The German chemical industry is facing a bleaker outlook

MOSCOW (MRC) -- German chemical industry output fell 4.2% in the third quarter of this year, the German Chemical Industry Association (VCI) said in its third quarter industry report, as per Echemi.

The German Chemical Industry Association (VCI) said in its third-quarter industry report on the 14th that compared with the previous quarter, the output of the German chemical industry in the third quarter of this year fell by 4.2%, and the capacity utilization rate was 79.3%, which was significantly lower than the normal level.

The report showed that the total turnover of the German chemical and pharmaceutical industry in the third quarter fell by 1.6% month-on-month to 63.1 billion euros due to lower sales due to sharp production cuts, price cuts and weak demand.

The report notes that the German chemical and pharmaceutical industry continues to be affected by the energy crisis, especially in the summer, and the situation has further worsened. Production in the sector has been slashed, affecting almost all sub-sectors, with production stagnating at some plants and below-normal capacity utilization in the industry.

At the same time, it is increasingly difficult for German chemical companies to pass on the sharply rising energy costs in the value chain to downstream users. The industry's turnover declined for the first time in two years, with domestic sales particularly evident. A weak global economy and weak industrial activity in Germany led to a decline in demand for chemical products.

The data shows that despite the sharp rise in energy costs, producer prices rose by only 2.6% in the third quarter. This means that chemical prices are 23.7% more expensive than in the previous year.

Markus Steilemann, president of the German Chemical Industry Association, said the chemical industry was facing a bleaker outlook. Due to the significant increase in energy costs, production in Germany is already in an extremely serious situation for many companies. In particular, SMEs have considerable problems in concluding follow-up contracts or new contracts after the expiration of electricity or gas supply contracts. The situation will worsen with the onset of winter and the decline in natural gas storage.

Given the continuing difficult situation in the sector, VCI maintains its forecast for a 5.5% decline in production for the full year 2022, with chemical production (excluding pharmaceuticals) expected to decline by 8.5%.

As per MRC, BASF posted a EUR130m loss in its German domestic market during the third quarter (Q3), as economic conditions deteriorated quickly, on the back of high production costs for chemicals companies. Martin Brudermuller added, however, that the overall increase in sales revenue in Q3 came thanks to the company’s ability to pass higher input costs onto customers through higher selling prices, as well as a weaker euro, benefiting the company in its non-euro sales.
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MOSCOW (MRC) -- DSM and Firmenich have officially launched the exchange offer as part of their merger process, said the companies.

The acceptance period will begin 23 November and run until 31 January 2023, unless it is extended.

Firmenich shareholders have already approved the transactions and the DSM board has recommended that its shareholders likewise accept.

Completion is currently expected in Q1 2023. “We are entering the exciting next phase as we look to bring together DSM and Firmenich's complementary capabilities, likeminded and passionate people, and unite the heritages of two great and historic companies,” said Geraldine Matchett and Dimitri de Vreeze, Co-CEOs of DSM in a statement.

“DSM-Firmenich is set to become the leading creation and innovation partner in nutrition, beauty and wellbeing, capable of delivering enhanced growth and shareholder value creation through strong growth synergies, as well as an enhanced customer offering and an even greater positive impact across the world.”

Gilbert Ghostine, CEO of Firmenich, added: “This merger is a transformational moment for the history of both businesses. “DSM-Firmenich will be a global-scale partner, uniquely positioned to anticipate and better address the evolving needs of consumers by unlocking opportunities for our customers, and our people.

“Our two companies have an unrelenting commitment to their role in society with ESG at the core of everything we do, and I firmly believe that DSM-Firmenich will have a positive and measurable impact on people, climate and nature.”

Plans to create the new DSM-Firmenich entity were announced in May.

DSM-Firmenich will comprise four businesses: Perfumery & Beauty; Health, Nutrition & Care, which covers the dietary supplements industry; Food & Beverage/Taste & Beyond; and Animal Nutrition & Health.

It will be co-headquartered in Kaiseraugst, Switzerland and Maastricht in the Netherlands.

In June, it was announced that Ghostine would retire from his position as Firmenich CEO upon completion, with Matchett and de Vreeze, the current Co-CEOs of DSM, poised to head up the new company as joint-CEOs of DSM-Firmenich.

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MOSCOW (MRC) -- Linde, the world’s largest industrial gases company, said on Tuesday it has started producing green hydrogen at its facilities in Greece, said Reuters.

Green hydrogen is made from water by electrolysis using renewable wind and solar power.

The U.S.-German company, which supplies gases such as oxygen, nitrogen and hydrogen to factories and hospitals, said it was the first green hydrogen production in Greece.

Hydrogen is key in Europe’s energy transition to a sustainable environment and net zero emissions by 2050.

Linde starts green hydrogen production in Greece, November 22, 2022.

We remind, Linde and SLB announced that they have entered into a strategic collaboration on carbon capture, utilization and sequestration (CCUS) projects to accelerate decarbonization solutions across industrial and energy sectors. The collaboration will combine decades of experience in carbon dioxide (CO2) capture and sequestration; innovative technology portfolios; project development and execution expertise; and engineering, procurement and construction (EPC) capabilities.

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MOSCOW (MRC) -- LUKOIL Neftochim Burgas , Bulgaria's only oil refinery, may have to shut down if the government does not follow through on plans to allow the Russian-owned business to continue exporting, said Reuters, citing Chief Executive Ilshat Sharafutdinov.

The European Union has agreed to a ban on Russian crude oil imports as part of its sanctions against Russia for its invasion of Ukraine in February. The ban takes effect next month, but Bulgaria has been given an exemption and is allowed to import Russian crude until the end of 2024.

The Bulgarian caretaker government plans to allow the LUKOIL Neftochim refinery to continue importing Russian crude once the ban takes effect and give it permission to export its output. The previous government wanted to limit sales of the refinery's fuels to just the Bulgarian market.

LUKOIL Neftochim, which has switched to only Russian crude since the spring, expects to process a record high 7.1 MMt of crude oil this year, Sharafutdinov said. He said the refinery exports about 50% of its fuels and other end-products.

"The refinery cannot work if the exports are curtailed," Sharafutdinov told a joint news conference with Bulgarian deputy Prime Minister in charge of economic policy, Hristo Alexiev.

After talks with the Bulgarian government, the refinery, situated in the Black Sea city of Burgas, has agreed to change its business model and keep the profits from its operations in Bulgaria, which will seriously increase the taxes it pays, Alexiev said.

The government has already proposed to the parliament a temporary windfall tax of 33% on profits of oil, gas and coal companies for this and next year.

Alexiev said Bulgaria expects to collect around 100 MM levs in taxes from LUKOIL's operations for 2022, which should jump to 700 MM levs in 2023.

Sharafutdinov said LUKOIL Neftochim could pay such taxes next year if the market conditions remain the same and it could work on full capacity, processing Urals crude and exporting its output.

We remind, Lukoil finished construction of a Petroleum Residue Recycling Facility with production capacity of 2.1 million tonnes per year at its LUKOIL-Nizhegorodnefteorgsintez LLC refinery. The facility is comprised of a delayed coking unit, diesel fuel and gasoline hydrotreatment unit, fractioning column, hydrogen and sulphur production unit, as well as infrastructure facilities.
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MOSCOW (MRC) -- Arkema is launching a new a range of bio-attributed acrylic monomers and specialty acrylic additives and resins using the mass balance approach, said the company.

This follows the certification the company’s new range of acrylic materials received from the International Sustainability and Carbon Certification PLUS (ISCC+) framework.

These monomers enable Arkema to start offering certified bio-attributed specialty acrylic additives and resins for a wide range of applications. This positions the Group as a global leader in the offer of bio-attributed acrylic materials and as a key partner for customers on the market.

The launch of Arkema’s new range of bio-attributed acrylic monomers and specialty acrylic additives and resins, mass-balance certified under the International Sustainability and Carbon Certification-PLUS (ISCC+) framework, is a key milestone in the transition to a more renewable and lower carbon economy.

The replacement of fossil feedstock by bio/bio-circular feedstock will support Arkema’s customers in achieving their climate plan goals by reducing their scope 3 greenhouse gas emissions.

We remind, Arkema’s Virtucycle program places the advanced materials designer at the center of a virtuous cycle to source, recycle, and recertify advanced polymers. In addition to being the specialty recycler, Arkema plays the role of matchmaker among its customers while playing an optional key role in eco-designing the finished product produced from the recycled material.

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