PE imports to Ukraine down by 1% in 2020

MOSCOW (MRC) -- Overall polyethylene (PE) imports into the Ukrainian market reached 265,900 tonnes in 2020, down by 1% year on year. Linear low density polyethylene (LLDPE) accounted for the main reduction in imports, according to MRC's DataScope report.

Last month's PE imports to Ukraine were 20,900 tonnes versus 20,200 tonnes in November, local companies increased their purchases of high density polyethylene (HDPE). Thus, overall PE imports exceeded 265,900 tonnes in January-December 2020, compared to 268,700 tonnes a year earlier. LLDPE imports decreased significantly, whereas HDPE imports increased.

The supply structure by PE grades looked the following way over the stated period.

Last month's HDPE imports were 8,700 tonnes, compared to 7,700 tonnes in November, Ukrainian companies raised their purchases of film grade PE. Overall HDPE imports totalled 97,300 tonnes in 2020 versus 95,000 tonnes a year earlier.

December imports of low density polyethylene (LDPE) into Ukraine were 6,100 tonnes versus 5,900 tonnes a month earlier. Overall LDPE imports reached 79,300 tonnes over the stated period, compared to 79,600 tonnes a year earlier.

Last month's LLDPE imports were 5,100 tonnes, compared to 5,600 tonnes in November, shipments of Middle Eastern film grade LLDPE decreased. Overall LLDPE imports reached 75,900 tonnes last year, compared to 81,700 a year earlier.

Imports of other PE grades, including ethylene-vinyl-acetate (EVA), totalled 13,400 tonnes over the stated period, compared to 12,500 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Imports of suspension polyvinyl chloride (SPVC) into Ukraine slumped in 2020 by 32% year on year to 33,400 tonnes. Sales of Ukrainian polyvinyl chloride (PVC) to foreign markets dropped by 5% year on year in favour of the domestic market, according to a MRC's DataScope report.

Last month's SPVC imports into the Ukrainian market rose to 2,400 tonnes from 2,100 tonnes in November, shipments of resin from Europe increased. Overall imports of suspension reached 33,400 tonnes in 2020, compared to 49,000 tonnes a year earlier. At the same time, stronger demand from the domestic market amid the increased capacity utilisation of the Ukrainian producer led to lower export sales.

European producers with the share of about 83% of the total imports over the stated period were the key suppliers of resin to the Ukrainian market. Producers from the USA with the share of about 15% were the second largest suppliers.

Last month, Karpatneftekhim significantly increased sales in the foreign markets on the back of record high global prices, export sales of Ukrainian resin were 15,800 tonnes versus 3,200 tonnes in November. Overall, about 155,300 tonnes of PVC were shipped for export in 2020, compared to 163,300 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Hanbang Petrochemical, also known as China Prosperity Jiangyin Petrochemical, has taken its purified terephthalic acid (PTA) unit in Jiangsu province offline on 6 January 2021 for maintenance, reported CommoPlast with reference to market sources.

The unit has an annual capacity of 2.2 million tons/year and would remain shut for around one month.

Meanwhile, the producer owns a smaller PTA unit at the same location with a capacity of 700,000 tons/year that has been shut since May 2020. The restart date at this plant in uncertain at the moment.

As MRC informed earlier, Hanbang Petrochemical shut its No. 2 PTA unit in Jiangsu province on May 19, 2020, for unspecified reason. The unit, which initially was slated to remain off-line for about two weeks, resumed operations on 21 June, 2020.

We remind that in March 2016, Hanbang Petrochemical successfully started up its second PTA at Jiangyin, Jiangsu. The plant has two production lines, each with an annual capacity of 1.1 million mt/year.

PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, Russia's estimate PET consumption reached 61,110 tonnes in November 2020, up by 1% year on year. Overall PET consumption in Russia reached 648,110 tonnes in the first eleven months of 2020, down by 18% year on year.

Hanbang Petrochemical, also known as China Prosperity Jiangyin Petrochemical, is situated in Jiangyin city within China's Jiangsu province.
MRC

MOSCOW (MRC) -- LG Chem, a South Korean petrochemical major, is expected to restart its naphtha cracker in Yeosu this week, following the last year's fire, reported Chemweek with reference to market sources.

The company said earlier that the fire broke out at its central control room at the Yosu cracker complex at around midnight local time (15:00 GMT) on 5 November, 2020. Then, the country's largest chemical company said it was in the process of figuring out the cause of the fire.

The facility can process about 1.2 million tonnes of ethylene per year (tpy).

Initially, the cracker's shutdown was expected to last for approximately three weeks.

As MRC informed earlier, LG Chem is planning to spend USD2.4-billion to expand its naphtha cracking center (NCC) and polyolefin (PO) plant in Yeosu, South Korea. The project, which will expand the NCC and PO facility by 800,000 t/y each, is expected to be completed in the second half of 2021.

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.

LG Chem Ltd., often referred to as LG Chemical, is the largest Korean chemical company and is headquartered in Seoul, South Korea. It has eight domestic factories and global network of 29 business locations in 15 countries. LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.
MRC

MOSCOW (MRC) -- AkzoNobel says that it has made a non-binding proposal to acquire Tikkurila for EUR31.25/share, valuing Tikkurila at about EUR1.4 billion (USD1.7 billion), reported Chemweek.

The company says that the offer represents a 113% premium compared with the volume-weighted average trading price of Tikkurila shares during the three-month period prior to 17 December 2020, when an initial offer to acquire Tikkurila was made by PPG Industries. It also notes that it is 13% higher than PPG’s revised bid, made on 5 January 2021 - in response to a rival bid from Hempel (Lyngby, Denmark) as Tikkurila disclosed on 18 January. PPG launched its tender offer for Tikkurila on 14 January after it had been recommended by Tikkurila's board.

AkzoNobel, meanwhile, says it has agreed on key terms with Hempel for the sale of assets, including the decorative paints business of AkzoNobel in the Nordic and Baltic countries, to obtain merger clearance and ensure deal certainty for Tikkurila and its shareholders. The planned divestments would be completed after closing of AkzoNobel's proposed offer for Tikkurila, the company says. Thierry Vanlancker, CEO of AkzoNobel, declined to comment on the scale of divestments in an analysts' presentation held by AkzoNobel earlier today.

“Our complementary geographic profiles would create superior value compared to any other combination, including growth opportunities for the company and its employees. Our collective procurement capabilities, expanded production, and combined sales and distribution channels would deliver substantial value creation,” says Thierry Vanlancker, CEO of AkzoNobel.

The main offices and production facilities of Tikkurila in Finland would become the hub for the combined business in the Baltic region and substantial investment would be made in production facilities to supply future growth, AkzoNobel says.

The transaction is expected to be earnings per share (EPS) accretive in 2022, is aligned with the capital-allocation priorities of AkzoNobel, and would be financed using existing cash and credit lines, the company says. During the presentation today, Maarten De Vries, CFO at AkzoNobel, said that the company sees a mid-term return on investment (ROI) period of 3-5 years for the proposed deal. In addition, AkzoNobel will continue its EUR300-million share buyback program and maintains a target leverage ratio of 1-2 times net debt/EBITDA, the company says.

Vanlancker said during the analysts’ briefing that AkzoNobel had not made an offer to acquire Tikkurila earlier, because the company was not aware that Tikkurila was thinking of making a strategic change. PPG’s offers triggered the company’s decision to submit its own offer, since it sees Tikkurila as a perfect fit in its bolt-on acquisitions strategy and believes that AkzoNobel could create better value for Tikkurila, he added.

Vanlancker also said that there have been no talks with Tikkurila’s shareholders and that AkzoNobel is waiting on Tikkurila’s board to assess the offer. “With this offer, AkzoNobel invites the board of directors of Tikkurila to enter into negotiations with a view to reaching agreement on a recommended voluntary public cash tender offer,” the company says.

Tikkurila says that its board will consider AkzoNobel’s potential offer from the point of view of Tikkurila and its shareholders. It notes that AkzoNobel’s offer is non-binding and subject to several conditions, and there can be no certainty that this proposal will eventually lead to any agreement between AkzoNobel and Tikkurila.

The finalization of the potential is subject to customary conditions substantially similar to those included in the current tender offer document published by PPG on 14 January 2021, Tikkurila says. It requires reaching a 90% acceptance level and obtaining required regulatory approvals, and would not be conditional on financing, it says.

In addition, Tikkurila says that PPG’s offer continues to be valid in accordance with its terms as set out in the tender offer document. Tikkurila's board may withdraw, modify or amend its recommendation for PPG’s tender only if the board has complied with certain agreed procedures allowing PPG to negotiate with it and to amend the terms and conditions of its tender offer pursuant to the combination agreement, the company says.

AkzoNobel will continue to build on the “growth momentum” it has in the EMEA region and move on to other M&A targets it has in its pipeline, if the Tikkurila deal does not go through, Vanlancker said during the presentation. Analysts at Bernstein (London, UK) say that AkzoNobel’s chances of acquiring Tikkurila will depend largely on PPG's willingness to raise its offer further.

PPG engaged in a hostile effort to merge with AkzoNobel in 2017, supported by activist investor 40 North Management. The effort was stymied in part by Dutch securities law.

As MRC informed previously, in February 2020, PPG said it had completed its acquisition of Industria Chimica Reggiana (ICR, Reggio Emilia, Italy), a maker of automotive refinish products. Financial terms of the deal, including purchase price, were not disclosed. The deal was announced on 8 January. ICR was founded in 1961 and employs about 180 people. ICR manufactures automotive refinish products, including putties, primers, basecoats and clear coats. It also makes a range of coatings, enamels and primers for light commercial vehicles and other light industrial coatings applications. ICR employs about 180 people and sells its products in more than 70 countries in Europe, Africa, the Middle East, the US and Latin America.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1% year on year.
MRC