Al-Hejailan Group and Dow announce joint venture

MOSCOW (MRC) -- Al-Hejailan Group and Dow announced an agreement to form a joint venture to design, build and operate a polyacrylic acid (PAA) and emulsion polymers plant in the Kingdom of Saudi Arabia, according to Hydrocarbonprocessing.

Al-Hejailan will hold a 75% stake in the joint venture, and Dow will have 25% ownership.

This partnership will enable Al-Hejailan and Dow to meet growing customer demand for coatings and water treatment applications in the Kingdom of Saudi Arabia and the broader Middle East region, as well as penetrate new markets.

The plant is expected to have a capacity of 40,000 metric tons per year and will be built and operated by Al-Hejailan Group in Plaschem Park. The facility will utilize Dow’s manufacturing technologies, and Dow will be responsible for the marketing of the plant’s production. Construction of the plant is expected to begin in 2021 and production is expected to come on-stream in 2023.

Faisal Al-Hejailan, chief executive officer of Al- Hejailan Group, said “At Al- Hejailan Group, we are excited about this investment, which fulfills an important milestone in our group’s overall strategy and drives towards the development of more robust and expansive downstream manufacturing capabilities in the Kingdom. It further strengthens our strategic partnership with Dow, as we work jointly to capture downstream opportunities that align with the Kingdom’s localization program and the overall Vision 2030 program.”

“This investment further reinforces Dow’s commitment to serving the region and promoting the downstream industry in the Kingdom of Saudi Arabia,” said Howard Ungerleider, president and chief financial officer for Dow. “This strategic partnership with Al-Hejailan builds on Dow’s long-standing presence in the Kingdom and supports the long-term growth potential we see for Dow and our partners throughout the region.”

As MRC reported earrlier, in September, 2020, Dow and Luhai, an integrated waste management company located in Xiamen, China, announced their collaboration to give plastics waste collected by Luhai a second life, thereby increasing the circularity of plastics in China. The agreement is in line with Dow’s new sustainability targets to Stop the Waste by enabling one million metric tons of plastic to be collected, reused or recycled through its direct actions and partnerships by 2030.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

The Dow Chemical Company is an American multinational chemical corporation. Dow is a large producer of plastics, including polystyrene, polyurethane, polyethylene, polypropylene, and synthetic rubber.

Crude settles higher as COVID-19 vaccine boosts outlooks

MOSCOW (MRC) -- Crude oil prices settled at multimonth highs Nov. 23 as demand outlooks improved amid reports of progress on a third COVID-19 vaccine, reported S&P Global.

NYMEX January WTI settled 64 cents higher at USD43.06/b, and ICE January Brent was up USD1.10 at USD46.06/b.

Oil prices moved higher overnight after European drug maker AstraZeneca announced its COVID-19 vaccine was 70% effective in late-stage trials. The news comes on the heels of the Pfizer and BioTech submitting a request Nov. 20 for Emergency Use Authorization of their COVID-19 vaccine to the US Food and Drug Administration. Those companies announced earlier in November their vaccine was more than 90% effective in late-stage trials.

"This is the third Monday in a row with positive vaccine news," OANDA senior market analysts Edward Moya said. "That's pretty much driving the trade."

Front-month WTI settled at the highest since Aug. 26, while front-month Brent futures were last higher March 5.

Brent futures saw additional upward pressure following an overnight missile attack on a Saudi Aramco distribution station north of Jeddah that caused a fuel tank to catch fire.

Yemen's Iran-backed Houthi rebels claimed responsibility for the attack, in a statement made by the militia's spokesperson on Twitter. Houthi general Yahya Sarea announced the distribution station was targeted with a Quds-2 missile.

The Jeddah incident follows an attempted attack Nov. 11, when Houthis directed two unmanned boats carrying explosives toward Aramco facilities in Jazan on the Red Sea.

Front-month Brent settled at a 2 cent/b premium compared with the second-month contract, flipping the front end of the forward curve to backwardation for the first time since June 26.

NYMEX December RBOB settled 2.88 cents higher Nov. 23 at USD1.2040/gal, and December ULSD was up 2.42 cents at USD1.3105/gal.

The IHS Markit US manufacturing PMI climbed to 56.7 for November, up from 53.4 in October and beating market expectations of a modest pullback in the index. The increase suggests that US economic recovery is extending into the fourth quarter even as rising COVID-19 cases force state and local governments to impose increasingly restrictive lockdown measures.

Still, gasoline cracks continued to weaken. The ICE New York Harbor RBOB crack against Brent fell to around USD4.27/ in afternoon trading, on pace for the lowest close since early August.

As MRC informed previously, global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

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 ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Chemical recycling boost could see global plastic packaging recycling rate hit 50% by 2040

MOSCOW (MRC) -- Approximately 220 million tons (MT) of plastic waste is generated globally each year. Of this, around 90MT is mismanaged and leaking into the natural environment, 70MT is landfilled, 30MT is incinerated and another 30MT is recycled. If the plastics value chain is to become more sustainable, the industry must focus on reducing the amount of mismanaged waste and recapturing as much of its value as possible. To do this, more investment must be allocated to chemical recycling technologies, reported Hydrocarbonprocessing with reference to Wood Mackenzie.

“Mechanical recycling has, to date, been the best way of capturing the value of plastic waste by turning it into other useful applications. However, the approach has its limitations.

“Chemical recycling - sometimes known as ‘advanced recycling’ - describes a range of approaches that can be used to significantly increase the amount of plastic waste that is cycled back into the chemicals value chain. Among several benefits, chemical recycling technologies reduce fossil fuel extraction and CO2 emissions, and give value to difficult to recycle plastic waste by acting as a complement to mechanical recycling,” said Ashish Chitalia, Wood Mackenzie head of Polyolefins.

While chemical recycling has the potential to provide solutions to challenges facing the plastics value chain, it is not universally hailed by all stakeholders as a having a positive role to play. Some are concerned by the environmental impact of chemical recycling, while others consider it to be a form of greenwashing.

“Despite objections from some stakeholders, if implemented carefully, chemical recycling can increase our capacity to process plastic waste, ensure that more plastic waste is reprocessed into higher value products such as food grade applications, and reduce carbon emissions relative to some - although not all - alternative means of dealing with end-of-life plastic,” added Chitalia.

According to a scenario modelled by Wood Mackenzie, which factored in plastic packaging consumption, collection rates and optimum disposal routes for different combinations of plastic, packaging type and region, chemical recycling can double the proportion of plastic packaging that is currently reprocessed.

The results of the model, as shown in the chart below, suggest that there is potential for strong growth in both total recycling rates and absolute volumes. In combination, the proportion of plastic packaging reprocessed into the energy and petrochemical value chains would more than double, from 22% today to 50% by 2040. Plastic to feedstock (P2F) routes - which are better positioned to handle the dominant polyolefin applications - would be expected to grow at more than twice the rate of plastic to plastic (P2P), accounting for 17% of plastic packaging in 2040 compared to 8% in 2020.

“If we look at the United States today, for example, only 13% of plastic packaging is recycled, a further 17% is incinerated and 70% is landfilled. If chemical recycling can be implemented to move significant volumes of waste to the most appropriate disposal route, it will make a considerable positive impact to the sustainability of the petrochemicals industry. In a country such as the United States, this could revolutionize the way plastic waste is managed,” said Chitalia.

What are the key variables that will determine whether chemical recycling is likely to scale? Wood Mackenzie’s report identifies three key factors:

Collection rates: the feedstock for recycling is plastic waste and this needs to be collected to be fed into managed disposal routes. 40% of plastic waste is currently mismanaged and lost to the system. This rate needs to increase to provide feedstock for chemical recycling facilities, particularly in middle-income countries.

Investment: to achieve a recycling rate of 25% of plastic packaging, Wood Mackenzie calculates that USD50 billion of investment will be required by 2040 to deliver enough chemical recycling capacities.

Value chain integration: with much of the cost of dealing with end of life plastic coming from collecting and sorting of the waste, there are likely to be considerable economies of scale by integrating waste management, refining and petrochemicals facilities to shorten the distance between waste leaving the consumer and re-entering the value chain.

Given the level of activity in the form of pilots, partnerships and investments, participants in the plastics value chain anticipate that chemical recycling will have an important role to play in addressing end of life plastic in the future, says Wood Mackenzie.

"The situation is moving fast, and we are now seeing major plastics producers beginning to commercialize chemically recycled plastics, with Chevron Phillips becoming the first company to announce the production of circular polyethylene in October 2020. The fact that there is so much activity in developing technologies and partnerships is indicative that there is confidence that these technologies will have an important role to play in the coming years," added Chitalia.

As MRC reported earlier, Chevron Phillips Chemical still has not lifted force majeure on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations. The force majeure circumstances were declared on 1 September, 2020. CP Chem operates a 420,000 mt/year high-density polyethylene (HDPE) plant in Orange, Texas, and an 855,000 mt/year cracker in Port Arthur. The company plans to minimize the impact of the event and return to full PE deliveries as soon as possible.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Asia Distillates-Gasoil cash discount narrows, cracks dip

MOSCOW (MRC) -- Asia's cash differentials for 10 ppm gasoil gained on Friday backed by a firmer deal in the physical market, while refining margins for the industrial fuel dipped amid concerns that near-term supplies would likely outweigh demand, reported Reuters.

Cash differentials for gasoil with 10 ppm sulphur content were at a discount of 13 cents a barrel to Singapore quotes on Friday, compared with a 14-cent discount on Thursday. Refining profit margins, also known as cracks, for 10 ppm gasoil slipped 8 cents to USD4.97 a barrel over Dubai crude during Asian trading hours. The cracks, however, have gained 6.7% this week. With surging COVID-19 cases and renewed lockdowns in several countries, the industrial and transportation demand will come under further pressure, trade sources said. The front-month time spread for 10 ppm gasoil, which has remained in a contango structure since early August, traded at a discount of 14 cents per barrel on Friday, Refinitiv Eikon data showed.

The regional gasoil market, currently grappling with supplies also due to lack of arbitrage opportunities to Europe, is expected to receive additional supplies from China over the next few weeks, which would worsen the glut, market watchers said. The exchange of futures for swaps (EFS), which determines the gasoil price spread between Singapore and Northwest Europe, traded around minus USD3 per tonne on Friday, typically making it unworkable for arbitrage shipments. Arbitrage is usually profitable when the EFS trades at about minus USD15 a tonne or below, though it also depends on other factors such as freight rates, according to traders. ARA STOCKS - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dropped 7.9% to 2.4 million tonnes in the week to Nov. 19, data from Dutch consultancy Insights Global showed. - The data showed ARA jet fuel inventories fell 4.4% to 1.1 million tonnes.

As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

Thus, in early November 2020, Royal Dutch Shell announced it was closing its refinery in Convent, Louisiana, the largest such US facility and first on the US Gulf Coast to shut down since the coronavirus pandemic devastated worldwide demand. The shutdown will occur this month after Shell failed to find a buyer. The refinery is the ninth in North America targeted for a shutdown or to be idled since the pandemic, which has dealt a heavy blow to fuel demand globally.

We remind that Royal Dutch Shell plc. said earlier this month that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

SCS demonstrate that mechanically recycled PS is suitable for food contact

MOSCOW (MRC) -- Styrenics Circular Solutions (SCS), a value chain initiative to increase the circularity of styrenics, announced that it has successfully demonstrated that polystyrene (PS) is mechanically recyclable to food contact standards, reported GV.

In cooperation with the Fraunhofer-Institute fur Verfahrenstechnik und Verpackung IVV, SCS performed so-called challenge tests, which confirmed the high cleaning efficiency of the mechanical recycling technology for polystyrene to remove impurities originating from waste streams. These results enable the first application for an opinion of the European Food Safety Authority (EFSA) on the use of recycled polystyrene (r-PS) as food contact material.

With the aim to consistently achieve the very high purity levels of the polystyrene recyclate needed for food contact materials, the ‘supercleaning’ technology of machine manufacturer Gneuss was used during the mechanical recycling process. Its ability to handle post-consumer polystyrene waste from food contact packaging was ‘stress tested’ and challenged by adding impurities under worst-case assumptions. The challenge test revealed the very good cleaning efficiency of the technology used, leading to excellent purity levels of the r-PS. This result is supported by the intrinsic properties of polystyrene being a low diffusion polymer, which prevents that any waste impurities enter into or migrate through the polymer matrix.

The resulting quality of the r-PS provides producers of packaging for the food industry with utmost flexibility, as it can be used in their existing industrial production processes such as extrusion and thermoforming. Members of SCS delivered the proof of concept that mechanically recycled polystyrene can serve as a drop-in solution in form, fill and seal (FFS) production lines. Multiple variants for packaging are possible: single layer, co-extrusion of the r-PS with virgin polystyrene or use of the recyclate as middle layer between virgin polystyrene (A-B-A).

Frank Eisentraeger, Product Director PS EMEA, Ineos Styrolution and member of the SCS working group Waste Feedstock said: “The challenge test indicates that polystyrene is one of the best recyclable materials, including for food contact applications. The test results are of crucial importance as they give brand owners and packaging producers full confidence that the applied mechanical recycling technology delivers the required high purity levels for their business. Most importantly, the qualities of the polystyrene molecule remain stable and do not degrade in multiple mechanical recycling. We can recycle polystyrene over and over again.”

Jens Kathmann, Secretary General SCS, said: “This is a huge milestone in styrenics' contribution to the circular economy. Recycled polystyrene of food grade quality combines all the well-known application, processing and environmental advantages of polystyrene, with the added value of being a fully circular polymer. This is a great attraction and value for the market. We are delighted to take the next step by filing our application with EFSA for food contact acceptance."

As MRC wrote earlier, Trinseo says feedstock supply issues that threatened the operation of its 300,000-metric tons/year styrene monomer (SM) plant in Boehlen, Germany, have been resolved, and the company is no longer “evaluating strategic options” for the asset.

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 362,820 tonnes in the first nine months of 2020, down by 1% year on year. September total estimated PS consumption in Russia was 48,690 tonnes, up by 13% year on year.