Westlake’s Q1 net income falls year on year on lower volumes

Westlake’s Q1 net income falls year on year on lower volumes

MOSCOW (MRC) -- Westlake’s Q1 net income fell 47.9% year on year to USD394m, the US-based chemicals and building products company reported.

The main reasons for the decline were:
Lower average sales prices and integrated margins in the company’s Performance Materials segment;
Lower production and sales volumes, especially in the Housing and Infrastructure Products (HIP) segment.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 36.5%, and the EBITDA margin fell to 25%, from 32% in Q1 2022.

Sequentially, results improved from Q4 2022 on higher operating rates and sales volumes, lower feedstock and energy costs, as well as cost synergies from recent acquisitions, partially offset by modestly lower pricing in each segment, the company said.

We remind, Westlake Chemical Corporation aims to buy the parent firm of US-based Dimex from Grey Mountain Partners through one of its offshoots. Dimex makes several consumer products produced from post-industrial-recycled (PIR) polyvinyl chloride (PVC), thermoplastic elastomer (TPE) and polyethylene (PE), and records sales of around USD100 M/y. These consumer products comprise of industrial, home and office matting; landscape edging; masonry joint controls; and marine dock edging.


SABIC and global chemical companies sign agreement with TNO for R&D hub for plastic waste processing

SABIC and global chemical companies sign agreement with TNO for R&D hub for plastic waste processing

MOSCOW (MRC) -- SABIC, a global leader in the chemical industry, together with BASF, Covestro, Dow, LyondellBasell, Mitsubishi Chemical, SABIC and Solvay have signed the agreement with renowned Dutch innovation organisation, TNO, which will host the new Hub and execute the R&D projects, said the company.

The first set of projects is set to launch in the second half of 2023. As a private sector driven initiative, the R&D Hub projects are aimed at making significant strides towards more sustainable plastic waste processing and help address industry-specific topics related to the development of mechanical and chemical recycling routes.

"With the launch of its first project, the LCET has demonstrated its role as an 'incubator' for collaborative action to accelerate greenhouse gas (GHG) reduction in the chemical production value chain," said Abdulrahman Al-Fageeh, CEO of SABIC and LCET Co-Chair. "Improving recycling rates can significantly contribute to our progress toward a circular carbon economy, and by bringing together the knowledge and expertise of our companies, we can find new ways to drive net-zero solutions".

Martin Brudermueller, LCET Chair and Chairman of the Board of Executive Directors of BASF SE, said: "Finding solutions to protect our climate is a global, societal task that will only succeed if we all contribute with our best ideas. Launching the first spin-off project out of the LCET initiative is a significant achievement and milestone for all the member companies. This enables us to develop breakthrough technologies while sharing early-stage risks. Bringing together seven leaders operating in the same marketplace demonstrates the collaborative spirit in the LCET-initiative that transforms ambition into action."

TNO will lead the technology development, Henk-Jan Vink, Managing Director at TNO adds: "We are very proud to be selected as the host and orchestrator of this great initiative. This unique co-creation between the LCET members, our experts and innovation partners will result in practical and disruptive technology solutions to allow increased levels of circular plastics with a lower environmental footprint. TNO is confident to further build on its experience in the field of circular modelling, packaging and materials know-how and provide the industry with fit-for-use solutions."

The R&D Hub is the first project to be launched out of the LCET initiative, with further projects in the development stage for 2023.

We remind, SABIC participated in a ceremony to announce the first package of Shareek projects involving large companies in Saudi Arabia. The event was held in the presence of several dignitaries, senior businessmen and heads of major companies participating in the program. During the ceremony, SABIC announced a strategic project to manufacture catalysts, aiming to transform Saudi Arabia into a manufacturing hub for specialized materials in line with the national industrial strategy.


China cuts second batch of 2023 fuel export quotas

China cuts second batch of 2023 fuel export quotas

MOSCOW (MRC) -- China has decreased its second batch of export quota volumes for refined oil products, consultancies and trader sources said on Thursday, focusing on local demand during the refinery overhaul season and boosting domestic sales amid poor export margins, said Hydrocarbonprocessing.

The export volumes, comprising 9 million tons of refined products and 3 million tons of marine fuel, were allotted primarily to state-owned refiners, according to two refining sources and consultancies Longzhong and JLC. China Petrochemical Corp (Sinopec), China National Petroleum Corp, China National Offshore Oil Company and Sinochem Group were the main recipients of these quotas, taking around 92% of the total allocation.

Reuters has asked the four companies for comment. In addition, private refiner Zhejiang Petrochemical Corp, a refinery subsidiary of state defense conglomerate Norinco and China National Aviation Fuel Company were assigned 1.01 million tons. China's Ministry of Commerce did not immediately respond to a faxed request for comment.

The quota was less than the first batch of 18.99 million tons in early January but double the allocation of 4.5 million tons issued around a year earlier, Reuters records show. The smaller export quota comes as refiners stockpile products amid strong demand expectations for gasoline and diesel in the peak summer season.

China's gasoline and diesel export volumes have fallen for three consecutive months as refiners kept more cargoes for the domestic market where they are earning better profit margins, despite overall slow domestic demand growth. While refiners have been unwilling to export because of the stronger local margins, the year-on-year increase in quotas mean that they can still choose to export should domestic demand turn weak at some point in time.

Longzhong estimated refiners could lose about 482 yuan (USD69.73) a ton on gasoline exports and 734 yuan a ton on diesel exports in the current market. "This year, quota holders have greater flexibility to prepare export plans and capture arbitrage opportunities," said Energy Aspects analyst Sun Jianan. The 3 million tons of low-sulfur fuel export quotas in this second batch was down from 8 million tons in the first batch for this year.

However a trader from a state-owned Chinese oil company said the previous batch of low-sulfur fuel quotas had yet to be used up as marine bunkering demand was weak in the first quarter.

We remind, Chinese customs authorities are stepping up inspection checks on cargoes of heavy crude oil after uncovering several Iranian shipments that were mislabeled as diluted bitumen in an effort to bypass import quotas.
The checks, begun a month ago, are delaying oil discharges into the eastern refining hub of Shandong province. They are also adding to uncertainty over the risk of disruption to shipments from Iran and Venezuela, while cutting into refining operations just as fuel demand recovers.


Iraq asks Turkey to resume northern oil export pipeline

Iraq asks Turkey to resume northern oil export pipeline

MOSCOW (MRC) -- Iraq has sent an official request to Turkey to restart oil export flows through a pipeline that runs from the semi-autonomous Kurdistan Region in northern Iraq to the Turkish port of Ceyhan, said Reuters.

A statement by Iraq's Kurdistan Regional Government (KRG) on Thursday confirmed news reported earlier by Reuters that Iraq requested Turkey restart flows that have been shut in for almost seven weeks. "Both the Kurdistan Region's Ministry of Natural Resources and Iraq's Ministry of Oil are reportedly waiting for Turkey's response before resuming oil exports," the KRG statement said.

Iraq's request to Turkish state energy company BOTAS came after traders buying crude from the Kurdistan region signed contracts with Iraq's state-owned crude marketer SOMO on Tuesday and Wednesday following weeks of discussions, according to four sources familiar with the matter. Iraq's oil ministry and Turkey's energy ministry did not immediately respond to requests for comment.

Turkey halted Iraq's 450,000 barrels per day (bpd) of northern exports through the Iraq-Turkey pipeline on March 25 after an arbitration ruling by the International Chamber of Commerce (ICC). The ICC ordered Turkey to pay Baghdad damages of USD1.5 B for unauthorized exports by the KRG between 2014 and 2018.

Iraq put off asking Turkey to resume flows as it spent weeks resolving various issues with the Kurdistan Regional Government (KRG) surrounding a restart deal.

The KRG has agreed for SOMO to market its crude oil. Its export revenue will be deposited in an existing KRG bank account with Citi in the United Arab Emirates, according to three sources familiar with the matter. Baghdad will have auditing access, Reuters previously reported.

SOMO also had to iron out contracts with buyers of KRG crude. The newly signed contracts are for a period of up to three months but do not address the vast amount of debt that the KRG owes trading firms, one of the three sources said.

Producers in the region have called for the KRG to prioritize debt repayment, making transparency and regularity of payments conditions for new investments and maximum export flows once the pipeline reopens, a separate industry source said.

The timing of the pipeline restart, however, remains uncertain. Turkey is seeking negotiations relating to the damages it was ordered to pay in the arbitration case, and wants permanent resolution of open arbitration issues before resuming flows, sources previously told Reuters.

"There are a number of considerations and one of the important (ones) is presidential elections in Turkey on May 14 with a possible run off," Bijan Mossavar-Rahmani, executive chairman of Norwegian oil company DNO, told a call with analysts on Thursday on the matter of the restart.

We remind, Russia has started diesel exports to Chile, expanding its oil products supplies to Latin America after a European Union embargo forced traders to find new outlets. According to Refinitiv data, two cargoes loaded in April in Russia’s Baltic port of Primorsk with about 73,000 tons of diesel heading to Guayacan port in Chile.


Japan's Eneos aims to double profit in 3 years with green energy plan

Japan's Eneos aims to double profit in 3 years with green energy plan

MOSCOW (MRC) -- Japan's biggest oil refiner Eneos Holdings said on Thursday it planned to more than double net profit to ¥310 B in three years and expand aggressively in green energy and climate-friendlier fuels, said Reuters.

Companies in Japan, an energy-poor country importing nearly everything from oil to coal, are under pressure from the government and shareholders to be carbon-neutral by 2050.

Russia's invasion of Ukraine has also made the green transition a matter of national energy security. Eneos, which still relies mainly on its oil business, plans to spend ¥1 T over three years on its energy segment including renewable energy projects, the hydrogen supply chain and sustainable aviation fuel (SAF).

Its first SAF plant in Japan should be launched in 2026 and it is considering another SAF facility that could be operational by about 2030. Renewable energy, primarily solar and wind power, should reach 6 to 8 gigawatts (GW) by 2040 from less than 1 GW now, the company said.

Eneos, also a major miner, said it was preparing to list its metal unit JX Nippon Mining and Metals, although the plans had yet to be finalized. Through the listing, Eneos will be able to execute strategic investment which is necessary for transforming the business portfolio to realize the energy transition, President Takeshi Saito said.

"The spin-off will also help reduce volatility of Eneos' earnings," he said. JX will sell majority stake in the Caserones copper mine in Chile to Lundin Mining after suffering a series of ramp-up delays and cost overruns, resulting nearly ¥350 B of appraisal loss in total.

Eneos aims to boost net profit to ¥310 B in the fiscal year to March 2026 from ?180 B projected for the current 2023/24 year. Net profit fell 73% in 2022/23 fiscal year to ¥143.8 B, hurt by declines in its petrochemical business and as gains on inventories were reduced.

Eneos plans to invest ¥180 B over the three years in its oil and gas upstream segment, including for additional development of liquefied natural gas in Indonesia and Papua New Guinea, and in its carbon-capture and storage business.

We remind, Eneos Holdings Inc. has no plans to buy Russian crude until all problems related to the Ukraine crisis are over and will purchase alternative supplies from the Middle East.