China plans petrochemical complex near Karachi

MOSCOW (MRC) -- A Chinese proposal to set up a refinery along with a downstream petrochemical complex near Karachi is advancing steadily as requests for 500-1,000 acres has been submitted to the provincial governments of Sindh and Balochistan, as per GV.

The estimated cost of the project is about USD 4 billion.

This was disclosed by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Zubair M. Tufail after a meeting with the visiting Chinese delegation, led by Ms Li-Jial, Director, Tianchen Engineering Corporation (TCC), at the Federation House in Karachi on Wednesday (16 Aug 2017).

The Chinese asked for land in Karachi since they found rents in Gwadar Free Zone to be too expensive, Mr Tufail told Dawn. "Port Qasim does not have enough space for a project of this size," he said. "So, they have asked for land a few kilometers away or in the Hub area, which falls in Balochistan".

They will go with whichever provincial government best facilitates their interests, Mr Tufail added. "Any of the two provincial governments give better deal they would go for it and this would be a win-win situation for both the countries."

Mr Tufail said both the provincial governments are interested in this project but would depend how they make a land deal with the Chinese investors.

The complex envisions a number of jetties, a refinery with 10 million tons per year capacity, as well as downstream processing facilities for naphtha and its component chemicals. "Currently we are importing USD 2 billion worth of these chemicals from the Middle East" Mr Tufail said, adding that the complex could help reduce Pakistan’s external deficit.

Building of the complex will take four to five years, he said, "since they’re starting from scratch".

Talks on the proposal have been under way for over a year now, but the proposal has begun to take shape more recently with the formal submission of a request for land.

Ms Li-Jial speaking on the occasion said that TCC would like to invest in Pakistan to enhance investment opportunities.

"Over the years, China had been extending cooperation in different sectors of the economy in Pakistan and lately there had been a sudden jump in these relations for the mutual benefit of both countries," she added.

The FPCCI president said that Pakistan could benefit from the TCC’s vast experience in oil refinery, energy, chemical complexes and other projects and explore investment opportunities mutually beneficial to both the countries.

We remind that, as MRC wrote before, in early July 2017, Pakistan State Oil was seeking 905,000 t of gasoline and fuel oil for September, three tender documents showed then. The state-owned company was seeking 10 cargoes of 65,000 t each of 180-cst high sulfur fuel oil for September loading on a free-on-board (FOB) basis. It was also looking for 55,000 t of low sulfur fuel oil for September delivery into Kaemari or Port Qasim in Karachi on a cost and freight (C&F) basis.
MRC

MOSCOW (MRC) -- Celanese Corporation, a global technology and specialty materials company, has announced that as a result of Hurricane Harvey's impact on Celanese's operations, suppliers and service providers in the Texas Gulf Coast, Celanese is temporarily unable to supply the vinyl acetate monomer (VAM) needs of its customers in the Americas, as per the company's press release.

Celanese is continuing to assess the regional and global impact of this force majeure event, and given that this is a rapidly developing situation, Celanese cannot provide any specific details or timing of the full impact to all customers. Celanese will stay in close communication with customers and will work with them to minimize the impact of this event.

As MRC informed before, Celanese Corporation raised August list and off-list selling prices for VAM in China in view of recent market conditions. The price increase was RMB150 per mt.

Besides, earlier, in June 2017, Celanese Corporation announced that it would increase the price for emulsions sold in Europe. Effective July 1, 2017, or as contracts otherwise allow, the following price increases applied:

- EVA - EUR75/tonne;
- VAM Homopolymers (PVAC) - EUR75/tonne;
- VAM Copolymers - EUR75/tonne;
- Pure Acrylics - EUR180/tonne.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,300 employees worldwide and had 2016 net sales of USD5.4 billion.
MRC

MOSCOW (MRC) - Crude oil slid and gasoline futures hit their highest since mid-2015 on Wednesday as flooding and damage from Tropical Storm Harvey shut over a fifth of US refineries, curbing demand for crude while raising the risk of fuel shortages, said Reuters.

Refineries with output of 4.1 MMbpd were offline on Tuesday, representing 23% of US production, Goldman Sachs said. Restarting plants even under the best conditions can take a week or more.

"It will be a while before operations can return to normal and the U.S. refining industry is bracing itself for an extended shutdown," Stephen Brennock of oil broker PVM said. Brent oil, the international benchmark for crude trading, was down 52 cents at USD51.48 a barrel by 1339 GMT. U.S. crude fell 42 cents to USD46.02.

In refined products, price movement was more dramatic and gains increased after sources on Wednesday said Total's Port Arthur, Texas, refinery had been shut by a power outage resulting from the storm.

US gasoline futures were up 6.4 percent at USD1.8966 a gallon, having hit $1.9022, the highest since July 2015. Diesel futures advanced by 1.8 percent to USD1.6960 a gallon, having touched their highest since January at USD1.7161.

"Crude is always easier to replace than products," said Olivier Jakob, analyst at Petromatrix. "If the refineries stay shut for more than a week or 10 days, it's going to be very problematic."

Harvey made landfall on Friday as the most powerful hurricane to hit Texas in more than 50 yr, resulting in the death of at least 17 people. In addition to shutting oil refineries, about 1.4 MMbpd of US crude production has been disrupted, equivalent to 15% of total output, Goldman Sachs said.

The impact of the storm overshadowed the latest weekly figures on U.S. supplies from the American Petroleum Institute (API) and a 360-Mbpd drop in Libya's output due to renewed unrest in the OPEC producer.

U.S. crude inventories fell by 5.78 MM barrels last week, the API industry group reported on Tuesday, suggesting a gradual tightening of the U.S. oil market. The figures, however, do not reflect the impact from Harvey.

Traders are awaiting the latest U.S. government inventory report, due at 1430 GMT from the Energy Information Administration, to compare with the API figures.
MRC

MOSCOW (MRC) -- Two explosions were reported on Thursday at the flood-hit Arkema SA (AKE.PA) plant in Crosby, Texas, and a sheriff’s deputy was taken to hospital after inhaling chemicals, the company said, as per Reuters.

The company said further explosions of organic peroxides stored on site were possible and urged people to stay away as the fire burns itself out.

Arkema said the company had no way to prevent fires because the plant is swamped by about 6 feet (1.83 m) of water due to flooding from Harvey, which came ashore in Texas last week as a powerful Category 4 hurricane, knocking out power to its cooling system.

The company said it was notified at about 2 a.m. by the Harris County Emergency Operations Center of two explosions and black smoke coming from the plant in Crosby.

"Organic peroxides are extremely flammable and, as agreed with public officials, the best course of action is to let the fire burn itself out," the company said.
MRC

MOSCOW (MRC) -- Negotiations over September shipments of suspension polyvinyl chloride (SPVC) began in Russia between producers and converters last Friday. All producers announced a price increase of not less than Rb5,000/tonne from August, according to ICIS-MRC's Price report.

Back in July, most Russian producers had sufficient stocks of resin, but strong demand for PVC in August led to a major reduction. And in the second half of August, a shortage of PVC already began to be felt in the market because of lower shipments and scheduled and unscheduled outages at Russian plants. Therefore, Russian producers announced an increase of Rb5,000-6,000/tonne from August in September prices. Many converters were forced to accept such a price increase because of the absence of an alternative.

Sshutdowns for maintenance at Bashkir Soda Company and SayanskKhimPlast in July and August were scheduled. Therefore, some converters purchased more than enough PVC in August. But since16 August, Bashkir Soda Company has been forced to suspend production of resin for almost two weeks due to problems with ethylene shipments.

The plant's representatives said, RusVinyl also intends to reduce its capacity utilisation to conduct a short turnaround in September. Kaustik Volgograd will take off-stream its production for a three-week maintenance in the third decade of September.

May accounted for the peak SPVC imports, totalling 11,800 tonnes, after which imports began to decline gradually. Imports of resin were 4,600 tonnes for 20 days of August. Since July, Chinese producers, the key suppliers, have begun to dynamically increase their export prices of acetylene PVC because of the deficit in the domestic market, and Russian companies began to refuse to purchase resin in China.

Prices have started to rise dynamically in China since the second half of July due to internal problems, which led to a proportional increase in export prices for shipments to Russia. Since the middle of the month, PVC purchases of Russian companies have been virtually discontinued because of the disparity of prices in China and in the domestic market, and those quantities that entered the market in August were to cover for debts of local producers for June shipments.

Given export prices, announced by Chinese producers for September shipments, prices of acetylene resin, including the payment of all taxes and delivery to a consumer, will be, at least, at Rb74,000/tonne, which is higher than prices of Russian producers even amid the September price rise.

Some converters said they anticipated this situation and built up additional inventories. These stocks will last until October, and they intend to refrain from purchasing PVC in September. But in most cases, converters were forced to accept the current price increase.

Deals for September deliveries were done in the range of Rb69,000-72,000/tonne CPT Moscow, including VAT, for K=65/67 and for quantities up to 500 tonnes. Deals for K=70 resin started from Rb70,000/tonne CPT Moscow, including VAT, and higher.
MRC