PKN Orlen signed contract with Hyundai, Tecnicas Reunidas for Olefins Complex expansion in Poland

MOSCOW (MRC) -- PKN Orlen says it has signed a final contract with Hyundai Engineering and Tecnicas Reunidas for the engineering and construction of the main units for PKN Orlen's previously announced Olefins Complex III project at Plock, Poland, said Chemengonline.

The project is due for completion in 2024. Following production launch, scheduled for early 2025, the share of crude oil used to manufacture petrochemical products in Plock will rise from 14% to 19%. This is all the more important given an expected drop in demand for refinery products and an expected increase, by as much as 80%, in demand for high-margin petrochemicals by 2050.

As part of the project, PKN ORLEN will consider shutting down the part of the olefin plant which was built over 40 years ago, with an ethylene production capacity of about 340,000 tonnes and lower operational and energy efficiency. The more modern part, with a capacity of about 300,000 tons of ethylene, is to be upgraded. Most importantly, however, PKN ORLEN will build a new Steam Cracker with a capacity of 740,000 tons of ethylene. Once the expansion of Olefins III is completed, the petrochemical plant in Plock will need around 1 million tonnes of additional feedstocks, which will be selected so as to maximise margins. The additional streams will come from the Plock refinery and other ORLEN Group refineries, as well as from the market in which Grupa LOTOS is a participant.

The Complex will comprise five additional production units: a new large ethylene oxide and glycol plant, a pyrolysis gasoline hydrogenation unit (PGH), an ethyl tertiary-butyl ether unit (ETBE), a styrene unit, and a generator unit (SGU). Once completed, Olefins Complex III will additionally increase PKN ORLEN’s capacity to produce other ethylene derivatives, delivering an extra margin and maximising the rate of return.

As per MRC, ORLEN Unipetrol (part of PKN Orlen), a large Czech manufacturer of petrochemical products, lifted force majeure circumstances on the supply of products from a polypropylene (PP) plant in Litvinov (Czech Republic) on June 22. Force majeure at this enterprise with a capacity of 345 thousand tons of PP per year was announced on May 28 of this year, and the plant was closed on May 25 due to a serious technical failure in the operation of the reactor and as a safety measure.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.

Polski Koncern Naftowy Orlen S.A. (PKN Orlen) is the largest Polish oil and gas company and one of the largest oil and gas companies in Europe. In Plock, the nominal capacity of the polypropylene (PP) line is 400 thousand tons per year. PKN Orlen owns a majority stake (63%) of the Czech polyolefin manufacturer Unipetrol. In addition, the largest Czech chemical manufacturer Spolana is also part of the Polish PKN Orlen group. The enterprise produces PVC, caprolactam, sulfuric acid, mineral fertilizers.
MRC

1. US crude oil inventories expected to decrease further on stronger refinery demand

MOSCOW (MRC) - US crude oil inventory draws likely extended in the week ended June 25 against a backdrop of rising refinery demand, reported S&P Global. Total commercial crude oil stocks are expected to have declined 4.7 million barrels to around 454.4 million barrels, analysts surveyed by S&P Global Platts said. The draw would put inventories at the lowest since March 2020 and leave them 6.3% behind the five-year average of US Energy Information Administration data, opening the widest deficit to that average since August 2008.


MRC

MOSCOW (MRC) -- Crude oil futures rose during the mid-morning trade in Asia June 30, as data from the American Petroleum Institute showed a large draw in US crude inventories, and as the market eagerly awaited the July 1 OPEC+ meeting, reported S&P Global.

At 11:13 am Singapore time (0311 GMT), the ICE August Brent futures contract was up 43 cents/b (0.58%) from the previous close at USD75.19/b while the NYMEX August light sweet crude contract was up 49 cents/b (0.67%) at USD72.98/b.

The data released by the American Petroleum Institute led to some bullishness in the market, as it showed a draw of 8.15 million barrels in the US crude inventories for the week ended June 25.

The data was less positive with regards to downstream products inventories, showing gasoline and distillate inventories rising by 2.42 million barrels and 428,000 barrels, respectively.

The market remains optimistic about US products demand, and especially gasoline demand, with Apple Mobility data showing the US driving activity staying near record levels at 162% of the January 2020 baseline in the week ended June 25.

The market will now be awaiting more comprehensive data from the Energy Information Administration, due to be released later June 30, for more pricing cues.

Meanwhile, the market has its eyes set on the July 1 OPEC+ meeting, after the July 29 Joint Technical Committee provided little definite guidance into the producer group's production plans for August.

Despite calls for higher production, analysts generally expect the coalition to raise production moderately by 500,000 b/d in August, especially as the resurgence in COVID-19 infections due to the delta variant of the coronavirus threatens demand, and as the threat of additional barrels from Iran following a possible Joint Comprehensive Plan of Action deal hangs over the market.

"Russia apparently is leading a group of countries that want to (increase) output. Saudi Arabia is taking a more cautious approach, with Energy Minister, Prince Abdulaziz bin Salman, cautioning (that) it's not clear whether oil prices were rising due to real supply and demand or because of expectations and trajectories that are excessively optimistic," ANZ analysts said in a June 30 note.

We remind that as MRC informed earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world"s third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- Japan's polyvinyl chloride (PVC) exports fell 5.9% month on month in May to hit a 13-month low of 42,212 mt, amid India's partial lockdown, reported S&P Global with reference to the latest data by Japanese Customs June 30.

From a year earlier, the exports fell 10.8%.

Around half of Japan's monthly exports go to India, where it enjoys zero import tax. Japan's PVC exports to India also hit a 13-month low of 22,310 mt in May as partial lockdown in India amid surging COVID-19 cases lowered PVC buying appetite.

India was hit by the second wave of the coronavirus pandemic in May, which resulted in partial lockdowns in major cities. India's buying appetite for PVC cargoes diminished quickly as economic activities slowed down amid partial lockdowns.

Market sources said India started recovering from the second wave in June. However, the sources expect a slower recovery.

We remind that as MRC informed earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world"s third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.

According to MRC's ScanPlast report, Russia's overall PVC production reached 346,100 tonnes in the first four months of 2021, down 1% year on year. All producers decreased production volumes over the reported period, with the exception of the Bashkir Soda Company.
MRC

MOSCOW (MRC) -- Epsilyte (The Woodlands, Texas), a leading North American producer of expandable polystyrene (EPS), has announced a reduction in its prices for all EPS grades for July shipments, said the company.

Thus, the price of the company's EPS grades will go down by 9 cents/pound (cts/lb) or USD198/tonne, effective 1 July, 2021 or as contracts permit.

The present adjustment reflects current EPS supply and demand dynamics as well as expected feedstock trends.

As MRC reported earlier, Epsilyte cut its June EPS prices in the region by 3 cts/lb or USD66/tonne.

EPS is a rigid form of polystyrene (PS) used in insulation foams for the construction industry as well as for packaging.

According to ICIS-MRC Price report, in Russia, EPS producers said they expect a further preservation of high activity in the EPS market in July. Prices of SIBUR-Khimprom's material were not adjusted last week. Russian producers are expected to announce July EPS prices this week. The shortage of polymer is expected to remain next month on the back of stronger demand.

Epsilyte is owned by private equity firm Balmoral Funds (Los Angeles, California). Epsilyte is one of North America’s leading producers of expandable polystyrene resin. The company is focused on solving customer needs for efficient, high-R value EPS. This includes reducing energy usage in buildings, ensuring safe and healthy food through innovative packaging technology, and participating in infrastructure investment both in the United States and abroad.
MRC