COVID-19 - News digest as of 04.02.2021

1. Albemarle launches USD1.3-billion stock offering, expects sequential sales increase

MOSCOW (MRC) -- Albemarle has commenced a USD1.3-billion common stock offering, to raise funds for multiple lithium expansion projects, according to Chemweek. The projects are in Australia, Chile, and the US. Albemarle will also use the proceeds to pursue “opportunities in China,” and for short-term debt repayment and general corporate purposes, the company says. Shares in Albemarle closed at USD169.35 on 2 February, and reached a 52-week high on 20 January. The company has about 106.5 million shares outstanding. J.P. Morgan is acting as lead book-running manager and underwriter on the offering. The underwriters have a 30-day option to purchase up to USD195 million additional common shares.

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Crude oil futures rise on bullish US data, improving outlook

MOSCOW (MRC) -- Crude oil futures rose during mid-morning trade in Asia Feb. 3 after the American Petroleum Institute reported a large draw in US crude inventories, underscoring the bullish sentiment being fostered by improved demand-supply fundamentals across the oil market, reported S&P Global.

At 10:46 am Singapore time (0246 GMT), the ICE Brent April contract was up 26 cents/b (0.45%) from the Feb. 2 settle at USD57.72/b, while the March NYMEX light sweet crude contract was up 27 cents/b (0.49%) at USD55.03/b.

The rise in oil futures came after API data released late Feb. 2 showed a sizable 4.26 million-barrel draw in US crude inventories in the week to Jan. 29. The data also indicated a marginal improvement in fundamentals for downstream markets, reporting 240,000-barrel and 1.62 million-barrel draws in US gasoline and distillate inventories, respectively.

The market will look to more comprehensive inventory data due for release by the Energy Information Administration later Feb. 3 for confirmation. If the EIA data validates the API data, oil markets could receive yet another boost.

Oil markets had already been turning bullish as demand in the physical market ticks higher and Saudi Arabia's 1 million b/d output cut begins to constrict supply.

"Oil continues to strengthen today with Brent just shy of USD58/b before profit-taking set in. Considerable activity in the physical market is behind the move," said Stephen Innes, chief global market strategist at Axi, in a Feb. 3 note.

The slow amelioration of the coronavirus pandemic in parts of the world has inspired further confidence in the demand outlook for oil.

Analysts noted that both infection and hospitalization numbers in the US were declining and that the Biden administration was on track to meet its target of administering 100 million vaccinations in 100 days. China also seems to have stemmed a coronavirus resurgence that had oil analysts worried in January, reporting only 25 infections Feb. 2, a one-month low.

"Crude prices are rallying as the US has turned a critical corner in the fight against COVID-19... the biggest risk remains a setback in Chinese crude demand and so far that does not seem to be happening," said Edward Moya, senior market analyst at OANDA, in a Feb. 3 note.

The market also has its eyes set on the OPEC+ Joint Ministerial Monitoring Committee meeting scheduled for later Feb. 3, which will provide a preview for the OPEC+ meeting in March, when the alliance is expected to unveil its production plan going forward.

"The big question (for the meeting) is how this rapid price rise might open up another potential can of worms for OPEC as members will want to pump more oil, not to mention US shale will be eager to step on the production accelerators," Innes said.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, exluding producers' inventories as of 1 January, 2020).
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Versalis licenses LDPE-EVA technology for MTO project in Uzbekistan

MOSCOW (MRC) -- Versalis S.p.A. (San Donato Milanese), the chemical company of Italian energy major Eni, has licensed to Enter Engineering Pte. Ltd. a Low-Density Polyethylene/Ethyl Vinyl Acetate (LDPE/EVA) swing unit to be built as part of a new Gas-to-Chemical Complex based on MTO-Methanol to Olefins technology to be located in the Karakul area in the Bukhara region of the Republic of Uzbekistan, said Chemweek.

The plant is part of a global complex that will have a major importance in Central Asia due to its size and the technologies involved. Enter Engineering Pte. Ltd., one of the largest construction companies in the region, will act as licensee on behalf of the Uzbek Company Jizzakh Petroleum JV LLC, who will own and operate the LDPE/EVA unit and the entire Gas to Chemical Complex once built and made ready for operation.

The licensed plant will be based on the Versalis proprietary LDPE/EVA Technology. The unit will be designed for a maximum production of EVA equivalent to180,000 metric tons per year (m.t./yr). LDPE and EVA are ethylene polymers and co-polymers possessing a suitable balance between processability and mechanical properties, which are widely used in the industry for the production of materials covering a variety of applications including film, coating, injection moulding, packaging, medical appliances, foams and as a base component for hot melt adhesives.

The LDPE/EVA technology is part of the wider polymers’ technologies portfolio offered by Versalis to produce high-value products. Versalis’ background and expertise as licensor of its proprietary technologies relies on its enduring R&D and lab & pilot plant testing capabilities, and full-scale operational experience at its own production facilities. This knowledge strengthens Versalis’ actions to support and assist its licensees in achieving their specific needs from the project development phase throughout the operational stages.

The contract has been acquired by Versalis in cooperation with ECI Group, a US based plant-lifecycle specialist providing services in design, engineering, procurement, construction, technology and consultancy particularly focused on polyolefins plants. ECI Group comprises Engineers and Constructors International (US), Simon Carves Engineering Ltd. (UK) and International Technical Excellence Center (US).

As per MRC, Versalis, Eni's chemical company and a leader in the production and marketing of elastomers, and AGR, company that owns technology for the devulcanization of post-consumer elastomers, signed an agreement to develop technological innovations and new products and applications with recycled rubber.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

Eni is an Italian multinational oil and gas company headquartered in Rome. It has operations in in 79 countries, and is currently Italy's largest industrial company. The Italian government owns a 30.3% golden share in the company, 3.93% held through the state Treasury and 26.37% held through the Cassa depositi e prestiti. Another 39.40% of the shares are held by BNP Paribas.
MRC

Group sells turboexpander business line to Air Liquide

MOSCOW (MRC) -- Nikkiso Cryogenic Industries’ Clean Energy and Industrial Gases Group (Group), a part of Nikkiso Co., Ltd (Japan), has recently announced the sale of its Turboexpander Business Line to Air Liquide, according to Hydrocarbonprocessing.

Located mainly in Santa Ana, California, the Turboexpander Business Line designs, manufactures and sells Turboexpanders within the industrial gas industry as well as the natural gas liquefaction industry.

Air Liquide is a world leader in gases, technologies and services for Industry and Health and has been the largest customer of the Nikkiso Group’s Turboexpander Business Line.

Nikkiso’s Cryogenic Service (NCS) unit will remain an authorized service company and will continue to provide Aftermarket Services, including repair and servicing of ACD designed and built Turboexpander machines while Air Liquide will provide service activities to its plants and its third party plants customers. This arrangement will guarantee all ACD service clients will continue to receive strong support going forward.

“We are confident the Turboexpander Business Line will continue to grow under Air Liquide’s management, and look forward to continuing to provide our services in favor of the entire ACD clientele with Air Liquide for a long time to come,” according to Peter Wagner, CEO of Cryogenic Industries and President of the Group.

As MRC wrote earlier, in September 2020, Air Liquide finalised an agreement with Sasol to acquire the biggest oxygen production site in the world with a plan to reduce its carbon dioxide (CO2) emissions by 30%. After the announcement on July 29, the international major industry gas company has now entered into a business purchase agreement with Sasol to acquire the oxygen production site in Secunda, South Africa.

We remind that Sasol's world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol's new cracker, the heart of LCCP, is the third and most significant of the seven LCCP facilities that came online and will provide feedstock to the company's six new derivative units at Sasol's Lake Charles multi-asset site.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
MRC

Trinseo earnings surge YOY on higher volume, margins

MOSCOW (MRC) -- Trinseo (Berwyn, Pennsylvania) reports net income for the fourth quarter of USD67 million, up tenfold from USD6 million in the year-ago period, on sales of USD860 million, down 3.3% year-over-year (YOY) from USD889 million, according to Chemweek.

Adjusted earnings per share came to USD1.84, up from $0.35 in the year-ago period and ahead of the consensus estimate of USD1.78 as compiled by Zacks Investment Research.

Lower prices, mainly on the pass through of lower raw material costs, resulted in a 10% decline in sales, partially offset by higher volume across all segments except feedstocks, says Trinseo. Higher net income reflected higher volume and margin, particularly within the polystyrene and base plastics segments, and a favorable pre-tax net timing variance of USD37 million.

“Demand recovery in end markets like appliances and automotive in the second half of the year, as well as commercial excellence initiatives, resulted in robust earnings in the third and fourth quarters,” says Frank Bozich, president and CEO. “In fact, the fourth-quarter adjusted EBITDA was our highest result in over two years, and we ended the year in a very strong liquidity position.”

Trinseo expects positive trends in volume and margins to continue in the first quarter. The company forecasts full-year 2021 net income of US167-200 million versus USD8 million for 2020.

The latex binders segment reported sales of $200 million, down 9% YOY on the pass through of lower raw material costs. Volumes increased slightly gains in CASE, textile, board and specialty paper applications were mostly offset by declines in graphical paper applications. Adjusted EBITDA was flat YOY at USD22 million as higher sales volume was offset by net timing.

The synthetic rubber segment reported sales of USD102 million, up 2% YOY. Higher solution and emulsion styrene-butadiene rubber (sSBR and eSBR) volume and favorable currency effects increased sales by 16% and 7%, respectively, but were mostly offset by lower pricing on raw material pass-through. Demand in the tire market was consistent with the third quarter. Adjusted EBITDA increased 33% YOY to USD16 million, with a favorable net timing variance of USD4 million and higher sales volume partially offset by lower fixed-cost absorption. Trinseo says it is still considering whether to divest the segment.

Sales in engineered materials totaled USD60 million, up 5% YOY on higher sales volume to consumer electronics applications in Asia and thermoplastic elastomer applications in Europe. Adjusted EBITDA increased 20% YOY to USD12 million, mainly on a 7% YOY increase in sales volume.

The Base Plastics segment reported sales of USD269 million, flat YOY as higher sales volume to automotive applications and favorable currency impacts were offset by lower pricing on raw material pass-through. Adjusted EBITDA increased 174%% YOY to USD52 million on higher acrylonitrile-butadiene-styrene (ABS), polycarbonate (PC) and compounding margins as well as higher sales volume.

Polystyrene (PS) sales totaled USD193 million, up 10% YOY on higher sales volume driven by continued strong demand into applications such as appliances, construction, and packaging. Adjusted EBITDA increased X% YOY to USD34 million on higher margins, particularly in Asia, higher sales volume, and a favorable net timing variance of USD9 million.

Feedstocks sales totaled USD36 million, down 47% YOY on lower styrene pricing and styrene-related sales volume. Adjusted EBITDA was USD15 million, up from a USD10 million loss in the year-ago quarter owing to higher styrene margins in Europe as well as a USD19 million favorable net timing variance.

Americas Styrenics adjusted EBITDA came to USD25 million, up 18% YOY on higher styrene volume and margin in North America, which reflected industry outages in the region.

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 PS and ABS in Europe. Effective February 1, 2021, 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 EUR40 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR40 per metric ton;
- MAGNUM ABS resins - by EUR200 per metric ton.

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.
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