Green Plains to supply ethanol to Lysol manufacturer

MOSCOW (MRC) -- Green Plains (Omaha, Nebraska) has signed a deal to supply high-grade ethanol through 2021 to consumer products manufacturer Reckitt Benckiser, which makes disinfectants under the Lysol brand, as per Chemweek.

"We are pleased to partner with Lysol to help fulfill their supply chain needs with our high-quality alcohol for products which are EPA approved for use against COVID-19," president and CEO Todd Becker says. "This transaction continues to validate the quality of our alcohol and our growing focus to provide a premium product at scale that can be used in sanitizers and disinfectants."

Ethanol supplied under the deal will come from Green Plains' York, Nebraska, plant, which was originally a beverage-grade facility.

"Our partnership with Green Plains continues to allow uninterrupted supply of our products to consumers," says Hal Ambuter, Reckitt Benckiser vice president/regulatory and government affairs.

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.


Saudi Aramco plans further capital spending cuts

MOSCOW (MRC) -- Saudi Aramco plans to cut its capital spending to a range of USD20 billion to USD25 billion this year to pay a USD75 billion dividend it pledged to investors during its initial public offering last year, reported Reuters with reference to the Financial Times, citing people familiar with the matter.

The report here says the new level of capital spending is largely dedicated to the state-owned group's exploration and production business and will hold for the next three years.

Spending has been cut across the board to shore up cash as the oil industry contends with a realization that lower crude prices could be the norm for a long period of time after the coronavirus pandemic sapped fuel demand.

Aramco had said on Sunday it expected capital expenditure for 2020 to be at the lower end of the original USD25 billion to USD30 billion range and the company posted a 73% plunge in second quarter profits.

As MRC informed earlier, Saudi Aramco is continuing with plans to increase its maximum sustained capacity to 13 million b/d from 12 million b/d, despite the market downturn caused by the coronavirus pandemic, said the company's President and CEO Amin Nasser. The capacity hike, which was first announced in March, will not have a significant impact on the oil giant's capex commitments for 2021, as it will be gradually expanded over a period of years, said Nasser, on a call to analysts and investors following the company's Q2 results announcement Aug. 9. The expansion follows Aramco hitting a new maximum production rate of 12.1 million b/d in April.

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.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.

North America chemical rail holding steady

MOSCOW (MRC) -- Chemical railcar traffic in North America remain firm, according to data released on 12 August by the Association of American Railroads (AAR), reported Chemweek.

During the week ended 8 August, volume year-to-date (YTD) was down 4.7% from 2019, within the 4.6-4.7% range observed since late June. On a four-week basis, volume decreased 4.5% from 2019 and 7.2% from 2018 (chart).

Weekly volume totaled 43,005 carloads, down 5.6% year-over-year (YOY) and down 2.4% from the previous week.

Chemical railcar traffic in the United States contributed 31,297 carloads to the total, down 2.5% YOY and up 0.1% from the previous week. For the year to date, US chemical railcar traffic is down 5.0%.

Canadian chemical rail traffic totaled 10,763 carloads, down 12.2% YOY and down 10.1% from the previous week. For the year to date, Canadian chemical railcar traffic is down 3.7%.

Chemical railcar traffic in Mexico totaled 945 carloads, a YOY decrease of 20.3% and a sequential increase of 12.1%. For the year to date, Mexican chemical railcar traffic is down 7.4%.

As MRC informed before, in early July, 2020, Dow agreed to sell the rail infrastructure assets and related equipment at six major sites in North America to Watco Companies (Pittsburg, Kansas), a transportation services company operating in North America and Australia. Dow expects the deal, which is slated to close in the fourth quarter, to yield over USD310 million in cash. Watco will provide Dow with rail services from the assets under a long-term agreement.

We remind that Dow Chemical restarted three polyethylene (PE) plants it shut in April on improving demand after widespread economic shocks in April and May, confirmed a company spokeswoman July 23.

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.

LG Chem records substantial rise in net income, improved petchems performance

MOSCOW (MRC) -- South Korea’s LG Chem Ltd. reported more than doubled operating profit in the second quarter as electric vehicle demand stayed robust despite virus pandemic and further cemented the leadership of the world’s battery bestseller, with the order book packed for the third quarter, said Chemweek.

In its regulatory filing on Friday, LG Chem announced its consolidated operating profit in the April-June period reached 571.6 billion won (USD480 million), sharply up from 206 billion won a quarter ago and 247 billion won a year earlier.

Net profit ballooned more than 11-fold from the previous quarter and five-fold from a year-ago to 419.1 billion won. The three-digit gains in bottom line overwhelmed the number in the top, pushing the operating margin 8.2 percent, its best since the third quarter of 2018. Sales added 3.1 percent from three months ago and 2.3 percent against a year earlier to total 6.94 trillion won in the period.

The second-quarter operating profit was way above market consensus of 429.9 billion won compiled by Seoul-based financial data provider FnGuide on July 1. For the first six months, LG Chem’s operating profit rose 52.4 percent to 777.5 billion won from the previous year. Net profit also gained 54 percent to 455.4 billion won, and sales up 4.8 percent to 13.66 trillion won.

The stellar performance in the second quarter was mainly driven by solid demand for electric vehicle batteries despite the coronavirus spread. LG Chem which commanded 27.1 percent of the global EV battery market is expected to maintain a comfortable lead.

Battery division delivered an operating profit of 155.5 billion won on revenue of 2.82 trillion won, making the best-ever earnings for its battery business upon rising demand for EV batteries in China and Europe amid stricter environmental regulations.

During an earnings conference call, the company projected its battery sales in the third quarter would surge more than 25 percent from the second quarter on expectation for higher demand from anticipated releases of new EV models by European major customers, including Volkswagen, and small batteries amid strong demand for IT devices. The company also forecast its sales for 2020 should top 13 trillion won. Profitability of the petrochemical business also improved in the second quarter.

The petrochemical business posted an operating profit of 434.7 billion won on sales of 3.31 trillion won. Sales slid from the previous quarter due to low oil prices but operating margin recovered to double-digits of 13.1 percent for the first time in five quarters thanks to a recovering spread from expanded orders from China. The advanced materials business reported 35 billion won in operating profit, with sales of 789.2 billion won. Overall market demand for IT and displays slowed but profitability improved on lower prices of raw materials and cost-reducing efforts.

The life science business raised 14.1 billion won in operating profit on revenue of 160.3 billion won. Its pesticides and fertilizer making subsidiary Farm Hannong raised 11.6 billion won in operating profit on sales of 177.8 billion won during the same period.

"In the third quarter, the company will keep up growth momentum by maintaining profitability in the petrochemical business and brining more growth in the battery division to establish a strong business structure for stable earnings,” said Cha Dong-seok, chief financial offer at LG Chem.

As MRC wrote previously, LG Chem, a South Korean petrochemical major, reduced its operational rates of its cracker to around 90-95% starting January 2020 due to weaker economic fundamentals. Based in Daesan, South Korea, the cracker is able to produce 1.27 million tons/year of ethylene and 650,000 tons/year of propylene. The company increased capacity utilisation at this cracker to 100% on 10 March, 2020, in order to supply ethylene to Lotte Chemical.

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.

LG Chem Ltd., often referred to as LG Chemical, is the largest Korean chemical company and is headquartered in Seoul, South Korea. According to ICIS report, it is 15th biggest chemical company in the world in 2011. It has eight domestic factories and global network of 29 business locations in 15 countries. LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.

COVID-19 - News digest as of 12.08.2020

1. ExxonMobil to ease shut-ins to 200,000 boe/d in Q3 on recovering demand

MOSCOW (MRC) -- ExxonMobil aims to ease global oil and gas production shut-ins by about 40% to 200,000 b/d of oil equivalent as demand for transportation fuels slowly recovers from a second-quarter plunge, according to S&P Global. About 70% of the shut-ins expected to persist into Q3 are from government mandates, with the rest being market-based cuts, the company said. ExxonMobil sees global gasoline and diesel demand returning to year-ago levels by Q4, while jet fuel demand will take much longer to recover.