US ethanol industry nearing breaking point

MOSCOW (MRC) - The U.S. ethanol industry is about to break under the weight of the Trump Administration's trade war with China and the surge in the number of small refineries exempted from the nation's biofuel laws, said Todd Becker, CEO of Green Plains, as per Hydrocarbonprocessing.

The U.S. ethanol industry was preparing for growth in recent years, but the momentum has stalled in the face of President Donald Trump's trade war with China, a major buyer, and his administration's decision to align itself with the oil industry on demand-cutting waivers from biofuel laws, Becker said.

The sustained downturn in margins will finally begin taking its toll as some producers run out of money and begin a host of austerity measures to weather the storm. "Some plants will slow down, some will shut down, some will shut down forever," Becker said late last week in an interview with Reuters.

Trump fulfilled his promise to lift the summer ban on sales of higher ethanol blends of gasoline, but the infrastructure needed to deliver it requires time to be built. There are some 1,000 retail stores equipped to supply so called E85 gasoline, but the industry needs 10,000 stores to boost demand, Becker said.

U.S. ethanol production in early June reached almost 1.1 million barrels per day (bpd), the highest seasonally on record, Energy Information Administration data showed. While that might seem like good news, margins to produce ethanol <ETH-CB-REF> are at the lowest seasonally since 2015, according to Refinitiv Eikon data.

Ethanol production fell 2.5 percent to almost 1.04 million bpd, according to the latest weekly EIA data. But inventories still rose to nearly 23.7 million barrels, the highest for this time of year on record.

Becker said the industry has been undisciplined, continuing to ramp up production in the face of weak demand growth and growing supplies. He says the company has decided to cut production in the past, but this time they have the capital and operational plan to sustain weak or negative margins. "We can't be the governor of supply alone. We have the liquidity and the balance sheet and we are going to let other people do the job," Becker said.

Green Plains is the fourth largest U.S. ethanol company with a market capitalization of USD400 million. Green Plains, which has seen its share price drop by 40 percent this year, agreed in October to sell three of its ethanol plants to Valero Renewable Fuels Co and suspended its quarterly dividend in June.

Ethanol traders expect companies to start announcing output cuts soon. Plymouth Energy, based in Merrill, Iowa, said in a statement last week it decided to suspend production until further notice because of the weak margin environment.

One trader said production needs to fall by about 10% or demand needs to increase by the same amount to help steady the market. The U.S. Renewable Fuel Standard (RFS), a more than decade-old law, requires refineries to blend corn-based ethanol into their gasoline to help farmers. The program also provides waivers to small refining facilities that can prove compliance would cause them financial harm.

Since Trump took office, the Environmental Protection Agency has more than quadrupled the number of waivers it has granted, saving the oil industry hundreds of millions of dollars but enraging another key constituency - corn growers - who claim the move threatens demand for one of their staple products. "The SREs (Small Refinery Exemptions) are a political football for the president, and he's going to have to take a look at how it's affecting agriculture and farmers," said Mark Marquis, CEO of privately-held Marquis Energy, which operates ethanol plants in Illinois and Wisconsin. "I can't say I'm happy with the way the administration has handled implementing the RFS."

While Marquis supports Trump and intends to vote for him in the next election, he said the increase in SREs granted is "troubling." The administration has delayed decisions on the some 40 applications for 2018 waivers amid a Trump-ordered review of the program. The previous rounds of waivers exempted some 2 billion gallons of fuel production from the RFS.

The refining industry says despite all the cries of demand destruction, there is little evidence to show that has actually happened. Federal government data shows demand has remained steady, despite the waivers, and that the industry has a supply problem, not one of demand.

“There is no statistically significant evidence that SREs are responsible for ethanol demand destruction," Susan Grissom, chief industry analyst at American Fuel and Petrochemical Manufacturers, said.

Becker says the oil industry is lying and they know it. He says the exemptions have slowed refiners from utilizing higher blends of ethanol and noted blending rates fell last year, though modestly, for the first time in years.
MRC

Huntsman announces acquisition of remaining 50% interest in Sasol-Huntsman JV

MOSCOW (MRC) -- Huntsman Corporation has announced that it has signed a definitive agreement with Sasol to acquire the 50% interest that Huntsman does not own in the Sasol-Huntsman maleic anhydride joint venture, reported CISION PR Newswire.

The joint venture owns a manufacturing facility in Moers, Germany with capacity to produce 230 million pounds of maleic anhydride. Huntsman will pay Sasol USD92.5 million, adjusted for debt and other agreed upon terms, funded from available liquidity. No other terms of the transaction were disclosed. Huntsman and Sasol currently anticipate the closing of the transaction to occur in the fourth quarter of 2019, subject to regulatory approvals and customary closing conditions.

Peter Huntsman, Chairman, President and CEO commented: "Acquiring the remaining interest in our maleic German joint venture from Sasol will provide us with the flexibility to fully integrate our European business into our worldwide footprint, thereby better servicing our global customer base in key markets such as construction and coatings. This fits well into our core strategy to expand our portfolio of businesses with higher, more stable margins and strong free cash flow."

As MRC informed before, in March 2018, Huntsman Corporation announced the acquisition of Demilec, one of North America’s leading manufacturers and distributors of spray polyurethane foam (SPF) insulation systems for residential and commercial applications, from an affiliate of Sun Capital Partners, Inc.

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2018 revenues of more than USD9 billion. Its chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. The company operate more than 75 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 10,000 associates within its four distinct business divisions.
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Asahi Kasei develops the world’s first polyamide beads foam

MOSCOW (MRC) -- Asahi Kasei develops the world’s first polyamide beads foam, said the company.

With the ongoing disruptive megatrends in the automotive industry, the automotive OEMs and suppliers are facing a strong innovation pressure. New, innovative solutions are in high demand. Asahi Kasei’s newly developed polyamide beads foam offers unique possibilities for lightweight and noise reducing applications.

The disruptive CASE (Connected – Autonomous – Shared – Electrified) megatrends and are leveraging the innovation pressure on the automotive industry to new heights. In addition to changing consumer needs, the EU legislation regarding the reduction of CO2 emissions has been significantly pushing the demand for new and innovative lightweight materials as a substitute for metal and aluminum parts. At the same time these materials have to live up to the high safety standards in the automotive industry, and to provide solutions to the changing and tightening regulations worldwide. Plastics and foams with their broad range of properties will become a key in this field, contributing to a reduction of CO2 emissions of conventional passenger cars with a combustion engine, and a longer driving distance of electrified cars.

Another challenge for the automotive industry is the tightening of noise regulations. With Regulation No. 51-031 issued by the United Nations in 2016, the noise level emitted to the outside must be continuously reduced in newly manufactured vehicles.

Asahi Kasei is one of only four fully integrated polyamide manufacturers worldwide – and is able to produce PA 6.6 completely from monomer to compound. Based on this expertise, the company is currently developing the PA Foam, a foam bead material based on polyamide – the first of its kind worldwide. It is offering solutions to both aforementioned challenges in the automotive industry – stiffness, mechanical strength and heat resistance for use in structural lightweight applications of cars, and noise reducing characteristics.

The PA Foam features the typical heat, chemical and oil resistant properties of polyamide, mixed with an outstanding rigidity or noise reducing quality – depending on the shape of the beads. PA Foam consisting of round-shaped beads features a strong rigidity, making it a promising alternative material for aluminum and metal in structural applications, as well as for use for insulators, ducts, spacers, or other lightweight parts of the battery case of electrified vehicles.

Asahi Kasei Corporation is a globally active diversified technology company with operations in the Material, Homes, and Health Care business. The Material division encompasses fibers & textiles, petrochemicals, performance polymers, performance materials, consumables, battery separators, and electronic devices. The Homes division provides housing and construction materials to the Japanese market. The Health Care division includes pharmaceuticals, medical devices, and acute critical care devices and systems. With approximately 39,283 employees around the world, the Asahi Kasei Group serves customers in more than 100 countries and achieved sales of 17.6 billion euros (2,170.4 billion yen) in the fiscal year 2018 (April 1, 2018 – March 31, 2019).
MRC

AkzoNobel to acquire Mapaero

MOSCOW (MRC) -- AkzoNobel has announced its intention to acquire French aerospace coatings manufacturer Mapaero, said the company.

The intended acquisition will strengthen AkzoNobel’s global position in aerospace coatings, notably in the structural and cabin coating sub-segments, and contribute directly towards delivering the company’s 2020 guidance.

Established in 1992 and specializing in sustainable water-based and advanced eco-friendly products, Mapaero operates a production facility in France and has around 140 employees.

“The world class product ranges from both companies have an excellent fit and by combining our expertise we’ll be able to strengthen our global position in the steadily growing aerospace coatings market,” said AkzoNobel CEO, Thierry Vanlancker.

"The transaction will enable us to provide our customers with a much wider portfolio of innovative and sustainable products. It also demonstrates our commitment to continue investing in strategic growth opportunities as we progress further with our Winning together: 15 by 20 strategy and will be accretive towards our 15% return on sales target."

Eric Rumeau, President and CEO of Mapaero, added: “AkzoNobel’s offer is an exciting opportunity. Our activities are complementary to those of AkzoNobel and we are ideally placed to help further improve their existing portfolio and service levels. There’s clearly a strong match in the combination."

AkzoNobel’s offer is subject to customary information and consultation procedures with Mapaero’s employee representative bodies and regulatory approvals. The transaction is expected to be completed in the second half of 2019.

AkzoNobel is a global leader in aerospace coatings, supplying high performance products and technologies for aircraft worldwide.
MRC

Panama becomes first Central American nation to ban plastic bags

MOSCOW (MRC) -- Panama on Saturday became the first Central American nation to ban single-use plastic bags to try to curb pollution on its beaches and help tackle what the United Nations has identified as one of the world's biggest environmental challenges, reported Rueters.

The isthmus nation of roughly 4 million people joined more than 60 other countries that have totally or partially banned single-use plastic bags, or introduced taxes to dissuade their use, including Chile and Colombia in the region.

Supermarkets, pharmacies and retailers in Panama must stop using traditional polyethylene plastic bags immediately, while wholesale stores will have until 2020 to conform to the policy approved in 2018. Fines can be applied for non-compliance but there are exceptions for the use of plastic bags for sanitary reasons, such as with raw food.

On the streets of Panama City, signs with the phrase "less bags, more life" reminded passersby that the measure had gone into effect.

"This seems like a good measure because you avoid continuing to pollute the streets and the community," said Victoria Gomez, a 42-year-old secretary in downtown Panama City.

Birds, turtles, seals, whales and fish often become entangled or ingest the remnants of plastic bags in Latin America, one of the most biodiverse regions in the world. Along Panama's coast, it is common to see plastic waste littering beaches, especially near populated areas.

Given projected growth in consumption, without new anti-pollution policies oceans are expected by 2050 to contain more plastics than fish by weight, according to the New Plastics Economy report published by Ellen MacArthur Foundation in 2016. The report also found that the entire plastics industry will consume 20% of total oil production by then.

As MRC wrote previously, in April 2019, New York State lawmakers agreed to impose a statewide ban on most types of single-use plastic bags from retail sales, changing a way of life for millions of New Yorkers as legislators seek to curb an unsightly and omnipresent source of litter.
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