BP Whiting, Indiana, refinery starts up new hydrotreater

MOSCOW (MRC) -- BP Plc started up a new naphtha hydrotreater (NHT) last week at its 435,000 barrel-per-day Whiting, Indiana, refinery, reported Reuters with reference to company spokeswoman Sarah Howell's statement.

The 85,000-bpd NHT took three years and cost more than USD300 million to build, Howell said.

“The NHT allows the refinery to produce the full slate of US Environmental Protection Agency Tier 3 fuels, which require gasoline to have an average sulfur content of no more than 10 parts per million,” she said.

Hydrotreaters use hydrogen to remove sulfur from motor fuels.

As MRC informed before, BP reports a 43% year-on-year (YOY) decline to USD47 million in second quarter earnings for its petrochemicals business, which remains on schedule to be sold to Ineos for USD5 billion before the end of the year. BP says it received proceeds from divestments and other disposals in the quarter of USD1.1 billion, including “the first payment from the agreed sale of BP’s petrochemicals business to Ineos.”

We remind that 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.

Formosa Plastics declares force majeure on PP from Point Comfort in Texas

MOSCOW (MRC) -- US polymer producer Formosa Plastics Corp., part of Formosa Petrochemical, announced a force majeure on polypropylene (PP) products from its Point Comfort, Texas, petrochemical complex effective August 8, the company said in a letter obtained by S&P Global Aug. 10.

"As a result of this production outage and pursuant to Formosa's General Terms and Conditions of Sale, Formosa is declaring Excuse of Performance (force majeure) on its Formolene polypropylene products effective Aug. 8, 2020," the letter said.

A call to Formosa seeking further information about the outage and the force majeure was not returned by the time of publication.

The letter stated they were evaluating the impact of this event and their ability to produce and supply material.

As MRC reported earlier, Formosa Plastics' new 1.5 million mt/year cracker in Point Comfort, Texas, came online in H1 January, 2020, and was seen ramping up through January.

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.

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).

COVID-19 - News digest as of 10.08.2020

1.CIA says majority of UK chemical companies expect improved stability, sales in third quarter

MOSCOW (MRC) -- A survey of UK chemical companies has revealed that 80% expect improved stability and a rise in domestic and international export sales over the next three months, with over 70% also seeing the same upward trend for exports to the EU, despite significant uncertainty remaining, said Chemweek. The survey of its member companies by the Chemical Industries Association (CIA; London, UK) shows the majority also expect to see an improvement in capital expenditure, although around 10% of companies expect job losses and a reduction in R&D expenditure. The decline in industry sales came to a halt in the second quarter of 2020, with half of the companies surveyed now reporting “stability or improvement,” the CIA says. Exports to the EU and the rest of the world remained at current levels or improved during the quarter for half of those surveyed, as did capex and business utilization, it says. Stability and growth in employee numbers during the quarter, as well as spending on R&D, was reported by 80% of companies contacted, it adds.


Chemical activity barometer rises in July

MOSCOW (MRC) -- The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 2.7 percent in July on a three-month moving average (3MMA) basis following a 0.1 percent gain in June. On a year-over-year (Y/Y) basis, the barometer fell 8.9 percent in July, said Americanchemistry.

The unadjusted data show a 1.3 percent gain in July following a 3.4 percent gain in June and a 3.6 percent gain in May. The diffusion index rose to 41 percent. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for June was revised upward by 1.36 points and the May reading was revised upward by 1.40 points.

"With three consecutive months of gains, the latest CAB reading is consistent with recovery in the U.S. economy," said Kevin Swift, chief economist at ACC. The CAB has four main components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.

Production-related indicators were mixed in July. Despite improvement in new home sales, housing starts and building permits, trends in construction-related resins, pigments and related performance chemistry were soft. Reflecting a recovery in light vehicles and other industries, resins and chemistry used in durable goods were mixed. Plastic resins used in packaging and for consumer and institutional applications were mixed. Performance chemistry strengthened, while U.S. exports were mixed. Equity prices gained, and product and input prices strengthened. Inventory and other supply chain indicators turned positive.

The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the U.S. economy’s business cycle, and the barometer can be used to determine turning points and likely trends in the broader economy. Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.

Applying the CAB back to 1912, it has been shown to provide a lead of two to 14 months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.

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.

Lotte Chemical earnings plunge on lower sales, prices, forecasts upturn in third quarter

MOSCOW (MRC) -- Lotte Chemical said Friday its second-quarter net profit fell 88.7 percent from a year earlier due to low demand amid the coronavirus pandemic, said Koreantimes.

For the April-June period, Lotte Chemical posted a net profit of 30.6 billion won (USD25.8 million), compared with a profit of 271.2 billion won a year earlier, the company said in a regulatory filing.

Lotte Chemical said the decreased profit is blamed on lower prices of its major products due to slowing demand in the markets amid increased uncertainty over the COVID-19 pandemic and trade disputes between the United States and China.

Lotte Chemical's operating profit plunged 90.5 percent year-on-year to 32.9 billion won in the second quarter. Sales fell 32.1 percent to 2.68 trillion won from 3.94 trillion won during the same period, it said.

Shares in Lotte Chemical fell 2.51 percent to 174,500 won, underperforming the broader KOSPI's 0.48 percent gain. Lotte Chemical manufactures a wide range of petrochemical products, including polymers, monomers, basic petrochemicals, construction and interior materials.

Lotte Chemical is a petrochemical unit of Lotte Group, a South Korean retail-to-chemicals conglomerate. Kumho Petro Chemical reported its second-quarter net income of 99.8 billion won, down 13.4 percent from a year earlier.

The company said in a regulatory filing that operating income for the April-June period fell 13 percent year-on-year to 120.1 billion won. Revenue decreased 20.6 percent to 1.02 trillion won. (Yonhap).

We remind that, as MRC informed before, Lotte Chemical Titan Holding (Kuala Lumpur, Malaysia), an affiliate of Lotte Chemical (Seoul, South Korea), announced that the group's ethane cracker and ethylene glycol (EG) plant at Lake Charles, Louisiana, commenced commercial operations in August, 2019. Lotte Chemical USA, a 40/60 joint venture (JV) between Lotte Chemical Titan and Lotte Chemical, holds the Lotte group's stakes in the plants. The USD3.1-billion ethane cracker is an 88/12 JV between Lotte Chemical USA and Axiall, a subsidiary of Westlake Chemical. Lotte has invested about USD1.9 billion in the JV. Lotte Chemical USA owns 100% of the EG plant.

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.