LANXESS completes sale of chrome chemicals business to Brother Enterprises

MOSCOW (MRC) -- Specialty chemicals company LANXESS on January 10, 2020, completed the sale of its chrome chemicals business. The buyer is Brother Enterprises, a Chinese leather chemicals producer, the German chemicals producer said.

All relevant antitrust authorities have given the necessary approvals for the transaction, which was announced in August 2019. Upon completion of the transaction, LANXESS has received cash proceeds of approximately EUR 80 million.

With this transaction, Brother Enterprises has also taken over the Newcastle site in South Africa with around 220 employees from LANXESS. At the site sodium dichromate is produced, some of which is processed into chromic acid. In Merebank, South Africa, LANXESS will continue to manufacture chrome tanning salts from sodium dichromate exclusively for Brother Enterprises on a contract basis, presumably until 2024.

As MRC informed earlier, LANXESS has acquired Brazilian biocide manufacturer Itibanyl Produtos Especiais Ltda (IPEL) to further expand its global biocide production network. Both companies signed an agreement to this effect on Thursday November 28, 2019. The parties have agreed not to disclose the purchase price. The transaction is still subject to the approval of the responsible antitrust authorities and is expected to be completed in the first quarter of 2020.

Earlier, Covestro has closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to\\from Belarus) fell in January-November 2019 by 14% year on year to 70,700 tonnes (62,000 tonnes a year earlier).

LANXESS is a leading specialty chemicals company with sales of EUR 7.2 billion in 2018. The company currently has about 15,500 employees in 33 countries and is represented at 60 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics.
MRC

MOSCOW (MRC) - Asian refining margins for 10 ppm gasoil fell on Friday, posting their biggest weekly decline in more than three years, weighed down by muted buying interest as the market awaits an expected demand boost following a switch to cleaner fuels in the shipping sector, said Reuters.

The International Maritime Organization (IMO) has banned ships from using fuels with a sulphur content above 0.5%, effective Jan. 1, and a section of ship-owners are expected to switch to marine gasoil (MGO) to adhere with the new rules. But some ship-owners and operators, especially those with larger ships, strongly prefer very low sulphur fuel oil (VLSFO) over MGO due to technical issues related to running on distillate fuel as opposed to heavy fuels. Traders, however, are optimistic that gasoil demand would pick up steadily over next few months as the availability of existing VLSFO supplies shrink. Refining margins, also known as cracks, for gasoil with 10 ppm sulphur content plunged to USD13.98 per barrel over Dubai crude during Asian trade on Friday, down from USD14.95 per barrel a day earlier. Cracks for the benchmark gasoil grade in Singapore have dropped about 13.4% this week in their steepest weekly decline since August 2016, Refinitiv Eikon data showed.

Cash premiums for 10 ppm gasoil, which have dropped 59% over the last two weeks, were at 37 cents per barrel over Singapore quotes on Friday, 1 cent higher compared with Thursday. Meanwhile, cash differentials for jet fuel were at a discount of 15 cents per barrel to Singapore quotes, compared with a 11-cent discount in the previous session. Refining margins for jet fuel fell to USD12.79 per barrel over Dubai crude on Friday, their lowest in more than eight months. They were at USD13.55 a barrel.

Global air passenger traffic for November showed demand rose 3.3% compared with the same month a year earlier, but stayed below the long-term trend, the International Air Transport Association (IATA) said on Thursday. - "November's moderate result reflects the continuing influence of slower economic activity, geopolitical tensions and other disruptions, including strikes in Europe," Alexandre de Juniac, chief executive officer of IATA said in a statement. "On the plus side, positive developments in the U.S.-China trade talks, in tandem with signs of improving business confidence, could support an uptick in travel demand," he added. - Passenger traffic for Asia-Pacific airlines increased 3.9% in November compared with the year-earlier period, slightly lower than the 4.2% annual growth recorded in October, IATA said. The Asia-Pacific region makes up more than a third of the global aviation market. - Among domestic passenger markets, Indian airlines experienced a return to double-digit growth for the first time since January 2019, as traffic rose 11.3% compared to November 2018, IATA said. - Domestic traffic in Japan rose 3.7% in November year-on-year, while airlines in China posted a rise of 5.3% in domestic traffic for the same period.

As MRC informed earlier, Asia is expected to receive up to 1.7 million tonnes of naphtha from the West, including Europe, the Mediterranean and the United States in January, which is more than 6% higher versus 2019's monthly average.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC

MOSCOW (MRC) -- Indorama Ventures Public Company Limited (IVL), a global chemical producer, has completed its acquisition of Huntsman’s world-class integrated oxides and derivative businesses, including a large flagship site on the US Gulf Coast (USGC) at Port Neches, as well as Chocolate Bayou and Dayton in Texas, Ankleshwar in India, and Botany in Australia, as per IVL's press release.

The acquisition is a profitable and growing end applications business along with unique products and geographical profile among the crowded olefins space. It has a well-integrated assets base with an extensive infrastructure and future expansion possibilities. The area is adjacent to many USGC feedstock suppliers. The cash value of USD2.0 billion makes it the largest acquisition by Indorama Ventures ever and now our capital employed is nicely spread over plastic, chemicals and fibers. The transaction value translates to an EV/EBITDA of ~5.7x and is expected to add substantial synergies to Indorama’s existing 450kta Ethane/Propane Cracker and our 550kta EO/EG. IVL will now be integrated from Ethane to PET as well as the high-margin EO and PO derivative businesses.

This acquisition reinforces IVL’s Integrated Oxides and Derivatives (IOD) segment’s continued development as envisaged in our strategy announcement in February 2019 and includes much sought after portfolios of value-added EODs and Propylene Oxide (PO) Derivatives, each coming with its own strong market position. The acquisition comes with its own strong R&D and technical capabilities apart from portfolio of about 900 patents and other intellectual properties. Entry into Australia will further diversify Indorama’s geographic presence. The Huntsman and Indorama Ventures assets are managed by extremely talented people who together will forge a successful global footprint and leverage the financial and commercial skills of Indorama to create shareholder value.

The acquisition will provide unprecedented entry into global niche markets and industries serving consumer’s daily needs with a sustained growth rate of ~5%. These products are used in home & personal care consumer goods, such as detergents, cleansers, shampoo, furniture applications, automotive parts fuels and lubricants. IVL has significant understanding of some of these end markets through its Fibers and PET businesses. New and exciting businesses include agrochemicals such as herbicides and unsaturated polyester resins for coatings, particularly in marine use.

IVL is committed to extracting further synergies and opportunities, such as supply chain and procurement consolidation as well as lowering corporate overheads and SG&A. These synergy benefits will further boost EBITDA contribution by USD 40M by 2021. Additional capex planned for the high value-added surfactants business will add incremental EBITDA of USD60M by 2022.

The transaction is funded by IVL’s internal cash flows and debt financing only and does not necessitate any equity dilution.

Mr. Aloke Lohia, Group CEO of Indorama Ventures, said, "I am excited to conclude this momentous deal with Peter Huntsman, a remarkable businessman, which will keep us both ahead of the curve and enhances our leadership in our chosen industries. I see this as IVL’s most strategic and ambitious deal as we set our goals and aspirations at the turn of this decade and as we groom ourselves into a global, diversified chemicals company with multiple integrated, and related earning streams.

“I would like to heartily welcome our new colleagues to the IVL family and I am confident that together we will drive this important business to generate significant value for all our stakeholders, reduce earnings volatility, and underpin IVL’s earnings growth opportunities for years to come."

As MRC wrote before, in May 2019, IVL announced that its indirect subsidiary Indorama Ventures Olefins in Westlake, LA, a manufacturer of Ethylene from Ethane with an annual capacity of 440,000 MT, achieved mechanical completion and was undergoing trial runs. IVOL then stabilized the production of on-spec ethylene and its byproducts at 5 of its 7 furnaces and ramped up gradually during the course of 2Q19. This project is the most ambitious project of its kind in IVL history and creates an exciting new platform of growth as well as affording stability and supply chain advantages to the EO/EG business by its pipeline integration. At normalized production, IVL will secure ~75% ethylene for internal consumption for EO/EG production and merchant the remaining output.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Indorama Ventures Public Company Limited, listed in Thailand, is one of the world's leading petrochemicals producers, a global manufacturing footprint with 59 sites in 20 countries across Africa, Asia, Europe and North America. The company's portfolio is comprises necessities and high value-added (HVA) categories of polymers, fibers, and packaging. Indorama Ventures has approx. 15,000 employees worldwide and consolidated revenue of USD 8.4 billion in 2017. The company is listed in the Dow Jones Sustainability Index (DJSI).

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2017 revenues of more than USD8 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.
MRC

MOSCOW (MRC) -- Tosoh Quartz Corporation, a group company of Tosoh Corporation that is headquartered in Tokyo, Japan, will establish a subsidiary corporation and a quartzware production facility in South Korea, said the company.

It plans to have the subsidiary corporation established before the end of fiscal year 2020, and to start production at the production facility within fiscal 2021.

Tosoh Quartz Corporation will make a capital investment in South Korea as the nation plays a major role in the growing demand for semiconductors. The South Korea-based quartzware production facility will join its sister companies in Japan and Taiwan to further strengthen the company’s quartzware manufacturing capabilities. It will feature world-class technologies and will continue to expand on the expertise accumulated through the company’s operations in Japan and Taiwan to respond to the rising global demand for quartzware.

The global semiconductor and quartzware markets are forecast to expand. The forecast anticipates growing demand for semiconductors for increased smartphone data capacity, for Internet of Things (IoT) devices, for artificial intelligence (AI) uses, and for a rising number of automotive applications spurred by the advancement of electric vehicle and autonomous driving technologies. Tosoh Quartz Corporation’s implementation of its plans in South Korea will ensure that the Tosoh Group keeps pace with this rapidly expanding demand. The company’s Korean operations will also boost the profitability of Tosoh’s advanced materials businesses.

As MRC reported previously, Tosoh Corp restarted its 527,000 tpa naphtha cracker in Yokkaichi, central Japan, after planned maintenance in mid-April, 2016. The cracker was shut on 8 March, 2016. The company also conducted an unscheduled turnaround at this cracker from 20 to 26 February, 2019.

The company runs two low-density polyethylene (LDPE) lines with a combined production capacity of 56,000 mt/year and a 43,000 mt/year LDPE/ ethyl vinyl acetate (EVA) swing plant at the same site. It also runs 120,000 mt/year high density polyethylene (HDPE) plant.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Tosoh is one of the largest chlor-alkali manufacturers in Asia. The company supplies the plastic resins and an array of the basic chemicals that support modern life. Tosoh's petrochemical operations supply ethylene, polymers, and polyethylene.
MRC

MOSCOW (MRC) -- France's CGT union said on Friday it would continue a strike over the government's planned pension reform at refineries and petrol depots until 16 January, extending by almost a week a four-day action that started on 7 January, reported Reuters.

The decision comes the day after new nationwide protest marches that failed to break the stalemate between government and unions after a more-than month-old public sector strike.

The action at refineries aims to cause shortages at petrol stations, which has not occurred yet, according to authorities.

As MRC informed before, French oil major Total said earlier that strikes against the government’s pension reform were having no impact on its fuel supply and distribution ahead of a four-day nationwide strike in French oil refineries.

We also remind that in November 2019, Total disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC