BASF, Huntsman, and Chinese partners agree to petrochemical deal in China

BASF and Huntsman together with their Chinese partner companies – Shanghai Hua Yi (Group Company), Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. and Shanghai Chlor-Alkali Chemical Co., Ltd. – announce the planned separation of their joint MDI (diphenylmethane diisocyanate) production at Shanghai Lianheng Isocyanate Co., Ltd. (SLIC), said Hydrocarbonprocessing.

Going forward, the companies will operate the two MDI plants located at the site in Caojing, China independently. Huntsman together with Shanghai Chlor-Alkali Chemical Co., Ltd, and BASF together with Shanghai Hua Yi (Group Company) and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd will each take over one of the MDI plants.

“The SLIC joint venture has been an important partnership to establish MDI production in China as one of the pioneers at the Shanghai Chemical Park,” said Ramkumar Dhruva, President Monomers division at BASF. “The new organizational setup will allow BASF and our partners Shanghai Hua Yi and Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. to further develop our MDI operations in Shanghai while serving the demand of our customers in the region even more effectively.”

“Through the production of crude MDI in the SLIC joint venture over almost 20 years, Huntsman together with its partner, Shanghai Chlor-Alkali Chemical Co., Ltd, has been able to successfully build its polyurethanes business in China. As we move to integrate these assets into our downstream operations, we will be even better positioned to meet the future innovation and growth needs of our customers,” said Tony Hankins, President of Huntsman Polyurethanes.

Huntsman, together with Shanghai Chlor-Alkali Chemical Co., Ltd, will own and operate the original MDI plant that started commercial production in 2006, along with a hydrogen chloride recycling unit for the production of chlorine, a precursor for MDI, that was added in 2018. BASF will own and operate the MDI plant that was added in 2018, including the manufacturing facilities for the precursors aniline and nitrobenzene. All employees currently employed in the Joint Venture will be transferred to the respective organizations.

The new operational setup is in preparation and is expected to become effective during the fourth quarter of 2023, and is subject to pending regulatory authority approvals, permits and other customary closing conditions.

In addition to the plant in Caojing, BASF operates MDI production sites in Chongqing, China as well as in Yeosu, South Korea; Antwerp, Belgium; and Geismar, Louisiana. Following the restructuring of the joint venture, BASF’s global production capacity for MDI will total around 1.9 million tons.

Huntsman operates world-scale MDI production and splitting facilities in Rotterdam, the Netherlands, and Geismar, Louisiana, in addition to its Caojing facilities.

MDI is an important precursor in the manufacture of polyurethanes – versatile polymers that are used in the automotive and construction industries, in appliances such as refrigerators, and in footwear.

We remind, BASF and Zhejiang Guanghua Technology Co.,Ltd. (KHUA) have signed a Letter of Intent (LoI) for the supply of Neopentyl Glycol (NPG) from BASF’s Zhanjiang Verbund site to KHUA. This agreement marks a significant milestone in the long-term partnership between both parties. KHUA, a reputed manufacturer of saturated polyester resins for the powder coatings industry in China, is planning to build a 100 kilotons per annum (KT/a) production plant for high-end powder coatings resins in Donghai Island, Zhanjiang Economic & Technological Development Zone, where BASF is building a world-scale NPG plant with an annual production capacity of 80,000 metric tons.

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Alpek SAB de CV announced its 2Q 2023 results, said the company.

Comparable EBITDA of USD201 M, down 3% versus 1Q23, mainly due to lower-than-expected volumes across the product portfolio and a decrease in reference margins particularly for PET and EPS. Reported EBITDA of USD148 M, 21% lower quarter-on-quarter, due primarily to an inventory adjustment of -USD32 M and a carry-forward effect of -USD8 M caused by a decrease in raw material prices.

"Others" is driven primarily by a non-cash hyperinflation effect in Argentina. Revenues for the 2Q 2023 reached USD2.05 bn, 1% lower than in 1Q 2023, due to lower overall average prices, which was partially offset by stronger consolidated volume. Net income attributable to the controlling interest for the 2Q 2023 was USD31 M, an improvement when compared to a USD6 M loss primarily due to the footprint optimization one-time shutdown costs in 1Q 2023.

Net working capital (NWC) improved by USD284 M through various optimizations, including improvements in inventory management. CAPEX for the quarter totalled USD75 M, allocated primarily for the Corpus Christi Polymers (CCP) construction and towards scheduled maintenance, in line with Guidance.

Income tax during 2Q 2023 was USD97 M, 70% higher than the previous quarter, as it includes the majority of the fiscal payments for 2022. Consolidated net debt as of 30 Jun 2023 was USD1.88 bn, down 10% QoQ. Gross debt was USD2.31 bn and cash increased to USD436 M, including restricted cash. Financial ratios for the quarter were: net debt to EBITDA of 2.3x and interest coverage of 5.3x.

We remind, Alpek, Indorama and FENC announced earlier that Corpus Christi Polymers (CCP) will resume construction on the facility in August. The plant is expected to begin production of polyethylene terephthalate (PET) and purified terephthalic acid (PTA) in early 2025. Construction of the state-of-the-art plan is resuming following a period of pandemic-related disruptions. The new facility is expected to be the largest vertically integrated PTA-PET production plant in the Americas, with annual capacities of 1.1m tonnes of PET and 1.3m tonnes of PTA. It will employ three state-of-the-art technologies.

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McDermott has been awarded a project management consultancy (PMC) and engineering, procurement, and construction management (EPCM) contract for the Naphtha Cracker Expansion (Phase II) polypropylene expansion and new ethylene derivative unit project from Indian Oil Corporation Limited (IOCL), said Hydrocarbonprocessing.

The project is located at the Panipat Refinery and Petrochemical Complex, located 62 miles (100 kilometers) from New Delhi, India.

The project will increase the ethylene production capacity of the naphtha cracker unit (NCU) by approximately 20 percent. The additional ethylene and propylene production will act as feed for downstream polymer units. The polymer products will be used for the manufacture of household and industrial items, including containers, automobile parts, furniture, and heavy-duty films.

"McDermott is currently executing four other projects for IOCL, including the maleic anhydride (MAH) unit at the same site, allowing us to leverage our local resources and expertise while realizing synergies," said Vaseem Khan, Senior Vice President, Global Operations. "Furthermore, the project supports the growing demand for ethylene and propylene which will reduce imports and accelerate economic development in the area."

McDermott will provide comprehensive EPCM services and overall project management for the duration of the project, which will be executed from its Center of Excellence in Gurugram, India.

We remind, McDermott has been awarded an engineering, procurement services and construction management (EPsCm) contract from Slovnaft, a.s., for the steam cracker intensification off-gas processing project at its plant in Bratislava, Slovakia.

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The board of directors of Marathon Petroleum Corp (MPC) has declared a dividend of USD0.75/share on common stock, said the company.

The dividend is payable on 11 Sep 2023, to shareholders of record as of the close of business on 16 Aug 2023.

We remind, Marathon Petroleum’s Q3 net income rose more than six-fold year on year to USD4.5bn, with the refining and marketing (R&M) margin more than doubling. Crude capacity utilisation was about 98%, with total throughput of 3.0m bbl/day in Q3 – compared with 93% and 2.8m bbl/day, respectively, in Q3 2021.

Marathon Petroleum Corp (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation's largest refining system. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company that owns and operates gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure.

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Huntsman expects its third-quarter adjusted earnings to decline from its second quarter as well as from earnings in Q3 2022, said the company.

Huntsman shares were down by more than 7% in after-hours trading. The following shows the company's Q3 guidance and compares it with adjusted earnings from Q2 and Q3 2022. Figures are in millions of dollars.

For Polyurethanes, Huntsman expects stable demand with some typical seasonality in Europe. Demand from construction should continue to be challenging, but those difficulties should moderate. Any benefits from lower costs for raw materials or energy should be more than offset by competitive pricing.

The Polyurethanes segment makes methylene diphenyl diisocyanate (MDI), polyols and thermoplastic polyurethanes (TPU). For Performance Products, Huntsman expects some seasonality in Europe and Asia as well as competitive pressures. Performance Products makes amines and maleic anhydride (MA). For Advanced Materials, Huntsman expects the typical modest declines in volumes that happen during the third quarter.

Advanced Materials makes thermoset resins, curing agents, toughening agents and formulations based on epoxy resins, phenoxy resins, acrylic resins, polyurethanes and acrylonitrile-butadiene.

We remind, Huntsman completed the USD593m sale of its Textile Effects division to Archroma, a company owned by the private-equity firm SK Capital Partners. Archroma was set up by SK Capital Partners in 2013 after acquiring the textile chemicals, paper specialties and emulsions businesses from Swiss producer Clariant in 2013. It has about 3,000 employees in 25 facilities globally.

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