COVID-19 - News digest as of 17.08.2021

1. Westlake earnings increased in Q2 on post-pandemic recovery

MOSCOW (MRC) -- Westlake Chemical Corporation reported record quarterly earnings in the second quarter 2021 compared to the previous year, as strong demand encouraged higher sales prices and margins, said the company. The vinyls segment made record income, driven by higher sales prices, margins and sales volumes for polyvinyl chloride (PVC) resin market on regaining strength in the building and construction materials business. Olefins also tracked record income from operations in the second quarter on higher sales prices and margins across the portfolio, on the back of good global demand, and tight supply, partially offset by lower polyethylene (PE) sales volumes.


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MOSCOW (MRC) -- Crude oil futures were stable to slightly higher in mid-morning trade in Asia Aug. 17 amid bargain-hunting by investors, with the upside limited by the rising number of COVID-19 cases globally sapping market sentiment, reported S&P Global.

At 11:20 am Singapore time (0320 GMT), the October ICE Brent futures contract was up 4 cents/b (0.06%) from the previous close at USD69.55/b, while the NYMEX September light sweet crude contract was 8 cents/b (0.12%) higher at USD67.37/b.

A resurgence in COVID-19 cases globally fueled by the delta variant has impacted the oil demand outlook in August, particularly in China, the world's largest energy consumer.

"China also reported weaker-than-expected industrials and retail sales on Monday, stoking fears about the global recovery, and oil demand," said Avtar Sandu, senior commodities manager at Phillips Futures, on Aug. 17.

Other analysts shared similar bearish views, noting that mobility in China has fallen sharply as authorities impose strict guidelines to curb rising COVID-19 infection rates.

China's refineries processed 13.96 million b/d of crude in July, down 6% from a record high of 14.86 million b/d in June, National Bureau of Statistics data released Aug 16 showed. The volume was also down 0.9% year on year, marking the first year-on-year fall since March 2020.

As MRC informed earlier, crude oil stockpiles fell modestly last week, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
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MOSCOW (MRC) -- Reliance Industries (RIL) has taken off-stream one of its polypropylene (PP) plants in Jamnagar, India for a scheduled maintenance, according to CommoPlast with reference to market sources.

Thus, this unit with an annual capacity of 400,000 tons/year of PP was shut on 5 August 2021 and will remain idle for approximately one month.

The local supply is expected to take a hit from the shutdown, especially when demand is recovering from the COVID-19 outbreak.

As MRC reported earlier, RIL shut its another PP unit in Jamnagar, India for a 20-day maintenance on 15 October, 2020. This unit came back online on 5 November, 2020. The plant has an annual capacity of 480,000 tons/year.

According to MRC's ScanPlast report, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
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MOSCOW (MRC) -- Formosa Plastics USA, part of Formosa Petrochemical, has postponed the start-up of its expanded polyvinyl chloride (PVC) production capacities at its existing plant in Baton Rouge, Louisiana, to Q4 2022, reported S&P Global with reference to sources familiar with company operations.

Initially, the company planned to launch the expanded capacities at its 513,000 mt/year of PVC plant in Q4 2021. Formosa did not respond to inquiries about the delay.

The company intends to debottleneck production at this plant, adding 130,077 mt/year of PVC capacity, according to permitting documents.

Formosa's last public announcement about the expansion came in November 2019, when it was in "detailed engineering design" with steady commercial operation slated for Q4 2021, a year later than announced in December 2018.

As MRC informed earlier, as part of the expansion project, new equipment will be installed at this plant, including the one for the production of halogenated acids, whose products Formosa will use to produce vinyl chloride monomer (VCM). As a result of the modernization of PVC production, the company plans to increase the output of material and its sales by 20%.

Back in 2017, Formosa announced its plans to expand PVC capacity in Louisiana, and in March 2019, the Louisiana Economic Development and FPC began to discuss this project. The state had allocated a grant of USD500,000 for this project.

According to MRC's ScanPlast report, Russia's overall production of unmixed PVC totalled 580,500 tonnes in the first seven months of 2021, up by 4% year on year. At the same time, one producer reduced its output.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
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MOSCOW (MRC) -- Thailand-based Indorama Ventures Public Company Limited (IVL), a global chemicals producer, has announced it agreed to acquire Brazil-based Oxiteno S.A. Industria e Comercio, a subsidiary of Ultrapar Participacoes S.A. for USD1.3 bln,, as per the company's press release

The acquisition gives IVL a unique portfolio in high-value surfactants and significantly extends its existing Integrated Oxides and Derivatives (IOD) business.

Oxiteno is a leading integrated surfactants producer, catering to highly attractive end-use markets in LATAM. The acquisition brings an excellent management team, world-class expertise in green chemistry innovation, strong customer relationships in Brazil, Uruguay and Mexico, and substantial growth potential in attractive end markets, including the US through a new facility in Pasadena, Texas. Oxiteno has a strong commitment to environmental governance, and its focus on lowering greenhouse gas emissions will also enhance IVL’s ESG credentials.

Through the acquisition, IVL will assume a unique market position in technologies catering to niche, IP-rich and value-added applications in home & personal care, agrochemicals, coatings and oil & gas markets. The surfactants market has seen consistent growth over the last decade, driven by trends in population growth, urbanization and increasing hygiene awareness amid the Covid-19 pandemic.

With 11 manufacturing plants, customers in 4 continents, and an experienced management team, Oxiteno will complement IOD’s footprint in the USand Latin America, while its 5 research and technology centers will add to IVL’s innovation credentials in green chemistry. The extended footprint has potential to drive expansion in Europe and Asia by leveraging on IVOX’s surfactants business in Australia and India and IVL’s global presence in 34 countries. IVL expects to realize synergies of USUSD100 million by 2025 through portfolio adjustments, asset optimization and operational excellence.

IVL will purchase Oxiteno for USUSD1.3 billion (subject to adjustments at closing), with a deferred payment of USD150 million in 2024. The transaction is subject to customary conditions to closing, including approval of relevant regulatory authorities. The transaction is expected to close in Q1 2022 and will be earnings accretive immediately.

Financing is secured through deferred payment, using existing extra cash on our balance sheet, free cash flow generated from existing businesses, short term loans against working capital and the balance as long-term debt.

As MRC reported earlier, in July 2021, IVL, a large producer of recycled polyethylene terephthalate (rPET) for beverage bottles, has announced plans to build a facility in Karawang, Indonesia, to recycle almost 2 billion plastic bottles a year in support of the Indonesian government’s plan to reduce ocean debris. The facility, which is planned to open in 2023, will recycle 1.92 billion PET bottles annually and will employ 217 people.
The plant will provide the washed and shredded postconsumer bottles as PET flake feedstock to produce recycled resin that is suitable for food-contact use.

According to MRC's ScanPlast report, Russia's estimated PET consumption totalled 411,200 tonnes in the first six month of 2021, up by 12% year on year. Russian companies processed 62,910 tonnes in June, compared to 85,890 tonnes a month earlier.

Indorama Ventures Public Company Limited, listed in Thailand (Bloomberg ticker IVL.TB), is one of the world’s leading petrochemicals producers, with a global manufacturing footprint across Africa, Asia Pacific, Europe and Americas. The company’s portfolio comprises Integrated PET, Olefins, Fibers, Packaging and Specialty Chemicals. Indorama Ventures products serve major FMCG and automotive sectors, i.e. beverages, hygiene, personal care, tire and safety segments. Indorama Ventures has approx. 24,000 employees worldwide and consolidated revenue of US$ 11.4 billion in 2019. The Company is listed in the Dow Jones Emerging Markets and World Sustainability Indices (DJSI).
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