EMS Group profits, sales fall on COVID-19 impact

MOSCOW (MRC) -- EMS Group (Domat, Switzerland), a producer of high-performance polymers and specialty chemicals, reports first-half 2020 results that deviate slightly from the provisional results it announced in July, according to Chemweek.

The company says net income declined 27.8% year on year (YOY) to 192 million Swiss francs (USD211 million) on sales that fell 26.8% YOY to SFr845 million. EBITDA and EBIT also went down 26.4% and 28.2%, to SFr254 million and SFr227 million, respectively.

Sales in the company's high-performance polymers division were 27.1% lower YOY at SFr741 million, with EBIT down 28.6% to SFr200 million. The specialty chemicals division recorded a 24.6% YOY drop in sales to SFr104 million, with EBIT of SFr27 million, 25% less than the prior-year period. The company’s net liquidity increased by SFr167 million, or 24% YOY, to SFr863 million, it says.

EMS expects the impact of COVID-19 to last throughout 2020 and says that, depending on “the respective epidemiologic and financial state measures,” it is possible “that sudden and selective periods of growth or slumps will occur and that these may be accompanied by currency shifts.” As a result, EMS continues to expect EBIT for 2020 to be less than in 2019, it says.

As MRC reported earlier, Merck KGaA says it plans to build an EUR18-million (USD20.6 million) laboratory facility at Buchs, Switzerland, to support its rapidly growing reference materials business. The facility will include laboratory and office space in a three-story, 1,125-square-meter building, Merck says. Completion of construction is scheduled for December 2021 and the move to the facility is planned for early 2022, the company says. Merck anticipates that about two dozen jobs will be created.

We remind that after the May fall in June, Russia"s output of products from polymers rose by 16.9% due to the easing of quarantine restrictions and seasonally stronger demand. However, this figure increased by 1.3% year on year in the first six months of 2020.

Petronas Chemicals, LG Chem to build plant at Pengerang complex

MOSCOW (MRC) -- Petronas Chemicals Group Bhd (PCG) has entered into a strategic partnership with LG Chem Ltd to build a nitrile butadiene latex manufacturing plant at Pengerang Integrated Complex (PIC) in Johor, according to New StraitsTimes.

The integrated chemicals producer said the partnership was timely amid a period where the demand for nitrile gloves was growing rapidly.

"In addition, the collaboration will create new revenue streams and unlock new markets by optimising resources in both companies.

"At the same time, PCG and LG Chem will work together to offer various grades and new applications of NBL as well as develop high-value added products through continuous research and development (R&D) and investments," PCG said.

Construction of the plant will begin in 2021 while production is scheduled to start in 2023.

"When completed, the plant will have an annual NBL production capacity of 200,000 tonnes," it said.

PCG managing director and chief executive officer Datuk Sazali Hamzah said the partnership marked a strategic step in developing its specialty chemicals portfolio, underpinning its position as a leading integrated chemicals producer in Malaysia.

Sazali said the partnership also provided a compelling entry point into the growing NBL-based products and enabled PCG to enhance its presence in attractive end-markets, especially for personal care and healthcare, mainly in Asia Pacific.

"This collaboration further strengthens the pursuit of our growth agenda, having acquired a silicone player last year.

"With more specialty chemicals in our portfolio, we are moving into segments with higher growth potential," he said.

NBL is a synthetic rubber that uses butadiene as the main feedstock and is a core raw material for making nitrile gloves, which is widely used in industries such as healthcare, medical, and food, among others.

Recently, the use of nitrile gloves had seen rapid growth in helping to prevent the spread of Covid-19 and other infections.

The rising demand of nitrile gloves is at an annual average of more than 10 per cent and is expected to account for 70 per cent of the entire latex gloves market in 2024.

As MRC wrote before, in early May, 2020, Petronas Chemicals (Kuala Lumpur), Malaysia’s leading petrochemicals player, reported a drop in first-quarter sales and earnings citing the coronavirus disease 2019 (COVID-19) pandemic. The sharp decline in petrochemical product prices following the outbreak of COVID-19, the deepening industry downcycle as crude oil prices collapsed due to the OPEC+ fallout, and the recessionary global economic outlook have hurt results, the company says.

We remind that 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.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.

Venezuela restarts gasoline output at Cardon refinery reformer unit

MOSCOW (MRC) -- Venezuela’s state-run oil company, Petroleos de Venezuela, has restarted gasoline output at the 310,000-barrel-per-day (bpd) Cardon refinery, reported Reuters with reference to five people familiar with the matter.

The move will provide partial relief to widespread fuel shortages in the once-prosperous OPEC nation, whose 1.3 million- bpd refining network is mostly halted because of years of underinvestment and lack of maintenance, as US sanctions restrict the country’s ability to import fuel.

Cardon’s reformer is currently producing some 25,000 bpd of gasoline for the internal market by processing naphtha and raising its octane levels, according to the people, most of whom spoke on condition of anonymity. The reformer had been halted for several months due to a lack of naphtha supply.

The company is still working to restart Cardon’s fluid catalytic cracking (FCC) unit, which is also crucial for gasoline production, one of the people said. That unit was halted in July, just days after restarting.

PDVSA did not immediately respond to a request for comment.

The only other plant producing gasoline in Venezuela is PDVSA’s 146,000-bpd El Palito refinery, whose FCC is producing some 20,000 bpd of gasoline. That is not nearly enough to satisfy domestic demand, leading to sprawling lines outside service stations across the country.

Union leader Ivan Freites told Reuters that the gasoline being produced at Cardon’s reformer had an octane level of 90, whereas most vehicles in Venezuela required gasoline with an octane level of either 91 or 95.

As MRC informed before, Russian state oil company Rosneft's decision to cease operations in Venezuela and sell its assets there to a Russian government-owned company was a "maneuver" made in reaction to collapsing oil prices, a US State Department official said earlier this year.

We remind that Angarsk Polymers Plant, part of Russian oil giant Rosneft, shut down its low density polyethylene (LDPE) production for a scheduled turnaround on 22 June. The outage was scheduled to last for one month. The plant"s annual production capacity is about 75,000 tonnes.

According to MRC's ScanPlast report, June LLDPE shipments to the Russian market rose to 38,600 tonnes from 31,290 tonnes a month earlier, production increased. Russia;s overall LLDPE shipments totalled 191,700 tonnes in the first six months of 2020, down by 7% year on year. Production increased by 89% year on year, whereas exports grew by several times.

Four missing after dredging vessel fire at Corpus Christi port in Texas

MOSCOW (MRC) -- Four members of a dredging vessel are missing after a fire and explosion near the Port of Corpus Christi, Texas, on Friday, causing the US Coast Guard to close the port’s inner harbor, reported Reuters.

Two injured crew members have been rescued from the dredging vessel Waymon L Boyd after it caught fire, while a search for missing crew members continues, the Coast Guard said.

The fire started shortly after 9:00 AM ET (1300 GMT) in an area referred to as “refinery row” because of its proximity to several refining facilities, according to a spokeswoman for the Corpus Christi fire department.

An investigation into the incident is underway. Authorities have not said what caused the explosion that sent six people to hospital. Local media reported an underwater pipeline was breached and a fiery explosion engulfed the vessel.

Names of the missing crew members have not been disclosed. The Coast Guard said the ship broke apart and sank. The four were working for Orion Marine Group, which was dredging in the Corpus Christi ship channel at the time of the explosion.

“We continue to work alongside the US Coast Guard, the Port of Corpus Christi Authority, TCEQ, and the other agencies to assist in the recovery of our personnel and the wider investigation into this incident,” said Orion Chief Executive Mark Stauffer.

As MRC wrote before, a dredging barge hit a natural gas liquids pipeline of Enerprise Products at the Port of Corpus Christi, Texas early Aug. 21, causing an explosion. "Shortly after 8 a.m. CDT today Enterprise Products Partners ("Enterprise") experienced a release of propane from a portion of its South Texas pipeline system at the Port of Corpus Christi. The incident resulted in a fire and unconfirmed reports of injuries," Enterprise said in a statement. "Initial findings indicate that the pipeline was struck by a third-party dredging barge working in the immediate vicinity, however a full investigation will be conducted to determine the cause." Enterprise "has isolated the affected segment of the pipeline," the company said.

We remind that Enterprise Products Partners LP (EPP), through one of its affiliates, has entered a long-term agreement with Marubeni Corp. of Japan, under which Marubeni will offtake polymer-grade propylene (PGP) produced from a second (PDH 2) plant currently under construction at EPP’s operations in Mont Belvieu, Tex., for supply to global customers. Concluded on June 16, the PGP offtake agreement is part of a long-term collaboration between EPP and Marubeni that also includes the export of liquefied ethylene, the first 25-million lb vessel of which loaded and sailed from EPP and Navigator Holdings Ltd.’s 50-50 joint venture marine terminal at Morgan’s Point, Tex., in early January, EPP and Marubeni said on June 30.

We also remind that in July, 2020, Enterprise Products conducted maintenance at its propane dehydrogenation (PDH) unit in Mont Belvieu, Texas. This PDH unit has the capacity of 750,000 mt/y of propylene.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's DataScope report, 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.

Crude prices fall on weak European data, rise in novel coronavirus cases

MOSCOW (MRC) -- Oil prices fell Aug. 21 as weak European economic recovery news teamed up with concerns about sluggish crude demand amid the ongoing coronavirus pandemic, reported S&P Global.

Crude prices were trading substantially more than USD1/b lower in midday US trading, but finished closer to 50 cents down as the curtain came down on the week. Front-month NYMEX WTI shaved off 48 cents and settled at $42.34/b while ICE October Brent dropped 55 cents to USD44.35/b.

Europe's manufacturing purchasing data hit a two-month low, according to figures released Aug. 21, although US manufacturing purchasing managers' index (PMI) data rose a bit. But the more positive US numbers were not enough to boost crude markets, said Edward Moya, senior market analyst at OANDA.

"Oil prices remained heavy after European PMI data confirmed the V-shaped recovery was not happening, as many regions lost momentum," Moya said. "The demand outlook needs both the US and Europe to be firmly in recovery mode."

Craig Erlam, also of OANDA, said a strengthening US dollar and still rising novel coronavirus cases across much of the world were also dragging on crude markets. And there was a softening risk appetite for oil at the end of the week, he said.

US crude production is down from nearly 13 million b/d before the pandemic to about 10.7 million b/d in August, according to the US Energy Information Administration.

Erlam said he questions whether US output will bearishly begin rising again with oil seeming to stay above USD40/b. This week, both Enverus and Baker Hughes reported small increases in US drilling rig activity.

As for refined products, NYMEX September RBOB dipped 1.24 cents to USD1.2841/gal and front-month NYMEX ULSD fell 3.87 cents to USD1.2080/gal.

Crude markets also could be reacting to continued fallout from the latest OPEC+ meeting and cynicism that the alliance will be able to persuade over-producing nations - Iraq, Nigeria, Angola and Kazakhstan - to comply with their quotas despite verbal agreements, said Bjornar Tonhaugen, Rystad Energy's head of oil markets.

"It looks quite challenging for certain members, such as Iraq, to compensate for their overproduction in previous months and that's taken as bearish news by the market today," Tonhaugen said, referencing OPEC's "naughty corner."

"COVID-19 does not seem to slow down and we see some return of restrictions in Europe and beyond. Even though OPEC+ seemed mostly optimistic about ... demand's recovery, we see it rather lagging," he said. "Demand, in our view, is only likely to near pre-pandemic levels in 2021, and the rest of 2020 will be a muted struggle while facing the effects of the second wave."

The positive spin for oil though, Tonhaugen added, is that most OPEC+ nations are complying with their cuts and there seems to be a solid floor on oil for now at close to USD40/b.

Crude prices could be impacted in the week starting Aug. 24 though as two potential hurricanes simultaneously move across the Gulf of Mexico and near a bevy of oil-producing platforms.

Tropical Storm Laura, which the US National Hurricane Center is projecting could strengthen into a hurricane on Aug. 24, is heading into the Gulf and aiming toward Florida and Alabama.

Likewise, Tropical Depression 14, which also could become a hurricane on Aug. 24, is moving to the Yucatan Peninsula and toward Texas, according to the NHC.

As MRC informed earlier, in advance of two tropical storms headed toward the US Gulf of Mexico, upstream operators have shut in 13% of the region's total oil production and more than 4% of its natural gas, reported according to the Bureau of Safety and Environmental Enforcement's (BSEE) statement Aug. 22. Total shut-in crude amounts to about of 240,785 b/d of oil, along with 19,000 Mcf/d of natural gas, or 4.39% of total US Gulf gas production, BSEE said. Six producing platforms, or just under 1% of all those in the US Gulf, have been evacuated, along with four rigs, which are 40% of all rigs in the Gulf. In the past 24 hours, BP, Shell and Chevron - three of the US Gulf's biggest producers - said they have shut down production on assorted platforms in the projected paths of the storms.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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.