Lower sales prices, weakening trade conditions dent Tosoh profit

MOSCOW (MRC) -- Tosoh reports an 8.4% decline in sales for the company's fiscal nine months, which ended on 31 December, to Yen 591.8 billion (USD5.45 billion), according to Chemweek.

The fall is attributed to lower sales prices, the result mostly of a decline in the price of naphtha and worsening conditions in overseas markets, it says. Net income was Yen 46.2 billion, down 18% year on year (YOY), while operating income fell 17.3% YOY to Yen 65.8 billion.

Sales for the company’s petrochemical segment decreased 13.5% YOY to Yen 125.1 billion, with operating income declining 24.9% to Yen 9.2 billion. Shipments of ethylene, propylene, and cumene rose in line with an increase in production volumes due to no plant maintenance being scheduled for the fiscal year, says Tosoh. Product prices, however, were down because of the decline in naphtha prices and worsening overseas trade conditions, it says.

Exports of polyethylene resin for use in photovoltaic cell encapsulating films increased and product prices fell, reflecting the lower naphtha prices. Chloroprene rubber exports, primarily to Asia, also declined, according to the company.

Tosoh's chlor-alkali segment saw operating income fall 33.2% YOY to Yen 21.8 billion, with sales down 12% YOY to Yen 223.7 billion. Stagnation in domestic demand led to a decrease in caustic soda shipments in the domestic market, it says. Additionally, caustic soda export prices declined in line with worsening market conditions overseas. Shipments of vinyl chloride monomer fell because of a drop in production and declining market conditions overseas led to a reduction in product prices. Rising polyvinyl chloride resin production volume resulted in increased shipments, while prices fell for methylene di-para-phenylene isocyanate, says the company.

Operating income at Tosoh's specialty segment decreased 20.4% YOY to Yen 15.4 billion, while sales of specialty products dropped 5.7% YOY to Yen 139.5 billion. Ethyleneamine shipments declined owing to stagnant demand, with poor trade conditions impacting ethyleneamine prices. Shipments mostly to Europe of packing materials for liquid chromatography decreased. Diagnostic-related product shipments, especially of in vitro diagnostic reagents bound for Europe, the US and China also fell. The company adds that shipments of silica glass reduced amid inactivity in the semiconductor market. Shipments of electrolytic manganese dioxide for dry cells also decreased.

The company’s other business unit is engineering.

Tosoh has maintained its forecast for the fiscal year ending 31 March 2020. The company expects its full-year net profit to be Yen 57 billion, while its guidance for operating income stands at ?84 billion. Full-year net sales are projected to be Yen 800 billion.

As MRC wrote previously, Tosoh Corp restarted its 527,000 tpa naphtha cracker in Yokkaichi, central Japan in mid-April 2016, after planned maintenance. The cracker was shut on March 8, 2016. 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 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

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.

Styrene, polycarbonate margins drag down Trinseo earnings

MOSCOW (MRC) -- Trinseo (Berwyn, Pennsylvania) reports fourth-quarter net income of USD6 million, swinging from a USD1-million loss in the year-ago period, reported Chemweek.

Adjusted EBITDA totaled USD27 million, down 47% year over year (YOY) from USD51 million, reflecting lower styrene and polycarbonate (PC) margins. Sales totaled USD889 million, down 17% YOY from USD1.065 billion, the result mainly of the pass-through of lower raw material costs, but also lower volume in the feedstocks, polystyrene, and synthetic rubber segments. Adjusted earnings per share came to 35 cents, up 52% YOY, but short of the average analyst estimate of 48 cents as compiled by Refinitiv (New York).

Frank Bozich, CEO, expects market conditions in the year ahead similar to those of the second half of 2019. "We are confident that our business excellence program, our improved cost structure from the recent restructuring, and our focus on the growth areas of our portfolio will largely offset incremental headwinds, including lower year-over-year styrene margins."

Trinseo expects 2020 net income of USD95-112 million, up from USD92 million, and adjusted earnings per share of USD2.40-2.84, down from USD3.13. The outlook assumes the 2019 novel coronavirus (2019-nCoV) outbreak will have a pretax impact of USD5-10 million. "While our operations haven’t been affected, we are seeing lower demand from our customers in China due to delayed plant start-ups following Chinese New Year," says Bozich.

Sales in the latex binders segment declined 14% YOY to USD219 million, mainly on the pass-through of lower raw material costs. Adjusted EBITDA was flat at USD22 million as unfavorable net timing was offset by higher volume to coatings, adhesives, sealants, and elastomers (CASE) applications and the contribution of the Rheinmuenster, Germany, latex binder facilities acquired from Dow in October.

Synthetic rubber segment sales declined 23% YOY to USD100 million. Trinseo cites cost pass-through and lower emulsion styrene-butadiene rubber (E-SBR) volume, partially offset by higher solution styrene-butadiene rubber (S-SBR) volume. Adjusted EBITDA doubled to USD12 million on favorable timing, higher S-SBR volume, and higher fixed-cost absorption.

Performance plastics sales dropped 10% YOY to USD325 million on cost pass-through and the weaker polycarbonate market, partially offset by higher volume, mainly into the consumer electronics market in Asia. Adjusted EBITDA came to USD29 million, down USD2 million YOY on higher fixed costs, partially offset by timing and increased volume.

Polystyrene (PS) sales dropped 26% YOY to USD176 million, mainly on styrene cost pass-through; lower volume in Europe was mostly offset by higher volume in Asia. Adjusted EBITDA dropped slightly to USD5 million.

Sales in the feedstocks segment dropped 13% YOY to USD69 million on lower styrene market prices. Adjusted EBITDA of negative USD10 million was USD3 million lower YOY on lower margins in Europe and Asia.

Americas Styrenics, the company’s joint venture with CPChem, reported adjusted EBITDA of USD21 million, down USD10 million YOY on lower styrene margin.

As MRC informed before, Trinseo have announced a price increase for all PS grades, acrylonitrile-butadiene-styrene (ABS) and acrylonitrile styrene copolymer (SAN) grades in Europe. Effective February 1, 2020, or as existing contract terms allow, the contract and spot prices for the products listed below rose as follows:

-- STYRON general purpose polystyrene grades (GPPS) -- by EUR100 per metric ton;
-- STYRON and STYRON A-Tech and STYRON X- Tech high impact polystyrene grades (HIPS) - by EUR100 per metric ton;
- MAGNUM ABS resins - by EUR55 per metric ton;
- TYRIL SAN resins - by EUR55 per metric ton.

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics was 46,260 tonnes in December 2019, up by 8% year on year. The estimated consumption of PS and styrene plastics totalled 500,660 tonnes in 2019, down by 1% year on year. Russian producers of PS and styrene plastics produced 44,960 tonnes of material in December 2019, up by 1% year on year.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD4.6 billion in net sales in 2018, with 16 manufacturing sites around the world, and approximately 2,500 employees.

Hengli Petrochemical cuts PTA production at No. 4 line in Dalian

MOSCOW (MRC) -- Hengli Petrochemical (Dalian) Co., Ltd (Hengli) had reduced capacity utilisation at its No. 4 purified terephthalic acid (PTA) line in Dalian to 50% as coronavirus impacts demand, reported Chemweek.

As MRC informed earlier, Hengli Petrochemical announced the successful start-up of its new fourth PTA line in January, 2020.

This 2.5 million tons per annum capacity plant, located in Changxing Island, Dalian City, Liaoning Province, utilizes INVISTA’s P8 PTA technology with industry leading variable cost, capital productivity, energy usage, water usage, effluent generation and footprint, came online on January 8th, 2020. As the result of joint effort of all parties involved, the schedule of this project is significantly shorter than other PTA projects, with start-up only 22 months after the project kicked off in early March, 2018.

A fifth PTA line, identical to the fourth PTA line is currently under construction and is expected to start-up around the middle of 2020. Hengli also operates another 3 PTA lines on the same site, each with a capacity of 2.2 million tons per annum, using INVISTA’s P7 PTA technology. This makes the Hengli site the largest PTA site in the world.

PTA is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

As per MRC's ScanPlast report, the estimated consumption of polyethylene terephthalate (PET) in Russia decreased by 16% year on year in December 2019. Russia's overall estimated PET consumption totalled 696,810 tonnes in 2019, up by 1% year on year (690,130 tonnes in 2018).

Hengli Petrochemical Co., Ltd. manufactures chemical fibers. The Company researches, produces, and sells polyester filament and chips for consumer and industry products. Hengli Petrochemical markets it products worldwide.

Trinseo introduces new portfolio of polycarbonate resins for medical devices

MOSCOW (MRC) -- Trinseo, a global materials solutions provider and manufacturer of plastics, latex binders and synthetic rubber, continues to support medical industry trends with the launch of a new wear resistant, high lubricity polycarbonate (PC), as per the company's press release.

The global medical industry is constantly evolving to address megatrends such as a rapidly growing and aging population. This is creating a need for home healthcare and self-administered treatments as well as medical wearables and patient-friendly devices.

Trinseo’s wear resistant, high lubricity PC has been designed for drug delivery devices and surgical tools, which are growing in importance for their convenience and cost saving potential. Part of Trinseo’s CALIBRE Polycarbonate Resins series, the new material platform provides a solution for the low friction movement of one material over another, extending product life and minimizing noise without external lubricants.

Beside this latest innovation, Trinseo is also recognized globally for its leadership position in advanced chemical resistant materials and will showcase its EMERGE 9000 product portfolio as well. This product range is used extensively in diagnostic equipment housings to resist the aggressive cleansers and disinfectants used by healthcare professionals to fight healthcare associated infections (HAIs), which remain a growing concern.

"Trinseo plastics satisfy the demand for aesthetically-pleasing devices designed for human interaction," said Aldo Zanetti, Global Market Leader Medical, Personal Care & Household, Trinseo. "At both Pharmapack and MD&M West, we look forward to sharing how Trinseo supports medical device manufacturers and also pharmaceutical companies, particularly with our latest grades for drug delivery device applications."

As MRC informed earlier, Trinseo raised its prices for all PC grades in Europe on 1 February, 2020, by EUR150 per metric ton.

According to MRC's ScanPlast report, Russia's estimated PC consumption (excluding imports and exports to/from Belarus) totalled 78,500 tonnes in 2019, up by 15% year on year (68,100 tonnes a year earlier).

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD4.6 billion in net sales in 2018, with 16 manufacturing sites around the world, and approximately 2,500 employees.

PVC production in Russia rises by 4% in January

MOSCOW (MRC) -- Contrary to seasonal factors, Russian producers of unmixed polyvinyl chloride (PVC) have maintained a high level of capacity utilisation. Overal PVC output totalled 91,700 tonnes in January 2020, up by 4% year on year, according to MRC's ScanPlast report.

January production of unmixed PVC was 91,700 tonnes versus 87,760 tonnes in January 2019 and 81,400 tonnes in December 2019. Thus, despite relatively weak demand for resin from the domestic market, the average capacity utilisation exceeded 95% last month. Russia's overall PVC production reached 975,000 tonnes in 2019, compared to 958,600 tonnes a year earlier.

The structure of PVC production by plants looked the following way over the stated period.

RusVinyl (joint venture of SIBUR and SolVin) produced 32,400 tonnes of PVC in January, with emulsion polyvinyl chloride (EPVC) accounting for 2,900 tonnes of the whole amount, compared to 29,500 tonnes of PVC in January 2019 and 23,100 tonnes in December 2019. RusViny's overall PVC output reached 339,800 tonnes last year.

SayanskKhimPlast produced 28,200 tonnes of suspension PVC (SPVC) last month, whereas this figure was at 27,700 tonnes in January 2019 and 27,900 tonnes in December 2019. Overall, the Sayansk plant managed to produce 294,500 tonnes of PVC in 2019.

Bashkir Soda Company produced 23,600 tonnes of SPVC in January 2020, compared to 23,000 tonnes a year earlier and 24,100 tonnes in December 2019. Bashkir Soda Company's overall output of resin reached 263,200 tonnes last year.

Kaustik Volgograd produced 7,500 tonnes of SPVC last month, whereas this figure was at 7,600 tonnes in January 2019 and 6,400 tonnes in December 2019. The plant's overall output of resin reached 77,500 tonnes in 2019.