Saudi Arabia may raise July oil prices to Asia

MOSCOW (MRC) -- Top oil exporter Saudi Arabia is expected to raise its official selling price (OSP) for all grades it sells to Asia in July, to track a jump in Middle East benchmarks although overall weak refining margins could cap price gains, industry sources said, as per Hydrocarbonprocessing.

Saudi Arabia is expected to increase the July OSP for Arab Light crude by $3.80 a barrel on average, a survey of five refinery sources showed. Forecasts ranged from an increase of USD2-USD3 a barrel to as much as $5 a barrel, as refiners’ margins weakened in May while a stronger DME Oman crude price, one of two underlying benchmarks for Saudi crude in Asia, has increased refiners’ feedstock costs, they said. “Refining margins actually worsened” by close to USD1 a barrel in May, one of the respondents said.

The DME Oman crude price was on average about USD3 a barrel more expensive than cash Dubai and Oman prices set by S&P Global Platts last month, according to Reuters calculations, pushing up costs for Asian buyers of Saudi Arabian and Kuwaiti oil.

Production from the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, fell to their lowest in two decades in May and has strengthened Middle East crude prices. OPEC and its allies including Russia are considering bringing forward a meeting to this week to discuss an extension of production cuts beyond June.

Tight Middle East crude supply has narrowed cash Dubai’s prompt contango price spread by USD6.60 a barrel in May from April. Spot prices are lower than those in future months in a contango market. In addition, light crude, such as Arab Extra Light, are expected to rise more than heavier grades as gasoline and naphtha cracks have improved, two of them said.

Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia. State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices. Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.

As MRC wrote earlier, in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.

Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.

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

MOSCOW (MRC) -- Members of the Arnhem, Netherlands-based European Electronics Recyclers Association (EERA) say they are facing difficulties arising from a Basel Convention decision of 2019 that is sometimes referred to as the “Norwegian Proposals.", said Recyclingtoday.

The proposals were made by Norway to reduce ocean plastic litter by controlling exports of mixed and contaminated plastics, says EERA. The association adds, “The logic behind these proposals was that these mixed and contaminated plastics may only be delivered to compliant recyclers so that it is certain that the non-recyclable plastics do not get dumped and ultimately become marine litter."

Currently, the Basel Conference of Parties and the EU “must now align EU law to incorporate these decisions, and the EU therefore drafted a delegated act in which only clean separated plastics may be transported as green-listed waste under a new Basel Code B3011 (the prior code B3010 will cease to exist),” says EERA.

Any mixed plastics would need notifications either as non-hazardous mixed plastics under the Basel Code Y48 (or EU 48 code) or as hazardous contaminated plastics under the new Basel code A3210, adds the association.

EERA says it is afraid that shredded mixed WEEE [waste electrical and electronic equipment] plastics carry a risk of being classified as hazardous waste at the start of 2021. “Our WEEE plastics recycling industry would face serious problems over the ones that we already face, as [recyclers] do not have permits to take in hazardous wastes; this decision risks having devastating effects on the economics of recycling WEEE plastics,” states the association.

Adds the EERA, “With the falling oil prices, virgin plastic prices have deteriorated enormously [to] as low and below the cost level of [making] post-consumer recycled plastics from WEEE. This is a serious threat to the WEEE plastic recycling industry, and EERA is calling for not only recycling targets but also for rules so that the [consumer electronics] industry is using post-consumer recycled materials."

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) -- Orbia Advance Corp., formerly Mexichem (Mexico City) says that in view of the COVID-19 pandemic and its impact on the global economy and capital markets, it has decided to pause its efforts to divest or seek an alternative strategy for its Vestolit vinyls business, reported Chemweek.

Orbia says it is "prepared to wait for the right environment to maximize shareholder value in any transaction involving its Vestolit business". The company adds that Vestolit is a "fundamentally strong business, with a unique global footprint and strong cash generation, and will continue to focus on driving sustainable, profitable growth."

Orbia announced on 10 January 2020 that it is in the process of analyzing potential divestment or strategic alliances for the vinyls business. The announcement was made in response to a report on Bloomberg, which said that Apollo Management, Ineos, and Westlake Chemical were among the bidders. The Bloomberg article estimated the price tag on Orbia’s vinyls business at up to USD4 billion.

The Vestolit vinyls business has 1.84 million metric tons/year of polyvinyl chloride (PVC) capacity divided among sites in Germany, the US, Mexico, and Columbia. The company has a single 400,000 metric tons/year unit for feedstock vinyl chloride monomer Marl, Germany. Orbia has chlor-alkali plants in Germany and Mexico, and it has a 50% share of Ingleside Ethylene, a joint venture ethane cracker at Ingleside, Texas.

As MRC wrote before, in August 2019, Mexican plastic pipe and chemicals company Mexichem changed its name to Orbia Advance Corporation under a restructuring and reorganization plan.

We also remind that in 2014, Mexichem SAB de CV agreed to buy German PVC paste producer Vestolit GmbH from investment company Strategic Value Partners LLC (SVP Global) for EUR219 million (USD293 million).

According to MRC's ScanPlast report, Russian producers of unmixed PVC decreased capacity utilisation in April. However, Russia's overall PVC output totalled 351,000 tonnes in January-April 2020, up by 2% year on year.

Oriba, of Tlalnepantla, an industrial municipality close to Mexico City, is Latin America’s largest manufacturer of PVC pipe, vinyl resins and compounds.
MRC

MOSCOW (MRC) -- Austrian packaging solutions and recycling solutions provider ALPLA has agreed to purchase Spanish plastic packaging company Bopla, said Packaging-gateway.

The acquisition is part of an asset deal. Both the parties have not disclosed the purchase price, or any further details involved with the acquisition. Financial or other terms were not disclosed.

ALPLA is planning to bolster its own portfolio by making use of the Spanish company’s single-stage manufacturing technologies expertise.

It will also strengthen ALPLA’s presence in the cosmetics and household care markets sectors.

Bopla, with a staff of 50, uses extrusion blow moulding (EBM) and injection stretch blow moulding (ISBM) to produces plastics packaging for customers in the cosmetics, personal and household care sectors.

ALPLA intends to use Bopla’s expertise in single-stage manufacturing technologies to expand its own product portfolio, it said. The Austria-based company has existing production at Les Franqueses which it will seek to integrate with Bopla’s site.

As MRC informed earlier, ALPLA strengthened its recycling operations and entered into the high density polyethylene recycling market with the acquisition of two Spanish businesses. The company said it signed the purchase agreements for the acquisition of Suminco SA in Montcada, near Barcelona, and Replacal SL in Palencia, north of Madrid, in October, 2019.

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.
MRC

MOSCOW (MRC) -- The closing of a USD252 million sale of the Philadelphia Energy Solutions (PES) oil refinery to a Chicago-based real estate developer has been delayed, reported Hydrocarbonprocessing with reference to a city official and source with knowledge of the agreement.

Hilco Redevelopment Partners won an auction in January to purchase the 1,300-acre site along the Schuylkill River in south Philadelphia. The companies were scheduled to close on the purchase agreement by the end of this month.

City of Philadelphia officials were told the closing was delayed, a city spokesman said by email. He did not offer additional details. Another source with knowledge of the deal said it was postponed this week.

Hilco and PES did not respond to requests for comment about the cause and duration of the delay.

The 335,000 barrel-per-day oil refinery shut last summer after a fire destroyed a section of the plant and released toxic chemicals into the air.

PES filed for Chapter 11 bankruptcy in July and put its refinery, which was the largest and oldest on the US East Coast, up for sale. More than 1,000 full-time workers were laid off, including 640 United Steelworkers.

The United States Bankruptcy Court for the District of Delaware in February approved the transaction with Hilco, whose plan has been to transform the site into a mixed-use industrial park, and seemingly secured the permanent end to operations at the plant.

The bankruptcy judge also signed off on a backup bidder, developer Industrial Realty Group, LLC, in case the deal with Hilco fell through.

PES’ unsecured creditors and union representatives initially opposed the sale to Hilco and pushed for Industrial Realty Group, which had entertained the possibility of leasing part of the site for refining.

Whoever purchases PES will face liabilities tied to cleaning the deeply-contaminated site, an issue that scared away potential buyers earlier in the sale process.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
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