Elkem swings to profit on higher sales, operational improvements

Elkem ASA recorded net profits of 92 million Norwegian kroner ($8.4 million) in the third quarter of 2024, compared with net losses of 456 million kroner in the same period of the previous year, as sales increased 3% year over year, to 8.06 billion kroner, said Chemweek.

The improved result was mainly driven by higher sales volume and operational improvements in the company’s silicones division, it said.

Elkem’s EBITDA more than doubled year over year, to 1.24 billion kroner, while EBITDA margin was 15%, up from 7% in the same period of the previous year. Operating profit was 554 million kroner, compared with an operating loss of 18 million kroner in the third quarter of 2023.

“While key markets remain weak, Elkem continues to strengthen profitability. The silicones division improved results in the third quarter mainly due to higher sales volume, operational improvements and positive effects from the new production line in China, delivering an EBITDA contribution of 75 million kroner in the quarter,” said Elkem CEO Helge Aasen.

The company’s silicones division posted a 20% year-over-year increase in sales, to 3.84 billion kroner. The division’s EBITDA was 202 million kroner, compared with a negative EBITDA of 268 million in the same period of the previous year.

Elkem’s silicon products division reported an 8% decrease in sales, to 3.64 billion kroner, on lower prices and volumes, the company said. The division’s EBITDA was, however, 56% higher, at 821 million kroner.

The carbon solutions business of the company recorded a decline of 13% in sales, to 886 million kroner on lower prices, Elkem said. The division’s EBITDA was 14% lower, at 269 million kroner.

Elkem has introduced an “improvement” program that aims to improve EBITDA by at least 1.5 billion kroner and reduce capital expenditure by 2.0 billion kroner compared with 2023, the company said. By the end of the third quarter, Elkem has realized EBITDA improvements of 1.0 billion kroner, with an estimated full-year effect of 1.4 billion kroner for 2024, the company added.

The silicones markets are still challenging, but the division expects to continue benefitting from the EBITDA improvement program and higher sales volume going forward, Elkem said. The silicon products division expects relatively stable market conditions, but lower sales prices in the fourth quarter, the company said. The carbon solutions division expects to deliver stable performance, taking advantage of its strong market position and geographical diversification, Elkem added.

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Sibur Holding PJSC (Moscow), Russia’s largest producer of petrochemicals, has started up a new naphtha cracker, the company said on Oct. 28.

The EP-600 plant is located at Nizhnekamsk, western Russia, and produces ethylene and propylene, as well as benzene, pyrolysis resins and solvents and it feeds derivative plants manufacturing products including polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS). The cracker’s nameplate capacity for the consumption of feedstock naphtha is 1.8 million metric tons per year, and downstream capacities for PS, ABS and polyethylene (PE) are estimated to total 650,000 metric tons per year.

Tests on the plant have been completed in October, during which two compressors for the ethylene and propylene refrigeration cycles were activated. Four out of 10 compressors are currently operating.

The first commercial products — ethylene, propylene and benzene — are expected to be released in December, it said.

The news follows a pivot by the company in April to a focus on Russian domestic market activity in response to extensive sanctions that have affected the ability of the Russian chemicals industry to move material into other markets since the country’s invasion of Ukraine in February 2022.

In June, Sibur announced plans to expand its capacity for PE to 300,000 metric tons per year within four years at its subsidiary Nizhnekamskneftekhim at Nizhnekamsk. Work on raising the site’s total PE capacity to 300,000 metric tons per year is scheduled to be completed in 2028, it said. Feedstock supply for the PE expansion will be provided by the new EP-600 cracker at the same site, it said at the time.

Sibur currently produces linear low-density PE at Nizhnekamsk.

In May, Sibur announced plans to invest more than $2 billion in the building of an ethylbenzene (EB) and styrene unit and a downstream PS plant with a combined production capacity of 1 million metric tons per year at Nizhnekamskneftekhim. Construction is scheduled to start in 2025, with mechanical completion and commissioning expected in 2028. The plants will have annual nameplate capacities for 400,000 metric tons of styrene, 350,000 metric tons of EB and 250,000 metric tons of PS, it said at the time of the announcement.

The EP-600 facility’s naphtha cracking unit was originally scheduled for completion in the second half of 2023. It was planned to have an annual ethylene capacity of 600,000 metric tons and produce 273,000 metric tons of propylene, 249,000 metric tons of benzene and 88,000 metric tons of butadiene, according to earlier statements by Sibur.

A second olefins plant at the site with a similar nameplate capacity is planned for development at a later stage, the company has said.

Nizhnekamskneftekhim produces synthetic rubber, PE, polypropylene, PS and surfactants.

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Alpek SAB de CV (Monterrey, Mexico) has reported third-quarter net income of $26 million, up 100% sequentially from $13 million and up from a net loss of $26 million in the year-ago quarter, as per Chemweek.

Revenue totaled $1.957 billion, up 2% sequentially and up 1% year over year. Alpek attributed the gains mainly to higher prices, particularly in the plastics and chemicals segment. Volumes increased on the restoration of operations at the company’s Altamira sites following water shortages during the second quarter.

Earnings per share came to 1 cent, even with the analysts’ consensus estimate, as compiled by S&P Capital IQ.

“Considering our stronger third quarter results, the successful execution of our structural-cost reduction initiatives, and the company’s ability to capitalize its position as a domestic supplier, we are confidently raising our comparable EBITDA guidance to $675 million for 2024,” said CEO Jorge Young. Alpek’s previously forecast comparable EBITDA was $600 million. The company also lowered its 2024 capital expenditure guidance, formerly $200 million, to $150 million.

The polyester segment turned in comparable EBITDA of $155 million, up 51% sequentially and up 36% year over year. Revenue totaled $1.4 billion, flat sequentially and down 4% year over year. Volume totaled 995,000 metric tons, down 1% sequentially and up 4% year over year. Earnings gains reflected improved reference margins for polyethylene terephthalate (PET) and high ocean freight costs, which supported regional margins, said Alpek.

The plastics and chemicals segment turned in comparable EBITDA of $63 million, up 52% sequentially and up 42% year over year. Revenue totaled $444 million, up 11% sequentially and up 19% year over year. Volume totaled 222,000 metric tons, up 10% sequentially and flat year over year. Reference margins for both polypropylene (PP) and expanded polystyrene (EPS) recovered from the lows of the year-ago period, and they increased 42% sequentially for EPS.

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PetroChina is set to shut its largest domestic oil refinery around mid-2025, sources said, the country's first major closure at a state-run plant and part of a long-mooted project to replace it with a smaller facility at a new site, as per Reuters.

The company will shut the remaining portion of the Dalian Petrochemical plant, with a total capacity of 410,000 barrels per day (bpd), that it was still operating in the northeastern Chinese city, said five sources with knowledge of the matter. It previously closed about 210,000 bpd of capacity beginning in October 2023, said the sources, declining to be named as the matter is not public.PetroChina did not respond to a request for comment.

Dalian represents 3% of China's refinery capacity and shutting the site should cut into the country's world-leading crude imports. The closure follows refiners' struggle with overcapacity and weakened fuel demand from slowing economic growth and the electrification of the country's car fleet.

The closures also align with Beijing's policy to cap the size of the industry to curb greenhouse gas emissions and manage industry overcapacity.

Shutting the plant is part of a long-proposed plan pushed by Dalian to relocate the refinery, which is in a densely populated area near downtown, after several deadly accidents including a major oil spill in 2010, an explosion in 2013 and a fire in 2017, the sources said.

PetroChina will re-allocate crude oil from Dalian to other subsidiary plants in northeast China, such as WEPEC, which is also in the city, and nearby Jinzhou, raising operation levels there to compensate for Dalian's cuts, said two of the sources.

Dalian Petrochemical mainly processed Russia's ESPO crude from Siberian fields that reaches Dalian via pipelines and Daqing from the country's flagship field in northeast China.

Under a framework agreement announced by Dalian authorities in November 2022, PetroChina parent CNPC agreed to build a new 70 billion yuan ($9.84 billion) refinery and chemical complex on Changxing island, about two hours' drive from downtown Dalian.

The new project would encompass a 200,000 bpd crude refinery, which is half the current plant's capacity, and a 1.2 million ton-per-year ethylene complex, Dalian's government said at the time.

However, the project remains at a pre-feasibility stage and PetroChina has not taken a final investment decision, said two of the sources.

High construction costs and a global petrochemical supply overhang following China's investments in the sector over the past decade are among the concerns PetroChina is weighing for the new site, said a third person familiar with its plans.

Once PetroChina's cash cow, the Dalian plant has faced competition from newer and more sophisticated plants such as privately controlled Hengli Petrochemical's 400,000-bpd refinery that opened in late 2018 on Changxing island.
PetroChina earlier this month shut a 90,000-bpd crude distillation unit (CDU) at Dalian, the sources said, which followed the closure of a separate 120,000-bpd CDU in October 2023.

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Sunlit Chemical (Taiwan) has opened a new semiconductor material facility at Phoenix, Arizona, said Chemweek.

The cost of the project was USD100 million. The plant will produce hydrofluoric acid and other high-purity industrial chemicals vital for semiconductor fabrication.

According to the Arizona Commerce Authority, Arizona has become a national leader in semiconductor manufacturing, attracting over 40 semiconductor-affiliated companies since 2020. These companies have contributed to more than USD100 billion in investments.
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