Exxaro to sell off bulk of Tronox stake

MOSCOW (MRC) -- Exxaro Resources (Pretoria, South Africa), a diversified resources firm, will sell off the bulk of its stake in Tronox in a public offering announced, Chemweek.

The 17-million share secondary public offering will reduce Exxaro’s stake in Tronox to about 1.6% from about 14.6%. Exxaro began selling down its stake in Tronox, which had previously exceeded 40%, in 2017. The company took a stake in Tronox in 2012, in compensation for Tronox’s acquisition of Exxaro’s mineral sands operations. A 2019 deal also saw Tronox acquire Exxaro’s interest in its South African subsidiaries, which hold mining licenses for a variety of titanium dioxide raw materials.

Tronox is also issuing to Exxaro about 7.2 million ordinary shares in the entire company in exchange for Exxaro’s 26% interest in Tronox’s South African subsidiaries, which hold mining licenses for a variety of titanium dioxide raw materials. Those shares are being included as part of the public offering.

The offering effectively completes a series of transactions between Tronox and Exxaro that were agreed to in 2018, covering Exxaro’s stakes in Tronox and in the company’s South African subsidiaries. In 2018, Exxaro "agreed to structure any potential divestiture of [the stake] in a controlled and scheduled manner." The transactions enabled Tronox to carry forward net losses for tax purposes, and to re-domicile in the United Kingdom from Australia.

J.P. Morgan is acting as the stock offering’s joint bookrunning manager, and lead underwriter. BofA Securities, Deutsche Bank Securities and Morgan Stanley are also acting as joint bookrunning managers. The underwriters have an option to purchase an additional 2.55 million shares within 30 days.

Tronox will have about 150.8 million shares outstanding after the offering is complete, and the company will receive no proceeds from the offering. Shares in Tronox closed at USD20.12 on 23 February, but declined in after-hours trading.

As MRC informed before, in late March, 2020, Tronox Holdings provided an investor update in light of the current global pandemic, to emphasize the strength of the company's cash flow, balance sheet, and sources of liquidity. The first quarter was expected to close better than anticipated, due to positive market trends and developments thus far in 2020. The company anticipated adjusted EBITDA in the first quarter to reach USD160–170 million, adjusted earnings per share of USD0.10–0.18, and revenue of USD700–730 million.

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 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 benzene grew to 120,000 tonnes from 106,000 tonnes a month earlier due to higher capacity utilisation of several producers. Overall output of this product reached 1,236,600 tonnes over the stated period, down by 2.2% year on year.
MRC

MOSCOW (MRC) -- The Sherwin-Williams Company announced it has signed a purchase agreement with global coatings company Hempel A/S to divest Wattyl, an Australian and New Zealand manufacturer and seller of architectural and protective paint and coatings with annual revenue of approximately USD200 million USD and 750 employees, said Chemweek.

The transaction is expected to close during the first quarter of 2021, subject to customary closing conditions. "Today's announcement of our intent to divest Wattyl aligns with our ongoing process to evaluate all aspects of our portfolio, including brands, product lines, customer programs and businesses, for their ability to meet our performance criteria and for their long-term strategic fit," said John G. Morikis, Sherwin-Williams Chairman and Chief Executive Officer. "While we've driven significant improvement in the Wattyl business, we believe Company resources can be better deployed to other opportunities offering greater growth, more meaningful scale, and higher returns and cash flow. We thank the employees of Wattyl for their contributions to Sherwin-Williams."

The Wattyl business became part of Sherwin-Williams through the 2017 acquisition of The Valspar Corporation. The business was previously reported in Sherwin-Williams Consumer Brands Group.

As per MRC, Tennant Company announced it has completed the sale of its coatings business, Tennant Coatings, to The Sherwin-Williams Company.

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) -- Massive refining outages in the U.S. state of Texas due to freezing weather has led to a flurry of fuel tanker bookings from Europe, while several carriers were diverting away from the U.S. Gulf Coast, traders and analysts said, said Reuters.

The cold snap has halted about one-fifth of the United States’ refining capacity and nearly all oil and natural gas production in west Texas. Traders were looking to fill the gap in refinery supplies with bookings from elsewhere.

U.S. Atlantic coast imports of diesel and gasoil from other countries was seen at 380,000 barrels per day (bpd) in February, at the same level of a multi-year high reached in November, according to oil analytics firm Vortexa. The rise is led largely by higher intake from northwest Europe, with 140,000 bpd of imports, a multi-year high, Vortexa said.

Imports on the route are also on track to remain firm in March, with around 2.5 million barrels currently forecast to arrive, Vortexa said. Gasoline exports from Europe to North America have also spiked. Loadings of gasoline and blending components along the route were pegged at 417,000 bpd Feb. 1-18, according to Vortexa, the highest level since July 2020, and 27% higher than average for the prior three months.

At the same time, clean products exports from the U.S. Gulf Coast have fallen sharply. Loadings are holding at 1.3 million bpd on a 10-day moving average basis, nearing levels last seen in May 2020, when coronavirus lockdowns greatly hampered demand, according to Reid l’Anson, senior commodity economist at Kpler. That compares with 2.5 million bpd last year, he added.

The disruptions are having a big impact on prices. The U.S. crack spread, a key measure of refining margins, settled at USD15.43 a barrel on Thursday, the highest since April 2020, Refinitiv Eikon data showed.

“The cargoes are going to follow the margins and with prices improving here in the U.S. that would signal more cargoes to the U.S.” said Phil Flynn, a senior analyst at Price Futures Group in Chicago. Gasoline and diesel profit margins in Europe have also risen, with the northwest Eurpan barge crack spread hitting its highest since October around USD4.50 a barrel on Thursday.

The disruptions also led to tankers that were due to load in the U.S. Gulf to divert away from the energy hub. Vortexa data shows four tankers, including the very large gas carrier (VLGC) Captain John NP. “Everything is getting delayed or moving out of the Houston area and not coming back,” a shipbroker told Reuters.

As per MRC, a winter storm has brought unusually cold temperatures, snow, and freezing rain to Texas and western Louisiana, forcing a large share of US light olefins production offline. As of the evening of Tuesday, 16 February, IHS Markit had confirmed the shutdown of at least 61% of US ethylene capacity, 59% of US chemical- and polymer-grade propylene (CGP, PGP) capacity, and 22% of US fluid catalytic cracking (FCC) capacity. Many plants that remained online were running at reduced capacity.

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) - Refining NZ has made "significant progress" in a study towards converting New Zealand's only oil refinery into a fuel import terminal, commencing as soon as next year, said Reuters.

Its Marsden Point refinery, which fills about 70% of New Zealand's fuel needs, has battled competitive pressure from huge refineries in Asia and rising domestic costs of power and gas, even as the coronavirus crisis caused unprecedented destruction of fuel demand. "While no decision has been made, Refining NZ is now well progressed in its assessment of the import terminal option," the company said in a statement.

The conversion to an import terminal would bring a sharp reduction in emissions for Refining NZ, as well as a cut of about 85% in electricity consumption. The company added that it was focusing on a detailed estimation of one-off transition and conversion costs, terminal operating and capital costs, and longer-dated refinery demolition costs.

Total one-off transition and conversion costs are now estimated at about NZ$200 MM (USD144 MM) over four or five years, excluding refinery demolition costs, it said in the statement. Refining NZ said it had reached in-principle agreement on key commercial terms, including price, with BP Plc, but is still in talks with two other customers, Z Energy and the New Zealand units of Exxon Mobil Corp.

The company expects the conversion will not require any additional equity funding, but said a final decision would require approval of non-customer shareholders. Late this month, the refinery is set to begin a four-week turnaround of a continuous catalytic reformer (CCR) platformer and a crude distillation unit (CDU 1), leading to a temporary shuttering of all processing units, with customers using imports of refined products.

The refinery, which has cut its primary crude intake by 18%, has already mothballed its CDU 2 as a part of the decommissioning.

As per MRC, a winter storm has brought unusually cold temperatures, snow, and freezing rain to Texas and western Louisiana, forcing a large share of US light olefins production offline. As of the evening of Tuesday, 16 February, IHS Markit had confirmed the shutdown of at least 61% of US ethylene capacity, 59% of US chemical- and polymer-grade propylene (CGP, PGP) capacity, and 22% of US fluid catalytic cracking (FCC) capacity. Many plants that remained online were running at reduced capacity.

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) -- Oil prices slid as much as 2% in early trade on Friday, adding to overnight declines, on worries that refineries shut by a big freeze in the U.S. South will take some time to revive operations and dent crude demand, said Hydrocarbonprocessing.

U.S. West Texas Intermediate (WTI) crude futures fell USD1.21, or 2%, to USD59.31 a barrel at 0157 GMT, after declining 1% on Thursday. Brent crude futures dropped USD1.07, or 1.7%, to USD62.86 a barrel, after declining 0.6% on Thursday.

Both benchmark contracts rallied to 13-month highs on Thursday driven by the historic freeze in U.S. southern states. While analysts estimate the extreme cold has shut in as much as one-third of U.S. crude production, attention has now turned to the impact on refiners.

“The market is concerned about the refinery outages in Texas, where arctic weather has caused power outages and frozen wells and pipes,” ANZ Research said in a note. The lack of demand from refineries will likely lead to builds in crude stocks over coming weeks, even though around 3.5 million barrels per day (bpd) of U.S. oil output has been shut, ANZ said.

Citi analysts said in a note that some U.S. refineries might bring forward maintenance work normally scheduled for the spring, ahead of the summer driving season. “Refinery outages could be deeper and longer lasting, especially ahead of the spring maintenance season, as some plants could decide to anticipate planned turnarounds of roughly 500-k b/d on aggregate over the next month,” Citi analysts said.

U.S. crude stockpiles fell more than expected in the week to Feb. 12, before the freeze, with inventories down by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday.

As per MRC, a winter storm has brought unusually cold temperatures, snow, and freezing rain to Texas and western Louisiana, forcing a large share of US light olefins production offline. As of the evening of Tuesday, 16 February, IHS Markit had confirmed the shutdown of at least 61% of US ethylene capacity, 59% of US chemical- and polymer-grade propylene (CGP, PGP) capacity, and 22% of US fluid catalytic cracking (FCC) capacity. Many plants that remained online were running at reduced capacity.

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