Petrobras wrapping up due diligence to buy back refinery from Mubadala

Brazil's state-run oil company Petrobras is wrapping up due diligence for a bid on the Mataripe refinery it sold to Abu Dhabi sovereign fund Mubadala for USD1.65 B in 2021, said Hydrocarbonprocessing.

President Luiz Inacio Lula da Silva campaigned against the sale of Petrobras refineries and has pushed for the company to accelerate job-creating investments in the segment. However, an agreement on the structure and price of a possible buyback has not been reached, said people involved in the talks.

Those discussions could delay the deal, which has been in the works for several months, given that the refinery, also known as RLAM, was sold below market value by some accounts.

Brazil's Comptroller General found that Petrobras may have sold the refinery at a discount during the COVID-19 pandemic. The union-backed Institute for Strategic Studies in Oil, Natural Gas and Biofuels (Ineep) estimated in 2021 that the refinery was worth between USD3 B to USD4 B.

Petrobras did not immediately respond to a request for comment. Mubadala representatives declined to comment.

Discussion of a possible buyback surfaced last year when Mubadala proposed a joint investment in traditional refining and a new biorefinery sharing infrastructure with the Mataripe refinery in Bahia state, a stronghold of Lula's Workers Party.

Petrobras (PBR) is considering increasing its investment in Bolivia's natural gas sector. Petrobras' plans to expand its investment in Bolivian natural gas are linked to the need to supply feedstock for the company's chemical projects.

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SM prices were assessed lower last Thursday, said Polymerupdate.

An industry source in Asia informed a Polymerupdate team member, Prices drifted lower on the back of a sluggish buying momentum in the Asian region.

On Thursday, FOB Korea SM prices were assessed at the USD 1085-1095/mt levels, a day on day drop of USD (-10/mt).

CFR China SM prices on Thursday were assessed at the USD 1100-1110/mt levels, a fall of USD (-15/mt) from Wednesday"s assessed levels.

Meanwhile, upstream benzene prices on Thursday were assessed at the USD 960-970/mt FOB Korea levels, down USD (-5/mt).

In plant news, Formosa Chemicals and Fibre Corp (FCFC) is likely to shut down its No.1 and No.2 Styrene monomer (SM) units for maintenance over October/November 2024. The exact date and duration of the shutdown could not be ascertained. Located in Mailiao, Taiwan, the No.1 SM and No. 2 SM units have production capacities of 250,000 mt/year and 350,000 mt/year respectively.

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Resin spreads generally improved during the second quarter owing to a “better balance between global supply and demand” as well as higher ocean freight rates stemming from the conflict in the Red Sea, according to Braskem SA (Sao Paulo), which released its second-quarter production and sales report on July 25.

Sales volumes were mixed, with a weather-related outage in Brazil and a planned outage in the US constraining availability, and market conditions in Europe weighing on demand.

Braskem calculated a 9% sequential increase in the polyethylene (PE) spread for its Brazil/South America segment on a 3% increase in US pricing. The company cited inventory buildup in advance of hurricane season as one factor for the higher prices. An increase in international maritime freight costs stemming from the conflict in the Red Sea also drove up regional exports, the company said.

The segment’s polypropylene (PP) spread increased 8% sequentially on a 2% increase in Asian pricing stemming from tighter supply. Braskem attributed the supply situation to logistical restrictions caused by the Red Sea conflict, including port congestion and a shortage of ships, as well as the shutdown of propane dehydrogenation units in Asia.

The segment’s polyvinyl chloride (PVC) “par” spread increased 3% sequentially on a 2% increase in Asian pricing. Braskem cited higher international freight rates, maintenance shutdowns in Northeast Asia, and higher demand, mainly from India, where import restrictions are expected to enter effect in August.

The US and Europe segment reported no change in the US PP spread, but the European PP spread dropped 8% sequentially. European pricing increased 2% as operational problems and a decline in imports tied to the Red Sea conflict tightened supply, but the price off feedstock propylene increased 4% on the back of production outages in May.

The Mexico segment’s North America PE spread increased 4% sequentially on the back of increased US pricing.

Braskem expects polymer prices to recover from 2026, its financial report said. Global prices for some of Braskem's key products, such as polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC), remain low, and despite some positive price signs in early 2024, this year will again be difficult, the company said.
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BASF's revenue in the second quarter fell by 7% due to a reduction in fertilizer production, said the company.

It reached EUR16.11 billion, while in the second quarter of last year, revenue was EUR17.31 billion. EBITDA, on the contrary, increased by 0.6%, to EUR1.957 billion, but in the fertilizer segment it fell by 66%.

Analysts expected the concern's revenue of EUR16.74 billion, and EBITDA - EUR2.05 billion.

At the same time, since the beginning of the year, the company's capitalization has already fallen by 11%.

Recall that BASF, as well as other chemical companies in Germany and the EU, suffered from more expensive natural gas after the partial withdrawal of Russian pipeline gas from the European market. and electricity. The chemical sector, for which natural gas is not only energy but also a raw material for production, has become unprofitable in Europe. It was previously reported that BASF had already begun to reduce its divisions in Germany, in particular, it has reduced production and staff at its key site in Ludwigshafen, Germany, and is closing sites for the production of herbicides in Frankfurt and near Cologne.

BASF has signed an agreement with chemical manufacturer Solenis (headquartered in Wilmington, Delaware, USA) to sell BASF's mining flocculants business. The deal is expected to close in the second half of 2024. Financial details of the transaction were not disclosed.

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Merck KGaA said it has signed an agreement to sell its surface solutions business unit to Global New Material International Holdings Ltd. (GNMI; Liuzhou, China) for EUR665 million in cash. Merck intends to use net proceeds from the divestment to strengthen its core businesses.

The transaction is expected to close in 2025, subject to regulatory approvals and the satisfaction of certain other customary closing conditions.

The surface solutions business produces pigments used in coating, industrial and cosmetic applications and had sales of EUR411 million in 2023. It has about 1,200 employees, approximately 700 of whom are based in Germany, who will all transfer to GNMI.

GNMI, also known under the brand name Chesir, is one of the largest producers of pearlescent pigments, according to Merck. It has sites in China and South Korea and is listed on the Hong Kong stock exchange. GNMI has expertise in effect pigments and the rapidly growing and competitive field of mica-based products, Merck said.

“Our activities are highly complementary in terms of products, expertise and regional footprint,” said Ertian Su, chairman and CEO of GNMI.

For Merck, the deal is expected to shift the focus of the company’s electronics division. “The divestiture of the surface solutions business unit will further sharpen our focus on high-tech applications in electronics, such as driving the development of next-generation chips as an integrated solutions provider for our semiconductor customers,” said Belen Garijo, chair and CEO of Merck.

According to Kai Beckmann, board member/electronics at Merck, “This transaction gives us the opportunity to focus even more intensively on the semiconductor and display industries within electronics.”

To prepare for completion of the sale, an integration team comprising representatives of Merck and GNMI will be established to define how the respective strengths of the merging businesses can best be combined.

GNMI is planning for the surface solutions business unit to have three regional headquarters, with one each in Germany, the US and Asia, while maintaining its existing production facilities at Gernsheim, Germany; Onahama, Japan; and Savannah, Georgia. Merck will remain the owner of the property at the Gernsheim site under a long-term lease contract with GNMI and a clear separation plan for the area used by surface solutions. Merck’s GreenTech Park Fluxum at Gernsheim is not affected by the sale.

The sale of surface solutions does not yet comprise the French surface solutions business, where GNMI has made a binding offer to acquire the relevant shares and assets once Merck has informed and consulted with the relevant works council representatives, Merck said.

Earlier it was reported that the Tambov manufacturer of dyes and pigments "Pigment" will invest 8 billion rubles in the modernization and expansion of chemical production. The investments will be directed to the modernization of infrastructure, expansion of production capacity and the release of new products. In particular, it is assumed that the company will come to the import substitution of fuel additives, acrylic emulsions, pigments.

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