Tronox turns in USD4 million loss on sharp decline in volume

MOSCOW (MRC) -- Tronox reports a second-quarter loss of USD4 million, up from a loss of USD55 million in the year-ago period. Revenue totaled USD578 million, down 27% year-over-year from USD791 million, reported Chemweek.

Adjusted earnings per share of 3 cents beat the average analyst estimate of 2 cents as compiled by Refinitiv (New York).

Including the contribution of Cristal, which was acquired in April 2019, pro forma net income in the year-ago period was USD32 million and revenue totaled USD827 million.

"Tronox delivered solid financial results in the quarter despite the significant reduction in demand and other challenges associated with the COVID-19 pandemic,” says Jeffry N. Quinn, chairman and CEO. “Our results were consistent with the outlook provided at the time of our first quarter earnings release. TiO2 volumes declined 19% quarter-over-quarter, and TiO2 pricing was sequentially flat. Zircon sales volumes and price were both up by 2% sequentially owing to shipment timing and favorable product mix.”

Adjusted EBITDA came to USD142 million, and the adjusted EBITDA margin was 25%.

"As we look to the third quarter, we are encouraged by the momentum carried forward from June, the strongest month of the second quarter. While the timing of re-opening of economies across the globe remains uncertain and subject to week-by-week developments, as of today, we anticipate TiO2 volumes to continue to improve in the third quarter relative to the second quarter and for the zircon market to remain relatively stable as compared to the last several quarters.”

As MRC informed before, in late March, 2020, Tronox Holdings provided an investor update in light of the current global pandemic, to emphasize the strength of the company's cash flow, balance sheet, and sources of liquidity. The first quarter was expected to close better than anticipated, due to positive market trends and developments thus far in 2020. The company anticipated adjusted EBITDA in the first quarter to reach USD160–170 million, adjusted earnings per share of USD0.10–0.18, and revenue of USD700–730 million.

We remind that Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six 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-June. June production of polymers in primary form fell to 791,000 tonnes from 820,000 tonnes in May partially because of a scheduled shutdown for maintenance at ZapSibNeftekhim. Output of polymers in primary form totalled 4,900,000 tonnes over the stated period, up by 14.8% year on year.

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

PVC imports to Ukraine down by 14% in Jan-Jul 2020, exports up by 14%

MOSCOW (MRC) -- Imports of suspension polyvinyl chloride (SPVC) into Ukraine decreased in the first seven months of 2020 by 14% year on year to about 23,000 tonnes. Sales of Ukrainian PVC to foreign markets rose by 14% year on year, according to MRC's DataScope report.


Last month's SPVC imports to the Ukrainian market dropped to 1,700 tonnes from 3,500 tonnes in June, the introduction of an 18% import duty significantly affected purchasing in foreign markets. Overall imports of suspension reached 23,000 tonnes in January-July 2020, compared to 26,900 tonnes a year earlier. The high level of capacity utilisation even amid strong demand from the domestic market allowed the Ukrainian producer to increase its exports.

European producers with the share of about 82% of the total imports over the stated period were the key suppliers of resin to the Ukrainian market. Producers from the USA with the share of about 16% were the second largest suppliers.


Karpatneftekhim was forced to reduce its export sales last month because of stronger demand from the domestic market, export sales of Ukrainian resin were 2,600 tonnes versus 12,700 tonnes in June. Overall, about 105,000 tonnes of PVC were shipped for export in January-July 2020, compared to 92,400 tonnes a year earlier.

MRC

US EPA receives recommendations on retroactive biofuel waivers

MOSCOW (MRC) -- The U.S. Department of Energy has finished reviewing retroactive requests from refiners for exemptions from the nation’s biofuel blending laws and has sent recommendations on how to address those requests to the Environmental Protection Agency, Senator Chuck Grassley said, as per Hydrocarbonprocessing.

The EPA now has 90 days to review the recommendations, said Grassley, a senator from Iowa, the top ethanol-producing state. The agency will consider 58 pending requests for compliance years 2011 through 2018, EPA data showed.

Under the U.S. Renewable Fuel Standard (RFS), oil refiners must blend billions of gallons of biofuels into their fuel, or buy credits from those that do. Small refiners that prove the rules would financially harm them can apply for exemptions.

The EPA is in charge of granting exemptions, after the Energy Department reviews applications and makes recommendations. EPA did not immediately provide comment.

The pending applications for blending exemptions would help bring oil refiners into compliance with a court ruling this year that had cast doubt over the EPA’s waiver program.

In January, the Denver-based 10th U.S. Circuit Court of Appeals ruled that waivers granted to small refineries after 2010 had to take the form of an “extension.” Most of the recipients of waivers in recent years have not continuously received them each year since 2010.

The waivers are controversial, as biofuel advocates say they hurt demand for corn-based ethanol, while the oil industry disputes that, and says blending requirements are too expensive.

As MRC informed earlier, The U.S. Environmental Protection Agency has proposed lifting the amount of biofuels that refiners must blend into their fuel next year to 20.17 billion gallons, from 20.09 billion this year, according to two sources familiar with the details of an agency draft proposal.

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 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.
MRC

BASF invests to boost alkoxylate capacity in Asia Pacific

MOSCOW (MRC) -- BASF will increase its alkoxylate capacity in Asia Pacific, with its latest investment in Jinshan, China, as per the company's press release.

The company has acquired land, buildings and assets of SPC, related to alkoxylates production, adjoining the BASF Jinshan site, in order to fulfil the growing demand from customers across Asia Pacific, especially China. With the current alkoxylate line in the Care Chemicals Jinshan plant running at full capacity, this acquisition will help double the capacity at Jinshan from end 2020.

“This investment reinforces BASF’s commitment to China and makes Jinshan a significant production base for a range of products across the Care Chemicals portfolio in the region,” said Dr. Stephan Kothrade, President and Chairman Greater China, BASF.

“Expanding production capabilities in Asia to support our customers’ growth is a key pillar of our business strategy. We see multiple positive implications with this investment in Asia, including enhancing our supply chain to serve our customers more efficiently, establishing a stronger base for our innovate-to-market approach and providing future expansion possibilities on the site,” said Dr. Rajan Venkatesh, Senior Vice President, Care Chemicals, BASF Asia Pacific.

“We are seeing a rising demand for high-quality alkoxylates in the Asia Pacific market, especially in China. This strategic expansion will double our alkoxylates capacities in Jinshan and increase our overall capacity in Asia Pacific. We will focus on maximizing synergies between the existing and new operations and supporting the growth of our customers and the market,” said Dr. Jianwen Mao, Vice President, Business Management Greater China, Home Care, Industrial & Institutional, and Industrial Formulators, Care Chemicals, BASF Asia Pacific.

Alkoxylation technology is used in the manufacture of surfactants that are employed in a wide range of industry segments, including home care, formulations for laundry detergents, surface cleaners and dishwasher detergents, personal care, industrial and institutional cleaning applications as well as industrial formulations like in raw materials for the manufacture of plasticizers, emulsifiers for emulsion polymerization, crop protection additives, and polyurethane foams for the rubber industry.

As MRC wrote before, BASF-YPC, a 50-50 joint venture of BASF and Sinopec, undertook a planned shutdown at its naphtha cracker on 30 April 2020. The company initially planned to start turnaround at the cracker on April 5, 2020. The plant remained under maintenance unitl 18 June, 2020. Located in Jiangsu, China, the cracker has an ethylene capacity of 750,000 mt/year and propylene capacity of 400,000 mt/year.

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.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of EUR59 billion in 2019.
MRC

Crude oil futures edge higher on US jobs report; Iraq's compensation cuts

MOSCOW (MRC) -- Crude oil futures were marginally higher in mid-morning Asian trade Aug. 7 as optimism over a better-than-expected US jobs report and pledged compensation cuts by Iraq buoyed the market despite the growing COVID-19 case counts worldwide, reported S&P Global.

At 10:25 am Singapore time (0225 GMT), the ICE Brent October crude futures was up 6 cents/b (0.09%) from the August 6 settle at USD45.15/b, while NYMEX September light sweet crude contract was up by 4 cents/b (0.1%) at USD41.99/b.

The global crude complex found strong support this week on the back of a larger-than-expected 7.37 million barrels drawdown in US commercial crude inventories as well as improvement in US factory orders for June and manufacturing PMIs in July.

This slew of positive economic data allowed the Brent marker to break out of its USD45/b resistance level, while WTI was also able to settle above USD42/b.

Further support was extended to the market over the state of the US economy after US initial jobless claims for the week ended Aug. 1 was reported at 1.186 million, lower than analysts' expectations of around 1.4 million and the 1.435 million figure reported in the previous week, US Labor Department data released on Aug. 6 showed.

This snapped a two-week uptrend of rising claims that had sown doubt regarding the strength of the US economic recovery. Investors will be looking to fresh cues from the official US non-farm payroll data for July due later today.

Meanwhile, Iraq had pledged to cut an extra 400,000 b/d in August to compensate for overproduction in the previous three months, as it tries to meet quotas under the OPEC+ supply agreement, S&P Global Platts reported earlier. This is positive for the global supply and demand fundamentals, especially as the group had begun to ease their output curbs to 7.7 million b/d in August.

However, the rapidly rising number of COVID-19 case counts worldwide continued to weigh heavily on market sentiments, capping further gains in the global crude complex. Global COVID-19 cases stand at 18,986,629, on track to breach the 19 million mark, latest data from John Hopkins University showed.

The number of daily infections worldwide had also climbed back up to 271,164 on Aug. 5, after four consecutive day of declines that culminated in a 3-week low of 202,486 cases on Aug 3.

Furthermore, rising geopolitical tensions between US and China remains a key concern.

"Given Asia's traders unfortunate predisposition to US-China tensions ahead of the August 15 trade talks, I expect Asia oil market activity, barring a big headline, could remain muted as it has been the past few days, but even more so ahead of the US Non-Farm Payroll report," Stephen Innes, chief global markets analyst at AxiCorp, said in a note Aug. 7.

As MRC informed before, US crude oil inventories moved sharply lower during the week ended July 24 as exports and refinery demand climbed to multi-month highs, US Energy Information Administration data showed July 29. Commercial crude stocks fell 10.61 million barrels to 525.97 million barrels that week, EIA data showed. While the draw pushed stockpiles to 14-week lows, they remained more than 17% above the five-year average for this time of year.

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