Covestro issues preliminary earnings forecast, will beat consensus

MOSCOW (MRC) -- Covestro says its forecast preliminary EBITDA for the second quarter will be above market consensus at EUR124 million (USD141 million), with an expected preliminary net loss for the period of EUR60 million also beating consensus, said Chemweek.

Ahead of the scheduled release of its second-quarter and half-year results on 23 July, Covestro says in the course of preparing its half-year report that “preliminary key financial data deviate from capital market expectations.” The market expectations are based on the latest consensus estimates of financial analysts provided by Vara Research, it says.

Covestro’s estimate of a preliminary net loss of EUR60 million for the quarter compares to a steeper estimated consensus loss of EUR107 million, while its forecast EBITDA of EUR124 million compares to a lower consensus estimate of €80 million, according to the company. Preliminary sales are forecast by Covestro to come in lower than the consensus estimate of EUR2.22 billion at EUR2.16 billion, it says.

Preliminary sales volumes were down 22% in the quarter, with consensus putting the decline at 22.5%. In April Covestro reported a fall of almost 90% year on year in its first-quarter net income to EUR20 million on sales that declined more than 12% to EUR2.8 billion, with all business segments hit hard by the COVID-19 pandemic and lower selling prices. Last month it also placed a Eurobond with a total volume of EUR1.00 billion in the capital markets, the proceeds of which would be used to strengthen the company’s liquidity in the current macroeconomic environment. In May it announced it was reducing working hours in Germany and cutting salaries of all employees for six months starting 1 June in response to the pandemic and the decline in consumer demand.

As MRC informed earlier, Covestro has closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

According to MRC's ScanPlast report, Russiaэы total estimated consumption of PC granules for the four months of 2020 (excluding imports and exports to Belarus) amounted to 30.5 thousand tons, which is 20% higher than last year (25.3 thousand tons).

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc. With 2018 sales of EUR 14.6 billion, Covestro has 30 production sites worldwide and employs approximately 16,800 people (calculated as full-time equivalents) at the end of 2018.

Marathon Petroleum halts projects at St. Paul Park refinery until next year

MOSCOW (MRC) -- US refiner Marathon Petroleum Corp is delaying all maintenance projects at its 102,000 barrel-per-day St. Paul Park, Minnesota, refinery for 2020, reported Reuters with reference to a source familiar with the matter, amid concerns related to the spread of the novel coronavirus.

Several refiners have delayed planned maintenance at their plants this year due to concerns around the spread of the coronavirus among workers, or as part of capital and operational expense cuts.

Contractors that work on a wide range of projects for the refinery were told they would not resume until next year, according to the source. Planned work included maintenance on a crude unit in September, according to Industrial Info Resources (IIR), which tracks refinery work and interruptions.

Marathon declined to comment.

Depending on the size of a project, refinery maintenance can require thousands of contract workers working for several weeks or months to carry out upgrades and maintenance at a plant.

Social distancing guidelines can be difficult to abide by while conducting such work, according to refiners.

The St. Paul Park refinery is operating at lower rates amid reduced demand for refined products resulting from the coronavirus pandemic, according to IIR.

Marathon Petroleum said in May that it would cut capital spending by approximately 30% and expected operating costs to be lower by USD950 million.

Net loss attributable to Marathon was USD9.2 billion in the first quarter of 2020, as it booked USD12.4 billion in charges related to inventory writedowns and goodwill impairment.

As MRC wrote previously, Marathon Petroleum Corp idled its 166,000 barrel-per-day (bpd)refinery in Martinez, California beginning April 27 in response to the coronavirus pandemic’s hit to demand for refined products.

Meanwhile, Marathon Petroleum Corp plans to operate the gasoline-producing fluidic catalytic cracker (FCC) at its 585,000 barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas. The 140,000 bpd FCC restarted on Sunday, 12 April, after repairs following a March 23 brief power outage that shut the unit.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.

Shell weighs sale of refinery

MOSCOW (MRC) -- Royal Dutch Shell Plc is weighing the sale of its 211,146 barrel-per-day (bpd) Convent, Louisiana, refinery, said Hydrocarbonprocessing.

Robin Mooldijk, Shell’s executive vice president of manufacturing, told employees in an internal message about the possible sale of the refinery, located 58 miles (93 km) west of New Orleans, according to sources familiar with plant operations. Shell took sole ownership of the refinery on May 1, 2017, when Motiva Enterprises became a wholly-owned subsidiary of Saudi Aramco. Motiva had been a joint-venture between the two companies for 15 years.

Shell spokesman Curtis Smith said the possible sale was part of the company’s plan announced in 2019 to structure its operations to match the future market for downstream products. "The remaining core sites will be advantaged by way of increased integration with Shell trading hubs and by producing more chemicals and related products expected to be resilient in a low-carbon future," Smith said in an email.

Shell has not announced consideration of a possible sale of its 227,400 bpd Norco, Louisiana, refinery which produces motor fuels and also supplies feedstocks to the company’s adjoining chemical plant. Along with the refinery, Shell plans to sell “its associated co-located logistics infrastructure - the products truck terminal, marine docks, Sorrento, Louisiana, salt cavern LPG storage, and line history rights for Bengal Pipeline,” Smith said.

In February, Shell sold its 156,400 bpd Martinez, California, refinery and logistics assets to PBF Energy for USD960 million plus the price for oil and refined products on hand. That would set the pre-pandemic price for refining assets at about USd6,000 a barrel.

Because of reduced travel caused by the COVID-19 pandemic, U.S. refinery utilization fell to 68% of 19 million bpd in April. Utilization rose to 75.5% by the last week of June.

As MRC informed earlier, Royal Dutch Shell Plc restarted the reformer and hydrocracker at its 227,400-barrel-per-day (bpd) Norco, Louisiana, refinery, sources familiar with plant operations said. The 40,000-bpd reformer restarted on Sunday after a month-long overhaul, the sources said. The 40,000-bpd hydrocracker restarted on Monday after tripping out of operation due to a brief furnace malfunction.

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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.

COVID-19 - News digest as of 09.07.2020

1. Iran oil storage almost full as sanctions and pandemic weigh

MOSCOW (MRC) -- Iran has slashed crude oil production to its lowest level in four decades as storage tanks and vessels are almost completely full due to a fall in exports and refinery run cuts caused by the coronavirus pandemic, industry data showed, said Hydrocarbonprocessing. Total onshore crude stocks surged to 54 million barrels in April from 15 million barrels in January, and swelled further to 63 million barrels in June, according to FGE Energy. Market intelligence firm Kpler estimated Iranian average onshore crude storage for June to be around 66 million barrels.


Overheated Mediterranean oil market cools as refiners seek other grades

MOSCOW (MRC) -- Premiums for Mediterranean oil grades over dated Brent have eased in the past few days as European refiners turn to cheaper alternatives to Russian Urals and other crudes, said Hydrocarbonprocessing.

The price differential for Russia’s Urals oil surged well above USD2 per barrel a week ago after the loading plan for July showed a 45% fall in exports from Baltic ports from June, but has pulled back significantly since then. Urals crude oil premiums eased to below USD1.50 per barrel on average this week in northwest Europe - down some 80 cents per barrel from a week ago, Refinitiv Eikon data showed.

Cargoes with prompt loading dates traded at a premium below USD1 per barrel, market participants said. “Sellers noticed refiners were well-prepared to leave the Russian grade aside, so they had to either limit their appetite or stay with unsold barrels," a source with an international trading firm said.

European refiners expected Urals oil loadings to be low in July after a surge in Russian gasoline demand in June prompted producers to feed the domestic market. Exports have also been curbed by an OPEC+ output pact. Refiners turned to alternatives available in the market - mostly U.S. oil, which remains relatively cheap, and Nigerian and Angolan crude, two traders said.

"We’ve seen sour refineries taking sweet barrels instead as it’s cheaper now," a trader in European market said. Caspian grades, Kazakhstan’s CPC Blend and Azerbaijan’s Azeri BTC have also dipped against dated Brent from recent multi-year records.

CPC Blend eased by USD1 per barrel this week, while Azeri BTC is down by some 70 cents per barrel, according to Refinitiv Eikon data. "The market got overheated after the quick transition from oil flood to supply deficit,” a trader with refiner in Mediterranean market said. “Now it’s trying to find a balance."

As MRC informed before, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We remind that in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.