Solvay completes its inaugural EUR 1.5 bn dual tranche bond issuance

Solvay completed the placement of its inaugural bond transaction, which represents another important milestone after the partial demerger of its Specialty Businesses in December 2023, said the company.

“This key transaction strengthens the capital structure of Solvay and gives the company the financial stability to execute its strategy in this new phase of its journey,” said Alexandre Blum, Solvay CFO. “We are particularly pleased with the exceptional participation of more than 250 and 300 investors in the 4-year tranche and the 7.5-year tranche respectively. This contributed to a transaction nearly 6 times oversubscribed, a clear testimony of the continuous support and confidence from institutional investors in Solvay's vision and strategy".

The 4-year €750m bond maturing on April 3rd, 2028, and the 7.5-year €750m bond maturing on Oct 3rd, 2031, will have coupons of 3.875% and 4.250% respectively. Both bonds will be rated BBB- by S&P, matching Solvay's long-term credit rating. Bond settlement is scheduled for April 3, 2024, with trading expected to begin on the Euro MTF market of the Luxembourg Stock Exchange around the same time.

In alignment with its prudent financial policy, the proceeds will be used for general corporate purposes, including the refinancing of the EUR 1.5b bridge facility set up at the end of 2023 in relation to the partial demerger.

BNP Paribas, BofA Securities, J.P. Morgan and Morgan Stanley acted as Global Coordinators for the transaction and as Joint Bookrunners together with Commerzbank, Credit Agricole CIB, ING and KBC Bank.

We remind, Solvay and Carester announced the signing of a Memorandum of Understanding (MOU) to form a strategic partnership, aimed at leveraging the expertise of both companies to pursue manufacturing opportunities within the rare earth industry for the permanent magnets value chain in Europe.

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Japanese oil refiner Idemitsu Kosan, opens new tab and Mitsui Chemicals, opens new tab plan to consolidate their ethylene complexes in Chiba near Tokyo, they said on Wednesday, as the industry is under pressure from competition with China, said Reuters.

The companies would consider closing Idemitsu's Chiba ethylene facility to consolidate production at Mitsui Chemical's site in the 2027 fiscal year. The new business would be operated by a limited liability partnership or a joint venture.

"Japanese ethylene complexes continue to be forced to operate at a low rate due to both the opening of large new additional petrochemical complexes, mainly in China, and the diminishing domestic ethylene demand," the statement said.

The final decision on the proposed consolidation, which should also accelerate the push towards carbon neutrality in the petrochemical sector, is yet to be made, the companies said.

On Monday, Shunichi Kito, president of the Petroleum Association of Japan and Idemitsu Kosan's president, said that the petrochemical sector will need to consolidate to withstand competition from emerging petrochemical complexes in China and the Middle East amid an already tough earnings environment.

Ethylene is a petrochemical that is used to produce plastics such as polyethylene for items such as plastic bags and containers.

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The Chemours Company (Wilmington, Delaware) reported a fourth-quarter net loss of USD18 million, which included a litigation settlement charge of USD62 mln, said the company.

Adjusted net income was USD46 million. Sales were USD1.4 billion, up 2% year over year, as volumes were up 3%, offset by a 1% decrease in price.

Company earnings were delayed twice due to an internal investigation on the handling of internal ethics hotline complaints as well as practices for managing working capital and related metrics that were tied to executive compensation targets. Three top executives were placed on leave: president and CEO Mark Newman; senior vice president and CFO, Jonathan Lock; and vice president, controller and principal accounting officer, Camela Wisel. Chemours said in a regulatory filing on March 25 that Newman had resigned from the company and its board, effective March 22.

Adjusted earnings per share totaled 31 cents ahead of the analysts’ consensus estimate of 24 cents as compiled by S&P Capital IQ.

“Chemours navigated a challenging year in 2023 that included prolonged destocking in certain key end markets, and these headwinds impacted our overall financial performance,” said new Chemours CEO Denise Dignam. “Our fourth quarter performance reflected continued growth for our low global warming potential refrigerants in our thermal & specialized solutions segment, double-digit growth in the performance solutions portfolio of our advanced performance materials segment, and improved demand for titanium dioxide across most regions in the titanium technologies segment.”

Looking ahead, Chemours expects a 10% sequential decline in titanium technologies sales for the first quarter 2024 due to weaker demand for TiO2 driven by regional seasonality. The company expects the thermals and specialized solutions segment to grow by about 20% sequentially in sales and adjusted EBITDA driven by seasonality and demand for Opteon products. For its advanced performance materials segment, the company sees a sequential decline of 10% for net sales in the first quarter driven by softness in end markets and the tail impact of an extended outage at a manufacturing site; the segment is also nearing its typical cycle lows, and the company expects the business to lag overall market recovery by six to nine months.

Overall, the company expects first quarter 2024 sales to be flat to slightly down sequentially and adjusted EBITDA to be down approximately 10% year over year.

We remind, Chemours Company, a global chemistry company with leading market positions in Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials, announces two upcoming changes to its Board of Directors. Director Sandra Phillips Rogers has announced her decision not to stand for reelection and will serve out the remainder of her current term. Pamela Fletcher will join the Chemours Board as a director, effective March 1, 2024.

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Controversial EU Packaging and Packaging Waste Regulation approaches adoptionControversial EU Packaging and Packaging Waste Regulation approaches adoptionDetails of the provisional agreement on the Packaging and Packaging Waste Regulation (PPWR) have been published, containing a number of wide-ranging elements which will reshape the packaging sector across the next two decades.

The regulation is now reaching its final stages but has faced a fraught journey through the various legislative chambers of the EU and has remained divisive among both legislators and the markets.

Under the provisional agreement the regulation will introduce: mandated packaging recyclability, minimum recycled content and reuse targets across packaging – albeit with potential derogations based on availability of recycled materialm, mandatory deposit return schemes (DRS) and separate packaging collection targets, new reporting and labelling obligations, the extension of extended producer responsibility (EPR) schemes, a restriction on the placing on the market of food contact packaging containing per- and polyfluorinated alkyl substances (PFAS) above certain thresholds, a restriction on plastic collation films except for transportation purposes, the possibility of bio-based plastic contributing to recycling targets, the allowance of imports to count towards recycling targets provided they are of similar quality as domestic material and have been separately collected.

The Committee of the Permanent representatives of the Governments of the Member States to the European Union (Coreper) endorsed the Packaging and Packaging Waste Regulation on 15 March following amendments to the provisional agreement reached by the EU Parliament and EU Council (but not endorsed by the EU Commission) during the trilogue negotiations.

The European Parliament Committee on Environment, Public Health and Food Safety (ENVI) endorsed the provisional agreement on 19 March.

By 1 January 2030, 40% of most transport packaging used within the EU – including e-commerce – will need to be reusable and ‘within a system of reuse’. This includes pallets, foldable-plastic boxes, boxes, trays, plastic crates, intermediate bulk containers, pails, drums and canisters of all sizes and materials, including flexible formats or pallet wrappings or straps for stabilisation and protection of products put on pallets during transport.

From 2040 this will increase to 70%. Some players said that this amounted to a defacto ban on flexible plastic transport packaging because of the difficulty in reaching the reuse target.

By 2030, 10% of grouped packaging boxes for stock keeping or distribution will need to be re-usable.

We remind, Shantou Mingca Packaging Co Ltd and ExxonMobil Asia Pacific Research & Development Co., Ltd (ExxonMobil) announced an innovative double bubble Polyethylene-based Shrink Film solution, the next generation of Polyolefin Shrink Film, created using ultra-low density Exceed XP performance polyethylene. PEF can be used to package products in a variety of shapes, such as electronics, household and personal care products, medicines, food, books and magazines, plastic utensils, and toys.

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US exporters of post-use low-density polyethylene (LDPE) film bales were processing the effects of a bridge collapse at Baltimore, Maryland, on March 26, said Chemweek.

A container ship struck the Francis Scott Key Bridge, causing the structure to collapse and shutting down the fifth-busiest container ship port on the US East Coast.

“Anyone with cargo on that ship is liable for damage,” said one exporter, adding that the insurance departments of commodity brokerages were scrambling to understand the impact of the collision.

Another exporter said the indeterminate closure of the port would impact its post-use LDPE bale shipments out of Baltimore. Although the volumes exported from Baltimore represent only a small portion of total US scrap plastic ethylene derivative exports, according to US International Trade Commission (ITC) data, a third exporter said the port closure could add delays to the next closest ports, such as New York and Norfolk, Virginia.

In all of 2023, Baltimore saw only 1,125 metric tons of scrap plastic exports, or less than 1% of the total 153,575 metric tons exported by the US. Three East Coast ports — New York and Norfolk, as well as Savannah, Georgia — handled more than half of the total 2023 export volumes.

For one shipper, New York is the best alternative while the port is closed, and a second said Norfolk is smaller but less complicated to navigate than Philadelphia. Regardless of the alternative port chosen, the sources agreed that the extra logistical steps to get to a more distant port could increase overall costs, including trucking and demurrage.

And although shipping on a cost, insurance and freight basis covers damages arising from such an incident, the first exporter said some shippers opt not to pay extra for the insurance coverage. In such cases, the incident could cause lasting and catastrophic financial damage, the source said.

Platts, part of S&P Global Commodity Insights, last assessed post-use A-grade LDPE film bales at 16 cents per pound (lb) FOB Chicago on March 25. Sources said before the collision that exporters’ bids were firming slightly on the week — last heard at 17 cents per lb FAS Chicago. Although cargoes for export tend to be priced higher than domestic bids to account for transportation costs ex-warehouse to port, domestic buying ideas do not have much room to go lower before sellers prioritize volumes for export, said a broker.

In virgin resin, only 1,236 metric tons of polypropylene, PE and polyvinyl chloride left from Baltimore in 2023, out of the 12.3 million metric tons of total US outflows, according to ITC data.

We remind, the US Department of Energy (DOE) has selected ExxonMobil’s Baytown, Texas, olefins plant carbon reduction project to receive up to USD331.9 million in funding under the USD6-billion Industrial Demonstrations Program (IDP). The announcement comes one month after a report in the Houston Chronicle that ExxonMobil might have to cancel the project if proposed federal tax incentives for the production of clean hydrogen exclude the use of carbon capture and sequestration (CCS).

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