Chevron profit fell 29% in Q1

MOSCOW (MRC) -- Chevron's first-quarter profit fell 29% from the same period a year ago as gains from oil and gas prices were undercut by weaker refining margins, production losses and the impact of an asset sale that benefited results last year, said Hydrocarbonprocessing.

Oil companies are generally enjoying a recovery in energy prices, up at least a third this year, after the pandemic hammered demand at the start of 2020. Chevron and its peers slashed spending, paving the way for several firms to post sharply better results.

But as European rivals topped forecasts, Chevron's earnings declined on winter storm production losses, weaker margins and the absence of asset and tax items that benefited year-ago profit. "Results were down from a year ago due in part to ongoing downstream margin and volume effects resulting from the pandemic and the impacts of winter storm Uri," Michael Wirth, Chevron's chief executive officer, said, referring to the plunging temperatures that hit Texas and other states in February.

The winter storm cost USD300 million in lost production and repairs, said finance chief Pierre Breber. "That's lost production in the Permian Basin and lost production in refining and chemicals," he said. Chevron, the second-largest U.S. oil producer, reported a profit of USD1.72 billion, or 90 cents per share, compared with USD2.45 billion, or USD1.31 per share, a year earlier. Year-ago results included about USD680 million in asset sales and favorable tax items.

Net profit was USD1.4 billion, or 72 cents a share, down from USD3.6 billion, or USD1.93 cents a share, a year earlier. Shares dipped 2% to USD104.69 in morning trading on Friday.

Chevron's cash flow from operations, at USD4.2 billion, was more than USD1 billion below Wall Street estimates, according to Refinitiv IBES data. Its expenses for debt costs, employee pensions and benefits more than doubled to USD978 million. Weaker-than-expected cash generation "left a slightly higher net debt position than expected," of $38.3 billion, said analyst Biraj Borkhataria at RBC Europe Limited.

While Chevron boosted its dividend this week, "investors will need to be patient" for share repurchases, Borkhataria said. The 3.9% dividend increase was a surprise as "most investors expected a more modest 2% dividend hike later in the year," said Manav Gupta, analyst at Credit Suisse.

The weaker earnings contrasted with those at BP, Royal Dutch Shell and Total, which reported results that topped year-ago levels. BP nearly tripled earnings while Total posted a 69% gain. Chevron's refining eked out a USD5 million profit, down from USD1.1 billion a year ago, as the pandemic continued to mute demand for jet fuel, diesel and gasoline, and the winter storm hurt U.S. operations.

Earnings from oil and gas production fell 20% despite price gains as non-U.S. operations suffered from declining volumes, foreign currency impacts and the absence of an asset sales gain. The unit benefited from higher oil volumes from the acquisition of Noble Energy in October. Chevron said capital spending for the first quarter was USD2.5 billion, down from USD4.4 billion in the same period last year.

The company will restrain spending this year, including in U.S. shale. "The stock markets are not sending a signal to us or our sector to increase capital," Breber said. Chevron is looking toward a "sustained global recovery" before increasing activity, Breber said, adding that OPEC and allies are easing their oil production curbs.

The United States accounts for more than half of Chevron's capital spending, up from one-quarter five years ago, with last year's Noble purchase increasing the company's U.S. focus, said Peter McNally, analyst at Third Bridge Group.

As per MRC, Chevron Phillips Chemical (CP Chem), one of the world's largest petrochemical companies, halted production at cracking unit 1592 in Cedar Bayou, TX, USA on April 26 for routine maintenance. It is expected that repairs at this enterprise with a capacity of 850 thousand tons of ethylene per year will continue until May 3 of this year. Chemical emissions to the atmosphere are expected within about seven days.

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.

Chevron Corporation is one of the world's leading full-cycle oil companies "from well to end user" and one of the largest companies in the world by market capitalization. Chevron Phillips Chemicals Company LP is a 50/50 joint venture between ConocoPhillips and Chevron Corporation. Chevron Phillips combines Chevron and ConocoPhillips' technologies and chemicals. Annual sales are USD7 billion.
MRC

Indian Reliance becomes largest domestic medical-grade liquid oxygen producer

MOSCOW (MRC) -- Amid a surging second wave of COVID-19 in the country, Reliance Industries (RIL) has increased output of medical oxygen to 1,000 mt/day, making it India's largest producer of medical-grade liquid oxygen from a single location, according to IndiaTV.

Reliance ramped up production from near-zero to 1,000 tonnes per day and now produces over 11% of the country's oxygen demand. It has rallied its resources to meet the daily need of over 1 lakh people every day.

"RIL ramps up production of medical-grade liquid oxygen from near zero to 1000 mt per day free of charge. (It is producing) 1000 mt of oxygen to meet the needs of over 1 lakh people every day on an average," the company said in a statement.

It had also airlifted 24 ISO containers for transporting Oxygen from Saudi Arabia, Germany, Belgium, The Netherlands and Thailand - creating an additional 500 tonnes of transportation capacity for India.

"As India grapples with an unprecedented new wave of the COVID pandemic, Reliance has risen to the occasion by making an all-out effort to save precious lives," the statement said.

The oxygen manufactured by the company would be provided free-of-cost to several states across the country to bring immediate relief to over 1 lakh patients on a daily basis. Since the beginning of the pandemic in March last year, Reliance has supplied over 55,000 MT of medical-grade liquid oxygen across the country.

"At its refinery-cum-petrochemical complex in Jamnagar and other facilities, Reliance now produces over 1,000 tonnes of medical-grade liquid oxygen per day - or over 11% of India's total production - meeting the needs of nearly every one in ten patients," it said.

The firm's oil refineries and petrochemical plants produce industrial oxygen as part of processes. This was scrubbed to produce high-purity medical grade oxygen. Also, it converted nitrogen tankers into transport trucks to move medical grade oxygen.

As MRC reported earlier, RIL shut its polyvinyl chloride (PVC) plant in India for maintenance in April 2021. The unit in Dahej with an annual capacity of 315,000 tons/year was taken offline by 5 April 2021 and will resume operations on 20 April.

According to MRC's ScanPlast report, Russia's overall PVC production reached 259,400 tonnes in the first three months of 2021, down 3% year on year. All producers decreased their output over the stated period.

Reliance Industries is one of the world's largest producers of polymers. The company produces polypropylene, polyethylene and polyvinyl chloride and other petrochemical products.
MRC

Trinseo raises prices for styrene butadiene, styrene acrylic and acrylic latex products sold in North America

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex, and rubber, has announced that effective May 15, 2021, the company is increasing the prices of all Styrene Butadiene, Styrene Acrylic, and Acrylic latex products sold into the carpet market in North America, as per the company's press release.

The increase will be USD0.06/dry lb (USD0.13/kg or USD133/tonne) for all indexed and non-indexed customers, as contracts allow.

According to the statement, the present increase is necessary to offset rising raw material and transportation costs and to remain a strong and reliable supplier.

As MRC reported earlier, Trinseo and its affiliate companies in Europe have announced a price increase for all polystyrene (PS), acrylonitrile-butadiene-styrene (ABS) and acrylonitrile-styrene copolymer (SAN) in Europe. Effective April 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 EUR330 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR330 per metric ton;
- MAGNUM ABS resins - by EUR300 per metric ton;
- TYRIL SAN resins - by EUR350 per metric ton.

According to ICIS-MRC Price report, prices of Russian PS grew significantly in April an broke the next historical records. All domestic producers announced an increase in PS prices last week. Such an abnormal price rise became critical for many small-sized converters.

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 USD3.0 billion in net sales in 2020, with 17 manufacturing sites around the world, and approximately 2,600 employees.
MRC

COVID-19 - News digest as of 30.04.2021

1. Shell raises its dividend in Q1 as profits surge

MOSCOW (MRC) -- Royal Dutch Shell's (RDSa.L) profits leapt to USD3.23 billion in the first three months of the year and the energy company raised its dividend as planned but warned that the outlook remained uncertain due to the coronavirus pandemic, said the company. Shell's adjusted earnings were above an average analyst forecast of USD3.125 billion and also ahead of earnings of USD2.9 billion last year, boosted by assets sales as well as higher oil and liquefied natural gas (LNG) prices. Sales of oil and gas assets in countries including Nigeria, Canada and Egypt added USD1.4 billion to first-quarter profits. Shell's London-listed shares were up 1.2% at 0736 GMT, outperforming a 1% gain for the broader European energy index (.SXEP).

MRC

Crude oil futures slip on weaker economic data from China and global pandemic concerns

MOSCOW (MRC) -- Crude oil futures ticked lower during mid-morning trade in Asia April 30, as prices pulled back from a six-week high due to weaker economic data from China, and persistent concerns over the progress of the pandemic in key economies around the world, reported S&P Global.

At 11:23 am Singapore time (0323 GMT), the ICE Brent June contract was down 32 cents/b (0.47%) from the April 29 settle at USD68.24/b, while the June NYMEX light sweet crude contract was down 36 cents/b (0.55%) at USD64.65/b.

The downturn in the market comes after oil prices had hit a six-week high on April 29, with front month ICE Brent and NYMEX light sweet crude contracts settling at USD68.56/b and USD65.01/b, respectively.

The rise in prices on April 29 was driven by signs of improving oil demand in China, Europe and the US. Optimism over the US economic recovery also provided some tailwind to the market, as the country had posted an annualized growth rate of 6.4% in Q1 2021, according to April 29 data from the Commerce Department.

This morning, however, prices came under pressure due to profit-taking activity, and weaker-than-expected Chinese Purchasing Managers' Index. Data from the National Bureau of Statistics released April 30 showed that the recovery in China's manufacturing and services sectors had slowed slightly, with manufacturing PMI at 51.1 in April from 51.9 in March, and non-manufacturing PMI at 54.9 in April from 56.3 in March.

"A weaker-than-expected Chinese manufacturing PMI weighed on sentiment," Margaret Yang, DailyFX strategist told S&P Global Platts April 30.

Yang also cited the resurgence of the pandemic in key economies, especially India, as a reason for the caution shown by investors this morning. The country reported a record 379,308 new cases and 3,645 deaths on April 28, latest data from John Hopkins University showed. "Viral resurgence in India appears to be a key concern among Asia-Pacific investors, dampening the prospect of energy demand from the world's third-largest oil importer," she said.

Concerns over the deterioration of the pandemic situation in other countries, such as Japan and Brazil, has also soured sentiment in the market, with ANZ analysts saying in a April 30 note that "demand in (these two countries) is also likely to be hit by a surge in infections and new restrictions."

As MRC informed earlier, 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 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 polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.
MRC