Evonik expects better financial results in 2021

Evonik expects better financial results in 2021

MOSCOW (MRC) -- After a strong third quarter, Evonik is making its earnings forecast for the current year more precise, as per the company's press release.

The company now expects adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) of about EUR2.4 billion. This is the upper end of the previous range of EUR2.3 billion to EUR2.4 billion that Evonik had expected mid-year. Sales will also reach the upper end of the forecast range - EUR14.5 billion. Previously, Evonik had expected EUR13 billion to EUR14.5 billion.

"We continued to grow strongly in the third quarter," said Christian Kullmann, chairman of the board of management. "All four chemical divisions benefited from increased demand. We were able to completely compensate for higher raw material, energy and logistics costs by raising our prices."

Adjusted EBITDA rose 24 percent to EUR645 million in the July to September period compared with the same three months the previous year. Compared with the second quarter, earnings remained stable, despite one-time costs of around €30 million from higher bonus provisions, maintenance shutdowns and loss of sales due to impaired supply chains and a lack of raw material availability.

Sales at the company gained 33% to EUR3.87 billion in the third quarter compared with the previous year. The increase reflects continued positive demand dynamics across all divisions. Adjusted net income increased 45% to EUR269 million with adjusted earnings per share rising from EUR0.40 to EUR0.58.

Improved business performance led to a 68 percent increase in free cash flow in the quarter to EUR524 million. As a result, free cash flow reached a record level of EUR937 million in the first nine months.

"For the year as a whole, we now expect free cash flow of around €1 billion," said Ute Wolf, chief financial officer. "We are proud that we were able to generate even more cash than previously thought. Now we’re expecting a full-year cash conversion rate above last year's good figure, which was about 40%."

Specialty Additives: The division's sales rose 20% to EUR934 million in the third quarter. Products for the construction and coatings industry as well as for renewable energies achieved significant sales growth in all regions because of a considerable increase in demand. Additives for polyurethane foams for the automotive sector as well as durable goods such as mattresses and refrigerators saw higher demand with sales rising significantly. The increase in sales at the division was partly limited by interruptions in global supply chains and the associated lack of availability of individual raw materials. Adjusted EBITDA increased by 5% to EUR224 million.

Performance Materials: The division's sales rose by 77% to EUR784 million in the third quarter. Sales of C4 products increased significantly with higher demand and strongly improved selling prices. The superabsorbent business continues to be affected by a difficult market environment. Adjusted EBITDA rose from EUR28 million to EUR97 million in the quarter.

As MRC informed earlier, in February, 2020, Dow and Evonik entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 33,000 employees.
MRC

China plans to reduce carbon emission before 2030

China plans to reduce carbon emission before 2030

MOSCOW (MRC) -- China will take action to reduce waste, promote renewables and unconventional fuel, and reform its electricity network as part of its plan to bring carbon emissions to a peak before 2030, said Hydrocarbonprocessing.

The new action plan repeats China's targets to bring wind and solar capacity to 1,200 gigawatts by the end of the decade, to build more hydropower and nuclear plants and further develop natural gas resources. The document was published just five days before talks get under way in Glasgow to strengthen the global fight against climate change. China is set to announce its updated "nationally determined contributions" before the meeting begins.

Climate watchers have been looking closely for signs that China, the world's biggest source of climate-warming greenhouse gases, might make more ambitious pledges ahead of the Glasgow talks. Tuesday's document offered few advances.

As the country grapples with power shortages and ramps up coal production in order to guarantee winter supplies, the State Council said China would accelerate efforts to build a new and more flexible power system that allows new energy sources to be steadily increased. As well as new solar and wind farms, new hydroelectric dams would also be built on the upper reaches of the Yangtze, Mekong and Yellow rivers, and China will also make more use of new-generation nuclear technology, including small-scale offshore reactors, it said.

China will also take action to ensure that energy-intensive industrial sectors such as steel, non-ferrous metals and building materials improve energy efficiency and recycling rates, and make full use of new technologies to bring their own emissions to a peak. Last week, China's state planner said at least 30% of production capacity in those energy-intensive sectors would meet tighter energy efficiency standards by 2025.

Additionally, primary oil refining capacity in China will be capped at 1 B tons per yr by 2025, the document outlined, while petroleum and chemical companies will be encouraged to adjust their feedstock structure by replacing coal with electricity and natural gas. Meanwhile, China plans to "reasonably" manage oil and gas consumption by "gradually adjusting gasoline use" and advocate biofuel and sustainable jet fuel to replace conventional fuel products.

Some Chinese oil refiners and analysts reckon that diesel consumption in the country has already peaked, and expect gasoline demand to peak in 2025-2028. China's plan promotes natural gas as well as non-conventional oil and gas, including coalbed methane, even though they are fossil fuels and sources of carbon dioxide. China is currently investing USD131 B in new gas infrastructure, think tank Global Energy Monitor said on Tuesday, adding that its reliance on gas would do little to reduce temperature rises.

As per MRC, oil refiners are ramping up output to meet a synchronized uptick in demand across Asia, Europe and the United States, but plant maintenance and high natural gas prices will constrain supply in the fourth quarter. This comes as profits for producing ground transportation fuels such as diesel and gasoline have rebounded globally for the first time since the start of the pandemic, as countries gradually emerge from COVID-19 movement restrictions.

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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in the first nine months of 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.
MRC

COVID-19 - News digest as of 08.11.2021

1. Global oil refiners increase output as margins recover to pre-pandemic levels

MOSCOW (MRC) -- Oil refiners are ramping up output to meet a synchronized uptick in demand across Asia, Europe and the United States, but plant maintenance and high natural gas prices will constrain supply in the fourth quarter, reported Reuters with reference to company officials and analysts' statements. This comes as profits for producing ground transportation fuels such as diesel and gasoline have rebounded globally for the first time since the start of the pandemic, as countries gradually emerge from COVID-19 movement restrictions. A coal shortage across Europe and Asia, which has forced some power generators to burn kerosene, diesel or fuel oil and stock up ahead of the peak winter heating demand, is also supporting global oil prices.



MRC

Crude oil futures rise in Asia on broad risk-on sentiment in financial markets

Crude oil futures rise in Asia on broad risk-on sentiment in financial markets

MOSCOW (MRC) -- Crude oil futures edged higher in mid-morning trade in Asia Nov. 8, extending gains from the previous session amid a broad risk-on sentiment in financial markets following a strong US jobs report and news of Pfizer's antiviral drug, reported S&P Global.

At 10:10 am Singapore time (0210 GMT), the ICE January Brent futures contract was up USD1.03/b (1.24%) from the previous close at USD83.75/b, while the NYMEX December light sweet crude contract rose USD1.02/b (1.26%) at USD82.29/b. Both benchmarks had settled higher by 2.7%-3.1% in the last session Nov. 5.

Financial markets across Asia are being buoyed by a stellar US jobs report that showed the US adding jobs at a faster-than-expected pace, boosting hopes of a quick recovery from the COVID-19 pandemic.

US non-farm payrolls jumped 531,000 last month, the Department of Labor said, beating some analysts' forecasts of a 450,000 increase.

"Global risk sentiment received yet another boost after Friday's (Nov. 5) US nonfarm payrolls exceeded market expectations and the October unemployment rate fell to a 19-month low of 4.6%," OCBC Treasury Research analysts said in a note.

"Asian markets are likely to cheer the better-than-expected US labor market data this morning," they added.

Also adding to bullish sentiment was news that pharmaceutical giant Pfizer had stopped a trial for a COVID-19 experimental antiviral pill early after it was shown to cut by 89% the chances of hospitalization, or death, for adults at risk of developing severe disease.

This comes as the US on Nov. 8 reopens its borders to vaccinated travelers across the world, boosting the outlook for jet fuel demand as airplanes prepare to take to the skies again.

The latest developments will add to the overall bullish sentiment in oil prices as analysts maintain that oil markets remain in deficit and prices will continue to be supported going forward.

Market watchers also noted that Saudi Aramco had raised its December official selling prices, announced late Nov. 5, for Asia, Mediterranean, Europe and US-bound cargoes as strengthening Asian demand ahead of colder winter months is expected to tighten crude supplies.

"Saudi Aramco raised its official selling price of crude to all buyers across the globe, suggesting demand remains strong. This comes following OPEC's decision to stick with its scheduled 400,000 b/d increase in output despite consumers saying the current pace is too slow to sustain the post-COVID recovery," ANZ Research analysts Brian Martin and Daniel Hynes said.

As MRC informed earlier, Saudi Aramco's downstream business consumed 43.5% of the company's crude in the first nine months of 2021, while its bottom line for the third quarter to September was in the black amid an improvement in market conditions. During January-September 2020, Aramco's downstream oil consumption stood at 39.5%, the company said in an earnings report released Nov. 1.

We remind that in June 2020, Aramco finalized its USD69 billion acquisition of a 70% stake in Saudi Basic Industries Corp., the Middle East's biggest petrochemical maker. SABIC reported more than a fivefold year-on-year increase in its Q3 net profit to USD1.49 billion thanks to higher average sales prices.

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 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
MRC

CNOOC makes rare diesel imports

CNOOC makes rare diesel imports

MOSCOW (MRC) -- China National Offshore Oil Corporation Ltd., or CNOOC, has booked two diesel shipments in late October, totalling about 50,000 tonnes, for early November delivery into south China, a rare purchase spurred by a strong domestic diesel market, reported Reuters with reference to several trading sources.

China has been a net diesel exporter in recent years but a reduction in domestic refinery throughput since June has tightened supplies and led to a rally in wholesale prices of the main transportation and industrial fuel.

The government's clampdown on light cycle oil, a blending component for diesel, by imposing a hefty tax on imports also cut into supplies.

"Very strong domestic diesel prices have created a window to bring in imported diesel," said one source.

A widespread power curb as well as soaring natural gas prices have also lent support to diesel, as some industrial and commercial consumers shifted to standalone diesel generators and truck fleets switched to more diesel use from natural gas.

As MRC wrote before, CNOOC targets to produce 545 million-555 million barrels of oil equivalent, or 1.49 million-1.52 million boe/d, of oil and gas in 2021, up about 4.5% from its estimated production of 528 million boe in 2020, on the back of contribution from its 19 new projects, including Buzzard oil field phase II.

We remind that CNOOC Dongfang, a subsidiary of CNOOC, halted production at its propylene plant in Hainan province on March 2 for a schedule turnaround. It was expected that the maintenance at this plant with a capacity of 150,000 mt/year of propylene to continue until mid-April 2021.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

CNOOC is China's third largest national oil company after CNPC and Sinopec. The company was founded in 1982. The headquarters is located in Beijing. The company is engaged in the production, processing and marketing of oil and natural gas offshore China. The Chinese government owns 70% of the company's shares.
MRC