Sabic wants to grow its way out of earnings slump

MOSCOW (MRC) -- Saudi Basic Industries Corp. (Sabic), one of the world's largest petrochemicals groups, aims to grow its way out of an extended earnings slump brought on by the impact of lower oil prices on the petrochemicals sector, its acting chief executive told Reuters.

However, cost-cutting through greater efficiencies and the sale of subsidiaries outside of the kingdom was also important in turning round the performance of one of the world's largest petrochemicals groups, Yousef Abdullah al-Benyan said.

The company's performance is closely tied to oil prices and global economic growth because its products - plastics, fertilizers and metals - are used extensively in construction, agriculture, industry and the manufacture of consumer goods.

Since global oil prices started to fall in mid-2014, Sabic has reported eight successive quarters of declining earnings, including a 23.2% slump in second-quarter profit on Wednesday.

Sabic has recently set out a number of initiatives, including an oil-to-chemicals joint venture with Saudi Aramco and a coal-to-chemicals project in China, both creating refined chemicals direct from raw materials instead of going through the costly traditional refinery process.

It said on Monday it was studying a potential petrochemicals complex with an ExxonMobil affiliate on the US Gulf Coast. The final decision on the project is due by mid-2017.

Sabic is also studying possibilities to grow its specialties unit, which produces resins and composite materials, and is seen as less vulnerable to market conditions.

The specialties unit is currently around 5% of its total business, but Benyan said it could increase to around 15% to 20%, although a decision was unlikely before the Q4.

The firm also has designs on new feedstock sources, such as US shale gas, to counter a gas supply shortage in the kingdom which is restricting domestic growth.

Sabic reduced costs by 18% and increased production by 3% between the Q1 and Q2 of 2016, Benyan said, as it sought to improve the efficiency with which it produces petrochemicals. The company also benefited from the falling price of key feedstock naphtha in Europe and China.

As part of its cost-cutting plan, SABIC was reviewing the sale of assets which weren't performing well, Benyan said, pointing to businesses outside Saudi as prime candidates.

Year-end would also see more clarity on its efforts to turn around its Ibn Rushd plastics and aromatics unit.

As MRC reported earlier, Sabic reported a 29.4% drop in Q4 2015 net profit due to lower prices for its products, particularly in its metals division.

Saudi Basic Industries Corporation (Sabic) ranks among the worldпїЅs top petrochemical companies. The company is among the worldпїЅs market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

Petrobras in talks to sell petrochemical assets to Alpek

MOSCOW (MRC) -- Brazil's state-run oil company Petroleo Brasileiro SA (Petrobras) is in exclusive talks for 60 days with Mexico's Alpek over the potential sale of PetroquimicaSuape and Citepe assets in Brazil's northeast, reported Reuters.

Mexico's Alpek is the petrochemicals unit of Mexican conglomerate Alfa.

Petrobras' subsidiary PetroquimicaSuape in the state of Pernambuco had revenues of 1 billion reais (USD304 million) in 2015 and posted a net loss of 65 million reais. Citepe, also in the Pernambuco, had revenues of 633 million reais and posted a loss of 817 million reais in 2015.

Petrobras, as Brazil's state oil company is known, has been trying to speed up a plan to divest USD14.4 bln in assets to cut its debt load.

In addition, to the potential sale of its petrochemical assets in Pernambuco, the company is trying to settle on a sale structure for its distribution division Petrobras Distribuidora.

It is also reported to be seeking a buyer for its stake in Latin America's largest petrochemical company, Braskem SA.

As MRC informed previously, in January 2016, Petrobras hired Brazilian bank Banco Bradesco SA as a financial adviser and started to pitch the sale to foreign investors. Petrobras owns a 36 percent stake in Braskem, Latin America's largest petrochemical producer. The sale would help Petrobras meet its target of selling USD15.1 billion worth of assets in 2015-16, a key part of its plan to cut debt as oil prices plunge to 12-year lows.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.

LyondellBasell to build HDPE plant on US Gulf Coast

MOSCOW (MRC) -- LyondellBasell, one of the world's largest plastics, chemical and refining companies, has made the final investment decision to build a high density polyethylene (HDPE) plant on the US Gulf Coast, as per the company's press release.

The plant will have an annual capacity of 1.1 billion pounds (500,000 metric tons) and will be the first commercial plant to employ LyondellBasell's new proprietary Hyperzone PE technology.

The start-up of the new plant is scheduled for 2019.

"Innovation is key to our future success. This new proprietary technology will have the capability to produce a wide range of HDPE products with enhanced properties, many of which have the potential to exceed industry benchmarks," said Bob Patel, LyondellBasell's CEO.

HDPE is used in numerous applications such as pipe, bottles, containers, toys, film, healthcare articles, plastic fuel tanks and industrial packaging. LyondellBasell's Hyperzone PE enhanced properties include improved stress crack resistance and enhanced balance between stiffness and impact strength.

The Hyperzone PE technology is a cascade gas phase process based on LyondellBasell's unique Multizone circulating reactor technology and was developed at LyondellBasell's European research and development centers located in Frankfurt, Germany, and Ferrara, Italy. The new proprietary technology will have the capability to produce a wide range of high-performance multi-modal HDPE products. In certain applications, Hyperzone PE resins allow customers to use less PE resin per unit produced, resulting in improved resource efficiency and savings for customers. While the Hyperzone PE plant will be located on the U.S. Gulf Coast, the products produced will serve markets across the globe.

LyondellBasell currently produces a total of 7.8 billion pounds (3.5 million metric tons) of HDPE annually, including capacity of its joint venture facilities. The company is a leading worldwide producer of all forms of PE with an annual capacity of 13.2 billion pounds (6 million metric tons).

As MRC reported earlier, in August 2014, CEO Bob Patel told the Chronicle that LyondellBasell plans to spend up to USD4 billion in capital along the Gulf Coast through 2020. The plan is to take advantage of cheaper gas feedstocks available in the US.

LyondellBasell is one of the world's largest plastics, chemical and refining companies. The company manufactures products at 57 sites in 18 countries. LyondellBasell products and technologies are used to make items that improve the quality of life for people around the world including packaging, electronics, automotive parts, home furnishings, construction materials and biofuels.

US makers file antidumping petition on ESBR from Brazil, Mexico, Poland, S Korea

MOSCOW (MRC) -- Two US emulsion styrene butadiene rubber producers have filed a petition to stop dumping from Brazil, Mexico, Poland and South Korea, one of the petitioners, Lion Elastomers, said late last week, reported Apic-online.

The other ESBR producer is East West Copolymer of Baton Rouge, Louisiana.

The International Union of Operating Engineers and the United Steel Workers are supporting the petition, which has been filed with the US Department of Commerce and International Trade Commission.

"The petition covers ESBR grades in the IISRP (International Institute of Synthetic Rubber Producers) 1500 and 1700 series," Lion Elastomers, said in a statement.

"The estimated dumping margins for imports from these countries range from 30% to 80%."

ESBR is used mainly in the production of tires, but is also used to make conveyor belts, shoe soles, hoses, roller coverings and flooring.

In 2015, the US imported 15,090 mt of ESBR from Brazil, 17,013 mt from Mexico, 2,352 mt from Poland and 436 mt from South Korea, ITC data showed.

We also remind that, as MRC wrote before, last April, Indian government announced the new anti-dumping duties on PVC imports following sunset investigations. Anti-dumping duties on PVC imports expired on January 23, 2014 and they had been suspended since then as the sunset investigation was extended several times. Players reported that the Indian government has implemented anti-dumping duties on PVC imports, with the variation in duties from the same country due to the assessment of anti-dumping duties according to individual producers.

Regarding European material, the new anti-dumping duties are set as USD190/ton while imports from Ineos will be subject to duties of USD48/ton. The anti-dumping duties on US PVC imports are set as USD38/ton for Westlake Chemical and as USD119/ton for OxyChem.

PP imports to Kazakhstan up 17% in H1 2016

MOSCOW (MRC) -- Imports of polypropylene (PP) into Kazakhstan increased in the first six months of 2016 by 17% year on year, totalling 11,900 tonnes, reported MRC analysts.

June 2016 PP imports to Kazakhstan rose to 1,900 tonnes to 1,400 tonnes a month earlier. Producers of PP bags and pipes raised their PP imports. Overall PP imports were 11,900 tonnes in January-June 2016, compared to 10,200 tonnes a year earlier.

The structure of PP imports by grades looked the following way over the stated period.

June imports of propylene homopolymer (homopolymer PP) into Kazakhstan grew to 1,300 tonnes from 877 tonnes a month earlier. Local producers of PP bags increased their PP purchasing. Overall imports of homopolymer PP exceeded 9,700 tonnes in January-June 2016, compared to 8,300 tonnes a year earlier.

June purchases of propylene copolymers by local companies rose to 610 tonnes from 477 tonnes a month earlier, with local producers of pressure PP pipes increasing their purchasing. Overall imports of propylene copolymers to Kazakhstan totalled slightly over 2,300 tonnes in the first half of the year versus 1,900 tonnes a year earlier.

At the same time, exports of Kazakh PP decreased by 22% in the first six months of 2016 to 11,100 tonnes, the main reason was a long outage at Neftekhim LTD, the local producer, in the first two months of the year due to a fire at the production site.