Celanese beats estimates, details COVID-19 measures

MOSCOW (MRC) -- Celanese (Dallas, Texas) has reported first quarter financial results and withdrawn previous annual earnings guidance, citing uncertainty around the coronavirus disease 2019 (COVID-19) pandemic, according to Chemweek.

The company also announced measures to address the financial impact of the pandemic, including the deferral of a new acetic acid plant at Clear Lake, Texas, by 18 months.

"We estimate the impact of COVID-19 on our first quarter adjusted EBIT across our businesses was USD25 to USD30 million," says Lori Ryerkerk, chairman and CEO. "The primary challenges encountered were a result of immediate actions in China in February and March to stem the spread of the virus. Demand activity was reduced several weeks beyond the typical Chinese New Year and further limited by logistics availability into March. The impact of COVID-19 on our businesses in the Western Hemisphere was very limited in the first quarter."

Net earnings for the quarter totaled USD220 million, up 388% sequentially from USD45 million, but down 35% year-over-year (YOY) from USD338 million. Sales totaled USD1.46 billion, up 1.9% sequentially from USD1.432 billion, but down 13% YOY from USD1.687 billion. Adjusted earnings per share came to USD2.29, up 15% sequentially from USD1.99, down 13% YOY from USD2.62, and ahead of the average analyst estimate of USD2.24 as compiled by Refinitiv (New York).

"We anticipate that we will generate USD300-400 million of incremental cash due specifically to the actions we are currently taking on productivity, working capital management, and capital expenditures prioritization which allow us to offset meaningful demand and earnings challenges and deliver exceptionally resilient cash flow in 2020," says Ryerkerk.

Celanese has achieved one-third of its 2020 productivity target, announced during the first quarter, of approximately USD200 million of gross savings, says Ryerkerk. "(W)e are also working on one-time cost savings of $30-40 million through travel reductions, manufacturing costs, and other corporate function expense. As part of these one-time savings, we are leveraging our manufacturing flexibility to temporarily reoptimize utilization of our global production network to align with expected demand softness in the second quarter and potentially beyond."

Celanese has paused production at certain facilities or units, mainly affecting the engineered materials segment but also the acetyl chain, and it has extended the duration of several second quarter turnarounds, including the Bishop, Texas, and Nanjing, China, facilities. The company will therefore "heavily utilize existing inventory" during the second quarter.

Celanese has also reduced its capital spending plans from previous guidance of USD500 million to less than USD350 million by prioritizing productivity-based projects with near-term benefits, says Ryerkerk. Construction of the new Clear Lake, Texas, acetic acid will be deferred by about 18 months, with completion now slated for the middle of 2023. The associated incremental expansion of the Clear Lake methanol unit will also be deferred by 18 months. The company has also decided that further localization of engineered materials production in China will proceed incrementally for the time being.

The engineered materials segment reported net sales of USD563 million, up 4% from the fourth quarter of 2019 on higher volume, but down 15% YOY. Robust growth in the Western Hemisphere offset declines in Asia tied to the COVID-19 pandemic and the Lunar New Year, although demand softened late in the quarter, says the company. Price levels held sequentially, while raw material costs declined. Adjusted EBIT totaled USD165 million, up sequentially from USD136 million and down YOY from USD183 million.

The acetyl chain reported net sales of USD799 million, up 3.6% sequentially as volume growth partially offset a continued decline in industry pricing resulting from weakness in Asian demand and lower raw material costs. Adjusted EBIT totaled USD139 million, down sequentially from USD144 million and down YOY from USD203 million. The pandemic reduced income by about USD15 million, largely through customer order cancellations in March.

Acetate tow sales totaled USD129 million, down 13% sequentially and down 22% YOY. Adjusted EBIT came to USD67 million, up sequentially from USD54 million and down YOY from USD72 million.

As MRC informed previously, Celanese Corporation, a global chemical and specialty materials company, has restarted its vinyl acetate monomer (VAM) unit in Singapore. The company has resumed operations at the unit on March 16, 2020. The unit was shut since February 4, 2020 following a fire at the site. Located in Jurong Island, Singapore, the unit has a production capacity of 210,000 mt/year.

VAM is the main feedstock for the production of ethylene-vinyl-acetate (EVA).

According to MRC's DataScope report, February EVA imports to Russia rose by 9,83% year on year to 3,107 tonnes from 2,829 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation increased in January-February 2020 by 8,36% year on year to 6,194 tonnes (5,716 tonnes a year earlier).

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

MOSCOW (MRC) -- Brazil’s sole polyethylene (PE) producer Braskem will raise LDPE and PP prices for the rest of May by Real 150/mt (USD26.61/mt), according to industry sources, while HDPE and LLDPE prices will remain unchanged, said S&P Global.

Braskem is currently renegotiating its naphtha contract with Petrobras, as prices in North America have edged up on higher crude. The Brazilian petrochemical company’s JV with Idesa in Mexico also has limited feedstock supply.

In the beginning of May, the company reduced the price of all PE grades in May to address falling demand and a decline in international feedstock prices.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided.
Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
MRC

MOSCOW (MRC) -- We often forget how vital the chemical industry is to our well-being, safety and daily lives. The stigma around the issue of plastics waste in the environment often overshadows the progress the industry has made in becoming one of the more sustainable producers of critical products, said Canplastics.

In recent months, it has never been clearer just how important and responsive this industry is when faced with a global health crisis. The world has been left reeling from the impact of coronavirus and the chemical industry has stepped in with incredible speed and agility to help struggling health authorities get the materials they need to help fight the virus – protecting our people on the front line to save lives.

Life-critical materials from chemical suppliers are required to produce antibacterial wipes, hand sanitizer, disinfectants, surfactants for soaps and personal protective equipment (PPE) such as masks, gowns and face shields. By supporting a robust supply of such products, the chemical industry is helping control the spread of the virus.

Alongside a huge swing of production towards isopropyl alcohol (IPA) and ethanol, used in the production of hand sanitizer, many chemical companies have acted to directly meet the massive spike in demand for the final hand sanitizer product.

INEOS built two new plants in the UK and Germany in just 10 days to produce hand sanitizer, which it is now distributing free to health authorities. Two more such plants were built in the Arkansas and Pennsylvania in the US, in under 10 days. INEOS sites in Grangemouth, Scotland and Moers and Herne in Germany and Lavera in southern France have also been running at capacity to produce the IPA and ethanol needed to support the new plants.

Dow has announced four additional global sites for sanitizer production which, including its existing facility in Germany, takes expected production to more than 200 metric tons. Again, the sanitizer will be free of charge to health authorities. Dow has also designed simplified and lightweight face shields, and is producing 100,000 such units for donation to hospitals in Michigan, US.

There are many examples where our industry, like humankind, has come together, stepped up and pivoted to support our fight against Covid-19.

The industry has, and will, play a significant role in this crisis, its prevention and the recovery. ExxonMobil, Oleon, MOL, Shell, Cropenergies, Huntsman, LyondellBasell, BASF, Arkema, Perstorp, Indorama, PTT Global Chemical, SABIC, Unica, VCI and many others, have all responded in a huge global effort to support the fight against the virus.

The response from the chemical industry to this global crisis is not surprising. The industry has long stood as a major contributor to global GDP and a game changer in human history.

Innovation continues to evolve to improve and save lives, and enable critical technologies. Chemicals have helped deliver low and zero fat foods; make water safe; create new materials that are stronger, lighter and safer for electric vehicles; enabled more efficient aircraft and increased crop yields.

Indeed, almost every industry relies on chemicals for some part of its production processes. Its work today has focused on supporting growth and addressing sustainability challenges.

On 19 March, the US Department of Homeland Security (DHS) identified the chemical industry and its workers as “Essential Critical Infrastructure” – an industry sector critical to public health and safety, economic and national security. The DHS noted to the chemical industry that there is “a special responsibility to maintain your work schedule”, while following CDC (Centers for Disease Control and Prevention) workforce and customer protection guidance.

As the industry continues to pivot its production capacity in response to Covid-19, it is doing so in a market landscape in which chemical prices due to the virus have plummeted.

Alongside cleaning and sanitizing products, polyethylene (PE) for food packaging and polypropylene (PP) for PPE are crucial in disease prevention. Although critical to the Covid-19 response, demand and pricing for these materials have also slumped on weakness in automotive, construction and consumer durables.

For an industry born out of innovation and pivotal to modern society, however, the chemical industry will remain strong. The effects of the Coronavirus pandemic will certainly echo through many industries and their supply chains, providing an opportunity to learn and most likely change the way they work in the future.

Under the pressures which a crisis brings, organisations will have to find better and new ways of doing old things, summoning creativity to adapt to a new normal with the conditions and opportunities this brings.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

MRC

MOSCOW (MRC) -- Bayport Polymers LLC (Baystar), the joint venture Total and Borealis, announced a 4 cents/lb price increase for all PE resins effective June 1, said S&P Global.

Baystar now is building a 625,000 mt/year HDPE plant along the Houston Ship Channel.

The state-of-the-art Borstar technology, which will be used in North America for the first time, will allow Baystar to produce enhanced polyethylene products for the most demanding applications. Approximately 1,750 jobs will be created during the peak engineering and construction activity.

Baystar is also building a one-million-ton per year steam cracker in Port Arthur, Texas. The new cracker will process ethane, which is abundantly available and competitively priced in the U.S., and will supply feedstock for its existing 400,000-ton-per-year polyethylene units as well as the new Borstar polyethylene unit in Pasadena.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim.

Total and NOVA Chemicals are founding members of the Alliance to End Plastic Waste, an alliance of nearly 30 companies from the plastics and consumer goods value chain committed to advance solutions to help end plastic waste in the environment, especially in the ocean. Borealis is a founding member of Project STOP, an initiative that aims to eliminate the leakage of plastics into the environment.
MRC

MOSCOW (MRC) -- Imports of expandable polystyrene (EPS) into Belarus rose in the first quarter of 2020 by 15% year on year, totalling 2,600 tonnes, according to MRC's DataScope report.

This figure was at 2,300 tonnes in January-March 2019.

March EPS imports into the country fell by almost two times from February to 1,160 tonnes from 650 tonnes. Imports of material into the country were 1,100 tonnes in March 2019.

Russia is the main EPS importer to Belarus.

Imports of Russian material to the Belarusian market rose in the first three months of 2020 by 25% year on year: from 1,390 tonnes in January-March 2019 to 1,740 tonnes. The share of EPS imports from Russia in the total shipments to the country reached 66% in the first quarter of 2020 versus 60% a year earlier. March shipments of Russian EPS to the region were 941 tonnes versus 477 tonnes in February, whereas imports of material were 731 tonnes in March 2019.

At the same time, the share of imports of Chinese material doubled year on year in January-March 2020: from 5% (120 tonnes) to 10% (260 tonnes).

MRC