S-Oil reports substantial rise in petchem operating profit

MOSCOW (MRC) -- S-Oil, the South Korean refiner controlled by Saudi Aramco, said demand for oil products will steadily increase in the current quarter as restrictions stemming from the Covid-19 pandemic are eased and economies around the world are revived, said Chemweek.

Global oil product demand reached its nadir in April, running at more than 20pc below pre-pandemic levels, then began its recovery from the crisis in May, S-Oil said. Demand, which bounced back to 10pc below December's level in June, will continuously recover through the July-September quarter, the company said.

S-Oil has been betting on a strong recovery throughout the economic collapse brought on by Covid-19, continuing to run its processing units at full output except in cases of scheduled maintenance, even as rivals such as SK Innovation cut run rates. The company's crude distillation units ran at 99.8pc of capacity in the second quarter, compared with 93.4pc a year earlier, despite profit margins sinking to a historic low.

The regional benchmark Singapore GRM variable-cost refining margin averaged minus USD1.70/bl in the April-June period, even worse than the USD0.60/bl positive spread in the first quarter. S-Oil said there was a "massive" build-up of fuel inventories in the second quarter. It sees global demand for oil products finishing this year as much as 10mn b/d lower than in 2019.

Petrochemical demand also has been hit hard by the crisis. Profit margins on aromatics will remain weak in the third quarter amid an oversupply of paraxylene and a sluggish demand recovery, S-Oil said. On the olefins side, margins widened in the latest quarter and should remain strong as robust sales of personal protective equipment boost polypropylene use and recovering demand for propylene oxide absorbs supply growth from plant restarts, the company said.

S-Oil's second-quarter operating loss widened by 82pc on the year to W164.3bn (USD136.9mn).

As MRC wrote before, S-Oil, South Korean petrochemical major, has taken off-stream its residue fluid catalytic cracker (RFCC) unit for a turnaround last month. The company is likely to undertake a planned shutdown at the unit by early-July, 2020. The unit is slated to remain off-line for about two weeks. Located at Onsan, South Korea, the RFCC unit has a propylene capacity of 705,000 mt/year.

Propylene is the main feedstock for the production of PP.

According to MRC's ScanPlast report, 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) -- Bharat Petroleum Corp plans to restart a 200,000 bpd crude unit at its 310,000 bpd Kochi refinery in southern India by end of this month after a three-week maintenance shutdown, said Reuters.

The shutdown of the crude unit and some secondary units at Kochi started earlier this month after the company restarted a 156,000 bpd crude unit at its Bina refinery in central India, R. Ramachandran told Reuters.

State-run BPCL, the country’s second biggest state refiner, had shut the crude unit at the Bina refinery for about three weeks from the second week of June for routine maintenance, he said. Bina has only one crude unit.

According to government data, BPCL’s Bina refinery operated at about 60% of its installed capacity in June.

BPCL also plans to shut a continuous catalytic reformer at its Mumbai refinery in western India for about three weeks from Aug. 1, he said.

As MRC informed earlier, India may extend the bid deadline to invest in state-controlled refiner Bharat Petroleum (BPCL) for a third time, blaming travel disruptions caused by Covid-19. Bids for a 53pc stake in the company are due by 31 July.

In January 2020, Bharat Petroleum Corporation Ltd (BPCL) said it would invest about Rs25,000 crore to set up an ethylene cracker plant at Rasayani, 50 kilometres from its Mumbai refinery, as the firm pushes further into the petrochemicals business to fuel growth.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Bharat Petroleum Corporation Limited (BPCL) is an Indian state-controlled oil and gas company headquartered in Mumbai, India. Bharat Petroleum owns refineries at Mumbai, Maharashtra and Kochi, Kerala (Kochi Refineries) with a capacity of 12 and 9.5 million metric tonnes per year.
MRC

MOSCOW (MRC) -- State-owned Thai oil and gas company PTT Pcl said its U.S. unit took a step forward on its proposed chemical plant in Ohio that will turn ethane into plastics with an agreement to develop a natural gas liquids storage facility, reported Reuters.

PTT Global Chemical America (PTTGCA) signed an agreement with Energy Storage Ventures LLC to build a facility to store and transport natural gas liquids (NGL) for PTTGCA's proposed complex.

“Our impending partnership ... brings us one step closer to a final investment decision," PTTGCA President and Chief Executive Toasaporn Boonyapipat said in a statement on Wednesday.

In June, PTTGCA said it delayed making a final investment decision to build the ethane cracker, which analysts estimate will cost USD5.7 billion, from the first half of 2020 to the first half of 2021 due to the coronavirus.

Analysts said the pandemic reduced expected growth in global demand for plastics.

Energy Storage Ventures' Mountaineer NGL Storage subsidiary will develop the underground salt caverns on a 200-acre (80-hectare) site in Ohio’s Monroe County about 8 miles (13 kilometers) from the PTTGCA site.

PTTGCA said it is working with Mountaineer on 1 million barrels of ethane storage and a pipeline linking the storage facility to the project.

PTTGCA said Mountaineer will develop the USD250 million storage facility in two phases by creating multiple caverns in the existing underground salt formation. Each phase will be able to hold about 1.5 million barrels.

PTTGCA said it is seeking new partners for its ethane cracker project after South Korea's Daelim Industrial Co Ltd pulled out earlier this month.

The ethane cracker is designed to produce about 1.5 million metric tons of ethylene per year and will take 4-6 years to build.

In addition, to PTTGCA's project, Royal Dutch Shell PLC is building an ethane cracker nearby in western Pennsylvania.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Dow reports a second-quarter net loss of USD217 million, down from income of USD90 million in the year-ago period, reported Chemweek.

Sales totaled USD8.354 billion, down 24% year-over-year (YOY) from USD11.014 billion. COVID-19 lockdowns cut into demand and low energy values weighed on prices, says the company. Citing the prospect of a gradual and irregular recovery, Dow says it will soon begin a restructuring program aimed at USD300 million in annualized EBITDA benefit by the end of 2021. Measures include a 6% reduction in the company’s global workforce and plans to exit uncompetitive assets.

An adjusted loss of 26 cents/share beat the average analyst estimate of a 30 cent/share loss as compiled by Refinitiv (New York, New York).

“We captured solid demand growth in packaging, health and hygiene, home care and pharma end-markets, which partially offset weakness in consumer durable goods,” says CEO Jim Fitterling. “Extended economic lockdowns shifted the inflection point for demand recovery in key markets and geographies into June, where we began to see gradual improvements across most industries. The growing recovery in China and early signs of improvement in Western Europe are positive indicators for the United States and Latin America.”

Fitterling says the company prioritized cash and maintaining financial strength. “We electively lowered our operating rates to meet demand, reduced inventory, and focused on cash to deliver on our priority. Importantly, we generated USD1.6 billion in cash flow from operations, up more than USD600 million year over year, and free cash flow of USD1.3 billion, up more than $800 million year over year.”

Dow has improved cash flow conversion every quarter since the spin out from DowDuPont, delivering 110% conversion on a trailing 12-month basis, notes CFO Howard Ungerleider. “Cash flow conversion was about 45% one year ago, and when we spun out, we talked about getting the best in class, which was 90%,” he says.

Dow continues to expect a “gradual and uneven recovery,” says Fitterling. “For that reason, we will upsize our 2020 operating expense reduction target from USD350 million to USD500 million through additional structural cost interventions. We will also initiate a restructuring program during the quarter, targeting more than USD300 million in annualized EBITDA benefit by the end of 2021. This program includes a 6% reduction in Dow’s global workforce as well as actions to exit uncompetitive assets. While these are difficult decisions, they are necessary to maintain competitiveness while the economic recovery gains traction.”

The packaging & specialty plastics segment recorded net sales of USD4 billion, down 23% YOY. Overall volume was flat. Strong gains in flexible food and specialty packaging, industrial and consumer packaging, and health and hygiene applications were offset by declines in durables, particularly automotive, infrastructure, and construction. Demand for cracker by-products also declined. Regionally, gains in Asia-Pacific and the Europe/Middle East/Africa/India were offset by declines in the US and Canada. Latin America was flat. Local price declined 22% owing to lower global energy prices, and currency decreased net sales by 1%. Operating EBIT was USD318 million, down YOY from USD768 million as targeted expense reductions, increased volume, and improved incremental integrated margin in packaging were more than offset by lower demand and integrated margins in durables.

The industrial intermediates & infrastructure segment recorded net sales of USD2.4 billion, down 28% YOY. Volume declined 18% on reduced demand into durables, primarily in polyurethanes & construction chemicals. Local price decreased 9%, and currency decreased net sales by 1%. Volume growth in Asia Pacific was more than offset by declines in other regions. Operating EBIT was a USD220 million loss, down from earnings of USD154 million in the year-ago period owing to much weaker demand, margin compression, and increased equity losses.

Performance materials & coatings net sales totaled USD1.9 billion, down 21% YOY. Volume declined 14% as growth in home care products and DIY architectural coatings in the US and Canada was more than offset by a decline in siloxanes reflecting weakness in automotive, construction, and personal care end-markets. Local price decreased 6%, and currency decreased net sales by 1%. Operating EBIT was USD27 million, down from USD214 million in the year-ago period, mainly on margin compression in siloxanes and lower demand. Acrylic monomers pricing remained under pressure globally on weaker supply/demand fundamentals.

As MRC informed before, as part of the company’s current slate of low capital intensity, high-return incremental growth investments, Dow announced in August 2019 that it will retrofit proprietary fluidized catalytic dehydrogenation (FCDh) technology into one of its mixed-feed crackers in Plaquemine, Louisiana, to produce on-purpose propylene.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

MOSCOW (MRC) -- Indian Oil Corporation Ltd (IOCL) is in plans to undertake a planned shutdown at its polypropylene (PP) plant in Paradip, as per Apic-online.

A domestic Polymerupdate source informed that state owned Indian Oil Corporation Ltd (IOCL) is likely to start turnaround at the plant by this weekend. The plant is expected to remain under maintenance for about two weeks.

Located at Paradip in the India state of Odisha, the PP plant comprises of two lines with a production capacity of 340,000 mt/year each.

As MRC wrote earlier, Indian Oil Corp restarted operation at its naphtha cracker in India in early-October, 2019, after completing maintenance works. The cracker was shut in early-September, 2019 for a maintenance turnaround. Located in Panipat, in the northern Indian state of Haryana, the cracker has an ethylene production capacity of 857,000 mt/year and propylene capacity of 425,000 mt/year.

According to MRC's DataScope report, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.
MRC