Asia naphtha premiums rise as supplies ebb; maintenance season to ease tightness

MOSCOW (MRC) -- Tighter Asian supplies of naphtha have driven price premiums for the petroleum product to more than 12-week highs as cargoes from the West dry up, offsetting a drop in demand caused by a rise in the use of liquefied petroleum gas (LPG) as an alternative, reported Reuters.

But with many Asia facilities that process naphtha - a feedstock for producing petrochemicals used to make plastics - going into maintenance in the next couple of months, the market tightness may be short-lived.

Naphtha premiums in South Korea, Taiwan and Malaysia have been rising since early March, with levels last week reaching over USD10 a tonne, the highest since December.

Asia's naphtha crack, which describes the profitability of producing the fuel, also trended higher to USD91.20 a tonne at the end of March, the highest since Jan. 19 and 17 percent higher from a year earlier.

Traders said these developments were largely due to fewer eastbound cargoes of naphtha despite strong demand.

"Demand is still doing well. Asian steam crackers not undergoing turnarounds are running flat out and there is only so much naphtha that can be substituted with LPG before co-product margins react," said Michael Dei-Michei, head of research at consulting firm JBC Energy.

As for east-bound cargoes, about 1 million tonnes were estimated to have arrived in March from Western suppliers, including in Europe and the Mediterranean, with April arrivals expected at 1.3 million tonnes, traders said.

That is down from nearly 2 million tonnes in January and 1.5 million tonnes in February.

But the trend may not last beyond May.

"Constraints on naphtha supply should ease as we move past maintenance season," said Dei-Michei.

As a result, Asia's supply deficit is expected to shrink.

Japan's Keiyo, Mitsubishi Chemical, Mitsui Chemicals and Asia's top naphtha importer, Formosa Petrochemical Corp in Taiwan, are due to start maintenance at their crackers in May or June.

In total, seven crackers in Japan were scheduled to undergo maintenance this year versus three units in 2017 while South Korea has turnarounds planned for four crackers compared to two last year.

"Asia will need about 1.4 million tonnes of naphtha from the West in May but this will drop to 800,000 tonnes in June," said a trader who tracks naphtha and LPG.

"The naphtha market is at its peak now. The second half of this year will be tough," he said.
MRC

MOSCOW (MRC) - China's Fuhaichuang, formerly known as Dragon Aromatics, plans to restart its refining-petrochemical complex in eastern Fujian as early as June after halting operations for three years, four sources with knowledge of the matter said, as per Hydrocarbonprocessing.

The re-opening of one of China's biggest petrochemical plants will add to demand for raw materials like condensate, fuel oil and mixed xylenes and will come amid increasing global use of the mainly polyester fibers it will produce.

The complex, an important addition to the synthetic textiles supply chain if started, has been shut since April 2015 after a fire, the second in less than two years, raised safety concerns and the need for fresh funds for repairs.

The cost of the complex was previously tagged at USD3 billion, before the fires. The sources did not have an amount for the cost of repairs.

Before the extended shutdown, the plant in Zhangzhou, on the east coast of China, included a 90 Mbpdcondensate splitter, a 3.2 MMtpy hydrocracker and two 800 Mtpy paraxylene plants.

The company wants to start operations by June or July, the sources said, adding that government approval of the revamp is still required.

Multiple calls to the offices of Fujian Petrochemical Group, the main new shareholder in the project, went unanswered.

Fuhaichuang is now 90 percent owned by Fuhua Gulei Petrochemical Co Ltd, while Dragon Aromatics, owned by Taiwan's Xianglu Group, retained a 10 percent share, one of the sources said.
MRC

MOSCOW (MRC) -- The Hydrocarbon Processing Awards are back for a second year and accepting nominations. Hydrocarbon Processing gives handsome awards in ten categories: for worthy projects commissioned since 2016, and for innovative technology launched in that same time frame, as per Hydrocarbonprocessing.

"Lifetime Achievement" and "Most Promising" are also awarded to people nominated in the industry. This black-tie event will be held in Houston on Thursday, August 30, 2018.

Nominations close April 12; please only one nomination per company. All of the award submissions will be judged by a panel not affiliated with any of the nominated companies.

Anyone can nominate a project or technology, but a person cannot nominate themselves for a Lifetime or Most Promising award.

Nominations of projects or technology from your own company are welcomed as you know best all the features of the project or technology that made it best in class, in your own words.

We recommend that suppliers or EPC firms if nominating a project, get agreement from their client for such nomination.

Nominations include stating, in under 400 words, why your choice is award-worthy. We recommend getting your client’s alignment on this narrative: the judges use this to decide winners.

If your nominated project or technology does get chosen, consider having the person also attend to accept the award, along with a designee from the nominating firm, if appropriate. Decisions about who should attend can be made once an award is decided: for now, HP just needs a submission contact.
MRC

MOSCOW (MRC) -- Indian Oil Corp plans to invest 1.43 trillion rupees (USD22 billion) in next five years as the country's top refiner seeks to raise its annual capacity to about 3.2 million barrels per day by 2030, its head of refineries said, reported Hydrocarbonprocessing.

Refiners in India, the world's third-biggest oil consumer and importer, have sketched out plans to raise their capacity by 77 percent to about 8.8 MMbpd by 2030 to meet the country's rising fuel demand.

India is emerging as one of the global drivers for refined fuels consumption as its economic expansion and rising industrial activity yields infrastructure improvements and increased energy access for commercial and retail consumers.

"There is a need for us to enhance our capacity to meet the future demand and enhance our capacity ... We have already made our plans for investment of 1.06 trillion rupees," B. V. Rama Gopal told a news conference.

He said board approval was yet to be obtained for 365 billion investment aimed at raising capacity of its Guwahati and Bongaigaon refineries in the northeast and Paradip plant in eastern Odisha state.

"We are going to enhance capacity in terms of crude processing and fuel specification," Rama Gopal said, as India plans a nationwide rollout of Euro-VI compliant fuels in the country from April 2020.

IOC's current capacity stands at about 1.62 MMbpd including 230,00 Mbpd controlled by its subsidiary Chennai Petroleum Corp.

IOC processed a record 1.38 MMbpd crude at its directly owned plants in 2017/18 mainly due to higher runs at its refineries in Paradip, which was commissioned in 2015, and at Bongaigaon, Guwahati and Digboi in the northeast.

Plants in land-locked northeastern India, with a combined capacity of about 80,000 Mbpd, for the first time operated at full capacity as the company began supplying low sulphur crude imported at Paradip through pipelines and by road.

Traditionally the northeastern refineries were using local crude, supplies of which have declined.

IOC is gradually building its portfolio of alternative fuels such as solar and production of ethanol, as well as boosting its petrochemical production.

"We don't want to remain a refining company alone ... in addition to refining we will be venturing out in different areas like petrochemicals and alternate fuels," he said.

As MRC wrote before, Indian Oil Corporation's Rs 34,555-crore 15 million tonnes per annum Paradip Refinery was commissioned in phases from March 2015 onwards. Indian Oil Corporation was conducting feasibility studies to set up a petrochemical complex at Paradip in Odisha for Rs 20,000 crore. The petrochemical complex will be built in the vicinity of the company’s to-be-commissioned 15-mln tpa greenfield refinery at Paradip. The petrochemical complex will be in addition to the already announced Rs 3,150-crore polypropylene project at the same location, the foundation stone for which was laid by MOS for petroleum and natural gas.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.
MRC

MOSCOW (MRC) - Chinese buyers of U.S. ethanol will have to cut imports because of higher tariffs, but eventually will have to return to the overseas market to meet government targets for using the fuel, said Reuters.

China said late on Sunday it will slap an extra 15 percent tariff on ethanol imports from the United States, part of its response to U.S. duties on aluminum and steel imports. The previous duty was 30 percent.

The tariffs, effective Monday, will neutralize cost savings from importing cheaper U.S. ethanol versus domestic supply, said three sources that participate in the market. Ethanol, an alcohol typically produced from corn or sugar, is often mixed with gasoline to reduce air pollution from vehicle emissions.

"The price difference is gone. We will suspend imports for now," said a manager at a private oil refinery, adding that he was considering turning to domestic suppliers for ethanol to blend into gasoline.

That is good news for domestic producers, who are already ramping up output on cheaper corn and government subsidies.

"We have so much corn. We will do absolutely fine if we don't import ethanol," said a manager at a major ethanol producer in China.

But analysts said China will probably need to resume imports to meet the government target of 10 percent ethanol content in all gasoline nationwide by 2020.

"Demand for fuel ethanol will potentially explode in 2019 and 2020 and we won't have enough domestic supplies by then. We might have to turn to overseas," said Michael Mao, an analyst with Zhuochuang, a commodities consultancy based in the Chinese province of Shandong.

China said last year the new ethanol mandate would boost industrial demand for corn and help clean up its choking smog. It would mean consumption of around 15 million tonnes of ethanol annually, made from 45 million tonnes of corn, according to Reuters calculations.

China's current ethanol production is around 2.5 million tonnes a year.
MRC