BASF invests to boost alkoxylate capacity in Asia Pacific

MOSCOW (MRC) -- BASF will increase its alkoxylate capacity in Asia Pacific, with its latest investment in Jinshan, China, as per the company's press release.

The company has acquired land, buildings and assets of SPC, related to alkoxylates production, adjoining the BASF Jinshan site, in order to fulfil the growing demand from customers across Asia Pacific, especially China. With the current alkoxylate line in the Care Chemicals Jinshan plant running at full capacity, this acquisition will help double the capacity at Jinshan from end 2020.

“This investment reinforces BASF’s commitment to China and makes Jinshan a significant production base for a range of products across the Care Chemicals portfolio in the region,” said Dr. Stephan Kothrade, President and Chairman Greater China, BASF.

“Expanding production capabilities in Asia to support our customers’ growth is a key pillar of our business strategy. We see multiple positive implications with this investment in Asia, including enhancing our supply chain to serve our customers more efficiently, establishing a stronger base for our innovate-to-market approach and providing future expansion possibilities on the site,” said Dr. Rajan Venkatesh, Senior Vice President, Care Chemicals, BASF Asia Pacific.

“We are seeing a rising demand for high-quality alkoxylates in the Asia Pacific market, especially in China. This strategic expansion will double our alkoxylates capacities in Jinshan and increase our overall capacity in Asia Pacific. We will focus on maximizing synergies between the existing and new operations and supporting the growth of our customers and the market,” said Dr. Jianwen Mao, Vice President, Business Management Greater China, Home Care, Industrial & Institutional, and Industrial Formulators, Care Chemicals, BASF Asia Pacific.

Alkoxylation technology is used in the manufacture of surfactants that are employed in a wide range of industry segments, including home care, formulations for laundry detergents, surface cleaners and dishwasher detergents, personal care, industrial and institutional cleaning applications as well as industrial formulations like in raw materials for the manufacture of plasticizers, emulsifiers for emulsion polymerization, crop protection additives, and polyurethane foams for the rubber industry.

As MRC wrote before, BASF-YPC, a 50-50 joint venture of BASF and Sinopec, undertook a planned shutdown at its naphtha cracker on 30 April 2020. The company initially planned to start turnaround at the cracker on April 5, 2020. The plant remained under maintenance unitl 18 June, 2020. Located in Jiangsu, China, the cracker has an ethylene capacity of 750,000 mt/year and propylene capacity of 400,000 mt/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.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of EUR59 billion in 2019.

Crude oil futures edge higher on US jobs report; Iraq's compensation cuts

MOSCOW (MRC) -- Crude oil futures were marginally higher in mid-morning Asian trade Aug. 7 as optimism over a better-than-expected US jobs report and pledged compensation cuts by Iraq buoyed the market despite the growing COVID-19 case counts worldwide, reported S&P Global.

At 10:25 am Singapore time (0225 GMT), the ICE Brent October crude futures was up 6 cents/b (0.09%) from the August 6 settle at USD45.15/b, while NYMEX September light sweet crude contract was up by 4 cents/b (0.1%) at USD41.99/b.

The global crude complex found strong support this week on the back of a larger-than-expected 7.37 million barrels drawdown in US commercial crude inventories as well as improvement in US factory orders for June and manufacturing PMIs in July.

This slew of positive economic data allowed the Brent marker to break out of its USD45/b resistance level, while WTI was also able to settle above USD42/b.

Further support was extended to the market over the state of the US economy after US initial jobless claims for the week ended Aug. 1 was reported at 1.186 million, lower than analysts' expectations of around 1.4 million and the 1.435 million figure reported in the previous week, US Labor Department data released on Aug. 6 showed.

This snapped a two-week uptrend of rising claims that had sown doubt regarding the strength of the US economic recovery. Investors will be looking to fresh cues from the official US non-farm payroll data for July due later today.

Meanwhile, Iraq had pledged to cut an extra 400,000 b/d in August to compensate for overproduction in the previous three months, as it tries to meet quotas under the OPEC+ supply agreement, S&P Global Platts reported earlier. This is positive for the global supply and demand fundamentals, especially as the group had begun to ease their output curbs to 7.7 million b/d in August.

However, the rapidly rising number of COVID-19 case counts worldwide continued to weigh heavily on market sentiments, capping further gains in the global crude complex. Global COVID-19 cases stand at 18,986,629, on track to breach the 19 million mark, latest data from John Hopkins University showed.

The number of daily infections worldwide had also climbed back up to 271,164 on Aug. 5, after four consecutive day of declines that culminated in a 3-week low of 202,486 cases on Aug 3.

Furthermore, rising geopolitical tensions between US and China remains a key concern.

"Given Asia's traders unfortunate predisposition to US-China tensions ahead of the August 15 trade talks, I expect Asia oil market activity, barring a big headline, could remain muted as it has been the past few days, but even more so ahead of the US Non-Farm Payroll report," Stephen Innes, chief global markets analyst at AxiCorp, said in a note Aug. 7.

As MRC informed before, US crude oil inventories moved sharply lower during the week ended July 24 as exports and refinery demand climbed to multi-month highs, US Energy Information Administration data showed July 29. Commercial crude stocks fell 10.61 million barrels to 525.97 million barrels that week, EIA data showed. While the draw pushed stockpiles to 14-week lows, they remained more than 17% above the five-year average for this time of year.

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.

PE imports to Ukraine increased by 2% in January-July

MOSCOW (MRC) - Imports of polyethylene (PE) into Ukraine increased to about 136,400 tonnes in the first six months of 2020, up 4% compared to the same period of 2019. Imports of high density polyethylene (HDPE) and low density polyethylene (LDPE) increased, according to MRC's DataScope report.

Last month, external supplies of polyethylene to Ukraine amounted to slightly less than 23,100 tonnes against 23,700 tonnes in June, local companies reduced their purchases of HDPE due to the introduction of an 18% import duty. Thus, overall PE imports reached 159,500 tonnes in January-July 2020, compared to 156,600 tonnes a year earlier. HDPE and LDPE imports increased, whereas imports of other PE grades decreased.

The supply structure by PE grades looked the following way over the stated period.
Last month, imports of HDPE reached 6,600 tonnes against 7,800 tonnes in June, Ukrainian companies reduced the volume of purchases of film and injection moulding polyethylene, including due to import duties. Overall HDPE imports exceeded 61,000 tonnes in the seven months of 2020 versus 56,300 tonnes a year earlier.

July LDPE imports were slightly over 7,900 tonnes, compared to 7,700 tonnes a month earlier, local companies raised their purchasing amid easing of the quarantine and under the pressure of seasonal factors. Overall LDPE imports reached 47,100 tonnes over the stated period, compared to 45,300 tonnes a year earlier.

July imports of linear low density polyethylene (LLDPE) into the country were about 7,100 tonnes, which was close to the previous month level. Overall LLDPE imports reached 43,600 tonnes in January-July 2020, compared to 47,500 tonnes a year earlier.

Imports of other PE grades, including ethylene-vinyl-acetate (EVA), totalled 7,800 tonnes over the stated period.


OPEC+ monitoring committee pushes back meeting to August 19

MOSCOW (MRC) -- The OPEC+ Joint Ministerial Monitoring Committee has pushed back its next online meeting by a day to Aug. 19, due to a request from Russia, reported S&P Global with reference to officials.

The committee, co-chaired by Saudi Arabia and Russia, meets monthly and is tasked with adjudicating compliance with OPEC+ production quotas and analyzing market conditions.

It can make recommendations for changes to the OPEC+ production cut agreement, although Russian energy minister Alexander Novak said none were likely for the upcoming meeting.

"No sharp movements or additional proposals are on the table," Novak told reporters Aug. 13, according to the Prime news agency.

The OPEC+ alliance in May instituted historic 9.7 million b/d production cuts - nearly 10% of pre-coronavirus pandemic demand - in response to the market collapse as a result of the health crisis.

The cuts eased to 7.7 million b/d in August and are scheduled to scale back further to 5.8 million b/d starting in 2021 through April 2022.

Under the deal, countries that failed to meet their quotas in May, June and July will be required to make so-called "compensation cuts" beyond their quotas in August and beyond, offsetting some of the production rise from other members.

Iraq has already said it will implement a 400,000 b/d compensation cut in August and September.

OPEC+ quota compliance fell to 96% in July, from 106% in June, with its collective output increasing by 1.10 million b/d, according to S&P Global Platts' latest survey of the alliance's production.

As MRC informed earlier, Russia’s Energy Ministry said in early August that the country’s oil output in July was unchanged from levels seen in June, in line with an OPEC+ agreement. The ministry added that its level of compliance with the deal in July was close that recorded in June, when it stood at 99%.

We remind that data collected and tabulated by the American Chemistry Council (ACC) show that due to growth in China, global chemicals production rose by 0.6 percent in June, an improvement from the 0.5 percent decline in May, Production has been declining throughout this year, with the last monthly gain occurring in December 2019. During June, chemical production fell in major regions except Asia-Pacific. Headline global production was off 7.2 percent year-over-year (Y/Y) on a three-month moving average (3MMA) basis and was off 7.4 percent from the peak December level. Global output stood at 109.8 percent of its average 2012 levels.

At the same time, 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. June production of polymers in primary form fell to 791,000 tonnes from 820,000 tonnes in May partially because of a scheduled shutdown for maintenance at ZapSibNeftekhim. Output of polymers in primary form totalled 4,900,000 tonnes over the stated period, up by 14.8% year on 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.

Indian Oil reports rise in petchem profit

MOSCOW (MRC) -- Indian Oil Corporation Ltd (IOC) on Friday reported a net profit of Rs 1,911 crore for the first quarter of FY2020-21 (FY21), a 47 per cent drop year-on-year compared to the same period of the previous fiscal, said Newindianexpress.

But, while the precipitous drop in revenues from operations during the quarter reflected the impact the lockdowns had on demand, the company also recorded an inventory loss due to the collapse of the crude oil markets in the month of April.

According to the company, its income from operations fell to Rs 88,936.54 crore in April-June from Rs 150,136.70 crore a year ago. "The company’s sales during the month of April 2020 were impacted significantly by the nationwide lockdown and consequently capacity utilisation of the plants was lower. However, the same has come back close to normal levels by the month of June 2020," IOCL said. IOC Chairman Shrikant Madhav Vaidya told reporters that the oil marketing company recorded an inventory loss of Rs 3,196 crore in Q1 as compared to inventory gain of Rs 2,362 crore a year back.

Inventory losses are recorded booked when a company buys raw material at a certain price, but by the time it is able to process it into finished product, prices have fallen. Since refinery prices are determined by prevailing international oil prices, an inventory loss is recorded by marketing companies like IOCL.

The official also said that Covid had impacted capacity utilisation during the quarter, with the company’s refineries averaging 69 per cent. This has risen to to 93 per cent in July but subsequent lockdowns by states have lowered the capacity utilisation to 75 per cent. "We won’t get back to normal times in the near future” due to way pandemic was spreading, the company’s chairman said.

We remind that 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.