OQ Chemicals to start sales process

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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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, as per Reuters.

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).

The head of the local district, Andrei Doroshevsky, said on the Telegram messaging app that the fire has been put out.

"This night, the civilian infrastructure of our region was subjected to a massive attack by the criminal Kyiv regime," he said, adding that a drone damaged administrative buildings at the Ilsky oil refinery.

The plant had already been hit by drones in February. Separately, regional authorities said on Friday that open fires were doused at oil depots in the Tambov and Rostov regions.

We remind, on May 9, an unmanned aerial vehicle attacked the industrial zone of the city of Salavat. As a result, the structure of the pumping station on the territory of Gazprom neftekhim Salavat was damaged, and smoke erupted at one of the enterprise’s facilities. There were no casualties. The technological process, according to regional authorities, was not disrupted at the plant.

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Hengyuan Refining Co. expects an unplanned shutdown of its long residue catalytic cracking unit (LRCCU) to impact its revenue, as per Hydrocarbonprocessing.

Hengyuan, a subsidiary of China's Shandong Hengyuan Petrochemical Co., said it planned to shut down the unit for inspection and repairs after a leakage was found at its carbon monoxide boiler on Wednesday. The LRCCU processes residue fuel into gasoline and light cycle oil.

Production at the Port Dickson-based refinery on Malaysia's west coast will be affected during the shutdown. "Given current uncertainties, the financial impact of this incident cannot be reliably estimated at this point, but is expected to be material for the company," Hengyuan said. The company said it would implement measures to ensure there was no major disruption of production supply to its customers during the shutdown.

Hengyuan has offered up to two 15,000-metric ton (t) cargoes of straight-run fuel oil to load in the first 10 days of July, two sources with knowledge of the matter said, attributing the sale to the unit's outage. The company has sought to buy at least one 15,000-t cargo each of gasoil and 95-octane gasoline for prompt delivery in the next two weeks, a third source who received the enquiry said.

The company did not immediately respond to a request for comment on its fuel sale and purchase. The Port Dickson refinery has a crude processing capacity of 120,000 bpd, according to the company website.

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Arkema announces a breakthrough in new manufacturing processes that integrate up to 40% post-consumer recycled content from end-of-life packaging products into its powder coating resins, said the company.

Powder coating is a solvent-free, low-waste technology, which can now be made more circular by including recycled content. Arkema's new recycled based powder resin innovation uses post-consumer PET (polyethylene terephthalate) coming from end-of-life packaging as an alternative to traditional fossil-based raw materials to create products containing up to 40% recycled PET and reducing PCF (Product Carbon Footprint) by up to 20%.

"Alongside our bio-based and mass balance offers, increasingly incorporating recycled feedstocks is another step towards ensuring more circular high-performance solutions and a more sustainable lifestyle. Arkema's new recycled based powder resins further enrich sustainable solutions for our partners, enabling end markets to increase the percentage of recycled content in their finished products," said Richard Jenkins, SVP and member of the Executive Committee.

We remind, Arkema built a polyamide 11 (PA11) plant at its site in Changshu, China. The plant was launched in the first quarter of 2023. Investments in the project amounted to USD450 million.

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