Mitsui Chemicals to establish new facility for long glass fiber reinforced PP

MOSCOW (MRC) -- Mitsui Chemicals, Inc. has decided to set up a new production facility for long glass fiber reinforced polypropylene (LGFPP) at Chinese manufacturing subsidiary Mitsui Advanced Composites (Zhongshan) Co, Ltd., as per Hydrocarbonprocessing.

This will become Mitsui Chemicals’ third manufacturing base for LGFPP, joining existing bases in Japan and the US. By establishing this new facility, Mitsui Chemicals’ production capacity for LGFPP will increase to 10,500 tons per year.

Developed by Prime Polymer Co., Ltd., Mitsui Chemicals’ LGFPP is a composite material made by melting and mixing polypropylene (PP) resin with long glass fibers. The lightweight material offers an attractive appearance, with long glass fibers providing a good balance between hardness and impact resistance. The material is already being adopted in areas such as the unpainted insides of rear car doors.

The recent strengthening of environmental regulations and a shift toward electric vehicles have led to increasing needs for automotive lightweighting.

As a result, demand is on the rise for fiber-reinforced resins and is expected to grow further for such materials able to substitute for metal such as car doors and other such parts. (Mitsui Chemicals certifies LGFPP as Blue Value product according to the high environmental contribution value.)

Mitsui Chemicals aims to achieve further business expansion in mobility, a key sector for the company, by continuing to correctly gauge global growth in demand.

As MRC wrote before, in March 2016, Mitsui & Co., Ltd. and Hankuk Carbon Co., a company listed on the Korea Exchange, entered into a strategic alliance agreement to engage in collaborative business activities relating to the processing of composite materials.

Mitsui Chemicals is a leading manufacturer and supplier of value added specialty chemicals, plastics and materials for the automotive, healthcare, packaging, agricultural, building, and semiconductor and electronics markets. Mitsui Chemicals is a Japanese Chemicals company, a part of the Mitsui conglomerate. The company has a turnover of around 15 billion USD and has business interests in Japan, Europe, China, Southeast Asia and the USA. The company mainly deals in performance materials, petro and basic chemicals and functional polymeric materials.

Evonik to sell Methacrylates to Advent for EUR3 bn

MOSCOW (MRC) -- German chemicals producer Evonik has agreed to sell its Methacrylates business to private equity investor Advent International for an enterprise value of EUR3 billion, as per Chemanager-online.

The plans announced a year ago reflect its “consistent strategy execution to focus on specialty chemicals,” the Essen-based player said. The announcement was due to be made at the annual results press conference today but was brought forward to yesterday evening after the news was leaked to UK newspaper Financial Times. The paper said chemicals giant Ineos, along with private equity firm SK Capital and a consortium of Triton and Rhone Capital had been interested buyers.

Selling price of the business with 18 production sites and 3,900 employees worldwide is 8.5 times EBITDA, which from 2016 to 2018 totalled about EUR350 million annually on sales of around EUR1.8 billion. Figures for 2019 are forecast to be at a similar level.

Evonik said the net purchase price following deductions consisting primarily of pension obligations will be about EUR500 million lower. Over the past two decades, Advent has been one of the leading buyers and sellers in the chemicals and plastics sectors.

Following regulatory approvals, the sale is planned to be wrapped up in this year’s third quarter. It will comprise the Methacrylates, Acrylic Products and the CyPlus business lines, in the main MMA and PMMA. The German company is ranked number two globally for both for the monomer and polymer. Without being specific, Evonik said it plans to retain some of its methacrylate resins activities.

While part of the proceeds will be used to strengthen the balance sheet, a sizeable share has been earmarked for “targeted growth projects” such as the acquisition of US hydrogen peroxide and peracetic acid producer PeroxyChem from One Equity Partners for USD625 million.

Additionally, some of the intake will be used to fortify the existing specialty chemicals portfolio, for example the new polyamide 12 plant to be built in Marl, Germany. Evonik said these businesses “generate an attractive margin and an above-average cash flow."

Expected to cost around €400 million, the PA 12 plant, the company’s largest investment in Germany so far, is expected to be operational in the first six months of 2021. The new production facility will increase overall capacity by more than 50%. Evonik currently produces around 40,000 t/y of the specialty polymer.

Asian surging fuel exports depress refining industry profits

MOSCOW (MRC) -- Asia’s biggest oil consumers are flooding the region with fuel as refining output is exceeding consumption amid a slowdown in demand growth, pressuring industry profits, accoridng to Hydrocarbonprocessing.

Since 2006, the Asia-Pacific has been the world’s biggest oil consuming region, led by traditional industrial users South Korea and Japan along with rising economic powerhouses China and India.

Yet overbuilding of refineries and currently sluggish demand growth have caused a jump in fuel exports from these demand hubs.

Car sales in China, the world’s second-biggest oil user, fell for the first time on record last year, and early 2019 sales also remain weak, implying a slowdown in gasoline demand.

For diesel, China National Petroleum Corp in January said it expected demand to fall by 1.1 percent in 2019. That would be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990.

The surge in fuel exports combined with a 25 percent jump in crude oil prices so far this year has collapsed Singapore refinery margins, the Asian benchmark, from more than $11 per barrel in mid-2017 to just over USD2.

Combine the slumping margins with labor costs and taxes and many Asian refineries now struggle to make money.

The squeezed margins have pummeled the stocks of most major Asian petroleum companies, such as Japan’s refiners JXTG Holdings Inc or Idemitsu Kosan, South Korea’s top oil processor SK Innovation, Asia’s top oil refiner China Petroleum & Chemical Corp and Indian Oil Corp., with some companies dropping by about 40 percent over the past year.

Jeff Brown, the president of energy consultancy FGE, said the surge in exports and resulting oversupply were a “big problem” for the industry.

"The pressure on refinery margins is a case of death by a thousand cuts... Refinery upgrades throughout the region are bumping up against softening demand growth," he said.

The profit slump follows a surge in fuel exports from China, India, Japan, South Korea and Taiwan. Refinitiv shipping data shows fuel exports from those countries have risen three-fold since 2014, to a record of around 15 million tonnes in January.

The biggest jump in exports has come from China, where refiners are selling off record amounts of excess fuel into Asia.

"There is a risk for Asian market turmoil if (China’s fuel) export capacity remains at the current level or grows further," said Noriaki Sakai, chief executive officer at Idemitsu Kosan during a news conference last week.

But Japan’s and South Korea’s fuel exports have also risen as demand at home falls amid mature industry and a shrinking population. Japan’s 2019 oil demand will drop by 0.1 percent from 2018 while South Korea’s will remain flat, according to forecasts from Energy Aspects.

In Japan, oil imports have been falling steadily for years, yet its refiners produce more fuel than its industry can absorb.

The situation is similar in South Korea, the world’s fifth-biggest refiner by capacity, according to data from BP Plc.
Cho Sang-bum, an official at the Korea Petroleum Association, which represents South Korean refiners, said the surging exports had "triggered a gasoline glut".

That glut caused negative gasoline margins in January.

Compounding the supply overhang in Asia, fuel exports from the Middle East, which the BP data shows added more than 1 million barrels per day (bpd) of refining capacity from 2013 to 2017, have doubled since 2014 to around 55 million tonnes, according to Refinitiv estimates.

Even more fuel is set to come. Malaysia’s state-owned Petroliam Nasional Bhd is starting up its RAPID refinery, capable of processing 300,000 bpd of crude, while China and India also have several projects coming online this year and next.

"Asia is expected to lead the global refining industry, both in terms of capacity as well as capital expenditure, between 2019 and 2023," data analytics firm GlobalData said in a report published this week.

“Between 2019 and 2023, 45 new refineries are expected to become operational in Asia,” said the report, adding that this would “increase petroleum products exports” from Asia.

Despite so many refineries coming to the market, the outlook is not entirely bleak.

FGE’s Brown said new regulations by the International Maritime Organization (IMO) that will require shippers to reduce the sulfur content in their fuel from next year meant demand for products like diesel and low-sulfur fuel oil (LSFO) would rise and improve refinery profits.

The main relief will come as the market shifts into IMO2020 mode in the fourth quarter," said Brown. "Margins will recover, restoring order to the market."

Stockmeier Buys Indukerns Industrial Chemicals

MOSCOW (MRC) -- Germany’s Stockmeier Group has acquired the industrial chemicals division of Spanish distributor Indukern as of Mar. 1 for an undisclosed amount, said Chemanager-online.

The business has been taken over by newly founded division Stockmeier Quimica. Indukern belonged both to the Barcelona-based Indukern Group and the Diaz-Varela family. The industrial chemicals business, which was one of five divisions, has sales of €50 million and 70 employees.

Daniel Diaz-Varela, Indukern’s managing director, said the company decided to sell the industrial chemicals business as it longer considered it to be a strategic part of the company and it did not have enough synergies with the other divisions.

Maintaining this division and not developing all its potential would have been a mistake, he said. “Our goal is to focus in another priority areas, as flavors & fragrances or food ingredients for example, which have grown most lately."

Stockmeier will take over Indukern’s warehouses in Barcelona and Valencia, continuing to run them as transshipment points for inorganic and organic products and specialty chemicals.

"We want to be among the top three chemical distributors in Europe. With this acquisition we have taken another big step in this direction," said Matthias Mirbach, managing director of Stockmeier Holding. "We will now further expand our business in Spain and exploit the synergies between our various companies in Europe."

In June 2018, Stockmeier was ranked thirteenth globally and sixth in Europe, with 2017 sales of EUR1.03 billion. On Jan. 1, 2017, the company acquired a stake in Austria’s HDS-Chemie, boosting its business in Central and Eastern Europe. It also recently opened a new sales office in Hungary.

Saudi Aramco seeks to overhaul engines, fuel amid EV hype

MOSCOW (MRC) -- More efficient fuels and more sophisticated combustion engines are needed to bring down carbon dioxide pollution and to secure the long-term future of Saudi Aramco's business, reported Reuters with reference to the company's chief technology officer.

"The growth of transport is greater than the growth of alternative drivetrains," Ahmad Al Khowaiter, Chief Technology Officer at Saudi Aramco told journalists at the Geneva car show.

The spike in electric car production in Europe will not offset an overall increase in global greenhouse gas emissions as emerging economies industrialize and buy cars with petrol and diesel engines, Al Khowaiter said.

"Improving combustion engines is key to sustaining our business in the long term," he said.

While carmakers have rolled out advances in combustion engine technology, the availability of sophisticated fuels has not kept pace, Al Khowaiter said.

Diesel became an industry standard more than 100 years ago and has remained popular mainly because it did not evaporate quickly, making it safer to handle during storage and refueling.

"Rudolf Diesel did not consider fuels which evaporated easily. That was an accident of history," Al Khowaiter said, referring to the German founder of the diesel engine technology.

But diesel has proven a key cause of health-threatening nitrogen oxide pollution, which is blamed for respiratory diseases, forcing the industry to explore ways to cut emissions.

"We can now optimize the fuel and the engine at the same time. And we can bring it to market by adding another fuel pump at the gas station, just like it is done with higher octane fuels," Al Khowaiter said.

"We do the patents on the fuel development to enable the engines to be efficient," the executive said.

Saudi Aramco is working on gasoline compression ignition which mixes fuel and air more effectively prior to combustion, resulting in lower nitrogen oxide and soot emissions and a 30 percent improvement in fuel economy.

The petrochemicals giant is also helping to develop mobile carbon capture technologies which could be built into next generation passenger cars for around USD1,400 per vehicle, and help to cut carbon dioxide emissions.

As MRC informed previously, in October 2018, Saudi Aramco signed an agreement to invest in a refinery-petrochemical project in eastern China, part of its strategy to expand in downstream operations globally. The memorandum of understanding between the company and Zhejiang province included plans to invest in a new refinery and co-operate in crude oil supply, storage and trading, according to details released by the Zhoushan government after a signing ceremony in the city south of Shanghai.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.