Brazil crude, gas output holds steady in April despite pandemic

MOSCOW (MRC) -- Brazil's crude oil and natural gas production remained stable in April as the global coronavirus pandemic had a limited impact on output in Latin America's biggest producer, according to data released by the National Petroleum Agency (ANP) June 2, said S&P Global.

Companies operating in Brazil pumped 3.738 million b/d of oil equivalent in April, little changed from 3.739 million boe/d in March, the ANP said. April's total hydrocarbons output, however, advanced 12.8% from 3.314 million boe/d in April 2019, the ANP said.

Brazil's oil industry has emerged from the global outbreak relatively unscathed, with production temporarily halted at two offshore floating production units operated by state-led Petrobras until the ships were disinfected. Dommo Energia also suffered an outbreak onboard the FPSO OSX-3 in May, but reported no impact on output in a production report released June 1.

The Mines and Energy Ministry said June 1 it registered a total of 378 confirmed coronavirus cases, 842 suspected cases and 12 deaths in Brazil's energy industry, which includes Petrobras and other state entities.

In addition, Brazil has benefited from the gradual restart of economic activity in China, which is the country's biggest trade partner and a key buyer of crude, iron ore and soy products. Petrobras ramped up exports of crude and refined products when domestic demand cratered because of social distancing measures were implemented in mid-March, with about 60% of the company's record crude and bunker fuel exports headed for China.

Brazilian crude grades naturally contain less than 0.5% sulfur content, which makes them ideal for processing into bunker fuel under the International Maritime Organization's 2020 mandate. The mandate, which went into effect January 1, increased demand for Brazilian grades and supported prices for the crude despite recent volatility, according to industry officials.

The better-than-expected international demand forced Petrobras to walk back 200,000 b/d worth of production cuts announced in late March, with Petrobras targeting production of 2.26 million b/d in April. rather than 2.07 million b/d.

The country's overall crude output, however, retreated slightly month on month in April, the ANP data showed. Brazil pumped 2.958 million b/d in April, down 0.5% from 2.973 million b/d in March, the ANP said. April's output, however, was up 13.6% from 2.604 million b/d in April 2019, the ANP data showed.

The year-on-year production growth was driven by the continued ramp up of several new floating production units installed at subsalt fields over the past two years, including a fleet of four vessels that were installed at the Buzios Field starting in mid-2018. Output, however, is expected to drift lower in the second half of 2020 amid Petrobras' plan to carry out a wide-ranging maintenance program at subsalt fields.

As MRC informed earlier, Brasil's sole PP and PE producer, Braskem selects Charleston as new Global Export Hub location. Polyolefins and biopolymers producer Braskem has announced plans for a new Global Export Hub facility in Charleston, South Carolina, US.

The new Global Export Hub facility will be used for activities such as packaging, warehousing and export shipping services. Specifically, it will support the company’s US polypropylene (PP) production facilities.

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.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
MRC

MOSCOW (MRC) -- Nexeo Plastics has appointed Michael Modak as interim CEO, the US-based global thermoplastic resins distributor, said Chemweek.

Modak is operating partner at One Rock Capital Partners, the majority owner of Nexeo Plastics. He was previously CEO of PolyAd Holdings, a plastics additives manufacturer, and before that held executive roles with Honeywell, HB Fuller, and Momentive Performance Materials, among others.

Nexeo Plastics was until recently led by Shawn Williams. It did not comment on whether Williams left. The company also appointed Austin Nichols as vice president, product line and market management.

The appointments come as the company is realigning its North American sales organisation.

As MRC informed earlier, New York City-based Investment firm One Rock Capital Partners completed its acquisition of Nexeo Plastics, which is the plastics distribution business of Nexeo Solutions Inc., a subsidiary of Univar Inc.

MRC earlier said, Nexeo Univar Inc., has announced that it has completed the acquisition of Nexeo Solutions, creating a leading global chemical and ingredients solutions provider. The combined company will conduct business as Univar Solutions, reflecting a commitment to combining the 'best of the best' from each legacy organization.

As MRC informed earlier, Russia's output of products from polymers grew in April 2020 by 11.2% year on year due to quarantine restrictions. However, this figure increased by 3.4% year on year in the first four months of 2020. According to the Russian Federal State Statistics Service, April production of unreinforced and non-combined films decreased to 107,000 tonnes from 110,400 tonnes a month earlier. Output of films products grew in the first four months of 2020 by 12.5% year on year to 402,800 tonnes.

MRC

MOSCOW (MRC) -- Fujian Refining & Petrochemical (FREP) has undertaken an unplanned shutdown at its No. 3 polypropylene (PP) unit, according to Apic-online.

A Polymerupdate source in China, informed that, the company has halted operation at the unit for unplanned maintenance on June 1, 2020. The unit is likley to restart by this weekend.

Located in Fujian province, China, the No. 3 PP unit has a production capacity of 220,000 mt/year.

As MRC reported earlier, FREP restarted its No.3 PP plant in Fujian Province on November 2, 2019, following an unplanned outage. The unit was taken off-line on October 27, 2019. Located in Fujian province, China, the No. 3 PP plant has a production capacity of 220,000 mt/year.

According to MRC's ScanPlast report, 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.

FREP is a joint venture between Fujian Petrochemical Co. (50%), ExxonMobil China Petroleum and Petrochemical Co. (25%) and Saudi Aramco Sino Co. (25%). Fujian Petrochemical is a 50:50 JV between Sinopec and the Fujian provincial government.
MRC

MOSCOW (MRC) -- The Food and Drug Administration (FDA) in a guidance document late Monday updated its policy on the use of ethanol in hand sanitizers for a third time in the last two months as part of its effort to ensure adequate supply of the product during the coronavirus disease 2019 (COVID-19) pandemic, reported Chemweek.

The agency says its updated guidance further clarifies the manufacturing and compounding of certain alcohol-based hand sanitizer products to prevent harmful levels of impurities from making their way into sanitizers.

Biofuels advocates - including US Senators Chuck Grassley and Joni Ernst, both Iowa Republicans - have urged the FDA to ease restrictions on allowing ethanol producers to supply alcohol for hand sanitizer production.

In a letter last week, the senators called the FDA's 15 April revision of its 27 March guidance on the use of ethanol for sanitizer production "inexplicable" and said submitted samples of ethyl alcohol have been rejected, possibly based on levels of acetaldehyde, a substance that occurs naturally in the distillation process.

FDA's March guidance declared that ethanol used for hand sanitizer production does not need to meet the U.S. Pharmocopeia (USP) or Food Chemical codex (FCC) standards provided that other purity standards were satisfied. The senators said that based on that guidance, biofuels producers made investments and began production of alcohol for hand sanitizer.

However, the agency's April revision said ethanol used in hand sanitizers must adhere to USP or FCC standards unless otherwise approved. FDA asked that ethanol companies submit data regarding any impurities.

FDA on Monday said the temporary guidance from April was based on concerns that at least some fuel ethanol products may contain harmful chemicals, including gasoline and benzene. FDA said it is working with the industry to ensure that harmful levels of impurities are not present in ethanol used in hand sanitizer products.

"Based on careful review and consideration of available data, we are specifying interim levels of certain impurities that we have determined can be tolerated for a relatively short period of time, given the emphasis on hand hygiene during the COVID-19 public health emergency and to avoid exacerbating access issues for alcohol-based hand sanitizer," FDA says.

Renewable Fuels Association (RFA) president and CEO Geoff Cooper says the latest guidance is still too restrictive.

"While we appreciate that FDA responded to RFA's request for more clarity and specific interim impurity limits, we do not believe the new guidance will help alleviate the hand sanitizer shortage in any meaningful way," Cooper says. "We welcome the specificity in the new guidance, but the new interim limits for certain impurities are overly restrictive and create a roadblock for producers who could otherwise supply huge volumes of safe, clean, high-quality ethyl alcohol to hand sanitizer manufacturers."

"For example, FDA's new limits for certain impurities are eight times more restrictive than what is typically found in a glass of red wine and twenty times more restrictive than what has been allowed in hand sanitizer by other countries, including Canada, during the COVID-19 pandemic," according to a statement.

Cooper adds that the US has had to ramp up imports of hand sanitizer from China and other countries, calling the imports "unfortunate" considering abundant supplies of "high-purity American-made ethanol could be used instead."

As MRC informed earlier, the US ethanol industry is showing some signs of recovery as government officials ease stay-at-home orders that depressed fuel demand, while a vote Friday in Congress could bring the industry one step closer to federal aid, industry officials said in late May. Fuel demand collapsed by about a third with the spread of the novel coronavirus this spring, and US ethanol production capacity halved as around 150 facilities either idled or reduced rates. Now as restrictions ease and gasoline demand inches higher, about 140 facilities are idled or running at reduced rates, Renewable Fuels Association President Geoff Cooper said on Friday.

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 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 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.
MRC

MOSCOW (MRC) - Quarantine restrictions have led to a reduction in demand for low density polyethylene (LDPE) due to the coronavirus pandemic. The scheduled maintenance works of one of the producer did not allow balancing the market, and, as a result LDPE prices had decreased by more than Rb8,500/tonne by the beginning of June, according to the ICIS-MRC Price Report.

LDPE prices reached their highest level in the late of March on the back of high demand and supply disruptions from some producers. The situation began to change dramatically in the second half of April due to the coronavirus pandemic. Demand for LDPE began to decline, and prices fell.

The prices of polyethylene continued to go down during May, and Russian producers announced a significant reduction in prices for June deliveries. Kazanorgsintez shut part of its facilities for scheduled maintenances in the end of April. But the shutdown of the second-largest producer of LDPE in Russia did not affect the market balance; a drop in demand due to quarantine restrictions levelled this factor.

The demand for LDPE began to gradually increase in the late May, although still quite far from last year's figures.
Angarsk Polymers Plant plans to shut its capacities for 30 day's turnaround from 22 April.

Gazprom neftekhim Salavat will shut down its HDPE production from 1 July. The 108th LDPE was the most scarce in March; prices reached Rb76,000/tonne CPT Moscow, including VAT by the end of March.

But in the second half of April, the situation changed significantly, and prices of this polyethylene began to go down more rapidly than others. Prices of 108 LDPE from some sellers decreased to the level of Rb59,000/tonne CPT Moscow, including VAT by 1 June.

The situation was similar in the market of the 158 LDPE, which by the end of March has risen in price to Rb84,000/tonne CPT Moscow, including VAT and above. Sellers announced prices for June delivery at the level of Rb74,000/tonne CPT Moscow, including VAT.

MRC