COVID-19 - News digest as of 09.10.2020

1. European Court of Auditors warns that EU risks not meeting its plastic recycling targets for 2025, 2030

MOSCOW (MRC) -- The European Court of Auditors (ECA), which audits the EU's finances, says in a recent review there is a significant risk that the EU will not meet its plastic packaging recycling targets for 2025 and 2030, said Chemweek. ECA notes that the EU's 2018 update of its legal framework for plastic recycling reflects the EU’s increased ambitions and could help boost recycling capacity, but says the scale of the challenge facing the EU member states should not be underestimated. The auditors call for new and more accurate recycling reporting rules and a tightening of plastic waste export rules. Concerted action is needed to get the EU to where it wants to be in 5–10 years’ time, ECA says. According to the review, packaging alone, such as yogurt pots or water bottles, accounts for about 40% of plastic use and more than 60% of plastic waste generated in the EU. However, packaging has the lowest recycling rate in the EU at slightly more than 40%, ECA says. The European Commission’s plastics strategy, adopted in 2018, included an update of its 1994 Packaging and Packaging Waste Directive and doubled the EU's recycling target to 50% by 2025 with a goal of 55% by 2030. Reaching these targets would be a significant step toward achieving the EU’s circular economy goals, the auditors say. "To meet its new recycling targets for plastic packaging, the EU must reverse the current situation, whereby we incinerate more than we recycle. This is a daunting challenge,” says Samo Jereb, the ECA member responsible for the review. “By resuscitating single-use habits amid sanitary concerns, the [COVID-19] pandemic shows that plastics will continue to be a mainstay of our economies, but also an ever-growing environmental threat."




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.

MRC

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, announced that two members of its board of directors, Stephen M. Zide and Christopher D. Pappas, have decided to retire from the board effective September 30, 2020, as per the company's press release.

In light of Mr. Zide’s and Mr. Pappas’ decisions, the board has appointed Jeanmarie Desmond and Matthew Farrell as their replacements, effective October 1, 2020 and November 1, 2020, respectively.

“On behalf of the Company and the board, I want to thank Steve and Chris for their leadership and dedication to Trinseo over the past 10 years,” said Frank Bozich, President and CEO, Trinseo. “They were both founding members of our board, and our success would not have been possible without them. I am personally thankful for their guidance and direction over the years and during my onboarding into the company.”

Mr. Zide has served as Chairman of the Board since 2010. Mr. Pappas served as the Company’s President and Chief Executive Officer from 2010 until his retirement in 2019 and has also been on the board of directors since 2010. As the board’s longest-tenured members, Mr. Zide and Mr. Pappas were instrumental in transitioning Trinseo from a carve-out business into a fully independent standalone public company.

“I’m grateful for the strong foundation that Mr. Zide and Mr. Pappas have created which continues to serve the Company,” Bozich continued. “Moving forward, we are excited to welcome Jeanmarie and Matthew to the board as we embark on a very exciting future and set out to achieve our strategic objectives and our recently announced sustainability goals. Their combined experience in the chemical space will be invaluable to our continued growth and innovation as a materials solutions provider.”

Jeanmarie Desmond is the former Executive Vice President and Chief Financial Officer of DuPont de Nemours, Inc. and has previously served as Vice President and Co-Controller for DowDuPont and as finance leader for the Specialty Products division following the merger of DuPont with Dow Chemical. Ms. Desmond brings substantial finance experience and extensive experience in the chemicals industry to the board of directors.

Matthew Farrell is the Chairman, President and Chief Executive Officer of Church & Dwight Co. Inc., serving since 2016 and as Chairman since 2019. Mr. Farrell served as Executive Vice President, Chief Financial Officer and Chief Operating Officer at Church & Dwight since 2014, and as its Chief Financial Officer since 2006. Mr. Farrell brings to the board of directors his experience as a chief executive officer, substantial financial and audit expertise and experience in the chemicals, industrial goods and consumer products industries.

As MRC reported before, Trinseo and its affiliate companies in Europe have announced a price increase for all polystyrene (PS), acrylonitrile-butadiene-styrene (ABS) and acrylonitrile-styrene copolymer (SAN) in Europe, according to the company's press release as of 5 October. Effective October 1, 2020, or as existing contract terms allow, the contract and spot prices for the products listed below rose as follows:

- STYRON general purpose polystyrene grades (GPPS) -- by EUR75 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR75 per metric ton;
- MAGNUM ABS resins - by EUR50 per metric ton;
- TYRIL SAN resins - by EUR30 per metric ton.

According to ICIS-MRC Price report, October prices of Russian PS continued their upward trend. A shortage of material remained in the domestic market. Traders said Nizhnekamskneftekhim reduced its offer prices for this month's PS purchases to 40%. October prices of Nizhnekamskneftekhim's GPPS grew for the agreed with buyers quantities to Rb89,000-95,000/tonne CPT Moscow, including VAT, whereas HIPS - to Rb93,000-99,000/tonne CPT Moscow, including VAT.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.8 billion in net sales in 2019, with 17 manufacturing sites around the world, and approximately 2,700 employees.
MRC

MOSCOW (MRC) -- Private equity firm SK Capital Partners has closed the acquisition from Baker Hughes of its specialty polymers business and renamed it NuCera Solutions, said Chemweek.

The acquisition was first announced in July. The newly named NuCera has manufacturing operations in Barnsdall, Oklahoma, and produces specialty low molecular weight olefin polymers, including differentiated functional polymers and high melting point polyethylene (PE) waxes. NuCera has appointed Steve McKeown as CEO and Shawn Ham as CFO, with immediate effect. McKeown was most recently president and COO at Galata Chemicals, while Ham served most recently as chief accounting officer at KMG Chemicals.

Morgan, Lewis & Bockius acted as legal counsel to SK Capital, with debt financing provided by KeyBanc Capital Markets. Evercore acted as financial advisor and King & Spalding served as legal counsel to Baker Hughes.

As MRC informed earlier, SK Global Chemical (SKGC), one of the largest producers of petrochemical products in South Korea, plans to permanently close cracking unit No. 1 in Ulsan (Ulsan, South Korea) on December 8 this year.
According to a letter from the company to its customers, production at this 190,000 tonnes of ethylene and 135,000 tonnes of propylene per year will be halted due to unfavorable market conditions. However, SKGC will continue to supply ethylene to its domestic customers from other crackers.

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.

SK Global Chemical is a division of SK Group, Korea's first refinery with over 50 years of experience. SK Group has over 70 thousand employees working in 113 offices around the world. Its largest enterprises produce mainly petrochemical products.
MRC

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.
MRC

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.
MRC