European producers do not plan to raise PVC prices for CIS markets

MOSOCW (MRC) -- Negotiations on prices of European polyvinyl chloride (PVC) for August shipments to the CIS markets started at the beginning of the week. The rise in the cost of ethylene in Europe has been going on for the third month in a row, but not all producers plan to increase export prices for PVC, according to the ICIS-MRC Price Report.

August contract price of ethylene was agreed up by EUR21/tonne from the previous month, which theoretically allows to talk about an increase of EUR11/tonne in net cost of PVC. Nevertheless, the offers from European producer for August export prices of PVC for CIS markets have been mixed. Both the increase in export prices of PVC for shipments in August and the roll over of the July ones are being discussed.

The demand for PVC from consumers from the CIS countries has remained at a good level in the last two months due to the seasonal factor, while the possibilities of local producers were limited, including due to scheduled shutdowns.
The situation is similar in Europe in the PVC market.

Scheduled maintenance works and good demand from both the domestic market and a number of export markets significantly limited the supply for a number of European producers. Some producers do not intend to carry out their shipments to the markets of the CIS countries in August.

Overall, deals for August shipments of suspension polyvinyl chloride (SPVC) to the CIS markets were negotiated in the range of EUR665-720/tonne FCA, whereas last month's deals were done in the range of EUR660-720/tonne FCA.

Nan Ya Plastics conducts maintenance at No. 1 MEG plant in Taiwan

MOSCOW (MRC) -- Nan Ya Plastics, part of Formosa Petrochemical, has shut its No. 1 monoethylene glycol (MEG) unit at Mailiao on 8 July for a catalyst change, reported S&P Global with reference to a company source.

The 360,000 mt/year plant is expected to be bought back on-line on 13 August, 2020.

The company's 360,000 mt/year No. 2 MEG unit will undergo a month-long overhaul after the No. 1 MEG plant restarts, and the 360,000 mt/year No. 3 plant will undergo a turnaround from mid-August, the company source added.

As MRC informed before, Nan Ya's 800,000 mt/year MEG plant in Texas is expected to come online by late 2020 or early 2021 rather than the third quarter of 2020. According to Formosa Plastics USA, Nan Ya suspended construction on the project at Formosa's Point Comfort, Texas, complex in March on coronavirus pandemic-related concerns to ensure worker safety and social distancing. The company has not publicly disclosed a new startup timeline. The facility's startup was originally expected to come in the first half of this year, and later pushed back to Q3.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to MRC's ScanPlast report, Russia's estimated PET consumption totalled 367,720 tonnes in the first six months of 2020, up by 19% year on year. Russian companies processed 62,910 tonnes of material in June.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company's plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).

COVID-19 - News digest as of 06.08.2020

1. U.S. specialty chemical markets strengthen in June

MOSCOW (MRC) -- The American Chemistry Council (ACC) reported that with continued recovery in the U.S. economy, specialty chemicals market volumes increased by 3.6 percent in June, an improvement from the revised 1.2 percent gain in May and the record 12.6 percent decline in April, said Americanchemistry. Of the 28 specialty chemical segments that ACC monitors, 25 expanded in June, an improvement from the expansion in 22 segments in May and the decline across all segments in April. On a sequential basis, diffusion was 89 percent, an improvement from 79 percent in May and 0 percent in April. In June, 23 segments featured gains of more than 1.0 percent.


Merck net profit drops sharply on impairments, other expenses; acquisitions boost revenue

MOSCOW (MRC) -- Merck KGaA (Darmstadt, Germany) says its net profits in the second quarter of 2020 dropped 38.5% year on year (YOY), to EUR290 million (USD343 million), despite revenue growing 3.7% YOY, to EUR4.12 billion, driven primarily by acquisition-related growth in the performance materials business and organic growth in the life-science business, reported Chemweek.

The fall in profits is attributed mainly to impairment losses on intangible assets in performance materials, higher interest expenses, and other operating expenses, the company says. EBITDA and EBIT fell by 2.5% and 20.6%, to EUR1.05 billion and €491 million, respectively, Merck says.

“Despite considerable pandemic-related obstacles in some businesses, overall we did well in the second quarter. In recent months, we again proved the strengths of our diversified business model with three strong innovation-driven business sectors,” says Stefan Oschmann, chairman and CEO at Merck.

The company’s healthcare business recorded a 10.6% YOY drop in sales, to EUR1.50 billion, due to the impact of COVID-19, and negative currency and portfolio effects. Fertility was the segment hurt the most by the pandemic, with an organic decrease in sales of 38.9%, Merck says. EBITDA was down 31.3% YOY, to EUR359 million.

Life-science sales rose by 5.9% to EUR1.81 billion, with the process solutions segment the key growth driver due to continued high demand in the underlying business, but also as a result of increased orders in the course of the pandemic that drove 19.8% organic growth in sales, Merck says. However, sales of the research solutions segment declined 7.1% and remained flat in the applied solutions segment, the company says. EBITDA jumped 12.8% YOY, to EUR584 million, it says.

Merck’s performance materials business recorded a 38.1% YOY increase in sales, to EUR814 million, with a 50.1% sales contribution from the acquisitions of Versum Materials and Intermolecular driving the growth, the company says. The display solutions and surface solutions segments posted lower sales by 20.8% and 29.6%, respectively. Meanwhile, organic sales growth of the semiconductor solutions segment was 12.1%. The performance materials business's EBITDA rose 35.9% YOY, to EUR219 million.

Merck has confirmed the assumptions it made, following the COVID-19 outbreak, in a forecast made on 31 March. The company continues to assume that its businesses will be impacted to varying degrees. For full-year 2020, it expects slight-to-moderate organic net sales growth compared with the previous year with sales between EUR16.9 billion and EUR17.7 billion. The company continues to expect that life sciences will be a major driver of its organic growth, healthcare will see a slight organic increase in net sales, and that the performance materials business will see a moderate-to-strong organic decline in net sales.

Merck has also raised the lower end of its expected full-year range for EBITDA before exceptional items and now forecasts slight-to-moderate organic growth to €4.45-4.85 billion. It expects strong organic growth in life sciences and a stable development in healthcare, but forecasts an organic decline in performance materials.

As MRC wrote previously, Merck KGaA has announced the opening its M Lab Collaboration Center in Shanghai, China. Merck Innovation Hub, the first in China, started in late 2019, with the company announcing a 100 million renminbi (USD14 million) seed fund injected into the China Innovation Hub.

We remind that Merck celebrated the opening of its new packaging center at the science and technology company’s headquarters in Darmstadt, Germany, in October, 2018. The new 161,458-square-foot facility is dedicated to the packaging and shipping of Merck’s current portfolio of pharma medicines in more than 90 countries and help meet increasing patient needs for flagship medicines Glucophage, Concor and Euthyrox in the areas of diabetes, cardiovascular diseases and thyroid disorders respectively. It will also provide capacity for potential future pharma products currently in clinical development such as evobrutinib in the area of neurology-immunology or tepotinib in the area of oncology.

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.

Momentive to sell consumer sealants business to Henkel

MOSCOW (MRC) -- Momentive Performance Materials Inc. (Waterford, N.Y.) outlined a series of steps to accelerate its global transition from commodity basics chemicals to specialty silicones – actions that will focus the company’s strengths and expertise on advanced technologies, said Chemengonline.

The steps include a USD15-million investment in specialized Electronic Materials Production and the sale of its Consumer Sealants Business. The company also envisions a two-year transition away from basics chemicals production at its Waterford facility, which began operations in 1947.

"’m excited about Momentive’s future, enabled by innovation that will provide creative solutions to our customers,” said President and CEO Sam Conzone, Ph.D. “We are continuing to prioritize and invest in specialty businesses where we have unique capabilities to win. Everything we do is focused on creating a stronger, more sustainable future for our employees, our customers and our communities."

Momentive will invest USD15 million in Advanced Electronic Materials Production at the Waterford site to serve rapidly growing high-tech applications. This investment in new capabilities and production will be operational starting in mid-2021 and is part of a USD40 million global investment to drive Electronic Materials growth in areas including advanced aerospace, 5G telecommunications, automotive electronics and advanced display applications.

"This investment is a major step in advancing the uniqueness of Momentive’s value, technologies and applications for customers around the world,” said Sandip Tyagi, President and General Manager of Formulated Specialties. “Moreover, investing in Waterford focuses our talent and expertise, and solidifies its future as a global center for innovation. We are very excited about the opportunities ahead."

Over the past five years, Momentive has invested approximately USD100 million in growth, technology, productivity, safety and reliability at the Waterford site.

Momentive also announced the sale of its Consumer Sealants Business to Henkel, encompassing GE-branded consumer sealants sold under license from General Electric Company and available through home-improvement centers, major retailers and hardware stores. Momentive will continue to manufacture consumer-line products through 2021 under a transition supply agreement. The move away from consumer sealants will enable greater focus on unique silicones and specialty applications where Momentive has a strong ability to win. This transaction excludes the GE-branded construction sealants product line, which will remain a Momentive focus.

"Millions of homeowners and commercial builders have relied on GE-branded consumer sealants for decades, and we remain very proud of that legacy,” Conzone said. “Selling this business to Henkel allows Momentive to fully focus our attention and resources on innovating and growing with advanced products that enable our customers’ success."

The anticipated sale remains subject to customary closing conditions including regulatory clearances. Momentive also outlined a two-year vision to phase out basics chemicals production at its Waterford, New York site. The move would position the facility as a sustainable, global center specializing in advanced silicone technologies. These envisioned changes will be discussed with IUE-CWA union leadership and would not begin until 2021, continuing into 2022.

As MRC informed earlier, Henkel AG & Co. KGaA (Dusseldorf, Germany) announced that Henkel Adhesives Technologies has officially inaugurated its new production facility in Kurkumbh, India.

Henkel are also partnering with Borealis and plastics solutions company Borouge to develop flexible packaging solutions for detergents containing both virgin polyethylene (PE) and high amounts of post-consumer recyclate (PCR) in efforts to increase sustainability.

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.