Advanced Petrochemical Q2 net profit falls

MOSCOW (MRC) -- Advanced Petrochemical's net profit fell in the second quarter amid a drop in polypropylene (PP) prices, the Saudi Arabia-based producer said, said Mubasher.

The net profits of Advanced Petrochemical Company amounted to SAR 154.95 million in the second quarter (Q2) of the year, 19.43% less than SAR 192.31 million in the same quarter in the previous year.

The decline in the interim earnings was mainly driven by lower sales prices of Polypropylene by 26.7% and higher consumption of outsourced Propylene by 19.9%, according to a bourse disclosure on Wednesday.

This drop came despite the increase in Polypropylene sales volume by 4% and the decrease in Propane and outsourced Propylene prices by 45.7% and 24.9% respectively. Moreover, the firm’s general and administrative expenses, and financial charges slumped by 20.2% and 93.5%, respectively.

Additionally, revenue dropped by 23.8% to stand at SAR 519.03 million in the three-month period ended 30 June 2020, compared with SAR 680.96 million in the year-ago period.

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.

Advanced Petrochemical Company (before Advanced Polypropylene) is a Saudi Joint Stock Company, established in October 2005. The company was initially launched by National Polypropylene Limited, jointly owned by Mr. Khalifa Al Mulhim, the chief executive officer of Advanced, and Mr. Monther Laheeq, who negotiated all the main deals related to the project, either before or after the establishment of Advanced Petrochemical. Currently, National Polypropylene Limited controls 7.9% of Advanced Petrochemical. Advanced Petrochemical started the construction of its plants in May 2005. The company produces 455,000 tons per year of propylene and 450,000 tons per year of polypropylene from its production facility located in Jubail Industrial City, in the Eastern coast of the Kingdom of Saudi Arabia.

MRC

Bayer swings to USD11.3-billion net loss on litigation charges

MOSCOW (MRC) -- Bayer swung to a second-quarter net loss of EUR9.55 billion (USD11.27 billion) from a net profit of EUR404 million in the year-earlier quarter on special charges of EUR12.51 billion comprising mainly provisions for agreements reached in legacy Monsanto litigation in the US related to glyphosate and dicamba herbicides, and polychlorinated biphenyls. Other special charges resulted from litigation in pharmaceuticals and the company’s ongoing restructuring program, reported Chemweek.

Bayer’s EBITDA before special items rose by 5.6% year on year (YOY) in the second quarter to EUR2.88 billion, net of EUR12 million in negative currency effects, beating analysts’ consensus estimate by 5%. Sales declined by 2.5% on a currency- and portfolio-adjusted basis to EUR10.05 billion and the special charges drove EBIT down to a negative EUR10.78 billion from a positive EUR785 million in the year-earlier period. Bayer, meanwhile, has downgraded its full-year outlook due to the impacts of the COVID-19 pandemic.

Free cash flow amounted to EUR1.40 billion in the second quarter, up from EUR751 million a year earlier. Net debt increased by 1.7% compared with 31 March 2020, to EUR35.99 billion as of 30 June 2020.

Bayer’s businesses delivered a solid performance in the quarter despite COVID-19 and the associated uncertainties, says chairman Werner Baumann. “Thanks to the growth in our agricultural business, we raised EBITDA before special items, and we did so in a challenging environment,” Baumann says. Sales in the pharmaceuticals and consumer health divisions receded, however.

Baumann says that Bayer is taking the necessary steps to safeguard the continuity of its business operations in the current challenging times and ensure reliable supplies of its products and services to hospitals, physicians, patients, consumers, and farmers.

Bayer says it has downgraded its full-year guidance, made in February, because the financial impact of the COVID-19 pandemic remains difficult to predict. Bayer now forecasts currency-adjusted 2020 sales of EUR43–44 billion, down from previous guidance of EUR44–45 billion, or an increase of 0–1% compared with a previous forecast for growth of about 3–4% on a currency- and portfolio-adjusted basis. Bayer has maintained its target of an increase in its EBITDA margin before special items to about 28% on a currency-adjusted basis, which would correspond to EBITDA before special items of about EUR12.1 billion, down from previous guidance of EUR12.3–12.6 billion on a currency-adjusted basis.

Bayer says it anticipates substantial negative currency effects this year, primarily due to the depreciation of the Brazilian currency. Based on 30 June exchange rates, this could push full-year sales down to €42–43 billion, the company says.

Taking into account the financing of the litigation payments, Bayer now expects to reduce net debt to about EUR33 billion this year, compared with a previous expectation of EUR27 billion.

As MRC wrote before, 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.

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.

According to MRC's ScanPlast report, Russia's overall estimated consumption of PC granules totalled 47,300 tonnes in the first two quarters of 2020 (excluding imports and exports to/from Belarus), compared to 40,700 tonnes a year earlier. Demand increased by 16% year on year.
MRC

Vinmar partners with Agilis on digitalization strategy

MOSCOW (MRC) -- Vinmar International, a global marketing and distribution company for petrochemicals and plastics, will partner with Agilis Chemicals to help execute on its digitalization strategy, according to Chemweek.

Agilis - which offers a cloud-based software solution to build branded portals for producers and distributors - will design, develop, and deploy digital solutions for Vinmar.

“We work closely with our petrochemical suppliers to develop tailored business solutions and marketing programs that work for them," said Vishal Goradia, Vinmar senior vp. "The partnership with Agilis will allow us to continue to execute on this commitment and to accelerate and drive our digitalization strategy.”

The effort will allow Vinmar to streamline operations and increase efficiency while maintaining high data privacy and security standards. “Vinmar has a set of complex business challenges, and we are excited about working with them," said Jay Bhatia, Agilis founder and CEO. "The chemical distribution market is only at the beginning stages of a digital transformation journey."

As MRC reported earlier, Vinmar Polymers America will distribute Lanxess Corp.'s high-performance plastics to customers in North America. Thus, VPA, a unit of Houston-based Vinmar International, and Lanxess of Pittsburgh will work together to complement Lanxess' market strategy with regionally placed inventory, along with sales and technical support, officials said in a Jan. 17, 2020, news release.

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. 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.

Vinmar is a global marketing and distribution company that brings value to the world’s leading producers and users of plastics and chemicals through the supply of best in class products and tailored business solutions. With over 40 years of experience and success, Vinmar has grown into one of the world’s largest plastics and chemicals marketing and distribution companies. The company has over 50 offices in more than 35 countries with sales in excess of 110 countries. Among other petrochemical products, the company produces polyethylene , polypropylene, polyvinyl chloride, polyethylene terephthalate and polystyrene.
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Crude futures stable in Asia as rising coronavirus cases offset US inventory draw

MOSCOW (MRC) -- Crude oil futures were largely steady in mid-morning trade in Asia July 30, as a sharp uptick in global coronavirus cases overrode a deep decline in US inventory stocks, reported S&P Global.

At 10:30 am Singapore time (0230 GMT), ICE Brent September crude futures was up 5 cents/b (0.11%) from the July 29 settle at USD43.80/b, while NYMEX September light sweet crude contract was up by 5 cents/b (0.12%) at USD41.32/b.

US crude oil inventories fell sharply during the week ended July 24 as exports and refinery demand climbed to multi-month highs, US Energy Information Administration data showed July 29.

However, total gasoline stocks climbed 650,000 barrels to 247.39 million barrels, pushing inventories to 7.9% above the five-year average while nationwide distillate inventories were also up 500,000 barrels at 178.39 million barrels, about 26% above the five-year average and notably, a fresh 38-year high.

"The mild market reaction to a huge inventory draw suggests that the gasoline inventory glut is providing the poor eye candy," Stephen Innes, chief global markets analyst at AxiCorp, said in a note July 30.

"Given how noisy this data set has been of late, that traders would rather wait before jumping for the inventory prints to flesh out a more convincing two- to four-week trend," he added.

Meanwhile, the US Federal Reserve Federal Open Markets Committee, in a move the market widely expected, held its target interest rate flat at 0-25 basis points Wednesday and extended its securities purchasing programs.

Globally, rising coronavirus infections and record daily fatalities in some US states continued to weigh on market sentiment. The number of total confirmed infections worldwide currently stands at 16.96 million, latest data from John Hopkins University showed. Cases remained high in US, Brazil and India, and combined, they account for about 50% of the worldwide infections.

In US, deaths from the coronavirus have surpassed 150,000. California, Texas and Florida - the three most populous state in the US - each reported a new single-day record of daily fatalities, according to media reports.

"The continued COVID-19 spread and rising fatalities remains a prevalent issue dragging on sentiment and more broadly capping further gains for crude oil prices from the current consolidation," Pan Jingyi, market strategist at IG, said July 30.

As MRC informed previously, data collected and tabulated by the American Chemistry Council (ACC) show that due to growth in China, global chemicals production rose by 0.6 percent in June, an improvement from the 0.5 percent decline in May, Production has been declining throughout this year, with the last monthly gain occurring in December 2019. During June, chemical production fell in major regions except Asia-Pacific. Headline global production was off 7.2 percent year-over-year (Y/Y) on a three-month moving average (3MMA) basis and was off 7.4 percent from the peak December level. Global output stood at 109.8 percent of its average 2012 levels.

At the same time, 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. 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

BASF South East Asia joins ZDHC Foundation as Contributor

MOSCOW (MRC) -- BASF South East Asia has joined ZDHC Foundation as a ‘Contributor’ in its chemical industry category. The partnership with the Foundation and its extensive pool of experts from organisations in textile, apparel, leather & footwear industry underlines BASF’s commitment to being an industry leader in driving sustainable chemistry, innovation and best practices, said Fibre2Fashion.

Additionally, Haptex is the first BASF material solution that has received the Eco Passport by Oeko-Tex certification for production of synthetic leather. Haptex, BASF’s first PU solution made without the use of organic solvents, has been certified Eco Passport by Oeko-Tex, an independent certification system for chemicals in the apparel, textile and leather industries. During a multi-stage process, Eco Passport analyses whether each ingredient in a chemical product meets international statutory requirements and is not harmful to human health. On-site inspections will also validate claims that suppliers are using safer and better chemistry according to industry best practices.

"The partnership with ZDHC represents BASF’s leadership in driving sustainability in chemicals and leather manufacturing. Through collaboration with partners, standard-setting and implementation, we are helping to protect the environment by reducing the industry’s chemical footprint across the textile, leather and footwear value chain,” said Andy Postlethwaite, senior vice president, BASF Performance Materials Asia Pacific. “We are pleased to know that Haptex meets the green standard of ZDHC Manufacturing Restricted Substances List (ZDHC MRSL) Level 3 conformance, which is the highest level in the Roadmap to Zero programme."

ZDHC MRSL Conformance indicates that Eco Passport certified chemical substances conform to ZDHC standards. The ZDHC MRSL covers chemical substances that are limited or banned from intentional use in the production of apparel and footwear materials to protect workers, consumers, and the environment.

BASF creates chemistry for a sustainable future. It combines economic success with environmental protection and social responsibility. More than 117,000 employees in the BASF Group work on contributing to the success of our customers in nearly all sectors and almost every country in the world. Its portfolio is organised into six segments: Chemicals, Materials, Industrial Solutions, Surface Technologies, Nutrition & Care and Agricultural Solutions.

The ZDHC Foundation oversees implementation of the Roadmap to Zero Programme and is a global multi-stakeholder initiative of more than 160 contributors within the fashion and footwear industry. The vision is widespread implementation of sustainable chemistry, driving innovations and best practices to protect consumers, workers and the environment. ZDHC uses collaborative engagement to drive a holistic, industry focused and practical approach to sustainable chemical management. ZDHC guidelines, platforms and solutions drive large-scale industry wide implementation that advances the industry as a whole towards the zero discharge of hazardous chemicals.

As MRC reported earlier, BASF Total's cracker in Port Arthur, Texas, is undergoing maintenance and expected to restart on 23 July, 2020, according to the company's statement in a filing with Texas Commission on Environmental Quality (TCEQ). An unexpected outage occurred at BASF Total Petrochemical’s joint-venture (JV) olefins unit at Port Arthur, Texas, on Thursday afternoon, 11 June, 2020. The cause of the outage is being investigated, with a compressor shutdown cited as a possible factor, according to TCEQ filing. The JV’s steam cracker at Port Arthur has a production capacity of more than 1 million metric tons/year of ethylene and 544,000 metric tons/year of propylene, according to IHS Markit data.

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.

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