Perstorp plans to reduce carbon emissions by half million tons through producing sustainable methanol

MOSCOW (MRC) -- Perstorp, a global leader in the specialty chemicals market, has developed a production concept to produce methanol from a large variety of recovered end-of-life streams and hydrogen from electrolysis. Project AIR will build a first-of-a-kind, large scale, commercial Carbon Capture and Utilization (CCU) unit to produce sustainable methanol, said Hydrocarbonprocessing.

The methanol plant will be unique in the sense that it is a combined CCU and gasification process where CO2, residue streams, renewable hydrogen and biomethane will be converted to methanol. Perstorp plans to do this in cooperation with Fortum, Uniper and Nature Energy.

"This innovation would both optimize the use of existing technologies whilst building something completely new, as well as demonstrating carbon capture and utilization, using captured CO2 as a raw material. It would be a concrete example of the transition towards a circular economy and of how significant CO2 emission reductions could be achieved by utilizing existing resources and closing loops. This would be an important step for us to achieve our goal of becoming Finite Material Neutral,” said Perstorp’s president and CEO, Jan Secher.

Methanol is one of the most important raw materials for the chemical industry. Project AIR aims to substitute all the 200,000 tons of fossil methanol that Perstorp uses annually in Europe as a raw material for chemical products. The project would support companies downstream in the value chains in their efforts towards renewable/circular materials, reduced carbon footprints, and in their ability to offer sustainable, affordable products. If completed, Project AIR will reduce greenhouse gas emissions by about 500,000 tons annually. The goal is to start producing sustainable methanol in 2025.

If the required fundings are granted, Perstorp plans to build the methanol plant in Stenungsund, Sweden, utilize its own CO2 and residue streams, and use the methanol to substitute all the fossil methanol used in its production in Europe. Fortum and Uniper plans to supply renewable hydrogen from a new electrolysis plant. One of the world’s largest producers of biogas, Nature Energy will seek to supply biogas to Project AIR.

As MRC informed earlier, Perstorp says it plans to build a large-scale commercial carbon capture and utilization (CCU) unit at Stenungsund, Sweden, dubbed Project AIR, that will use a production concept the company has developed to produce sustainable methanol from a variety of recovered end-of-life streams and hydrogen from electrolysis.

As MRC reported earlier, in December 2017, Perstorp announced world’s first portfolio of renewable alternatives to the essential polyols Pentaerythritol (Penta), Trimethylolpropane (TMP), and Neopentyl glycol (Neo).

As per MRC's ScanPlast report, November total production of unmixed PVC was about 86,100 tonnes versus 86,600 tonnes a month earlier, SayanskKhimPlast and RusVinyl decreased their capacity utilisation last month. Overall output of polymer were 892,100 tonnes in the eleven months of 2020 from 893,600 tonnes a year earlier. Two producers increased their production, whereas two other manufacturers reduced their output.

Perstorp is one of the world leaders in various sectors of the specialty chemicals market, it's pioneer in formalin chemistry, plastics and surface materials. Perstorp was founded in 1881 and is controlled by PAI partners,a major European private equity company. The company has around 1,500 employees in with 22 production plants in Europe, Asia and North America.

Indian Specialty Chemicals firm Anupam Rasayan files for IPO

MOSCOW (MRC) -- Anupam Rasayan, a specialty chemicals manufacturer based in Gujarat India, has filed its draft red herring prospectus with the capital market regulator of India, SEBI for Rs 760 crore (USD103.3 million) initial public offering (IPO), according to Kemicalinfo.

Anupam Rasayan intends to use the proceeds mainly for debt repayment. The company has decided to reserve a portion for its employees and may consider a discount for eligible staff.

The Gujarat-based company commenced operations in 1984 with conventional products and has over the years evolved into custom synthesis and manufacturing of life sciences-related specialty chemicals and other specialty chemicals, which involve multi-step synthesis and complex technologies.

The company has two distinct business verticals - life sciences specialty chemicals comprising products related to agrochemicals, personal care and pharmaceuticals. The second vertical is other specialty chemicals, comprising pigment and dyes and polymer additives.

The company’s major clients include Syngenta Asia Pacific, Sumitomo Chemical Company and UPL Limited.

In FY20 and in the six months ended September 2020, revenues from life sciences vertical accounted for 95.37% and 92.48%, respectively, of revenue from operations, while revenue from other specialty chemicals accounted for 4.63% and 7.52%, respectively, during the periods.

It has six multi-purpose manufacturing facilities in Gujarat with a combined aggregate installed capacity of around 23,396 tonnes, of which 6,726 tonnes was added in March 2020.

Axis Capital, Ambit, IIFL Securities and JM Financial are the lead managers to the issue.

As MRC reported previousky, earlier this month, Sumitomo Chemical and Axens signed a license agreement of ethanol-to-ethylene technology Atol for Sumitomo Chemical’s waste-to-polyolefins project in Japan. In the project, to promote circular economy, Axens’ Atol technology will transform ethanol produced from waste into polymer-grade ethylene that will be polymerized in Sumitomo Chemical’s assets into polyolefin, a key product in the petrochemical industry. At full roll-out, the project will enable the production of waste-based polyolefin at industrial scale, which will represent a leapfrog towards a sustainable economy based on renewable carbon.

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Lotte Chemical Titan sees demand growth offsetting oversupply pressure

MOSCOW (MRC) -- The share prices of Lotte Chemical Titan Holdings Bhd (LCT) and its peer Petronas Chemicals Group Bhd (PetChem) have risen 40.6% and 24.5% respectively since their lows in August, thanks to better product prices over the past few months, reported TheEdgeMarkets.

This is because the petrochemical industry has been experiencing supply disruptions from the US as a result of Hurricane Laura, as well as strong demand for polyethylene (PE) and polypropylene (PP), which are used in the manufacturing of a host of things, including face masks, personal protective equipment and packaging materials.

Still, analysts have cautioned that incoming supply may outweigh demand.

LCT is Malaysia’s largest integrated producer of olefins and polyolefins, consisting of PP and PE products. Its products are sold to plastic fabricators and trading houses locally and around the world.

In an email interview with The Edge, LCT president and CEO Dr Lee Dong Woo concedes that industry oversupply will persist in the short to medium term, resulting in some pressure on average selling prices (ASPs). Over the longer term, the overcapacity concern could be offset by overall demand growth, supported by a growing population and economic expansion.

He sees continued improvement in the business outlook in 4Q2020, after the reopening of regional economies, especially with the strong recovery in China.

“Our business is closely tied to regional and domestic economic growth, as it is essential to the key manufacturing sector,” says Lee.

He adds that the petrochemical sector’s outlook is also dependent on how US president-elect Joe Biden’s administration manages its relationship with China, after the industry was hit by trade disputes between the two superpowers.

Domestically, LCT’s rivalry with PetChem may intensify in view of rising capacity from the latter’s Refinery and Petrochemical Integrated Development (RAPID) in Pengerang, Johor.

Lee is unfazed, however, saying Malaysia remains a net importer of petrochemicals and that the new supply from PetChem will replace domestic imports.

“Currently, we have some pricing premium for our products, owing to the value-added services LCT provides to its customers.”

While the new supply may erode some of the pricing premium, he stresses that LCT’s market is not confined to the country, but it also exports to Indonesia, China and other Southeast Asian markets.

Malaysia, Indonesia and other Southeast Asian markets contribute 70% to the company’s revenue, while Northeast Asia and other parts of the world contribute the remainder.

LCT operates an integrated petrochemical complex comprising 12 plants in Pasir Gudang and Tanjung Langsat, Johor. In Indonesia, three non-integrated downstream PE plants are in operation.

“We expect sustained ASPs in the short term, similar to that observed in 3Q2020 amid further reopening of regional markets as well as post-pandemic recovery, with more vaccines (developed),” says Lee.

During the Movement Control Order (MCO) period, LCT saw lower demand from the industrial plastics segment such as automotive and electrical and electronics, but this was partially mitigated by higher demand from the commercial and disposable food packaging and medical equipment segments.

“Our sales in the domestic market were notably affected during the full MCO in April and May. However, we were able to divert our local sales to the regional markets such as China,” he explains.

LCT’s operating rate was lower in the first half of 2020, owing to the major statutory plant turnaround (shutdown to perform maintenance, repair or overhaul operations), but it is on track to meet the full-year operating capacity target of 80% to 85%.

On average, its budgeted capex for annual routine maintenance is RM200 million to RM300 million.

The pandemic has affected LCT’s expansion, particularly its 51%-owned Indonesia Lotte Chemical Indonesia New Ethylene (LINE) project, which is now under strategic review. The other 49% of the project is held by its South Korea-based parent Lotte Chemical Corp.

The USD4.4 billion (RM18 billion) project is crucial in LCT’s becoming the top-tier petrochemical firm in Southeast Asia, with USD6 billion in revenue by 2024, from USD2 billion in 2019.

The initial arrangement was to commence project construction at end-2020 or early 2021, according to Lee.The capital mix for the project comprises 40% equity and 60% debt.

“We aim for the project to be completed in time to ride the next petrochemical cycle uptrend to maximise our return on investment in the project,” he says.

To enhance its footing in the regional market, LCT is exploring opportunities to develop and expand value-accretive as well as synergistic businesses.

In its financials for the third quarter ended Sept 30, 2020, LCT reported a 13.7% fall in net profit to RM78.77 million from RM91.3 million a year ago, owing to lower revenue, higher share of associate losses and higher operating cost of RM15.9 million resulting from Hurricane Laura.

it expects LCT to post stronger q-o-q earnings in 4Q, as Lotte Chemical USA Corp plants have fully resumed operations since mid-October after Hurricane Laura, coupled with a higher polymer spread of US650 a tonne in October against US589 a tonne in 3Q.

“Though the spread may remain firm in November/December, it could soften in 2021 on new supply from Malaysia’s RAPID as well as China,” the research house says.

LCT has been in a net-cash position since its relisting in July 2017, with RM3.97 billion recorded as at end-September 2020.

However, its share price has more than halved against its initial public offering price of RM6.50, on the back of declining profits in the past years caused by high feedstock costs and low product prices.

The stock closed at RM2.47 on 1 December, valuing it at RM5.7 billion.

Titan Chemical Corp Bhd was taken private in 2011, a year after Lotte Chemical Corp, an affiliate of South Korean retail giant Lotte Group, bought into it.

LCT’s IPO in 2017 received tepid response from investors, prompting it to cut the IPO price by one-fifth to RM6.50, from RM8. The number of shares was also reduced to 580 million, from 740.48 million, owing to the cut in the institutional offering.

Within a month of its listing, LCT shocked investors when it announced a 47.2% q-o-q drop in its 2QFY2017 earnings before interest, taxes, depreciation and amortisation (Ebitda), owing mainly to water disruption at its Johor-based petrochemical plant. Compared with a year ago, 2QFY2017 Ebitda was down 58.1%.

The water shortages occurred in April, before the IPO, but LCT said the full impact was not known until mid-July - after the listing.

It later caught the market by surprise when its net profit slumped 97% to RM10.13 million in the last quarter of 2018 from RM378.15 million a year earlier, owing to margin squeeze.

Its share price had been on a downtrend after it fell below RM4 in April 2019. During the recent market crash in March, the counter even hit an all-time low of 93.7 sen. Year to date, it has rebounded 2.5%.

As LCT is tightly controlled by Lotte Chemical Corp, which has a 76.03% stake, its public shareholding spread of 23.97% falls short of the minimum spread requirement of 25%.

LCT has embarked on a dividend reinvestment scheme to address the shortfall, but this is subject to its ability to declare dividends. It paid a 7 sen dividend in 2019 after a 17 sen payout in 2018.

Lee says LCT has been distributing half of its profit after tax since its relisting in 2017. Its 12-month trailing dividend yield stands at 2.85%.

“It is the board’s intention to continue with the dividend payout subject to the company’s financial performance,” he says.

As MRC wrote earlier, South Korea’s Lotte Chemical has restarted its fire-hit naphtha-fed steam cracker in Daesan. Thus, the facility begins trial runs of naphtha on 7 December, 2020. Lotte Chemical had initially planned to restart the cracker in September, then - in mid-November and finally - to early December. The cracker was shut on March 4 following an explosion, which injured more than 30 people. Lotte Chemical has two steam crackers. The steam cracker in Daesan has a production capacity of 1.1 million mt/year of ethylene, 550,000 mt/year of propylene and 150,000 mt/year of butadiene, while the Yeosu steam cracker is able to produce 1.18 million mt/year of ethylene, 550,000 mt/year of propylene and 130,000 mt/year of butadiene.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Asia distillates-jet fuel cracks inch up; renewed travel bans likely to hurt recovery

MOSCOW (MRC) -- Asian refining margins for jet fuel inched higher on Monday, but reimposed travel restrictions in several countries to slow the spread of a highly-infectious coronavirus variant is expected to dent passenger demand recovery, reported Reuters.

Refining margins, also known as cracks, for jet fuel ticked up USD0.05 to USD4.76/bbl over Dubai crude during Asian trading hours.

The cracks, however, have shed 11% since hitting a more than nine-month high of USD5.35/bbl on Dec. 18.

The Philippines on Saturday extended a ban on flights from the United Kingdom by another two weeks to mid-January in a bid to prevent the spread of the new coronavirus variant, while Japan said it would temporarily ban non-resident foreign nationals from entering the country.

Cash differentials for jet fuel were at a discount of USD0.10/bbl to Singapore quotes on Monday, compared with a discount of USD0.11/bbl in the last trading session on Thursday.

The aviation fuel market is getting some support from air cargo demand, which has firmed in recent weeks as e-commerce deliveries surged during the holiday season, market watchers said.

Meanwhile, airlines are also expected to play a vital role in the mass vaccine rollout in coming days, which is expected to unlock an immediate boost for the sector.

As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Pinnacle acquires specialty risk-based inspection firm Trinity Bridge

MOSCOW (MRC) -- Pinnacle, a leading provider of data-driven reliability and integrity programs, has acquired Houston-based Trinity Bridge, LLC, a consulting company specializing in risk-based inspection programs for the refining and petrochemical industries, said Hydrocarbonprocessing.

This comes on the heels of Pinnacle’s announced rebrand and reinvestment into technology and systems to create next generation reliability solutions for the industry.

"Reliability will be the key to sustainability for industries like oil and gas refining, chemicals, mining, and water treatment, and Trinity Bridge brings a great team of people to accelerate that advancement,” said Ryan Sitton, founder and CEO, Pinnacle and author of "Crucial Decisions." "Lynne Kaley and I have worked alongside each other as competitors and collaborators for nearly 20 years, and I have always respected and admired her. She was a pioneer in the early days of Risk-Based Inspection technology development, and we are excited to have her and her team join us in building next generation of solutions to optimize reliability."

Lynne Kaley, principal owner of Trinity Bridge, will be joining Pinnacle as vice president of research and development. In this role, she will lead Pinnacle’s investment into the development of new technology, processes, and solutions to advance industrial reliability.

"We are really excited to join the Pinnacle organization and combine our expertise with the resources of such a forward-thinking company,” said Kaley. “Pinnacle’s vision and commitment to advancing credible reliability solutions for the industry is an area where we believe we have a lot to contribute. We are looking forward to being a part of driving the next revolutionary advancements."

As MRC informed earlier, in 2018, Pinnacle Polymers, one of the major PP manufacturers in the US, has announced force majeure at its polypropylene (PP) facility in Garyville, Louisanna, USA. The Pinnacle Polymers plant has a capacity of 410,000 tonnes per year.

According to MRC's ScanPlast report, November PP production in the country exceeded 169,100 tonnes, compared with 152,000 tonnes in October; several producers increased their capacity utilisation. Russia's overall PP production reached 1 698,000 tonnes in January-November 2020, compared to 1 298,000 tonnes a year earlier. Six out of eight producers increased their capacity utilisation, two producers decreased production volumes.