CNOOC and Shell take final investment decision to expand petrochemical complex in China

MOSCOW (MRC) -- China National Offshore Oil Corporation and Shell Nanhai announce final investment decision to expand CNOOC and Shell Petrochemical Co (CSPC) existing 50:50 joint venture (JV) in Huizhou, said Reuters.

CNOOC and Shell take final investment decision to expand petrochemical complex in Xhina.

Subject to regulatory approvals, cnooc and shell have agreed that cspc should take over cnooc's ongoing project to build additional chemical facilities next to cspc's petrochemical complex.

Shell will apply its proprietary OMEGA, SMPO and Polyols technologies to produce 150,000 tonnes per annum (TPA) of ethylene oxide, 480,000 tpa of ethylene glycol and 600,000 tpa of high quality polyols.

As MRC informed earlier, in December 2015, Shell Nanhai B.V. (Shell) and China National Offshore Oil Corporation (CNOOC) signed a Heads of Agreement (HOA) to expand their existing 50:50 joint venture (JV) in Huizhou, Guangdong Province, China.

China National Offshore Oil Corporation (CNOOC), the largest offshore oil & gas producer in China. CNOOC businesses cover the main segments of oil & gas exploration and development, engineering & technical services, refining and marketing, natural gas and power generation, and financial services.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.

Chinese polyester sector snaps up PTA, MEG feedstocks amid run-rate jump

MOSCOW (MRC) -- China's polyester producers have been snapping up feedstocks purified terephthalic acid (PTA) and monoethylene glycol (MEG) amid a rise in operating rates ahead of peak demand season, according to producers and market sources TPS spoke to.

TPS reported in February that polyester demand was expected to strengthen in March after the Lunar New Year holidays, ahead of a seasonal rise in production before summer.

Loom operating rates among weavers in the key eastern China provinces of Jiangsu and Zhejiang have hiked to 84.25% March 14, compared to 49.39% reported on February 19.

Polyethylene terephthalate (PET) operating rates have risen to 77.59% for the same period after touching a 2016-low right after the holidays at 60.93% recorded on February 12.

A fiber intermediate broker estimates that polyester production rates were around 75% mid-March, which the broker described as "healthy".

"So far, PET is doing well, and operating rates are near capacity," according to a source from China's biggest PTA producer Yisheng Petrochemical.

However, the upside for PTA may not be so big, since supply is ample, the source said, referencing a recent startup of a 2.2 million mt/year PTA plant by China's Hanbang Petrochemical.

Nonetheless, PTA plants have responded favorably to the rise in PET and loom rates - PTA production buoyed higher to 66.66% March 14, after hitting a low at 54.39% reported on February 19. PTA operating rates lag behind those of the other two industries due a significant capacity overhang.

In the MEG market, most supply is imported as China lacks self-sufficiency, where transaction volume has spiked in March, according to MEG traders and brokers.

"I'm seeing an average of one hundred deals daily," one intermediates broker said.

Assuming parcels traded are in 500 mt or 1,000 mt lots, between 50,000 mt to 100,000 mt of MEG are transacted daily.

China's polyester industry typically enjoys peak seasonal demand ahead of summer.

We remind that, as MRC informed previously, in March 2016, Hanbang Petrochemical successfully started up its second purified terephthalic acid (PTA) unit and production operations are ongoing. However, the plant has yet to achieve on-spec production. According to the source, the plant is currently running one of its two production lines, each with an annual capacity of 1.1 million mt/year. A market source says the company has intentions to run the plant at full tilt once they are able to achieve on-spec production.

South Korean petrochemical producers seek out M&As or joint ventures

MOSCOW (MRC) -- South Korea’s major petrochemical producers, backed by higher earnings last year, are keen for mergers & acquisitions (M&A) or joint ventures with companies specializing in high-value added specialty products, reported TPS.

The latest move to actively seek for M&As and joint ventures is in tandem with South Korean producers’ efforts to diversify business portfolios amid China’s increasing self-sufficiency rates for petrochemical products.

Among major producers, SK Global Chemical (SKGC), a subsidiary of SK Innovation, has been most active in rebalancing its business portfolio to include high-end and high-value added products.

"We are reviewing a variety of options, including a stake purchase and joint ventures," said an official from SKGC. The official said the company is on the lookout for Chinese firms and other smaller foreign rivals for potential takeovers.

SK Innovation’s CEO Chung Chul-khil also said last month that the company is in need of shifting its business structure to focus on high-value added chemical products in order to ensure sustainable growth.

LG Chem, the country's top chemical producer, is also seeking to find new revenue sources via M&As.

During an annual shareholder meeting last week, LG Chem’s CEO Park Jin-soo said that his company will consider a strategic M&A while focusing on traditional and new business areas such as bio and new materials.

In January this year, LG Chem signed a USD442 million (KRW 555 billion) deal to takeover Dongbu Hannong Co., a local fertilizer producer, as part of the company’s efforts to diversify its revenue sources.

Lotte Chemical, which completed the acquisition of Samsung Group’s chemical business arms including Samsung SDI, Samsung Fine Chemicals and Samsung BP Chemical last month, will also consider for further M&As within this year.

The major petrochemical producers’ emboldened push for M&As and joint ventures were possible thanks to their record-high operating profits prompted by profitable product spreads last year.

In 2015, SK Innovation posted an operating income of USD1.7billion (KRW 1.98 trillion), the second highest in the company’s history, while LG Chem and Lotte Chemical posted a record-high operating income of USD1.57 billion (KRW 1.82 trillion) and USD1.39 billion (KRW 1.61 trillion) respectively.

We remind that, as MRC wrote before, in January 2016, South Korea’s LG Chem completed the acquisition of Dongbu Farm Hannong, the country’s largest agricultural products provider. Following a series of negotiations since September 2015, LG Chem has finally acquired 100% equity stake in Dongbu Farm Hannong’s shares worth USD426.49 million (KRW 515.20 billion).

PCS restarts butadiene unit in Singapore on 17 March

MOSCOW (MRC) -- The Petrochemical Corporation of Singapore (PCS) restarted its butadiene unit on March 17 after being shut for three weeks, a company source confirmed to TPS.

Both crackers are located on Pulau Ayer Merbau, on Singapore's Jurong Island.

The unit at its No. 2 cracker is able to produce 140,000 mt/year of butadiene. The No. 2 cracker has a capacity of 655,000 mt/year of ethylene and 350,000 mt/year of propylene.

The No. 1 cracker has a capacity of 474,000 mt/year of ethylene and 270,000 mt/year of propylene.

We remind that, as MRC informed previously, in September 2015, another large producer of petrochemical production in Asia - Ube Industries Ltd. - launched Lotte Ube Synthetic Rubber Sdn. Bhd., a joint venture of Lotte Chemical Corp. (40%), Lotte Chemical Titan Holding Sdn. Bhd. (10%), Ube Industries, Ltd. (40%), and Mitsubishi Corporation (10%), for the manufacturing of butadiene rubber (BR) based in the Tanjung Langsat industrial park in Johor, Malaysia.

Lotte Ube Synthetic Rubber has a BR production capacity of 50,000 tonnes per year, becoming the fourth BR production facility of the UBE Group. With facilities in Japan (126,000 tonnes), Thailand (72,000 tonnes), China (72,000 tonnes) and now Mayasia, the Ube Industries Group has a combined annual BR production capacity of 320,000 tonnes.

YNCC to restart No.2 cracker in South Korea after maintenance

MOSCOW (MRC) -- Yeochun NCC (YNCC) plans to resume production at its No. 2 naphtha cracker, reported Apic-online.

A Polymerupdate source in South Korea informed that the cracker will be brought on-stream on April 9, 2016. It was taken off-stream on March 10, 2016 for a maintenance turnaround.

Located in Yeosu, South Korea, the cracker has an ethylene production capacity of 580,000 mt/year and propylene capacity of 270,000 mt/year.

YNCC shut its 578,000 tonne/year No 2 naphtha cracker in Yeosu since 10 March for a regular maintenance. The company is expecting the plant to resume operations on 9 April.

As MRC informed previously, in early September 2015, YNCC reached on-specification propylene production at its new 140,000 t/yr olefins conversion unit (OCU) at Yosu. The company fed in feedstock supplies a week earlier.

South Korea’s Yeochun NCC (YNCC) pyrolyzes naphtha to produce basic feedstock materials for the petrochemical industry. YNCC, a joint venture between South Korean firms Hanwha and Daelim, is a key exporter of ethylene and propylene in the country.