Marathon says it will idle Martinez, California refinery

MOSCOW (MRC) -- Marathon Petroleum Corp will idle its 166,000 barrel-per-day (bpd)refinery in Martinez, California beginning April 27 in response to the coronavirus pandemic’s hit to demand for refined products, reported Reuters with reference to a company official.

The company did not provide further comment on the likely duration of the idle, but said it intends to return the plant to normal operations once demand levels support doing so.

The Martinez plant is the second in the United States and third in North America to temporarily cease operations in response to the plummeting demand for products such as gasoline and jet fuel amid severe travel restrictions in place to help slow the spread of the coronavirus.

Marathon previously announced it would idle its 26,000 bpd refinery in Gallup, New Mexico.

North Atlantic Refining has also idled its 130,000 bpd refinery in Come-by-Chance, Canada.

Earlier this year, a portion of Marathon Petroleum Corp’s 363,000 barrel-per-day Carson refinery in California was shut in late February 2020, following a fire.

As MRC informed previously, Marathon Petroleum Corp plans to operate the gasoline-producing fluidic catalytic cracker (FCC) at its 585,000 barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas. The 140,000 bpd FCC restarted on Sunday, 12 April, after repairs following a March 23 brief power outage that shut the unit.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, 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.
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US diesel market starts to show weakness, follows gasoline

MOSCOW (MRC) -- The US diesel market is weakening as the nation’s economy crashes, cutting demand for the refined product that had until recently been a lifeline for refiners dealing with the sharp fall in gasoline and jet fuel consumption, reported Reuters.

US demand for diesel, which fuels farming equipment and trucks that haul goods across the country, had held up relatively well as governments ordered residents to shelter in homes to curb the spread of the new coronavirus that has killed more than 30,000 people nationwide.

Refiners responded to trucking and farming demand by increasing their slate of diesel as processing margins remained higher.

However, diesel consumption is falling now as well. The four-week average of diesel product supplied - a proxy for consumption - fell to just under 3.9 million barrels per day last week, lowest for the start of April since 2016, Energy Information Administration data showed on Wednesday.

That represents an 8% decline from the year-ago period. Gasoline demand, by contrast, is off by 32% in that same time period. Wednesday’s figures for last week showed diesel demand fell by 28% - which, if it persists, shows that deliveries may be starting to decline as the economic pain deepens.

"With job losses mounting, there are nearly guaranteed fewer goods being transported by trucks," said Patrick De Haan, head of petroleum analysis at GasBuddy. "It’s a bellwether for the economy, and it doesn’t look good."

Margins to refine distillates HOc1-CLc1 have fallen since the end of March and now sit at USD18.43 a barrel, lowest since 2017, Refinitiv Eikon data showed.

Fuel demand has dropped by roughly 30% nationwide, and numerous refiners are idling units and cutting runs to deal with the excess product. But their shift to producing more diesel is increasing supply, a concern as storage space dwindles. Distillate inventories rose to 129 million barrels, the most seasonally since 2017, the EIA said.

In the Midwest, where diesel use is heavy in planting season, storage has started to become an issue, traders said.

"There’s still storage, but we’re near all-time highs," one market participant said about the Group Three market, which serves the Midwest.

That is translated to lower prices in the spot market. Chicago ultra-low sulfur diesel cash differentials this week fell to 26 cents a gallon below futures, lowest seasonally since 2012.

In the Gulf Coast, prices fell to 8.75 cents a gallon below futures, also the lowest since 2012.

As MRC reported earlier, global oil consumption cut by up to a third. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

We remind that earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We also remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

Dow develops simplified, lightweight design for face shields to help protect healthcare professionals

MOSCOW (MRC) -- Dow develops simplified, lightweight design for face shields to help protect healthcare professionals, shares open-source design to encourage additional production, said Hydrocarbonprocessing.

To help address the urgent need for personal protective equipment (PPE) among healthcare professionals battling the COVID-19 pandemic, Dow developed a simplified face shield design and is sharing its design through an open-source file to help accelerate production rates of this critically-needed PPE. In addition, the Company is collaborating to produce 100,000 face shields for donation to the state of Michigan for distribution to hospitals.

Dow, a leading manufacturer of polyethylene resins, does not typically fabricate plastic products for consumer end-use. However, the Company quickly developed the resin film technology for these face shields through its prototyping and fabricating capabilities at its Pack Studios application development facility in Freeport, Texas. Dow also worked with other value chain partners to identify a fabricator for the foam comfort strip that enables the shield to be worn comfortably.

“Our goal in offering an open-source, simplified design is to provide a way for others to increase additional production of much needed face shields,” said Diego Donoso, president of Dow Packaging & Specialty Plastics. “This is another example of how our materials, technical service personnel, and our Pack Studios collaborative development capabilities are enabling solutions that can be used to help protect those on the frontlines of the pandemic.”

The face-shield design is very flexible, allowing for the shields to be produced from a variety of readily available polymers, and can be cut using several high throughput technologies, such as water, laser and die cutting techniques. It is also simple and lightweight, comprised of just two pieces – a shield and forehead cushion – which eliminates multi-component assembly that can slow production, allowing for faster distribution.

In addition to sharing the open-source design, Dow is producing 100,000 face shields to be donated to the state of Michigan for distribution to hospitals. Michigan-based tinkrLAB is serving as a key development partner providing laser-cutting and assembly and has already completed an initial allotment of production.

“COVID-19 has shaken our communities. Being a small business, we see firsthand the need from those on the frontline and even though we are small, we still wanted to have an impact and offer a solution,” said Melissa Rabideau, founder and president of tinkrLAB. “As a small business, we are able to mobilize volunteers quickly to do our part, but the tangible impact of a small/large business collaboration allows us to combine resources and the impact can be much more substantial. Being hands-on is in our DNA, so it’s only appropriate that we have a hands-on approach to helping.”

Several prototypes were field tested, and feedback from healthcare professionals including doctors and nurses was used to develop the final design. Face shields are often a one-time use item, however when utilizing certain film formulations, shields can be disinfected and reused. The face shield was developed and is being distributed consistent with the limitations described in U.S. Food and Drug Administration’s guidance and Emergency Use Authorization issued for face shields for the duration of the public health emergency.

Dow’s face shield project is the latest action the Company has undertaken to address the COVID-19 global pandemic crisis.

Dow’s material science expertise and production capabilities are used to develop some of the most vital hygiene medical products and technologies to fight the COVID-19 pandemic, such as disinfectants, sanitizers, cleansers, plastics used in the production of disposable PPE for medical professionals, and memory foams for hospital beds.

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.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

Oil mixed as Chinese data offsets Trump plans to ease lockdown

MOSCOW (MRC) -- Oil prices were mixed on Friday as China’s worst quarterly economic contraction on record offset President Donald Trump’s plans to revive the U.S. economy, said Reuters.

Brent rose by 41 cents, or 1.5%, to USD28.23 a barrel by 1347 GMT, while U.S. crude CLc2 for June was down 24 cents, or 0.9%, at USD25.29. The less active U.S. crude contract CLc1 for May tumbled by USD1.77, or 8.9%, to USD18.10, attributable to the imminent expiry of the contract on April 21 and fast-filling crude storage.

“As the oversupply is more a topic for right now, the May contract trades at a deep discount to June,” said UBS analyst Giovanni Staunovo.

The hobbling of China’s economy was highlighted by data showing that GDP shrank 6.8% year on year in the three months to March 31, the first such decline since quarterly records began in 1992.

China’s daily crude oil throughput in March sank to a 15-month low as state refiners maintained deep output cuts, though there are some signs of recovery as the country begins to ease coronavirus containment measures.

Investors pinned their hopes on U.S. plans to ease lockdown measures after Trump laid out new guidelines for states to emerge from a coronavirus shutdown in a three-stage approach, but the early boost to Brent prices was short-lived.

Excitement over Trump’s intention to end the country’s lockdown seems to be dying down as traders realise that a return to full economic activity will not come overnight, said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

FXTM analyst Han Tan, meanwhile, pointed to the potential for oil prices to strengthen next month as moves to lift lockdowns gather momentum. “If more of the global economy enacts plans to reopen and restores some sense of normality, that could help oil prices find a firmer floor in May, aided by the OPEC+ supply cuts kicking in."

The Organization of the Petroleum Exporting Countries (OPEC) and producers including Russia, a grouping known as OPEC+, agreed on production cuts of nearly 10 million bpd last weekend after an earlier oil supply pact collapsed.

Earlier in the session oil prices found some support from a report of encouraging partial data from trials of U.S. company Gilead Sciences’ (GILD.O) experimental drug remdesivir in severe COVID-19 patients, but the company cautioned that full data would need to be analysed to draw any conclusions.

Analysts said that investors remain cautious, with readings of economic indicators worsening while global supply chains remain shut and large-scale production stoppages put millions out of work.

Both oil benchmarks are heading for a second consecutive week of losses, with U.S. oil prices at 19-year lows.

As MRC informed earlier, Russia’s oil export duty CL-EXPDTY-RU, a key source of tax revenue for the government, is likely to plummet in May to its lowest level in nearly two decades if oil prices stay low. The expected sharp decline in duty paid by Russian oil exporters will encourage oil producers to sell crude oil and make refining it less attractive, hitting the profit margins of Russian refineries.

As MRC informed earlier, based on the results of operations in the 1st quarter 2020, Gazprom neftekhim Salavat ramped up its stable gas condensate throughput and production output. The throughput performance of stable gas condensate during the 1st quarter 2020 (1 502 thousand tons) has grown by 15.7% at the Company’s Oil Refinery, as compared to the same period last year (1 298.5 thousand tons) due to increases in supplies.

It was previously reported that Gazprom Neftekhim Salavat (STS), one of the largest Russian petrochemical producers, plans to start scheduled repairs of acrylate production on April 20. This production will be closed until May 30.
MRC

Chemical Industry outlook: uncertainty and downside risks linked to COVID-19

MOSCOW (MRC) -- The American Chemistry Council (ACC) released an abbreviated, interim update to its Chemical Industry Situation and Outlook. The update offers two scenarios intended to capture a range of potential trajectories for the global and U.S. economies and the chemical industry, said Americanchemistry.

“ACC typically updates our economic forecast twice a year, but we wanted to provide an interim update that would reflect some of the potential impacts of COVID-19,” said Kevin Swift, ACC chief economist. “While there is significant uncertainty in the projections, short-term risks are to the downside before a possible rebound in 2021."

According to the update, U.S. chemical volumes are expected to fall 3.3 percent in 2020 before rising 5.2 percent in 2021. Basic chemical volumes will drop 2.9 percent in 2020 before rising 6.7 percent next year. Chemical shipments are expected to fall 10.0 percent in 2020 before rebounding by 7.8 percent in 2021. Anticipated declines reflect struggling end-use markets and export customers for U.S. chemistry products.

Partially offsetting weakness in U.S. chemical production is strengthening demand for chemistry used in the response to COVID-19. Among the many chemistry solutions used in the fight against the virus are synthetic materials for personal protective equipment (PPE), ingredients for cleaners and disinfectants, and plastics used in medical equipment such as ventilator machines and IV bags.

Automotive and building and construction are key end-use markets for chemistry. According to ACC projections, vehicle sales will fall sharply to 13.1 million in 2020 before improving to 15.5 million in 2021 – down from 16.9 million in 2019. Housing starts will tumble to 1.08 million before edging to a higher 1.19 million pace in 2021. Specialty chemical volumes will decline 4.4 percent in 2020 before rebounding 3.3 percent in 2021.

“Industrial activity started the year on a weak note even before news of COVID-19 emerged in late January,” said Martha Moore, senior director of policy analysis and economics at ACC. “Then supply disruptions from China began to percolate through the U.S. industrial sector. With further shocks to aggregate demand, U.S. industrial production is set to fall 8.4 percent this year before growing by 2.6 percent in 2021."

Global GDP is expected to contract by 2.5 percent in 2020 before rebounding 6.0 percent in 2021, according to ACC’s update. As the industrial sector has been dealt a series of blows from closures related to COVID-19, demand destruction and logistical challenges, global industrial production will fall 3.9 percent in 2020 before improving 5.6 percent in 2021. Trade and commercial activity have experienced an unprecedented collapse, and world trade is seen shrinking 10.5 percent in 2020 before improving by 9.9 percent in 2021.

U.S. GDP is projected to fall by 4.0 percent in 2020 before rising 4.0 percent in 2021. Consumer spending will decline by 4.6 percent in 2020 before rebounding 4.4 percent next year. Economy-wide business investment was already lower prior to COVID-19 and is expected to decline 9.7 percent in 2020 before showing 3.0 percent growth in 2021.

With more than 20 million people filing unemployment claims in the past four weeks, the unemployment rate is expected to reach over 13 percent by the end of Q2 2020 before steadily easing through 2021. After three years of gains, chemical industry employment is expected to decline by 28,000 (5.1 percent) in 2020. Chemical industry capital spending declines 2.0 percent in 2020, but grows 1.8 percent in 2021.

ACC’s analysis presents an assessment of current conditions and expectations using economic data and publicly available information through April 14, 2020. For the U.S. chemical industry, we use our own model (supplemented by other forecasters), projecting likely paths for the industry in 2020-2022. In addition, we take into account forecasts made by manufacturing economists, economic forecasting consultants and other institutions.

The projections in this release rely on a baseline scenario under which U.S. COVID-19-related restrictions are lifted before the end of Q2 2020. ACC also developed a “pessimistic” scenario under which U.S. restrictions are extended through Q4 2020.

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.
MRC