Net profit of Kazanorgsintez in the first quarter increased by 3.2 times

MOSCOW (MRC) - The net profit of Kazanorgsintez (KOS, part of the TAIF group) in the first quarter grew 3.2 times to Rb6.2 bn, BUSINESS Online reports.

Kazanorgsintez's revenue in the first quarter of 2021 increased by 49% to Rb24.2 bn, follows from the company's quarterly report. This result became a record for the first quarter, leaving behind the previous maximum of Rb20.1 bn, recorded in 2016.

The company's financial performance is expected to exceed 2020 and 2019 results this year. In their opinion, the market situation favors the largest producer of low-density polyethylene.

As for the key driver, the situation on the plastics market, it really worked out well for KOS. Thus, the average value of the PPI-ST index, which reflects prices for large-capacity plastics, increased by 1.5 times: from 87 thousand rubles per ton in January-March 2020 to Rb130,000 per tonne in January-March 2021. At the same time, sales profit increased 4.2 times to almost Rb8 bn.

The contribution of Kazanorgsintez's production to the growth of its revenue was small. Despite the increase in receipts for all main products from the KOS line, their dynamics were uneven. Thus, the highest growth was shown by polycarbonates - proceeds from their sale doubled to almost 5 billion rubles. Revenue became a record for the direction, leaving Rb3.3 bn behind the sample in January - March 2018. Unlike other products, polycarbonates showed an increase in 2020, by 11% to Rb8.8 bn.

Further, revenue from the sale of high-density polyethylene (LDPE) increased by 71% to Rb6 bn. Revenues from the product that brings the most revenue to KOS, low-density polyethylene (HDPE), increased by 26% to Rb10 bn.

Earlier it was reported that Kazanorgsintez plans to reconstruct reactor B at the plant for the production and processing of low-density polyethylene (HDPE).

As it became known earlier, the largest petrochemical holdings of Russia - SIBUR and TAIF - in April announced plans to combine their assets. Within the framework of the merger, a company will be created on the basis of SIBUR Holding, in which the current shareholders of TAIF PSC will receive a 15% stake in exchange for the transfer of a controlling stake in a group consisting of petrochemical and energy enterprises. The remaining stake in TAIF can be subsequently purchased by the merged company.

It was also noted that the combined company of SIBUR and TAIF will include the parent company of the Tatarstan group, its two chemical plants and an energy company. On the part of TAIF, the following companies will join the merged company: TGK-16 JSC, Kazanorgsintez PJSC, Nizhnekamskneftekhim PJSC and TAIF JSC. The oil complex of TAIF-NK PSC is not included in the deal with SIBUR. The merger of SIBUR and TAIF will not affect the position of Kazanorgsintez (KOS); TAIF will remain its shareholder.

According to the ScanPlast report of MRC, Kazanorgsintez’s total HDPE production grew to 38,600 tonnes last month from 29,000 tonnes in April, with the increase in the output due to weaker linear low-density polyethylene (LLDPE) production.

Kazanorgsintez PJSC is one of the largest enterprises in the Russian Federation (TAIF Group of Companies). It produces 40% of all Russian polyethylene and is its largest exporter. Currently, PE, polycarbonate (PC), polyethylene pipes, phenol, acetone, bisphenol A are produced. KOS is the only Russian PC manufacturer. There are 170 types of products in total. The annual production volume is 1.6 mln tonnes. The enterprise is the largest Russian manufacturer of low-pressure polyethylene (HDPE) pipes. The annual capacity of HDPE production is 540,000 tonnes, and LDPE - 225,000 tonnes.
MRC

MOSCOW (MRC) -- ExxonMobil Chemical Company has signed an agreement with Celanese for the sale of its global Santoprene business for USD1.15 billion, subject to working capital and other adjustments, according to Hydrocarbonprocessing.

The sale includes two world-scale manufacturing sites in Pensacola, Florida and Newport, Wales along with associated product, process development and laboratory equipment, operating and administration buildings, control systems and documentation, and intellectual property.

“Reaching this agreement with Celanese is consistent with our strategy and allows us to focus on serving the growing market for primary olefin derivatives, where we can leverage our competitive advantages of industry leading scale, integration and proprietary technology,” said Jack Williams, senior vice president of ExxonMobil Corporation.

The transaction is expected to close in the fourth quarter of 2021, subject to regulatory, information and consultation processes, and third-party approvals.

As MRC informed previously, in June 2021, Gov. John Bel Edwards and ExxonMobil Baton Rouge Refinery Manager David Oldreive announced the company’s final investment decision for more than USD240 million in capital improvements at the ExxonMobil Baton Rouge Refinery.

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.

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) -- PKN Orlen says it has signed a final contract with Hyundai Engineering and Tecnicas Reunidas for the engineering and construction of the main units for PKN Orlen's previously announced Olefins Complex III project at Plock, Poland, said Chemengonline.

The project is due for completion in 2024. Following production launch, scheduled for early 2025, the share of crude oil used to manufacture petrochemical products in Plock will rise from 14% to 19%. This is all the more important given an expected drop in demand for refinery products and an expected increase, by as much as 80%, in demand for high-margin petrochemicals by 2050.

As part of the project, PKN ORLEN will consider shutting down the part of the olefin plant which was built over 40 years ago, with an ethylene production capacity of about 340,000 tonnes and lower operational and energy efficiency. The more modern part, with a capacity of about 300,000 tons of ethylene, is to be upgraded. Most importantly, however, PKN ORLEN will build a new Steam Cracker with a capacity of 740,000 tons of ethylene. Once the expansion of Olefins III is completed, the petrochemical plant in Plock will need around 1 million tonnes of additional feedstocks, which will be selected so as to maximise margins. The additional streams will come from the Plock refinery and other ORLEN Group refineries, as well as from the market in which Grupa LOTOS is a participant.

The Complex will comprise five additional production units: a new large ethylene oxide and glycol plant, a pyrolysis gasoline hydrogenation unit (PGH), an ethyl tertiary-butyl ether unit (ETBE), a styrene unit, and a generator unit (SGU). Once completed, Olefins Complex III will additionally increase PKN ORLEN’s capacity to produce other ethylene derivatives, delivering an extra margin and maximising the rate of return.

As per MRC, ORLEN Unipetrol (part of PKN Orlen), a large Czech manufacturer of petrochemical products, lifted force majeure circumstances on the supply of products from a polypropylene (PP) plant in Litvinov (Czech Republic) on June 22. Force majeure at this enterprise with a capacity of 345 thousand tons of PP per year was announced on May 28 of this year, and the plant was closed on May 25 due to a serious technical failure in the operation of the reactor and as a safety measure.

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.

Polski Koncern Naftowy Orlen S.A. (PKN Orlen) is the largest Polish oil and gas company and one of the largest oil and gas companies in Europe. In Plock, the nominal capacity of the polypropylene (PP) line is 400 thousand tons per year. PKN Orlen owns a majority stake (63%) of the Czech polyolefin manufacturer Unipetrol. In addition, the largest Czech chemical manufacturer Spolana is also part of the Polish PKN Orlen group. The enterprise produces PVC, caprolactam, sulfuric acid, mineral fertilizers.
MRC

1. US crude oil inventories expected to decrease further on stronger refinery demand

MOSCOW (MRC) - US crude oil inventory draws likely extended in the week ended June 25 against a backdrop of rising refinery demand, reported S&P Global. Total commercial crude oil stocks are expected to have declined 4.7 million barrels to around 454.4 million barrels, analysts surveyed by S&P Global Platts said. The draw would put inventories at the lowest since March 2020 and leave them 6.3% behind the five-year average of US Energy Information Administration data, opening the widest deficit to that average since August 2008.


MRC

MOSCOW (MRC) -- Crude oil futures rose during the mid-morning trade in Asia June 30, as data from the American Petroleum Institute showed a large draw in US crude inventories, and as the market eagerly awaited the July 1 OPEC+ meeting, reported S&P Global.

At 11:13 am Singapore time (0311 GMT), the ICE August Brent futures contract was up 43 cents/b (0.58%) from the previous close at USD75.19/b while the NYMEX August light sweet crude contract was up 49 cents/b (0.67%) at USD72.98/b.

The data released by the American Petroleum Institute led to some bullishness in the market, as it showed a draw of 8.15 million barrels in the US crude inventories for the week ended June 25.

The data was less positive with regards to downstream products inventories, showing gasoline and distillate inventories rising by 2.42 million barrels and 428,000 barrels, respectively.

The market remains optimistic about US products demand, and especially gasoline demand, with Apple Mobility data showing the US driving activity staying near record levels at 162% of the January 2020 baseline in the week ended June 25.

The market will now be awaiting more comprehensive data from the Energy Information Administration, due to be released later June 30, for more pricing cues.

Meanwhile, the market has its eyes set on the July 1 OPEC+ meeting, after the July 29 Joint Technical Committee provided little definite guidance into the producer group's production plans for August.

Despite calls for higher production, analysts generally expect the coalition to raise production moderately by 500,000 b/d in August, especially as the resurgence in COVID-19 infections due to the delta variant of the coronavirus threatens demand, and as the threat of additional barrels from Iran following a possible Joint Comprehensive Plan of Action deal hangs over the market.

"Russia apparently is leading a group of countries that want to (increase) output. Saudi Arabia is taking a more cautious approach, with Energy Minister, Prince Abdulaziz bin Salman, cautioning (that) it's not clear whether oil prices were rising due to real supply and demand or because of expectations and trajectories that are excessively optimistic," ANZ analysts said in a June 30 note.

We remind that as MRC informed earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world"s third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.

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