Braskem Idesa increases PE sales by 4% in 2020

MOSCOW (MRC) -- Braskem Idesa’s polyethylene (PE) sales totalled 845,000 metric tons in 2020, up by 4% from 813,000 metric tons in 2019, according to Chemweek with reference to Braskem's annual management report.

Sales to Mexico represented 53% of the total, down from 59% a year earlier, while sales to the US and Latin America increased to 13% and 19%, respectively. Sales to Europe also increased, from 8% to 12%, and sales to Asia fell from 11% to 4% of the total.

Braskem Idesa’s operating results for 2020 include a USD119 million accounting provision related to the write-off of the amount receivable from Braskem Idesa as a payment for damages for the supply of ethane in volumes below that established in the ethane supply agreement with Pemex.

Bag and film applications accounted for a larger percentage of PE sales in 2020 at 39%, up from 34% in 2019, while construction/infrastructure-related sales fell from 14% to 9%.

Braskem Idesa expects to invest USD34 million in 2021 for operating efficiency gains, such as the ethane import project and maintenance.

Braskem Idesa’s PE plant at Nanchital, Coatzacoalcos, Mexico, operated at 74% of its nameplate capacity in 2020, down by 2% year on year, after the site’s operations were shut in early December.

The site’s fourth-quarter 2020 utilization rate fell to 48%, down from 84% in the prior quarter, after a disagreement over an ethane supply contract led to the supply of natural gas to the Etileno XXI ethylene-PE complex being cut off by the Mexican government. Braskem Idesa has since signed a memorandum of understanding with Mexico’s state-owned Petroleos Mexicanos (Pemex) to discuss potential amendments to the ethane supply contract, with gas supply restored on 1 March.

Customers in Mexico have indicated they expect to be back to normal supply levels by April.

Braskem Idesa has also taken steps to increase its supply of imported ethane after years of being unable to run its facility at full rates due to feedstock constraints. In the fourth quarter, the company imported 35,000 metric tons of ethane from the US, representing 9% of the facility’s feedstock utilization capacity, according to the Braskem report.

In December, Braskem Idesa completed an expansion of its ethane import operation, bringing the current expected capacity to 20,000 barrels/day, or about 30% of the site’s total ethane requirement.

The Etileno XXI complex, which comprises a 1.05-million metric tons/year ethylene plant and three PE units, had a utilization rate of 84% in the third quarter of 2020.

As MRC informed earlier, in June 2020, Braskem announced the selection of Charleston, South Carolina for its new global export hub facility to serve international customers. The hub will provide packaging, warehousing and export shipping services to support Braskem's polypropylene (PP) production facilities in the United States. With the design and development phase well underway, the new global export hub was expected to be completed by the third quarter of 2020 and will have a capacity to support export shipments of up to 204,000 metric tons/year of PP and specialty polymers.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
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1. Weaker demand for crude oil takes toll on tankers, US refiners

MOSCOW (MRC) -- US refiners are scaling back on hiring ships for longer periods to save on costs in another sign of uncertainty over when global oil demand will return to pre-COVID levels, reported Reuters with reference to shipping and trade sources. The global rollout of coronavirus vaccines and the expectation that government-offered stimulus packages will boost the world economy has raised expectations of a recovery in oil consumption. But fuel demand remains sluggish, keeping oil refiners under pressure and looking for ways to limit further losses. The International Energy Agency, for example, does not expect oil demand to catch up with supply until about the third quarter.

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MOSCOW (MRC) -- Crude oil futures fell own during the mid-morning trade in Asia March 18, after the Energy Information Administration showed a build in crude and product inventories, even as a free-falling US dollar provided some cushion to the market, reported S&P Global.

At 10:40 am Singapore time (0240 GMT), the ICE Brent May contract was down 38 cents/b (0.56%) from the March 17 settle at USD67.62/b, while the April NYMEX light sweet crude contract was down 37 cents/b (0.57%) at USD64.23/b.

On the back of subdued refinery demand amid lingering storm outages, data from the EIA, released late March 17, showed a 2.4 million-barrel build in US crude inventories in the week ended March 12. The counter-seasonal build pushed inventories to 500.8 million barrels, nearly 7% above the five-year average, thereby opening the widest surplus since the week ended Jan. 15.

The build in crude stocks shown by the EIA data put pressure on prices this morning as it came in above analysts' projections of a 400,000-barrel build, and was contrary to the 1 million-barrel draw shown by data from the American Petroleum Institute released March 16.

The oil complex was also weighed down by EIA's release of uninspiring downstream data, which showed that in the week ended March 12, US gasoline and distillate inventories had edged up 470,000 barrels and 255,000 barrels, respectively. Analysts had expected gasoline and distillate stocks to slide 1.4 million barrels and 900,000 barrels lower, respectively, amid weak refinery runs.

Despite the bearish EIA data, the market is optimistic over the demand outlook for oil, as vaccines promise to reign in the pandemic, and global economic activity picks up pace. While some concerns remain over Europe, where a number of countries have suspended the Oxford-AstraZeneca vaccine, analysts are especially bullish over the US, where the success of the country's vaccination drive may encourage travel and boost downstream demand for gasoline and jet fuel.

The oil complex has already received some support from the movements in the US dollar, which has been weakening since the US Federal Open Market Commission meeting reaffirmed the Federal Reserve's dovish stance on monetary policy. At 10:32 am, the June contract for the US dollar index was down 0.441% from the previous close at 91.475.

As MRC informed before, the largest US refinery, Motiva Enterprises’ 607,000 barrel-per-day Port Arthur, Texas, plant, returned to normal operations. The refinery was shut on Feb. 15 when freezing temperatures, rarely seen on the US Gulf Coast, knocked out steam supply. Motiva began restarting the refinery on Feb. 24.

Motiva Chemicals has also resumed operations at its mixed-feed cracker in Port Arthur, USA. The process of restart of this cracker with the capacity of 635,000 mt/year of ethylene and 340,000 mt/year of propylene began on 27 February, 2021, and finished late last week. The cracker wa shut along with the refinery at the same site on 14 February, 2021, because of the deep freeze.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
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MOSCOW (MRC) -- Olin (Clayton, Missouri) has announced plans to shut a portion of its diaphragm-grade chlor-alkali capacity in the USA, reported Chemweek.

Thus, th company is to permanently shut down about 200,000 metric tons/year of diaphragm-grade chlor-alkali capacity at its McIntosh, Alabama, facility by 31 March. Olin will take a USD5 million of restructuring charge for the move, which the company expects to be cash flow accretive.

"This is yet another step in Olin's efforts to right-size our asset base and achieve reinvestment economics across our complete electrochemical unit portfolio," says Scott Sutton, Olin president and CEO.

Separately, the company has raised its adjusted EBITDA forecast for Q1 2021 by USD75 million, citing gains related to hedges and contracts that protected the company during the polar storm at the US Gulf Coast in mid-February, .

Before the storm, Olin expected first-quarter adjusted EBITDA of USD400-425 million, up year-over-year (YOY) from USD123 million. The company now expects adjusted EBITDA of USD475–500 million range.

“This forecast includes a net one-time benefit associated with Olin's customary financial hedges and contracts maintained to provide protection from rapid and dramatic changes in energy costs, partially offset by unabsorbed fixed manufacturing costs, reduced profit from lost sales, and storm-related maintenance costs,” says Olin. “This first quarter 2021 outlook has further potential upside associated with the final settlement of these one-time items associated with Winter Storm Uri.”

Olin was forced to shut production at its Freeport, Texas, facility during the storm because of the loss of access to electrical power, natural gas, and other raw materials. Products made at Freeport include chlor-alkali, vinyl chloride monomer (VCM), epichlorohydrin, and bisphenol-A. Olin says production at its facilities in Plaquemine, Louisiana; St. Gabriel, Louisiana; Oxford, Mississippi; and McIntosh, Alabama facilities were also affected. By 18 February, the company had declared force majeure on all chemical product shipments from North America. “While our facilities have returned to operation, product supply constraints are expected to continue,” says Olin.

We remind that Russia's November production of sodium hydroxide (caustic soda) were 111,000 tonnes (100% of the basic substance) versus 108,000 tonnes a month earlier. Overall output of caustic soda totalled 1,165,600 tonnes in the first eleven months of 2020, down by 1.3% year on year.
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MOSCOW (MRC) -- Borealis continues to operate its steam cracker in Stenungsund, Sweden at 100% capacity utilisation in March, reported Chemweek.

The cracker with the capacity of 625,000 mtyear of ethylene was restarted on 15-17 January, 2021, and force majeure was lifted on 29 January. And the company reached full capacity utilisation at this cracker in early February.

The force majeure at Stenungsund was declared after a fire started at the cracker on 10 May last year. A restart of the cracker was initially planned for the fourth quarter of 2020.

As MRC reported previously, the company began the process of the cracker restart in early January, 2021.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
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