ExxonMobil weighs global job cuts after unveiling Australian lay-off plan

MOSCOW (MRC) -- ExxonMobil Corp is assessing possible worldwide job cuts, a spokesman said, after the company announced a voluntary lay-off program in Australia, according to Hydrocarbonprocessing.

Exxon is the latest oil major to embark on axing jobs spurred by a historic collapse in fuel demand because of the coronavirus pandemic.

The company has slashed capital spending this year by 30% to around USD23 billion and said in August it planned both capital and operating expense cuts to defend its dividend after reporting losses in the first and second quarters.

“We have evaluations underway on a country-by-country basis to assess possible additional efficiencies to right-size our business and make it stronger for the future,” spokesman Casey Norton, based at the company headquarters in Irving, Texas, said in emailed comments to Reuters.

The comments mark a shift, after Exxon told Reuters in July it had no plans for layoffs due to the pandemic and no percentage targets to reduce its workforce through this year’s employee reviews.

In Australia, Exxon said on Wednesday it had completed a review of its current and future project work in the country and was seeking volunteers to quit the company.

“This program will ensure the company manages through these unprecedented market conditions,” it said in a statement.

“Until other study work is complete, it would be premature to draw conclusions for other countries,” Norton said.

Exxon is looking to sell its 50% stake in the Bass Strait oil and gas joint venture in southeastern Australia, which analysts have estimated could fetch up to USD3 billion.

Analysts have speculated it could also sell or close its Altona plant in Melbourne, Australia’s oldest refinery.

As MRC informed earlier, ExxonMobil has put off for a year work on its refinery expansion in Beaumont, Texas. The expansion project is now slated to be online sometime in 2023, versus the original 2022 proposal. Bloomberg first reported the delay. ExxonMobil declined to confirm the story, noting that it does not comment on the status of individual projects. The company "is evaluating all appropriate steps to significantly reduce capital and operating expenses in the near term as a result of market conditions caused by the COVID-19 pandemic and commodity price decreases," the company said in a statement.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

COVID-19 - News digest as of 03.09.2020

1. High petrochemical inventories in China dampen trade activity in August

MOSCOW (MRC) -- High levels of petrochemicals stored in China's tanks and warehouses, much of which was purchased during the price trough in March-April, are slowing import demand into China in August, reported S&P Global with reference to market sources. Despite inventory drawdowns in recent weeks, styrene monomer stockpiles remain above 300,000 mt in East China, keeping shore tanks filled to the brim, due in part to concentrated arrivals and a slowdown in consumption. Tank shortage and port congestion have led to an average 8-10 day waiting time for vessels offloading, one market source said, while traders were heard to be bearing higher demurrage costs, especially for import cargoes. "Given ample supplies and tight storage space, nobody in China is in a hurry to buy styrene cargoes at present," a downstream producer source said. Benzene commercial storage swelled to more than 283,000 mt in the last week of July, with further increases expected in the first week of August.

MRC

High petrochemical inventories in China dampen trade activity in August

MOSCOW (MRC) -- High levels of petrochemicals stored in China's tanks and warehouses, much of which was purchased during the price trough in March-April, are slowing import demand into China in August, reported S&P Global with reference to market sources.

Despite inventory drawdowns in recent weeks, styrene monomer stockpiles remain above 300,000 mt in East China, keeping shore tanks filled to the brim, due in part to concentrated arrivals and a slowdown in consumption.

Tank shortage and port congestion have led to an average 8-10 day waiting time for vessels offloading, one market source said, while traders were heard to be bearing higher demurrage costs, especially for import cargoes.

"Given ample supplies and tight storage space, nobody in China is in a hurry to buy styrene cargoes at present," a downstream producer source said.

Benzene commercial storage swelled to more than 283,000 mt in the last week of July, with further increases expected in the first week of August.

With deepsea parcels from Europe and the US set to discharge over the next few weeks, benzene stocks are set to rise further and tank companies are likely to impose stricter rules to ensure a smooth flow of material in and out of tanks, one source said.

The protracted storage of material in tanks has prompted tank companies to consider imposing overdue fees to encourage faster drawdown. It has also proven a challenge for earlier-traded CFR China cargoes, with at least one trade heard unwound because buyers were not able to place cargoes in tanks.

Isomer-grade mixed xylene inventory in East China hit a five-year high at 134,000 mt August 2; it was last higher in mid-March 2015, S&P Global Platts data showed.

"There is a huge issue on tank storage in China, hence the low prices," an aromatics trader said, referring to aromatics spot prices, which have recently hit record lows against feedstock naphtha.

With supply chains disrupted by the COVID-19 pandemic, producers and end-users of paraxylene and its downstream purified terephthalic acid said they have become accustomed to high inventories, but this has led to operational difficulties as producers look to load at the earliest possible laycan and buyers request that cargoes arrive later in the month. The result is an "operational mess," one source said.

PTA inventories in East China are estimated at 3.8 million-3.9 million mt in early August.

Adding further bearishness to PX, more PTA turnarounds are expected over second-half August to October due to the high inventory. Heightened US-China tensions in recent days pose further challenges, market sources said.

China's domestic yarn and fiber grade polyethylene terephthalate inventories remain high for both producers and buyers, with the overall textile-making inventory at 37.8 days in East China and limited export orders from the clothing sector resulting in weak buying interest for PET.

Inventories of another fiber-related product, monoethylene glycol, have eased to around 1.38 million mt, although this level is still considered high. Operating rates were heard at around 50% as end-users adjust to poor demand and high stock levels.

High MTBE inventories in China have dashed expectations of demand improving prior to the festive season in China.

"There are long holidays at end September and early October in China, which tend to increase the stockpile demand prior to that, however the positive demand expectation is increasingly pressured by the current high inventory level," a market source said, adding buyers were reluctant to import as they grappled with high tank storage costs and demurrage risks.

High toluene stockpiles have pressured some domestic suppliers in China to export to neighboring countries, with several market sources saying two parcels of toluene totaling 8,990 mt were exported in June.

The Asian phenol market has also been significantly impacted by tank shortages and severe flooding.

"Many vessels in China (are) lining up for discharging and need to wait for at least seven to 10 days," a Chinese phenol source said August 4.

China's coastal methanol inventory has also swollen to around 1 million-1.3 million mt in the past two weeks on the back of ample oversesas supply and lackluster domestic demand, with the discharging rate slowing as flooding impacts some downstream demand, trade sources said.

As MRC wrote previously, 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. 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.

According to MRC's ScanPlast report, Russia's estimated PET consumption totalled 367,720 tonnes in the first six months of 2020, up by 19% year on year. Russian companies processed 62,910 tonnes in June. Russian plants reduced their PET output in January-June 2020 by 25% year on year. Overall PET chips production at four Russian plants reached 281,100 tonnes in January-June 2020.
MRC

Mitsui Chemicals runs its Osaka cracker normally after restart

MOSCOW (MRC) -- Mitsui Chemicals has operated its naphtha cracker normally following a maintenance turnaround, according to Apic-online.

A Polymerupdate source in Japan informed that, the company resumed operations at the cracker on July 19, 2020. The cracker was shut for maintenance on June 11, 2020.

Located in Osaka, Japan, the cracker has an ethylene capacity of 500,000 mt/year and a propylene capacity of 280,000 mt/year.

As MRC informed before, the company last conducted a turnaround at this cracker from mid-June, 2018, to 11-22 August, 2018.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

Mitsui Chemicals is a leading manufacturer and supplier of value added specialty chemicals, plastics and materials for the automotive, healthcare, packaging, agricultural, building, and semiconductor and electronics markets. Mitsui Chemicals is a Japanese Chemicals company, a part of the Mitsui conglomerate. The company has a turnover of around 15 billion USD and has business interests in Japan, Europe, China, Southeast Asia and the USA. The company mainly deals in performance materials, petro and basic chemicals and functional polymeric materials.
MRC

Polief to produce PET partially from recycled feedstock

MOSCOW (MRC) -- SIBUR's Polief site in Blagoveshchensk, Republic of Bashkortostan, launches the production of green polyethylene terephthalate (PET) granules, which, among other materials, will rely on some 34 kt of recycled plastics annually, according to the company's press release.

PET flakes derived from used food packaging will serve as an input for primary polymers. Compliant with the highest standards, Polief green granules will help satisfy growing demand for eco-friendly PET packaging while providing the manufacturer with a comprehensive solution combining primary and secondary PET. On top of that, reusing valuable feedstock to make high-quality products will cut specific electricity consumption and greenhouse gas emissions, as a result.

PET is utilised to manufacture packaging for soft drinks, dairy products, pharmaceuticals, household chemicals, and much more. PET packages are inert to foods, safe for people and the environment, and fully recyclable.

Maxim Remchukov, Head of Sustainable Development at SIBUR said: “Involving recyclables in PET production is a vital part of SIBUR’s 2025 Sustainability Strategy. SIBUR remains focused on boosting process efficiency, improving its grade range, enhancing product properties and developing new solutions. By using recycled feedstock, the Company will help promote the circular economy, while also cutting its greenhouse gas emissions per tonne of end products.”

SIBUR has signed relevant cooperation agreements with the Ministry of Natural Resources and Environment and the Russian Environmental Operator on the sidelines of EEF 2019. The investment project provides for installing the equipment to further treat and sort flakes, which will make it possible to feed the recycled feedstock into the existing production line. The design and engineering documentation will leverage the latest solutions and technologies from global leaders in industrial polymer processing. The project is on the priority list of SIBUR's Blagoveshchensk site for 2020–2022.

Evgeny Semenko, CEO of Polief said: “We expect to start using recycled polyethylene terephthalate packaging at POLIEF by mid-2022. This will enable us to offer both primary and secondary PET and contribute to promoting the circular economy. The processing method allows for the polymer break-down and repeated use of feedstock. The approved technology for using secondary PET (PET flakes) in the primary PET production is an eco-friendly advanced way of industrial PET recycling, unique in Russia.”

PET flakes will come from different parts of Russia, with Bashkortostan and the neighbouring regions having priority. The project will rely on intermediates from processed bottles washed and prepared by suppliers at their own sites. The incoming feedstock will be checked for compliance with quality standards. Bashkortostan currently collects 4 kt of used PET bottles per year, with the figure to potentially reach 20 ktpa if measures are taken to improve collection rates and the sorting quality.

As MRC reported before, in early December 2019, on the margins of the meeting at SIBUR’s PolyLab R&D Centre, SIBUR, the largest petrochemical comples in Russia and Eastern Europe, and BASF, Geman petrochemical major, signed a Memorandum of Understanding (MOU) formalizing their partnership on sustainable development and circular economy agenda further to the companies’ environmental talks held back in June 2019. The memorandum is set to strengthen the partners’ commitment to long-term sustainable development goals. BASF and SIBUR agreed to collaborate more closely on water efficiency, carbon footprint management and chemicals recycling along with joining forces in implementing international environmental initiatives.

According to MRC's ScanPlast report, Russia's estimated PET consumption totalled 367,720 tonnes in the first six months of 2020, up by 19% year on year. Russian companies processed 62,910 tonnes in June. Russian plants reduced their PET output in January-June 2020 by 25% year on year. Overall PET chips production at four Russian plants reached 281,100 tonnes in January-June 2020.

Polief JSC (Blagoveshchensk, Republic of Bashkortostan) is the only producer of terephthalic acid (PTA) and the largest supplier of PET in Russia. SIBUR began the reconstruction of the production of PTA in Blagoveshchensk in December 2017. The capacity for the production of PTA after modernisation is 350,000 tonnes per year, PET - 219,000 tonnes per year.

SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.
MRC