Westlake Polymers declares force majeure on Lake Charles polymer units

MOSCOW (MRC) -- Westlake Polymers declared force majeure on its North American polymer facilities Aug. 31 after Hurricane Laura adversely impacted its unit sites, the company said in a letter seen by S&P Global.

Additionally, Westlake's Lake Charles, Louisiana, complex had "incurred limited physical damage" and restarts would primarily depend on the availability of electric power, industrial gases, and other feedstocks, according to an official statement Aug. 27 that spokeswoman Erika Soechting shared with Platts on Sept. 1.

The company also declared the force majeure as a result of the hurricane and associated uncertainty, the letter stated.

"Westlake has begun assessing its facility conditions and associated supply and distribution issues," the letter said.

There will be a better assessment of the damage and potential restart timing in the forthcoming days and any potential impacts on their sales, the letter added.

Westlake's facility at Lake Charles, Louisiana, has a 200,000 mt/year linear low density polyethylene (LLDPE) unit; a 60,000 mt/year high density polyethylene (HDPE)/LLDPE unit; a 386,000 mt/year low density polyethylene (LDPE) plant.

The letter joins a list of force majeures declared in the week of Aug. 30 by petrochemical producers, including Ineos Olefins & Polymers and Sasol, recovering from widespread power outages and damage from Hurricane Laura, which made landfall Aug. 27.

In turn, market participants expect September to be very challenging as offers grow tight due to limited availability from producers facing shutdowns.

"I won't be surprised if export offers are significantly less. Ineos and Sasol have already declared force majeure and several others are facing production issues," one trader source said.

As MRC wrote before, Westlake Chemical also declared a force majeure on Aug. 31 for all its North American PVC and VCM. Westlake's shutdown of its Lake Charles complex has idled 38% of its US VCM production, resulting in two VCM plants with a combined capacity of 952,318 mt/year going offline.

The complex also has three upstream chlor-alkali plants with a combined capacity of 1.27 million mt/year of chlorine and 1.36 million mt/year of caustic soda - 46% of the company's overall North American chlor-alkali capacity.

According to MRC's DataScope report, imports of suspension polyvinyl chloride (SPVC) into Russia totalled 13,800 tonnes in the first half of 2020, up by 5% year on year, whereas exports grew by 7% year on year.

As per MRC's ScanPlast report, Russia's overall production of polyethylene (PE) totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. LLDPE accounted for the greatest increase in the output.

Westlake Chemical Corporation is an international manufacturer and supplier of petrochemicals, polymers and building products with headquarters in Houston, Texas. The company's range of products includes: ethylene, polyethylene, styrene, propylene, chlor-alkali and derivative products, PVC suspension and specialty resins, PVC Compounds, and PVC building products including siding, pipe, fittings and specialty components, windows, fence, deck and film.

September prices of European PVC rise significantly for CIS markets

MOSOCW (MRC) -- Negotiations over prices of European polyvinyl chloride (PVC) for September shipments to the CIS markets started at the beginning of this week. European producers announced an increase of EUR30/tonne or higher in their export PVC prices, despite a roll-over of the ethylene price, according to ICIS-MRC Price report.

September contract price of ethylene was agreed at the previous month's level, which theoretically allowed to talk about the steadiness of the net cost of PVC production, if compared to August. However, scheduled and unscheduled plants' shutdowns in Europe and globally strong demand for PVC allowed European producers to talk about an increase in export prices for the CIS countries in September. An increase of EUR30-40/tonne in export PVC prices has been under discussion.

Demand for PVC from consumers in the CIS countries remained good due to the seasonal factors, and converters were forced to purchase some of their quantities in Europe, whereas European producers have limited their export sales to a number of regions, including the CIS markets, for the past three months. Restrictions were caused by plants' scheduled shutdowns for maintenance and unscheduled shutdowns for repairs and strong demand from both the domestic market and export markets.

Overall, deals for September shipments of suspension polyvinyl chloride (SPVC) to the CIS markets were negotiated in the range of EUR705-750/tonne FCA, whereas the previous month's deals were discussed in the range of EUR665-720/tonne FCA.

September PP prices in Europe roll over from August for CIS markets

MOSCOW (MRC) -- The September contract price of propylene was agreed in Europe at the previous month's level. Thus, most European producers rolled over their export PP prices for September shipments to the CIS countries, according to ICIS-MRC Price report.

Negotiations over September prices of European PP begun in the middle of this week. All market participants said European producers agreed to maintain their export prices of propylene polymers at the August level for this month's shipments on the back of stability of propylene prices in the region.

Deals for September deliveries of homopolymers of propylene (homopolymer PP) were negotiated in the range of EUR880-940/tonne FCA. Deals for block copolymers of propylene (PP block copolymer) were discussed in the range of EUR960-1,020/tonne FCA.

Some European producers still had restrictions on export shipments, but they were not critical for most buyers.

US largest crude oil refinery to begin making motor fuels

MOSCOW (MRC) -- Motiva Enterprises plans for the largest US crude oil refinery to return to making motor fuels by Sept. 11 following restart from a complete shutdown, reported Reuters with reference to sources familiar with plant operations.

Motiva has restored utilities ahead of starting up production units at its 607,000-barrel-per-day (bpd) refinery in Port Arthur, Texas, which was shut on Aug. 25 when Hurricane Laura menaced the US Gulf Coast.

The refinery went through a cold shutdown, meaning all units were completely idled and allowed to cool down. Cold shutdowns are rare events.

The utilities at the refinery were also shut.

Temperatures on production units will have to be raised as high as 1,000 Fahrenheit (578 C) before oil and other feedstocks can be added. The units will be returned to production after sitting idle.

The fuels produced will have to meet specifications before they are sent to terminals and retail stations.

As MRC wrote before, Motiva Chemicals at Port Arthur, Texas, began shutting down light olefin operations last Monday to prepare for the arrival of Tropical Storm Laura.

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.

Motiva Enterprises, LLC, is a fully owned affiliate of Saudi Refining Inc. and headquartered in Houston, Texas, United States with revenue of USD24 billion. Previously, it was a 50–50 joint venture between Shell Oil Company (the wholly owned American subsidiary of Royal Dutch Shell) and Saudi Refining Inc. (controlled by Saudi Aramco).

Oil prices at one-month low on demand worries

MOSCOW (MRC) -- Oil prices extended losses, falling by more than 2% to their lowest point since early August, as worries about weaker US gasoline demand and a sluggish economic recovery from the COVID-19 pandemic dented sentiment, reported Reuters.

Brent crude LCOc1 fell USD1, or 2.25%, to USD43.43 a barrel by 1118 GMT. US West Texas Intermediate (WTI) crude CLc1 futures were down USD1.02, or 2.5%, at USD40.49 a barrel.

Both benchmarks fell more than 2% on Wednesday.

US gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier, Energy Information Administration (EIA) data showed on Wednesday, with consumption of other oil products also falling.

“It is the latest data set that possibly caught the eye of those who ran long positions, and not even another record close in the US stock market was able to change the direction of the herd,” Tamas Varga of oil brokerage PVM said.

Other data, such as US private employers hiring fewer workers than expected for a second straight month in August, also fed fears that economic recovery was lagging.

Oil markets, however, drew some support from Iraq’s denial it was seeking exemption from OPEC+ oil cuts during the first quarter of next year.

OPEC’s second largest producer also said it may seek to extend by two months until the end of November the period for making additional compensation cuts under the OPEC+ deal.

Analysts warn that the upcoming refinery maintenance and the end of the summer driving season would also limit crude demand.

WTI crude has come under pressure “after US refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil”, ANZ Research said in a note on Thursday.

Due to shutdowns ahead of Hurricane Laura, US refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity, the EIA said.

“These factors suggest a seasonal drop-off in refinery runs and higher oil inventory levels as we advance through September,” AxiCorp market strategist Stephen Innes said.

As MRC informed earlier, most chemical production facilities in the region between Beaumont-Port Arthur, Texas, and Lake Charles, Louisiana, have shut down in preparation for Hurricane Laura, which was forecast to make landfall near the Texas-Louisiana border last Wednesday night or early Thursday. Several olefin crackers and associated derivative polymer units have been shut down, as has about 2.5 million b/d of refining capacity.

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