Formosa shuts Mailiao refinery unit in Taiwan after fire

MOSCOW (MRC) -- Taiwan’s Formosa Petrochemical Corp has shut a residue desulphurises (RDS) unit at its 540,000 barrels-per-day (bpd) Mailiao refinery after it was hit by a fire early on Wednesday, reported Reuters with reference to three sources close to the matter.

Mailiao is one of Asia’s 10 largest standalone refining plants. The sources said its no. 2 RDS, with a capacity of 80,000 bpd, had been affected by the fire.

Formosa spokesmen could not immediately be reached for comment.

Trade sources said the outage would hit output of low-sulphur residual fuels used either in blending, to make very low sulphur fuel oil (VLSFO) for bunkering, or fed into other secondary units for gasoline or gasoil production.

Formosa cut VLSFO exports this month as it stepped up production of gasoline and gasoil on improving margins, while VLSFO profits weakened, the sources added.

The unit had been restarted in May after completing maintenance.

The company also operates three crackers in Mailiao with a combined 2.935m tonne/year capacity, which are operating normally, market sources said.

As MRC informed earlier, Formosa Petrochemical plans to shut down its No.3 cracker in Taiwan for maintenance in mid-August, 2020. The 1.2-MMt/y No. 3 cracker is due to be offline until end-September.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC

MOSCOW (MRC) -- Solenis says it has acquired Poliquimicos S.A. de C.V. (Mexico City, Mexico), a maker of water treatment chemicals for the Mexican market, said Chemweek.

Terms of the transaction, including purchase price, were not disclosed. Poliquimicos makes chemicals for customers in pulp and paper and other water-intensive industries.

"The acquisition of Poliquimicos will enhance Solenis’ direct sales channel in the Mexican market and improve our production capabilities in the region,” says Solenis CEO John Panichella. The location of the Poliquimicos production facility outside Mexico City, as well as the company’s position in the packaging market, give the acquisition further benefits for Solenis, according to Jose Armando Pinon Aguirre, vice president/Latin America at Solenis.

As MRC informed earlier, Solenis (Wilmington, Delaware) says it has signed an exclusive distribution agreement with Peter Greven (Euskirchen, Germany), a leading manufacturer of oleochemical additives. Under the terms of the agreement, Solenis will be the authorized distributor for Peter Greven's calcium stearate dispersions for paper coating applications in the EU, UK, and Russia.

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) -- The diverging price spread between LPG and naphtha in recent weeks has incentivized South Korean petrochemical producers to partially switch feedstock from naphtha to LPG from July, reported S&P Global with reference to market participants' statement.

South Korean naphtha buyers Hanwha Total, LG Chem, Lotte Chem and YNCC have all purchased LPG to take advantage of the cheaper feedstock, company sources have confirmed in recent days.

"Most of the South Korean crackers have bought LPG," a South Korean naphtha end-user said.

LPG typically becomes economically viable as a steam cracker feedstock when its price is 90% that of naphtha, or lower. Steam crackers typically begin utilizing more LPG when it is USD40-USD50/mt cheaper than naphtha, sources said.

The physical spread between CFR North Asia propane and CFR Japan naphtha averaged 91.11% in June, while the spread between CFR North Asia butane and CFR Japan naphtha averaged 86.8%.

With LPG commanding a sizable discount to naphtha in June, South Korean steam crackers emerged to purchase July and August delivery LPG to lower dependence on the use of naphtha.

Naphtha supply has been tight for July and August delivery cycles, firming prices as few cargoes were available due to refinery run cuts and limited Western arbitrage shipments, market sources said.

South Korea's Yeochun NCC has bought two spot cargoes of butane for delivery over July and August, sources said.

Lotte Chemical has lowered its naphtha requirements for August and purchased additional spot LPG recently for its steam cracker in Yeosu, confirmed a source aware of the matter. The company's Yeosu facility is able to produce 1.18 million mt/year of ethylene and 550,000 mt/year of propylene.

LG Chem has plans to utilize more LPG for its steam crackers in July, at around 15,000 mt more than in June, confirmed a source aware of the matter. The company's Daesan and Yeosu steam crackers have ethylene production capacities of 1.27 million mt/year and 1.18 million mt/year, respectively.

Hanwha Total Petrochemical recently purchased an evenly-mixed cargo via spot tender for delivery over the second half of July. Hanwha Total has a propane cracker with an ethylene production capacity of 310,000 mt/year.

Petrochemical makers in South Korea and Taiwan are typically the first to capitalize on cheaper LPG as feedstock for cost advantage; however not all steam crackers can switch easily to using more LPG and some may require a steeper discount to make it viable, sources said.

As MRC wrote previously, on 4 March, 2020, Lotte Chemcial shut its naphtha cracker after an explosion at the plant in the southwestern city of Seosan, which injured 31 people. The explosion, which was triggered by a fire at a compressor in Lotte Chemical’s naphtha cracker at around 3 a.m. local time (1800 GMT), was soon contained and under control, the company said then in a statement. The cracker may resume production this October, although initially the restart was planned in a couple of weeks after the accident.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

MOSCOW (MRC) -- Tosoh Silica Corporation (headquarters: Minato Ward, Tokyo), a member of the Tosoh Group, recently decided to establish a joint venture with Namhae Chemical Corporation of South Korea and construct a base to produce silica for use in fuel-efficient tires, as per the company's press release.

Demand for silica for fuel-efficient tires is expected to increase in line with a continued reduction in automotive fuel consumption as well as a shift towards vehicle electrification. Silica exhibits superior effectiveness in improving tire performance by reducing rolling resistance, which leads to enhanced automotive fuel economy.

Utilizing the advanced technological capabilities it has cultivated, Tosoh Silica will establish the second production base overseas to satisfy robust demand, ensure a stable supply of products, and strengthen the profitability of the business.

As MRC reported previously, Japan's Tosoh Corp has brought on-stream its naphtha cracker following a planned outage. The company resumed operations at the cracker on April 20, 2020. The cracker was shut for maintenance on March 4, 2020. Located at Yokkaichi in Japan, the cracker has an ethylene production capacity of 527,000 mt/year and a propylene production capacity of 315,000 mt/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 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.

Tosoh is one of the largest chlor-alkali manufacturers in Asia. The company supplies the plastic resins and an array of the basic chemicals that support modern life. Tosoh's petrochemical operations supply ethylene, polymers, and polyethylene.
MRC

MOSCOW (MRC) -- Enterprise Products Partners' planned Sea Port Oil Terminal offshore of Houston is facing new delays now that the federal government has stopped the clock on the licensing process to allow Enterprise more time to answer questions and provide additional information, reported S&P Global.

The regulatory US Maritime Administration said it suspended the timeline for the SPOT project that is the leading contender to be the first deepwater Texas terminal built to export crude oil around the world.

"SPOT provided some responsive information but also notified the US Coast Guard that additional time would be needed to fully respond," MARAD noted in a new letter to Enterprise.

The delay is not particularly surprising because Enterprise said in late April that it no longer expected to receive federal approval for SPOT in 2020 amid the coronavirus pandemic and the global collapse in crude oil demand. Enterprise had previously planned to start construction as soon as this summer and open the terminal in 2022 after receiving its federal license no later than June. However, the two-year construction timeline now pushes the project's completion to at least 2023.

Enbridge partnered with Enterprise on the SPOT project in December - abandoning its competing Texas COLT project in the process - and Chevron already is signed on as the anchor customer.

SPOT is proposed to be built about 30 miles offshore of Freeport, which is due south of Houston. The deeper-water depths offshore are needed for Very Large Crude Carriers to load up to capacity. SPOT would be able to load 2 million b/d and simultaneously two VLCCs at a time.

Enterprise has remained committed to the project though.

"The company is working on addressing information requests from USCG/MARAD, reviewing submittals from the public comment period, as well as other input from landowners and public officials," Enterprise spokesman Rick Rainey said in a late June 8 statement. "This work includes evaluating options to meet our business needs while mitigating concerns that have been expressed. We are in regular communication with USCG/MARAD and other federal and state regulators to help assure that these considerations are integrated smoothly into the permitting process."

The project has faced opposition from environmental groups and some local communities.

As of early this year, there was a race to build the first deepwater oil exporting terminals offshore of the crude oil hubs near Houston and Corpus Christi. However, the coronavirus pandemic has put that race on hold -- if not canceling the race outright.

Multiple proposed offshore oil-exporting terminals already were shelved or merged with other projects even before the pandemic.

The only other project with substantial backing thus far is Phillips 66's and Trafigura's planned Bluewater terminal offshore of Corpus Christi.

Pearce Hammond, a midstream analyst with Simmons Energy, questioned on June 9 whether any of them will be built.

"The bigger issue at this point, in our view, is how needed is the terminal in light of the changed dynamics for the US oil market post COVID?" Hammond stated in a note. "Does the terminal get built because it is a much cheaper and more efficient means of exporting crude (and replaces existing less efficient crude export terminal capacity), or does the terminal not get built because the global need for higher US crude exports has been redefined lower post COVID? Time will tell."

Already, US crude exports in 2020 have fallen from a high of 4.38 million b/d for the week ending March 13 down to 2.79 million b/d for the week ending May 29, according to the US Energy Information Administration. And analysts project crude export volumes to further plunge in the coming months.

Only one Gulf of Mexico port, LOOP, can fully load VLCCs currently without lightering from smaller vessels. However, LOOP was built primarily for imports and has only more recently added crude-exporting capacilities.

As MRC reported earlier, Enterprise Products Partners LP (EPP), through one of its affiliates, has entered a long-term agreement with Marubeni Corp. of Japan, under which Marubeni will offtake polymer-grade propylene (PGP) produced from a second propane dehydrogenation plant (PDH 2) currently under construction at EPP’s operations in Mont Belvieu, Tex., for supply to global customers. Concluded on June 16, the PGP offtake agreement is part of a long-term collaboration between EPP and Marubeni that also includes the export of liquefied ethylene, the first 25-million lb vessel of which loaded and sailed from EPP and Navigator Holdings Ltd.’s 50-50 joint venture marine terminal at Morgan’s Point, Tex., in early January, EPP and Marubeni said on June 30.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC