Chinas March crude oil imports rose 4.5% year-on-year on stockpiling

MOSCOW (MRC) -- China’s crude oil imports in March rose 4.5% from a year earlier, according to official customs data, as refiners stocked up on cheaper cargoes despite falling domestic fuel demand and cuts in refining rates caused by the COVID-19 disease outbreak, said Hydrocarbonprocessing.

China, the world’s top crude oil importer, took in 41.1 million tons of oil, according to the official data from the General Administration of Customs. That is equal to 9.68 million barrels per day (bpd). The official March figure in bpd compared to an average of 10.47 million bpd for the first two months of the year. Imports in the first quarter rose 5% from a year earlier to 127.19 million tons, customs said, equal to 10.2 million bpd.

Reuters reported a higher import number earlier for March based on quarterly figures released in a customs statement and data from previous months. In the official data set, the customs department gave a lower figure for the quarterly imports.

Refiners, including state majors and private plants, began slashing crude throughput in February as fuel demand collapsed amid a nationwide lockdown to contain the novel coronavirus. But independent plants, also known as “teapots”, started cranking up production rates in March, as a plunge in oil prices triggered by the Saudi-Russia price war boosted margins.

“Teapots started to book crude oil from late February when domestic virus transmission was easing. Some of the vessels have arrived in March and more will come in April,” said Li Yan, senior analyst at Longzhong Information Group.

Li also expected an increase in oil imports in late April and May as Chinese refineries scrambled to purchase cheap energy after oil prices collapsed. Chinese fuel demand has started to recover as companies resume operations and travel curbs are eased, although analysts expect demand across the full year to fall 19.1% from 2019 in what would be the steepest drop since at least 2004.

Chinese companies also shipped 7.26 million tons of refined fuel products overseas in March, 0.7% above the year-earlier level, the customs data showed. In the first three months, China exported a total of 18.02 million tons of fuel products, up 9.6% from the same period last year.

Customs will release detailed export data by product later in the month. Gasoline and aviation fuel led the growth in product exports in the first two months of year, with a year-on-year increase of 32% and 21%, respectively. Natural gas imports, including piped and liquefied natural gas (LNG), in the first quarter were 24.66 million tons, up 1.8% from a year earlier, customs said.

In March, imports were 6.92 million tons, down 0.2% from a year earlier, according to the customs data. PetroChina, China’s top gas importer, cancelled some contracts in early March, including piped gas from Central Asia and LNG shipments, as a seasonal plunge in demand adds to the impact on consumption from the coronavirus outbreak.

As MRC informed earlier, Shandong Lihuayi Group, has planned to take off-stream its No. 1 Bisphenol A (BPA) unit for a maintenance turnaround. A source in China informed that, the company is likely to undertake a planned shutdown at the unit on April 15, 2020. The unit is likely to remain off-line for about one month. Located in Shandong, China, the No. 1 BPA unit has a production capacity of 120,000 mt/year.

BPA is the main feedstock for the production of polycarbonate (PC).

According to MRC's ScanPlast report, Russia's overall consumption of PC granules (excluding exports from Belarus) totalled 6,700 tonnes in January 2020, up by 43% year on year (4,300 tonnes a year earlier).

MRC

MOSCOW (MRC) -- A U.S. federal court rejected a challenge from two oil refining companies to its January ruling that the Environmental Protection Agency had been handing out biofuel waivers inappropriately, said Hydrocarbonprocessing.

In a major blow to the refining industry, the ruling effectively forces the EPA to reduce the number of waivers it can grant to refiners exempting them from their obligations under the U.S. Renewable Fuel Standard.

Under the RFS, refineries must blend billions of gallons of ethanol into their gasoline each year or buy credits from those that do - a policy that has expanded the market for corn but which the oil industry says costs them a fortune.

Before the ruling, the Trump administration’s EPA had sought to ease the regulatory burden on refiners by granting dozens of small facilities exemptions from the RFS.

But the 10th Circuit Court of Appeals ruled in January that such Small Refinery Exemptions can only be used as extensions for refineries that had secured them continuously each year since 2010. That standard would exclude all but two refineries from consideration for future waivers.

Oil refiners HollyFrontier and CVR Energy, both of which had received waivers the court considered inappropriate, had sought a rehearing in the case but were denied on Tuesday, according to court filings reviewed by Reuters.

The EPA said it was holding off on deciding on pending waiver requests until the court case is ended. The agency is expected to apply the court’s ruling nationally, effectively gutting the exemption program, but is also considering other measures to ease the regulatory burden on refiners like limiting prices for blending credits.

As MRC reported earlier, South Africa’s largest refinery SAPREF will “minimize” maintenance to critical activities, a spokeswoman said, as a national lockdown looms to contain the spread of coronavirus. SAPREF, situated near Durban along the east coast, is a 50/50 joint venture between BP and Shell with a refining capacity of around 8.5 million tons a year. It accounts for 35% of the refining capacity in Africa’s most advanced economy, which is a net importer of petroleum products.

We also remind that the COVID-19 outbreak has led Shell Chemical to temporarily suspend construction on the massive plastics and petrochemicals site it's building in Monaca, Pa, USA.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Shell lifted a force majeure on exports of Nigeria’s Forcados crude oil after the pipeline transporting it reopened, reported Reuters with reference to the company's statement.

The removal of force majeure followed the reopening of the Trans Forcados pipeline by operator Heritage Energy Operational Services Limited, a spokeswoman for the Shell Petroleum Development Company of Nigeria said on Monday.

The pipeline was shut down on April 4, Shell said in a previous statement. It declared force majeure on April 6.

Forcados exports were set at roughly 245,000 barrels per day (bpd) in May and 283,000 bpd in April.

As MRC wrote previously, 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 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

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.
MRC

MOSCOW (MRC) -- India plans to completely fill its strategic petroleum reserve (SPR) by the third week of May by moving about 19 million barrels into the sites by then, the managing director of the country’s SPR said, as per Reuters.

India is moving the oil to the SPR to help the country’s refineries reduce their excess crude as the lockdown to contain the outbreak of COVID-19, the respiratory disease caused by the new coronavirus, has dented transportation and industrial fuel consumption in Asia’s third-largest economy. India’s fuel demand in March declined by 17.8%, the lowest in over two decades.

India will be diverting cargoes for loading in April already bought by refiners Indian Oil Corp (IOC.NS), Bharat Petroleum (BPCL.NS), Hindustan Petroleum (HPCL.NS) and Mangalore Refinery and Petrochemicals Ltd (MRPL.NS). The refiners cut their crude processing after local fuel demand collapsed and are unable to store the excess oil themselves.

"As of now the plan is to fill the caverns by (the third week of May), before the arrival monsoon rains. We are buying oil from state refiners,” H.P.S. Ahuja, the managing director of the Indian Strategic Petroleum Reserves Ltd (ISPRL) said. ISPRL is responsible for building and filling of SPR sites.

ISPRL wants to receive the cargoes before India’s monsoon begins in May as the single point mooring system that can unload very large crude carriers (VLCC) at the port of Mangalore, which will feed two SPR sites, is shut during the three-month rainy season.

Reuters last month reported India planned to buy oil from the United Arab Emirates (UAE) and Saudi Arabia to fill its SPR to gain from low prices. "We are taking advantage of low oil prices,” he said, adding most of these cargoes are linked to official selling prices (OSP) for April.

Saudi Arabia drastically cut its OSPs for April to boost its oil sales after major producers failed to agree to extend a supply curtailment agreement that expired at the end of March. Ahuja said ISPRL hopes to receive the last oil cargo on May 21, while IOC supplied a VLCC containing oil from the UAE on Monday.

The SPR is divided between three locations in southern India and can store about 37 million barrels of oil, equivalent to about 9.5 days of India’s oil demand. A portion of the SPR is already filled. The federal government has allocated about 38 billion rupees (USD498.18 million) for the oil purchases, he said.

As MRC informed earlier, Indian IVL Dhunseri, Indorama Ventures Company Ltd (IVL) and Indian Dhunseri Petrochem Ltd, are planning to resume production of polyethylene terephthalate (PET) in Panipat (Panipat, Haryana, India) this week. This enterprise with a capacity of 216 thousand tons of PET per year was closed on March 26 due to logistics problems in the country caused by quarantine in the country due to coronavirus.

Earlier it was reported that IVL Dhunseri Petrochem Industries, JV Indorama Ventures Company Ltd (IVL) and Indian Dhunseri Petrochem Ltd, on March 26 closed the plant for the production of polyethylene terephthalate (PET) in the city of Haldia (Haldia, India). This line with a capacity of 240 thousand tons of PET per year is closed for an indefinite period.

According to ScanPlast of Market Report, in February of this year, the estimated PET consumption in Russia fell by 3% compared to the same period a year earlier and amounted to 53.89 thousand tons. According to the results of January - February 2020, 100.83 thousand tons of granulate was processed in Russia.


MRC

MOSCOW (MRC) -- Following Sasol’s (Johannesburg) announcement on 17 March of steps it is taking to overcome its financial problems, the company has informed the Johannesburg stock exchange that it is taking further actions in response to the fast-developing coronavirus disease 2019 (COVID-19) pandemic, reported Chemweek.

The company said that “a small number of Sasol employees have tested positive for COVID-19 and are receiving full support.”

It says that substantial progress has been made with regard to its USD2-billion cash conservation program and it plans to implement additional self-help management actions to mitigate further negative impacts of COVID-19 across its portfolio. In South Africa, the national COVID-19 lockdown has resulted in an unprecedented decline in fuel demand since coming into effect on 27 March 2020. Sasol and its partner Total South Africa have decided to suspend production at their Natref refinery at Sasolburg with effect from 9 April 2020 until further notice.

Given the steep decline in fuels demand, Sasol has also decided to reduce daily production rates at its Secunda Synfuels Operations (SSO) by approximately 25% to meet the current market demand, while maintaining optimal inventory levels, until further notice. A further reduction in production rates may be required depending on developments in the fuels market, the company says. All Sasol's coal mines are continuing to operate despite lower internal demand, resulting in external coal purchases being significantly minimized.

Sasol says it will continue to prioritize chemicals production within the revised SSO operating parameters including the latest cutback scenario. Despite the suspension of production at the Natref refinery and lower production rates at SSO, the country's current demand for fuels and chemicals, including sanitizers, will be met. The company says it will continue to monitor chemicals demand as well as supply chain risks.

Given these developments and the decline in demand, liquid fuels sales volumes are expected to be approximately 50–51 million barrels (MMbbl) against the previously guided 57–58 MMbbl for financial year 2020. Accordingly, synfuels production volumes will be approximately 7.3–7.4 million metric tons (MMt) against the previously guided range of 7.7–7.8 MMt. Sasol says that at this stage a similar reduction in synfuels chemicals demand is not being experienced, and the company is prioritizing supply of chemicals within South Africa as well as strong export demand.

Sasol has made significant progress on the $2-billion business self-help measures for financial years 2020 and 2021, which form the basis of the response strategy to the COVID-19 pandemic and oil price volatility. Given the continued negative impact of COVID-19 on market demand and global macroeconomic indicators, Sasol's management team is in the process of proactively identifying further measures to provide an additional buffer against short-term volatility.

As MRC wrote previously, in mid December 2019, Sasol announced that the LCCP Ethane Cracker was increasing production rates following the successful replacement of the acetylene reactor catalyst. Sasol’s Ethane Cracker with a nameplate capacity of 1.54 million tons per year achieved beneficial operation in August 2019 but has run approximately 50-60% of nameplate capacity due to underperformance of the plant’s acetylene removal system. The company stated that the issue had been resolved then.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC