Marathon Petroleum sells Speedway, looks to repurpose idled refinery

MOSCOW (MRC) -- Marathon Petroleum sold its Speedway retail operations and is keeping offline two refineries shut earlier during the coronavirus pandemic, while increasing runs at its other refineries in the third quarter to meet rising demand following the easing of coronavirus-induced lockdowns, reported S&P Global with reference to CEO Mike Hennigan's statement on August 3.

Marathon Petroleum on August 2 agreed to sell its Speedway retail assets to 7-Eleven for USD21 billion in cash. The agreement includes a 15-year fuel supply agreement which calls for Marathon to supply 7-Eleven approximately 7.7 billion gallons/year or just over 500,000 b/d of transportation fuel.

Marathon also said it is indefinitely idling the two refineries it had shut down earlier when demand first crashed due to the pandemic--the 26,000 b/d El Paso, Texas, plant and the 161,000 b/d Martinez, California plant.

California was the first state to shut down, with Governor Gavin Newsome ordering all residents – except essential workers -- to stay at home on March 19, causing gasoline demand to fall by about half and prices to plummet, reducing refinery cracks.

As a result, Los Angeles 88.5 CARBOB prices fell to an average of USD1.08/gal in the second quarter from USD1.68/gal in the first quarter, Platts price assessments show. So far, third quarter prices are averaging USD1.45/gal.

"By shutting Martinez, MPC [Marathon Petroleum Corporation] will not only be able to cut fixed costs but will also operate Los Angeles (363,000 b/d) refinery in a more profitable environment", said Credit-Suisse analyst Manav Gupta in a research note.

"Gallup is a small refinery with high fixed cost and was profitable when Midland diffs were wide. Shutting it lowers costs and MPC will see product markets tightening in El Paso where it already has refining capacity [131,000 b/d]," he added.

Marathon said it was unsuccessful in its attempt to sell the El Paso plant, but will keep logistics operating there despite the plant closure.

Marathon is evaluating re-purposing Martinez into a 48,000 b/d renewable diesel plant.

"We have the unique opportunity to take advantage of a strong set of logistics for the area and three significant processing units that are an ideal fit for making renewable diesel," said Hennigan.

Martinez has three high pressure, hydroprocessing units which, if retrofitted, could produce renewable diesel about equal to about one-third of the refinery's nameplate crude capacity, said Raymond Brooks, Marathon's head of refining.

"There are also existing hydrogen plants, power generation and extensive inbound and outbound logistics that are all needed to produce renewable diesel," he added.

"So our intention is to pivot to the production of higher value, low-carbon intensity diesel for California,' he said.

The plant currently produces about 54,000 b/d of ULSD. If Marathon decides to go ahead with the project, it is expected to be online in 2022 with initial production of 48,000 b/d of renewable diesel and "ramping up from there," he added.

Marathon Petroleum expects its total system third quarter refinery throughput to average 2.345 million b/d, up from the 2.276 million b/d in the second quarter as runs increase at its Midwest and US West Coast plants. Second quarter utilization was 71% across its 16-refinery system which has over 3 million b/d of refining capacity.

Marathon expects third quarter Midwestern throughput of 1.045 million b/d compared with the 957,000 b/d processed in the second quarter. US West Coast refinery runs are expected to average 435,000 b/d topping the second quarter's 419,000 b/d, despite a total turnaround planned for its 68,000 b/d Kenai, Alaska, refinery and hydrocracker work underway at its 363,000 b/d Los Angeles complex during the quarter.

On the US Gulf Coast, third quarter throughput is expected to be lower, averaging 920,000 b/d, compared with the 970,000 b/d in the second quarter, as third quarter catalyst changes are planned for Marathon's two largest refineries – the 585,000 b/d Galveston Bay, Texas, plant and the 578,000 b/d Garyville, Louisiana plant.

As MRC reported earlier, US refiner Marathon Petroleum Corp is delaying all maintenance projects at its 102,000 barrel-per-day St. Paul Park, Minnesota, refinery for 2020 amid concerns related to the spread of the novel coronavirus. Several refiners have delayed planned maintenance at their plants this year due to concerns around the spread of the coronavirus among workers, or as part of capital and operational expense cuts.

Besides, Marathon Petroleum Corp idled its 166,000 barrel-per-day (bpd) refinery in Martinez, California beginning April 27 in response to the coronavirus pandemic’s hit to demand for refined products.

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

SP Chemicals undertakes unscheduled shutdown at SM plant in China

MOSCOW (MRC) -- SP Chemicals has taken off-stream its styrene monomer (SM) plant owing to technical issues, according to Apic-online.

A Polymerupdate source in China informed that the company halted operations at the plant on August 4, 2020. The plant is likely to restart on August 8, 2020.

Located at Taixing in Jiangsu province of China, the plant has a production capacity of 320,000 mt/year.

As MRC reported earlier, SP Chemicals last conducted a scheduled turnaround at SM plant in Jiangsu province from 19 to 30 March, 2020.

SM is the main feedstock for the production of polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics was 225,870 tonnes in the first half of 2020, down by 8% year on year. PS consumption increased by 2% year on year in June 2020, totalling 39,590 tonnes.

SP Chemicals, a Singapore-based company, is one of the largest ion-membrane chlor-alkali producer and aniline producer in China. The company's products include: aniline, caustic soda, chlorine, chlorobenzene, nitrochlorobenzene, nitrobenzene, vinyl chloride monomer (VCM). SP Chemicals plans to invest approximately RMB1.1 billion in facilities for the production of styrene monomer, an intermediate raw chemical used in making polystyrene plastics, protective coatings, polyesters and resins.
MRC

Ningxia Baofeng Energy resumes production at No. 1 MTO unit in China after turnaround

MOSCOW (MRC) -- Ningxia Baofeng Energy has brought on-stream its No.1 (methanol-to-olefins) MTO unit following a maintenance turnaround, as per Apic-online.

A Polymerupdate source in China informed that, the company resumed operations at this unit on August 2, 2020. The unit was shut for maintenance on 1 July, 2020.

Located at Yinchuan, Ningxia, China, the MTO unit has an ethylene and propylene production capacity of 300,000 mt/year each.

As MRC wrote previously, in June 2019, Johnson Matthey (JM) announced that Ningxia Baofeng Energy Group had "successfully" commissioned a new methanol plant at Ningxia Baofeng's 600,000-t/y coal-to-olefins complex in Ningxia Province, China. The 6,600-t/d methanol unit, based on technology from JM, utilizes syngas feedstock and combines advanced JM catalysts to produce stabilized methanol, which is used to produce olefins in a downstream facility.

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

INEOS Styrolution signs deal with UK firm to develop PS recycling

MOSCOW (MRC) -- INEOS Styrolution, the styrenics subsidiary of Ineos, has signed a joint development agreement with Recycling Technologies (Swindon, UK), a specialist plastic recycling technology provider, to advance the development of polystyrene (PS) recycling in Europe, according to Chemweek.

The agreement recognizes the commercial value of post-consumer plastic waste to prevent it being incinerated or ending up in landfill, the companies say.

Recycling Technologies has completed a detailed research and trial process with Styrolution. This included scientific research and processing of PS on Recycling Technologies’ Mark II test reactor, which has produced “excellent results,” the companies say. They will now further advance this depolymerization process based on Recycling Technologies’ fluidized-bed technology, currently used for mixed plastics, to adapt it for the commercial recycling of PS.

“Recycling Technologies’ fluidized-bed technology is a very promising technology to drive our joint agenda forward,” says Sven Riechers, vice president/business management, standard products, EMEA at Styrolution

“To date we have focused on the recycling of mixed plastic waste, this initiative will allow us to develop and expand our feedstock recycling technology solutions to address a new and important market, recycling polystyrene,” says Adrian Griffiths, CEO and founder of Recycling Technologies.

As MRC reported earlier, in January 2020, INEOS Styrolution, the global leader in styrenics, announced plans to build a world-scale acrylonitrile-butadiene-styrene (ABS) plant in Ningbo, China. The new production site will be adjacent to the recently acquired polystyrene plant in Ningbo. Thus, company plans to construct a green field ABS plant adjacent to the Ningbo PS site in the Zhejiang Province in Eastern China. Its annual capacity is planned to be at 600,000 tonnes. Construction is planned to start in 2020, completion is expected in 2023.

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics was 225,870 tonnes in the first half of 2020, down by 8% year on year. PS consumption increased by 2% year on year in June 2020, totalling 39,590 tonnes.

INEOS Styrolution is the leading, global styrenics supplier with a focus on styrene monomer, polystyrene, ABS Standard and styrenic specialties. With world-class production facilities and more than 85 years of experience, INEOS Styrolution helps its customers succeed by offering the best possible solution, designed to give them a competitive edge in their markets. The company provides styrenic applications for many everyday products across a broad range of industries, including Automotive, Electronics, Household, Construction, Healthcare, Packaging and Toys/ Sports/ Leisure. In 2018, sales were at 5.4 billion euros. INEOS Styrolution employs approximately 3,500 people and operates 20 production sites in ten countries.
MRC

July crude stocks in China reach record high, dampens Q3 refinery feedstock demand

MOSCOW (MRC) -- China's crude stockpiles reached a record high level in July as refiners struggle to digest mass crude oil cargoes purchased during the second quarter, while domestic fuel consumption slowed amid widespread flooding across 23 provinces during the month, reported S&P Global.

As a result, the high inventory has dampened China's crude oil demand for delivery in the third quarter as it might take a while to destock, industry officials and market sources said July 29.

Data intelligence firm Kpler said China's crude inventory hit a fresh high of 889.35 million barrels in the week beginning July 20, comparing to 874.84 million barrels in a month ago and 766.21 million barrels in the same week a year ago.

The surge in inventory came as little surprise as Chinese refiners have been aggressively buying crude oil since late first quarter in order to take full advantage of low oil prices.

China's crude oil imports, through both shipping and pipelines, surged 34.4% year on year to hit a record high of 12.99 million b/d in June and this has caused serious port congestion along the Easter provinces, Platts previously reported.

Kpler data showed that China's crude seaborne imports in July hover at about 11.09 million b/d, steady from 11.18 million b/d in June.

Combined with stable domestic crude output at 3.91 million b/d over the first-half of 2020, China's overall crude supplies are set to rise over 16 million b/d in July, according to S&P Global Platts estimates.

Signs of waning Chinese crude oil demand and requirement for Q3 has directly hit price differentials for various OPEC+ export crude grades, as well as the Platts benchmark Dubai price structure.

Chinese refiners' top crude picks, Oman and ESPO Blend grades, have taken a hit recently with price differentials for the Middle Eastern and Russian grades falling to multi-week lows.

The spread between front-month Platts cash Dubai and same-month Dubai swap may also struggle to push above the USD2/b premium threshold in Q3 as Chinese refiners put the brakes on crude procurement activities, trading desk managers in Beijing, Hong Kong, Seoul and Singapore said.

The physical Dubai crude market structure has weakened, with the spread between front-month Platts cash Dubai and same-month Dubai swap averaging 80 cents/b to date in July, down from the June average of 84 cents/b, Platts data showed.

Meanwhile, crude throughput in July remained at a high level after hitting all-time-high of 14.14 million b/d in June, as state-run Sinopec and PetroChina's flagship refineries have resumed operations after their scheduled maintenance.

But the throughput levels are capped as the widespread flooding in about 23 provinces forced refineries, especially those located along the Yangtze river line, to lower their operation rates amid weakening consumer and industrial fuel consumption.

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 only refinery Quanzhou Petrochemical, Platts data showed.

On the other hand, independent refineries' run rates declined about six percentage points from June amid narrowing margins and slowing sales.

Independent and state-owned non-major refineries account for about 31% of China's refining capacity, with the oil giants accounting for about 69%.

In addition, the volume of floating crude cargoes in Chinese waters remains at four times of the levels in normal days, despite easing slightly from the record high, port sources said on July 29.

There were 88.26 million barrels of crude on tankers idled in Chinese waters for seven or more days in the week beginning July 27, edging down from the all-time high of 88.4 million barrels seen in the week beginning June 29, Kpler said on July 29.

This means the volume of new arrivals still exceeds China's port handling capacity, leaving the cargoes to be discharged in August which will sustain China's crude imports and inventory levels in the month.

As MRC reported earlier, Sinopec SABIC Tianjin Petrochemical Co. (SSTPC), a 50-50 joint venture of Sinopec and SABIC, completed the debottlenecking of its ethylene cracker on 11 July 2020, adding another 30,000 tons/year output to its current capacity. Followed the expansion, the Tianjin based plant become the country's largest compressor unit, producing 1.3 million tons of ethylene annually.

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.

Saudi Basic Industries Corporation (Sabic) ranks among the world"s top petrochemical companies. The company is among the world"s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC