Chemical activity barometer rises in September in US

MOSCOW (MRC) -- The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), was up 0.1 percent in September on a three-month moving average (3MMA) basis following a 0.1 percent decline in August and gains averaging 0.2 percent per month during the second quarter, said Americanchemistry.

On a year-over-year (Y/Y) basis, the barometer was flat at 0.0 percent (3MMA). The unadjusted measure of the CAB was up 0.6 percent in September following a 0.7 percent decline in August. The diffusion index rose to 67 percent in September. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for August was revised upward by 0.09 points and that for July by 0.34 points.

“Although one month does not make a trend, the positive September CAB reading and upward revisions in the data are encouraging signs,” said Kevin Swift, chief economist at ACC. “The barometer indicates gains in U.S. commerce into the second quarter of 2020, but at a slow pace."

The CAB has four main components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.

Production-related indicators in September were slightly positive. Housing activity rebounded sharply in August, while trends in construction-related resins, pigments and related performance chemistry were mixed, suggesting slow gains in housing activity. Plastic resins used in packaging and for consumer and institutional applications were mixed. Performance chemistry improved. U.S. exports were mixed, reflecting trade tensions, a high dollar and a weak global manufacturing environment. Equity prices rebounded this month, as did product and input prices. Inventory and other indicators were positive.

The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the U.S. economy’s business cycle, and this barometer can be used to determine turning points and likely trends in the broader economy. Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.

Applying the CAB back to 1912, it has been shown to provide a lead of two to 14 months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.

As MRC informed earlier, Russia"s output of products from polymers rose in August by only 0.5% year on year. And this figure increased by 1.2% year on year in the first eight months of 2019. According to the Russian Federal State Statistics Service, August production of unreinforced and non-combined films was slightly over 110,000 tonnes, compared to 112,000 tonnes a month earlier. Output of films products grew in January-August 2019 by 8.5% year on year to 718,900 tonnes.

Dow Texas PDH unit begins turnaround

MOSCOW (MRC) -- Dow Chemical's propylene dehydrogenation (PDH) unit in Freeport, Texas, is offline for a turnaround, reported S&P Global with reference to US olefin market participants.

Sources said the PDH unit went offline for scheduled maintenance September 26, and the work is expected to last 45-60 days. Originally, sources expected the turnaround to begin in early September, but then learned it had been delayed.

Dow said it does not typically comment on turnaround activity.

One market participant said that as a result of the turnaround, she expects US propylene inventory to begin decreasing. This comes a day after the US Energy Information Administration data showed an increase in inventories last week, the third consecutive weekly rise for propylene inventories.

As MRC informed previously, Dow Chemical began major maintenance on the LHC 1 cracker at Terneuzen, Netherlands from 9 September, 2019. More than 1,500 extra employees from various external companies will carry out maintenance work in the subsequent period.

Propylene is a feedstock for producing polyprolypele (PP).

According to MRC's ScanPlast report, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Dow believes that plastic waste has value and can be transformed into new products and energy. In addition to plastic roads, Dow is working with key partners in South America to use recycled plastics to develop construction materials for schools in Colombia. Dow is also at the forefront of developing and scaling chemical recycling technology to take recycled plastic waste back to feedstock for the creation of new products. By reimagining new ways to reuse, recycle and repurpose plastic waste, Dow and its partners are leading the way in the development of innovative circular economy solutions.

Honeywell names Deborah Flint to Board of Directors

MOSCOW (MRC) -- Honeywell announced that its Board of Directors has elected Deborah Flint, 52, chief executive officer of Los Angeles World Airports (LAWA), to its Board of Directors as an independent Director, said the company.

Flint was appointed CEO of LAWA in 2015. LAWA is a self-supporting department of the City of Los Angeles and owns and operates Los Angeles International (LAX) and Van Nuys (VNY) general aviation airports. Flint's responsibilities include managing the comprehensive modernization of LAX, including championing the use of connected, Internet of Things technologies to manage the airport more efficiently, provide a world-class experience for travelers, and enhance safety and security. Prior to her leadership at LAWA, Flint held senior roles at the Port of Oakland, where she honed her management and finance skills over 23 years.

"Deborah brings to the Honeywell Board of Directors a skillset that supports our strategy of becoming the premier software-industrial company, including innovation and technology, finance, and operations in many of the verticals we serve," said Darius Adamczyk, chairman and CEO of Honeywell. "Her deep experience in areas such as critical infrastructure, connected buildings and advanced security solutions will be invaluable to Honeywell's leadership team. Her leadership skills are demonstrated each day at LAX, where she is leading the largest public works project in the history of the City of Los Angeles and oversees the largest airport police force in the U.S. We are confident that Deborah's invaluable expertise and experiences will help advance Honeywell's ongoing transformation and the acceleration of our growth in software across our end markets."

In her current role, Flint oversees more than USD14 billion in contracts. Among the LAX upgrades completed or in progress under Flint's leadership are several major airfield and facility improvements, including a state-of-the-art midfield concourse, new taxiways and taxilanes, and major renovations and infrastructure upgrades in all terminals.

As MRC informed earlier, in September 2019, Honeywell announced that Zhejiang Satellite Petrochemical Co., Ltd. is using Honeywell UOP’s C3 OleflexTM technology to produce 450 000 tpy of polymer-grade propylene for a new petrochemicals complex in China. This is the second C3 Oleflex unit now operating with Satellite. Honeywell UOP delivered Satellite’s first Oleflex unit in 2014.

Propylene has historically been produced as a by-product of refining fuels, but demand for propylene has exceeded the supply from refining processes. Propane dehydrogenation such as the Oleflex process can bridge this gap by producing ‘on-purpose’ propylene from propane that is derived from natural gas as well as from refining processes.

Propylene is the main feedstock for producing polyprolypele (PP).

According to MRC's ScanPlast report, the estimated consumption of PP in the Russian market totalled 694,210 tonnes in January-June 2019, up by 14% year on year. The supply of propylene block copolymers (PP-block) and propylene homopolymers (PP-homo) increased.

Formosa to operate refinery in Mailiao at near 70% due to maintenance

MOSCOW (MRC) -- Taiwan’s Formosa Petrochemical Corp aims to lower its October average run rate at the 540,000-barrel-per-day (bpd) Mailiao refinery to about 70% from more than 87% last month due to maintenance, reported Reuters with reference to the company's spokesman.

Formosa, Asia’s sixth-largest standalone refinery by capacity, has taken an 80,000-bpd residue desulphurizer down for a planned maintenance since Tuesday.

Throughput at the crude units has to be adjusted down accordingly from this week, said the spokesman, adding that this would also affect its gasoline production as less fuel oil feedstock would be available for making petrol.

He estimated that the amount of petrol that would be lost during the maintenance could be equivalent to two medium-range tankers.

Formosa’s lower production run is coming at a time when demand for oil products is strong.

An attack on Saudi Arabia’s oil facilities on Sept. 14 had disrupted the Kingdom’s production and prompted Aramco to source fuel, including naphtha, gasoline and diesel, from various outlets to plug the gap.

This pushed the overall Asian average monthly refining margin in September to a two-year high of more than USD7.50 a barrel.

As MRC informed before, on 19 March, 2018, Formosa Petrochemical Corp (FPCC) undertook an emergency shutdown at its No. 1 cracker in Mailiao owing to technical issues. The plant remained off-line for around one day. Located at Mailiao in Taiwan, the No. 1 cracker has an ethylene production capacity of 700,000 mt/year, propylene production capacity of 350,000 mt/year and butadiene production capacity of 109,000 mt/year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. Meanwhile, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).

October prices of Iranian PS rose for Ukrainian market by USD30/tonne

MOSCOW (MRC) -- Prices of Iranian polystyrene (PS) increased for October shipments of material to Ukrainian buyers by an average of USD30/tonne, according to ICIS-MRC Price report.

Thus, Iranian Tabriz's general purpose polystyrene (GPPS) for injection moulding was offered at USD1,065-1,075/tonne last week, and its extrusion grade material - at USD1,100-1,110/tonne CIF Odessa, excluding VAT.

As reported earlier, Nizhnekamskneftekhim (NKNH, part of the TAIF group) also raised its October PS prices for the Ukrainian market. The increase in the Russian producer's PS prices was USD30/tonne for Ukrainian buyers.