Shell Chemicals Unit Profits Weaken

On January 7, Shell said profits from its chemical division were expected to weaken in the final three months of 2021 as margins in bulk chemicals continued to fall, with the division's profitability and joint venture earnings set to show quarter-over-quarter results. 

The company said its chemical margins and joint venture earnings are expected to be significantly lower than in the third quarter of 2021 due to lower margins in basic chemicals. Shell expects that in the fourth quarter, the chemical sector's total capacity utilization will be 74% to 78%, lower than the third quarter. Total chemical sales were 3.3 million to 3.6 million tonnes, down sharply from the previous forecast. This is due to the fallout from Ada continuing to impact the company's chemical revenue in the fourth quarter and the long maintenance period at the company's Scottford, Canada plant, particularly the Scottford Glycol plant. It will remain idle until at least early 2022.

For the oil and gas business, Shell said the company's consolidated natural gas earnings have a bright future. Natural gas earnings are expected to perform significantly better than the third quarter as spot prices surge due to shortages in parts of the world.