Huntsman to acquire CVC Thermoset Specialties

MOSCOW (MRC) -- Huntsman has agreed to buy CVC Thermoset Specialities, a North American specialty chemical manufacturer, for USD300 million in cash. CVC makes highly specialized toughening, curing and other additives used in various composite, adhesive and coatings applications across the aerospace, automotive and industrial markets, said the company.

The transaction, which remains subject to the usual closing conditions, is anticipated to complete around mid-2020.

Part of Emerald Performance Materials, which is majority owned by affiliates of private equity firm American Securities, CVC has annual revenues of about USD115 million and operates two plants in Akron, Ohio and Maple Shade, New Jersey.

"The acquisition of CVC Thermoset Specialties brings valuable complementary technology breadth to our Advanced Materials portfolio and its unique products will make systems using our class-leading epoxy-based materials even tougher, stronger, and more durable,” said Scott Wright, president of Huntsman’s Advanced Materials division.

"In addition to strengthening our position in North America, Huntsman will use our existing asset footprint and routes to market in Europe and Asia to rapidly grow and globalize CVC Thermoset Specialties’ exciting and complementary product range. This acquisition will further improve our ability to create differentiation in our customers’ applications, in particular through our strong formulations business," Wright said

Peter Huntsman, chairman, president and CEO of Huntsman, added that “significant synergies” between the businesses are expected within two years.

Late last month, Huntsman closed its purchase of Icynene-Lapolla, a leading North American manufacturer and distributor of spray polyurethane foam (SPF) insulation systems. Huntsman said the combination of Icynene-Lapolla with Demilec, the SPF business it acquired in 2018, will create the world’s leading supplier of spray foam products used to insulate commercial and residential structures.

“The combined business is now approaching USD500 million in revenues and by the end of 2021 with synergies we see the SPF business exceeding USD100 million in EBITDA,” said Huntsman. At facilities in Texas, USA, and Ontario, Canada, Icynene-Lapolla produces a full range of MDI-based SPF formulations and reflective roof coatings, which it markets directly to applicators as well as through distributors.

As MRC informed earlier, Huntsman has announced that in 2020, its polyols production facility in Kuan Yin, Taiwan, will begin to utilise the company's well-proven Terol polyols technology to recycle distressed PET streams to satisfy the growing demand from the regional PIR foam insulation market.

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

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim"s homopolymer PP accounted for the main increase in shipments.
MRC

MOSCOW (MRC) -- European oil refineries are reducing operations as they face an unprecedented fall in fuel demand brought about by the coronavirus pandemic, reported Reuters.

In the United Kingdom, INEOS shut down a 35,000 barrels per day crude unit at its 200,000 bpd Grangemouth refinery on March 17, according to industry monitor Genscape.

A source familiar with the plant’s operations said the shutdown was related to deteriorating profit margins for fuels produced at a refinery including aviation and motor fuels.

“Horrendous margins and even worse physical markets,” the source said when asked about the cause of the shutdown.

A spokesman for the company declined to comment.

With planes around the world being grounded, demand for jet fuel, once one of the biggest factors in oil demand growth, has fallen off a cliff, with prices for the fuel in Europe now at record lows.

Refiners in Europe are producing gasoline at a loss.

“Refiners must cut runs now to manage the situation,” consultants FGE said in a note.

Oil major BP also shut down a 70,000 bpd crude unit at its Gelsenkirchen (Scholven) oil refinery in Germany on March 18, Genscape said.

BP declined to comment. But two trading sources said the shutdown was an economic run cut.

In France, whose population is currently under government enforced lockdown, oil major Total delayed the restart of its 102,000 bpd Grandpuits refinery near Paris by eight days to April 1, CGT union delegate Thierry Defresne said.

Other sources said the maintenance work at the company’s 110,000 bpd Feyzin refinery was suspended.

It is difficult to gauge how extensive the fall in fuel demand the outbreak of the coronavirus has caused as the situation is changing day by day and more and more cities are shutting down.

Head of research at the world’s biggest oil trader Vitol said on Friday demand could fall by more than 10%, or 10 million bpd. )

As MRC wrote before, Total said Tuesday it had a suspected case of coronavirus on a rig at its Culzean gas field in the UK North Sea, but production was unaffected.

We also remind that Total has recently 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 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
MRC

MOSCOW (MRC) -- Major oil companies including BP and Shell are preparing to take the rare step of storing jet fuel at sea as the coronavirus outbreak disrupts airline activity globally, while refiners are shifting to diesel because of the poor margins associated with jet fuel production, said Hydrocarbonprocessing.

Jet fuel demand has cratered as airlines suspend flights due to the coronavirus pandemic, which globally has infected more than 204,000 people and killed 8,700, prompting travel restrictions from governments around the world, including the United States. Market participants and refiners have had to scramble to adjust to incredibly low prices.

Storing jet fuel at sea, however, is something of a last resort. The product is sensitive to contamination and degrades more quickly than other refined fuels and especially crude oil, so after a few months, it no longer can be used for aviation, according to analysts.

"The industry generally expects products will be used within three months of being produced,” said George Hoekstra, an independent consultant specializing in hydroprocessing technology. Gulf Coast jet cash prices were at 26.50 cents per gallon below futures, the lowest seasonally since at least 2011, the earliest data available, Refinitiv Eikon data showed.

Jet fuel demand averages about 8 million barrels per day, but that has already dropped by about 20%, according to Robert Campbell, head of oil products at consultancy Energy Aspects. Overall, the oil market could see a record build in supply in April that could overwhelm storage capacity within months, analysts said.

BP has provisionally booked the 60,000-tonne Stena Polaris tanker to store jet fuel for 40 to 60 days starting March 20 to March 22 at a rate of $25,500 a day, according to shipping and trading sources. A BP spokesman declined to comment.

Royal Dutch Shell has provisionally booked Torm Sara to store jet fuel for 90 to 120 days, sources said. “With European kerosene (jet fuel) stocks near record levels, floating storage is one possibility for surplus jet fuel, though due to strict quality specifications, traders will be reluctant to attempt long-term storage of surplus fuel given the risk of contamination,” Campbell said.

Demand for jet fuel storage has also increased in the United States, said Ernie Barsamian, founder and chief executive of The Tank Tiger, a terminal storage clearing house based in Princeton, New Jersey.

As MRC informed earlier, operations at Italian petrochemical producer Versalis (part of Eni) have not affected by emergency quarantine measures in the country. Italian Prime Minister Giuseppe Conte extended its emergency coronavirus measures Wednesday evening and announced the closure of "non-essential" commercial businesses. This follows the announcement of a nationwide lockdown on Monday, limiting movement for around 60 million people. Under these measures people will only be allowed to leave their homes for work or health reasons. Versalis has three steam crackers in Italy, capable of producing 1.675 million mt of ethylene, 750,000 of propylene and 285,000 mt of butadiene a year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
MRC

MOSCOW (MRC) -- Major energy companies in the United States imposed work-from-home rules for office staff and began health checks for remote or critical workers as coronavirus spread and threatened an industry reeling from falling demand and profits, said Reuters.

BP, Exxon Mobil, Kinder Morgan, Motiva Enterprises and Royal Dutch Shell told most office staff to work from home starting Monday. Federal regulators on Friday were pressed by companies to ease work rules for pipeline operators and to limit visits to some sites. Shell and Chevron began health checks of workers and visitors at some key U.S. facilities, spokesmen said.

Offshore rigs, refineries and pipelines require on-site teams and group workers in close quarters, making them vulnerable in a Covid-19 outbreak. They cannot be run remotely and health checks could prevent forced shutdowns that could lead to big losses or local fuel shortages.

The pandemic has infected more than 156,000 people worldwide including some 2,900 people in the United States, killed more than 5,800 globally and slashed fuel demand amid shuttered schools, churches, offices and some retail stores.

There is only one known case of Covid-19 to hit a U.S. refinery. Marathon Petroleum Corp, the nation’s largest refiner by capacity, removed some staff at a California plant after an employee became ill. Norwegian oil firm Equinor halted a North Sea development project and removed staff after an offshore worker fell ill.

Falling oil demand and a price-war that slashed crude prices by about 50% this year has put the industry in a tailspin. Many oil firms have abruptly cut spending and staff to cope with the downturn. Work-at-home rules, fewer car and plane trips are expected to reduce U.S. petroleum demand by up to 2.5 million barrels per day (bpd). For the full year, it could cut motor fuel use by roughly 300,000 to 400,000 bpd.

There have been no refining or chemical plant shut-ins caused by coronavirus. Still, companies are drafting plans similar to hurricane measures that keep plants running with minimal staff, said people familiar with operations. Shell asked salaried staff at its Louisiana refineries to begin shadowing hourly plant operators to prepare managers to run units if necessary, the people said.

Exxon will allow only trained operators into control rooms at its Baytown plant, and they must remain at least six feet apart from one another, they added. Pipeline regulators discussed work-rules for control room operators and visits by U.S. and state inspectors with trade group executives on Friday, said Suzanne Lemieux, an emergency expert at trade group American Petroleum Institute.

As MRC informed earlier, operations at Italian petrochemical producer Versalis (part of Eni) have not affected by emergency quarantine measures in the country. Italian Prime Minister Giuseppe Conte extended its emergency coronavirus measures Wednesday evening and announced the closure of "non-essential" commercial businesses. This follows the announcement of a nationwide lockdown on Monday, limiting movement for around 60 million people. Under these measures people will only be allowed to leave their homes for work or health reasons. Versalis has three steam crackers in Italy, capable of producing 1.675 million mt of ethylene, 750,000 of propylene and 285,000 mt of butadiene a year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
MRC

MOSCOW (MRC) -- The oil market could see a record supply surplus in April as coronavirus wipes out demand and big producers pump more, creating a global glut that threatens to overwhelm storage capacity within months and force widespread industry shutdowns, according to Hydrocarbonprocessing with reference to analysts.

Crude is already gushing into storage at land and sea worldwide as countries curb travel and economic activity falls due to coronavirus. Storage levels are rising even before a wave of supply hits the market from Saudi Arabia, Russia and other producers who are gearing up to fight a price war for market share.

US benchmark crude fell to its lowest since April 2002 at USD22.60 a barrel on Wednesday, and is down more than 60 percent since the start of the year. Brent crude prices have fallen almost 45% in March alone, following the most pronounced demand destruction since the financial and economic crisis of 2008.

As storage reaches capacity, a slide toward USD10 per barrel is possible, according to some investors and analysts. That last happened during the 1998 glut before both oil companies and oil producing nations curbed supply.

Some Canadian crude is already trading not far off USD10 per barrel because of steep price discounts to U.S. benchmark WTI crude.

"We believe we have not seen the worst of the price rout yet, as the market will soon come to realise that it may be facing one of the largest supply surpluses in modern oil market history in April," said Rystad Energy's Head of Oil Markets Bjornar Tonhaguen.

IHS Markit analysts estimated the global oil supply surplus on a monthly basis to range between 4 million barrels per day (bpd) and 10 million bpd from February to May 2020 - equal to 4-10% of global demand.

Standard Chartered Bank expected an "extreme" global surplus of 12.9 million bpd in the second quarter - 13 percent of global demand - and a cumulative surplus exceeding 2.1 billion barrels by the end of the year - well above the annual output of OPEC's second largest producer Iraq.

"Does the world have enough storage capacity to handle it? ... For crude oil, we estimate total spare inventory capacity at 900 million barrels," BofA Global Research said.

Goldman Sachs sees over 1 billion barrels of unused storage still available and said while it does not expect the glut to lead to a breach in storage capacity, "it will likely lead to a breach in logistical capacity, meaning ships, pipelines, terminals and processing units."

The Organization of the Petroleum Exporting Countries (OPEC) and Russia failed to seal a deal to cut oil production earlier this month, as they disagreed on how to respond to the impact on demand of coronavirus. Since then, OPEC's de facto leader Saudi Arabia has pledged to flood the world with cheap oil.

Saudi Arabia now plans to boost its crude oil production to a record high of 12.3 million bpd in April, and its crude oil exports to more than 10 million bpd from May.

Some major oil consuming nations like the United States and India have tried to take advantage of low oil prices and bulk their its strategic stockpiles.

US President Donald Trump vowed to fill the country’s Strategic Petroleum Reserve to the top. The US strategic reserve has the capacity to take an additional 77 million barrels of crude, and will fill it over several weeks.

That is a fraction of the expected global glut.

Around 3.3 billion barrels of oil is stored globally onshore, close to the peak of 3.4 billion barrels reached in early 2017, according to Kpler data.

Another 91 million barrels is in floating storage - in vessels at sea. That is not far off peaks reached in 2009.

The surplus will only get worse if producers continue their price war. It will be "intensified by the fact that other OPEC countries will likely do their utmost to boost exports as their fiscal budget is under pressure due to lower prices," said Homayoun Falakshahi, senior analyst at Kpler.

The International Energy Agency said on March 9 it expected oil demand to be 99.9 million barrels per day (bpd) in 2020, lowering its annual forecast by almost 1 million bpd and signalling a contraction of 90,000 bpd, the first time demand will have fallen since 2009.

The IEA said that in the first quarter alone, the virus wiped out 2.5 million bpd of demand or 2.5%.

"We estimate OPEC+ spare capacity at 2 million bpd, and at 3 million bpd if Libya’s nearly 1 million bpd production comes back online. What we are seeing here is essentially the atomic bomb equivalent in the oil markets," said Rystad Energy’s analyst Louise Dickson.
MRC