PE production in Russia up by 56% in H1 2020

MOSCOW (MRC) -- Russia's overall polyethylene (PE) production totalled 1,463,000 tonnes in the first six months of 2020, up by 56% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output, according to MRC's ScanPlast report.

June PE production in Russia was 210,500 tonnes, whereas this figure was 259,100 tonnes a month earlier, output of high density polyethylene (HDPE) at the facilities of Zapsibneftekhim and Kazanorgsintez decreased. Thus, overall PE production reached 1,463,000 tonnes in January-June 2020, compared to 938,900 tonnes a year earlier. Production of all PE grades rose, but LLDPE accounted for the greatest increase, which was provided by ZapSibNeftekhim.

The structure of PE output by grades looked the following way over the stated period.

June HDPE production fell to 114,400 tonnes against 176,400 tonnes a month earlier, Kazanorgsintez reduced the capacity utilisation, and Zapsibneftekhim also shut its facilities for scheduled maintenances. Russian plants' overall HDPE output reached 892,800 tonnes in January-June 2020, up by 84% year on year.

Last month's total low density polyethylene (LDPE) production increased to 58,600 tonnes from 48,200 tonnes in May, Kazanorgsintez and Tomskneftekhim increased their output. Thus, overall production of this PE grade totalled 338,600 tonnes over the stated period, up by 3% year on year.

June LLDPE production rose to 37,400 tonnes from 34,500 tonnes a month earlier, ZapSibNeftekhim and Kazanorgsintez increased its capacity utilisation. Overall LLDPE output rose to 231,000 tonnes in the first six months of 2020 from 122,100 tonnes a year earlier.


US refiners ramp up crude imports from Mexico to 8-year high

MOSCOW (MRC) -- US crude oil imports from Mexico surged to the highest level in more than eight years in the second week of July as swelling inventories and a fire at the Latin American country’s largest refinery in late June led it to offload more barrels, reported Reuters.

US buyers boosted their purchases by 834,000 barrels per day (bpd) to about 1.3 million bpd in the week to July 3, the highest since February 2012, according to the Energy Information Administration. The surge helped send U.S. net imports last week to the highest since August 2019.

US Gulf Coast refiners including Lyondell Basell Industries’ Houston refinery, Valero Energy Corp , Shell and Marathon Petroleum Corp were among the buyers in recent weeks, according to market sources and Refinitiv Eikon data.

The crude was delivered to 10 different terminals, according to vessel-tracking firm ClipperData, with more than half the volumes going to Shell’s Deer Park and Valero’s Port Arthur refineries.

Lyondell Basell and Shell declined to comment. Valero and Marathon Petroleum did not immediately respond to requests for comment.

Mexico had an outage at the Salina Cruz refinery in late June after tremors from an earthquake caused a fire that led to the brief shuttering of the installation.

The country has resisted deep output cuts in the wake of a plunge in global oil demand due to the coronavirus pandemic. Mexico agreed at OPEC+ meetings earlier this year to cut 100,000 barrels per day of the 1.75 million bpd it pumps for a two-month period, far less than the 25% reduction from other members.

“Without the production cuts, they have extra to sell. Remember, they only cut 100,000 bpd for May and June. Now they can make as much as they want,” one trader who purchases crude from Mexico said.

Demand to book Aframax tankers from the East Coast of Mexico to the US Gulf remains busy, shipbrokers said, with companies including commodities merchant Vitol looking to book cargoes loading in mid-July.

Houston Refining, CNR and Marathon have provisionally chartered Aframax vessels this week to load Mexican crude next week, data showed. Freight rates for Aframax vessels are lower, helping to open up the arbitrage, one shipbroker said.

As MRC reported previously, Royal Dutch Shell Plc plans to idle a sulfur recovery unit (SRU) at the joint-venture Deer Park, Texas, refinery in 2021, said Shell spokesman Curtis Smith in July 2020. Currently, the refinery is operating at about 75% of its 318,000 barrel-per-day capacity because of reduced demand due to the COVID-19 pandemic.

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.

Crude oil climbs as demand outlook firm amid slowing virus spread, EU stimulus

MOSCOW (MRC) -- Oil futures settled at four-month highs July 21 as positive COVID-19 vaccine news and the passage of a European stimulus package boosted demand outlooks, reported S&P Global.

NYMEX August WTI was up USD1.15 at market close to settle at USD41.96/b and ICE September Brent climbed USD1.04 on the day to finish at USD44.32/b.

Front-month ICE Brent last settled higher on March 6 while front-month WTI was strongest since March 5.

"Crude prices are surging after both EU leaders wrapped up a landmark rescue fund and as the US seems to be getting a handle of the coronavirus spread," OANDA senior market analyst Edward Moya said. "Oil is tentatively breaking out of its tight trading range, but still seems to lack a strong enough catalyst for WTI crude to break above the USD45 level."

Oil prices climbed overnight after European Union leaders announced a Eur750 billion stimulus package aimed at offsetting the economic impact of the coronavirus crisis. The stimulus report came on the heels of reports on July 20 that a vaccine jointly developed by British drugmaker AstraZeneca and Oxford University has been shown to lower immune responses with minimal side effects.

While the positive headlines regarding vaccine treatments was bullish for forward demand outlooks, there are signs that the recent resurgence in COVID-19 has begun to fade.

The number of new COVID-19 infections reported daily in the US has steadily declined since a July 16 peak of nearly 76,000, according to New York Times data. On July 20, the seven-day moving average of new cases declined for the first time since early June. Worldwide, daily new infections has dropped for four consecutive days from a record high of 252,500 on July 16 to 214,600 on July 19, latest data from John Hopkins University showed.

Second-month WTI futures settled at a 4 cents/b premium to the front-month contract, marking the first time prompt month futures have been in backwardation since mid-May.

Energy prices were also supported by a weaker US dollar. Front-month ICE US Dollar Index futures fell to 95.145 in afternoon trading, the weakest since March 9. Oil prices and the US dollar are typically inversely correlated.

Refined product futures moved sharply higher on the day. NYMEX August RBOB settled 5.12 cents higher at USD1.2797/gal and August ULSD was up 4.45 cents at USD1.2800/gal.

As MRC informed previously, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

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.

And 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 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.

July throughput in China likely to hit record high as companies lift average runs to 84%

MOSCOW (MRC) -- Crude throughput at China's domestic refineries is likely to hit another record high in July as the state-owned oil companies, which collectively account for 69% of the country's refining capacity, have boosted their average utilization rate to a six-month-high of 83.6% this month from 80% in June, data collected by S&P Global showed July 24.

China's crude throughput jumped 9% year on year to hit an all-time-high of 14.14 million b/d in June, General Administration of Customs data showed.

Persistent leaps in its throughput would help China continue to actively digest huge volumes of crude oil cargoes purchased during the second quarter.

The higher run rate in July is likely driven by Sinopec and PetroChina's flagship refineries, which resumed operations this month after undergoing maintenance works. This include Sinopec's 23 million mt/year Zhenhai Petrochemical and the 13.8 million mt/year Tianjin Petrochemical refineries, as well as PetroChina's 2.05 million mt/year Dalian Petrochemical refinery.

Moreover, Sinopec's new 10 million mt/year Zhongke Petrochemical has been running at 50% of its capacity in July after its official start on June 16, according to market sources.

The increased runs at these refineries have tempered the impact of throughput cuts by some of their peers, including those along the Yangtze River, after widespread flooding in about 23 provinces forced them to cut output on weakening consumer and industrial oil consumption and alter their scheduled maintenance plans, Platts data showed.

Platts collected information for 38 state-owned refineries in July, with a combined capacity of 8.6 million b/d covering 19 Sinopec refineries, 17 PetroChina refineries, and CNOOC's Huizhou Petrochemical as well as Sinochem's Quangzhou Petrochemical.

These refineries plan to process 7.2 million b/d of crude in July. Sinopec led the pack with a four percentage point increase in run rates from June, while PetroChina and CNOOC each raised rates by three percentage points.

In total, at least 20 state-owned refineries across the country, which have no maintenance plan, have cut run rates in July by 1-17 percentage points from June. These comprise seven refineries under PetroChina, 12 from Sinopec, and Sinochem's solo refinery Quanzhou Petrochemical.

The 8.5 million mt/year Sinopec-SK Wuhan Petrochemical cut the most, by 17 percentage points from June, to run at an average 82% of its capacity this month as heavy flooding interrupted transportation for sending out its oil products, Platts reported.

Wuhan is one of the cities in the middle-stream of Yangtze River that has been battered by recent floods.

Meanwhile, PetroChina's refineries - the 7 million mt/year Jinxi Petrochemical and the 5 million mt/year Ningxia Petrochemical - have been shut over the month for maintenance, capping the total throughput.

On the other hand, independent refineries' run rates still remain high despite declining slightly from June amid narrowing margins. They account for about 31% of China's refining capacity.

Zhejiang Petroleum & Chemical continued to operate at higher run rates of its nameplate capacity of 20 million mt/year in July, compared with 130% in June, while the 20 million mt/year Hengli Petrochemical (Dalian) lowered run rates slightly to around 108% in July, down from 115% in June, information collected by Platts showed.

The 45 small-scale independent refineries in Shandong province lowered their average run rate to around 72.7% as of July 22 from a record high of around 79% in June, according to local information provider JLC.

In contrast, the Shandong refineries' average run rate was at 60.2% in July 2019 and 72% in December 2019, when China's throughput hit the previous record high of 13.84 million b/d before the COVID-19 outbreak.

The average refining margin of the small-scale independent refineries was at Yuan 19/mt ($2.74/mt) in the week started July 19, dropping from about Yuan 285/mt in June, according to JLC.

As MRC wrote before, top Chinese state refiner Sinopec Corp said in mid-June it had started up a USD6 billion new refinery and petrochemical plant in south China, making it the country’s third integrated complex to start operations in the past 18 months or so. The Sinopec venture, situated in coastal city of Zhanjiang, comprises a 200,000 barrel per day (bpd) crude oil refinery and an 800,000 tonne-per-year ethylene facility, built at a cost of 44 billion yuan (USD6.2 billion), Sinopec said in a statement.

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.

Givaudan to buy French biotech specialist Alderys

MOSCOW (MRC) -- Givaudan (Vernier, Switzerland) says it is acquiring French biotechnology company Alderys (Orsay, France) as part of its long-term strategy to expand its capabilities in bioengineering technologies, said S&P Global.

No value for the transaction has been given, although Givaudan says Alderys’ business would have represented EUR3 million (USD3.3 million) of incremental revenue to its results in 2019 on a proforma basis. The transaction will be funded from existing resources, it adds.

Alderys, founded in 2009, develops innovative approaches to the biological engineering of valuable compounds from renewable plant feedstock. The projects it develops are aimed at the chemical and cosmetic industry sectors, as well as nutrition, and are “fully complementary” to Givaudan’s fragrance and active beauty businesses, according to Givaudan.

"It will allow us to expand our portfolio of natural and biosourced products, thanks to their strong research and development bioengineering platform. It will be an additional tool to drive our future development and innovation in the active cosmetic ingredients space and beyond,” says Maurizio Volpi, president/fragrance division at Givaudan. “Alderys has a strong track record in designing innovative biological pathways to produce environmentally-friendly raw materials, which is essential to the way we develop our cosmetic ingredients,” adds Laurent Bourdeau, head of Givaudan’s active beauty business.

The proposed acquisition remains subject to formal approvals from the relevant regulatory authorities, with the transaction expected to close in the second quarter of 2020.

As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six 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-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.