Siegfried profits plummet on higher costs, sales remain resilient

MOSCOW (MRC) -- Siegfried (Zofingen, Switzerland) says net profit for the first half of 2020 shrunk 33.2% year on year (YOY) to 20.67 million Swiss francs (USD22.62 million) on revenue that was slightly lower at SFr388 million, down 1.4% YOY, said Chemweek.

The fall in profit is due mainly to higher cost of sales and negative currency effects, while the more resilient revenue performance is attributed to the company's crisis management that began in January, it says. Siegfried was able to largely maintain its production activities at all sites, it adds. Operating profit was down 24.9% for the period, to SFr30.79 million.

The company has "coped well with the significant challenges posed by COVID-19," says Wolfgang Wienand, Siegfried's CEO. Multiple national governments identified the company as a manufacturer of essential pharmaceutical products, creating the basis for the continued operation of its plants during the crisis, he says.

Sales of drug substances, a growth driver for Siegfried in 2019, were affected by COVID-19 but were still nearly 1% higher YOY in local currencies, the company says. Sales in the field of drug products grew by about 7% in local currencies, supported mainly by the business with aseptic filling, it says. Siegfried is currently generating three quarters of its sales from active pharmaceutical ingredients and intermediates, and about one quarter with finished formulations, it notes.

Siegfried has confirmed its outlook for the full year 2020, expecting low single-digit percentage sales growth in local currencies and a stronger second half-year with a slight expansion of the core EBITDA margin, it says. Its medium-term expectations have also been confirmed, with expected growth in line with the market and an ambition to outgrow it in local currencies, it says.

As MRC informed earlier, Russia's output of chemical products rose by 4.4% year on year in May 2020 . Thus, production of basic chemicals increased year on year by 5.4% in the first five 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-May. Production of benzene was 110,000 tonnes in May 2020, which equalled the figure a month earlier. Overall output of this product reached 615,000 tonnes over the stated period, up by 1.7% year on year.
MRC

MOSCOW (MRC) -- China's crude oil imports fell from a record high in July, snapping a three-month rally, as sluggish domestic fuel demand due to flooding capped refinery feedstock requirements, reported S&P Global.

Crude imports fell 6.7% to 12.13 million b/d in July from a record high 12.99 million b/d in June, preliminary General Administration of Customs data released Aug. 7 showed.

However, the import volume remained above 12 million b/d for the second time on record, as Chinese buyers who rushed into the market to secure cheap crudes in March/April received their deliveries in the month due to ongoing port congestion.

The country's crude imports grew sharply from 9.72 million b/d in March amid COVID-19 pandemic.

GAC releases data in metric tons, which S&P Global Platts converts to barrels using a 7.33 conversion factor.

On metric tons basis, the country imported 51.29 million mt of crude in July, down 3.6% from June, the GAC data showed.

The month-on-month decline was more likely attributed to the state-owned sector as the crude imports for independent refineries surged to a fresh high of 4.68 million b/d in July from 4.4 million b/d seen in June, Platts data showed.

The high July volume took imports for the first seven months of 2020 to 11.01 million b/d, up 11.5% year on year, amid sustained low crude prices. The value of the crude inflows over January-July fell 23.7% on the year to $138.89 billion, the GAC data showed.

Looking forward in August, China's crude imports are likely to stay at a higher level due to the ongoing port congestion for discharging, analysts said.

Data intelligence firm Kpler said there were 79.16 million barrels of crude on tankers idled in Chinese waters for seven or more days in the week beginning Aug. 2.

The volume was four times of the normal levels seen before May 2020, despite easing from the record high of 88.61 million barrels seen in the week of June 29.

In September and October, however, the inflow volumes were expected to fall significantly as China halts its buying spree for August-loading cargoes amid high domestic stock, Platts reported.

As MRC wrote previously, China’s massive build-up of crude oil inventories this year slowed somewhat in July, but remained elevated by historical standards as imports stayed near record levels.

We remind that Chinese polyethylene (PE) producers have been running plants at around 80-90%, and inventories were heard around 640,000 mt, stable in the first week of August.

We also remind that four large new crackers are poised to start operations in China in the next 3-6 months, in a sharp expansion of the country's petrochemical cracker sector.

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) -- Overall imports of unmixed polyvinyl chloride (PVC) into Belarus totalled 21,300 tonnes in the first six months of 2020, up by 9.3% year on year, according to MRC's DataScope report.

According to the Statistical Committee of the Republic of Belarus, local converters significantly increased their purchasing of PVC in June 2020 under the pressure of seasonal demand for finished products, overall imports totalled 5,600 tonnes versus 2,800 tonnes a month earlier. Russian resin accounted for the main increase in purchasing.

Thus, imports of unmixed PVC reached 21,300 tonnes in January-June 2020, compared to 19,400 tonnes a year earlier.

Russian producers with the share of about 84% of the Belarusian market were the key suppliers of resin to Belarus over the stated period. Producers from Germany and Ukraine with the share of about 7% and 6%, respectively, were the second and third largest suppliers.

MRC

1. China slows crude oil storage flows slightly in July

MOSCOW (MRC) -- China’s massive build-up of crude oil inventories this year slowed somewhat in July, but remained elevated by historical standards as imports stayed near record levels, said Hydrocarbonprocessing. One of the few bullish spots in the global oil market this year has been China’s ravenous appetite for crude, with imports for May, June and July being the highest three months on record. And, after a blip caused by lockdowns in the first quarter to combat the spread of the novel coronavirus, refinery processing has also been ramped up to record levels.




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