Trinseo's sales volumes have stabilised at 20% below mid-cycle levels

MOSCOW (MRC) -- -Trinseo's sales volumes have stabilised at levels that are 20% below typical mid-cycle levels, said the company.

So far, demand in the third quarter is similar to that in the first half of the year, said Frank Bozich, CEO. He made his comments during an earnings conference call. The company continues to see lower demand across many applications, particularly in building and construction as well as consumer durables, he said. Consumer demand remains soft and Trinseo's customers continue to destock.

Trinseo did see pockets of relative strength, such as for products that contain recycled content and those used in coatings, adhesives, sealants and elastomers (CASE). Even though Trinseo is headquartered in the US, more than half of its sales are in Europe, making it vulnerable to the disruptions that region has suffered from higher energy costs caused by the war between Russia and Ukraine.

Higher energy costs have made European producers less competitive against much of the world, Bozich said. Already, Trinseo is shutting down a styrene plant and a polycarbonate (PC) line in Germany to lower costs.

It is in talks to shut down its last styrene plant, in the Netherlands, because it makes more sense for Trinseo to buy the material instead of produce it in Europe.

In addition to higher energy costs, lower demand from China has also dragged down European profits, Bozich said. The company has lowered its forecast for Chinese growth from that it made six months ago.

We remind, Trinseo, a specialty material solutions provider, announced the inauguration of its polycarbonate (PC) dissolution pilot facility in Terneuzen, the Netherlands. The new pilot facility is a major step in Trinseo’s commitment to sustainability, part of the journey in realizing the company’s sustainability goals. The guests of honor at the inauguration ceremony included Jo-Annes de Bat, Provincial Executive (responsible for regional economy) of the Netherlands.

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MOOSCOW (MRC) -- Independent U.S. refiner Phillips 66 plans to run its refineries in the mid-90% range of their combined crude oil throughput capacity of 1.9 million barrels per day (bpd) in the third quarter of 2023, Chief Financial Officer Kevin Mitchell said on Wednesday, as per Reuters.

The company's refineries ran at an average of 93% of combined capacity in the second quarter of the year, the company said on Wednesday in a statement released ahead of a conference call with investor analysts.

The gasoline-producing fluidic catalytic cracker (FCC) at the company's 285,000 bpd Bayway refinery in Linden, New Jersey was back in full production on July 20, said Richard Harbison, executive vice president of refining. The 145,000-bpd FCC was shut on June 8 for repairs, Harbison said.

The company continues to expect its Rodeo, California refinery will be fully converted to the production of renewable diesel in the first-quarter of 2024 when it is scheduled to begin commercial operation, Harbison said.

Phillips 66 Chief Executive Mark Lashier said the company continues to seek the best options for its 139,000-bpd Los Angeles refinery in the "politically challenging" California marketplace.

"It is, frankly, a difficult environment," Lashier said. "And it's been very publicly, politically challenging there, whether it's EV (electric vehicle) mandates. But we believe that it's going to be challenging for California to implement their aspirations around EVs so I think that may be overplayed."

California officials have said they want 100% of new vehicles by 2035 to produce zero emissions.

Phillips 66 owns nine refineries and is a 50% co-owner of two others in the United States. The company is the nation's fourth largest refiner, according to the U.S. Energy Information Administration.

We remind, We remind, Phillips 66 reported a substantial 46% drop in its second-quarter profits, reflecting the challenges faced by U.S. refiners due to declining margins. This decline comes after last year’s record-high margins, which were boosted by a surge in fuel demand and supply constraints caused by the pandemic-driven refinery closures and the global oil market disruptions resulting from Russia’s invasion of Ukraine. The company’s premarket trade showed its shares falling 1.2% to USD110.80.

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MOSCOW (MRC) -- ExxonMobil's 564,440 bpd Baytown, Texas, refinery resumed normal operations on Thursday, company spokesperson Lauren Kight said, following a malfunction on a unit that triggered the plant's safety flare, said Reuters.

"The issue has been resolved and we are in the process of resuming unit operations," Kight said in an emailed statement. "We expect to meet our contractual commitments."

The refinery's 65,000-bpd hydroformer (HF-4) reformer malfunctioned on Wednesday night, people familiar with Baytown's operations said.

Reformers convert low-octane naphthas into high octane liquids to make high-octane gasoline.

We remind, ExxonMobil Catalysts and Licensing LLC and Axens have signed an exclusive licensing alliance agreement allowing Axens to include ExxonMobil’s MTBE Decomposition Technology for high purity isobutylene in its portfolio. Used in the production of high-reactivity polyisobutylene and butyl rubber, this technology enables Axens’ customers to better address the growing demand for petrochemical intermediates over the next decade.

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MOSCOW (MRC) -- Chemicals group Lanxess set out plans to trim costs, including job cuts, and called on German politicians to support the struggling industry after its quarterly profit fell by more than half, said Reuters.

Lanxess, which until recently had managed to pass rising raw material and power costs onto customers, was one of several German chemical firms that have trimmed their forecasts in the past weeks due to still high energy prices and weak demand.

"We urgently need sustainable framework conditions – above all an internationally competitive electricity tariff for the industry," CEO Matthias Zachert said in a statement.

Lanxess, which makes high-end speciality chemicals such as additives, lubricants, flame retardants and plastics, said it would save 100 million euros ($110 million) this year through strict cost discipline and a Europe-wide hiring freeze.

Further measures focusing on reviewing its energy-intensive operations and streamlining administrative structures will result in annual savings of around 150 million from 2025, Lanxess said.

Zachert added in a call these will include job cuts but did not elaborate on the number. The company said implementing these measures would cost around 100 million euros.

The Cologne-based group plans to shut down the hexane oxidation facility with 61 staff at its Krefeld-Uerdingen site in Germany by 2026. The chromium oxide production facility with 52 employees at the same location would be sold or shut down.

We remind, LANXESS has doubled its production capacity for benzyl alcohol at its site in Kalama, WA, US, to support the growth of its established customer base in the Americas. The capacity expansion is the result of various technical upgrades. LANXESS also produces benzyl alcohol at its sites in Krefeld-Uerdingen (Germany), Botlek (Netherlands), and Nagda (India).

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MOSCOW (MRC) -- U.S. manufacturers reported another decline in activity in July 2023, but industrial electricity and especially diesel consumption have declined less than expected in recent months, explaining why prices remain relatively firm, said Reuters.

The Institute for Supply Management’s purchasing managers index increased slightly to 46.4 (13th percentile for all months since 1980) in July from 46.0 (11th percentile) in June but down from 52.8 (51st percentile) a year ago.

Despite the improvement, the manufacturing index has been below the 50-point threshold dividing expanding activity from a contraction for nine months since November 2022.

The length of the downturn already puts it somewhere between a mid-cycle slowdown (generally eight months or fewer) and a full cycle-ending recession (generally 11 months or more).

If the slowdown proves to be a “soft landing”, it is already the second longest mid-cycle slowdown after the Second World War, exceeded in duration only by the slowdown in 1995/96, which lasted a total of 10 months.

The forward-looking new orders component remained weak, indicating the downturn is likely to last for several months more, which is likely to make it the longest on record.

The new orders index was stuck at 47.3 (13th percentile) in July up from 45.6 (9th percentile) in June but still down from 48.0 (16th percentile) a year earlier.

Industrial electricity use and distillate fuel oil consumption are both correlated with the manufacturing and freight cycle and therefore with the purchasing managers index.

But both have fallen much less than expected given the length and apparent depth of the downturn in industrial activity, especially in the case of diesel and other distillate fuel oils.

Based on the most recent data available, industrial electricity consumption was down by only -1.3% in the three months from February to April compared with the same period a year earlier.

The change in electricity use was in the 19th percentile for all overlapping three-month periods since 1980 (“Monthly energy review”, U.S. Energy Information Administration, July 26, 2023).

Distillate fuel oil consumption actually rose by almost +0.8% in the three months from March to May compared with a year earlier.

The change in apparent distillate consumption was in the 44th percentile for all three-month periods since 1980 which is not consistent with an industrial recession.

The strength of domestic distillate consumption helps explain why fuel oil inventories have remained well below the prior ten-year seasonal average.

We remind, North American chemical railcar traffic rose for a second week, with loadings for the week ended 29 July up 3.1% year on year to 48,009, according to the freight rail data of Association of American Railroads. For the first 30 weeks of 2023 ended 29 July, North American chemical rail traffic was down 2.6% year on year to 1,355,556 - with the US down 3.8% to 934,382 loadings.

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