Lotte Chemical earnings plunge on lower sales, prices, forecasts upturn in third quarter

MOSCOW (MRC) -- Lotte Chemical said Friday its second-quarter net profit fell 88.7 percent from a year earlier due to low demand amid the coronavirus pandemic, said Koreantimes.

For the April-June period, Lotte Chemical posted a net profit of 30.6 billion won (USD25.8 million), compared with a profit of 271.2 billion won a year earlier, the company said in a regulatory filing.

Lotte Chemical said the decreased profit is blamed on lower prices of its major products due to slowing demand in the markets amid increased uncertainty over the COVID-19 pandemic and trade disputes between the United States and China.

Lotte Chemical's operating profit plunged 90.5 percent year-on-year to 32.9 billion won in the second quarter. Sales fell 32.1 percent to 2.68 trillion won from 3.94 trillion won during the same period, it said.

Shares in Lotte Chemical fell 2.51 percent to 174,500 won, underperforming the broader KOSPI's 0.48 percent gain. Lotte Chemical manufactures a wide range of petrochemical products, including polymers, monomers, basic petrochemicals, construction and interior materials.

Lotte Chemical is a petrochemical unit of Lotte Group, a South Korean retail-to-chemicals conglomerate. Kumho Petro Chemical reported its second-quarter net income of 99.8 billion won, down 13.4 percent from a year earlier.

The company said in a regulatory filing that operating income for the April-June period fell 13 percent year-on-year to 120.1 billion won. Revenue decreased 20.6 percent to 1.02 trillion won. (Yonhap).

We remind that, as MRC informed before, Lotte Chemical Titan Holding (Kuala Lumpur, Malaysia), an affiliate of Lotte Chemical (Seoul, South Korea), announced that the group's ethane cracker and ethylene glycol (EG) plant at Lake Charles, Louisiana, commenced commercial operations in August, 2019. Lotte Chemical USA, a 40/60 joint venture (JV) between Lotte Chemical Titan and Lotte Chemical, holds the Lotte group's stakes in the plants. The USD3.1-billion ethane cracker is an 88/12 JV between Lotte Chemical USA and Axiall, a subsidiary of Westlake Chemical. Lotte has invested about USD1.9 billion in the JV. Lotte Chemical USA owns 100% of the EG plant.

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.
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MOSCOW (MRC) -- Russia's second largest crude producer, Lukoil, said Aug. 7 that its oil production, excluding the West Qurna 2 project, fell to 18.82 million mt in the second quarter, in line with deeper cuts under the OPEC+ agreement, reported S&P Global.

This is equivalent to an average of around 1.52 million b/d, down 11.6% on the year and 12% on the quarter.
From May, Russian producers including Lukoil were subject to the strictest output restrictions so far under the OPEC+ agreement as the group attempted to ease market volatility caused by the coronavirus pandemic. The cuts are being eased from Aug. 1.

Output restrictions were also reflected in Lukoil's production in the first half of the year, which was 40.2 million mt, equivalent to an average of around 1.62 million b/d. This was down 5.6% on the year.

Hydrocarbon output averaged 1.98 million boe/d in Q2, down 14.8% on the year, and 15% on the quarter. Hydrocarbon production in H1 fell 8.4% to average 2.155 million boe/d.

"The cut was due to the new OPEC+ agreement and a decrease in gas supply from Uzbekistan to China that were driven by the negative impact of the COVID-19 pandemic on hydrocarbon demand," Lukoil said in a statement.

Lukoil's gas output totaled 6.396 Bcm in Q2, down 23.6% on the year and 24% on the quarter.

Total gas production in H1 fell 14.7% year on year to 14.8 Bcm.

The company's Q2 refining throughput fell 19.6% on the year, and 20.8% on the quarter to 13.525 million mt.

Refining in H1 fell 8.6% to 30.6 million mt.

"The decline was due to scheduled maintenance work and throughput optimization at some of the company's refineries Q2 2020 because of lower demand for petroleum products and a fall in refining margins due to the COVID-19 pandemic," Lukoil said.

As MRC wrote before, the European refineries of Russia’s No.2 oil producer Lukoil were only processing Russian oil in H2 April-early May, 2020.

We remind that Stavrolen (part of Lukoil), Russia's major polyolefins producer, resumed its polypropylene (PP) production in Budennovsk after a long scheduled turnaround. The plant's customers said Stavrolen had fully resumed its PP production after the long scheduled maintenance by 15 October 2019. The outage began on 6 September. The start-up of the plant"s high density polyethylene (HDPE) production took place with a week delay.

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.

Lukoil is one of the leading vertically integrated oil company in Russia. The main activities of the company include operations for exploration and production of oil and gas, production and sale of petroleum products. Lukoil is the second largest private oil Company worldwide by proven hydrocarbon reserves. Lukoil's structure includes one of the largest Russian petrochemical plant - Stavrolen.
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MOSCOW (MRC) -- Crude oil futures were lower during mid-morning trade in Asia Aug. 4 as traders took profit after the overnight rally amid better-than-expected global economic data, reported S&P Global.

At 11:07 am Singapore time (0307 GMT), the ICE Brent October crude futures was down 30 cents/b (0.68%) from the August 3 settle at USD43.85/b, while NYMEX September light sweet crude contract was down by 27 cents/b (0.66%) at USD40.74/b.

In the US, IHS Markit July manufacturing PMI released on Aug. 3 stood at 50.9, an improvement from June's 49.8, while the Institute of Supply Management's manufacturing PMI rose to 54.2% in July, up from 52.6% in June, exceeding market expectations.

"However, when it comes to manufacturing output, it continues to suggest it's easier for the central bank and government stimulus to fire up the industrial heartlands," Stephen Innes, chief global markets analyst at AxiCorp, said in an Aug. 4 note.

"Still, it remains a challenge to get people working again or even in some US states to leave their apartment," he added.

Meanwhile, even as the number of new COVID-19 cases in the US has continued to move lower for a fifth consecutive day, from a high of 70,800 cases on July 29 to 47,500 cases on Aug. 2, according to latest data from John Hopkins University, deaths from COVID-19 rose for the fourth week in a row, according to media reports.

On the supply front, with OPEC+ easing into a 7.7 million b/d production cut in August and returning production limited to 1.1 million-1.5 million b/d because of compensation cuts, this increase in global oil supply comes at a time when uncertainty around global demand recovery remains elevated.

"In the larger scheme of things, crude prices have become locked in a tight range and that may remain the case as fundamentally, not much is expected to change on the supply or the demand front," Vandana Hari, founder and CEO of oil consultancy firm, Vanda Insights, said Aug. 4.

"On an intraday basis, bargain-hunting buying or profit-taking shaves off the shallow troughs and peaks. The US dollar, which has been a major influence on crude prices, has also gone into a holding pattern this week. We may see sideway movements in crude unless the US weekly stocks data jolts them out of the current range," she added.

At 11:05 am (0305 GMT), the US dollar index stood at 93.463, down 0.05% from 93.507 at the close.

Market participants will look to fresh cues from the inventory reports by the American Petroleum Institute and the Energy Information Administration on Aug. 4 and 5, respectively.

As MRC informed before, China's crude stockpiles reached a record high level in July as refiners struggle to digest mass crude oil cargoes purchased during the second quarter, while domestic fuel consumption slowed amid widespread flooding across 23 provinces during the month. In total, at least 20 state-owned refineries across the country, which have no maintenance plan, have cut run rates in July by 1-17 percentage points from June. These comprise seven refineries under PetroChina, 12 from Sinopec, and Sinochem's only refinery Quanzhou Petrochemical.

We remind that Sinopec SABIC Tianjin Petrochemical Co. (SSTPC), a 50-50 joint venture of Sinopec and SABIC, completed the debottlenecking of its ethylene cracker on 11 July 2020, adding another 30,000 tons/year output to its current capacity. Followed the expansion, the Tianjin based plant become the country's largest compressor unit, producing 1.3 million tons of ethylene annually.

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

MOSCOW (MRC) -- Taiwan's Formosa Petrochemical Corporation Company (FPCC) is running their residual fluid catalytic crackers (RFCC) at 80-90% in August, following a fire at its number 2 residue desulfurization (RDS) unit in the morning of July 15, reported S&P Global.

There are two RFCC units, each with a propylene capacity of 330,000 mt/year, located near the RDS, which supplies feedstock to the RFCCs.

As MRC wrote before, FPCC has to shut its No. 2 naphtha cracker in Mailiao, Taiwan until further notice. Thus, this cracker was taken off-stream on 15 July after a fire broke out at RDS unit belong to FPCC at the same site earlier that day. The No. 2 RDS unit is designed to process 80,000 barrels per day, which is a part of 540,000 barrel per day oil refinery complex. The No. 2 cracker has an annual capacity of 1.03 million tons/year of ethylene, 515,000 tons/year of propylene, and 162,000 tons/year of butadiene.

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.

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).
MRC

MOSCOW (MRC) -- ELIX Polymer is in plans to take off-stream its acrylonitrile-butadiene-styrene (ABS) plant for maintenance, as per Apic-online.

A Polymerupdate source in Europe informed that the company has schedule to start turnaround at the plant by end-August, 2020. The plant is likely to remain off-line for around 15 days.

Located in Tarragona, Spain, the plant has a production capacity of 180,000 mt/year.

As MRC reported previously, leading ABS producer ELIX Polymers is collaborating with a large group of companies within ClusterMAV, the Advanced Materials Cluster of Catalonia, Spain, in the fight against COVID-19. The partners are working in collaboration with the National Federation of Innovative Business Groups and Clusters (FENAEIC), which focuses on promoting collaboration between federations, clusters and their partners, within the European Cluster collaboration platform.

ELIX Polymers is donating a medical-grade material, ELIX ABS 3D-FC, in response to high demand from hospitals for medical masks, valves for ventilators and other medical devices. This product, developed for transformation into filaments for FFF (Fused Filament Fabrication) 3D printing, is now being used by Ford Motor Company (which has switched some of its production in automobiles to medical equipment), research organization AIMPLAS, and two Spanish plastics processors, PESL and SIIM.

We remind that in June 2018, ELIX Polymers, a thermoplastics manufacturer located in Tarragona's Poligono Sur industrial complex, announced a new investment amounting to EUR4 million, whose objective is to optimize its ABS powder production facilities. The company began executing this new project in 2018, which it continued to develop and consolidate throughout the year of 2019.

According to MRC's ScanPlast report, the estimated consumption decreased in January-June 2020 by 18% year on year in the Russian ABS sector, totalling 19,360 tonnes. 2,680 tonnes of ABS plastics were processed in Russia in June 2020.

ELIX Polymers is one of the most important manufacturers of ABS resins and derivatives in Europe, with 40 years of experience in engineering plastics and an installed capacity of 180,000/year from their plant in Tarragona (Spain) to the world. The operation starts in 1975, when the Tarragona ABS and SAN production plant was inaugurated.
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