Albemarle falls short of estimates on weaker results in lithium, catalysts

MOSCOW (MRC) -- Albemarle has reported fourth-quarter net income down 6.4% year-on-year (YOY), to USD84.6 million, while net sales declined 11.4%, to USD879.1 million, according to Chemweek.

Adjusted earnings were down 32.4% YOY, to USD1.17/share, short of analysts’ consensus estimate of USD1.30/share, as reported by Refinitiv (New York, New York). Lower YOY results in catalysts and lithium drove the declines, partly offset by improved results in bromine. Adjusted EBITDA was down 25.0% YOY, to USD221.1 million.

Results have improved sequentially, however, and the company’s fourth-quarter adjusted EBITDA exceeded expectations, says Albemarle CEO Kent Masters. “As we continue to rebound from last year's pandemic-related lows, we are accelerating high-return growth in our Lithium and Bromine businesses and maintaining our focus on operational discipline to drive cost and efficiency improvements,” Masters says.

Lithium segment sales fell 12.8% YOY, to USD358.6 million, while segment adjusted EBITDA was down 12.8%, to USD122.1 million. Lower YOY prices were partly offset by higher volumes. Restarts in North America and operating efficiencies are expected improve full-year volumes for 2021.

Bromine specialties segment sales grew 8.2% YOY, to USD263.4 million, while segment adjusted EBITDA increased 10.2%, to USD87.9 million. A rebound in demand following COVID-19 lows drove results higher. Results are expected to improve further this year due to a continued demand rebound and “positive long-term trends in electronics and automotive end markets,” Albemarle says.

Catalyst segment sales declined 30.7% YOY, to USD195.7 million, while segment adjusted EBITDA declined 71.3%, to USD22.1 million. Volumes fell YOY for fluid catalytic cracking (FCC) and hydroprocessing catalysts, although FCC catalyst volumes rose sequentially. Catalysts results are expected to flat for full-year 2021, due to changes in customer order patterns in North America.

As MRC reported earlier, in April 2018, W. R. Grace & Co. completed the USD416 million acquisition of the Polyolefin Catalysts business of Albemarle Corporation. The acquired business primarily develops and manufactures proprietary and custom-manufactured single-site catalysts as well as metallocenes and activators used in the production of plastic resins. The transaction also includes a comprehensive series of highly optimized Ziegler-Natta catalysts for polyethylene production. The acquisition includes production plants in Baton Rouge, LA and Yeosu, South Korea; R&D and pilot plant capabilities; and an extensive portfolio of intellectual property.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Partnership empowers industrial customers to build solid data foundation for digital transformation

MOSCOW (MRC) -- Rockwell Automation announced an extension of its 15-year partnership with OSIsoft to ensure continued value for industrial manufacturing customers by enabling informed, data-driven decisions, said Hydrocarbonprocessing.

OSIsoft’s PI System is the market-leading operations data management platform for industrial organizations meeting next-generation demands for efficiency, reliability, security, sustainability, and resilience. The agreement reinforces the companies’ joint commitment to drive outcome-based digital transformation solutions for customers across essential industries, including energy, mining, oil and gas, utilities, pharmaceuticals, transportation, and more.

Customers will benefit from this partnership in several ways. They can take advantage of Rockwell’s FactoryTalk Historian—which is powered by PI System and offered as part of the FactoryTalk OperationsSuite. This software provides premier integration with FactoryTalk InnovationSuite, powered by PTC, making it an essential data management component to execute on the customer’s overall digital transformation strategy. As an example, one of Rockwell Automation’s large automotive customers experienced a nearly 80 percent- time savings by populating data into PTC ThingWorx using the FactoryTalk Historian ThingWorx connector. Additionally, customers can optimize their operational investments with subscription-based business models.

"We are thrilled to expand our agreement with OSIsoft.This partnership helps us continue to provide industry-leading digital transformation solutions to the process, discrete, and hybrid manufacturing industries. In turn, this enables us to bring the connected enterprise to life for our customers. It’s a win-win," says Jason Wright, Director of Digital Design & Visualization Applications at Rockwell Automation.

Bry Dillon, Vice President of Global Business Development for OSIsoft, added, “OSIsoft’s ongoing and very productive relationship with Rockwell Automation ensures our joint customers will continue to benefit from tighter integration of FactoryTalk Historian with Rockwell-centric controls and solutions. This enables a seamless integration of Rockwell’s solutions with OSIsoft’s edge-to-cloud portfolio."

With this extended partnership, Rockwell Automation and OSIsoft are continuing to work together and provide greater value to their customer base.

As MRC informed earlier, Rockwell Automation, Inc. (Milwaukee, Wisc.) announced that it has acquired Oylo, a privately-held industrial cybersecurity services provider based in Barcelona, Spain. Oylo is dedicated to providing a broad range of industrial control system (ICS) cybersecurity services and solutions including assessments, turnkey implementations, managed services and incident response.

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). Supply of exclusively PP random copolymer increased.

PPG gains European approval for acquisition of Tikkurila shares

MOSCOW (MRC) -- PPG Industries says it has received European Commission approval for its acquisition of Tikkurila’s shares, reported Chemweek.

The approval is “an important milestone” in the process of cementing the deal, PPG says. The tender offer for Tikkurila’s shares will expire on 15 March.

On 4 February, as MRC wrote before, Pittsburgh-based PPG announced a deal to acquire Tikkurila for USD1.82 billion after a brief bidding war with AkzoNobel. Thus, PPG raised its all-shares offer for the company to EUR34.00 per share, topping a rival bid from Akzo Nobel.

The deal is expected to close late in the first quarter or early in the second quarter of this year.

We remind that in February 2020, PPG 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 also 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.

Bayer sets midterm margin, sales growth targets

MOSCOW (MRC) -- Bayer has announced midterm targets covering margin- and sales growth for 2022-24. The company announced the targets at its virtual capital markets day on 10 March, said Chemweek.

Bayer is aiming for group net sales of EUR43.0-45.0 billion by 2024, up from EUR41.4 billion in 2020. The Crop Science division is projected to grow at a currency- and portfolio-adjusted rate of 3-5% annually from 2022 through 2024, faster than the market. Crop Science is targeting an EBITDA margin before special items of 27-29% by 2024, up from 24% in 2020 on further efficiency improvements.

Bayer expects its sales growth to regain momentum in 2021 and accelerate in subsequent years. The company says it is taking steps to strengthen revenue growth, profitability, and cash flow, and says that all three of its divisions “are projected to contribute to the company’s success in the coming years.” Werner Baumann, CEO of Bayer, said during the capital markets day that the company is aiming for above-market growth from 2022 for the Crop Science and consumer health divisions.

Sales of the consumer health division are also projected to increase annually by 3-5% at a currency- and portfolio-adjusted rate, with the division set to gain further market share, Bayer says. “The primary goal now for consumer health is to consolidate the substantial growth and margin improvements seen over the past 18 months,” Baumann said. Leading innovation and strong brands, a further digitalization of the business, and potentially also bolt-on acquisitions are expected to drive the growth of the business, Bayer says. The division's EBITDA margin before special items is expected to increase toward a mid-20s percentage from 22% in 2020, the company says.
Meanwhile, Bayer plans “to continue to grow at pharmaceuticals despite patent expirations and only expects to register a modest decline in sales in 2024,” Baumann says. The pharma division is expected to post annual sales growth of 3-5% at a currency- and portfolio-adjusted rate, through 2023. In 2024, Bayer anticipates a low- to mid-single digit percentage decline due to the patent expirations, with pharma set to return to sustainable growth in 2025. The division is expected to generate an EBITDA margin before special items of 32.0-34.0% through 2023, down from 34.9% in 2020, and remain above 30% even in 2024 despite the effect of the patent expirations, Bayer says.

The restructuring program Bayer announced in September 2020 will also help strengthen the company’s earnings power. “We aim to become an even simpler, leaner, and more flexible company,” said Wolfgang Nickl, CFO at Bayer. “In doing so, we are freeing up additional resources to invest in innovation and growth, enabling us to further strengthen profitability.” The program is expected to deliver annualized savings of more than EUR1.5 billion from 2024.

Nickl says that the company’s capital-allocation priorities include deleveraging its balance sheet after anticipated US litigation payouts; using a significant portion of its capital for dividends, maintaining its dividend policy and planning to pay out 30-40% of core earnings per share; and investing further resources in bolt-on acquisitions, especially at the pharma and consumer-health businesses. Net financial debt is projected to drop to EUR28-30 billion by the end of 2024, from EUR30 billion at the end of 2020 disregarding potential divestment proceeds, Bayer says.

As MRC reported earlier, Covestro closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to\from Belarus) rose in January-November 2020 by 18% year on year to 83,600 tonnes (70,600 tonnes a year earlier).

Global oil inventories to become tight by mid-2021

MOSCOW (MRC) -- Global refineries will increase crude processing sharply over the next six months to stabilize stocks of fuels such as gasoline and diesel – even if substantial coronavirus controls remain on travel and service sector businesses, reported Reuters.

The prospective rise in processing and consequent draw down in crude inventories in the second and especially third quarters is what has been boosting futures prices and causing calendar spreads to tighten.

The oil market’s rapid evolution from a massive production surplus last year to deficit has been most evident in the United States, where reliable data on stocks is published weekly by the Energy Information Administration (EIA).

US inventories of crude and products outside the strategic petroleum reserve amounted to 1,283 million barrels on March 5, which was just 12 million barrels or 1% above the previous five-year average.

Crude stocks were 29 million barrels or 6% above the five-year average, mostly as result of the disruption to refineries caused by cold weather and power failures in Texas last month.

But inventories of finished fuels and intermediate refinery products had already fallen to 15 million barrels or 2% below the average for 2016-2020.

The gasoline shortfall has become particularly severe, with inventories 15 million barrels or 6% below the five-year average.

Total stocks of crude and products have fallen by 168 million barrels since July, largely reversing the 198 million build between March and June associated with the epidemic and volume war between Saudi Arabia and Russia.

In the next few months, US refineries will have to accelerate crude processing and fuel production to prevent stocks from depleting further.

If coronavirus controls on travel, services and international passenger aviation are relaxed, that would provide an even bigger boost to consumption.

But it is important to stress that crude processing will have to accelerate even if controls are maintained to prevent fuel stocks from eroding to undesirably low levels.

The depletion of petroleum inventories is most obvious in the United States because of its high-frequency real-time data, but the phenomenon is worldwide.

Commercial petroleum inventories in the OECD countries have fallen by around 284 million barrels since July, reversing most of the 335 million barrel build between last February and June, according to the EIA.

In March, OECD inventories are likely to fall slightly below the average for the previous five years, for the first time since the epidemic started to spread outside China in February last year.

Globally, petroleum consumption has been above production in eight out of the last nine months, according to EIA estimates (“Short-term energy outlook”, EIA, March 9).

OPEC+ leaders have expressed scepticism about the continued recovery in oil demand in the near term, opting to leave production unchanged at their meeting on March 4, rather than increasing it.

But even if consumption remains at current levels, global inventories will continue to tighten over the next six months, and any relaxation in coronavirus movement controls will intensify the drawdown.

Futures prices are anticipating global inventories will become tight over the second and third quarters and signalling the immediate need for more production, either from OPEC+ or the US shale industry.

As MRC informed before, the largest US refinery, Motiva Enterprises’ 607,000 barrel-per-day Port Arthur, Texas, plant, returned to normal operations. The refinery was shut on Feb. 15 when freezing temperatures, rarely seen on the US Gulf Coast, knocked out steam supply. Motiva began restarting the refinery on Feb. 24.

Motiva Chemicals has also resumed operations at its mixed-feed cracker in Port Arthur, USA. The process of restart of this cracker with the capacity of 635,000 mt/year of ethylene and 340,000 mt/year of propylene began on 27 February, 2021, and finished late last week. The cracker wa shut along with the refinery at the same site on 14 February, 2021, because of the deep freeze.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.