Lotte Chemical completes takeover of Samsung Group chemical businesses

MOSCOW (MRC) -- Lotte Chemical Corp. has finalized the takeover of Samsung Group’s chemical units.The company said that it paid for money to acquire Samsung SDI Chemical on Apr. 29 and completed the acquisition of Samsung Group’s chemical businesses in about six months after the announcement of "Big Deal" in October 2015, reported BusinessKorea.

Samsung Fine Chemicals, which was completely taken over by Lotte in Feb., changed its name to Lotte Fine Chemical, while SDI Chemical, which completed the acquisition process on the 29th, changed its name to Lotte Advanced Materials through the general meeting of stockholders.

Lee Ja-hyeong, former head of the production division of at Lotte Chemical, which is formerly known as Honam Petrochemical Corp., is appointed as new CEO of Lotte Advanced Materials. Lotte Fine Chemical CEO Oh Sung-yup, who was named in Feb., joined Lotte Chemical in 1985, worked at the finance team and served as the head of the planning division and business management division at the company.

Lotte Chemical CEO and President Huh Soo-young said, "As the company successfully completed the takeover of Samsung chemical units, it has gained a foothold to jump into a global leading chemical company. Lotte Chemical has the world class technology in raw materials that is used to produce synthetic resins. So, the latest acquisition will help the company expand high value added product lineups through the vertical integration in the petrochemical sector."

Combining 11.7 trillion won (USD10.26 billion) of Lotte Chemical’s consolidated sales last year and 4 trillion won (USD3.51 billion) of acquired company, its sales in the petrochemical division will reach 16 trillion won (USD14.03 billion.)

As MRC wrote previously, in November 2014, South Korea's Samsung Group said it is selling stakes in four chemical and defence firms for 1.9 trillion won (USD1.72 billion) to Hanwha Group. In March 2015, South Korea's Fair Trade Commission (KFTC) gave conditional approval to Hanwha's proposed acquisition of Samsung General Chemicals.

Established in 1976, Lotte Chemical has been solidifyng its position by localizing cutting-edge petrochemical technologies. Among the high-quality products produced by Lotte Chemical through its efficient processes are ethylene, HDPE, LDPE, LLDPE, PP, functional resin, EG, SM, PIA, PET, etc. Lotte Chemical’s products are being distributed to 152 countries around the world. With the acquisition of Pakistan’s PTA in 2009, Artenius in the UK in 2010 and Titan Chemical Corp., Lotte Chemical is now able to efficiently supply excellent products to an increasing number of countries. The company is further accelerating its efforts to strengthen its global competitiveness by establishing overseas branches in Hong Kong, Russia, and USA, along with the sales corporation in China for active sales activities both in domestic and abroad.
MRC

Construction will continue to dominate the global bio-based polyurethane market until 2020

MOSCOW (MRC) -- The global bio-based polyurethane (PU) market is expected to grow at a CAGR of close to 7% until 2020, as per Plastemart with reference to Technavio.

Based on application, the report categorizes the global bio-based polyurethane market into the following: construction, automotive, electronics, bedding and furniture.

The construction industry was the largest end-user of bio-based polyurethane in 2015. The industry is growing extensively globally. The US and developing countries, including China and India will likely account for 60% of the global construction industry by 2025.

Rigid polyurethane foam is used in thermal insulation and other modern construction activities. These materials are comparatively thinner than other insulating materials such as fiber glass, increasing the living space. Therefore, the growth in the construction industry is expected to reflect an increase in the market's revenue share during the forecast period.

According to Chandrakumar Badala Jaganathan, a lead analyst at Technavio for the plastics, polymers, and elastomers sector, "Growing emphasis on green infrastructure to reduce energy consumption is anticipated to intensify during the forecast period. This factor along with the innovations in the construction industry and the development of advanced bio-based polymers is expected to propel the segment's growth."

The market for bio-based polyurethanes in the automobile segment is expected to grow significantly during the forecast period. Polyurethane foams are used in automobiles for manufacturing vehicle fascias and their interior and exterior parts. The global production of motor vehicles is estimated to increase to about 90 mln in 2015 from 75 mln in 2010. The increase in per capita income and the improvement in the living standards of people in developing countries are driving the market demand. Bio-based polyurethane foam allows automobile designers and manufacturers to produce seating that can be easily assembled, disassembled, and recycled. It also offers maximum performance specifications over a wide range of firmness without adding extra weight. This means that the lifespan of bio-based polyurethane is much longer than conventional polyurethanes.

High-density polyurethane foam insulation is used for minimizing heat loss. Bio-based polyurethane foams are widely used in the electronics industry, especially in refrigeration. Panels made of bio-based polyurethane foam provide 30%-40% more insulation per given thickness than expanded polystyrene (EPS).

Refrigerators, coolers, heaters, and boilers use panels made of a polyurethane rigid foam core that offers insulation. In addition, insulation also increases energy efficiency as it prevents unwanted heat loss. Bio-based polyurethane also provides moisture resistance to help ensure long-term performance of the insulation in a refrigeration panel. Earlier, manufacturers of bedding and furniture were reliant on petroleum-based polyols as the prime component for the production of flexible foam. However, the consistent, high-quality foam generated by bio-based polyols is leading to the elimination of non-renewable petroleum resources. These polyols also aid in reducing emissions and consequently global warming.

The constant rise in the global population is propelling the demand for bedding and furniture. The increase in the demand for luxury bedding and furniture is also on the rise due to the growth of production capacities of suppliers in emerging economies. These suppliers are also expanding rapidly to cater to the increasing demand from the domestic markets like Brazil and India.

The top vendors highlighted by Technavio’s research analysts in this report are BASF, Cargill, Covestro, Dow Chemical, Lubrizol.

We remind that, as MRC reported previously, the global thermoplastic polyurethane (TPU) films market size is likely to be valued at USD724.6 mln by 2020.
MRC

Evonik Q1 sales decreased 9%

МОSCOW (MRC) -- Evonik did well in the first quarter in challenging business conditions. Overall, the Evonik Group’s sales contracted by 9 percent to EUR3,106 million (Q1 2015: EUR3,425 million), said the company in its press release.

While demand for Evonik products was stable overall, selling prices declined by 7 percentage points.

Adjusted EBITDA was EUR565 million, 13 percent lower than in the exceptionally strong prior-year period (Q1 2015: EUR650 million). The adjusted EBITDA margin remained very good at 18.2 percent, compared with 19.0 percent in the prior-year period. Adjusted EBIT fell 20 percent to EUR389 million. Adjusted net income was EUR254 million in the first quarter, down 21 percent from EUR320 million in the first quarter of 2015. Net income declined 6 percent to EUR240 million (Q1 2015: EUR256 million).

Capital expenditures for property, plant and equipment were EUR160 million in the first quarter of 2016, 15 percent below the prior-year level of EUR189 million. In the first quarter of 2016, the free cash flow was EUR161 million, compared with EUR179 million in the prior-year period.

Evonik's expectations for global economic conditions are unchanged: Overall the company anticipates slightly lower momentum in the global economy, with a year-on-year growth rate of 2.5 percent in 2016.

In these conditions, Evonik is confirming its outlook for the full year: Following a very successful year in 2015, the company expects to report slightly lower sales in 2016 and adjusted EBITDA of between EUR2.0 billion and EUR2.2 billion.

As MRC informed previously, in 2015, Evonik Industries invested over EUR400 mln in its plants in Germany in 2015. The lion’s share of the funds (around two-thirds) was divided among Evonik’s five-largest sites in Germany: Marl (hundreds of millions of euros), Hanau, Essen, Darmstadt, and Wesseling (tens of millions of euros at each site). Evonik is planning further large-scale projects in Germany. One of these is the construction of a new plant for production of specialty copolyesters in Witten by 2018 with an investment in the double-digit million euro range.

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.
MRC

Lower refining margins cut Valero profit in half

MOSCOW (MRC) -- US refiner Valero Energy reported a 49% fall in profit, hurt by weak margins and higher inventories, said Hydrocarbonprocessing.

Refiners ramped up production in 2015, leading to higher inventories and weaker margins this year as demand softened during the mild winter.

Valero's refining throughput margin fell to USD7.96/bbl in the first quarter, from USD12.39/bbl last year. Net income attributable to shareholders fell to USD495 million, or USD1.05/share, in the first quarter ended March 31, from USD964 million, or USD1.87/share, a year earlier.

Operating revenue fell 26.3% to USD15.71 billion in the quarter. Up to Monday's close of USD59.82, Valero's New York-listed shares have fallen 15.4% this year, while the S&P 500 oil & gas refining & marketing sub-index has fallen 13.3% over the same period.

As MRC informed earlier, Valero Energy Corp.’s previously-announced USD700 million methanol plant, planned at its existing St. Charles Parish, LA, facility, has been shelved indefinitely. The methanol plant, announced in 2013 would have produced 1.6 million tons/year of methanol, tapping low-cost natural gas from the nearby Eagle Ford Shale and other basins to make a wide range of products, including paints, solvents, plastics and other consumer goods.

Valero Energy Corporation is a Fortune 500 international manufacturer and a marketer of transportation fuels, other petrochemical products, and power. It is based in San Antonio, Texas, United States. The company owns and operates 16 refineries throughout the United States, Canada, United Kingdom, and the Caribbean with a combined throughput capacity of approximately 3 million barrels (480,000 m3) per day, 10 ethanol plants with a combined production capacity of 1.2 billion US gallons (4,500,000 m3) per year, and a 50 megawatt wind farm.

MRC

Braskem-Idesa starts second HDPE line

MOSCOW (MRC) -- Mexico's Braskem-Idesa, a 75-25 joint venture between Braskem and Grupo Idesa, started operations at the end of last week on its second high density polyethylene (HDPE) line at the Etileno XXI petrochemical complex, as per Magships.

The HDPE will ramp up the second week of May, as per a company spokeswoman.

"The first HDPE plant ramped up April 8, the second one tonight and the third will start in the next 10 days," spokeswoman Yeraseth Bello said. The cracker feeding the PE plants is said to be operating at 50-60% but is expected to increase to 80-90% by mid-May.

A source with knowledge of business operations said this week that the second HDPE line had been delayed due to some problems related to the supply of ethane, which has since been corrected. Pemex won the bid in 2010 to provide ethane feedstock on a 20-year contract for the complex.

Braskem-Idesa is a joint venture between Brazil's Braskem (75%) and Mexico's Grupo Idesa (25%). Etileno XXI PE production was expected to begin with HDPE injection resin, followed by blowmolding and finally low-density PE. Etileno XXI will focus on meeting Mexico's growing PE demand, with remaining output available for export, including to the US and South America.

Etileno XXI will include 1 million mt/year of polyethylene capacity.

As MRC informed previously, Braskem Idesa started polyethylene (PE) production at its Coatzacoalcos, Mexico complex on 6 April. The JV started injecting ethane at its Etileno XXI steam cracker on 18 March.

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