Force majeure continues at BP, December acetic acid allocation at 70% in Europe

МОSCOW (MRC) -- BP has extended its force majeure by a month on AA supplies out of Hull, northeast England, said Plastemart.

Its December acetic acid allocation to European contract customers will be 70%. The force majeure was declared on October 4 as a result of a breakdown in the company's syngas production plant at the Saltend site near Hull. For the months of October and November, customers have been on 60% allocation, as per a company statement. The Hull facility has the capacity to produce 520,000 m tpa of acetic acid.

Other market participants expected continued supply tightness and price rises in the coming weeks in the European region on the back of this news.

As MRC wrote before, BP is negotiating with the Oman government to build a large petrochemical plant in Duqm, with an envisaged investment of over USD1 bln, to manufacture acetic acid using a patented technology.

Acetic acid is a versatile intermediate chemical, used in a variety of products, such as paints, adhesives and solvents, as well as in the production of purified terephthalic acid, used extensively for manufacturing polyester.

BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.
MRC

MOSCOW (MRC) -- LyondellBasell Industries, the world’s biggest maker of polypropylene (PP) plastic, has announced earnings from continuing operations for the third quarter 2014 of USD1.3 billion, or USD2.46 diluted earnings per share, as per the company's report.

Third quarter 2014 EBITDA was USD2.0 billion. The quarter includes a USD45 million non-cash charge for the impact of a lower of cost or market (LCM) inventory adjustment. The increase from the second quarter 2014 was primarily due to increased earnings in our Olefins and Polyolefins - Americas segment.

"We are pleased to deliver a second consecutive quarter of record earnings, and our best quarter ever. During the third quarter we achieved diluted earnings per share from continuing operations of USD2.46 and, for the first time, EBITDA exceeded USD2 billion. Our Olefins and Polyolefins- Americas segment generated EBITDA in excess of USD1.1 billion during the quarter. A tight US ethylene market helped drive the record earnings," said Jim Gallogly, LyondellBasell Chief Executive Officer.

"In addition to our strong earnings, we continue to return cash to our shareholders. During the quarter, dividends and share repurchases totaled USD1.6 billion. We repurchased approximately 12 million shares during the third quarter, and approximately 46 million shares year to date. Since the first share repurchase program was started in May 2013, we have repurchased approximately 73 million shares, or approximately 13 percent of the shares outstanding," continued Gallogly.

"Industry fundamentals remained strong during the quarter, and we continue to make progress on our investment program. Late in the quarter we initiated production from the 800 million pound per year La Porte ethylene expansion. This is the first of multiple ethylene expansions by the company, putting us well ahead of new greenfield plants pursued by others in the industry. In addition, we announced the development of two new growth projects, a further expansion of our Channelview olefins complex and a new US Gulf Coast PO/TBA plant. Both projects take advantage of the favorable environment for North American raw materials, and the PO/TBA plant leverages our proprietary technology. These projects demonstrate that LyondellBasell has continued organic growth opportunities," Gallogly added.

"Despite declines in crude oil prices, US industry fundamentals remained favorable through the first weeks of October. Domestic ethylene and polyolefins pricing remained strong, and we continued to benefit from favorable NGL pricing. Our fourth quarter results should be favorably impacted by the new La Porte ethylene capacity. Additionally, our refinery should begin receiving shipments of Canadian crude from the Flanagan South pipeline. However, we historically experience margin compression in products such as oxyfuels in winter months and slower polyolefin demand around the holiday season. Recent crude oil price declines are expected to ultimately impact domestic margins but today's tight market conditions may delay the timing of potential declines. We are watching to see how this develops. Given favorable NGL prices, our domestic assets remain significantly advantaged," Gallogly noted.

Capital expenditures, including growth projects, maintenance turnarounds, catalyst and information technology-related expenditures, were USD338 million in the third quarter 2014. Our cash and short-term securities balance was USD2.9 billion at September 30, 2014. We repurchased approximately 12 million of our outstanding ordinary shares and paid USD358 million in dividends during the third quarter of 2014. There were 504 million common shares outstanding as of September 30th.

As MRC wrote before, LyondellBasell Industries said "tight" markets for its products may stall the narrower margins that it expects will ultimately come from lower oil prices.

LyondellBasell Industries NV is a manufacturing company. The Company produces chemicals, fuels, and polymers used for packaging, clean fuels, durable textiles, medical applications, construction materials, and automotive parts. LyondellBasell Industries operates globally and is headquartered in the Netherlands. LyondellBasell is also a leading licensor of polypropylene and polyethylene technologies. The more than 250 polyolefin process licenses granted by LyondellBasell are twice that of any other polyolefin technology licensor.
MRC

MOSCOW (MRC) -- Kraul & Wilkening u. Stelling GmbH (KWST), a Hannover-based manufacturer of ethanol with a long-standing tradition, has joined into a strategic partnership with global operating conglomerate Mitsubishi Corporation (MC), said KWST in the press release.

By taking on Mitsubishi Corp. as a minority shareholder, KWST has transformed the previous existing cooperation in the area of Ethanol- procurement into a long-term strategic alliance.

The new alliance enables the still largely family-owned KWST GmbH to expand its position on the international ethanol-distribution market. It offers KWST a strong base and supports the company’s ongoing growth strategy in the area of global-integrated sourcing of ethanol and for tapping new markets. Thereby KWST can guaranty high-quality ethanol at a fair market price for its European partners.

Executive Director Ludz Wilkening said: "In order to continue our business-model and at the same time remain one of the leading suppliers of ethanol in Germany and Europe we need strong and reliable partners. With Mitsubishi Corporation we have found the ideal partner for KWST and are pleased to integrate MC in our ownership structure."

The board of directors of KWST and the existing shareholders are confident that the new, global operating partner will support the creation of a sustainable base for the long-term future of the company as well as promote its continuous development.

As MRC wrote before, Mitsubishi Gas Chemical Co. said that it has decided to discontinue its purified terephthalic acid (PTA) business. Mitsubishi currently operates a 260,000-t/y PTA plant at Mizushima, Japan, through its Mizushima Aroma joint venture with Toyobo Co.

Mitsubishi Chemical with headquarters in Tokyo, Japan, is a diversified chemical company involved in petrochemicals, polymers, agrochemicals, speciality chemicals and pharmaceuticals. The company's main focus is on three business pillars: petrochemicals, performance and functional products, and health care.
MRC

MOSCOW (MRC) -- Brazil's anti-trust regulatory body, the Administrative Council for Economic Defense (CADE), has vetoed Braskem SA’s purchase of Solvay Indupa SAIC, said Plasticsnews.

CADE said the two companies are the chief competitors in South America’s PVC market. The decision suspends a USD200 million deal that was announced in December 2013, in which Braskem, the largest petrochemicals company in the Americas, would have acquired the controlling 70.59% capital stake of Brussels, Belgium-based Solvay SA’s South American subsidiary. The deal would have made Braskem the top PVC producer in the Americas and the lone producer in Brazil.

CADE said the solutions Braskem offered to help balance the market were "behavioral remedies" that were "too fragile and weak," according to board adviser Gilvandro Araujo. Those solutions were not revealed publicly, due to confidentiality clauses.

Buenos Aires-based Solvay Indupa has two plants producing PVC resin for pipe and fitting production in Santo Andre, Brazil, and Bahia Blanca, Argentina, with a combined annual production capacity of more than 1 billion pounds.
The companies can file a new proposal that includes the sale of assets, CADE President Vinicius Marques de Carvalho said. He said Braskem should only buy one plant from Solvay.

In a corporate statement on Wednesday, Sao Paulo-based Braskem said the CADE decision is harmful to the Brazilian plastics industry, and that the PVC market should be considered an international one by Brazil's anti-trust regulator. Braskem said it will evaluate its options following the decision.

Solvay Indupa’s plants in Brazil and Argentina have capacity to produce 540,000 tonnes/year of PVC and 350,000 tonnes/year of caustic soda.

Indupa, with a manufacturing capacity of more than 500,000mtpa of polyvinyl chloride (PVC), runs facilities at Santo Andre, Brazil, and Bahia Blanca, Argentina. Solvay, with a market share 27%, is the second largest PVC manufacturer in Europe, after Kerling with 29% of the market.

Braskem is Brazilian main producer of polyethylene and polypropylene. In addition with ongoing plants located in both petrochemical complexes, in April 2008 Braskem opened a 300,000 metric ton polypropylene plant in the city of Paulinia (Sao Paulo).
MRC

MOSCOW (MRC) -- Following clearance by the competition authorities, Ineos has successfully completed the purchase of BASF’s 50% share in Styrolution, a joint venture between the companies, as per the company's press release.

The purchase price for the acquisition is EUR1.1 billion.

Styrolution will continue to operate as a stand-alone Business within Ineos Industries Holdings Limited.

"We are pleased to have completed this acquisition. It represents another important step in the growth of the Styrolution business as it competes effectively with large-scale producers from Asia and the Middle East. We are pleased to bring Styrolution fully into the Ineos family," said Jim Ratcliffe, Chairman, Ineos Capital.

Styrolution was founded in October 2011 as a 50-50 joint venture between BASF and Ineos, and is the leading, global styrenics supplier.

As MRC wrote before, in October 2014, Ineos Industries Holdings Ltd agreed to acquire the Combined Heat and Power Plant (CHP) from Fortum, that serves the Grangemouth site, for GBP54 million.

Ineos Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.
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