Chemours reveals certain financial revisions after internal review

Chemours Co, opens new tab on Wednesday reported a smaller loss for the fourth quarter and announced revisions to certain past financial results following an internal review into accounting issues, said Reuters.

The internal review revealed earlier this month that its senior executives had manipulated some vendor payments and collections of receivables in the fourth quarter of 2023, in part to meet free cash flow targets tied to their incentives.

Chemours said on Wednesday the review identified "material weaknesses" in its internal control over financial reporting and resulted in revisions of its balance sheet as of Dec. 31, 2022, and its cash flow statements for 2021 and 2022.

It also led to "immaterial revisions" to financial statements for March, June and September, 2023. The review did not result in any misstatements of the company's financial statements or disclosures.

Shares of the chemical company fell 8% in trading after the bell. Chemours had earlier said its preliminary results would not be impacted by the internal review and later appointed chemical industry veteran Denise Dignam as CEO.
It reported a net loss of $18 million, or 12 cents per share, for the three months ended Dec. 31, compared with a loss of $97 million, or 65 cents per share, a year earlier, helped by lower costs.

The twice-delayed results came a month after the company placed its top three executives, including CEO Mark Newman, on administrative leave and said it was looking into potential "material weaknesses" in its financial reporting.
Chemical companies have been trying to reduce costs to combat low demand and destocking trends in the past year that were driven by weaker-than-expected growth in China and across major economies.

Separately, Chemours said it expected first-quarter net sales to be flat to down sequentially and capital expenditures of about USD100 million.

It also expects a 10% sequential decline in net sales for the Titanium Technologies segment owing to seasonally weak demand for titanium, and a sequential 10% decline in the Advanced Performance Materials unit's net sales due to softness in certain end markets.

We remind, Chemours, a global chemistry company with leading market positions in Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials, announced that the U.S. Department of Energy (DOE), under the Bipartisan Infrastructure Law, selected two of its applications for grants totaling USD60 million.

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China imported 15,700 tonnes of petroleum products from Azerbaijan in January-February 2024, Interfax has calculated based on data from the General Customs Administration of the People's Republic of China, as per Interfax.

The entire volume of products was delivered in February. Supplies are estimated at approximately USD6.8 million in value terms.

The administration has not provided data for the same period last year.

Meantime, the administration said that China exported around 2,600 tonnes of jet fuel to Azerbaijan in January-February 2024, an increase of 10.9% year-on-year by approximately USD2.4 million, growth of 1.7 %.

We remind, Gazprom is sticking to its goal of achieving 100% of the technically possible level of network gasification by 2030, and is actively working with the regions via five-year programs, Deputy Chairman of the Board of Gazprom Oleg Aksyutin said in an article in the company's corporate magazine.

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Russia's plastic pipe market could grow to more than 1 million tonnes in 2025, Polyplastic Group operations director Kirill Trusov forecast, said Interfax.

"We crossed the threshold of 850,000 tonnes for the whole plastic pipe market in 2023 and we have a very good chance of crossing 900,000 tonnes in 2024. And in 2025, I'm confident, the market in Russia will certainly, through joint efforts, already break through the threshold of 1 million tonnes. And we further hope that it will not just break through, but also firm up there, not decreasing anymore," Trusov said at a conference on plastic pipe systems.

The market totaled 793,000 tonnes in 2022, with interior systems making up 18% and exterior networks 82%, and grew to 866,000 tonnes (17% and 83%, respectively) in 2023, according to Trusov's presentation. It is forecast to grow to 934,000 tonnes in 2024 (16% and 84%, respectively).

"If you look at consumption, why we're growing, again, there are no surprises. The foundation is cold water supply and a little water disposal. However, if we're talking about the growth leader, gas is leading by far, growing by 150% in five years, and now makes up a very substantial, stable part of our market," Trusov said.

Polyplastic Group is the largest manufacturer of plastic pipes for external water supply and wastewater disposal, gas distribution and heating networks. The group includes pipe plants in Russia, Belarus and Kazakhstan with combined capacity of about 750,000 tonnes.

The group's sales grew to over 90 billion rubles in 2023 from 77 billion rubles a year earlier, and its production rose 9% to 283,000 tonnes. The group aims to increase sales to 105 billion-110 billion rubles in 2024.

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The PP market has also been suffering from a surge in excess production capacity, said Pooja Jain, associate director at S&P Global Commodity Insights, as per Chemweek.

She noted that while the current PP investment cycle began in 2019, the initial overbuild was relatively modest, totaling around 3 MMt per year (MMt/y) through 2021.

“It wasn’t until 2022 that we started to feel the heat,” said Jain. Demand growth dropped close to zero that year while new capacity surged, and though demand rallied in 2023, more than twice as much new capacity came online, resulting in another 8.5 million metric tons of excess capacity in just two years. “It’s going to take us some time to absorb, and thus, in our estimation, we expect the market to remain long for at least two more years before showing any strong signs of recovery,” Jain said.

Rationalization will be necessary, and S&P Global expects close to 2 million metric tons of capacity to be shut down in 2024, much of it in China. “China has this long tail of very small, old, nonintegrated assets running at suboptimal [rates],” said Jain. “Will that help with prices? Not so much. … Northeast Asia prices have essentially bottomed out, and we don’t expect any strong recovery, at least this year.”

More capacity is on the way. India alone is expected to see a new project commissioned every quarter for the next two years, while China’s PP capacity is forecast to increase by 8 MMt/y over the next two years.

Jain noted that 69% of the PP capacity installed during 2019–27 will be located in China, and of that, 50% will be integrated with propane dehydrogenation units producing feedstock propylene. “Propane is a highly traded commodity with very well-established logistics and trade routes in place,” she said. “Any region that does not possess a significant source of domestic propane can easily import it at economic rates.”

China’s dependence on propane imports does give producers in the Middle East or North America a feedstock cost advantage, but the difference is not as great as that seen in the ethylene chain, Jain said. “Thus, we are seeing more and more polypropylene investment getting closer to the high-demand regions such as Asia and not to where the feedstock is.”

We remind, 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.

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Over USD700m of US federal funding is being made available for Gulf Coast-based chemical and refining projects to use clean hydrogen in their operations, as per Hview.

Coming as part of a USD6bn funding package from the US Department of Energy (DOE), four projects have been selected to negotiate funding for their respective plans that hope to clean up chemical production and refining with low-carbon hydrogen.

Backed by the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA), US Energy Secretary, Jennifer Granholm, said the investments would “slash emissions” from hard-to-abate sectors.

ExxonMobil could receive up to USD331.9m of funding for its Baytown Olefins Plant Carbon Reduction Project, which aims to use hydrogen instead of natural gas across high heat-fired equipment using new burner technologies for ethylene production.

The plant is where the energy giant is looking to establish a 900,000 tonne per year blue hydrogen project which is expected to start production in 2028.

Exxon’s Chief Executive Darren Woods reportedly said last week that the project could be scrapped if it wasn’t eligible for IRA production tax credits. However, if the project is successful, once fully implemented, the company expects to cut more than 50% of the existing plant’s emissions.

T.EN Stone & Webster Process Technology has also been invited to negotiate up to USD200m of funding for its Sustainable Ethylene from CO2 Utilisation with Renewable Energy (SECURE) project on the Gulf Coast.

In partnership with LanzaTech, T.EN plans to demonstrate ethanol and ethylene production through a biotech process using captured CO2 and green hydrogen.

Demark’s Orsted has also been selected for up to USD100m for its Star e-Methanol project which plans to use CO2 and clean hydrogen to produce up to 300,000 tonnes of e-methanol per year on the Texas Gulf Coast.

The project is hoped to prove both supply and demand is there for hydrogen-based fuels in the marine and transportation sectors.

Melissa Peterson, Head of Onshore and P2X Americas at Orsted, said the production of e-methanol would be “critical” to achieving “rapid decarbonisation” for the most hard-to-electrify sectors.

BASF will also be negotiating up to USD75m of funding for its Syngas Production from Recycled Chemical Byproduct Streams project in Freeport, Texas.

With plans to recycle liquid by-products into syngas (carbon monoxide and hydrogen) for use as a feedstock at BAFS’ operations using plasma gasification, BASF expects the technology and renewable power could replace natural gas-fired incineration.

Under the same funding package, the DOE earmarked USD1bn for hydrogen-based steel production projects in Mississippi and Ohio.

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