COVID-19 - News digest as of 30.06.2020

1. Saudi Polymers to permanently shut down PS complex

MOSCOW (MRC) -- National Petrochemical Co. (Petrochem) said that the board of directors of its subsidiary, Saudi Polymers Co., decided to shut down the polystyrene unit and amortize its value, due to difficulties in achieving profits amid the global polystyrene market conditions, said Argaam. The company expected this process to have an impact of up to SAR 277 million on its financial statements for Q2 2020.


Grand Resource to shut No. 1 PP unit for maintenance

MOSCOW (MRC) -- Dongguan Grand Resource Science and Technology Co Ltd (JuZhengYuan) is planning to shut its No. 1 polypropylene (PP) plant for scheduled maintenance on 10 July, 2020, according to CommoPlast with reference to market sources.

Based in Dongguan, China, the company has a propane dehydrogenation (PDH) plant with production capacity of 600,000 tons/year and two PP plants with a combined production capacity of 600,000 tons/year.

As MRC wrote before, Dongguan Grand Resource Science and Technology Co Ltd restarted its No.2 PP plant on January 16, 2020, following a turnaround. The plant was shut for maintenance on January 6, 2019.

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.

Dongguan Grand Resource Science and Technology Co Ltd is owned by Juzhengyuan Energy (Shenzhen, Guangdong, China). On 26 October 2019, Dongguan Grand Resource’s (Dongguan, Guangdong, China) integrated complex for polypropylene production in Dongguan officially started up.

Zhejiang Petrochemical to produce on-spec material at new ACN plant in China this week

MOSCOW (MRC) -- Zhejiang Petrochemical Co Ltd is poised to produce on specification material at its new acrylonitrile (ACN) plant plant this week, reported S&P Global.

The company started up this plant on 23 June, 2020.

Based in Zhejiang, China, this plant is able to produce 260,000 tons/year of ACN. Initially, the company planned to begin operations at this production in early May, but then postponed the start to the second half of May. Zhejiang Petrochemical last announced mid-June to be the start.

As MRC informed earlier, Zhejiang Petrochemical Co Ltd started up its ethylene cracker in late December 2019 and its polyolefin plants in late December 2019-January 2020.

Market sources reported then that one of its polypropylene (PP) plant with capacity of 450,000 tons/year started up by 30 December 2019, followed by another line with same capacity by 15 January 2020.

Meanwhile its 450,000 tons/year of linear low density polyethylene (LLDPE) and 300,000 tons/year of high density polyethylene (HDPE) were launched around similar time with PP plants.

ACN is the main feedstock for the production of acrylonitrile-butadiene-styrene (ABS).

According to MRC's DataScope report, overall ABS imports to the Russian market increased in the first four months of 2020 by 5% year on year to 10,900 tonnes. This figure was at 10,400 tonnes in January-April 2019. April imports of material to the Russian Federation rose by 5% to 3,300 tonnes from 3,100 tonnes a year earlier. March ABS imports into the country were 2,800 tonnes.

USGC ethylene exports pick up amid stronger Asia pricing

MOSCOW (MRC) -- Ethylene exports from the US Gulf Coast (USGC) are recovering from their recent trough as ethylene prices in Asia and Europe show signs of strength, said Chemweek.

Enterprise Products Partners' new joint-venture ethylene export facility with Navigator Gas has sent out its first cargo since the start of April, headed for Europe. PetroChem Wire data show total ethylene exports from the two facilities in Houston dipped to 23,000 metric tons (mt) during April, compared with 44,000 mt in March.

Volumes are poised to recover respectively to 27,000 mt and 42,500 mt during May and June, based on preliminary PetroChem Wire vessel tracking. The Enterprise facility accounts for almost all of the increased volumes, these data show. Shipbroker fixture reports corroborate an uptick in cargo activity as well.

The US Gulf Coast is awash with ethylene supply despite reduced operating rates at many steam crackers. While some companies have disclosed operating rates as low as 70–80%, overall Gulf Coast cracker utilization is estimated around 85% at present.

US ethylene has had the lowest price in the world for many months. Ethylene prices in those two markets are also in recovery mode.

The cavern in Mont Belvieu, 20 miles northeast of Morgan's Point, has a capacity of 600 million lbs. Enterprise has designed the system "to serve as an open market storage and trading hub for the ethylene industry through storage, connections to multiple ethylene pipelines and high-capacity export capabilities," according to a previous announcement.

A Europe-headquartered chemical producer is believed to have a term agreement at the new terminal, lifting one cargo per month.

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.

BP agrees to sell global petrochemicals business to INEOS for USD5 billion

MOSCOW (MRC) -- BP has agreed to sell its global petrochemicals business to INEOS for USD5 billion as part of plans to "reinvent" BP into a more focused, integrated energy company, reported S&P Global.

The sale agreement comprise all of BP's aromatics and acetyls businesses, including assets, technology and licences, as well as related assets that are concentrated mostly in Asia, the US and Europe, BP said.

Last year, BP's petrochemicals division produced 9.7 million mt of products and employed over 1,700 staff worldwide.

The sale will also include related interests, such as the chemical recycling technology BP Infinia, and BP's interest in acetylated wood developer Tricoya, BP said.

"This is another significant step as we steadily work to reinvent BP," CEO Bernard Looney said in a statement. "Strategically, the overlap with the rest of BP is limited and it would take considerable capital for us to grow these businesses. As we work to build a more focused, more integrated BP, we have other opportunities that are more aligned with our future direction. Today's agreement is another deliberate step in building a BP that can compete and succeed through the energy transition."

Petrochemicals company INEOS has bought a number of businesses from BP over the past two decades, notably the USD9 billion purchase of Innovene in 2005, a BP subsidiary that comprised the majority of BP's's then chemicals assets, and two refineries.

Following the agreed deal, BP said it has now meet its current USD15 billion divestment target through 2019 and 2020, a year earlier than expected.

The move comes two weeks after BP said it plans to write off up to USD17.5 billion worth of assets after cutting its long-term price assumptions for oil and gas to reflect expectations that the coronavirus pandemic will accelerate a shift away from fossil fuels.

The write-offs would likely push BP's debt gearing to 47.8%, by far the highest in the sector, according to Royal Bank of Canada analyst Biraj Borkhataria.

Proceeds from the sale of its petrochemicals business will be used for "general corporate purposes," BP said.

Under the terms of the agreement, INEOS will pay BP a deposit of USD400 million and will pay a further USD3.6 billion on deal completion. An additional USD1 billion will be deferred and paid in three separate installments of USD100 million each in March, April and May 2021, with the remaining $700 million payable by the end of June 2021.

ubject to regulatory and other approvals, the transaction is expected to complete by the end of 2020.

As MRC informed before, BP says it expects to take an estimated USD13.0-17.5 billion hit in non-cash impairments and write-offs in the second quarter of 2020 after lowering its long-term assumptions for oil and gas price.

We remind that BP has entered into an agreement to license its latest generation technology for the production of purified terephthalic acid (PTA) to China’s Dongying Weilian Chemical Co., Ltd. Weilian Chemical is a subsidiary of Dongying United Petrochemical Co., Ltd, one of the leading manufacturers and distributors of petroleum and petrochemical products in China. Weilian Chemical intends to build a 2.5 million tonnes per annum PTA production unit at the Dongying Port Economic Development Zone in eastern Shandong province, adding to Dongying United Petrochemical’s existing refineries and paraxylene (PX) facilities portfolio.

PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, April total estimated PET consumption virtually did not change year on year, totalling 60,840 tonnes (in April 2019 - 60,980 tonnes). 235,160 tonnes of PET chips were processed in Russia in January-April 2020.

BP is one of the world's leading international oil and gas companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.