Chinese independent refiners shy away from crude purchases amid rising stockpiles, low margins

MOSCOW (MRC) -- Plagued by high crude stockpiles and weak margins, Chinese independent refiners have curtailed buying cargoes in the September-loading cycle, impacting differentials for several China-focused grades in the region, said S&P Global.

Chinese refiners' top crude picks, including Oman and Russia's ESPO Blend grades, have taken a hit in recent days amid tepid buying appetite from teapots, another name for China's independent refineries.

"The Chinese market is still flooded with supply, inventories are still high and refining margins are still weak," a source from a Chinese trading house said.

Reflecting a weaker Oman market, the cash Oman-Dubai spread has trended narrower this year, data from S&P Global Platts showed. The spread averaged 13 cents/b in July so far, compared with 14 cents/b over the second quarter, and 34 cents/b over the first quarter, the data showed.

ESPO blend crude differentials have also narrowed to lows seen two months earlier. The spot differential of ESPO M1 to Dubai was assessed 5 cents/b lower day on day at USD1.45/b at the Asia close on July 21, and was last narrower at USD1/b on May 18, the data showed.

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) -- Elliott Group announced plans to close its Packaging Solutions operations in Belle Vernon, Pennsylvania by the end of 2020, and to consolidate design engineering and manufacturing operations for unit packaging and auxiliary systems with its primary Engineered Products business in Jeannette, said Hydrocarbonprocessing.

"The decision to close our Belle Vernon facility was a difficult but necessary step to sustain Elliott’s auxiliary products portfolio while reducing the fixed costs associated with maintaining a separate, stand-alone operation,” said Michael Lordi, CEO of Elliott Group. “Closing the Packaging Solutions operation will impact the 40 people who work there, but we are making every effort to absorb some positions into Jeannette."

Over the next several weeks, Elliott will phase out operations at the Belle Vernon Facility as open orders are completed. We will process new orders for unit packaging and auxiliary systems through our Engineered Products business in Jeannette.

"Leveraging the capabilities of our Jeannette operations and our broad based network of global, suppliers will improve our competitive position and strengthen our ability to support customer requirements for unit packaging, lube oil systems, and buffer and dry gas panels,” said Shugo Hosoda, Vice President of Engineered Products. “Throughout the transition, we will maintain existing points of contact and provide uninterrupted customer service and supply chain support."

As MRC informed earlier, China Resources Packaging, a major manufacturer of petrochemicals in the country, plans to commission a new line at its polyethylene terephthalate (PET) plant in Zhuhai, Guangdong, southern China, in the fourth quarter of this year. The capacity of the new line will be 500 thousand tons per year. With its launch, the company's total capacity for the production of bottle PET granules in China will grow to 2.1 million tonnes per year.

According to ICIS-MRC Price report, in Russia, July formulae prices for contract customers were in the range of Rb65,000-67,500/tonne CPT Moscow, including VAT. Prices of material in the spot market remained steady last week, Russian producers continued to ship material from 20 tonnes at a price of Rb70,000-72,000/tonne CPT Moscow, including VAT.
MRC

MOSCOW (MRC) -- SK Capital (New York, New York) is acquiring a majority interest in Techmer PM (Clinton, Tennessee), a designer and producer of engineered compounds and polymer modifiers. John Manuck, president and CEO of Techmer, says access to the resources of SK Capital will allow Techmer to grow beyond North America, said Chemweek.

"“What we see is demand among the global OEMs for a reliable, high-quality, innovative partner, and we find it necessary to have a presence on every continent," he explains. Terms of the deal were not disclosed.

Manuck, who will continue to hold a significant ownership stake in Techmer, describes the transaction as a partnership. “SK is committed to helping Techmer grow our business globally," he says.

The only change in Techmer’s management team will be the addition of Michael McHenry, formerly of Ciba and BASF, “who will help us pull off the strategic road that we have in mind,” says Manuck. “We are preparing ourselves for taking great strides despite everything that is happening in the economic climate globally."

As MRC informed earlier, SK Capital Partners announced it will reinvest in Switzerland-based specialty chemicals provider Archroma to support its growth. Archroma has completed an offering of its credit facilities including a multi-currency revolving credit establishment, a facility for capital expenditures, and term loans.

As MRC informed earlier, Russia's output of chemical products rose by 4.4% year on year in May 2020 . Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May.

Founded in 1981, Techmer currently has six manufacturing sites in North America and more than 600 employees. In late 2017, the company opened its first plant outside the US, in Queretaro, Mexico.
MRC

MOSCOW (MRC) -- Air Liquide has entered into a long-term supply agreement with NLMK Group (Moscow) that will see it invest around EUR100 million (USD114 million) in the steel producer’s site at Lipetsk, Russia, on the construction of a new air separation unit (ASU) and the acquisition of existing hydrogen and rare gases production units, said Chemweek.

Air Liquide says it will design, build, own, and operate the ASU, which will have a production capacity of 1,000 metric tons/day of oxygen, with the plant expected to start up in 2023. The company will also take over the hydrogen and rare gases production units at NLMK’s flagship site “in the coming months,” it says. The project also provides a growth base for Air Liquide’s industrial merchant activity in one of the largest industrial merchant markets in the Moscow region, and adds reliable sourcing of rare gases for its customers worldwide, it adds.

As MRC wrote before, in late December 2019, Air Liquide Philippines and Pilipinas Shell signed a long-term contract for a supply of Hydrogen to Shell’s Tabangao refinery in Batangas, Philippines. The new venture will secure for the Tabangao refinery a continuous supply of Hydrogen for its processing needs.

We remind that Shell Singapore restarted its naphtha cracker in Bukom Island in early December 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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) -- U.S. refineries have sustained fewer mechanical outages as production has fallen because of the coronavirus pandemic in 2020, according to data from energy intelligence service Industrial Info Resources, said Hydrocarbonprocessinmg.

Average unplanned mechanical maintenance for crude units resulted in 95,000 barrels of capacity offline in April, May and June, compared with 254,000 barrels offline on average in the prior-year period. Because of reduced travel caused by the COVID-19 pandemic, U.S. refinery utilization fell from record highs to 68% of 19 million barrels per day in April. Utilization rose to 78.1% by the first week of July.

"Running units at higher capacity for many years requires more maintenance," said Sandy Fielden, energy analyst at financial services firm Morningstar. Prior to the pandemic, U.S. energy and chemical production was at an all-time high, and increasingly complex refineries had been running full-tilt, sometimes eschewing planned downtime to try to boost profits.

John Auers, executive vice president with Dallas-based Turner, Mason, said most U.S. refiners operate their plants reliably and safely and brought production down quickly when demand took a dive in March. "More than anything you can say it shows how good refiners were reacting to this crisis," Auers said.

Unexpected refining outages have soared in recent years, surpassing 2,000 incidents in 2019, quadruple 2015 levels. This year, some refiners took advantage of the unexpected downtime to perform routine maintenance. Others have delayed projects because of concerns the coronavirus could spread among refinery workers if the maintenance goes ahead.

But the reduced production rates may be affecting refiners’ financial ability to make repairs. "Refiners are piling overhead onto fewer barrels of oil refined, restricting cash flow that could be used for maintenance," Fielden said.

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