SCG Chemicals seeking up to USD3bn in largest Thai IPO

MRC) -- SCG Chemicals Pcl, a unit of Siam Cement Pcl, is seeking to raise as much as USD3 billion in what could be Thailand's largest ever initial public offering (IPO), said Bangkokpost.

The group submitted to the Securities and Exchange Commission (SEC) for approval the proposed listing of up to 3.85bn shares of SCG Chemicals on 27 April. The shares represent 25.2% of SCG Chemicals, which accounted for about 45% and 40% of SCG group’s first-quarter 2022 sales and profit, respectively.

First-quarter profitability in chemicals slumped due to squeezed margins as feedstock naphtha prices spiked along with crude when Russia started invading Ukraine in late February, while China demand was weak amid COVID-related lockdowns. For the second quarter, SCG expects some recovery in demand for polyolefins and PVC as lockdowns start easing, while supply for these polymers, as well as feedstock naphtha, is likely to stay limited.

For the whole of 2021, a strong recovery in oil prices and demand allowed SCG Chemicals to post a 64% rise in profit, which accounted for 61% of SCG group’s total net profit.

The Thai conglomerate’s board approved the planned IPO of SCG Chemicals on 26 January 2022, about nine months since it announced a possible restructuring of the business for the pursuit of strong growth opportunities in the ASEAN. It was the same strategy adopted for another subsidiary SCG Packaging, which started trading on the Thai bourse on 22 October 2020.

For SCG Chemicals, the IPO proceeds would fund new capacities being built in Indonesia and Vietnam; a planned vinyl chain integration and expansion; as well as strategic acquisitions, SCG said in a filing to the Thai bourse on 28 April 2022.

In Vietnam, its 100%-owned Long Son Petrochemical project (LSP1) in Ba Ria-Vung Tao province is now 93% complete and is on track to start up in the first half of next year, while a second complex at the site is being mulled. Test runs are expected to begin at the LSP1 polyolefins units of the complex by the end of the year; while the cracker start-up will be in Q1/Q2 2023.

As per MRC, on 26 October 2021, a fire hit Thai petrochemical producer Siam Cement's (SCG) Map Ta Phut olefins complex. The fire broke out at a naphtha tank, which was empty at the time of the incident, because it had been shut for cleaning and maintenance. The cause of the fire is unknown.

As MRC reported earlier, Map Ta Phut Olefins Co Ltd (MOC), a subsidiary of Thailand’s SCG Chemical, has completed the maintenance work at its cracker in Map Ta Phut. Thus, the cracker with the capacity of 900,000 mt/year of ethylene and 450,000 mt/year of propylene was shut for a scheduled turnaround on 2 November, 2020, and fully resumed operations in the fourth week of December, 2020.

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Arkema's first-quarter adjusted net income more than doubled to EUR376m in the first quarter, supported by price increases, said the company.

EBITDA of EUR619 million, up by 72.9% compared with Q1’21, and EBITDA margin up sharply to 21.4%:
EBITDA of Specialty Materials up by 82% at EUR556 million (EUR306 million in Q1’21), benefiting from solid volumes, the selling price policy against a highly inflationary context, and the development of high value-added applications linked to sustainable megatrends (batteries, 3D, lightweighting, bio-based materials, more eco-friendly paints, etc.)
Intermediates’ EBITDA up by 25%, supported by the improvement of Fluorogases and better conditions in upstream acrylics in Asia.

Adjusted net income multiplied by 2.4 to EUR376 million, representing EUR4.96 per share (EUR2.08 in Q1’21). Recurring cash flow of EUR26 million (EUR53 million in Q1’21), including the seasonal increase in working capital, as well as higher selling and raw materials prices.

Net debt tightly controlled at EUR2,703 million – of which EUR700 million in hybrid bonds – including the acquisition of Ashland’s performance adhesives finalized on 28 February 2022, and representing 1.4x last-twelve-months EBITDA.

The company "aims to reach in second-quarter 2022 a strong increase in its EBITDA compared with the prior year, driven in particular by high organic growth in Advanced Materials and Coating Solutions", Arkema said.

"Moreover, Arkema now aims to achieve in 2022, at constant scope, Specialty Materials EBITDA and group EBITDA slightly above the record level of 2021," it said.

As per MRC, Arkema has closed its previously announced acquisition of Ashland’s Performance Adhesives business for around USD1.65bn in an all-cash transaction. The company signed an agreement to acquire Ashland’s business in August last year.

As MRC wrote before, in January 2022, Arkema announcedd that it will be increasing its fluoropolymer capacity at its site in Changshu, China by 50% instead of 35%. The decision to increase polyvinylidene fluoride (PVDF) capacity at the site is to cater to growing demand for lithium-ion batteries for semiconductors, water filtration and specialty coatings markets. This is not expected to change the expected start-up date, which is still scheduled for the end of 2022.

Arkema is one of the world's leading chemical manufacturers headquartered in Colombes (near Paris, France). Founded in 2004 as a result of the restructuring of the French oil company Total, Arkema, with a turnover of EUR6.5 billion, has operations in 40 countries, 10 research centers around the world, and 85 plants in Europe, North America and Asia.
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Shell's chemicals and products unit posted a 17.7% year-on-year increase in its first-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), despite lower chemical sales volumes, said the company, said the company.

Chemical sales volumes slipped by to 3.33m tonnes in Q1 2022 from 3.58m tonnes in Q1 2021 and 3.48m tonnes in Q4 2021.

Chemicals manufacturing plant utilisation was 78% compared with 75% in the fourth quarter 2021, due to lower turnarounds and lower unplanned maintenance.

Refinery utilisation was 71% compared with 68% in the fourth quarter 2021, also due to lower turnarounds and lower unplanned maintenance.

Chemicals sales volumes are expected to be around 3.1m- 3.5m tonnes.

Chemicals manufacturing plant utilisation is expected to be about 69% - 77%.

As MRC wrote before, Shell faces writedowns on USD400 MM in Russian downstream assets, it said, having announced USD3 B worth of other projects previously. The oil major announced on Feb. 28 that it would quit its ventures in Russia with Gazprom and related entities including the flagship Sakhalin 2 LNG plant and the Nord Stream 2 pipeline project.

We remind that Shell Chemicals expects its new petrochemical complex in southwest Pennsylvania to come online by the end of 2022, Royal Dutch Shell CFO Jessica Uhl said February 3, during the company's Q4 2021 earnings call.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors".

Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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Solvay's net profit rose by 53.7% year on year in the first quarter, supported by higher chemicals sales, said the company.

Net Sales in the first quarter of 2022 were over €3 billion, a new quarterly record, up +26.1% organically versus Q1 2021, with double-digit sales growth in every business and all regions driven by successful price actions (+20% or EUR475 million) and volume growth (+6% or EUR157 million).

Structural cost savings of EUR22 million were achieved in Q1 2022, totaling EUR410 million since 2020, and on track to achieve our €500 million mid-term target ahead of plan.

Record underlying EBITDA in Q1 2022 of EUR712 million was +20% higher on an organic basis. All three segments delivered double-digit EBITDA growth driven by price and volumes. Price gains in the quarter more than offset €369 million of inflationary cost increases. Solutions was up +35%, with particular strength in Novecare, while Materials was up +21%, and Chemicals was up +15%.

The underlying EBITDA margin in Q1 2022 was 23.3%, similar to full year 2021 level as strong pricing actions offset inflation headwinds.

Underlying Net Profit was EUR369 million in Q1 2022, up +54% compared to Q1 2021.

"Full year underlying EBITDA is now estimated to grow by mid to high single-digits," the company said in a statement.

As per MRC, Solvay, a leading global supplier of specialty polymers, announces the production of the new generation solvent Rhodiasolv IRIS, with eco-friendly properties. Previously manufactured in China, this solvent will now be produced from 2023 onwards at Solvay's Melle site, France.

We also remind that in August, 2020, through the acquisition of the Solvay polyamide (PA) business, BASF enhanced its R&D capabilities in Asia Pacific with new technologies, technical expertise, and upgraded material and part testing services. BASF is planning to integrate the R&D centers from Solvay into its R&D existing facilities in Shanghai, China, and Seoul, Korea. The enhanced capabilities will boost BASF’s position as a solution provider to develop advanced material solutions for key industries.

Solvay is a science company whose technologies bring benefits to many aspects of daily life. With more than 24,100 employees in 64 countries, Solvay bonds people, ideas and elements to reinvent progress. The Group seeks to create sustainable shared value for all, notably through its Solvay One Planet plan crafted around three pillars: protecting the climate, preserving resources and fostering better life. The Group’s innovative solutions contribute to safer, cleaner, and more sustainable products found in homes, food and consumer goods, planes, cars, batteries, smart devices, health care applications, water and air purification systems. Founded in 1863, Solvay today ranks among the world’s top three companies for the vast majority of its activities.
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US-based specialty chemicals producer Eastman reported on Thursday a decline in Q1 net income because of an outage at its complex in Kingsport, Tennessee, said the company.

The outage caused a USD125m hit to the company. The outage took place on 31 January, when a steam-line failed. The primary area affected by the failure was specialty copolyesters in Eastman's Advanced Materials segment. It was operational as of 31 March.

The following shows the company's first-quarter financial performance. Figures are in millions of dollars. Eastman reaffirmed its 2022 guidance, which calls for adjusted earnings to be USD9.50-10.00/share. Operating cash flow should approach USD1.6bn.

Eastman's guidance assumes that GDP will grow by 3%, Brent crude-oil prices should be USD100-110/bbl and logistical constraints will persist.

As per MRC, Eastman has entered an exclusive negotiation with Port-Jerome-sur-Seine as the preferred location of the molecular recycling facility it plans to build in France. This is an important step toward a significant milestone in the company's plan to invest up to USD1 B and build the world's largest material-to-material molecular recycling plant in France - a facility that will recycle approximately 160,000 tpy of hard-to-recycle polyester waste.

We remind that Eastman is increasing capacity for its Naia-brand cellulosic filament yarn at its plant in Barcelona, Spain. Eastman is increasing its capacity to produce Naia cellulosic filament yarns at its plant Barcelona, by 30% by mid-2021, and by more than 50% by the end of 2022.

According to MRC's ScanPlast report, Russia's estimated PET consumption remained steady in December 2021 year on year. December estimated PET consumption totalled 67,880 tonnes (67,710 tonnes in December 2020).

Eastman is a multinational chemical company serving customers in approximately 100 countries. Sales in 2015 amounted to around USD9.6 Billion. The company is headquartered in Kingsport, Tennessee, USA. The company employs approximately 15 thousand people around the world.
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