MOSCOW (MRC) -- SIBUR Holding (Moscow), Russia’s largest integrated petrochemicals company, today announced that Fitch and Moody's rating agencies have affirmed its long-term issuer default ratings at investment grade BBB- and Baa3, with a stable outlook, said Chemweek.
This means that the company now enjoys investment grade credit ratings from all three key rating agencies.
In its rating commentary, Fitch notes that a stable outlook for the company reflects the higher utilization rate at its recently built ZapSibNeftekhim complex at Tobolsk, Russia, a fall in 2020–2021 capital expenditure due to the completion of large investments, and overall economic recovery after the downturn caused by the coronavirus pandemic.
The agency’s expectation is that in 2020 a slump in demand for Sibur’s key products--polypropylene and polyethylene--will not be as heavy as the global GDP decline, and over a longer horizon, demand for these products will keep growing above the global GDP growth rate.
Moody's expects SIBUR to be in a sufficiently strong position going forward thanks to its business resilience, an accumulated liquidity cushion, and successful completion of the active investment phase early in 2020, which will help drive its EBITDA growth.
"We have consistently focused on transforming Sibur into a highly resilient business prepared to navigate the uncertainty in global markets. The polymer capacities of our recently completed ZapSibNeftekhim project already contribute to EBITDA generation and help us to offset negative effects thanks to higher internal consumption of gas processing products and increased polymer output,” said Alexander Petrov, Sibur CFO. During the pandemic, Sibur has maintained utilization rates at all key production facilities by redirecting output to alternative markets, achieving significant cost optimization, and increasing liquidity reserves. “Our affirmed investment-grade ratings reflect the fundamental resilience of Sibur’s business and our commitment to stringent financial discipline," Petrov said.
As MRC informed earlier, in February 2020, Linde PLC recieved a contract to provide technology for PJSC SIBUR Holding’s cracker at Amur gas chemical complex (GCC). GCC is an integrated 1.5 million tons per year polyethylene and polypropylene production complex to be built near Svobodny in Russia’s far-east Amur region. The contract was awarded to Linde under a consortium with SIBUR subsidiary and project contractor NIPIgazpererabota (Nipigaz).
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.
SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.