OCI eyes options for nitrogen fertilizer assets in Netherlands

OCI Global (Amsterdam) is continuing with its major strategic overhaul that has so far raised $11.6 billion in total expected proceeds from the divestment of its equity stakes in four fertilizer and methanol businesses in recent months, said the company.

The company said in a third quarter trading update on Nov. 12 that it remains “actively engaged in the evaluation of strategic alternatives for its continuing businesses. Any future decisions will be made in the best interests of all shareholders.”

OCI stated in a Q3 financial presentation to investors that the evaluation of alternatives is for its remaining European nitrogen assets in the Netherlands. The firm did not give further details on the options being considered for the assets at Geleen. OCI is a leading integrated European producer of premium nitrogen products, including calcium ammonium nitrate (CAN), with capacity to produce up to 2.6 million metric tons per year (MMt/y) of nitrogen products, according to the company’s website.

Following completion of three equity divestments and the expected completion of a fourth transaction in the first half of 2025, OCI’s only remaining business and assets are its European nitrogen fertilizer business and its ammonia import terminal at Rotterdam, according to the presentation.

For the latter, OCI said a planned phase expansion of the import terminal will triple throughput capacity to 2 MMt/y and cement its position “as the only terminal dedicated to third party sales and ammonia import hub for impending European decarbonization.” The company increased throughput capacity at the terminal to approximately 400,000 metric tons in 2022 with plans to further expand it to 1.2 MMt/y.

In its trading statement, OCI said adjusted EBITDA in the third quarter from continuing operations showed a similar small loss to the prior-year period. The continuing operations now solely include its European nitrogen and corporate entities, it said. Despite improved sales volumes, margins at the company’s European nitrogen business were negatively impacted by higher natural gas pricing and other costs, it said.

The expected “cumulative crystallization of approximately $11.6 billion of gross transaction proceeds from four transactions affords OCI significant flexibility to deliver on its capital allocation priorities,” it said.

“OCI has achieved significant milestones in its strategic transformation. We announced the sale of OCI Methanol to Methanex for a consideration of $2.05 billion, and successively closed the sales of IFCo to Koch Industries for $3.6 billion, Fertiglobe to Adnoc for $3.62 billion, and Clean Ammonia to Woodside for $2.35 billion,” said Hassan Badrawi, CEO of OCI Global.

The transactions provide “highly valuable liquidity for significant capital returns to shareholders as a priority, alongside future investment capacity,” he said. Badrawi, formerly OCI’s CFO, was announced as its new CEO on Oct. 15. Previous CEO Ahmed el-Hoshy stepped down simultaneously as CEO in order to continue in his other existing role as CEO of Fertiglobe PLC.

OCI said it will pay an interim extraordinary distribution of €14.50 per share in aggregate ($3.3 billion) on Nov. 14 to its recorded shareholders at close of business on Oct. 29. It also expects to make an estimated further extraordinary distribution of approximately $1 billion through a repayment of capital during the first half of next year, it said. “This will be subject to continued progress on the execution of the announced transactions and the strategic review,” it said.

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Indorama Ventures Public Company Limited (IVL), a global sustainable chemical producer, posted a marked improvement in quarterly performance as the chemical industry struggles to recover from a prolonged downturn and the company’s management executes their 3 year IVL 2.0 strategy to enhance competitiveness and drive efficiencies, said the company.

Indorama Ventures reported Adjusted EBITDA1 of $427 million in 3Q24, a gain of 32% YoY, supported by steady volumes, improving industry spreads, and the company’s unstinting focus on optimizing assets and reducing fixed costs. The quarter marks Indorama Ventures’ first YOY improvement for the year, with all three business segments recording earnings growth, following a prolonged industry downcycle marked by customer destocking and suppressed margins. Volumes remained steady for the Combined PET and Fibers segments, while Indovinya posted a robust performance amid a peak season in the Crop Solutions market.

Looking ahead, the global economic outlook remains uncertain amid continued inflation, geopolitical tension, and supply chain disruptions. However, throughout the downcycle, Indorama Ventures’ experienced management team has worked hard to optimize and deleverage the business under their IVL 2.0 evolved strategy to emerge stronger and drive enhanced earnings quality in a new era of sustainable profit growth. In 3Q24, this unrelenting focus delivered fixed-cost savings of $19 million, which will sequentially increase into next year as the benefits are fully realized. Operating rates for the group increased to 82% in the quarter—from 69% previously—as the company completed its planned optimization program for CPET and Indovinya, with Fibers under implementation.

The company’s digital transformation program is accelerating according to schedule following the implementation of the SAP S/4HANA ERP platform as a digital core. North America is already benefiting from an AI-based procurement solution, while the Connected Worker Platform is driving manufacturing excellence. The first sales and supply chain solutions are expected to go-live early next year.

We remind, Indorama Ventures Public Company Limited, a global leader in sustainable chemicals, announced that its Indovinya business segment, through subsidiary Indorama Ventures Oxides LLC, has signed an agreement to acquire two major brands in the energy extraction sector from Cargill Bioindustrial UK Limited.

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Indorama Ventures Public Company Limited, a global sustainable chemicals company, announced that its Indovinya business segment—through its flagship subsidiary Indorama Ventures Oxides LLC—has agreed to acquire two leading brands in the energy extraction sector, targeting Demulsifiers and Flow Assurance products, from Cargill Bioindustrial UK Limited, said the company.

This strategic action augments Indovinya’s specialty surfactants offering and solutions growth trajectory.

The acquisition includes valuable trademarks, customer relationships, 25 patents, tolling rights, and an R&D facility in Houston, Texas. The renowned KEMELIX and FLOWSOLVE brands are central additions to Indovinya’s growing portfolio of innovative solutions, which are celebrated for their high-quality formulations and outstanding performance in optimizing operations in the oil and gas sector. These products are vital for demulsification and flow assurance processes, addressing critical challenges in energy extraction and enhancing operational efficiencies for our customers.

The KEMELIX brand includes high-performance demulsifiers that facilitate the economical separation and removal of water from crude oil. Its best-in class product range covers alkoxylates, polyamine derivatives, and modified polyols. They are highly effective under the most demanding field conditions, including heavy oil, low temperature, and low/high water applications.

The FLOWSOLVE brand includes leading asphaltene and wax inhibitors that improve the end-to-end flow of crude oil from the reservoir to the refinery. Its optimized range of additives are designed to suit different crude oil types, such as onshore, offshore, and deepwater.

We remind, Indorama Ventures reported Adjusted EBITDA1 of $427 million in 3Q24, a gain of 32% YoY, supported by steady volumes, improving industry spreads, and the company’s unstinting focus on optimizing assets and reducing fixed costs. The quarter marks Indorama Ventures’ first YOY improvement for the year, with all three business segments recording earnings growth, following a prolonged industry downcycle marked by customer destocking and suppressed margins. Volumes remained steady for the Combined PET and Fibers segments, while Indovinya posted a robust performance amid a peak season in the Crop Solutions market.

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Trinseo PLC (Wayne, Pennsylvania) has agreed to supply a polycarbonate (PC) technology license as well as all proprietary PC production equipment from its facility in Stade, Germany, to a wholly owned subsidiary of Deepak Nitrite Ltd (Vadodara, India) for use in India, said the company.

The transactions advance Deepak’s plan to expand from basic and specialty chemicals into engineering plastics. The total value of the agreements is $52.5 million, Trinseo announced on Nov. 13.

Trinseo in October announced plans to shut down permanently PC production at Stade in January 2025 and to rely on external suppliers for its PC requirements. The company has 160,000 metric tons per year of PC capacity at the site, according to S&P Global Commodity Insights data.

“These are the initial steps of a strategic, collaborative partnership with Deepak, as we explore additional opportunities to leverage our technology portfolio and expand in higher-growth areas such as India,” said Frank Bozich, Trinseo’s president and CEO.

Deepak in February 2024 announced that affiliate Deepak Chem Tech Ltd. had signed a memorandum of understanding with the Indian state of Gujarat to invest 90 billion Indian rupees ($1 billion) in various projects at Dahej, India, including plants for the production of PC resins and compounds as well as methyl methacrylate (MMA) and aniline. Operations are slated to begin in late 2027. In May 2024, Deepak acquired PC compounder OXOC Chemicals Ltd. (Akota, India). Deepak is currently building a 30,000 metric tons per year PC compounding plant.

During Deepak’s fiscal fourth-quarter 2024 earnings call in August, CEO Maulik Deepak Mehta said the company was evaluating a range of PC production technologies.

“Some routes have more flexibility and are more relevant for an Indian context but come at a higher operating cost, and other routes may have more facility and more flexibility but may have more provisions that we have to take for things like statutory compliances,” said Mehta. “And rest assured, whether it takes more time or less time is not relevant. What is far more relevant is that we take the right decision. It is not about a couple of months here or there. We're going to be manufacturing products for decades to come, and Indian demand is going to be robust enough to be able to absorb this kind of capacity we're putting in.”

Trinseo said it expects the transaction to yield approximately $9 million by the end of 2024 and another $21 million during the first half of 2025, subject to milestones. The company also said that it has decided to exit the Stade site completely.

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Styrene monomer (SM) prices decline in Asia, as per Polymerupdate.

On Tuesday, despite stronger crude values, SM prices witnessed a drop in Asia. An industry source in Asia informed a Polymerupdate team member, "Prices dropped on the back of a sluggish regional market momentum." The source added, "Bearish upstream benzene values further pressured SM prices lower in Asia."

On Tuesday, FOB Korea SM prices were assessed at the USD 995-1005/mt levels, a drop of USD (-5/mt) from Monday.

CFR China SM prices on Tuesday were assessed at the USD 1015-1025/mt levels, a fall of USD (-5/mt) from Monday’s assessed levels.

Meanwhile, upstream benzene prices on Tuesday were assessed at the USD 860-870/mt FOB Korea levels, day on day down USD (-10/mt).

We remind, European polystyrene contracts fell to lowest since February 2021 in October amid falling raw material costs.

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