Eastman to sell tire additives business product lines to One Rock affiliate

MOSCOW (MRC) -- Eastman Chemical Company announced it has entered into a definitive agreement with an affiliate of One Rock Capital Partners, LLC to sell the rubber additives (including Crystex insoluble sulfur and Santoflex antidegradants) and other product lines and related assets and technology of the global tire additives business of its Additives & Functional Products segment, according to BusinessWire.

The sale does not include the Eastman Impera and other performance resins product lines of the tire additives business.

The total sale price of USD800 million consists of USD725 million cash at closing and an additional amount of up to USD75 million to be paid based on performance of the rubber additives business post-closing through 2023. The final purchase price is subject to working capital and other adjustments at closing. The company expects the sale will be either neutral or accretive to adjusted earnings per share in 2022.

“This announcement is part of our ongoing effort to improve the performance of our Additives & Functional Products segment. After reviewing strategic options, we believe this action is the most beneficial to Eastman and the rubber additives business,” said Mark Costa, Board Chair and Chief Executive Officer. “We are pleased to reach this agreement with One Rock and to have a clear path forward for the rubber additives business. We continue to evaluate other actions to improve our AFP segment.”

The sale, subject to regulatory approvals and satisfaction of other customary closing conditions, is expected to be completed in the second half of 2021. The agreement contains customary representations, warranties, and covenants of both parties including, among other things, for Eastman to conduct the rubber additives business in the ordinary course consistent with past practice.

As MRC reported before, in 2016, Eastman Chemical's chief executive Mark Costa announced that the company wanted to reduce its surplus ethylene and commodity intermediates, but did not intend to sell its cracker in Longview, Texas.

Ethylene is the main feedstock for the production of polyethylene (PE).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased.

Eastman is a global specialty chemical company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in more than 100 countries. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 14,500 people around the world.
MRC

MOSCOW (MRC) -- The US Environmental Protection Agency's biofuel blending mandates for this year and next are likely to be in line with those of 2020 as the agency accounts for weaker fuel demand since the onset of the coronavirus pandemic, reported Reuters with reference to three sources familiar with the matter.

That would spare the US refining industry the added costs associated with the usual annual expansion in renewable volume obligations under the Renewable Fuel Standard, at the expense of biofuel producers and the corn industry which depend on regular increases to grow their businesses.

The RFS requires refiners are meant to blend billions of gallons of biofuels like corn-based ethanol and biodiesel into their fuel, or buy tradable credits from those that do. The required amount of biofuels can increase each year, in hopes of reducing foreign petroleum imports and helping farmers.

The EPA administers the program and is meant to propose new volumes mandates yearly. But the administration of former President Donald Trump delayed the 2021 proposal because of the pandemic, and ahead of an election in which he was courting voters in both the oil and farm sectors.

The agency is now intending to issue both the 2021 and 2022 volumes proposals this summer.

In its last finalized ruling, which came out at the end of 2019, the EPA mandated that refiners must blend 20.09 billion gallons of renewable fuel into nation's fuel mix for the 2020 compliance year. The mandate included 15 billion gallons of conventional biofuels like ethanol, with the rest including other forms of biofuels. The upcoming volume proposals are due to include requirements that are largely the same, the three sources said, citing the impact of the coronavirus pandemic.

The agency likely was also guided by volume targets set by Congress under the RFS for conventional biofuels and non-cellulosic advanced biofuels, one source said.

As MRC informed earlier, in April 2021, the US Environmental Protection Agency asked industry groups for their input on the future of the nation's biofuel policy after it ends its current phase in 2022. The consultations will provide a new opportunity for the oil, corn and biofuel lobbies to reshape the regulation, called the Renewable Fuel Standard, which has bitterly divided the two industries for more than a decade. Under the RFS, oil refiners must blend increasing billions of gallons of biofuels into the nation's fuel mix each year or buy trade able credits from those that do.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) - The largest seller of polypropylene (PP) in Russia cut spot prices for the domestic market on Thursday by roubles (Rb) 20,000-25,000/tonne, depending on the type, according to the ICIS-MRC Price Report.

Russian converters faced a limited supply of polypropylene from local producers in the first three months of the year.
But the main influence on the market was provided by the dynamic growth of polypropylene prices in Europe and Turkey. Taking this into account polypropylene in Russia was constantly growing in price and by the beginning of April reached record levels.

Since mid-April, the situation in foreign markets has changed dramatically, but similar changes in the Russian market took place only at the end of June. Under pressure from the record high polypropylene prices, some Russian converters in May - June decided to limit their purchases.

At the same time, the demand for injection moulding homopolymer PP dropped most significantly in June. Converters were "exhausted" from the price race, and there were also major problems with working capital.

The polypropylene (PP) prices in a number of foreign markets decreased again in June, as a result, Russian producers had to decrease significantly export prices, and sales volumes in some directions decreased.

Competitive offers appeared for the supply of polypropylene to Russia from Asia and the Middle East in May - June.
But there was no growth in imports in these areas, the risks exceeded the possible benefits from buying imports at a lower price.

Pressure from external markets and low demand from the domestic market were the main reasons for the decline in prices. On Thursday, the largest Russian seller decreased the spot prices of homopolymer PP by Rb20,000/tonne to Rb150,000-152,000/tonne, including VAT, and shipment. PP random copolymers prices fell by Rb25,000/tonne.

MRC

MOSCOW (MRC) -- Specialty chemicals company LANXESS, specialty chemicals company, has completed the sale of its organic leather chemicals business to TFL Ledertechnik GmbH, as per the company's press release.

TFL is a global supplier of leather chemicals and a portfolio company of US investment firm Black Diamond Capital Management, L.L.C. All relevant antitrust authorities have granted the necessary approvals for the transaction, which was announced in August 2020.

The purchase price comprises a fixed component of EUR80 million.

Furthermore, the agreed trade working capital mechanism will lead to a payment of around EUR 20 million, to be paid out in the third quarter. In addition, there will be a performance-related component of up to EUR115 million, to be paid out over the next three years.

TFL has also assumed certain liabilities associated with the business. With the sale, all operations of the organic leather chemicals business line with around 420 employees have been transferred to TFL.

As MRC informed earlier, in January 2020, the specialty chemicals company had already divested its chrome chemicals business and, at the end of 2019, signed an agreement to sell its stake in the South African chrome ore mine. LANXESS is thus exiting the leather chemicals business completely. Since the end of 2019, the company has reported the Leather business unit as a discontinued operation.

We remind that Russia's output of products from polymers grew in March 2021 by 11.5% year on year. However, this figure increased only by 10.3% year on year in the first three months of 2021.

LANXESS is a leading specialty chemicals company with about 19,200 employees in 25 countries. The company is currently represented at 74 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. Through Arlanxeo, the joint venture with Saudi Aramco, Lanxess is also a leading supplier of synthetic rubber.
MRC

MOSCOW (MRC) - Biaxplen (part of SIBUR Holding) has developed a metallized film of the HBV.M brand, which has high barrier properties, according to a press release from the company.

It is noted that only a few companies around the world are capable of producing films with similar characteristics. The new brand will be produced at the Kursk plant Biaksplena. The production capacity will be 500 tons per year. The production launch of the film is scheduled for the second half of 2021.

"The development of a new brand became possible thanks to the effective work of a large cross-functional team for the development of formulations, production technology and modernization of equipment on the BOPP (biaxially oriented polypropylene) line, metallizers, digital quality control systems and new methods for determining characteristics in the quality laboratory", - said Maxim Fedorov, manager of the "Product Development" function of Biaxplen.

Earlier it was reported that Biaxplen in August 2019 closed a deal on the sale of a production site for the production of cast films from polypropylene (CPP) in the city of Novokuibyshevsk, Samara region. The implementation of a non-core low-tonnage asset with a capacity of 5 thousand tons will allow the company to concentrate its resources on the development of a large-tonnage line of business - the production of BOPP films and expanding the brand assortment.

Earlier it was reported that in 2020 Biaxplen sold 158,000 tonnes of products.

Biaxplen is a subsidiary of the SIBUR petrochemical holding, the leader of BOPP in Russia. Production capacity - 180 thousand tons per year, 8 high-speed lines. Brand assortment - over 40 types. Production sites are located in five regions. The products are exported to 27 countries.
MRC