UK car industry calls for support package, warns on risks of no-deal Brexit

MOSCOW (MRC) -- The UK auto industry has called for a dedicated restart package to help protect jobs, citing a survey showing that up to one in six jobs in the sector are at risk of redundancy, said S&P Global.

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"More than 6,000 UK automotive job cuts have been announced in June, a result of global lockdowns, closed markets and shuttered plants," the Society of Motor Manufacturer and Traders said June 23.

SMMT carried out a member survey this month which garnered 290 responses delivering 239 individual company responses, representing a combined GBP77 billion ($96 billion) turnover and 148,917 permanent employees.

While showrooms in England and Wales are now reopening and production lines restarting, reduced demand and social distancing are slowing productivity, the group said. "With a third of automotive workers still furloughed, the end of the government's job retention lifeline in November highlights the critical need for a dedicated restart support package to safeguard these jobs," SMMT said.

SMMT is calling on the government to launch a support package for the automotive sector, citing potential measures such as unfettered access to emergency funding, permanent short-time working, business rate holidays, VAT cuts and policies that boost consumer confidence.

"The prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid," said Mike Hawes, SMMT's chief executive, in a statement. "Government's intervention has been unprecedented. But the job isn't done yet. Just as we have seen in other countries, we need a package of support to restart; to build demand, volumes and growth," he added.

The threat to jobs is exacerbated by the prospect of a "no-deal" Brexit, SMMT warned. The UK government confirmed earlier this month it would not seek an extension to the Brexit transition period, which ends in December opening up the prospect of the UK leaving the EU without a trade deal in place if negotiations in the interim are unsuccessful.

The impact of the coronavirus pandemic on manufacturing is expected to cut annual UK car and light commercial vehicle production volumes by a third to 920,000 units this year, SMMT said. "With an ambitious, tariff-free FTA [free trade agreement] in place, full recovery is expected to take up to five years, with output reaching pre-crisis levels of 1.35 million units by 2025," the group said.

But, it added, "a 'no-deal' scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 -- the lowest level since 1953." This would mean a GBP40 billion cut in revenues, on top of the GBP33.5 billion cost of COVID-19 production losses over the period, SMMT said.

"COVID has consumed every inch of capability and capacity and the industry has not the resource, the time nor the clarity to prepare for a further shock of a hard Brexit," Hawes said. "That's why we do need to 'turbo charge' the negotiations to secure a comprehensive free trade agreement with the EU that maintains tariff- and quota-free trade," he added.

As MRC imformed earlier, Russia's output of chemical products rose by 4.4% year on year in May 2020 . Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May.

Production of benzene was 110,000 tonnes in May 2020, which equalled the figure a month earlier. Overall output of this product reached 615,000 tonnes over the stated period, up by 1.7% year on year.


Saudi Aramco expects SABIC acquisition to accelerate its downstream strategy

MOSCOW (MRC) -- Saudi Aramco’s acquisition of petrochemical maker SABIC will accelerate the company’s downstream strategy and transform it into a global petrochemical player, reported Reuters with reference to an official of the state oil giant's statement to al-Arabiya TV.

"We expect long-term demand for petrochemicals to grow, with the sector expected to record the fastest growth in oil demand to 2040," said Abdulaziz al-Gudaimi, a senior vice president at Aramco.

As MRC informed earlier, Saudi Aramco on June 17 said it completed the share acquisition of a 70% stake in petrochemicals company Saudi Basic Industries Corporation, or SABIC, from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyal 259.125 billion (USD69.1 billion). However, the transaction terms have been changed to increase the timeline over which Aramco makes the payments by almost three years. An upfront cash payment of 36% of the deal value has also been eliminated from the deal.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Saudi Basic Industries Corporation (Sabic) ranks among the world"s top petrochemical companies. The company is among the world"s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.

Celanese extends carbon monoxide feedstock contract in China

MOSCOW (MRC) -- Celanese Corporation, a global chemical and specialty materials company, announced that its subsidiary, Celanese (Nanjing) Chemical Co. Ltd., has recently extended its long-term contract with Nanjing Chengzhi Clean Energy Co., Ltd for the supply of carbon monoxide to its chemical facility in the Nanjing Chemical Industrial Park, Nanjing City, in eastern China (Jiangsu Province), said the company.

Fiinancial details of the contract were not disclosed. Carbon monoxide is a key feedstock in the production of acetic acid. The extended contract will provide Celanese’s Nanjing facility with an ongoing and reliable supply of carbon monoxide for its 1,200 kiloton acetic acid plant.

"Chengzhi has been a valued partner of Celanese for many years, and this extension will continue to provide Celanese with a flexible and reliable supply of carbon monoxide supporting the acetyl chain in the region,” said John Fotheringham, Celanese Senior Vice President, Acetyls. “I am delighted that our close cooperation with Chengzhi has enabled Celanese to lower its manufacturing cost in China while enhancing our operational flexibility in support of our long-term growth strategy."

With manufacturing and distribution in all regions, Celanese is a leading producer of acetic acid, which is a basic chemical used in paints and coatings, adhesives, plastic bottles, food packaging and construction materials.

As MRC reported earlier, the company last raised its VAM prices for China on 22 May, 2020, by RMB350/mt.

According to MRC's DataScope report, April EVA imports to Russia dropped by 5,85% year on year to 3,050 tonnes from 3,250 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation increased in January-April 2020 by 1,55% year on year to 12,540 tonnes (12,350 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.

Hyundai Motor, LG Chem considering EV battery JV in Indonesia

MOSCOW (MRC) -- Hyundai Motor Group and LG Chem Ltd are considering establishing an electric vehicle (EV) battery manufacturing joint venture in Indonesia, said Chemweek.

The investment size and production capacity have not been decided, the person said, declining to be identified as discussions are private.

Global automakers are moving to secure batteries in anticipation of a rise in EV sales due to government subsidies and quotas designed to cut carbon emissions.

In recent years, LG Chem has set up ventures with General Motors Co and Geely Automobile Holdings Ltd. LG Chem also supplies batteries to automakers including Hyundai and Tesla Inc.

As MRC informed earlier, LG Chem is carrying out emergency inspections at all 40 of its factories worldwide in response to two fatal accidents this month, including a leak of styrene vapour at the LG Polymers India plant in Visakhapatnam that killed at least 12 people. The inspections will be done by internal and external safety experts and will be completed by the end of June. Safety upgrades will be made as needed, but LG said any plants with questionable prospects for being made safe may be closed indefinitely. The company did not indicate if the inspections will disrupt production at the plants.

According to MRC's ScanPlast report, March 2020 estimated consumption of PS and styrene plastics dropped by 2% year on year, totalling 42,130 tonnes. The estimated consumption totalled 121,880 tonnes in the first three months of 2020, down by 2% year on year. Overall, Russian plants produced 42,790 tonnes in March 2020. Overall output of high impact polystyrene (HIPS) and general purpose polystyrene (GPPS) totalled 32,100 tonnes in March 2020. 98,390 tonnes of HIPS and GPPS were produced in January-March 2020. The decrease in Russian plants' output was 3%.

LG Chem Ltd., often referred to as LG Chemical, is the largest Korean chemical company and is headquartered in Seoul, South Korea. According to ICIS report, it is 15th biggest chemical company in the world in 2011. It has eight domestic factories and global network of 29 business locations in 15 countries. LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.

US chemical production down 2.0% in May

MOSCOW (MRC) -- Chemical production in the US fell by 2.0% in May on a three-month moving average (3MMA) basis, the third consecutive month of declines as the COVID-19 pandemic continues to put a dent into demand, reported Chemweek.

The decline softened a bit from April, which saw a 2.7% drop in production. “The lower level of activity is directly related to supply chain disruptions and continued restrictions across much of the country during May,” the American Chemistry Council (ACC) says.

All segments except plastic resins posted production declines in May, according to ACC. Production of some particular materials did increase, however, including products tied to personal protective equipment (PPE) supply chains and disinfectants.

One a year-on-year (YOY) basis, US chemical production fell 6.0% in May, the 12th consecutive month of YOY declines, ACC says.

As MRC reported earlier, Russia's output of chemical products rose in May 2020 by 4.4% year on year. Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May.