Petro Rabigh swings to net loss on lower margins, market conditions

MOSCOW (MRC) -- Rabigh Refining and Petrochemical Company (Petro Rabigh) swung to net losses of SAR 610 million in the third quarter (Q3) of 2020, versus net profits of SAR 394 million in the same quarter a year earlier, said Chemweek.

The return to losses was driven by the challenging market conditions and the prevailing coronavirus pandemic, which led to lower refinery margins, according to a bourse statement on Tuesday.

Moreover, the decline in global travel has severely impacted demand for Jet fuel.

Revenues amounted to SAR 7.1 billion in the three-month period ended 30 September 2020, a yearly decrease of 19.3%.

Over the first nine months of the year, the Tadawul-listed firm turned to a net loss of SAR 3.8 billion, against a net profit of SAR 343 million in the year-ago period.

As MRC informed earlier, Sumitomo Chemical and Saudi Aramco have jointly loaned out a total of USD2bn to Rabigh Refining and Petrochemical Co (Petro Rabigh), which faced shortfall of working capital as “the market environment has rapidly deteriorated” since end-2019.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

INEOS announces launch of offering of senior secured notes due 2026

MOSCOW (MRC) -- INEOS Holdings Limited has recently announced that its indirect wholly owned subsidiary, INEOS Finance plc, has launched an offering (the “Offering”) of euro-denominated senior secured notes due March 2026 (the “Notes”), as per the company's press release.

The Offering was done in order to raise, in combination with additional term loan borrowings announced on October 19, 2020 (the “TLB Financing”, and together with the Offering, the “Transactions”), an aggregate principal amount of approximately EUR700,000,000.

INEOS Finance plc intends to use the proceeds from the Transactions for general corporate purposes, including to pay transaction fees and expenses and the payment of future dividends to its parent entities of up to EUR300 million.

There can be no assurance that the Transactions described above will be completed.

As MRC reported earlier, a 660,000-metric tons/year phenol-acetone plant operated by INEOS in Gladbeck, Germany, was will be shut for maintenance from 27 October until 6 December.

Phenol is the main feedstock component for the production of bisphenol A (BPA), which, in its turn, is used to produce polycarbonate (PC).

According to MRC's ScanPlast report, Russia's overall estimated consumption of PC granules in the Russian market reached 58,000 tonnes in January-July 2020, up by 22% year on year (47,500 tonnes).

INEOS Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.
MRC

COVID-19 - News digest as of 28.10.2020

1. Elkem swings to net loss due to one-off expenses

MOSCOW (MRC) -- Elkem (Oslo, Norway) has recorded net losses of 97.0 million Norwegian krone (USD10.5 million) in the third quarter compared with net profits of NKr220 million in the same period of 2019, said Chemweek. The result is due to financial expenses of NKr157 million including net interest expenses, losses linked to negative currency effects, and other financial expenses, the company says. Revenue increased 6% year on year (YOY), to NKr5.89 billion driven mainly by the company's silicones division and explained by higher sales volumes and the integration of Polysil, Elkem says. All divisions reported higher YOY sales volumes despite the challenging market conditions, the company says. However, EBITDA and EBIT fell by 20% and 65%, to NKr512 million and NKr99 million, respectively, due to low selling prices and lower sales of specialty products, Elkem says.



MRC

Sabic profits rise on higher prices, volumes, reversal of Clariant impairment charges

MOSCOW (MRC) -- Sabic reports a net profit of 1.09 billion Saudi riyals (USD290 million) for the third quarter, a 47% rise year on year (YOY), due to higher product prices, increased sales volumes, and improved margins, according to Chemweek.

Sales declined 11% to SR29.30 billion compared with the prior-year period, with EBITDA down 26% YOY to SR5.67 billion.

Improved economic activity in the third quarter and an average Brent crude oil price up 50% compared with the second quarter were reflected in the improved product prices, volumes, and margins, says Sabic CEO Yousef al-Benyan. Sales volumes were 8% higher compared with the second quarter and average selling prices rose 11% quarter on quarter, although feedstock costs also increased with the average price of naphtha increasing 45%. Sales and EBITDA rose 19% and 62%, respectively, compared with the second quarter, when Sabic reported a net loss of SR2.22 billion. Sabic says its firm commitment to cost control resulted in EBITDA margins of 19% for the third quarter, up from 14% in the second quarter.

The company has also reversed write-downs related to Clariant, which offset some impairments in other assets. This resulted in non-recurring gains in the quarter of SR690 million “primarily due to the reversal of impairment provisions associated with Clariant,” compared with non-recurring charges of SR1.18 billion recorded in the second quarter, it says. Sabic holds a 31.5% stake in Clariant.

Sabic is maintaining its 2020 outlook, with global GDP expected to contract this year before an improvement is seen in 2021, says Benyan. “However, even without the COVID-19 impact, supply still exceeds demand for our key products, which will continue to pressure product prices and margins for the foreseeable future,” he says.

The implementation phase of Sabic’s alignment as the chemical arm of Saudi Aramco also got under way in the third quarter, “positioning it well to achieve long-term growth and to create and deliver value for its stakeholders,” according to the company. The portfolios of the two companies “complement one another, and we are both global organizations with a deep understanding of the worldwide marketplace,” Benyan says.

Sabic marketed a USD1.0-billion dual-tranche bond offering in September on the Taiwan stock exchange, demonstrating the company’s “agility and robustness to market conditions and its attractiveness for a diverse investor base looking for different tenors, which stimulated demand and drove favorable prices,” he says. The company also remains “committed” to driving sustainability forward in the chemicals industry, he adds.

In its petrochemicals business unit, Sabic’s largest, the company reports third-quarter sales of SR25.55 billion, up 20% on the second quarter. Average selling prices rose 13% and sales volumes were up 7% compared with the previous quarter, it says. EBITDA was up 63% compared with the second quarter at SR5.31 billion. Ethylene glycol (EG) prices improved in the third quarter due to a reduction in supply coupled with an improvement in demand, especially in polyester and polyethylene terephthalate (PET) bottle resin across regions, it says. Methanol demand also began recovering in the third quarter. In its polyethylene (PE) unit, prices rose in the third quarter, supported by steady demand and better macroeconomics conditions, according to Sabic. Polypropylene (PP) prices also improved compared with the previous quarter, supported by healthier demand from automotive and steady demand for applications such as personal hygiene, it says. Polycarbonate prices also rose in Asia following an increase in feedstock prices, it adds. “Demand for automotive, construction, and electrical appliances improved from the low levels observed in the second quarter of 2020. However, an increase in demand may be offset by increased supply from announced capacity additions,” Sabic says.

The company’s agri-nutrients business saw sales slip 1% to SR1.57 billion compared with the previous quarter, driven by a 5% fall in sales volumes that offset a 4% increase in average selling prices. Urea prices increased in the quarter due to tighter supply-and-demand balances, with favorable farming conditions across multiple regions, it says. Demand improved in India, Southeast Asia, and South America, and outages in the Middle East, Southeast Asia, and the Black Sea/Baltic region tightened supply, Sabic says.

Earlier this month Sabic and Aramco announced plans to expand the scope of their proposed joint crude-oil-to-chemicals project in Saudi Arabia, with the project now to include the integration of the existing Yanbu complex. Sabic earlier this year suspended all capital expenditure (capex) except nondiscretionary capex for safe and reliable operations and late-stage projects.

As MRC reported earlier, Saudi Aramco and Saudi Basic Industries Corporation (SABIC) have decided to reevaluate their crude-oil-to-chemicals project in Yanbu on the kingdom's west coast, according to an Oct. 18 statement on the Tadawul stock exchange, as they slash spending due to low prices. The USD20 billion project may be downsized to use Aramco's existing facilities in the port city, instead of building a new plant, the statement posted by SABIC said. "Both parties intend to re-evaluate the scope of the crude-oil-to-chemicals (COTC) complex project and study the integration of Saudi Aramco's existing refineries in Yanbu with a world-scale mixed feed steam cracker and downstream olefin derivative units," the statement said.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Saudi Basic Industries Corporation (Sabic) ranks among the world's top petrochemical companies. The company is among the world's market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC

Adnoc seeks opportunities to strengthen downstream portfolio in India

MOSCOW (MRC) -- Abu Dhabi National Oil Company (ADNOC), UAE’s biggest energy producer, is seeking Indian companies for partnership in its ambitious USD 45 billion downstream petrochemical expansion plans, said Chemweek.

ADNOC CEO Sultan Ahmed Al Jaber, during a virtual session Prime Minister Narendra Modi had with global energy chief executives on Monday evening, sought opportunities to strengthen the UAE-India energy relationships, a company statement said. Speaking at the roundtable, Al Jaber said India has always been and will always remain one of the UAE’s closest friends and one of its most important trading partners.

Strategic ties between the two nations, he said, have strengthened in recent years, particularly in the field of energy. Indian companies are present in UAE oilfield concession, he said referring to ONGC Videsh Ltd and its partners in 2018 acquiring a 10 per cent in a large offshore oilfield for USD 600 million. This was the first time any Indian company set foot in the oil-rich Emirate. “As we continue to work together, I see significant new opportunities for enhanced partnerships, particularly across our downstream portfolio. As you know, we have launched an ambitious plan to expand our chemicals, petrochemicals, derivatives and industrial base in Abu Dhabi and I look forward to exploring partnerships with even more Indian companies across our hydrocarbon value chain,” Al Jaber said.

ADNOC in 2018 unveiled plans to invest USD 45 billion with partners to develop its local downstream activities, including the expansion of its Ruwais refinery and petrochemical capacity in the industrial hub. The company has courted international investors to expand its oil and gas production and monetise its assets. “India’s remarkable growth as an economic power has cemented its place as one of the world’s largest energy consumers.

“In fact, it represents the second biggest market for ADNOC. This is a position we hope to build on, in line with the huge expansion of India’s ambitions for growth,” Al Jaber said. ADNOC, he said, is ready to meet India’s growing demand across the full portfolio of products. He added ADNOC is proud to be a key supplier to India’s Strategic Petroleum Reserves and is keen to expand the commercial scale and scope of this strategic reserves partnership.
ADNOC was the first foreign company to hire space at the underground crude oil storage India has built as an insurance against supply and price disruptions.

"In the past two years, ADNOC has enhanced its strategic energy links with India a key growth market for crude, refined and petrochemical products. In addition to its partnership in the strategic reserves program, ADNOC is also a stakeholder in one of India’s largest refinery and petrochemical projects, to be constructed on India’s west coast,” he said.

ADNOC along with Saudi Aramco have together taken a 50 per cent interest in the massive 60 million tonnes a year refinery-cum-petrochemical complex planned on Maharashtra coast at a cost of USD 44 billion. Concluding his remarks, Al Jaber said he believes both countries have only scratched the surface of the opportunities that could benefit both India and the UAE in the energy sector, the statement said.

As MRC informed earlier, ADNOC Onshore, a subsidiary of ADNOC, awarded the three contracts which will see the procurement and construction of flowlines and wellhead installations across several onshore oil fields in the Emirate of Abu Dhabi. The contracts also include the engineering, procurement, and construction (EPC) of a new bypass system to provide critical backup for the existing crude receiving stations at the Jebel Dhanna and Fujairah export terminals.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.



MRC