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MOSCOW (MRC) -- Sika (Baar, Switzerland) reports a fall of 7.6% in net profit in the first half of 2020, to 275.6 million Swiss Francs (USD297.1 million) compared with SFr330.7 million in the same period of the year before, reported Chemweek.
This is mainly attributed to the adverse impact of COVID-19 on sales, Sika says. Revenue declined 3.2% year on year (YOY), to SFr3.61 billion, due to the effect of lockdown measures on demand, the company says. The acquisition of Parex in 2019 had a positive effect on sales, amounting to 13.4%, Sika says. Second-quarter figures have not been disclosed.
EBITDA and EBIT decreased 4.8% and 14.8% YOY, respectively, due to a negative operating leverage in March-May, initial expenses in connection with structural adjustments and efficiency measures, integration costs in connection with the acquisition of Parex, and strongly negative currency effects, Sika says.
In the EMEA region, Sika's sales of SFr1.58 billion compared with SFr1.62 billion in the first half of 2019, with Central Europe the area affected most by measures against COVID-19, the company says. In the Americas, sales went down to SFr942 million from SFr986.7 million in the prior-year period, mainly due to the impact of COVID-19 on the construction sector in the US, Sika says. However, the company’s sales in the APAC region went up to SFr746.7 million, due mainly to China’s economy recovering after the first quarter, it says. In the rest of the world, Sika’s sales were 28.5% lower YOY, at SFr341.7 million.
“Around 35 of the 100 countries Sika is present in experienced a full lockdown for about two months in the first half of the year, and the rest of our countries have been strongly impacted by the pandemic. With our local management structure in place, we quickly adapted globally to the changing market conditions in the respective countries. We swiftly implemented the necessary measures to protect our employees, customers, and suppliers, whilst simultaneously maintaining our supply chain and business activities with a focus on consistent cost management,” says Paul Schuler, CEO at Sika.
The company’s “strong focus on liquidity and cash management resulted in a high operating free cash flow of SFr254.7 million," which exceeded the year-earlier figure by SFr75 million, Sika says. “Key drivers of this were an optimized inventory management, a focus on accounts receivables, and reduced capital expenditures,” the company says.
For the second half of the year, Sika expects more favorable market conditions that should lead to higher sales volumes. The company saw an improvement in sales in June, due to the construction industry reopening and returning gradually to normality. The company also anticipates an over-proportional EBIT increase in the second half.
Sika has confirmed its targets for 2023. It is seeking to grow 6%–8%/year in local currencies in this period. It is also aiming for an EBIT margin of 15%–18% from 2021 onward. Projects in the areas of operations, logistics, procurement, and product formulation should result in an annualized improvement in operating costs equivalent to 0.5% of sales, Sika says.
As MRC reported earlier, in August 2015, Swiss specialty chemicals company Sika opened its forth production site in Russia. A new mortar factory and a plant to produce concrete admixtures were opened in Volgograd, in southern Russia. Thus, at the existing site in Lobnya, 30 km north of Moscow, a new production facility, which manufactures polymers for concrete admixtures, came on stream.
According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Sika is a specialty chemicals company with a leading position in the development and production of systems and products for bonding, sealing, damping, reinforcing, and protecting in the building sector and motor vehicle industry. Sika has subsidiaries in 101 countries around the world and manufactures in over 200 factories. Its more than 20,000 employees generated annual sales of CHF 7.09 billion in 2018.
MRC
Sika earnings fall as lockdown squeezes sales
Lotte Chemical to resume operations at its Daesan cracker in mid-November
MOSCOW (MRC) -- South Korea’s Lotte Chemical has delayed the restart of its fire-hit naphtha-fed steam cracker in Daesan for the second time to mid-November, from October, reported S&P Global.
It had initially planned to restart the cracker in September.
"The restart has been moved back to mid-November, but could be delayed again," a company source told S&P Global Platts. Lotte Chemical has plans for the cracker to operate as per normal by the end of 2020.
As MRC wrote before, the cracker was shut on March 4 following an explosion, which injured more than 30 people.
Lotte Chemical has two steam crackers. The company's other steam cracker in Yeosu is currently running at more than 100% of capacity due to positive petrochemical margins.
The company last purchased 50,000 mt of naphtha for H2 August delivery to its Yeosu steam cracker, at a premium of around USD21/mt to the Mean of Platts Japan naphtha assessments, CFR, pricing 30 days prior to delivery.
The steam cracker in Daesan has a production capacity of 1.1 million mt/year of ethylene, 550,000 mt/year of propylene and 150,000 mt/year of butadiene, while the Yeosu steam cracker is able to produce 1.18 million mt/year of ethylene, 550,000 mt/year of propylene and 130,000 mt/year of butadiene.
We remind that Lotte Chemical shut down its Deasan cracker for maintenance turnaround on October 14, 2019. The cracker resumed production on November 10, 2019.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Lotte Chemical runs two naphtha crackers in South Korea. One cracker is located in Daesan county in Seosan which can produce 1.1 million tonnes per year of ethylene with the other 1.2 million tonnes per year cracker in the southwestern city of Yeosu.
MRC
PE production in Russia up by 56% in H1 2020
June PE production in Russia was 210,500 tonnes, whereas this figure was 259,100 tonnes a month earlier, output of high density polyethylene (HDPE) at the facilities of Zapsibneftekhim and Kazanorgsintez decreased. Thus, overall PE production reached 1,463,000 tonnes in January-June 2020, compared to 938,900 tonnes a year earlier. Production of all PE grades rose, but LLDPE accounted for the greatest increase, which was provided by ZapSibNeftekhim.
The structure of PE output by grades looked the following way over the stated period.
June HDPE production fell to 114,400 tonnes against 176,400 tonnes a month earlier, Kazanorgsintez reduced the capacity utilisation, and Zapsibneftekhim also shut its facilities for scheduled maintenances. Russian plants' overall HDPE output reached 892,800 tonnes in January-June 2020, up by 84% year on year.
Last month's total low density polyethylene (LDPE) production increased to 58,600 tonnes from 48,200 tonnes in May, Kazanorgsintez and Tomskneftekhim increased their output. Thus, overall production of this PE grade totalled 338,600 tonnes over the stated period, up by 3% year on year.
June LLDPE production rose to 37,400 tonnes from 34,500 tonnes a month earlier, ZapSibNeftekhim and Kazanorgsintez increased its capacity utilisation. Overall LLDPE output rose to 231,000 tonnes in the first six months of 2020 from 122,100 tonnes a year earlier.
MRC
US refiners ramp up crude imports from Mexico to 8-year high
MOSCOW (MRC) -- US crude oil imports from Mexico surged to the highest level in more than eight years in the second week of July as swelling inventories and a fire at the Latin American country’s largest refinery in late June led it to offload more barrels, reported Reuters.
US buyers boosted their purchases by 834,000 barrels per day (bpd) to about 1.3 million bpd in the week to July 3, the highest since February 2012, according to the Energy Information Administration. The surge helped send U.S. net imports last week to the highest since August 2019.
US Gulf Coast refiners including Lyondell Basell Industries’ Houston refinery, Valero Energy Corp , Shell and Marathon Petroleum Corp were among the buyers in recent weeks, according to market sources and Refinitiv Eikon data.
The crude was delivered to 10 different terminals, according to vessel-tracking firm ClipperData, with more than half the volumes going to Shell’s Deer Park and Valero’s Port Arthur refineries.
Lyondell Basell and Shell declined to comment. Valero and Marathon Petroleum did not immediately respond to requests for comment.
Mexico had an outage at the Salina Cruz refinery in late June after tremors from an earthquake caused a fire that led to the brief shuttering of the installation.
The country has resisted deep output cuts in the wake of a plunge in global oil demand due to the coronavirus pandemic. Mexico agreed at OPEC+ meetings earlier this year to cut 100,000 barrels per day of the 1.75 million bpd it pumps for a two-month period, far less than the 25% reduction from other members.
“Without the production cuts, they have extra to sell. Remember, they only cut 100,000 bpd for May and June. Now they can make as much as they want,” one trader who purchases crude from Mexico said.
Demand to book Aframax tankers from the East Coast of Mexico to the US Gulf remains busy, shipbrokers said, with companies including commodities merchant Vitol looking to book cargoes loading in mid-July.
Houston Refining, CNR and Marathon have provisionally chartered Aframax vessels this week to load Mexican crude next week, data showed. Freight rates for Aframax vessels are lower, helping to open up the arbitrage, one shipbroker said.
As MRC reported previously, Royal Dutch Shell Plc plans to idle a sulfur recovery unit (SRU) at the joint-venture Deer Park, Texas, refinery in 2021, said Shell spokesman Curtis Smith in July 2020. Currently, the refinery is operating at about 75% of its 318,000 barrel-per-day capacity because of reduced demand due to the COVID-19 pandemic.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC
Crude oil climbs as demand outlook firm amid slowing virus spread, EU stimulus
MOSCOW (MRC) -- Oil futures settled at four-month highs July 21 as positive COVID-19 vaccine news and the passage of a European stimulus package boosted demand outlooks, reported S&P Global.
NYMEX August WTI was up USD1.15 at market close to settle at USD41.96/b and ICE September Brent climbed USD1.04 on the day to finish at USD44.32/b.
Front-month ICE Brent last settled higher on March 6 while front-month WTI was strongest since March 5.
"Crude prices are surging after both EU leaders wrapped up a landmark rescue fund and as the US seems to be getting a handle of the coronavirus spread," OANDA senior market analyst Edward Moya said. "Oil is tentatively breaking out of its tight trading range, but still seems to lack a strong enough catalyst for WTI crude to break above the USD45 level."
Oil prices climbed overnight after European Union leaders announced a Eur750 billion stimulus package aimed at offsetting the economic impact of the coronavirus crisis. The stimulus report came on the heels of reports on July 20 that a vaccine jointly developed by British drugmaker AstraZeneca and Oxford University has been shown to lower immune responses with minimal side effects.
While the positive headlines regarding vaccine treatments was bullish for forward demand outlooks, there are signs that the recent resurgence in COVID-19 has begun to fade.
The number of new COVID-19 infections reported daily in the US has steadily declined since a July 16 peak of nearly 76,000, according to New York Times data. On July 20, the seven-day moving average of new cases declined for the first time since early June. Worldwide, daily new infections has dropped for four consecutive days from a record high of 252,500 on July 16 to 214,600 on July 19, latest data from John Hopkins University showed.
Second-month WTI futures settled at a 4 cents/b premium to the front-month contract, marking the first time prompt month futures have been in backwardation since mid-May.
Energy prices were also supported by a weaker US dollar. Front-month ICE US Dollar Index futures fell to 95.145 in afternoon trading, the weakest since March 9. Oil prices and the US dollar are typically inversely correlated.
Refined product futures moved sharply higher on the day. NYMEX August RBOB settled 5.12 cents higher at USD1.2797/gal and August ULSD was up 4.45 cents at USD1.2800/gal.
As MRC informed previously, 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.
And 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC