Stepan reports net income 28.2% higher YOY on strong consumer surfactant sales

MOSCOW (MRC) -- Stepan reports net income of USD33.2 million, 28.2% higher year-on-year (YOY), as demand for surfactants amid the COVID-19 pandemic more than offset the crisis’s impact on construction markets, said Chemweek.

Adjusted net income of USD1.56/share was up 30% YOY and beat the analysts’ consensus estimate of USD1.40/share, as reported by Refinitiv (New York). Net sales increased 2.8% YOY, to USD464.5 million, on a 5% increase in volumes.

"Surfactant third quarter operating income was up significantly on volume growth, which was mostly attributable to strong demand in the consumer product end markets driven by the fight against the COVID-19 virus,” says F. Quinn Stepan, Jr., Chairman, President and Chief Executive Officer. "Operations in Mexico delivered strong earnings growth versus the prior year quarter. Our Polymer business was down slightly versus the prior year quarter as North America continues to experience construction project delays and cancellations as a result of COVID-19. On a global basis, the demand for rigid polyols is gradually improving. Our Specialty Product business results were down due to reduced margins and customer order patterns."

Surfactant operating income doubled YOY, to USD41.2 million due to higher demand for cleaning, disinfection, and personal wash products due to COVID-19. Segment sales increased 11%, to USD333.8 million. Polymer operating income declined 3.9% YOY, to USD22.4 million, due to construction delays and cancellations. Segment sales fell 14%, to USD116.7 million. Specialty Product operating income fell 30.4% YOY, to USD1.6 million, on lower medium change triglycerides margins. Segment sales were down 17% YOY, to USD13.9 million.

Looking ahead, Stepan expects surfactant volumes for consumer end markets to remain strong, although demand for agriculture and oilfield are expected to be flat and down, respectively, in 2020. Although rigid polyols sales have slightly recovered, the company expects it will remained “challenged” in the short-term as as re-roofing and new construction projects are deferred or canceled. Longer-term, rigid polyols “remain attractive as energy conservation efforts and more stringent building codes should increase demand,” it adds. Specialty Product results are forecast to be flat compared to 2019.

As it was written earlier, Stepan will conduct planned maintenance on its 90,000 tonnes/year PA plant through end-October.

According to MRC's ScanPlast report, Russia's overall PVC production totalled 718,500 tonnes in January-September 2020, down by 0.3% year on year. At the same time, only two producers managed to increase their PVC output.

LG Chem profit more than doubles on big increases in petchems, battery earnings

MOSCOW (MRC) -- LG Chem reports that its third-quarter operating profit more than doubled to 902.0 billion South Korean won (USD7.9 million) versus W348.0 billion in the year-ago period, said Chemweek.

Sales were W7.5 trillion, a rise of 8.8% year on year (YOY). The company has not provided a net profit figure.
Profit at LG Chem's petrochemicals division also more than doubled to W721 billion, compared with W321 billion a year earlier. Sales declined by 9.6% YOY to W3.5 trillion. Earnings grew due to improved spreads resulting from increased prices for major products such as acrylonitrile-butadiene-styrene, polyvinyl chloride, and nitrile-butadiene rubber and continued low costs of raw materials. However, the company projects that the petchems unit will be hurt in the fourth quarter due to the traditionally slow demand season. It expects to “achieve sound performance due to continued increase in demand for major products."

Sales at LG Chem's new battery business jumped 42% YOY to W3.1 trillion and it achieved a huge increase in operating profit to W168 billion from W700 million in the same period last year. The launch of new electric car models by major European clients, an increase in sales of cylindrical batteries, and an expanded supply of IT products led to higher profit, it says. LG Chem expects fourth-quarter sales to grow and profit to improve through an expanded supply of car batteries and cylindrical batteries for electric vehicles.

Operating profit grew sharply at the advanced materials business to W59 billion, from W510 million in the corresponding period of the previous year. Sales increased 18% YOY to W9.6 trillion.

LG Chem’s other businesses are life sciences and farm hannong.

As MRC informed earlier, LG Chem will close its plasticizer plant in Naju for about three weeks from the beginning of November due to planned renovations. According to the source, the current production capacity of the enterprise is about 110,000 tonnes of plasticizers per year, and in mid-2021 it will be increased to about 160,000 tonnes per year.

According to MRC's ScanPlast report, Russia's overall PVC production totalled 718,500 tonnes in January-September 2020, down by 0.3% year on year. At the same time, only two producers managed to increase their PVC output.

South Korean LG Chem is one of the largest chemical companies in the world. The company manufactures a wide range of products, from petrochemicals to high-tech plastics.

Saudi Kayan moves to SAR 28m loss in Q3 2020

MOSCOW (MRC) -- Saudi Kayan Petrochemical Company, a Sabic affiliate, turned to a net loss of SAR 28.16 million in the third quarter (Q3) of 2020, against net profits of SAR 1.26 million in the corresponding period a year earlier, according to Chemweek.

The move to losses was driven by a slump in the average selling prices of the company's products, according to a bourse disclosure on Tuesday.

This came despite an increase in the quantities sold, a drop in the average feedstock cost, and lower financing costs and general and administrative expenses.

Revenues slipped by 8.6% yearly, standing at SAR 2.1 billion in the July-September period.

In the first nine months of 2020, the company’s losses deepened by 100.9% to SAR 943.14 million from SAR 469.36 million in the prior-year period.

As MRC wrote earlier, Saudi Kayan conducted a 21-day scheduled maintenance at its ethylene glycol (EG) and ethylene oxide (EO) facilities at Jubail, Saudi Arabia, starting on 1 February, 2020. The company said that some of its other facilities that rely on EG and EO feedstocks would also undergo periodic maintenance and improvements.

Ethylene oxide is one of the most important raw materials used in large-scale chemical production. Most ethylene oxide is used for synthesis of ethylene glycols, including diethylene glycol and triethylene glycol, that accounts for up to 75% of global consumption. Other important products include ethylene glycol ethers, ethanolamines and ethoxylates. Among glycols, ethylene glycol is used as antifreeze, in the production of polyester and polyethylene terephthalate (PET - raw material for plastic bottles), liquid coolants and solvents.

According to ICIS-MRC Price report, contract prices of Russian PET plants increased by Rb1,000-1,500/tonne this month under the pressure from the growth of the dollar exchange rate against the rouble.

Saudi Kayan Petrochemical Company is a manufacturing affiliate of the Saudi Basic Industries Corporation (Sabic, 35%). Saudi Kayan is the fifth-largest petrochemical manufacturer by market value in Saudi Arabia.

EPA releases federal marine litter strategy

MOSCOW (MRC) -- The US Environmental Protection Agency (EPA) on Monday released a federal strategy for addressing marine litter that includes broad efforts to incentivize recycling and build infrastructure both domestically and overseas, reported Chemweek.

“Internationally, up to 28 billion pounds of waste makes it into our oceans every year, harming marine life and coastal economies,” says EPA administrator Andrew Wheeler. “Marine litter is a top priority for this Administration, and working together with our global partners, we aim to solve the current growing marine litter problem in our shared oceans.”

According to EPA, five countries in Asia - China, Indonesia, the Philippines, Thailand, and Vietnam - account for over half of the plastic waste input into the ocean. The majority of marine litter comes from land-based sources, such as littering and the mismanagement of waste, and the most effective way to combat marine litter is to prevent and reduce land-based sources of waste from entering the oceans in the first place.

The federal strategy highlights four pillars for addressing marine litter: building capacity, incentivizing the global recycling market, promoting research and development, and promoting marine litter removal. It also identifies existing US legal authorities and federal programs already under way, such as a collaboration between EPA, the US Agency for International Development (USAID), the Alliance to End Plastic Waste, and the National Oceanic and Atmospheric Administration (NOAA) to implement innovative programs and finance initiatives around the world to provide approaches and tools to countries that are struggling with this problem. Domestically, through EPA’s Trash Free Waters program, EPA works directly with states, municipalities, and businesses to reduce litter, prevent trash from entering waterways, and capture trash that is already in our waters. Currently, over 50 partnership projects are active across the US.

To date, NOAA’s Marine Debris Program has provided over $24 million in funding to local partners for prevention, removal, and research initiatives to address marine debris. Thus far, the program has resulted in the removal of over 22,000 metric tons of marine debris from US waters, engagement with more than 65,000 students on marine debris prevention activities, and development of 12 marine debris response guides and 11 regional action plans.

In addition, President Trump’s 2021 and 2022 budget proposals include over USD7 million in funding for EPA to address marine litter domestically and internationally. The funding would allow EPA to expand the international Trash Free Waters program to large source countries, which are located in Southeast Asia. The funding would also allow the expansion of the domestic Trash Free Waters program, allowing for even more domestic place-based projects.

The American Chemistry Council (ACC) welcomed the federal strategy, saying better global coordination is critical to strengthening the response to plastic waste and creating a circular economy for plastics. “The Environmental Protection Agency’s newly introduced strategy will implement the Save Our Seas Act, bringing to bear the expertise of NOAA, EPA, USAID, DOE, and other federal agencies to help keep used plastics out of our ocean,” says Joshua Baca, vice president of ACC’s Plastics Division, in a statement. “We actively support the bipartisan Save Our Seas (SOS) Act (versions 1.0 and 2.0), as well as the RECOVER Act, the RECYCLE Act, and the PLASTICS Act, which seeks to reduce ocean plastics by encouraging innovative, market-based solutions and catalyzing private capital to enable the development of integrated waste management systems and strengthen markets for recycling materials.”

As MRC informed earlier, Braskem has formed first partnership for removing household plastic waste from landfill in Greater Sao Paulo. The partnership forged between Braskem and Tecipar, the Brazilian company specializing in environmental engineering, will avoid some 2,000 tons of plastic waste annually from being discarded in the landfill of Santana do Parnaiba, a city in the metropolitan area of Sao Paulo. This volume is equivalent to 36 million units of plastic packaging made from polyethylene (PE) and polypropylene (PP). The partnership reinforces Braskem's commitment to the Circular Economy and is aligned with the business strategy of the company, which is engaged in supporting the development of the recycling chain and its market.

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.

Axalta easily beats estimates on cost cuts despite lower YOY demand

MOSCOW (MRC) -- Axalta reported third-quarter net income up 26.0% year-on-year (YOY), to USD82.5 million, on net sales down 7.2%, to USD1.03 billion, said Chemweek.

Adjusted earnings totaled 59 cents/share, up 13.5% YOY and easily beating analysts’ consensus estimate of 33 cents/share, as reported by Refinitiv (New York, New York). The decline in sales was driven by a 6.0% YOY drop in volumes, and 1.4% lower average price and product mix.

Sales grew 57.2% sequentially, indicating a solid rebound from the pandemic-induced shutdowns in the second quarter. “Lower volumes across all end-markets were driven by ongoing COVID-19 related macroeconomic impacts, though volumes improved considerably through the quarter and exceeded earlier expectations due to faster recovery pacing in key end-markets,” Axalta says.

"Although economic impacts from the coronavirus pandemic persisted across our business in the period, we [saw] rapidly improving demand, and the effectiveness of our cost management programs has continued to help offset volume impacts,” says Axalta chairman and CEO Robert Bryant. Cost cuts helped boost operating earnings, Bryant adds.

Performance coatings segment sales fell 5.7% YOY, to USD682.7 million, while segment adjusted EBIT grew 7.2%, to USD133.9 million. Volumes fell 4.5% YOY, mainly due to the automotive refinish business, with industrial volumes flat. Lower operating and variable drove profits higher.

Transportation coatings segment sales declined 10.2% YOY, to USD344.2 million, while segment adjusted EBIT was up 30.4%, to USD48.5 million. Volumes fell 9.0% YOY, mainly due to lower automotive production volumes. Lower operating and variable costs helped increase profits.

Axalta expects fourth-quarter 2020 sales to be down 6-8% YOY from 2019. For the full-year, sales are expected to be down by about 18% YOY.

As MRC informed earlier, Axalta Coating Systems Ltd. announced its financial results for the fourth quarter and full year ended Dec. 31, 2019. Net sales of USD1,098.4 million for the fourth quarter decreased 5.8 percent, including 1.3 percent negative foreign currency translation impact and a two percent impact from the sale of a consolidated Joint Venture interest in Q2 2019.

As MRC informed earlier, Axalta Coating Systems has completed its previously announced acquisition of the Spencer Coatings Group, a leading manufacturer of high performance industrial coatings for heavy-duty equipment, general industrial, oil and gas, and glass coatings segments.

As per MRC, Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight 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 January-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year.