Finnish Neste forecasts lower sales and profit for Q3 on higher feedstock, oil prices

MOSCOW (MRC) -- Finnish energy company Neste warned of a drop in sales and profit for the third quarter as it deals with higher feedstock and crude oil prices as well as planned refinery maintenance, sending its shares down more than 5%, reported Reuters.

Major sources of biofuel feedstock such as waste and residue have seen a steady increase in prices, given the growing emphasis on renewable energy globally. A rise in crude oil prices due to production cuts by the OPEC+ countries and recovering demand driven by the vaccine rollouts is also expected to weigh on its refining business.

The company, however, reported a rise in second-quarter operating profit, which rose to EUR463 million (USD546.2 million) from EUR208 million a year ago on gains in inventory valuations.

The company's revenue also rose 17% to EUR3.02 billion, while analysts had expected it to drop to 2.55 billion euros.

While oil products accounted for just EUR8 million, renewable products, such as biodiesel and aviation fuel, turned an operating profit of EUR443 million.

However, when cleared from inventory valuation gains, comparable operating profit for renewable products fell 5.5% from a year earlier to EUR241 millions.

The oil product unit saw its operating profit fall to EUR8 million from EUR40 million due to a 12-week maintenance turnover at Neste's oil refinery in Porvoo in southeast Finland.

It also said a turnaround at Neste's Singapore refinery will cut operating profit by EUR90 million and a catalyst change at its Rotterdam facility will lower operating profit by EUR50 million.

As MRC informed earlier, Neste and LyondellBasell has recently announced a long-term commercial agreement under which LyondellBasell will source Neste RE, a feedstock from Neste that has been produced from 100% renewable feedstock from bio-based sources, such as waste and residue oils and fats. This feedstock will be processed through the cracker at LyondellBasell’s Wesseling, Germany, plant into polymers and sold under the CirculenRenew brand name.

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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.

Neste (Helsinki) creates solutions for combating climate change and accelerating a shift to a circular economy. The company refines waste, residues and innovative raw materials into renewable fuels and sustainable feedstock for plastics and other materials. The company is the world’s leading producer of renewable diesel and sustainable aviation fuel, developing chemical recycling to combat the plastic waste challenge. In 2020, Neste's revenue stood at EUR 11.8 billion, with 94% of the company’s comparable operating profit coming from renewable products.
MRC

MOSCOW (MRC) - Tatneft and the Hungarian MOL Group have launched a project to build a plant for the production of rubber modified bitumen (RMB) at the TANECO complex, the company said.

For these purposes, the companies agreed to establish a joint venture LLC RMB-Russ. Construction is underway at the Taneco oil complex. Its capacity will be 25 thousand tons of bitumen per season. The launch of the enterprise is scheduled for mid-2023. The total investment will amount to RUB 1.2 billion. "The project is planned to be implemented in part through tender funding from the Hungarian Export Support Agency (HEPA). To support the foreign use of the patented MOL technology, HEPA has allocated a one-time non-refundable grant to reimburse up to 50% of capital costs if the project meets the requirements of structural conditions and profitability," company message.

According to the MOL Group, the new plant will ensure the recycling of up to 500,000 car tires per year. RMB production involves the processing of already used rubber, namely car tires and tire production waste in RMB. It is assumed that the plant will be able to reuse rubber from 500 thousand tires in one road construction season. Eco-friendly bitumen will be used in road construction.

Last week, Lukoil, the second largest oil company in the Russian Federation, began construction of a polymer-bitumen binders production facility launched at the Nizhny Novgorod refinery on the territory of the Nizhny Novgorod refinery in the city of Kstovo. The plant's capacity exceeds 150 thousand tons during the production season.

Also last week it was reported that Tatneft plans to launch the production of terephthalic acid (TPA) to provide its Ecopet plant in the Kaliningrad region with raw materials. Tatneft bought Ecopet in June 2021. The deal amounted to RUB 6.4 billion. The company is engaged in the production and sale of polyethylene terephthalate in Russia and Eastern Europe.

According to the ICIS-MRC Price Report, spot prices for PET from Russian producers remained unchanged this week. There is still no free material on the spot at the Senezh plant. Producer Ecopet also reported a shortage of spot volumes in the current month, which is likely to persist in August.

OAO TATNEFT is part of OAO Tatneftekhiminvest-holding, an industrial and financial company that unites the largest enterprises of the oil and gas chemical complex of Tatarstan. TATNEFT accounts for over 80% of oil produced in Tatarstan. In 2013, the company increased oil production by 0.4% to 26.107 million tons. The main shareholder of Tatneft is the state holding OJSC Svyazinvestneftekhim, which owns 30.44% of shares in the authorized capital of the company. Tatarstan owns the "golden share" of Tatneft.

MOL is the largest Hungarian oil, gas and petrochemical group, engaged in exploration and production, transportation of hydrocarbons, as well as the operation of a network of trunk gas pipelines. TVK is a 100% subsidiary of MOL. TVK manufactures HDPE, LDPE, and PP.
MRC

MOSCOW (MRC) -- An explosion was heard in Leverkusen on Tuesday, and witnesses reported seeing plumes of smoke at chemicals maker Bayer’s site in the western German city, said Reuters.

The explosion occurred at a chemical plant in the city of Leverkusen at 9.40 am local time. Five staff members went missing, several were injured, two were seriously injured, and Leverkusen residents were told to stay indoors with the air conditioning turned off and the doors and windows closed. Regional emergency services arrived at the scene. According to eyewitnesses, the explosion occurred at one of the sites of the chemical and pharmaceutical concern Bayer.

The Cologne Fire Department, which also dispatched brigades to the site, said that sections of numerous highways in the area had been closed.

Bayer is headquartered in Leverkusen and several other companies including LANXESS, BASF and Covestro also own factories in the area.

Earlier it was reported that Bayer and Lanxess sold their stakes in the Currenta chemical park to funds managed by infrastructure investor Macquarie Infrastructure and Real Assets (MIRA). Both companies signed related agreements with MIRA in August 2019.

Earlier it was reported that the German concern BASF, the world leader in the production of chemical products in the world, keeps the capacity utilization at the expandable polystyrene (PSV-S) plant at its complex in Ludwigshafen (Ludwigshafen, Germany) at a reduced level in July due to technical problems , the letter says to the company. Thus, a technical malfunction at the reactor of one of the lines of this enterprise with a capacity of 200 thousand tons of PSV-S per year, discovered on July 11, led to a reduction in the production of Styropor F95, Peripor and F15 grades. It is currently unknown how long this line will remain underutilized.

According to MRC's ScanPlast, EPS consumption in Russia amounted to 40,690 tonnes in the first five months of this year, an 18% increase over the same period last year. In May, the consumption of EPS in the country increased by 35% compared to the same month a year earlier and amounted to 8,790 tonnes.
MRC

1. Dow sees strong petrochemical demand in a number of end-markets

MOSCOW (MRC) -- Dow Chemical, one of the largest US petrochemical companies, saw packaging, construction materials and coatings, industrial and electronics markets surge in the second quarter amid strong demand and higher chemical and resin pricing, reported S&P Global with reference to CFO Howard Ungerleider's statement July 22. "Strong consumer trends continue in retail, housing, and the manufacturing sectors and inventory levels remain low across most of our value chains," Ungerleider said during the company's Q2 earnings call. "We expect these dynamics to continue to support price strength in (Q3) as the industry works to fulfill pent-up demand." The company reported USD1.9 billion in profits, up from a USD225 million loss in Q2 2020, when demand cratered for many products amid the height of coronavirus pandemic-related shutdowns in many global regions.


MRC

MOSCOW (MRC) -- Crude oil futures were higher during mid-morning trade in Asia July 27 as a weakened US dollar prompted buying activity, but upside was limited as the rising number of COVID-19 cases globally sapped market sentiment, reported S&P Global.

At 11:17 am Singapore time (0317 GMT), the ICE September Brent futures contract was up 46 cents/b (0.62%) from the previous close at USD74.96/b, while the NYMEX September light sweet crude contract rose 35 cents/b (0.49%) at USD72.26/b. The ICE Brent and the NYMEX light sweet crude markers had edged up 0.54% and down 0.22%, respectively, on July 26, following a directionless trading session.

The uptick in prices comes amid the depreciation of the US dollar ahead of the US central bank's Federal Open Market Committee meeting, with the ICE US dollar index trading at 92.61 at 11.00 am, down 0.35% from the July 23 close.

A weaker US dollar makes dollar denominated assets such as oil futures more attractive for buyers holding foreign currency, and whips up appetite for such assets.

Meanwhile, analysts said the rapid spread of the delta variant of the coronavirus has created significant downside risk for the oil market, as it has raised the prospect of extended and more stringent mobility restrictions. Citing the spread of the delta variant both domestically and internationally, US White House press secretary Jen Psaki said on July 26 that the country will maintain its existing coronavirus travel restrictions, resisting pressure from the travel industry and US allies to ease them, media reports said.

A similar trend of rising cases has been seen all over the world, including in the UK, which boasts one of the highest vaccination rates in the world. Chancellor Angela Merkel's chief of staff, Helge Braun, said July 25 that COVID-19 infections in Germany could surge to 100,000 a day in two months unless more people get vaccinated.

"New COVID-19 cases have been rising in Asia for a few weeks now, but sentiment in the oil market is starting to deteriorate as infections rise in the heavy energy-consuming countries of the west," Avtar Sandu, senior commodities manager at Phillips Futures, said July 27.

As MRC informed earlier, Saudi Arabia, the world's top crude oil exporter, will supply full contractual volumes of August-loading crude to at least five Asian customers. However, Saudi Aramco has turned down two of the buyers' requests for extra barrels.

We remind that Mukesh Ambani, chairman and managing director of Reliance Industries Ltd (RIL), said in June he expects the company's deal with Saudi Aramco to materialise this year. Meanwhile, Yasir Al-Rumayyan, chairman of Saudi Aramco and the Governor of the Public Investment Fund, joined the board of Reliance as an independent director.

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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
MRC