First North American refinery to suspend production on coronavirus concerns

MOSCOW (MRC) -- North Atlantic Refining Ltd’s Come-by-Chance refinery in Canada will be the first to close in North America due to the coronavirus pandemic as refineries worldwide cut back operations, reported Reuters.

The company confirmed on Monday that it told stakeholders it was pausing production because of concerns about worker safety as the virus spreads.

Refineries worldwide have shut units or are operating at minimum processing levels due to slumping demand, as the pandemic has caused the global aviation industry to virtually shut and motorists to stay off the roads. Overall global fuel demand is expected to drop by 20% to 30% in April and remain weak for months after that.

So far, the refineries that have shut down are smaller operations. Come-by-Chance, located in Newfoundland and Labrador, Canada, can process up to 130,000 barrels per day. Last week, Italy’s API shut its 85,000 bpd refinery in Ancona, the first to shut in Europe, due to demand concerns.

Come by Chance will maintain a reduced workforce, the company said in a statement that went out late on Sunday.

“While we have no cases of COVID-19 at the refinery, our actions are consistent with the advice of public health officials to further prevent the spread of the COVID-19 virus,” it said.

Numerous refineries worldwide, including India’s IOC, Phillips 66 and PBF in the United States, and several units in Brazil and Venezuela have already cut production.

Several U.S. refineries have stopped using contractors that were performing maintenance work, and others, including Delta Airlines’ Trainer, Pennsylvania refinery, are operating with smaller staffs.

The length of the shutdown at Come-by-Chance is currently unclear.

As MRC informed earlier, US-based Phillips 66 is delaying three sizeable scheduled shutdowns at its refineries this year, the company said last week, because of concerns that coronavirus could spread among the refineries' workers if the maintenance goes ahead.

We also reminad that Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

Evonik Kullmann appointed VCI president

MOSCOW (MRC) -- Christian Kullmann, chairman of Evonik Industries, has been appointed president of German chemical industry association VCI (Frankfurt) with immediate effect, said Chemweek.

Kullmann succeeds Hans Van Bylen, chairman of Henkel, as VCI president. Markus Steilemann, CEO of Covestro, has assumed the role of VCI vice president. VCI says that due to the coronavirus disease 2019 (COVID-19) epidemic, the VCI presidential council made the two appointments in a written circulation procedure. They will be endorsed by the VCI general assembly due to be held in Dusseldorf, Germany, in September 2020.

"The corona epidemic is a fundamental change and a test for our country and for all of us,” Kullmann says. “In this exceptional situation, our companies are doing whatever they can to supply the public and the health system with medical goods without thinking of profits. We are pooling our resources to develop virus tests, vaccines, and medicines and to make available disinfectants and plastics for protective clothing and medical equipment."

According to Kullmann, it is now essential to secure jobs and stabilize the economy. “Together with politicians and trade unions, we need to create the prerequisites for our economy to return to growth as soon as possible,” he says. “In particular, this applies to the Mittelstand, the medium-sized enterprises which have been forming for decades the reliable backbone of the German economy, especially in the chemical industry."

Seeking and driving forward an open and objective dialogue with politicians and society is one of the central tasks of Kullmann’s presidency, he says. “In order to strengthen the performance of the chemical-pharmaceutical industry, we need business-friendly framework conditions in Germany so that we can hold our own and grow in international competition,” Kullmann says. “After all, the chemical industry is an essential starting point of much-needed value and supply chains. Right now, it becomes apparent that our researchers and developers are carrying out immense tasks for humankind, for example in medicine, nutrition, and the fight against climate change. Chemistry is the only way towards a sustainable society, as we are the engineers of the future."

Kullmann became an Evonik board member in 2014 and was named the company's chairman in 2017.

As MRC informed earlier, Evonik has fully resumed operations in its 10 factories and four offices in China. The company did not indicate the level of production load, and whether all employees returned to work. The Chinese government instructed companies to return to work on February 10 after the New Year holidays were extended by 10 days to curb the spread of the new coronavirus, which is thought to have originated in Wuhan in central China.

The company added that not a single employee of Evonik has contracted the virus in China or elsewhere.

It was previously reported that in June 2018, Evonik Industries launched the production of a new generation of phthalate-free plasticizers of PVC with a capacity of 40 thousand tons per year at its production complex in Marl, Germany.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.

U.S. crude dips below USD20 as lockdowns wipe out demand

MOSCOW (MRC) -- Oil prices fell sharply on Monday, with U.S. crude briefly dropping below USD20 and Brent hitting its lowest in 18 years, on heightened fears that the global coronavirus shutdown could last months and demand for fuel could decline further, Reuters.

Brent crude, the international benchmark for oil prices, was down USD1.98, or 7.9%, at USD22.95 by 1337 GMT, after earlier dropping to USD22.58, the lowest since November 2002.

U.S. West Texas Intermediate (WTI) crude was USD1.31, or 6.1%, lower at USD20.20. Earlier in the session, WTI fell as low as USD19.92. The price of oil is now so weak that it is becoming unprofitable for many oil firms to remain active, analysts said, and higher-cost producers will have no choice but to shut production, especially since storage capacities are almost full.

“Global oil demand is evaporating on the back of COVID 19-related travel restrictions and social distancing measures,” said UBS oil analyst Giovanni Staunovo. “In the near term, oil prices may need to trade lower into the cash cost curve to trigger production shut-ins to start to prevent tank tops being reached,” he added.

Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said: “The oil market supply chains are broken due to the unbelievably large losses in oil demand, forcing all available alternatives of supply chain adjustments to take place during April and May”.

These included cutting refinery runs and increasing onshore or offshore storage, he said. Supertanker freight rates are rising for a second time this month as traders rush to secure ships for storage. Goldman Sachs analysts said demand from commuters and airlines, which account for about 16 million barrels per day of global consumption, may never return to previous levels.

Besides the demand shock, the oil market is also under pressure from a price war between Saudi Arabia and Russia, after the collapse earlier this month of a three-year deal to limit supply between the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Moscow.

U.S. President Donald Trump said he planned to speak with Russian President Vladimir Putin on Monday. He said that Saudi Arabia and Russia “both went crazy” following the collapse of the deal to cut output, as oil prices were pushed down by an economic slowdown caused by the need to slow the spread of the coronavirus.

Saudi Arabia said on Monday it plans to boost its oil exports to 10.6 million barrels per day from May. “This game of attrition is likely to drag prices even lower and even a price of $10 per barrel is no longer unimaginable,” said Hussein Sayed, analyst at FXTM.

Collapsing oil prices have left some African producers facing lost revenue when they most need it to tackle coronavirus. Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are also on course to dump up to USD225 billion in equities.

The contango spread between May and November Brent crude futures reached its widest ever at USD13.45 a barrel, while the six-month spread for U.S. crude broadened to minus USD12.85 a barrel, the widest discount since February 2009.

In a contango market prompt prices are lower than those in future months, encouraging traders to store oil for future sales.

As MRC informed earlier, the Trump administration has decided not to appeal a court ruling that would sharply reduce its use of waivers exempting refineries from the nation’s biofuels regulation, cheering the corn lobby but drawing anger from oil refiners. The administration had until the end of March 24 to file a challenge, but by early March 25, no such filing had been entered, according to a case docket on the US government’s electronic access service for court records.


Tronox provides guidance for strong first quarter

MOSCOW (MRC) -- Tronox Holdings on Thursday provided an investor update in light of the current global pandemic, to emphasize the strength of the company's cash flow, balance sheet, and sources of liquidity, reported Chemweek.

The first quarter is expected to close better than anticipated, due to positive market trends and developments thus far in 2020. The company anticipates adjusted EBITDA in the first quarter to reach USD160–170 million, adjusted earnings per share of USD0.10–0.18, and revenue of USD700–730 million.

Commenting on the company's current financial position, CEO Jeffry Quinn said, "Our balance sheet is solid, with no upcoming maturities on our term loan or bonds until 2024. We also have no financial covenants on our term loan or bonds and only a minor springing financial covenant on our [asset based loan]. We have the ability to reduce our capital expenditures and manage our working capital that, combined, could unlock over USD200 million of cash should the need present itself. Out of abundance of caution, we provided notice to draw down USD200 million of revolving credit loans under our credit facilities as a precautionary measure to increase liquidity and preserve financial flexibility. We plan to repay the amounts drawn when the macro uncertainty subsides. We also remain committed to maintaining the recently increased dividend."

Shell restarting units at its Pernis oil refinery after power outage

MOSCOW (MRC) -- Royal Dutch Shell is restarting units at its Pernis oil refinery in the Netherlands following a power outage on Saturday, reported Reuters with reference to a spokesman for the oil major.

“The Pernis site is currently in the process of restarting the impacted units and restoring its electrical facilities,” he said.

A power outage on Saturday evening caused multiple unit shutdowns at the 404,000 barrel per day refinery, Europe’s largest.

As MRC informed before, a contractor working at Shell's Pulau Bukom manufacturing site in Singapore has contracted the new coronavirus. The Bukom manufacturing site in Singapore houses Shell's biggest wholly-owned refinery. The company said earlier it had sent some staff home from its main office at Metropolis in western Singapore after discovering another employee had been in contact with a carrier.

We also remind that Shell Singapore restarted its naphtha cracker in Bukom Island in early December, 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.

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.