Trinseo 3Q 2020 earnings surge on higher margins

MOSCOW (MRC) -- Trinseo reports third-quarter net income of USD106 million, up from USD22 million in the year-ago quarter on higher margins in most segments and cost-reduction initiatives, says the company, according to Chemweek.

Net income also included a USD50 million tax benefit. Revenue totaled USD752 million, down 18% year-over-year (YOY) from USD922 million on the pass-through of lower raw material costs. Sales volume was comparable YOY, says Trinseo, which cites strong demand recovery in automotive, tires, construction, and appliances. Adjusted earnings per share came to USD2.87, up from 67 cents in the year-ago quarter and well ahead of the average analyst estimate of USD1.86 as compiled by Refinitiv (New York).

“During the third quarter we observed significant demand recovery in many of our end markets. In addition, tighter market conditions led to higher year-over-year margins for styrene, polystyrene, polycarbonate and ABS,” says Frank Bozich, president and CEO. “We have seen demand momentum continue in October and we are cautiously optimistic that this will continue through the end of the year.”

The latex binders segment had sales of USD183 million, down 20% YOY almost entirely on the pass-through of lower raw material costs, says Trinseo. Volumes were slightly lower YOY as continued headwinds in graphical paper were not quiet offset by positive volume trends in board packaging, CASE applications, and textile, as well as the contribution of the Rheinmuenster acquisition. Adjusted EBITDA was USD20 million, down USD1 million YOY on a negative net timing variance partially offset by cost reduction initiatives.

Synthetic rubber sales totaled USD79 million, down 24% YOY, mainly on the pass-through of lower raw material costs. Demand in the tire market improved from the low levels of the second quarter. Adjusted EBITDA of negative $2 million was USD10 million below the year-ago quarter from both lower margins, including the impact of higher spot sales in ESBR, and lower fixed cost absorption from inventory reduction initiatives.

Performance plastics sales dropped 11% YOY to USD290 million, mainly on the pass-through of lower raw material costs. Adjusted EBITDA increased USD15 million to USD51 million owing to cost-reduction initiatives and expanded margins in polycarbonate and ABS resulting from tighter market conditions and improved customer mix. Sales volume into engineered materials applications decreased 3% YOY.

Polystyrene sales dropped 15% YOY to USD167 million. Lower pricing from the pass through of lower raw material costs reduced sales by 25%, but this was partially offset by higher sales volume owing to higher demand into essential applications such as packaging and appliances. Adjusted EBITDA increased USD4 million YOY to USD21 million on higher volume, particularly into appliance applications, as well as expanded margins in Asia and Europe resulting from high demand and industry utilization.

Feedstocks sales dropped 51% YOY to USD32 million owing to lower styrene pricing as well as lower styrene-related sales volume. Higher styrene margin and production propelled adjusted EBITDA to USD11 million, up YOY from breakeven.

Americas Styrenics, the joint venture between Trinseo and CPChem, turned in adjusted EBITDA of USD18 million, down USD7 million YOY, mainly on lower styrene margins in North America as well as volume-related impacts from COVID-19.

As MRC reported earlier, Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, 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 3 November. Effective Noveber 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 EUR110 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR110 per metric ton;
- MAGNUM ABS resins - by EUR110 per metric ton;
- TYRIL SAN resins - by EUR80 per metric ton.

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 362,820 tonnes in the first nine months of 2020, down by 1% year on year. September total estimated PE consumption in Russia was 48,690 tonnes, up by 13% year on year.

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) -- Eastman Chemical reports third-quarter net earnings of USD165 million, down 38% year on year (YOY), as volumes remained lower YOY due to the COVID-19 pandemic but improved sequentially, reported Chemweek.

Adjusted earnings of USD1.57/share was down 19.1% YOY but beat the analysts’ consensus estimate of USD1.37/share, as reported by Refinitiv (New York). Net sales fell 8.7%, to USD2.1 billion. Volumes fell 5% YOY, but in end markets hit hardest by the pandemic, such as transportation, building and construction, and consumer durables, showed signs of improvement over the second quarter.

“Demand across most of our end markets improved in the third quarter resulting in 10% higher sales revenue and almost 60% higher adjusted earnings sequentially,” says Mark Costa, Eastman chair and CEO. “This performance continues to demonstrate the value of having a diverse set of end markets and the benefit of our innovation-driven growth model. We also are continuing to aggressively manage costs, enabling us to significantly mitigate the financial impact of COVID-19.”

Additives and functional products earnings before interest and taxes (EBIT) fell 25.7% YOY, to USD107 million, on sales down 10.8% US742 million. Sales revenue decreased primarily due to lower sales volume, lower selling prices, and less favorable product mix. The negative impact of COVID-19 on demand resulted in lower sales volume of products sold in transportation end markets, particularly aviation fluids and certain coatings additives. Lower selling prices were attributed primarily to increased competition in tire additives. Cost pass-through contracts also contributed to lower selling prices.

Advanced materials EBIT declined 18.9% YOY, to USD129 million, on sales down 4.2%, to USD668 million. Sales revenue decreased due to lower sales volume, less favorable product mix, and lower selling prices. Sales volume recovered to 2% below third quarter 2019 due to strong recovery in auto demand and innovation and market development, particularly for product lines in Performance Films. Specialty Plastics also continued with strong and steady performance. Lower selling prices were attributed to lower raw material prices, particularly for paraxylene used in copolyester products.

Chemical intermediates posted EBIT down 8.8% YOY, to USD31 million, on sales down 12.6%, to USD506 million. Sales revenue decreased due to lower selling prices and lower sales volume across the segment. Lower selling prices were attributed to lower raw material prices. Lower sales volume was due to planned maintenance shutdowns and also attributed to the negative impact of COVID-19 on demand.

Fibers EBIT fell 19.6% YOY, to $41 million, on sales down 5.1%, to USD206 million. Sales revenue benefited from stable acetate tow sales volume but declined due to lower textile products sales volume attributed to the impact of COVID-19 and lower acetate tow selling prices, primarily due to previously negotiated multiyear contracts.

Assuming current economic conditions continue, Eastman expects fourth-quarter adjusted earnings similar to the prior year quarter of USD1.42/share. "With demand having improved throughout the third quarter and into October, we entered the fourth quarter with solid momentum,” Costa says. “However, the resurgence of COVID-19 is increasing uncertainty in the global economic outlook, further limiting visibility for the back half of the fourth quarter.”

As MRC informed previously, Air Liquide plans to invest over USD160 million in new capacity and upgrades to support a long-term agreement under which the company will supply additional gaseous oxygen, nitrogen, and syngas to Eastman Chemical’s Longview, Texas, facility.

We remind that in 2016, Eastman Chemical's chief executive Mark Costa announced that the company wanted to reduce its surplus ethylene and commodity intermediates, but did not intend to sell its cracker in Longview, Texas.

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

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Eastman is a global specialty chemical company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in more than 100 countries. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 14,500 people around the world.
MRC

MOSCOW (MRC) -- Monthly chlorine production in Europe has declined 2.2% year on year (YOY) in September to 731,111 metric tons, with the daily average output of 24,370 metric tons also slipping by 1.7% from the daily average in August this year, according to latest figures from Euro Chlor, the European chlor-alkali industry association, said Chemweek.

The monthly figure for September makes it seven months in a row that European chlorine production has fallen compared with the equivalent period last year. Production has fallen in eight out of the first nine months of 2020, apart from February.

Chlorine production capacity utilization in Europe during September fell to 77.0% from 79.4% in the prior-year period, and was 1.1% down on August’s utilization rate, it says.

Caustic soda stocks in Europe were 13.4% lower in September compared with August at 227,330 metric tons, and also down 26,737 metric tons on the prior-year monthly total of 254,067 metric tons.

Euro Chlor’s figures are drawn from the EU-27 countries plus Norway, Switzerland, and the UK. The association represents 38 companies producing chlorine in 19 countries.

Chlorine, obtained by electrolysis of sodium chloride solution, and ethylene are the main raw materials for PVC production.

According to ICIS-MRC Price report, a shortage of PVC has remained in many regions of the world for the past few months because of scheduled and unscheduled shutdowns of the plants amid strong demand, and prices have broken records for the past few years. And this situation is reflected in the Russian market. In the autumn months, Russian producers virtually maintained their prices of suspension in dollars the same for the domestic market, whereas the weakening of the rouble against the dollar boosted prices for domestic consumers. Russian producers announced a price increase of on average of Rb3,000/tonne for November deliveries.
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MOSCOW (MRC) -- Celanese Corporation, a global chemical and specialty materials company, has announced that its subsidiary, Celanese (Nanjing) Chemical Co. Ltd., has recently extended its long-term contract with Nanjing Dragon Crown Liquid Chemical Terminal Co. Ltd., for providing terminal services to its integrated chemical facility in the Nanjing Chemical Industrial Park, Nanjing City, in eastern China (Jiangsu Province), as per the company's press release.

Financial details of the contract were not disclosed.

Reliable terminal services are a key component of a highly efficient end-to-end supply chain. Extending this critical contract will provide Celanese’s Nanjing manufacturing facility with ongoing and reliable terminal services for the company’s acetyls chemical products.

“Dragon Crown has consistently provided Celanese with safe, compliant and reliable terminal services in China for more than a decade,” said John Fotheringham, Celanese Senior Vice President, Acetyls. “The renewal of this contract is a representation of the collaboration between the two parties and further strengthens our long-term business relationship.”

With manufacturing and distribution in all regions of the world, Celanese is a leading producer of acetic acid and other acetyl intermediate products, which are basic chemicals used in the manufacture of paints and coatings, adhesives, plastics, food packaging and construction materials.

As MRC informed earlier, Celanese has recently announced plans to add a 15,000-metric tons/year line for the production of GUR ultra-high molecular weight polyethylene (UHMWPE) at its facility in Bishop, Texas. Startup is expected by.the beginning of 2022.

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased.

Dragon Crown is an integrated terminal service provider in the PRC specialized in the storage and handling of liquid chemical products. Dragon Crown offers a comprehensive range of high-quality terminal and storage of liquid chemical services ranging from loading and discharging of liquid chemical products at Dragon Crown jetties and storage of liquid chemical products at Dragon Crown’s tank farm and delivery of such products by utilizing Dragon Crown’s dedicated pipelines and other basic terminal infrastructure. Nanjing Dragon Crown (NJDC) was incorporated April 26, 2004.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

MOSCOW (MRC) -- Elkem, one of the world's leading suppliers of silicon-based advanced materials, is showcasing its wide range of innovative technologies and solutions at the 3rd China International Import Expo (CIIE) 2020 in Shanghai, China. The company is signing letters of intent with three Chinese customers, said Chemweek.

“China is the most important market for Elkem Silicones. After the initial impact of Covid-19, we now see demand recovering strongly. More than 50 percent of Elkem's employees are based in China. While ensuring the safety of our employees, we have made every effort to ensure the smooth supply of products to customers, and the revenue has also grown steadily," says Frederic Jacquin, Senior Vice President of Elkem Silicones.

"We are the largest silicones producer in China and our strategy is to continue to grow and develop high-end products supporting the dual circulation strategy which is to create products and solutions with a personal touch for our Chinese customers, but also for the rest of the world", says Jacquin.

During the CIIE 2020, Elkem Silicones has signed letters of intent with three Chinese customers, with a potential total contract value of more than NOK 1,3 billion (CNY 1 billion). "Elkem Silicones has enormous confidence in the development of the Chinese market. The three new partners have signed a cooperation agreement with us, which fully reflects their trust in Elkem. We are looking forward to working with Chinese customers on advanced materials shaping the future", says Larry Zhang, Vice President of Elkem Silicones and Director of the Asia-Pacific region.

As MRC informed before, Elkem (Oslo, Norway) says it will invest 180.0 million Norwegian krone (USD19.7 million) in a new plant in Canada to pilot an industrial biocarbon process specifically for silicon and ferrosilicon production. The plant will be constructed near Elkem’s production site at Chicoutimi, Quebec, with start of construction planned for the second half of 2020, the company says. The project has received financial support from the Canadian government, the Quebec government, and the city of Saguenay, reducing Elkem’s net investment to NKr60 million.

We remind that the COVID-19 pandemic has interrupted the development of Norway's offshore oil and gas projects, pushing up costs and postponing startups, the government and oil company Equinor announced. The costs of ongoing projects rose by 13.2 billion Norwegian crowns (USD1.4 billion) from a year ago on an inflation-adjusted basis, government documents showed, as COVID-19 restrictions stalled construction at several fields. "The COVID-19 pandemic and weakened Norwegian (currency) have negatively impacted some of the projects, but the combined project portfolio is still very resilient," Equinor said in a separate statement.

We also remind that BP and Equinor confirmed they are shutting in production on their platforms, while Chevron, BHP and others said they are evacuating some personnel and considering decisions on production reductions.

As reported earlier, Chevron Phillips Chemical, part of Chevron Corporation, still has not lifted force majeure on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations. The force majeure circumstances were declared on 1 September, 2020. CP Chem operates a 420,000 mt/year high-density polyethylene (HDPE) plant in Orange, Texas, and an 855,000 mt/year cracker in Port Arthur. The company plans to minimize the impact of the event and return to full PE deliveries as soon as possible.

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).
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