Brenntag opens warehouse in India

Leading chemicals and ingredients distributor Brenntag SE (Essen, Germany) has opened a warehouse at Sonipat, Haryana state, said the company.

The warehouse is a single-story facility with cold storage space as well as ancillary office space to serve Brenntag’s customers from various industries such as pharmaceutical, nutrition, beauty and care, material science and others.

The company said that the new warehouse will serve over 70% of Brenntag’s customers in northern India, “which were motivating factors for consolidating all three existing warehouses in North India under the new warehouse facility.”

The warehouse is built by Harshna Agro Fresh Pvt. Ltd. Brenntag said that Harshna has obtained excellence in design for greater efficiencies (EDGE) advanced certification in recognition of its commitment to sustainability and eco-friendly practices.

EDGE is a globally recognized green building certification system developed by the International Finance Corporation, a member of the World Bank Group. It is designed to help buildings achieve resource efficiency in energy, water and materials to make buildings more sustainable, cost-effective and environmentally friendly, it added.

In May this year, the company decided to expand its material science innovation and application center at Navi Mumbai, India.

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Russian gasoline production has increased by only 2% from May's average in the first 18 days of June, less than expected by the energy ministry, the Kommersant newspaper reported on Monday, citing sources familiar with the official data, as per Hydrocarbonprocessing.

It said that gasoline production rose to 108,000 metric tpd on average over June 1–18, about 7.2% below the expected level.

Gasoline exports jumped 53% from the same period in May to 8,400 tpd after the suspension of an export ban.

Stockpiles of gasoline at fuel depots and refineries edged down by 2.7% from the previous week to a little below 2 MMt, slightly above the same period last year, the newspaper reported.

The government is due to discuss at the end of the month whether to continue gasoline exports in July.

We remind, a drone crashed into the Ilsky oil refinery in Russia's southern Krasnodar region on Friday, injuring at least two people and causing a small fire, local authorities said. Ukraine has been systematically targeting Russian energy infrastructure to try to disrupt Russia's economy and its ability to fund its military effort. The Ilsky refinery is one of the main fuel producers in southern Russia, with a capacity to refine 6.6 metric MMtpy of crude (132,000 bpd).

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Covestro AG announced it has entered into “concrete negotiations” with Abu Dhabi National Oil Co. (Adnoc) over a potential takeover bid that could value Covestro at almost EUR12 bn, said the company.

The starting point for the talks is a possible offer price indicated to Covestro by Adnoc of EUR62 per Covestro share, it said. This would value Covestro at about EUR11.7 billion. The offer price is subject to the results of the confirmatory due diligence and agreement on the content of an investment agreement, it said.

Covestro’s management board said that, after consultation with its supervisory board, it had decided to enter into formal discussions regarding the potential transaction and the potential conclusion of an investment agreement “based on the open-ended talks held so far with Abu Dhabi National Oil Company.” Entering into the detailed negotiations with Adnoc would also allow for “an adequate exchange of company information to confirm assumptions (confirmatory due diligence),” it said.

Discussions so far “have shown that Covestro and Adnoc can generally reach a common understanding regarding core aspects of a possible transaction including support for Covestro’s further growth strategy,” the management board statement said.

“We have made good progress in our discussions with Adnoc. Therefore, we have decided to enter into concrete transaction negotiations,” said Markus Steilemann, CEO of Covestro.

Both companies intend to proceed with the negotiations about the potential transaction and the confirmatory due diligence “in a timely manner,” Covestro said, adding that there is “no certainty whether the upcoming negotiations will lead to an agreement. There is also no certainty as to the final terms of any such agreement.”

Any potential transaction would, in addition to mutual agreement on the commercial and legal transaction parameters, among other things, be subject to the approval of the respective boards of the parties and clearance by the competent authorities, Covestro said.

A capital markets day event scheduled for June 27 has been postponed until further notice in light of this recent development, it noted.

In February, Covestro posted sales of EUR14.38 billion for the full financial year 2023, down 20% compared to the previous year, and a net loss of EUR198 million, which narrowed from a loss of EUR272 million in 2022. In April, the company reported first-quarter sales of EUR3.51 billion, down 6.2% year over year and missing consensus of EUR3.6 billion as provided by S&P Capital IQ, but which were up sequentially from EUR3.35 billion. Covestro also posted its third consecutive loss in the quarter, reporting a net loss of EUR35 million.

In its year-head guidance issued in February, Covestro said that it expected the current weak demand environment in all regions to continue and that the outlook for its core end-user industries in the automotive, construction, furniture, and electrical and electronics sectors remained “depressed.” Covestro said EBITDA in 2024 was anticipated to be in a range between EUR1.0 billion and EUR1.6 billion.

In October last year, Covestro said it was continuing to pursue discussions with Adnoc, with Steilemann saying at the time that it was “pursuing these discussions in good faith, open minded and in the interest of our shareholders and all other stakeholders.” Covestro had confirmed on Sept. 8 that it would enter into discussions with Adnoc on a possible acquisition.

According to unconfirmed media reports last year, Adnoc made an initial takeover bid for Covestro at EUR55 per share, which it then raised to EUR57 per share in July last year. It was then reported to be considering plans to increase its bid to about EUR60 per share, which would have valued the company at about EUR11.6 billion, with today’s possible offer price of EUR62 per share announced by Covestro further increasing the latter’s potential market valuation to about EUR11.7 billion.

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The owners of OQ Chemicals GmbH (OQC; Monheim am Rhein, Germany) are set to start a sales process for the oxo alcohols producer after the company reached a short-term financing deal with lenders, according to a Bloomberg report.

OQ Chemicals is owned by Oman’s state-run OQ SAOC (Muscat), which was itself formed in late 2019 from the merger of Oman Oil Co. (OOC) and Orpic Group. OQ Chemicals, formerly Oxea, was acquired by OQ from Advent in 2013.

OQ Chemicals today confirmed an earlier initial report by Bloomberg that some of its main lenders had agreed to provide EUR75 million in bridge financing. A group of lenders has also signed an agreement with the company to extend the maturities of EUR1.1 billion equivalent of debt due later this year, although the details are still yet to be finalized.

“Owners and management are confident that OQC’s financial restructuring will progress successfully,” said chief restructuring officer, Hans-Joachim Ziems, in an emailed statement, according to the report. “At the same time, OQC’s strong operating performance will pick up further which in turn will contribute to the envisaged M&A process.”

OQ Chemicals’ refinancing plans were thrown into disarray earlier this year after its owner ruled out providing further new funds to the business, as previously reported. The company’s debt load includes euro- and dollar-denominated term loans, which would have been due in October. The lenders had previously rejected a takeover proposal from private equity firm Advent International as it didn’t offer creditors a high enough recovery, as previously reported.

Rothschild & Co has been mandated as the lead adviser for the sale of OQ Chemicals, according to a person familiar with the matter. A spokesperson for Rothschild declined to comment.

In May 2023, OQ Chemicals announced it would implement cost-cutting measures and an organizational realignment at its oxo chemicals sites in Germany against a backdrop of persistent weak demand and oversupply in European oxygenated chemical markets. OQ’s cost-saving program would take two years and was prompted by the challenges of high energy and raw material costs, as well as inflation rates, “particularly in Europe,” and will include workforce reductions, it said at the time.

As part of OQ’s cost-cutting program, it said it planned to outsource technical and logistical service areas to external players, alongside a reduction of up to 10% in non-production-based jobs. OQ said in the announcement last year that the program’s goal was to concentrate on its core business and establish a more efficient structure “that meets the current and future requirements of a successful medium-sized chemical company.”

Oliver Borgmeier, CEO of OQ Chemicals, said at that time that the planned measures would enable annual cost savings in the double-digit million-euro range in the long term. “The cost pressure is substantial — in the previous year alone, we incurred additional energy costs amounting to a high three-digit million Euro figure,” said Borgmeier in the original announcement.

In May this year, OQ Chemicals lifted a force majeure declaration for all products at its Oberhausen and Marl sites in Germany, with all its plants returning to production at nameplate capacity. During the operational pause, OQ Chemicals implemented strategic enhancements to optimize production processes, it said. The force majeure had been declared on March 4 due to a disruption at a raw material supplier’s synthesis gas plant at the end of February. Syngas is a raw material to produce n-butanol.

OQ Chemicals had not replied to a request for comment from CW at the time of article publication.

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The ethylene-vinyl acetate (EVA) market has been delving into US-China subsidies and levies impacting the global flow of the solar industry, according to market participants, said Chemweek.

EVA sheet, with a vinyl acetate monomer (VAM) content of 25% and above, is an essential material in solar modules manufacturing.

The EVA global market has been oversupplied by China-based producers operating at high rates despite tight margins to support its photovoltaic (PV) industry, according to sources. This has led to several price declines in the US export market and in China, the largest market for EVA and the main destination for US-origin product.

Platts, part of S&P Global Commodity Insights, assessed medium-grade EVA at $1,110 per metric ton FAS Houston on June 19, down $90 per metric ton since April 29, when it began declining. Meanwhile, US domestic contract prices for all grades were heard to have remained stable.

In Asia, medium-grade EVA was assessed at $1,175 per metric ton CFR China on June 20, down $265 per metric ton compared with March 11, when the price assessment was launched by Platts. PV-grade EVA was assessed at $1,170 per metric ton CFR China on June 20, down $350 per metric ton since March 11, unusually trading at a discount to lower grades.

Commodity Insights forecasts c-Si module production, which often uses EVA as an encapsulation film, to add 302 GW in the second half of 2024, with China accounting for 76% of the total. North America, mostly the US, will account for 6% of the production, showing a 74% increase compared with its own production in the first half of 2024. By 2029, North America is projected to represent 9% of global production, increasing its output by 127% compared with 2024.

Considering EVA is used in around 80% of the solar modules and making adequate assumptions for the product specifications, demand for PV-grade EVA in the second half of 2024 is estimated to be around 542,000 metric tons, representing growth of 5% compared with the first half of this year.

Despite the increase in demand, prices are not expected to rise as long as the market remains oversupplied, according to an EVA distributor in the US, who highlighted that PV-grade EVA demand in China has been amply met by local suppliers. “Chinese producers have been running more EVA and less LDPE to support solar panel production,” the distributor said.

In the US, the solar industry accounted for over 50% of new electricity capacity additions to the grid in 2023 and is expected to maintain the rhythm. Inflation Reduction Act (IRA) incentives are crucial for supporting the growth of the domestic manufacturing base, which currently falls significantly short of demand.

The US Bureau of Land Management (BLM) has finalized the Renewable Energy Rule, which will cut fees for wind and solar projects developed on federal land by up to 80%. The rule comes into effect on July 1, 2024, according to BLM documents.

In related news, the US government announced in May plans to increase tariffs on Chinese solar cells, whether or not assembled into modules, from 25% to 50%. The tariffs are expected to have limited immediate impact as the majority of solar cells are imported from Southeast Asia — mostly from facilities operated by Chinese manufacturers in response to US tariffs established years ago.

Additionally, the International Trade Commission continued an ongoing investigation to determine whether the tariffs that apply to Chinese products should be expanded to other Southeast Asian manufacturers.

As the US strives to be less reliant on solar industry imports, domestic demand for EVA should be positively impacted. This would be beneficial to US EVA sellers currently seeking alternative markets amid China’s low pricing.

According to DataScope, in December 2023, imports of EVA to Russia fell by 15.91% to 3,180 tonnes from 3,790 tonnes in the same month of the previous year, and at the end of 2023, imports of this type of copolymer ethylene in the Russian Federation decreased by 1.30% - to 44,890 tonnes (45,480 tonnes in January-December 2022).

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