US Gulf braces for more benzene cargoes from South Korea as volumes hit new highs

MOSCOW (MRC) -- Benzene exports from South Korea have increased as prices spiked globally, leading to more than 204,000 metric tons being loaded for export in December for destinations worldwide, said Chemweek.

The last time that South Korean export volumes were near this level was in April 2020. Since then, the country’s exports of benzene have fallen from 196,000 metric tons in both May and June to 147,000 metric tons in October, at a time when low benzene prices and poor margins for para-xylene caused producers in South Korea to throttle back benzene output.

However, the final six weeks of 2020 saw benzene prices spike in North America and Europe as traders and consumers become concerned about availability as styrene monomer prices were also spiking.

In December 2020 more than 80,000 metric tons of benzene departed South Korea for the US Gulf Coast (USGC), the highest since February last year. About 10,000-15,000 metric tons of that volume was the result of delayed November loadings that became early-December departures. November benzene volumes from South Korea to the USGC had been expected to be around 35,000 metric tons and ended up at 23,000 metric tons instead.

The higher benzene prices in the USGC and Europe attracted more supply. With Indian benzene moving to the EU, China pulled in over 100,000 metric tons from South Korea, the highest volume to load from there to China since June 2020.

The driving factor behind the higher benzene prices and better margins remains the stronger end demand for styrene, phenol, and methylene di-para-phenylene diisocyanate (MDI). COVID-19 has changed consumer behavior and caused spikes in demand for food packaging and single-use plastics, and has even improved automobile demand in some regions.

The spot benzene price in North America on 10 November was USD1.68/gallon (gal) for the prompt month. One month later, the prompt month benzene price was USD2.56/gal for North America, an increase of USD0.88/gal, or USD263/metric ton. Such a steep price increase has improved benzene margins for the various production methods, including heavier steam cracker feedstocks, refinery extraction, and selective disproportionation (STDP) units.

Producers noticeably began to increase benzene production in both South Korea and North America by December. North America saw the STDP units increase rates, and domestic producers begin to sell more barrels into the spot market. At the same time, the frenzy of cargoes being booked from South Korea resulted in the 58,000 metric tons loading increase between October and December.

When producers in South Korea are running at high rates, their monthly benzene exports can reach upward of 260,000 metric tons. South Korean derivative production rates or turnarounds also impact how much benzene is exported from month to month.

North American benzene supply is expected to be more plentiful in January than was initially expected in November 2020. The high prices were not sustainable, however, as the influx of cargoes into the USGC combined with US sellers diverting as much supply as possible into the spot market caused prices to ease. The benzene spread over gasoline narrowed from USD1.50/gal on 9 December to USD1.20/gal this week as traders and consumers adjusted their price expectations now that more supply has been made apparent. That includes the consideration that up to 40,000 metric tons of benzene was exported from the USGC to Europe between December and January scheduled loadings, some of which was made available due to unplanned derivative production issues at US styrene and/or phenol plants.

Along with phenol, acetone is largely used to produce bisphenol A (BPA), which, in its turn, is used in the production of plastics such as polycarbonate (PC) and epoxy resins.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to\\from Belarus) rose in January-November 2020 by 18% year on year to 83,600 tonnes (70,600 tonnes a year earlier).

OPEC+ resumes talks amid divide on February oil output levels

MOSCOW (MRC) -- Top oil producers resume debate on policy after talks stumbled over February supply levels, with Russia leading calls for higher output and others suggesting holding or even cutting production due to new coronavirus lockdowns, said Hydrocarbonprocessing.

Talks are set to restart at 1430 GMT after the OPEC+ group, which combines OPEC and other producers including Russia, failed to find a compromise on Monday. OPEC+ sources told Reuters that Russia and Kazakhstan backed raising production by 0.5 million barrels per day (bpd) while Iraq, Nigeria and the United Arab Emirates suggested holding output steady.

An internal OPEC document, seen by Reuters on Tuesday and dated Jan. 4, suggested a 0.5 million bpd cut in February as part of several scenarios considered for 2021. The document also said that the OPEC+ joint ministerial committee highlighted bearish risks and "stressed that the reimplementation of COVID-19 containment measures across continents, including full lockdowns, are dampening the oil demand rebound in 2021".

Three OPEC+ sources said chances of a cut were slim as very few producers supported it and most countries favoured either steady supply or an increase in February. "Two clear factions have formed - the Saudi-led proposal for a cautious approach to maintain oil prices and the Russia-led clarion call for a swifter return of supply to the market," said Louise Dickson from Rystad Energy.

On Monday, Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ should be cautious, despite a generally optimistic market environment, as demand for fuel remained fragile and variants of the coronavirus were unpredictable. New variants of the coronavirus first reported in Britain and South Africa have since been found in countries across the world.

With benchmark Brent oil futures holding above $50 per barrel, OPEC+ took the opportunity to raise output by 0.5 million bpd in January as it looked to eventually ease cuts that currently stand at 7.2 million bpd.

OPEC+ producers have been curbing output to support prices and reduce oversupply since January 2017 and cut a record 9.7 million bpd in mid-2020 as COVID-19 hammered demand for gasoline and aviation fuel.

As MRC informed earlier, in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.

Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

DuPont to develop scrubbing project with BELCO technology

MOSCOW (MRC) -- Chilean oil refiner ENAP Refinerias S.A. has selected BELCO scrubbing technology, licensed by DuPont Clean Technologies (DuPont), to improve emissions control from its 31,449 BPSD fluid catalytic cracking (FCC) unit at the Aconcagua refinery, according to Hydrocarbonprocessing.

This new BELCO wet scrubber will reduce sulfur oxide and particulate emissions from the FCCU (fluid catalytic cracking unit) to well below Chilean emissions requirements. This will be the second BELCO Scrubber for ENAP. ENAP previously commissioned a BELCO scrubber for its FCCU at the BioBio refinery in 2018.

Ramiro Abel Gonzalez, Latin America Business Development Manager, DuPont Clean Technologies, says, “With this decision, which will not only serve to improve emissions control but also operational reliability, ENAP becomes a regional leader in observing more stringent environmental specifications. It is likely that almost the entire Chilean refining park will be prepared to follow suit. Expectations are that other countries will go down the same route.”

Eli Ben-Shoshan, Global Business Leader, DuPont Clean Technologies, comments, “Resolute action by responsible refiners such as ENAP minimizes emissions and helps to improve air quality. By developing tailored emissions control solutions, DuPont Clean Technologies is delighted to be able to help refinery customers worldwide meet site-specific environmental, energy consumption, cost and operation targets.”

The BELCO wet scrubbing technology is the global standard for limiting flue gas emissions from oil refinery fluid catalytic cracking units (FCCUs), fluid cokers, fired heaters and boilers. The BELCO wet scrubbing system reliably controls particulate, SOx and NOx emissions to well below the most stringent regulatory requirements in a single upflow tower, thereby eliminating the need for a separate control device to manage different emissions. With its unique open-vessel design and non-plugging features, the BELCO technology is extremely robust and proven to support uninterrupted FCCU operation, with units typically working continuously for 3 -7 years without any maintenance or service shutdowns. These systems are engineered to handle severe upset conditions including high-particulate carry over and high-temperature excursions. Licensed and marketed by DuPont as part of its Clean Technologies portfolio, the BELCO wet scrubbing technology is the world-leading flue gas emissions control technology with more than 150 licensed units worldwide.

As reported earlier, DuPont is investing USD400 million in the production capacity of Tyvek nonwoven fabric made from high density polyethylene (HDPE) at its site in Luxembourg. A new building and a third work line at the production site will be constructed. The launch of new facilities is scheduled for 2021.

According to MRC's ScanPlast report, November estimated HDPE consumption in Russia rose to 125,950 tonnes from 58,330 tonnes a month earlier. ZapSibNeftekhim reduced its export polyethylene (PE) sales. Overall HDPE shipments to the Russian market totalled 1,096,510 tonnes in the first eleven months of 2020, up by 5% year on year. Production and exports grew significantly, whereas imports fell by 31%.

The DuPont Corporation, founded in the USA in 1802, operates in more than 70 countries. The company produces specialty chemicals, offers goods and services for agriculture, food production, electronics, communications, security and protection, construction, transport and light industry. In Russia, DuPont has 100% control over the DuPont Khimprom plant since 2005, and in 2006 established a joint venture between DuPont - Russian Paints and Russian Paints.

W.R. Grace open to discussing sale to 40 North

MOSCOW (MRC) -- W.R. Grace CEO Hudson LaForce said the company is open to discussing a sale to private investment fund 40 North Management (New York, New York) “in the context of our ongoing review of strategic alternatives” in a letter sent to 40 North that was released in mid-January, 2021, reported Chemweek.

“Any transaction would need to be at a price level that reflects full value for Grace and its shareholders,” the letter adds.

40 North submitted an unsolicited USD4.3-billion, USD65/share, bid to acquire Grace earlier this month, which Grace said its board would review. The bid came after Grace rejected a USD60/share offer, also unsolicited, in November.

“Grace’s opportunities for continued growth and value creation are strong, particularly as our end markets recover from the disproportionate displacement resulting from the COVID-19 pandemic,” LaForce says in the letter. “As we disclosed when we announced our third quarter 2020 results, we have experienced a rapid recovery from the pandemic and expect fourth quarter 2020 sales and gross margin to approach pre-pandemic levels, with adjusted free cash flow nearing 2019 levels as well.”

The company is prepared to share “information that would support the full value of Grace” under confidentiality agreements with 40 North, LaForce adds.

As MRC informed previously, in April 2018, W. R. Grace & Co. completed the USD416 million acquisition of the Polyolefin Catalysts business of Albemarle Corporation.

According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 1,990,280 tonnes in the first eleven months of 2020, up by 1% year on year. Only high density polyethylene (HDPE) shipments increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 090,900 tonnes in the first eleven months of 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.

A leader in polyolefin catalysts and licensing, W.R. Grace has the world’s broadest portfolio of polypropylene and polyethylene catalyst technologies used to produce thermoplastic resins for a variety of applications. A leading innovator and strategic partner to its customers, Grace supplies catalyst solutions for all polyolefin processes, as well as polypropylene process technology and process controls. Grace employs approximately 3,700 people in over 30 countries.

Limetree Bay oil refinery begins producing transportation fuel

MOSCOW (MRC) -- Limetree Bay refinery in St. Croix, United States Virgin Islands, recently began producing transportation fuel, reported Reuters with reference to people familiar with the matter, clearing one of the hurdles that had disrupted a facility restart and jeopardized its crude supply contract.

Achieving full operation is required for Limetree Bay owners’ EIG Global Energy Partners and Arclight Capital Partners to retain a crude supply and product offtake contract with BP Plc. Full startup has been delayed a year and the project has run more than USD1 billion over budget.

BP is set to load ultra low sulfur diesel from the 210,000-barrel per day plant this week, according to two sources and vessel tracking data. Plant operations are “stabilizing,” according to one of the people familiar with the matter, after two fires in December.

Limetree Bay did not respond to a request for comment. BP declined to comment on Monday.

Limetree was given an undisclosed period to cure the plant’s problems after BP warned delays past mid-January would allow it to exercise a clause in its contract and exit the agreement to supply crude oil and market the resulting fuels.

The plant has been making semi-processed fuels including light-end distillate fuel oil and naphtha since restarting a crude unit in September. But it struggled to bring units online to make gasoline and diesel. It had been idled since 2012.

The refinery restart suffered repeated setbacks including high levels of corrosion in pipes and weaker-than-expected demand for IMO 2020-compliant transportation fuels, such as ultra low sulfur diesel, that the owners have sought to tap.

As MRC wrote before, in late October 2020, a “technical defect” disrupted production at part of BP's Gelsenkirchen integrated refinery and petrochemicals complex in Germany, early last week. The company operates plants in the Horst and Scholven districts at Gelsenkirchen, with the defect occurring at Horst. BP said then it was working to resume normal operations as soon as possible. It did not specify which unit has been affected, with sources suggesting it was the fluid catalytic cracker, but this was not confirmed by the company.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.