Dow Chemical to shut PE plants amid lackluster demand

MOSCOW (MRC) -- USA based Dow Chemical is planning to shut three polyethylene (PE) plants in the USA and Argentina to avoid piling inventories amid sluggish global demand conditions due to the COVID-19 related lockdown, reported Commoplast with reference to market sources.

According to the company, in the first quarter of the year, demand from the packaging and specialty plastics sector were stable to slightly improved, however, sales in the industrial intermediates and infrastructure remained weak.

The company plans to take off-line one PE line in Freeport, Texas, one gas-based PE line in Seadrift, Texas, and another gas-based PE line in Bahia Blanca, Argentina. Besides, two elastomer units in Louisiana would also be shut.

These plants have a combined capacity of 907,000 tons/year and would remain shut for one month.

As MRC informed earlier, in the first week of November 2019, Dow said the Glycol 2 plant at its Plaquemine, Louisiana, facility was in "recovery mode" after a vessel ruptured the morning of 3 November. The company said there were no injuries, nor have any offsite emissions been detected, and other production units at the site continue to run normally. The Glycol 2 plant includes an ethylene oxide production unit and downstream production of isopropanolamines and alkyl alkanolamines, according to a permit issued by the Louisiana Department of Environmental Quality.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided.

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

MOSCOW (MRC) -- A recent strengthening in refinery margins in Asia is leading to a sense that the worst may be over for the embattled sector as more nations in the region start to emerge from coronavirus lockdowns, said Hydrocarbonprocessing.

But the main risk now for both the crude oil and refined products industries is that the renewed optimism leads them to boost output to levels above the nascent recovery in demand. The profit margins, or cracks, for producing both gasoline and gasoil, the building block of diesel and jet kerosene, have bounced off record lows in recent sessions, as traders report tentative signs of a recovery in demand and more interest in securing cargoes.

The crack for making a barrel of gasoline from Brent crude in Singapore GL92-SIN-CRK rose to a loss of 24 U.S. cents a barrel on Monday, the highest in two months and up from the low of a loss of USD13.15 on April 14. The profit on producing a barrel of gasoil with 10 parts per million sulphur lifted to $4.37 a barrel on Monday, up 147% from the low of USD1.77 on May 5.

However, both refined products are still well below their highs so far in 2020. Gasoline is still loss-making, compared to a high of a profit of USD9.35 a barrel on Feb. 11, and the gasoil crack is some 73% below its high of USD16.15 from Jan. 3.

The improvements in cracks in recent days have lifted refinery margins close to breakeven, with a typical complex refinery in Singapore processing Dubai crude making a loss of just 6 cents a barrel, based on the prices of the underlying crude and products on Monday.

With the large discounts to benchmarks like Dubai crude being offered by major exporters such as Saudi Arabia, it’s likely that many of Asia’s refiners are able to make a profit from processing at current prices. This in turn may encourage them to ramp up operations, which were severely curtailed in April as the new coronavirus led to lockdowns across Asia, including major economies such as India, Japan and Australia.

As much as 4 million barrels per day (bpd) of refining capacity in Asia was idled in April, according to estimates by analysts, and as much as 2.7 million bpd may be offline during the second quarter as a whole.

Ethylene and propylene are feedstocks for producing PE and 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) -- On 9 April 2020, 23 member countries of OPEC+ discussed the economic recession caused by Covid-19 pandemic and agreed to cut oil production by 9.7 million bpd from 1 May 2020, in order to balance supply and demand on the global market, according to WorldPipelines.

The Republic of Azerbaijan, as a member of OPEC+, participated in the meeting and, along with other countries, committed voluntarily to production cuts in relevant proportions.

The Ministry of Energy, which represented Azerbaijan in the meeting, subsequently announced the terms of the agreement and the commitments undertaken by Azerbaijan. The Ministry proposed proportional sharing of the production cut quotas among the country’s oil producers. SOCAR, the State Oil Company of Azerbaijan, was ordered to carry out the implementation of the production cuts by the Cabinet of Ministers of the Republic of Azerbaijan.

The OPEC+ agreement considers temporary implementation of production cuts in three stages: first during May and June 2020, second between July and December 2020, third between January 2021 and April 2022. It was agreed to reduce production at a higher rate in the first stage, and to gradually restore production levels in the following periods. According to the international agreement, daily production in Azerbaijan should not exceed 554 000 bbls in May and June 2020, 587 000 bbls in July - December 2020 and 620 000 bbls between January 2021 and April 2022. These figures are applied only to crude oil, but not to gas condensate production.

Hence, the daily oil production is expected to be reduced by 96 000 bbls in May - June 2020, by 63 000 bbls in July - December 2020 and by 30 000 bbls from January 2021 to April 2022, as compared to the initial national production plan for 2020.

SOCAR's Azneft Production Unit will initially reduce its daily production by 17 000 bbls to 100 000 bbls. In the following period, it will gradually increase its production adding 5000 bpd to total output. Beginning from next year, it plans to add 6000 bpd more to daily production, which would bring Azneft’s total crude oil production to 111 000 bpd.

Daily production on the Azeri-Chirag-Deepwater Gunashli fields is expected to be reduced by 76 000 bbls in May and June. During the second stage of agreement, the operator of the fields – Azerbaijan International Operating Company (AIOC) – will be able to increase production by 27 000 bpd, adding 26 000 bpd in the next year. Thus, in 2021, the level of AIOC production is forecasted at 487 000 bpd.

Other operating companies will initially reduce their production by 3000 bpd and then increase it by 1000 bbls in July - December, adding 1000 bpd in the next year.

As a result of measures arising from the OPEC+ agreement, between the beginning of May and the end of December 2020 Azerbaijan's oil production will decrease by 17.4 million bbls, amounting to 141.8 million bbls in total. In 2021, the country's total crude oil production is forecasted at 30.7 million t or 226.3 million bbls. These figures do not include hydrocarbon production by the Shah Deniz consortium and the Umid Babek Operating Company, nor is the condensate production by SOCAR's Azneft PU and Bahar Energy Operating Company Limited included.

By the end of 2020, SOCAR's Azneft PU plans to suspend production at several oil and gas production facilities and conserve equipment in accordance with industrial requirements. The decision rationale for suspending particular fields is based on the assessment of field’s economic efficiency, technical sustainability, industrial safety and minimisation of negative impact on the environment.

The suspension of operations is envisaged to take place mainly on the onshore fields with high production costs, whilst the exploitation of offshore fields with higher profitability is going to resume.

SOCAR employees, who become unoccupied as a result of the temporary production cut, will be involved in the conservation of wells and equipment maintenance. Therefore, following the suspension of some fields, no massive staff reduction is currently expected. The unoccupied employees will be registered in the Employee Reserve Database (ERD). They will be directed to SOCAR’s other units and departments in accordance with due legal procedures. SOCAR is suspending the external recruitment of personnel in the areas, which can be occupied by the employees in the ERD. Other measures have been planned as well, such as reskilling the unoccupied workers at SOCAR’s professional training centres.

As MRC reported previously, SOCAR Polymer plans to reach the design load for low-pressure polyethylene (HDPE) no earlier than 2023. In 2019, SOCAR Polymer is expected to produce 48.2 thousand tons of low-pressure polyethylene and 110 thousand tons of polypropylene. In 2020, these indicators will amount to 97.4 and 140 thousand tons, respectively. In 2023, the company is expected to be able to reach its design targets and produce 120 thousand tons of polyethylene and 170 thousand tons of polypropylene. Thus, the production of HDPE relative to 2019 will grow by 2.5 times, polypropylene - by 54%.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
MRC

1. API expects Falconara refinery to restart next week

MOSCOW (MRC) -- Italian oil refiner API said it expected its Falconara Marittima facility to restart production early next week after shutting down at the end of March as a result of COVID-19, said Hydrocarbonprocessing. “The refinery ... has launched preliminary operations for the restart,” the group said in a statement. The lockdown imposed by the Italian government to stop the spread of the pandemic led to a sharp fall in demand for oil products with excess supply saturating storage capacity.


MRC

MOSCOW (MRC) -- Lotte Chemical Titan might carry out a scheduled turnaround at its No. 1 cracker in Malaysia in 2021, reported CommoPlast with reference to a source close to the producer.

No further details on the exact time period is revealed at the moment. The previous news reported that the company might shut down the No. 1 cracker with a capacity of 285,000 tonnes of ethylene per year and polyethylene (PE) 1 in June 2020 for 35 days overhaul.

The company also has a cracker No. 2 at this site with a capacity of 522,000 tonnes of ethylene and 360,000 tonnes of propylene per year, which was shut for maintenance from early March 2020 to late March-early April 2020.

It is also reported that Lotte Chemical Titan completed all maintenance works at its petrochemical plants in Pasir Gudang, Malaysia, in early April 2020. The plants under maintenance included two polypropylene (PP) lines with the capacity of 150,000 and 240,000 tonnes/year, low density polyethylene (LDPE) plant with a capacity of 320,000 tonnes/year and high density polyethylene (HDPE) line No. 3 with a capacity of 115,000 tonnes/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.

Lotte Chemical Titan produces Malaysia's most comprehensive portfolio of olefins and polyolefins which contribute to the enhancement of everyday life. Lotte Chemical Titan's production site in Malaysia consists of eleven process facilities, two co-generation plants and three tank farms. They are located on 2 sites in Pasir Gudang and Tanjung Langsat in the state of Johor. In 2006, Lotte Chemical Titan acquired PT Lotte Chemical Titan Nusantara, Indonesia’s first and largest polyethylene plant in the country. This acquisition boosted the polyolefins capacity by approximately 50%, thus making the company one of the largest producers in South East Asia. Lotte Chemical Titan was acquired by Lotte Chemical Corp., forming part of the Lotte conglomerate of Korea, in 2010. The company thus became one of Lotte Chemical Corp.’s largest overseas subsidiaries.
MRC