Butadiene demand recovery to battle fresh online capacity

MOSCOW (MRC) -- Global butadiene demand is expected to continue to recover in the first half of 2021, in line with increasing downstream tire and automobile production. However, Asia's spot demand may slow down in line with rising butadiene capacities, reported S&P Global.

"Petrochemical demand has remained resilient," Enterprise Products Partners' co-CEO Randall Fowler said in its third quarter earnings call. This was seen in butadiene and its derivatives in the latter part of 2020.

In the early part of the year, the COVID-19 pandemic slashed downstream tire and automobile plant operations, impacting the global butadiene market. In order to clear excess supplies, European suppliers actively exported cargoes to Asia, which pushed Asian butadiene prices to an all-time low in May 2020, according to S&P Global Platts data.

However, the butadiene market started to rebound in the fourth quarter of 2020, driven by multiple butadiene plant hiccups in Asia. In Europe, market sources have said that the bull run seen in the fourth quarter will continue into the first quarter of 2021, pulled by strong buying appetite in Asia.

In Malaysia, Pengerang Refining and Petrochemical, or PRefChem, plans to restart its 180,000 mt/year butadiene plant in Johor in Q1 2021 following a fire at its refinery in March 2020.

There are additional capacity increases expected in China, South Korea and Thailand.

Market sources said butadiene exports from China could increase in 2021 in line with rising capacities. In 2020, ex-China exports were heard mainly to South Korea. According to Korean customs, Korea imported around 4,000 mt of butadiene from China between January and October, two times more than a year earlier.

In the US, market participants predict continued strength in pricing in H1 2021 due to the ongoing curtailment of supplies following TPC Group's explosion at its Port Neches butadiene unit during the Thanksgiving holiday in 2019 and increased demand from the automobile industry.

In early 2021, there will be many challenges for butadiene supply and the US will need to compensate through imports as automobile demand spikes, market sources said.

The Association of Natural Rubber Producing Countries (ANRPC) forecast a 4.9% drop in global natural rubber supply in 2020, when compared with 2019.

Goodyear Tire & Rubber Company CFO Darren Wells said higher costs for butadiene and natural rubber were "the kind of snapback in price that we would expect... the industry is ramping up production or getting production back to pre-COVID levels."

Wells noted that, if production holds at current levels, the company could see raw material costs rebounding to 2019 levels.

In Europe, sources expected demand to continue to gradually improve, though remained wary about a widespread recovery in the synthetic rubber sector until the COVID-19 pandemic abated.

European synthetic rubber markets are expected to remain primarily driven by exports to Asia, initially with high run rates seen at the end of 2020 due to an open arbitrage east, amid stagnant domestic demand.

"There is a big question mark for next year. For a (tire market) return to pre-COVID levels, the 2024-2025 scenario is the pessimistic scenario and 2022 is the optimistic," one butadiene consumer said.

Market sources said butadiene demand should also come from ABS and NB latex, both of which have been enjoying positive margins, despite butadiene price rises in Q4 2020. NB latex has seen a boom from its use in medical gloves, with ABS also benefitting from medical applications.

In the European ABS markets, the lack of import volumes that drove market developments in H2 2020 is expected to continue in the opening months of 2021, fueling demand for domestic product, unless further coronavirus restrictions halt automotive and consumer appliance production. The return of imported material from Asia could rebalance the market but remains contingent on the gap between European and Asian ABS prices closing.

As MRC informed before, PrefChem received commercial ethylene and propylene at its new cracker in Pengerang on 13 September, 2019.

Butadiene is the main feedstock for the production of ABS.

According to the ICIS-MRC Price Report, January-September ABS imports to Russia increased by 3% year on year to 25,300 tonnes from 24,500 tonnes. The share of South Korean supplies was 63% (16,000 tonnes) versus 56% (13,600 tonnes) in January-September 2019.

Songwon: Global price increases due to higher freight rates

MOSCOW (MRC) -- Songwon announced on 7 December that prices for all its products will be raised by 2-5 %, depending on business line and region, according to GV.

The company said that these price increases are a consequence of the sudden escalation of freight rates that took place on most routes. The new prices are effective as of 1 January 2021, or as contracts allow.

Headquartered in South Korea, Songwon is the 2nd largest manufacturer of polymer stabilisers worldwide. The group also supplies a broad range of polyurethane-based products, among these thermoplastic polyurethanes (TPU) under the brand name Songstomer.

As MRC reported earlier, in August 2017, South Korean specialty chemicals company Songwon Industrial Co Ltd launched its new pilot plant in Panoli (Gujarat), thereby strengthening the organisation’s overall specialty chemicals development capability.

We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, 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-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.

Headquartered in Ulsan (South Korea), Songwon Industrial Co is a leader in the development, production and supply of specialty chemicals. The second largest manufacturer of polymer stabilisers worldwide, Songwon operates group companies all over the world, offering the combined benefits of a global framework and readily accessible local organisations.

Ineos declares force majeure on EO from plant in Germany

MOSCOW (MRC) -- Ineos Oxide, an Ineos subsidiary, has declared force majeure on supplies of ethylene oxide (EO) from its 280,000-metric tons/year plant in Cologne, Germany, reported Chemweek with reference to sources' statement to OPIS Thursday.

"We heard about the Ineos ethylene oxide force majeure earlier in the week," a market source said.

A declaration of force majeure was extended to other parts of the site at Dormagen in Cologne, including a 150,000-metric tons/year ethylene glycol (EG) plant, said other chemical market sources and IHS Markit analysts. Customers have been allocated 50% of their contractual EG volumes for December and January delivery, according to downstream sources.

Supplies of EG across Europe have tightened significantly over the last week, according to IHS Markit research and analysis associate director Lauren Zeiss. Inventory levels of EG are extremely low in Europe following a series of planned turnarounds and unplanned outages in the region, which started in September, said Zeiss.

As MRC informed before, the Ineos-operated 660,000-metric tons/year phenol-acetone plant in Gladbeck, Germany, was to restart by 10 December following planned maintenance. The producer shut the plant down for maintenance on 27 October until 6 December, according to the producer’s website. “They have not restarted yet, they should come back in 2-3 days,” says one source. “They are starting up right now and expect to be back online next week if all goes to plan,” the source said on 4 December. Ineos Phenol did not reply to a request on Monday seeking confirmation of the restart date. Ineos produces 409,000 metric tons/year of acetone at the Gladbeck site, according to IHS Markit data.

EO is primarily used as an intermediate in the production of several industrial chemicals. Ineos uses a large amount of the EO it produces to manufacture ethylene glycols, including monoyethylene glycol (MEG), which, in its turn, is used to produce polyethylene terephthalate (PET).

According to MRC's ScanPlast report, Russia's estimate PET consumption reached 59,310 tonnes in October 2020, down by 8% year on year. Overall PET consumption in Russia reached 589,580 tonnes in the first ten months of 2020, down by 20% year on year.

Ineos Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.

Shell to resume production at Rheinland, Germany, complex

MOSCOW (MRC) -- Shell is resuming production at several plants within its Rheinland refining and chemicals complex in Germany following a maintenance program that ran throughout November, reported Chemweek.

The 325,000-b/d complex near Cologne consists of both the Godorf (north) and the Wesseling (south) sites. “The commissioning of those plants, that were affected by the planned maintenance at the Godorf site, started on Friday 4 December and is still in progress,” Shell says, without specifying an expected completion date. “We cannot comment on which plants or products were affected by the maintenance at our Godorf site.”

The supply of toluene and xylenes from Shell has been low during November and December, according to Eleanor Dann, principal analyst at IHS Markit. “We believe that’s a result of low feedstock from reformers whilst the upstream units at Shell (the crude distillation unit, hydrocracker, etc…) have been taken offline for maintenance and elsewhere due to poor fuel demand,” Dann says.

Reformers in Europe have been running at low rates because of low or negative margins for gasoline production, according to market sources and IHS Markit analysts. “Currently reformer margins are positive for benzene, toluene, and xylene (BTX) production, but only because benzene and toluene spreads against naphtha have improved,” she says.

Shell has a 600,000-metric tons/year benzene extraction plant in Godorf and a 180,000-metric tons/year benzene extraction plant in Wesseling.

As MRC informed before, Royal Dutch Shell plc. said in November 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 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.

LyondellBasell joins the United Nations Global Compact

MOSCOW (MRC) -- LyondellBasell, one of the world's largest plastics, chemicals and refining companies, has announced it has joined the United Nations (U.N.) Global Compact, the world's largest corporate sustainability initiative, as per the company's press release.

Under the U.N. Global Compact, signatories are encouraged to align their operations and strategies with key principles on human rights, labor and anti-corruption.

"At LyondellBasell, we have a culture of accomplishing goals through what we call 'the power of many.' Addressing the challenges facing our world will require global commitment and collaboration between the private sector, NGOs and governments," said Bob Patel, CEO Of LyondellBasell. "The goals of the U.N. Global Compact align well with our company's focus on eliminating plastic waste in the environment, addressing climate change and supporting a thriving society. We are proud to be part of this important, collective effort."

In 2020, LyondellBasell advanced its sustainability agenda by setting ambitious targets for recycled and renewable-based polymers, progressing on the goal of zero polymer pellet loss from operations and transportation and starting up the MoReTec molecular recycling pilot plant in Ferrara, Italy. In addition, the company is one of the founding members of the Alliance to End Plastic Waste (AEPW), the first global, cross value chain initiative dedicated to eliminating plastic waste in the environment.

As MRC reported previously, earlier this month, LyondellBasell and SUEZ, a world leader in environmental services, jointly announced the acquisition of TIVACO, a plastics recycling company located in Blandain, Belgium. The company will become part of Quality Circular Polymers (QCP), the companies" existing 50/50 plastics recycling joint venture. With this transaction, QCP will increase its production capacity for recycled materials to approximately 55,000 tonnes per year.

We remind that in September 2020, LyondellBasell announced that Duqm Refinery and Petrochemical Industries Company LLC (DRPIC) hds selected LyondellBasell's world-leading polypropylene (PP) and high-density polyethylene (HDPE) technologies for a new facility. The new plants will comprise of a PP plant that will utilize LyondellBasell's Spheripol PP process technology to produce 280,000 metric tons per year (m.t./yr) of PP and a 480-m.t./yr high-density polyethylene (HDPE) plant which will utilize LyondellBasell's Hostalen ACP process technology and will be built in Al Duqm, Oman.

According to MRC"s ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers" inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world"s largest licensor of polyolefin technologies.