US crude stocks fall as Hurricane Delta shuts in production, exports

MOSCOW (MRC) -- US crude stocks moved lower last week as Hurricane Delta shut in Gulf of Mexico output and exports hit a 14-month low, reported S&P Global with reference to US Energy Information Administration data showed Oct. 15.

US commercial crude stocks declined 3.82 million barrels in the week ended Oct. 9 to 489.11 million barrels, EIA data showed. The draw left inventories just 10% above the five-year average, the weakest supply overhang since mid-May.
The draw was concentrated on the US Gulf Coast, where stocks fell 5.12 million barrels to 256.33 million barrels, and on the US West Coast, which saw a 1.59 million-barrel draw put inventories at 52.37 million barrels.

Notably, stocks at the NYMEX delivery point of Cushing, Oklahoma, climbed 2.91 million barrels to 59.44 million barrels, the highest since the week ended May 8.

US crude production fell to 10.5 million b/d, down 500,000 b/d from the week prior and the lowest since the week ended September 4, as Hurricane Delta churned through the Gulf of Mexico, causing significant disruptions to oil and gas operations.

At peak on Oct. 10, the storm shut in 1.697 million b/d of crude and 1.692 MMcf/d of gas production, respectively representing 91.72% and 62.43% of total Gulf output, according to US Bureau of Safety and Environmental Enforcement data.

As of midday Oct. 15, approximately 440,000 b/d of crude production, or 24% of total Gulf output remained offline. S&P Global Platts Analytics projected it could take nearly two weeks to fully restore production.

US crude exports plunged 520,000 b/d to 2.14 million b/d, the lowest since mid-August 2019, EIA data showed.

While Hurricane Delta - which temporarily closed both LOOP and the Houston Ship Channel - delayed some exports, weak global spot crude demand and tight arbitrage economics continued to challenge US producers.

US light sweet barrels delivered in Northeast Asia have faced stiff competition from Nigerian and Middle Eastern crudes, with cracks projected to yield between 62 cents/b and 86 cents/b in refined value over WTI from the Magellan East Houston terminal to-date in October, according to Platts Analytics data.

US refinery net crude inputs pulled back 280,000 b/c to 13.58 million b/d as total utilization fell 2 percentage points to 75.1% of capacity.

Delta had only minor impact on regional refineries as close to 1 million b/d of crude refining capacity in Louisiana was already offline ahead of the storm. Citgo Petroleum's and Phillips 66's Lake Charles refineries, representing a combined 678,000 b/d of capacity, both sustained damage from Laura and Phillips 66's 255,600 b/d Belle Chasse refinery is undergoing maintenance work.

Total gasoline inventories fell 1.63 million barrels to 225.12 million barrels. The draw was in line with seasonal norms, holding the deficit to the five-year average steady at around 0.3%.

US Atlantic Coast gasoline stocks plunged 1.91 million barrels to 59.55 million barrels, putting inventories 4.7% behind the five-year average and just off 11-month lows.

Total distillate stocks plunged 7.25 million barrels to 164.55 million barrels, EIA data showed -- the largest weekly draw since the week ended January 31, 2003. Still, distillate stocks remain more than ample, sitting 18% above the five-year average.

The draws come as refined product supplied, EIA's proxy for demand, surged 1.13 million b/d higher to 19.48 million b/d, the strongest since the week ended Aug. 21.

The surge was skewed toward industrial consumption, however, with distillate demand climbing 8% on the week to 4.18 million b/d and petrochemical feedstocks appetite up 26% at 4.16 million b./d, a 14-week high. In contrast, gasoline demand fell back nearly 4% to 8.58 million b/d.

As MRC informed before, in August, 2020, US refiner Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

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 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.
MRC

MOSCOW (MRC) -- Trinseo (Berwyn, Pennsylvania) today issued preliminary third-quarter financial results, estimating net income of USD102-109 million, versus a net loss of USD128 million in the second quarter and net income of USD22 million in the third quarter of 2019, said Chemweek.

The company puts adjusted earnings per share of USD2.76-2.94, well ahead of the average analyst estimate of 69 cents, as compiled by Refinitiv (New York). Trinseo expects adjusted EBITDA of USD100-104 million, up sequentially from a loss of USD8 million up year-over-year (YOY) from USD88 million. Volumes were comparable, YOY, and margins improved YOY in most segments.

Frank Bozich, president and CEO, says strong market conditions have continued into the fourth quarter. "We observed a strong recovery in demand in the third quarter, most notably in automotive, construction, and appliance applications,” says Bozich. “This demand recovery supplemented continued strength in packaging, protective sheeting, and consumer electronics, which had been more resilient through the COVID-19 pandemic. The momentum in demand recovery has thus far extended into October and we are hopeful that it will continue throughout the quarter."

According to ICIS-MRC Price report, October prices of Russian PS continued their upward trend. A shortage of material remained in the domestic market. Traders said Nizhnekamskneftekhim reduced its offer prices for this month's PS purchases to 40%. October prices of Nizhnekamskneftekhim's GPPS grew for the agreed with buyers quantities to Rb89,000-95,000/tonne CPT Moscow, including VAT, whereas HIPS - to Rb93,000-99,000/tonne CPT Moscow, including VAT.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.8 billion in net sales in 2019, with 17 manufacturing sites around the world, and approximately 2,700 employees.
MRC

1. SABIC Specialties business on track to establish stand-alone operations

MOSCOW (MRC) -- SABIC has confirmed that the establishment of its Specialties strategic business unit (SBU), as a separate, stand-alone business, which will remain owned by SABIC, is on track, as per the company's press release. While SABIC continues to monitor the business impacts of COVID-19, at this time, it anticipates that the timing of the “go-live” for the stand-alone operations of the group of companies embedding its Specialties strategic business unit (SBU) will be November 1, 2020. The establishment of the stand-alone model for the Specialties SBU will bring additional value to its customers who depend on the Specialties business for its innovation expertise and highly differentiated ULTEM and NORYL resins, LNP compounds and copolymers.



MRC

MOSCOW (MRC) -- South Korea’s Lotte Chemical has delayed the restart of its fire-hit naphtha-fed steam cracker in Daesan for the third time to end-November, from October, reported S&P Global.

And this is likely to reduce the propylene supply to China and push up CFR China price.

It had initially planned to restart the cracker in September, then - in mid-November.

"The restart has been moved back to mid-November, but could be delayed again," a company source told S&P Global Platts previously. Lotte Chemical has plans for the cracker to operate as per normal by the end of 2020.

As MRC wrote before, the cracker was shut on March 4 following an explosion, which injured more than 30 people.

Lotte Chemical has two steam crackers. The steam cracker in Daesan has a production capacity of 1.1 million mt/year of ethylene, 550,000 mt/year of propylene and 150,000 mt/year of butadiene, while the Yeosu steam cracker is able to produce 1.18 million mt/year of ethylene, 550,000 mt/year of propylene and 130,000 mt/year of butadiene.

We remind that Lotte Chemical shut down its Deasan cracker for maintenance turnaround on October 14, 2019. The cracker resumed production on November 10, 2019.

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

Lotte Chemical runs two naphtha crackers in South Korea. One cracker is located in Daesan county in Seosan which can produce 1.1 million tonnes per year of ethylene with the other 1.2 million tonnes per year cracker in the southwestern city of Yeosu.
MRC

MOSCOW (MRC) -- Formosa Plastics USA, part of Formosa Petrochemical, has left a force majeure on polyvinyl chloride (PVC) supplies from its Texas and Louisiana plants in force as of 12 October, reported S&P Global.

The force majeure circumstansed were announced in mid-August, 2020, due to difficulties to produce the product amid upstream steam cracker problems.

"Formosa Plastics Corporation, USA, on behalf of Formosa Plastics Corporation, Texas, and Formosa Plastics Corporation, Louisiana, has experienced unexpected difficulties in its upstream facility at Point Comfort, Texas, impacting the PVC production at both manufacturing sites," the company said in the letter as of Aug. 14.

As MRC informed before, in March, 2020, Formosa Plastics was emerging from a turnaround at its 798,000 mt/year PVC plant and upstream 753,000 mt/year vinyl chloride monomer unit at its Point Comfort, Texas, complex.

According to MRC's ScanPlast report, Russia's overall PVC production totalled 718,500 tonnes in January-September 2020, down by 0.3% year on year. At the same time, only two producers managed to increase their PVC output.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC