US chemical production up in July, says ACC

MOSCOW (MRC) -- US chemical production is rebounding, according to the ACC’s US Chemical Production Regional Index (US CPRI). The figure, a three-month moving average (3MMA), increased 0.8% in July after dropping 2.0% in May and 1.6% in June, reported Chemweek.

Segments contributing to the increase included plastic resins, chlor-alkali, organic chemicals, industrial gases, synthetic dyes and pigments, consumer products, and fertilizers, says ACC. Production continued to decline in adhesives, coatings, other specialty chemicals, crop protection, synthetic rubber, and manufactured fibers.

ACC notes that goods manufacturing continued a broad-based recovery in July, with overall factory activity up 4.9% on a 3MMA basis.

Year-over-year (YOY), the US CPRI was down 5.9%, the fourteenth consecutive month of YOY declines, but an improvement over recent months.

As MRC wrote previously, US chemical volumes are expected to drop nearly 10% this year as global economic activity contracts due to the impacts of COVID-19, according to the American Chemistry Council's (ACC) Mid-Year 2020 Chemical Industry Situation and Outlook. Volumes should recover in 2021 with a return to pre-COVID-19 output levels in the US by the second half of 2021.

We remind that after the May fall in June, Russia"s output of products from polymers rose by 16.9% due to the easing of quarantine restrictions and seasonally stronger demand. However, this figure increased by 1.3% year on year in the first six months of 2020.

LyondellBasell beats Q2 earnings estimates

MOSCOW (MRC) -- LyondellBasell came out with quarterly earnings of USD0.71 per share, beating the Zacks Consensus Estimate of USD0.61 per share. This compares to earnings of USD2.75 per share a year ago. These figures are adjusted for non-recurring items, as per ZACKS.

This quarterly report represents an earnings surprise of 16.39%. A quarter ago, it was expected that this oil refiner and chemical company would post earnings of USDUSD.36 per share when it actually produced earnings of USD1.52, delivering a surprise of 11.76%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

LyondellBasell, which belongs to the Zacks Chemical - Diversified industry, posted revenues of USD5.55 billion for the quarter ended June 2020, missing the Zacks Consensus Estimate by 3.98%. This compares to year-ago revenues of USD9.05 billion. The company has not been able to beat consensus revenue estimates over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

LyondellBasell shares have lost about 30.9% since the beginning of the year versus the S&P 500's gain of 0.5%.

As MRC reported previously, in early August, 2020, China’s Bora LyondellBasell Petrochemical, a JV between the privately owned Bora Enterprise Group and the world's petrochemical major - LyondellBasell, has started up its new steam cracker at the Panjin complex in northeast China. The steam cracker, when fully operational, is able to produce up to 1 mln mt/year of ethylene.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.

COVID-19 - News digest as of 24.08.2020

1. Petkim posts USD20M profit in Q2 2020

MOSCOW (MRC) -- Turkey's first and only integrated petrochemical plant, Petkim, a subsidiary of the State Oil Company of the Azerbaijan Republic (SOCAR), reported a TL 145 million (approximately USD20 million) profit in the second quarter of 2020, reported Chemweek. According to the statement made by the company on Monday, Petkim’s sales revenue reached TL 2.2 billion with domestic sales recording a 10% increase in the March-May period compared with the previous quarter. During the period, the plant, located in the Izmir province in the Aegean region, prioritized the production of medical supplies and raw material for packaging to help the country’s fight against the pandemic.


Companies shut in 13% of oil production, 4.4% of gas as storms hit US Gulf of Mexico

MOSCOW (MRC) -- In advance of two tropical storms headed toward the US Gulf of Mexico, upstream operators have shut in 13% of the region's total oil production and more than 4% of its natural gas, reported S&P Global with reference to the Bureau of Safety and Environmental Enforcement's (BSEE) statement Aug. 22.

Total shut-in crude amounts to about of 240,785 b/d of oil, along with 19,000 Mcf/d of natural gas, or 4.39% of total US Gulf gas production, BSEE said.

Six producing platforms, or just under 1% of all those in the US Gulf, have been evacuated, along with four rigs, which are 40% of all rigs in the Gulf, the agency said.

In the past 24 hours, BP, Shell and Chevron - three of the US Gulf's biggest producers - said they have shut down production on assorted platforms in the projected paths of the storms.

Some independents are also evacuating crews from platforms ahead of the storms, which should strike the US Gulf Coast by mid-week.

The US Gulf produces currently about 1.85 million b/d of oil and about 2.7 Bcf/d of natural gas.

At 2 p.m. ET, Laura was projected to have mostly crossed over Puerto Rico and headed northwest towards the Louisiana coast, while at about 1 p.m., Marco was forecast to be near the tip of the Yucatan Peninsula and headed northwest for the southeast Texas coast, according to maps by the US National Hurricane Center.

Both storms are predicted to become hurricanes as they near the coast, but currently only Laura is projected to remain at that wind speed (minimum 74 mph) as it is about to make landfall, NHC maps showed.

Laura is targeted to make landfall around Aug. 26. Marco if forecast to be downgraded to a tropical storm prior to striking shore late Aug. 25 or early Aug. 26.

As MRC informed earlier, on 18 August, 2020, Chevron Corp reported a fire at its 112,229-barrel-per-day (bpd) Pasadena, Texas facility. "At this time, flames, smoke may be noticeable to the community. We are coordinating with local officials, and working to resolve the issue as soon as possible," the company reported on August, 19.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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.

Barge hits propane pipeline in Port of Corpus Christi, causing explosion

MOSCOW (MRC) -- A dredging barge hit a natural gas liquids pipeline at the Port of Corpus Christi, Texas early Aug. 21, causing an explosion, reported S&P Global with reference to sources.

"Shortly after 8 a.m. CDT today Enterprise Products Partners ("Enterprise") experienced a release of propane from a portion of its South Texas pipeline system at the Port of Corpus Christi. The incident resulted in a fire and unconfirmed reports of injuries," Enterprise said in a statement. "Initial findings indicate that the pipeline was struck by a third-party dredging barge working in the immediate vicinity, however a full investigation will be conducted to determine the cause."

Enterprise "has isolated the affected segment of the pipeline," the company said.

The explosion was caused by the dredging barge Waymon I Boyd, said a spokeswoman from the United States Coast Guard Atlantic Area.

The US Coast Guard shut down vessel traffic in the Corpus Christi Ship Channel Inner Harbor around 8 am Aug. 21, establishing a safety zone from the Inner Harbor Bridge at US Hwy 181 to the Viola Turning Basin.

The spokeswoman for the Coast Guard said there was no estimate for when vessel flow would resume in the safety zone.

The Inner Harbor channel, nicknamed Refinery Row, includes docks and terminals for companies including Citgo, Valero, Trafigura, Buckeye, and Plains Marketing. The channel also contains multiple bulk material terminals.

A Valero spokesperson said the company's Corpus Christi refineries are operating under normal conditions and no Valero employees were impacted by the incident.

No impact was seen in refined products markets. The US Gulf Coast is well-supplied with gasoline and distillates because of low demand stemming from the coronavirus pandemic.

Also, no immediate market impact was felt on the clean or dirty tanker markets, with the length of the channel closure still unknown. Platts Analytics cFlow showed two Aframax tankers and one Suezmax tanker anchored inside the Inner Harbor, and for product tankers two Medium Range ships and one Long Range 1 tanker were shown anchored in the area.

As MRC wrote before, Enterprise Products Partners LP (EPP), through one of its affiliates, has entered a long-term agreement with Marubeni Corp. of Japan, under which Marubeni will offtake polymer-grade propylene (PGP) produced from a second (PDH 2) plant currently under construction at EPP’s operations in Mont Belvieu, Tex., for supply to global customers. Concluded on June 16, the PGP offtake agreement is part of a long-term collaboration between EPP and Marubeni that also includes the export of liquefied ethylene, the first 25-million lb vessel of which loaded and sailed from EPP and Navigator Holdings Ltd.’s 50-50 joint venture marine terminal at Morgan’s Point, Tex., in early January, EPP and Marubeni said on June 30.

We remind that in July, 2020, Enterprise Products conducted maintenance at its propane dehydrogenation (PDH) unit in Mont Belvieu, Texas. This PDH unit has the capacity of 750,000 mt/y of propylene.

Propylene is the main feedstock for the production of polypropylene (PP).

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.