemical producer, to stable from negative. Concurrently, Moody's affirmed CAP's B2 corporate family rating (CFR), reported Moody's on its site.

The change in rating outlook to stable reflects our expectations of an improved operating environment in 2014 relative to the cyclical trough which meaningfully depressed CAP's margins and cash flows in 2012. CAP's operating performance, which improved substantially in 2013, is expected to generate mid to high single digit EBITDA margins in 2014 bolstered by earnings from its new butadiene plant, which became operational in Q4 2013.

"We have stabilized CAP's outlook as improving operating performance alleviates ratings pressure driven by cyclical decline and tight liquidity," says Brian Grieser, a Moody's Vice President Senior Analyst and lead analyst for CAP.

However, aggressive capital spending plans for 2014-2015, which have been pre-funded with bank debt and equity, will temper ratings momentum as they introduce significant execution and financial risk. Moreover, CAP's performance in 2015 is expected to soften mildly due to the tie-in works required to integrate its ongoing naptha cracker expansion and scheduled turn around maintenance.

During 2013, CAP announced two major projects that will help the company to expand production capabilities downstream in the petrochemical value-chain. The first project is a roughly 43% production capacity expansion of its naptha cracker and the second is a joint venture with Compagnie Financiere Michelin (Michelin, Baa1 stable) to build a synthetic rubber plant, both of which are located in Indonesia. CAP's financing requirements for these projects will largely be funded with proceeds from a USD128 million rights offering and a 7-year USD265 million term loan both of which have been completed in the fourth quarter of 2013.

CAP's B2 rating reflects its leading position in the Indonesian petrochemicals market, a position based on its vertically integrated operations. However, the rating is constrained by its modest leverage, small global presence, and asset concentration. The rating also takes into consideration the cyclical nature of the petrochemical industry, which is a cause of significant volatility in its earnings and cash flow.

CAP operates the only naphtha cracker in Indonesia.

As MRC reported earlier, German petrochemical company Ferrostaal Industrial Projects GmbH and Jakarta-listed PT Chandra Asri Petrochemical, have agreed to work on studies for the development of a petrochemical plant. Under an agreement, Ferrostaal and Chandra Asri will develop a methanol-based olefin production complex in Teluk Bintuni in West Papua, with a total investment amounting to USD1.89 billion. The complex is expected to produce up to 400,000 tonnes of polypropylene and 175,000 tonnes of ethylene annually
MRC

MOSCOW (MRC) -- BASF Business Services Holding GmbH will in future focus on providing information services, supply chain operations and business process management solutions exclusively for BASF Group, reported the company on its site.

These include consulting, development and operation of IT systems as well as the design of business processes along the value chain. Following this strategic decision, the company will not continue its business with third party customers, which has sales in the low double-digit million euro range.

BASF Business Services Holding GmbH has thus signed an agreement to sell its third party business including the 100%-owned subsidiary BASF Business Services Consult GmbH, based in Hamburg, to Tech Mahindra GmbH, Dusseldorf, a German subsidiary of Tech Mahindra Limited, India, a provider of IT solutions and services.

Legal closing of the transaction is expected in the second quarter of 2014.

As MRC informed earlier, last year, the largest diversified chemical company in the world, successfully completed the second phase of registration for REACH under EU chemical law. REACH stands for the Registration, Evaluation, Authorization and Restriction of Chemicals and represents a fundamental reorganization of chemical law in Europe. The second phase of registration for chemicals with a production volume between 100 and 1,000 tonnes per year ends on May 31. In this phase, BASF submitted around 550 substance dossiers to the European Chemicals Agency (ECHA) - more than any other company.

BASF Business Services Holding GmbH (until 31.12.2013 BASF IT Services Holding GmbH) is an indirect wholly-owned group company of BASF SE. The group of companies employs approximately 2,200 employees and had annual sales of EUR523.5 million in 2013.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals.
MRC

MOSCOW (MRC) -- BASF will build a new world scale production plant to manufacture specialty amines at its existing wholly-owned site in the Nanjing Chemical Industry Park in China, as per the company's press release.

The plant, which is scheduled to come on stream in late 2015, will have dimethylaminopropylamine (DMAPA) and polyetheramines (PEA) as the main products.

With this new facility BASF will further strengthen its global production network. The new plant complements existing facilities in Germany and the US for DMAPA and PEA.

"BASF is a leading supplier of DMAPA and PEA globally, and this investment reflects our continued commitment to meeting the growing market demand in Asia Pacific," said Sanjeev Gandhi, President of BASF’s Intermediates division.

"The investment is driven by the increasing consumption of personal care products by the growing middle class in China and in Asia," said Dr. Guido Voit, Senior Vice President, BASF Intermediates, Asia Pacific. "Additionally, the development in the construction, wind energy and coatings industries in China and other emerging countries in Asia will continue to drive demand for PEA."

DMAPA is mainly consumed in the production of betaines, which are used as co-surfactants in personal care products like shampoo and body wash. DMAPA is also used in various other applications including dye-stuff intermediates, lubricant additives, electroplating, coupling agents for rubber and others.

PEA is an intermediate chemical for epoxy curing agents used in the production of plastics, polyurea coatings, adhesives, reaction injection moulding and wind blade composites. BASF offers polyetheramines under its Baxxodur brand.

BASF has manufacturing capacities for both products at its sites in Ludwigshafen, Germany, and in Geismar, Louisiana.

As MRC informed earlier, in late January 2014, BASF and China Petroleum & Chemical Corporation (Sinopec) broke ground on the construction of its world-scale isononanol (INA) plant in Maoming Hi-tech Industrial Development Zone, Maoming, China. At start-up in 2015, the plant, which is the first of its kind in China, will serve the increasing market demand for next-generation plasticizers. A newly-formed 50-50 joint venture company has been created, BASF MPCC Company Limited.

INA is used as the feedstock for the production of next generation plasticizers, including diisononyl phthalate (DINP) and non-phthalate plasticizer Hexamoll DINCH. DINP is widely used as a plasticizer in industrial applications such as automotive, wires, building and construction, while Hexamoll DINCH is BASF’s non-phthalate plasticizer for sensitive applications, including toys as well as food contact and medical applications.

The BASF Group’s Intermediates division develops, produces and markets a comprehensive portfolio of more than 700 intermediates around the world. Its most important product groups include amines, diols, polyalcohols, acids and specialties. Among other applications, intermediates are used as starting materials for coatings, plastics, pharmaceuticals, textiles, detergents and crop protectants. Around the globe the division generated sales to third parties of about EUR2.8 billion in 2013.
MRC

MOSCOW (MRC) -- Shanghai Golden Phillips Petrochemical has shut a high density polyethylene (HDPE) plant, according to Apic-online.

A Polymerupdate source in China informed that the plant was shut on March 3, 2014. The shutdown has been attributed to high cost of feedstock ethylene.

Located in Shanghai, China, the plant has a production capacity of 135,000 mt/year.

As MRC wrote before, on 7 January 2014, Fushun Petrochemical shut its HDPE plant for maintenance turnaround for around one month. Located in Fushun, Liaoning province, China, the plant has a production capacity of 350,000 mt/year.

Besides, Chinese Wuhan Petrochemicals shut its HDPE plant in mid-January 2014 owing to technical issues. A restart date for the plant could not be confirmed. Located in Hubei province of China, the plant has a production capacity of 300,000 mt/year.
MRC

MOSCOW (MRC) - Imports of polyethylene (PE) to Kazakhstan decreased significantly in January 2014, following the repeal of benefits for pipe producers. PE imports decreased by 44% in January 2014 compared to January 2013 according to MRC DataScope.

The benefits for Kazakh producers of PE pipes were abolished from 1 January 2014 (the imports of PE from the the Customs Union (Russia and Belarus). Local converters had to reduce purchases of feedstock in Asia. As a result, PE imports in January 2014 reduced to 6,100 tonnes against 10,900 tonnes in January 2013.

Structure of PE imports was as follows. Imports of high density polyethylene (HDPE) decreased to 4,700 tonnes in January of this year, against 9,500 tonnes in the same period a year earlier.

The imports of HDPE not from the Customs Union fell below 400 tonnes, while in January 2013 they were about 5,000 tonnes, and in December 2013 - 6,000 tonnes (local pipe producers actively built up stock inventories ahead of benefits abolition).

Tax concession period was adopted for HDPE imports for pipe producers before 1 January 2014. Tax benefits suggested duty-free imports of PE if a converter had direct contract with an external supplier outside he Customs Union, otherwise HDPE import duty was 10%. Polyethylene from Russia and Belarus was not subject to import duty.

Imports of low density polyethylene (LDPE) in January this year, by contrast, rose to 1,200 tonnes, compared with 900,000 tonnes in January 2013. The increase of LDPE imports resulted from converters anticipation of stronger demand for finished products and weaker feedstock prices.

About 94% of total January imports occurred for Russian PE. Demand for linear polyethylene (LLDPE) was weak in the local market. LLDPE imports decreased to 200 tonnes in January 2014, compared with 500 tonnes in January 2013. Almost all imported January LLDPE occurred for Shurtan GKhK, Uzbekistan.

PE imports to Kazakhstan is expected to decrease in February further on the bak of 20% devaluation of the national currency.


MRC