Financial watchdog refers K+S to German audit office over USD2.4-billion potash impairment

MOSCOW (MRC) -- K+S (Kassel, Germany) says the German Audit Office for Accounting (DPR) is examining the company’s consolidated statements after Germany’s financial watchdog, the Federal Financial Supervisory Authority (BaFin), found potash-related impairment charges of about EUR2.0 billion (USD2.4 billion), said Chemweek.

The DPR is studying financial statements for the periods ending 31 December 2019 and 30 June 2020. At the request of BaFin, the DPR “has announced that it will examine the accuracy of the impairment losses recognized. For this purpose, DPR requests the company’s cooperation and the submission of documents,” K+S says. The company states that it “comprehensively complies with this request and has already provided the documents requested by DPR.” It will cooperate fully in the examination and provide further information upon request “with maximum transparency,” K+S adds.

According to K+S, BaFin contacted DPR stating an examination was required as assets in the company’s Europe+ operating unit reported in the consolidated financial statement ending 31 December 2019 and in abbreviated financial statements ending 30 June 2020, in particular non-current assets, “may be overstated."

“BaFin has concrete indications that this impairment requirement may not have been determined correctly and should have been recognized in full or in part at an earlier date. Other asset items may also be affected by the need for an impairment loss,” K+S says. The DPR has indicated that it reserves the right to extend the examination to further items if further indications of incorrect accounting become known, it says.

In November last year K+S announced it had adjusted its long-term assumptions for its potash business, essentially related to the long-term development of potash prices. An adjustment of the weighted average cost of capital also became mandatory. “Overall, this resulted in a non-cash, one-off impairment loss of around €2 billion on assets in the Europe+ operating unit,” it says. The impairment loss was recognized in the company’s third-quarter 2020 financial statements “and had a correspondingly negative impact on adjusted consolidated earnings after tax and ROCE, but did not result in a cash outflow,” it says.

The executive board at K+S “is convinced that the impairment loss has been recognized appropriately and in compliance with all relevant accounting standards,” it states, adding that the board “assumes that it will be able to invalidate BaFin’s indications.” The company’s supervisory board “also does not anticipate any indications to the contrary at present. It has immediately established committees and processes to monitor the occasion-related examination,” it says.

As per MRC, K+S (Kassel, Germany) and Remex, a subsidiary of Remondis Group (Lunen, Germany), are bundling their waste-management activities in a new joint venture (JV) called REKS, K+S says. The partners plan jointly to tap into the rapidly growing market for reutilization and disposal, as well as sustainable waste-management solutions.

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

MOSCOW (MRC) -- ExxonMobil's operational shutdowns include polyethylene (PE) facilities amid power outages prompted by the deep freeze that has enveloped the US Gulf Coast, the company said in a customer letter seen by S&P Global Platts.

"This event has caused widespread power outages across Texas and Louisiana" Feb. 15," the letter, dated Feb. 16, said. "As a consequence, several ExxonMobil Chemical operations have experienced loss of power and other key utilities, impacting our ability to resume full operations."

The letter said the company was assessing impacts to its polyethylene production and supply capabilities, and "the impact on current and future orders is still being determined."

ExxonMobil operates three PE units in Mont Belvieu, Texas, with combined capacity of 880,000 mt/year, according to S&P Global Platts Analytics.

Exxon is among many petrochemical producers that shut Feb. 14 and subsequent days because of sustained extreme sub-freezing temperatures in the region.

ExxonMobil previously confirmed Feb. 16 that the company had shut all refining and chemical operations at its Baytown and Beaumont, Texas, complexes. Ethylene produced at Baytown feeds the Mont Belvieu PE operations.

"Due to freezing weather conditions, coupled with the curtailment of natural gas supplies throughout the state of Texas, ExxonMobil has safely shut down its Beaumont and Baytown area facilities," spokeswoman Sarah Nordin previously said in an email to Platts Feb. 16.

ExxonMobil's Baytown site includes three crackers with a cumulative 3.79 million mt/year of capacity. The Beaumont complex has 1.66 million mt/year of polyethylene capacity and an 826,000 mt/year cracker.

As MRC informed before, earlier this week, ExxonMobil Corp said it will close its 72-year-old Altona refinery in Australia, the country’s smallest, and convert it to a fuel import terminal as refiners struggle with low demand.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world's energy.
MRC

MOSCOW (MRC) -- Stepan reports net income of USD30.9 million, up 40.4% year-on-year (YOY) on higher demand for cleaning products amid the COVID-19 pandemic and an insurance recovery related to a power outage in early 2020. Adjusted earnings of USD1.42/share was 29.1% higher YOY and beat the analysts’ consensus estimate of USD1.08, as reported by Refinitiv (New York), said Chemweek.

Net sales increased 11.2% YOY, to USD494.7 million. Surfactant operating income was USD43.3 million versus USD33.9 million in the prior year. This increase was primarily attributable to an 8% increase in global sales volume as well as improved product and customer mix. The sales volume growth was principally due to higher demand for cleaning, disinfection and personal wash products as a result of COVID-19.

Polymer operating income was USD22.8 million versus USD11.4 million in the prior year. This increase was mostly attributable to an insurance recovery related to the first quarter 2020 Millsdale, IL plant power outage and a 7% increase in global Polymer sales volume versus prior year. Global rigid polyol volume growth of 10%, principally in Europe, more than offset lower demand within the phthalic anhydride business.

Specialty Product net sales were USD19.6 million, a 6% increase YOY. Sales volume was down 1% between quarters and operating income improved 2%.

Stepan expects surfactant volumes in consumer end markets to remain strong and for volumes to agricultural and oilfield markets to improve slightly in 2021. Global demand for rigid polyols has slowly begun to recover from delays and cancellation related to the pandemic, and a modest pace for recovery is expected to continue in 2021. “Despite recent challenges, we believe the long-term prospects for rigid polyols remain attractive as energy conservation efforts and more stringent building codes should increase demand,” says F. Quinn Stepan, Jr., Chairman and Chief Executive Officer. “We believe our acquisition of INVISTA's aromatic polyester polyol business and two manufacturing sites positions us to meet long term demand growth. We anticipate our Specialty Product business results will improve slightly year-over-year."

As MRC informed before, Stepan conducted planned maintenance at its 90,000 tonnes/year phthalic anhydride (PA) plant Millsdale, Illinois, US, from early October to end-October, 2020.

Phthalic anhydride is widely used in for the production of paints and varnishes and plasticizers for PVC products. In a small amount it is used in the manufacture of rubber products, tires. In addition, it is used in the light, pharmaceutical and electrical industries.

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

MOSCOW (MRC) -- Henkel says it has entered a research partnership with North Carolina State (NC State) University’s Future Renewable Electric Energy Delivery and Management (FREEDM) Systems Engineering Research Center, to study the impact of materials technology on power electronics applications, said Chemweek.

Henkel has joined the research center as an associate member and will also leverage services from NC State’s Packaging Research in Electronic Energy Systems (PREES) lab facilities as part of the agreement, the company says.

“The demands on power electronics across many applications are immense,” says Justin Kolbe, director/market strategy for Henkel’s power and industrial automation business. “The often-contradictory objectives of increased power densities, high reliability, expansive functionality, and cost efficiency are driving new approaches to systems design."

Henkel believes relationships with academia have broad benefit, facilitating acceleration of market-ready solutions for some of the industry’s most significant challenges, and says it has partnered with the university on various projects in the past. “Most recently, Henkel’s team provided specialized materials that enabled us to meet aggressive targets in the design of a high-power electric vehicle fast charger. We see many areas such as this where our relationship can bring notable results,” says Iqbal Husain, professor of electrical engineering and director at FREEDM, noting the new association marks a more formal collaboration.

As MRC informed earlier, Henkel AG & Co. KGaA (Dusseldorf, Germany) announced that Henkel Adhesives Technologies has officially inaugurated its new production facility in Kurkumbh, India.

Henkel are also partnering with Borealis and plastics solutions company Borouge to develop flexible packaging solutions for detergents containing both virgin polyethylene (PE) and high amounts of post-consumer recyclate (PCR) in efforts to increase sustainability.

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). Supply of exclusively PP random copolymer increased.
MRC

MOSCOW (MRC) -- Honeywell announced that Shandong Yulong Petrochemical Co. has selected Honeywell UOP?s advanced platforming and aromatics technologies for its 20,000-t/y integrated refining and petrochemical complex in Longkou, Shandong Province, China, according to Apic-online.

The complex will include a UOP naphtha Unionfining unit and CCR Platforming technology to convert naphtha into high-octane gasoline and aromatics. It will also include a UOP Olefin Removal Process, UOP Sulfolane technology for aromatics extraction, Isomar isomerization technology and Tatoray technology for toluene disproportionation.

Once complete, the complex will produce 3-million t/y of mixed aromatics. Value of the contract and a schedule for the project were not given.

UOP will provide a range of technology licenses, engineering design, key equipment and state-of-the-art catalysts and adsorbents, operator training, and technical services for start-up and continuing operations.

The complex will also include two mixed feed ethylene crackers, two polypropylene (PP) lines, and ethylbenzene and styrene monomer plants.

As MRC reported earlier, in November, 2020, Honeywell announced Zhenhua Petrochemical Co. Ltd will use Honeywell UOP’s C3 Oleflex technology for propane dehydrogenation to process 1 million metric tons per year of polymer-grade propylene for a proposed plant in Dongying City, Shandong Province, China.

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). Supply of exclusively PP random copolymer increased.
MRC