Evonik to invest 8 billion euros by 2030 in high-margin businesses

German chemicals company Evonik plans to invest 8 billion euros (USD8.45 billion) by 2030 to boost growth in its smart materials, specialty additives and nutrition & care units, said Reuters.

The company, which makes ingredients for products ranging from animal feed and diapers to Pfizer/BioNTech’s COVID-19 vaccine, is restructuring to focus on high-margin and high-growth businesses. Evonik’s business in Russia will come to a standstill, CEO Christian Kullmann said. “We are deliberately letting it run down."

Methionine, an amino acid that Evonik produces in Russia and which is used as an animal-feed additive, is now on the European Union’s embargo list, according to Kullmann. Half of the investments are planned for Germany, Kullmann said. The money was earmarked for products that are sustainable and generate a margin on earnings before interest and tax of more than 20%.

The group had decided to sell its 900-staff baby care business next year, and was looking for a partner or a buyer for its C4 Verbund unit, which makes components for car petrol, rubber and PVC plastic, with around 1,000 staff.

Evonik also plans to divest its production site in Luelsdorf, close to the city of Cologne, the CEO said. Evonik has around 600 employees at the chemical site.

As per MRC, Evonik, one the world's petrochemical majors, is embarking on the next phase of its strategic transformation. Sustainability is being integrated fully and systematically into all elements of the strategy: portfolio management, innovation, corporate culture.

We remind that 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.

Evonik is one of the world leaders in specialty chemicals. The company is active in more than 100 countries around the world and generated sales of EUR12.2 billion and an operating profit (adjusted EBITDA) of EUR1.91 billion in 2020. Evonik goes far beyond chemistry to create innovative, profitable and sustainable solutions for customers. About 33,000 employees work together for a common purpose: to improve life today and tomorrow.
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MRC -- At least three vessels carrying crude oil from U.S. emergency stockpiles sailed for Europe in April as refiners there scrambled to replace Russian crude supplies, said Reuters.

Releases from the Strategic Petroleum Reserve (SPR) since Russia's invasion of Ukraine were designed to counter supply shortages and stem fuel price gains. A release last fall was aimed primarily at pushing down rising U.S gasoline prices. The Biden administration last month added 180 MM barrels to two smaller releases since November from caverns along the U.S. Gulf Coast. The United States has not prohibited exports of SPR oil and some analysts believe the exports will grow.

U.S. retail gasoline and diesel prices, averaging USD4.40 and USD5.55 per gallon nationally, have remained near record highs despite the releases. Fuel demand is so strong U.S. refiners' average per share earnings this quarter are projected to run four times the first quarter's profit, according to analyst projections. Last month, U.S. oil refiner Phillips 66 loaded about 600,000 barrels of crude from the Bryan Mound cavern in Texas onto tanker Sea Holly. It is on its way to Trieste, Italy, U.S. customs data and Refinitiv Eikon showed. Trieste is home to a pipeline that send oil to refineries in central Europe.

Atlantic Trading & Marketing (ATMI), an arm of French oil major TotalEnergies, sent a little over 1 MM barrels of SPR crude to Rotterdam last month. About 2.25 MM SPR barrels on three vessels were exported to Italy and the Netherlands in April, according to Matt Smith, lead oil analyst for the Americas at data provider Kpler.

ATMI has secured at least 3.5 MM barrels from the SPR, while Phillips has secured at least 10 MM barrels, based on government disclosures. Other companies taking SPR oil include Exxon Mobil, Chevron, Marathon Petroleum and Valero Energy.

Phillips 66 declined to comment on trading activities. ATMI did not immediately respond to a request for a comment. With continued releases of SPR over next several months, "expect to be seeing some of those exported," Kpler's Smith said.

As per MRC, oil prices fell on as concerns over weak economic growth in China, the world's top oil importer, overshadowed fears supply might be crimped by a potential European Union ban on Russian crude. Brent crude futures were down USD3.73, or 3.4%, to $103.41 a barrel at 1403 GMT, while U.S. WTI crude futures fell USD3.98, or 3.8%, to USD100.71 a barrel. Markets in Japan, Britain, India and across Southeast Asia were closed for public holidays on Monday. China released data showing factory activity in the world's second-largest economy contracted for a second month to its lowest since February 2020 because of COVID lockdowns.

We remind, US oil refiners expect strong first-quarter earnings as margins to sell gasoline and diesel strengthened due to a steep dropoff in refining capacity and crude oil supplies tightened because of Russia's war with Ukraine.
Refining capacity worldwide has dropped during the coronavirus pandemic, with several less profitable oil refineries closing in the last two years. However, worldwide fuel demand has rebounded to near pre-pandemic levels, boosting profits for facilities that are still operating.
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Bayer’s first-quarter net profit increased by 57.5% year on year, thanks to strong gains from its agriculture business, said the company.

March-quarter sales growth was 14.3% year on year after foreign exchange and portfolio adjustments. “Group sales and earnings were not negatively impacted by Russia’s invasion of Ukraine in the first quarter,” Bayer said in a statement.

“In business terms, Russia and Ukraine do not rank among the company’s top ten key countries,” it said, adding that the two countries have a combined share of about 3% of the company’s sales.

Bayer chairman Werner Baumann said: "Our forecast going forward this year remains confident despite the great uncertainties, including the stability of supply chains and energy supplies, and we confirm the currency-adjusted outlook for the full year published in March."

The German firm expects to generate full-year sales of about EUR46bn, up by about 5% from 2021 levels, after adjusting for currency and portfolio effects, with EBITDA before special items projected at around EUR12bn. Click here to read the Ukraine topic page, which examines the impact of the conflict on oil, gas, fertilizer and chemical markets.

We remind, Bayer has announced midterm targets covering margin- and sales growth for 2022-24. The company announced the targets at its virtual capital markets day on 10 March. Bayer is aiming for group net sales of EUR43.0-45.0 billion by 2024, up from EUR41.4 billion in 2020. The Crop Science division is projected to grow at a currency- and portfolio-adjusted rate of 3-5% annually from 2022 through 2024, faster than the market.

As per MRC, Bayer reports a 78.2% decrease in fourth-quarter net profit compared with the corresponding period of the previous year, to EUR308 million (USD376 million) on sales down 7%, to just under EUR10 billion. Fourth-quarter EBITDA before exceptional items decreased 3.4% year on year (YOY) to EUR2.4 billion, missing analysts’ consensus estimate by 2.4% on lower earnings and sales at the company’s agricultural and consumer health businesses, as well as currency effects.
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Pressure on Europe to secure alternative gas supplies increased on Thursday as Moscow imposed sanctions on European subsidiaries of state-owned Gazprom a day after Ukraine stopped a major gas transit route, said Hydrocarbonprocessing.

Gas prices surged, with the key European benchmark gaining 12% as buyers were unsettled by the mounting threats to Europe's supply given its high dependence on Russia. Moscow has already cut off supply to Bulgaria and Poland and countries are racing to fill dwindling gas reserves before winter.

Russia imposed sanctions late Wednesday mainly on Gazprom's European subsidiaries including Gazprom Germania, an energy trading, storage and transmission business that Germany placed under trusteeship last month to secure supplies. It also placed sanctions on the owner of the Polish part of the Yamal-Europe pipeline that carries Russian gas to Europe.

Kremlin spokesperson Dmitry Peskov said there can be no relations with the companies affected nor can they take part in supplying Russian gas. The affected entities, listed on a Russian government website, are largely based in countries that have imposed sanctions on Russia in response to its invasion of Ukraine, most of them members of the European Union.

Germany, Russia's top client in Europe, said some subsidiaries of Gazprom Germania were receiving no gas because of the sanctions. "Gazprom and its subsidiaries are affected," German Economy Minister Robert Habeck told the Bundestag lower house. "This means some of the subsidiaries are getting no more gas from Russia. But the market is offering alternatives."

The list also includes Germany's biggest gas storage facility at Rehden in Lower Saxony, with 4 Bcm3 of capacity and operated by Astora, as well as Wingas, a trader which supplies industry and local utilities. Wingas has said it would continue operating but would be exposed to shortages. Rivals Uniper, VNG or RWE could be potential sources of supply to the market. Russian gas flows to Germany continue via the Nord Stream 1 pipeline under the Baltic Sea.

If sanctioned firms cannot operate, other companies such as gas utilities could take over contracts, which would likely involve agreeing new terms with Gazprom, including for payment, said Henning Gloystein, director at Eurasia Group. "This may be what Gazprom intends here, beyond also sending a retaliatory signal (for EU sanctions)," he added.

Gazprom said it would no longer be able to export gas through Poland via the Yamal-Europe pipeline after sanctions against EuRoPol Gaz, which owns the Polish section. The pipeline connects Russian gas fields in the Yamal Peninsula and Western Siberia with Poland and Germany, through Belarus, and has a 33 Bcm3 capacity, around a sixth of Russian gas exports to Europe.

However, gas has been flowing eastwards through the pipeline from Germany to Poland for some weeks, enabling Poland - which was cut off from Russian supplies along with Bulgaria last month for refusing to comply with a new payment mechanism - to build stocks. Exit flows into Poland at the Mallnow metering point on the German border stood at 9,734,151 kWh/h on Thursday, down from roughly 10,400,000 kWh/h the previous day, data from the Gascade pipeline operator showed.

Germany's Habeck said Russia's measures seemed designed to drive up prices but the expected 3% drop in Russian gas deliveries could be compensated for on the market, albeit at a higher cost. Dutch gas prices at the TTF hub, the European benchmark, rose by as much as 20% before closing 12% higher. The benchmark has skyrocketed over the past year, adding to the burden on households and businesses.

Although German gas storage is around 40% full, that is still low for the time of year and inventories need to be built up in preparation for winter. Moscow's sanctions came just a day after Ukraine halted a gas transit route, blaming interference by occupying Russian forces, the first time exports via Ukraine have been disrupted since the invasion.

The Sokhranovka gas transit point will not be re-opened until Kyiv obtains full control over its pipeline system, the head of operator GTSOU said, adding that flows could be re-directed to the alternative Sudzha transit point, although Gazprom has said this is not technologically possible. Ukraine's gas transit system operator said Gazprom had booked capacity of 65.67 MMcm3 via the Sudzha entry point for Friday, versus 53.45 MMcm3 for Thursday.

While the European Commission said the Ukrainian suspension does not present an immediate gas supply issue, there are concerns in the market about winter, when heating demand will rise and global supply constraints will bite.

Finnish politicians have been warned that Russia could halt gas supplies to its neighbour on Friday, newspaper Iltalehti reported, citing unnamed sources. Gas accounts for about 5% of Finland's energy consumption. There is also confusion still among EU gas companies over a payment scheme decreed by Moscow in March which the European Commission has said would breach EU sanctions.

Germany's top power producer, RWE, expects Berlin to soon clarify whether payments for Russian gas can be made under Moscow's proposed scheme, its finance chief said on Thursday, as a deadline approaches at the end of the month.

Russia's demand for payment in roubles has been rejected by most European gas buyers over the details of the process, which requires opening accounts with Gazprombank, fuelling fears about potential supply disruptions and their far-reaching consequences for Europe and particularly Germany, which relies heavily on Russian gas.

As per MRC, Uniper remains in talks with Gazprom and the German government over how to implement Moscow's demand to pay for Russian gas in roubles, which the European Commission said would breach sanctions. Uniper, in presentation slides published along with final first-quarter results, cited "ongoing discussions with German government and Gazprom on potential implementation" of the decree, which has stoked fears that supplies may be disrupted. The company, Germany's largest importer of Russian gas in which Finland's Fortum owns 78%, declined to comment on details of the talks, only saying that no binding assessment had been made as of now.

We remind, Germany would be able to weather an EU embargo on Russian oil imports by the end of this year even though a stoppage could result in shortages, Economy Minister Robert Habeck said on Monday, appearing to throw his weight behind a ban. Two European Union diplomats said at the weekend that the bloc is leaning toward a ban by the end of the year as part of a sixth package of sanctions against Russia over its invasion of Ukraine. EU energy ministers will discuss the proposed oil ban in Brussels later on Monday.
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Braskem has agreed with Dutch recycler Terra Circular to enter a joint venture for mechanical recycling, said the company.

Financial details were not disclosed. Terra Circular, through its subsidiary ER Plastics, operates the production facilities, with nominal capacity for mechanical recycling of 23,000 tonnes/year.

The plant is to process mixed plastic waste.

"With the agreement’s execution and once its conditions' precedents are fulfilled, Braskem will become the controlling shareholder of the joint venture, with the possibility to expand the technology’s use to other regions. Terra Circular will transfer to the joint venture the shares in its subsidiary ER Plastics," said Braskem.

Netherlands-based Terra Circular will provide the JV all the shares in its subsidiary ER Plastics, which has a capacity to recycle 23,000 tonnes of plastic waste per year.

As per MRC, Braskem, the largest polyolefins producer in the Americas, as well as a market leader and pioneer producer of biopolymers on an industrial scale, announces the release of three new sustainable 3D printing filament product offerings for the additive manufacturing market. These first of their kind products include 3D printing filaments produced from bio-based ethylene vinyl acetate (EVA) filament derived from raw sugarcane as well from recycled polyethylene and polypropylene (PE/PP) blended filaments with, or without, carbon fiber.

As per MRC, Lummus Technology announced a partnership with Braskem, the largest biopolymer producer in the world, to license green ethylene technology. Lummus and Braskem will license worldwide technology to produce green ethylene and accelerate the use of bioethanol for chemicals and plastics, supporting the industry's efforts towards a carbon neutral circular economy.

As MRC wrote earlier, in late 2020, Braskem announced its latest sustainability ambitions to significantly expand its efforts to eliminate plastic waste in the environment by 2030 and to achieve carbon neutrality by 2050.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,487,450 tonnes in 2021, up by 13% year on year. Shipments of all grades of ethylene polymers increased.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
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