Huhtamaki reduced sales in the second quarter by 8%

MOSCOW (MRC) - Finnish company Huhtamaki (Finland), one of the largest European suppliers of food and beverage packaging, reduced sales in the second quarter by 8%, the company said.

Low demand for food packaging in restaurants and cafes during the COVID-19 pandemic affected the company's sales in the second quarter of 2020.

Thus, the sales of the Finnish packaging manufacturer Huhtamaki ("Huhtamaki") in the second quarter of 2020 decreased by 8% - to EUR797 million, as due to the pandemic the demand for its products from restaurants and cafes sharply decreased. The company's profit decreased from EUR53.3 million to EUR46.3 million.

Adjusted earnings before interest and taxes (EBIT) fell 10% to EUR70.1 million. Despite very weak second quarter results, stronger first quarter results helped Huhtamaki end the first half with modest profit growth and only marginal sales decline.

Sales of paper and plastic disposable tableware for restaurants and cafes in the food service segment fell 31% to EUR167.2 million, while adjusted EBIT declined 72% to EUR6.2 million.

In the North American region, also hit by the coronavirus shutdown, sales fell 3% to EUR296.1 million, but adjusted EBIT rose 17% to EUR37.9 million on lower energy, fuel and polymers. Huhmataki noted that demand for finished food packaging in the flexible and woven packaging segments remains robust despite COVID-19.

The company's sales of flexible plastic packaging rose 6% to EUR263.1 million, driven by strong demand in most markets, especially “higher than usual” in Europe. At the same time, Adjusted EBITDA declined 5% to EUR19.1 million due to COVID-19 production interruptions in India and the UAE.

Fiber Packaging sales declined 2% to EUR75.7 million, but adjusted EBIT jumped 12% to EUR8.5 million, driven by higher volume and prices. Earlier it was reported that in December last year Huhtamaki put into operation a new line in the city of Ivanteevka (Moscow region). The commissioning of new equipment is part of an investment project that was presented in November 2018 and valued at USD7 million.

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.

Huhtamaki is a manufacturer of food grade consumer packaging made from paper, molded paper fiber and plastic. The company has 76 factories in the world with more than 16 thousand employees. Since 1994, one of the two Russian factories Huhtamaki has been operating in Ivanteevka for the production of disposable tableware and packaging made of plastic, paper and molded paper fiber for food and eggs. This plant is the largest company in Eastern Europe, as well as the largest producer of egg packaging in Russia and the CIS. The total investment in the plant is EUR125 million. In Russia, "Huhtamaki" has two production sites - in Ivanteevka (Moscow region) and in Alabuga (Tatarstan), where it produces packaging for catering and packaging for eggs.

Teijin Carbon Europe and the UK National Composites Centre strengthen innovation partnership

MOSCOW (MRC) -- Teijin Carbon Europe GmbH, the Teijin Group's carbon fiber business in Europe, has upgraded to Tier 2 membership with the National Composites Centre (NCC) in Bristol, UK as a key part of Teijin’s strategy to support next generation aerospace manufacturing projects, said Jeccomposites.

Teijin originally joined the NCC as an associate member in November 2018. As a global manufacturer of carbon fiber, Teijin Carbon Europe is well placed to support the NCC to advance its materials and manufacturing technologies. Many of their digital automated deposition technologies were funded by the Aerospace Technology Institute (ATI) as part of the NCC iCAP program (Digital Capability Acquisition Program, an investment program for digitalizing composite manufacturing, increasing production rates and quality while improving efficiency and reducing costs), including the Ultra High Rate Deposition Cell, which has two huge industrial robots that automate the aircraft wing production process. The robots measure, cut, lift and place pieces of carbon fiber fabric (‘plies’) with millimetric accuracy – laying 5m wide strips of composite material, up to 20m long, in one precise movement.

This cuts the number of fabric components required from around 100,000 to just 150 and therefore can significantly reduce wing component build time. This has the potential to revolutionize aircraft production and is playing a critical role in the Wing of Tomorrow – a research and development program led by Airbus to deliver the next generation of aircraft wings, which also includes UK-based Tier 1 suppliers GKN Aerospace and Spirit AeroSystems.

Teijin Carbon Europe looks forward to supporting the NCC and partners on various highperformance aerospace projects as well as contributing to the UK composites community. As a Tier 2 member, the company will provide unique carbon fiber non-crimp fabrics as well as thermoset and thermoplastic prepreg materials for diverse applications in these projects and in other NCC development programs.

Enrique Garcia, Chief Technology Officer at the NCC, commented: "We’re delighted that Teijin are enhancing their membership with the NCC, which will enable us to explore many more opportunities for future collaboration. We have already established a fruitful working relationship with Teijin, who have consistently provided us with materials, so that we can continue to develop new processes and products across all sectors. This strengthened partnership will make a valuable contribution to both the NCC’s and Teijin’s future growth in the composites industry."

As one strategic focus of its medium-term management plan for 2020-2022, the Teijin Group is intensively accelerating its development of mid- to downstream applications for aircraft. Teijin Carbon Europe has already been selected to supply carbon fiber based Non-Crimp Fabric (NCF) to the Wing of Tomorrow project.

Going forward, Teijin intends to further strengthen its carbon fiber and its intermediate material business as a leading solution provider for aircraft applications, targeting annual sales in this field in excess of USD 900 million by around 2030.

As mRC informed earlier, Teijin Chemicals plans to resume production at its polycarbonate (PC) plant in Matsuyama, Japan in early August, after preventive maintenance. Repair work at this enterprise with a capacity of 130,000 tonnes/year began at the end of June.

According to MRC's ScanPlast, the total estimated consumption of PC granulate in Russia in January - May 2020 (excluding imports and exports to Belarus) increased to 38,900 tonnes, an increase of 19% relative to the same period in 2019 (32, 700 tonnes).

Taiyo Petrochemical Co. Ltd. manufactures petrochemical products. In particular, the company manufactures and markets styrene monomer.

Ineos launches consumer healthcare business

MOSCOW (MRC) -- Ineos has launched its previously announced consumer healthcare business, Ineos Hygienics. The new business will produce a range of hospital-grade hand gels, sanitizer sprays for hands and surfaces, and sanitizer wipes for retail sale, available for the home and to the public, said Chemweek.

Ineos Hygienics is headquartered in the UK and operates manufacturing plants at Newton Aycliffe, UK; Herne, Germany; Etain, France; and at Jacksonville, Arkansas, and Neville Island, Pennsylvania.

"To date, we’ve delivered more than four million bottles of sanitizer to hospitals around the world, bringing confidence to thousands of frontline medical staff and care providers,” says George Ratcliffe, chief operating officer at Ineos Hygienics. “Now, we’re able to offer that same level of protection to the public."

Ineos Hygienics will formulate its sanitizers with 75% alcohol as advised by the World Health Organization, the US Food and Drug Administration, and European health services.

As MRC informed earlier, Ineos is enacting a series of ‘social distancing’ measures in order to protect its employees who play a vital role in the production of essential products. Ineos announced a series of measures to protect employees and thereby ensure the continued operation of its plants and businesses through the coming weeks and months. As the manufacturer of essential materials that are vital to life, the company is taking immediate action to limit the spread of the virus.

As MRC informed earlier, 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. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.

MFG Chemical to move headquarters

MOSCOW (MRC) -- MFG Chemical, a global leader in specialty and custom chemical manufacturing, says it is moving its corporate headquarters to Chattanooga, Tennessee from Dalton, Georgia, according to Chemweek.

The move is due to growth at the company, which has created a need for more work space at the headquarters.

MFG’s manufacturing sites at Dalton will continue to operate, with executive, finance, human resources, and sales staff relocating to Chattanooga, which is 25 miles from Dalton.

“MFG Chemical has outgrown its original headquarters in Dalton, Georgia,” says MFG president and CEO Paul Turgeon.

The new headquarters location will be in downtown Chattanooga.

As MRC reported earlier, in October 2019, MFG Chemical successfully renewed its ISO 9001:2015 Certifications at each of its three Dalton, Georgia facilities. MFG was one of the first chemical companies to achieve ISO 9001: 2015 certification in October of 2016, and has now been audited and certified four times.

We remind that MFG Chemical has upgradied its Pasadena, Texas plant, which the company acquired in March 2018. The acquisition of the Pasadena plant, together with the company’s 3 plants in Northwest Georgia, made MFG Chemical one of America’s largest consumers of Maleic Anhydride (MA). Pasadena plant improvements were scheduled for completion by the end of the 1st Quarter of 2019, and entail a multi-million dollar investment.

Maleic anhydride is a feedstock for the production of tetrahydrofuran, tetrahydrophthalic anhydride, films and synthetic fibers, pharmaceuticals, detergents, plasticizers, maleic, succinic, fumaric and malic acids, and a number of agricultural chemicals.

Plasticizers are substances introduced into a polymeric material to make it elastic and plastic during processing and operation. In particular, plasticizers are used for the production of polyvinyl chloride (PVC). The share of plasticizers used for the production of PVC products is about 80%.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia totalled 13,800 tonnes in the first half of 2020, up by 5% year on year, whereas exports grew by 7% year on year.

Crude oil futures steady to higher on a weaker US dollar

MOSCOW (MRC) -- Crude oil futures were steady to higher during mid-morning trade in Asia July 28 as a weaker US dollar boosted risk appetites and provide support for the global crude complex, as per S&P Global.

NYMEX September WTI settled up 31 cents at USD41.60/b, and ICE September Brent was up 7 cents on the day at USD43.41/b.

At 11:05 am Singapore time (0305 GMT), ICE Brent September crude futures was up 19 cents/b (0.44%) from the July 27 settle to USD43.60/b, while the NYMEX September light sweet crude contract was up by 6 cents/b (0.14%) at USD41.66/b. The US Dollar Index was at 93.64, down 0.02% from the close of the US trading session.

The weaker US dollar is trading below the 94.0 level, its lowest since May 2018, continuing to boost investor appetite for risk assets, such as crude oil.

With an upcoming Federal Open Market Committee meeting on July 28 and 29 where Federal Reserve chairman Jerome Powell is expected to express continued support for the Fed's dovish monetary policy, the decline in the US dollar is likely to continue, keeping oil prices buoyant.

"Oil markets are receiving support from expectations of the FOMC's firmer commitment in the upcoming policy meeting towards allowing above-target inflation to occur for some time, which should be viewed as incredibly positive for risk assets. And oil prices will continue to draw support from the Fed's dovish policy, which sees the US dollar move lower," Stephen Innes, chief global markets analyst at AxiCorp, said in a note July 28.

Meanwhile, the US' Senate Majority Leader McConnell had formally announced details of a newly proposed trillion-dollar fiscal stimulus package on July 27, which will provide most Americans with a one-time, $1,200 stimulus check and cut enhanced weekly unemployment benefits by two-thirds, from the current USD600 to about USD200 a week, according to media reports.

Negotiations over the final details of the fiscal stimulus package will ensue just as the weekly USD600 unemployment benefits from the USD2.2 trillion Coronavirus Aid, Relief and Economic Security Act expires.

However, rising geopolitical tensions between the US and China, amid an uncertain economic backdrop will continue to limit gains, keeping Brent crude futures trading within the familiar USD40-USD45/b range.

"For oil prices to break out higher, there must be a significant flattening of the US Sunbelt CV-19 case count curve at a minimum," Innes added.

While the number of daily new infections in US has come off considerably from a record high 77,300 on July 16 to 55,000 on July 26, according to the latest John Hopkins University data, the number remains significantly higher than the daily infection rates in other major economies, even as many US states paused or reversed reopening plans.

Market participants will look for fresh cues from the inventory reports by the American Petroleum Institute and the Energy Information Administration on July 28 and 29, respectively.

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.