Sumitomo Chemical to establish PP compound plant in Poland

MOSCOW (MRC) -- Sumitomo Chemical will establish a subsidiary, Sumika Polymer Compounds Poland (SPCP), to build and operate a polypropylene (PP) compounding facility at PoznaA, Poland, reported Chemweek.

The capacity of the planned PP compounding plant will be 30,000 metric tons/year. It is due to commence operations in 2022.

PP compounds are materials made by kneading PP with synthetic rubber, glass fibers, or inorganic fillers to improve its functionality and increase rigidity and other properties, for use in automobile bumpers, interiors, and home appliances.

The company produces short glass fiber reinforced PP compounds (GFPP). GFPP is a high-performance material that combines the lightweight and superior moldability of PP with the strength and heat tolerance of glass fibers. It has been expanding GFPP sales globally for use in automotive parts, such as battery casings, and home appliances, such as drum cover cases for washing machines.

Many automobile and electric manufacturers have production bases in Poland and neighboring regions, such as eastern Germany and the Czech Republic. Because of the widespread adoption of electric vehicles prompted by tighter environmental regulations, strong demand for PP compounds is expected to continue, it added.

As the European Union’s circular economy action plan heightens the need for recycled products, Sumitomo Chemical intends to increase the market share of GFPP containing 60 to 100% recycled PP by starting production in SPCP, following the lead of Sumitomo Chemical’s bases in the United Kingdom and France.

As MRC reported earlier, in December 2020, 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.

According to MRC's ScanPlast report, 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).

Gail petchem business swings to operating profit

MOSCOW (MRC) -- State-owned gas utility GAIL India Ltd on Wednesday reported a 170 per cent jump in its fourth-quarter net profit, as lower corporate tax rate offset lower petrochemical and natural gas prices, said Chemweek.

Net profit in January-March 2020 at Rs 3,018.20 crore, or Rs 6.69 per share, was 169 per cent higher than Rs 1,122.23 crore, or Rs 2.49 a share, net profit in the corresponding quarter a year ago, GAIL Chairman and Managing Director Manoj Jain told reporters here.

Jain said the company opted for lower corporate tax rates offered by the government to firms willing to forego exemptions. The lower tax rate offset a dip in petrochemical, liquid hydrocarbon and natural gas prices. Besides, leading to a dip in energy prices, the outbreak of the coronavirus pandemic and the ensuing lockdown to contain its spread also evaporated demand after industries shut down.

Jain said natural gas demand fell by up to 30 per cent in April as industries shut down and city gas operations comprising of mainly CNG sales saw a slump with vehicles going off road. The demand has since returned to near normal after lifting of the restrictions. "Except for CNG, we are near normal," he said adding that pre-COVID-19 levels for CNG sales are expected in two months.

The fall in domestic demand led to the company asking both domestic producers as well as its overseas LNG suppliers to reschedule supply of some of the gas volumes. In 2019-20, the company imported 74 cargoes or shiploads of liquefied natural gas (LNG) - 44 from US, 3 from Qatar, 15 from Gazprom of Russia and 12 from spot or current market.

As many as 56 cargoes of the LNG contracted from the US were sold in overseas market in the financial year ended March 2020. In 2020-21, it has scheduled 49 of US cargoes to come to India and sold 28 of them in the overseas market. Another 8-9 cargoes are left untied, he said.

Considering the slump in demand in the first quarter, GAIL may end up cutting down on spot volumes. Jain said the company had a capita expenditure (capex) spending of Rs 6,114 crore in 2019-20, mostly in laying of pipelines.

In the current financial year 2020-21, it plans to maintain a capex spend of Rs 4,000-5,000 crore, he said adding that there is no review of the spending in view of COVID-19 as most of the expenditure is in ongoing committed projects of laying gas pipeline grid.

Jain said the company has decided to opt for the tax dispute resolution scheme, the Vivad se Vishwas Scheme 2020, in respect of 44 number of income tax cases, involving 21 assessment year 1996-97 to 2016-17 having an estimated financial implication of Rs 2,157.34 crore.

"On settlement of these cases, in terms of the scheme, there would be an income tax liability of approximately Rs 1,183.15 crore and accordingly, after considering the existing provision of Rs 265.59 crore already made in the previous years, additional provision of Rs 917.56 crore has been made towards tax expenses during the financial year 2019-20," he said.

For the full financial year 2019-20, GAIL recorded a 10 per cent rise in its net profit to Rs 6,621 crore as the company opted for lower corporte tax rate. The turnover for the year stood at Rs 71,730 crore as against Rs 74,808 crore in the last fiscal year. "The increase in PAT (profit after tax) is mainly due to adoption of the lower tax regime," he said.

He said although there were some reductions in GAIL's business activities in initial stage due to the country-wide lockdown, with graded relaxation in lockdown and other measures by the Government of India to resume economic activities, the operations of the company has been normalised to a great extent.

The petrochemical plant, which had taken a shutdown in April 2020, is now operating at full capacity. The liquid hydrocarbon (LHC) production and transmission segments did not see much impact and are currently operating at 100 per cent of FY20 levels, he added.

As MRC informed earlier, GAIL India Ltd has restarted its polyethylene (PE) unit in Pata, Uttar Pradesh. Thus, the company's 400,000 tons/year high density polyethylene (HDPE)/linear low density polyethylene (LLDPE)swing plant in Pata, Uttar Pradesh resumed operations just a couple of days after the company shut down the unit on 25 September 2020 due to feedstock supply disruption.

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).

BASF restarts cracker following technical issue at Ludwigshafen, Germany

MOSCOW (MRC) -- BASF says it is restarting one of its steam crackers at its Ludwigshafen complex in Germany after operations were halted on Wednesday due to a technical issue, reported Chemweek with reference to a company spokesperson's statement.

“The affected cracker is in the process of restarting,” the spokesperson says. “I can’t give you any further details on the technical defect or which of our crackers is affected.” Operations were interrupted at around 8am on Wednesday morning, according to BASF. “There is currently visible fire and soot formation. Flaring is expected to continue until tomorrow. The responsible authorities have been informed,” it further stated in a social media post.

The naphtha cracker produces ethylene and propylene, and is one of two crackers on the site. One has a production capacity of 420,000 metric tons/year, with the other’s capacity at 240,000 metric tons/year, according to IHS Markit data.

BASF shut down an undisclosed part of its chemical complex at Ludwigshafen on 15 January, also due to a technical fault, it said last month.

OPIS is an IHS Markit company.

As MRC informed earlier, BASF has restarted its No. 1 steam cracker following a maintenance turnaround. Thus, the company resumed operations at the plant on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

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).

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.

MEGlobal raises ACP for March 2021 by USD50 per tonne

MOSCOW (MRC) -- MEGlobal has announced its Asian Contract Price (ACP) for monoethylene glycol (MEG) to be shipped in March 2021, according to the company's press release.

Thus, on 10 February, the company said ACP for MEG would be at USD790/MT CFR Asian main ports for arrival in March 2021, up by USD50/MT from February.

The March 2021 ACP reflects the short term supply/demand situation in the Asian market.

As MRC reported earlier, MEGlobal announced its February ACP for MEG at USD740/MT CFR Asian main ports, up by USD70/tonne from January 2021.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to ICIS-MRC Price report, there was an acute shortage of PET in the Russian market. As a result, there was speculative excitement in the market. Sellers were raising prices of Russian PET chips, while the buyers who needed material had no other alternative at the moment.

MEGlobal is a fully integrated supplier of monoethylene glycol (MEG) and diethylene glycol (DEG), collectively known as ethylene glycol (EG).

Activist Sachem Head buys up stake in IFF

MOSCOW (MRC) -- Activist investor Sachem Head has reportedly bought a stake valued at about USD1 billion in IFF and submitted nominations to the company’s board, according to a Reuters, citing people familiar with the matter, said Chemweek.

The move comes less than two weeks after IFF closed its USD26.2-billion merger with DuPont’s nutrition and biosciences (N&B) business, creating a company that will generate more than USD11 billion/year in sales.

Sachem Head launched a proxy fight against Olin last year, reaching a deal in which it took two board seats. The firm is aiming for IFF to take undisclosed steps to improve financial results and ensure the smooth integration of DuPont N&B, according to Reuters.

IFF’s market capitalization is currently about USD33.5 billion. Shares in the company have traded up on report, at around USD135/share today and yesterday, the highest level seen since June 2020.

During IFF’s earnings call this morning, some analysts questioned the company’s financial performance, noting that EBITDA margins trailed below peers even prior to the COVID-19 pandemic. IFF Chairman and CEO said the integration of Frutarom, which IFF acquired in 2018, could have gone better in some respects. There were some “compliance issues” in the taste business, and “we probably could have integrated the European organizations faster,” Fibig told investors.

IFF in January said it is targeting 4-5% annual currency-neutral sales growth through 2023 in the new entity with DuPont N&B. Company executives defended those targets this morning, saying that revenue growth was about a percentage point below that level prior to the merger, and that synergies should boost growth to meet the target. “We have positioned ourselves to deliver very significant growth over the years to come,” Fibig said.

Yesterday, IFF reported fourth-quarter earnings that exceeded analysts’ expectations on the back of volume gains and cost reductions.

As per DuPont forecasts higher-than-expected annual profits on Thursday as industrial material manufacturers' quarterly results exceeded expectations due to rigorous cost checks and a recovery in the auto industry, one of the largest markets.

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.