Index of chemical production in Russia up by 5.3% in Jan-Jul 2020

MOSCOW (MRC) -- Russia's output of chemical products rose in Jule 2020 by 3.3% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first seven months of 2020, according to Rosstat's data.

According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output.

July production of benzene fell to 95,300 tonnes from 106,000 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 816,000 tonnes over the stated period, down by 4.9% year on year.

July production of sodium hydroxide (caustic soda) was 89,400 tonnes (100% of the main substance) versus 106,000 tonnes a month earlier because of shutdowns for maintenance at SayanskKhimPlast and RusVinyl. Overall output of caustic soda totalled 738,400 tonnes in the first seven months of 2020, down by only 0.4% year on year.

2,113,000 tonnes of mineral fertilizers (in terms of 100% nutrients) were produced in July 2020 versus 2,032,000 tonnes a month earlier. Overall, Russian plants produced slightly less than 14,500,000 tonnes of fertilizers in January-July 2020, up by 3.9% year on year.

Last month's production of polymers in primary form grew to 838,000 tonnes from 791,000 tonnes in June mainly because of higher capacity utilisation at ZapSibNeftekhim. Overall output of polymers in primary form totalled 5,740,000 tonnes over the stated period, up by 15.7% year on year.
MRC

US fuel inventories fall as demand rebounds

MOSCOW (MRC) -- US crude oil, gasoline and distillate inventories fell last week as refiners ramped up production and demand improved, according to Hydrocarbonprocessing with reference to a government report.

Refinery utilization rose 1.4 percentage points to 81% of total capacity nationally in the week to Aug. 7, the Energy Information Administration said in a weekly report. On the East Coast, refinery utilization rates climbed to 71.8% of total capacity, the highest since August 2019, according to the data.

US fuel demand rose to 19.37 million barrels per day last week, the highest since March, reducing gasoline and diesel inventories even as refineries produced more fuel.

"We're seeing the demand bounce back," said Phil Flynn, senior energy analyst at Price Futures Group. "The market is tightening a lot quicker than people thought."

The market has recovered from the doldrums of April, when US crude futures briefly dropped to more than negative-$40 a barrel, as producers trimmed supply due to a slump in demand amid lockdowns to control the COVID-19 pandemic.

Crude prices gained as much as 2% in the 30 minutes after the report was released. US crude was last trading 61 cents, or 1.5%, higher at USD42.22 a barrel by 12:28 p.m. EDT (1628 GMT), while Brent crude rose 67 cents, or 1.1% to USD45.17.

Gasoline stockpiles fell 722,000 barrels, the EIA said, exceeding analysts' estimates for a 647,000-barrel drop.

Distillate stockpiles, which include diesel, jet fuel and heating oil, fell by 2.3 million barrels, compared with expectations for a 400,000-barrel increase, the EIA data showed.

"Distillate, which has been the weak sister because of jet demand, had a big drawdown. That all is playing into the idea that demand is getting a little bit better," Flynn said.

Crude inventories fell 4.5 million, compared with analysts' expectations in a Reuters poll for a 2.9 million-barrel drop.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.3 million barrels last week, EIA said. US Gulf Coast crude stockpiles posted their biggest combined three-week drop on record, according to the report.

US crude output dropped to 10.7 million bpd from 11 million bpd the previous week, according to the report.

"The most surprising statistic was the decline in oil production by 300,000 barrels per day at the same time that we've been hearing producers talking about restoring production," said Andrew Lipow, president of Lipow Oil Associates in Houston. "That's going to give more support to crude oil prices for the balance of the year."

As MRC reported earlier, US crude oil stockpiles fell in the second week of August even as net imports jumped sharply, while fuel demand dipped as well, according to the US Energy Information Administration's statement. Crude inventories fell by 1.6 million barrels in the week to Aug. 14 to 512.5 million barrels, less than analysts’ expectations in a Reuters poll for a 2.7 million-barrel drop. Net US crude imports rose by 1.1 million barrels per day to 3.6 MMbpd, the EIA said.

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.
MRC

Stronger Hurricane Laura aims at heart of US oil refining industry

MOSCOW (MRC) -- Hurricane Laura strengthened on Wednesday as it churned over evacuated oil-production platforms in the US Gulf of Mexico and took aim at the energy industry’s refining hub along the Texas/Louisiana coast, reported Reuters.

The storm is forecast to become a Category 4 hurricane with catastrophic, 130 mile (209 km) per hour winds that will drive ocean waters up to 30 miles inland, forecasters said.

A half a million people in the two states fled the storm, clogging highways out of the area. Laura is forecast to dissipate quickly after landfall either late Wednesday or early Thursday, with the greatest danger more from wind and storm surges than rain.

Nine oil-processing plants that convert nearly 2.9 million barrels per day of oil into fuel, and account for about 15% of US processing were shutting down. Chevron Corp and Motiva Enterprises halted two oil refineries in the area on Wednesday.

The storm track will bring devastating winds and a storm surge to an area spanning Port Arthur, Texas, to Lake Charles, Louisiana, forecasters said, an area with a half-dozen large oil refineries and natural-gas processing plants.

The most powerful storm to hit the area since Hurricane Rita in 2005 could deliver an up to 15-foot (4.6-m) storm surge to the plants along the Texas/Louisiana border, the National Hurricane Center said.

Coastal area will see large and destructive waves accompanied by a storm surge that “could penetrate up to 30 miles inland from the immediate coastline,” according to NHC forecaster Daniel Brown.

Oil producers on Tuesday had evacuated 310 offshore oil facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production.

As the storm prepared to strike the Texas/Louisiana border, refiners further west were expecting to ride it out. Marathon Petroleum Corp plans normal production at its large refinery in Texas City, according to people familiar with the matter. Marathon did not have an immediate response.

As MRC wrote before, Marathon Petroleum has recently 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.

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

Executives request Trump back small refineries on relief

MOSCOW (MRC) -- Executives of 16 US refiners have asked President Donald Trump to side with small refineries on pending petitions for small refinery hardship relief under the Renewable Fuel Standard (RFS) in conversations with the Environmental Protection Agency, reported Reuters with reference to a letter signed on Monday.

“We ask that you resist efforts to harm the critical energy infrastructure you have fought so hard to protect during your Presidency under the false premise that doing so will help farmers,” wrote executives at refiners, including Par Hawaii Refining, Sinclair Casper Refining and Calumet Montana and Shreveport Refining.

The US Department of Energy recommended that some of the oil refiners that applied for retroactive exemptions from the nation’s biofuel blending law be granted partial relief, Reuters reported earlier this month.

As MRC wrote before, the US Department of Energy has finished reviewing retroactive requests from refiners for exemptions from the nation’s biofuel blending laws and has sent recommendations on how to address those requests to the Environmental Protection Agency, Senator Chuck Grassley said in mid-August. The EPA now has 90 days to review the recommendations, said Grassley, a senator from Iowa, the top ethanol-producing state. The agency will consider 58 pending requests for compliance years 2011 through 2018, EPA data showed.

Ethylene and propylene are feedstocks for producing 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

Evonik to acquire US catalyst rejuvenation firm Porocel

MOSCOW (MRC) -- Evonik Industries says it is acquiring catalyst rejuvenation firm Porocel Group (Houston, Texas) for USD210 million, as per the company's press release.

The purchase price is 9.1 times adjusted EBITDA in 2019, which Evonik says “is an attractive valuation for a high-quality asset in the catalyst sector.” The transaction will be financed by Evonik's "strong cash position" and is expected to close by the end of 2020 subject to approval by the relevant authorities, the company says.

The acquisition of Porocel expands significantly Evonik’s catalyst portfolio and especially its catalyst production capabilities, the company says. Sales of the combined catalyst business are expected to grow to more than EUR500 million (USD590 million) by the end of 2025 without the need for investment in new capacities, Evonik says.

“This acquisition is the next logical step in the strategic development of our portfolio. Our focus is on stable and high-margin specialty chemicals,” says Christian Kullmann, chairman of Evonik. “We are systematically expanding the share of our specialty businesses - and at an attractive valuation.”

Porocel generated sales of approximately USD100 million with an EBITDA of about USD23 million and EBITDA margin at about 23% in 2019, which is above Evonik's target range of 18-20%, the company says. Porocel has increased its EBITDA significantly in the last three years, driven by new product development through an expansion of R&D capabilities, Evonik says. It has more than 300 employees worldwide and production facilities in the US, Canada, Luxembourg, and Singapore.

Porocel offers a technology for rejuvenation of desulfurization catalysts, which are in increasing demand for producing low-sulfur fuel, Evonik says. Rejuvenation reduces CO2 emissions by more than 50% compared with the production of new desulfurization catalysts, it says.

As MRC reported before, Dow and Evonik have recently entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.

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.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.
MRC