Stolt-Nielsen's profits rise, tanker market momentum builds

MOSCOW (MRC) -- Stolt-Nielsen has reported net profit of USD29.2 million for the third quarter, a substantial improvement on net profit of USD3.4 million in the prior-year period and USD3.6 million in the second quarter, despite sales that declined over 8% year on year (YOY) to USD474.0 million, according to Chemweek.

The improved result was mainly driven by healthy volumes, lower fuel prices in its tankers and tank containers businesses, and lower overall administrative and general expenses, it says. “We are cautiously optimistic that the momentum of a strengthening chemical tanker market will continue,” says CEO Niels Stolt-Nielsen. “Longer term, the favorable supply/demand outlook should provide a good foundation for continued improved results at Stolt Tankers,” he says. For its Stolthaven tank terminals business, the company expects to see healthy demand in most regions, he says. Stolt’s tank containers business is also seeing “signs of improvement, particularly in Asia,” after a seasonally slow third quarter, he adds.

While the global economic outlook remains uncertain, the company is also cautiously optimistic about the fourth quarter and beyond, based on the contract portfolio it has secured across its three logistics businesses, according to Stolt-Nielsen. The COVID-19 pandemic is still impacting scheduling in its tankers business, “necessitating costly rerouting of ships in order to make overdue crew changes,” he says. The company was able to secure five modern 26,000-deadweight metric ton stainless-steel chemical tankers in the secondhand market “at a very attractive price,” he notes. The tankers are expected to be delivered starting in December.

The chemical tankers business reported third-quarter operating profit of USD28.1 million, up from USD15.0 million a year earlier, with lower bunker costs and improved results from bunker hedging more than offsetting reduced revenue. Sales were USD25 million lower YOY at USD266.3 million, mainly because of fewer operating days and lower freight rates driven by the lower bunker prices, the company says.

The tank terminals segment saw operating profit rise USD3.2 million YOY to USD22.7 million, with results continuing to improve “as demand for chemicals used for packaging and healthcare products remained strong, offsetting weak demand for those bound for the automotive and construction sectors,” says Stolt-Nielsen. Sales were slightly lower YOY at USD59.8 million. The average terminals utilization rate slipped lower to 93.7% from 95.2% in the second quarter.

The tank containers business reported a rise of USD4.5 million YOY to USD17.5 million, reflecting lower move-related expenses, on sales of USD125.4 million, down almost USD10 million on the prior-year period.

We remind that, as MRC informed earlier, Anglo-Swiss company Ineos delivered its first US shale gas shipment into Rafnes, Norway on March 23, 2016. The INEOS Intrepid, the world’s largest LNG multi gas carrier, left the Marcus Hook terminal near Philadelphia on March 9, bound for Rafnes carrying 27,500 cubic meters of US ethane gas. Ineos said this is the first US shale gas shipped to Europe and represents the culmination of a long-term investment by Ineos.

To receive the gas, Ineos has built the largest two ethane gas storage tanks in Europe at Rafnes in Norway and Grangemouth in Scotland. Ineos uses the ethane from US shale gas in its two gas crackers at Rafnes and Grangemouth, both as a fuel and as a feedstock.

Ethylene and propylene are the main feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

Mitsubishi Chemical completes acquisition of Gelest

MOSCOW (MRC) -- New Mountain Capital, LLC, announced that the sale of Gelest, Inc. to Mitsubishi Chemical America, Inc., the U.S. subsidiary of Mitsubishi Chemical Corporation, has closed following the clearing of all regulatory approvals, said Chemweek.

Gelest is a global leader in silicones, organosilanes, metal-organics, and specialty monomers for high-growth materials-science intensive applications including medical devices, life sciences, microelectronics and personal care. In March 2017, NMC made a majority investment in Gelest and worked closely with Gelest management to scale the company through organic initiatives and M&A. Under New Mountain’s ownership, Gelest more than doubled its enterprise value by augmenting its leadership team and building its capabilities in the life sciences, medical device, and microelectronics end markets, both organically and through the strategic acquisition of Bimax Chemicals in 2019.

"Since partnering with Gelest in 2017, we have been extremely impressed by the management team and Gelest’s ability to innovate continuously to serve the evolving needs of its demanding customers,” said Andre Moura, Managing Director at NMC and lead director of Gelest. “We are proud to have supported Gelest’s execution of an organic and inorganic growth strategy, and we thank everyone at Gelest for an exceptional partnership."

"We are extremely proud of the efforts of everyone who has contributed to make Gelest the company that it is today, with world-class technology and supply capabilities, made possible by the industry leading team we have built and support from NMC for our strategic investment programs. This has made Gelest an extremely valuable partner to customers around the world," said Dr. Barry Arkles, Chair and founder of Gelest.

"New Mountain Capital has been a terrific partner and helped us to significantly grow the company over the past three years. We now look forward to joining MCC where their capabilities and breadth will allow Gelest to create even more value for customers and opportunities for employees," said Ken Gayer, CEO of Gelest.

Gelest will continue to execute its strategy of helping customers succeed by assisting them to develop and supply chemicals technology to solve their most challenging materials science problems and enable their new product roadmap.

As MRC informed earlier, Mitsubishi Chemical, a subsidiary of Mitsubishi Chemical Holdings Corporation, halted methyl methacrylate (MMA) production in Otake, Japan in mid-September for scheduled repairs. This production with a capacity of 110,000/tonne of MMA per year will be closed until mid-November.

The main application, consuming approximately 75% MMA, is in the production of polymethyl methacrylate acrylic plastics (PMMA). Methyl methacrylate is also used to produce methyl methacrylate-butadiene-styrene copolymer (MBS) used as a modifier for polyvinyl chloride (PVC).

According to MRC's ScanPlast report, September total production of unmixed PVC grew to 86,000 tonnes from 75,500 tonnes a month earlier, SayanskKhimPlast and RusVinyl increased their capacity utilisation. Overall output of polymer were 718,500 tonnes in the first nine months of 2020 versus 720,500 tonnes a year earlier, only two producers raised their production volumes, and RusVinyl cut its output.

Mitsubishi Chemical, a Japanese integrated chemical company, was established on October 1, 1990 through the merger of Mitsubishi Kasei and Mitsubishi Petrochemical Co. Due to its wide range of activities, it is one of the ten leading chemical companies in the world.

Unipetrol completes PE3 investment in Czechia

MOSCOW (MRC) -- Unipetrol has completed the highest ever investment in the Czech chemical industry. Following the completion of the respective tests, the company took delivery of the second part of the new polyethylene unit, PE3, said the company.

The first part of the unit producing natural polyethylene (the Natural Line) was put into operation this spring. The current delivery concerns the Black Line for black polyethylene. One of the most advanced facilities of its sort in Europe manufacturing enhanced products with high margin will have a positive impact on the development of Unipetrol and the entire ORLEN Group, which also includes Unipetrol. Polyethylene is used in many applications, including the packaging, cosmetic and construction industry, or the manufacture of chemical products for households.

"The new polyethylene unit will produce 270,000 tonnes per year of state-of-the-art high-density polyethylene (HDPE) granulate. It will significantly increase the production of our Litvinov plant. The lower energy intensity and higher production stability brought by modern manufacturing technologies will result in a lower impact on the environment. We count on major investments in our production technologies in the future despite the adverse macroeconomic situation,” says Tomasz Wiatrak, Chairman of the Board of Directors of the Unipetrol Group.

Polyethylene is widely used, for example, in the pharmaceutical, cosmetic and construction industries or in the production of household chemical products. The new PE3 unit will replace the current PE1. Operations of the PE2 unit with an annual production of 200,000 tonnes will continue without interruption. The total production capacity of the petrochemical site in Litvinov will grow from 320,000 to 470,000 tonnes of polyethylene per year. The planned capital expenditure totals about CZK 9.6 billion.

The investment will enable deeper integration of the petrochemical and refinery production both within the Unipetrol Group and the entire PKN ORLEN Group. The new technologies will allow Unipetrol to expand its activities in new market segments and boost its competitiveness in the petrochemical industry nationally and internationally.

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

The Unipetrol Group is the largest refinery and petrochemical company in the Czech Republic. It focuses on crude-oil processing and on the production, distribution and sale of vehicle fuels and petrochemical products – particularly plastics and fertilisers. In all these areas, it belongs among the important players on the Czech and Central European market. The Unipetrol Group encompasses refineries and production plants in Litvinov and Kralupy nad Vltavou, Paramo with its Mogul brand in Pardubice and Kolin, Spolana Neratovice, and two research centres in Litvinov and Brno. Unipetrol also includes a network of Benzina filling stations in the Czech Republic and Slovakia. With 417 filling stations, Benzina is the largest chain in the Czech Republic. Unipetrol is one of the largest companies in terms of turnover in the Czech Republic. It earned over CZK 130 billion last year and employs more than 4,800 persons. In addition to its business development, Unipetrol is proud to be a socially responsible corporation. Therefore, it pays an equal amount of attention to initiatives which focus on the cultivation and support of sustainable development, education, local communities, and the environment. In 2005, Unipetrol became a member of the PKN Orlen Group, the largest crude-oil processor in Central Europe.

Crude oil futures inch higher despite US crude build

MOSCOW (MRC) -- Crude oil futures ticked up during mid-morning trade in Asia Oct. 8, clawing back some of the overnight losses, as the impact of a build in US crude inventories was negated by the support offered to the market by draws in product inventories and escalating supply disruptions in Norway and the US Gulf of Mexico, reported S&P Gllobal.

At 11.23 am Singapore time (0323 GMT), ICE Brent December crude futures were up 13 cents/b (0.31%) from the Oct. 7 settle to USD42.12/b, while the NYMEX November light sweet crude contract was up 5 cents/b (0.13%) at $40/b. Both international crude markets had dived 1.55% and 1.77% to settle at USD41.99/b and USD39.95/b respectively on Oct. 7, when the cancellation of US stimulus negotiations had rattled the market.

The uptick came despite data from the US Energy Information Administration showing that, due to increased US production and a slowdown in exports, US commercial crude inventories jumped 500,000 barrels to 492.93 million barrels in the week ended Oct. 2.

The impact of the crude inventory build was cushioned by indications of improved downstream demand, as the EIA data also showed that, in the same week, US distillate inventories fell 960,000 barrels to 171.8 million barrels and US gasoline inventories fell 1.44 million barrels to 226.75 million barrels, 0.4% lower than the five-year average gasoline inventory.

Stephen Innes, chief market strategist at AXI, in an Oct. 8 note said: " Prices received some support from a draw in product stocks in the DOE data, which offset small crude build."

In addition, escalating supply disruptions in Norway and the US Gulf has also buoyed oil prices.

With 330,000 b/d of oil equivalent production already offline in Norway, the Lederne union in Norway said that it will extend its strike on Oct. 11 to include two platforms at the flagship Ekofisk field, two satellite fields that feed the Oseberg crude stream, and Kristin, a satellite of the Asgard crude stream, S&P Global Platts reported on Oct. 7.

"Around 330,000 barrels a day have already been lost to the strike, and (the Lederne union's latest move) is expected to add about 170,000 more," Innes said.

Meanwhile, in the US Gulf of Mexico, nearly 1.49 million b/d of crude production and 1,335 MMcf/d of natural gas production -- 80.42% and 49.26% of total offshore output, respectively, -- was offline, according to the US Bureau of Safety and Environmental Enforcement, as producers in the region braced for the Hurricane Delta.

Lastly, hopes of fiscal relief continued to lift market sentiment. US President Donald Trump, after shutting down discussions over a US stimulus package till after the elections, said he supported passing stand-alone relief provisions instead.

ANZ analysts in an Oct. 8 note said: "House leader Nancy Pelosi signaled openness to such a bill, resulting in a risk on tone enveloping markets."

As MRC informed earlier, global oil refiners reeling from months of lackluster demand and an abundance of inventories were cutting fuel production into the autumn because the recovery in demand from the impact of coronavirus has stalled, according to executives, refinery workers, and industry analysts. Refiners cut output by as much as 35% in spring as coronavirus lockdowns destroyed the need for travel. As lockdowns eased, refiners increased output slowly through late August. But in top fuel consumers the United States and elsewhere, refiners have been decreasing rates for the previous several weeks in response to increased inventories, a sustained lack of demand, and in response to natural disasters.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

More than 90% of Gulf oil offline as LNG plants, refineries prep for hurricane

MOSCOW (MRC) -- More than 90% of crude oil production in the US Gulf of Mexico went offline in advance of Hurricane Delta as LNG plants and refineries shuttered or hunkered down in advance of the storm's anticipated landfall on Oct. 9 in southwestern Louisiana, reported S&P Global.

Delta is targeting the same area already devastated by Hurricane Laura in late August, so the major refineries near Lake Charles, Louisiana remained closed. However, US Gulf Coast LNG producers were shutting down or making emergency preparations on Oct. 8 ahead of Delta now that most of the Gulf's oil and gas flows have already come offline.

More than 1.69 million b/d of US Gulf of Mexico crude production and 1.675 Bcf/d of natural gas output were shut in Oct. 8, 91.53% and 61.82% of total offshore output, respectively, according to the US Bureau of Safety and Environmental Enforcement. BSEE said 279 of the Gulf's platforms and rigs were evacuated, almost 45% of the Gulf's operating facilities offshore.

The offshore Gulf of Mexico is home to roughly 1.9 million b/d of crude production capacity, according to the US Energy Information Administration.

Sempra Energy's Cameron LNG plant in southwestern Louisiana is again shuttering after recently shipping its first cargoes since August, when the facility was previously shut down from Laura, the company said Oct. 8.

However, Cheniere Energy's Sabine Pass LNG facility and Freeport LNG in Texas said they are activating emergency response plans, but maintaining operations for now.

"We will staff Sabine Pass with a limited ride-out crew to safely manage operations and will provide updates as appropriate following the storm," Cheniere spokeswoman Jenna Palfrey said on Oct. 8.

Delta is forecast to strengthen into a major Category 3 hurricane and then weaken back into a still-powerful Category 2 storm before landfall. A bevy of tropical storms and hurricanes have disrupted oil and gas operations in the Gulf this year for what could end up as the most active Atlantic storm season in recorded history, potentially surpassing the record-setting season in 2005.

Shell, BP and Chevron said they took the extra steps of shutting in production at all of their operated Gulf platforms and facilities.

"As a precautionary measure, Shell has shut in production at all nine of its assets and has evacuated all personnel," Shell said in an Oct. 8 statement. "All drilling operations have been safely paused."

Shell also said it will closely track potential impacts at its Louisiana refineries in Convent and Norco, and its chemicals plant in Geismar.

BP said Oct. 6 it would shut in production and evacuate all four of its offshore platforms: Thunder Horse, Atlantis, Mad Dog and Na Kika. Likewise, Chevron shut in production and evacuated crews from all of its Gulf platforms.

ExxonMobil said it evacuated its Hoover platform in the Gulf, but that its Baton Rouge refining complex is continuing to operate.

Crude exports from Louisiana are feeling the impact as well. A LOOP spokesperson said Oct. 7 that the offshore port's marine terminal had suspended operations in advance of the storm.

Kinder Morgan's NGPL pipeline system made a force majeure declaration on Oct. 8 because of the advancing storm, and the connected Sabine Pass LNG plant saw its feedgas nominations fall by about 500 Mmcf to 3.078 Bcf/d on the same day because of the pipeline closure.

Hurricane Delta's projected path previously shifted west away from New Orleans and toward Lake Charles, Louisiana, meaning fewer refineries are currently in the direct path of the storm. Still, a combined 2.4 million b/d of operating capacity is in the path of Delta in Texas and Louisiana.

Area refiners have yet to report any shutdowns, but there is still time ahead of the storm's landfall to do so if necessary.

Roughly 813,500 b/d of capacity in the path of the storm remains offline from previous hurricanes, including the Phillips 66 and Citgo Petroleum refineries near Lake Charles.

Hurricane season extends through the end of November.

As MRC informed earlier, hurricane Delta is on track to reach the US Gulf Coast (USGC) between High Island, Texas, northeast of Houston, and Grand Isle, Louisiana, south of New Orleans, Friday. Located north of Mexico’s Yucatan Peninsula Wednesday afternoon, the storm is forecast to strengthen as it heads north toward the heart of the US petrochemical industry.

We remind that strengthening hurricane Delta forced the closure of 29.2% of offshore crude oil production in the US-regulated northern Gulf of Mexico by midday Tuesday, regulator US Bureau of Safety and Environmental Enforcement (BSEE).

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.