China crackdown along with impact of high crue prices could make oil imports sink to 20-year low

MOSCOW (MRC) -- Beijing's crackdown on the misuse of import quotas combined with the impact of high crude prices could see China's growth in oil imports sink to the lowest in two decades in 2021, despite an expected rise in refining rates in the second half, reported Reuters.

Shipments into the world's top crude importer and No. 2 refiner could be steady, or increase by up to 2% to just over 11 million barrels per day (bpd) this year, consultancies Energy Aspects, Rystad Energy and Independent Commodity Intelligence Services (ICIS) found.

That compares to an average annual import growth rate of 9.7% since 2015, and would be the slowest growth since 2001, China customs data showed.

The flat forecasts coincide with plans by OPEC+ to raise oil output by 400,000 barrels per day between August and December. News of the decision by the Organization of the Petroleum Exporting Countries and allied producers sparked a sell-off in benchmark prices this week.

China has been the global oil demand driver for the last decade, and accounted for 44% of worldwide growth in oil imports since 2015, when Beijing started issuing import quotas to independent refiners.

While analysts expect global crude markets to stay in deficit this year despite the OPEC+ output rise, China's investigations into the trading of crude import quotas, and the resulting lower import allocations to independent refiners, have already cooled demand from the group that provides a fifth of China's imports.

"This could mean an end to the rapid growth in China's crude imports which we've seen in the past," said a Beijing-based analyst who declined to be named because of company policy.

China's crude imports in June fell to the lowest since 2013 after Beijing clamped down on import quota trading as part of a drive to consolidate its refining industry and reduce emissions. Several small refiners did not receive any quotas in a second batch issued in June, while others have already used their full allocations, traders and analysts said.

The remaining refiners are expected to reserve whatever quotas they have left for the fourth quarter, when fuel demand typically peaks, FGE said.

Shandong refiners, where most of the small, independent refiners, known as teapots, are located, will reduce imports by around 350,000 bpd and 250,000 bpd in third and fourth quarters, respectively, FGE added.

"Overall, we see Shandong independent refinery runs falling by around 490,000 bpd from pre-clampdown levels to average 1.75 million bpd in 3Q. Runs should make a recovery to 1.90 million bpd levels in 4Q."

This has curbed demand for crude from Africa, Brazil and Russia, prompting traders to divert cargoes to Europe and the United States.

A senior trader based in Singapore, who also asked to remain anonymous, said teapot refineries had lost their position as market drivers and it was wise for sellers to find other outlets. Increasingly, he said, Brazilian and Russian ESPO crudes have been heading to the United States while Brazilian Buzios crude has gone to Europe.

Despite slowing imports, China's crude processing could hit another all-time high this year as state-owned majors and large private refiners operate plants at higher rates and buy more crude to offset lower independent refining, analysts and traders said.

Sinopec and PetroChina are likely to consolidate their positions as the top Chinese crude traders as the independent refiners are sidelined. Together with other refiners, they are boosting output to replace lower supplies of light cycle oil and mixed aromatics used in fuel blending, imports of which have slumped since new taxes took effect in June.

Rystad Energy, FGE and Energy Aspects forecast higher refining throughput at 14.5 million to 14.6 million bpd in the second half, with imports between 10.85 million and 11.5 million bpd. Beijing-based consultancy SIA Energy forecasts processing of 16 million bpd in the second half of 2021, 6.8% higher year on year, leading to imports of 12.48 million bpd, up 15%.

As MRC wrote before, earlier this year, Sinopec Engineering (Group) and ExxonMobil (Huizhou) Chemical (EMHCC) entered into a BEPC (basic design, engineering, procurement and construction) contract for the proposed Huizhou Chemical Complex Project (Phase I). The main units of the project include a 1.6 million tonnes/year ethylene flexible feed steam cracker, downstream polymer and derivative units and utilities. The main product units include two performance polyethylene (PE) lines and two differentiated performance polypropylene (PP) lines.

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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- An explosion in a German industrial park on Tuesday killed at least two people and injured 31, setting off a fierce blaze that sent a pall of smoke over the western city of Leverkusen, several people were still missing, said Reuters.

The fire, which broke out at the site’s Burrig waste disposal complex following an explosion, has been extinguished, with rescue workers searching the site for the missing personnel. 16 people are known to be injured so far, at least two seriously, according to Chempark management.

Bayer, LANXESS, BASF and Covestro are among the players with operations in the area, with a spokesperson for LANXESS confirming that power supply to the Chempark is currently restricted, and that all company facilities have been brought down as a precautionary measure.

Bayer, Covestro and BASF had not responded to requests for comment at the time of publication.

Earlier it was reported that Bayer and Lanxess sold their stakes in the Currenta chemical park to funds managed by infrastructure investor Macquarie Infrastructure and Real Assets (MIRA). Both companies signed related agreements with MIRA in August 2019.

Earlier it was said that the German concern BASF, the world leader in the production of chemical products in the world, keeps the capacity utilization at the expandable polystyrene (PSV-S) plant at its complex in Ludwigshafen (Ludwigshafen, Germany) at a reduced level in July due to technical problems , the letter says to the company. Thus, a technical malfunction at the reactor of one of the lines of this enterprise with a capacity of 200 thousand tons of PSV-S per year, discovered on July 11, led to a reduction in the production of Styropor F95, Peripor and F15 grades. It is currently unknown how long this line will remain underutilized.

According to MRC's ScanPlast, EPS consumption in Russia amounted to 40,690 tonnes in the first five months of this year, an 18% increase over the same period last year. In May, the consumption of EPS in the country increased by 35% compared to the same month a year earlier and amounted to 8,790 tonnes.
MRC

MOSCOW (MRC) -- AkzoNobel has extended its partnership with Mercedes-Benz for another four years for works in China and Indonesia, said the company.

The deal was confirmed after extensive testing and analysis of the product assortments and services provided by AkzoNobel’s premium Sikkens brand. “We’re delighted to extend our successful partnership with one of the world’s most renowned automotive brands,” says Patrick Bourguignon, Director of AkzoNobel’s Automotive and Specialty Coatings business. “We believe that our class-leading Sikkens portfolio, digital color tools and services offering can add value to our partner’s after sales network and deliver the best possible support to its customers in China and Indonesia.”

Under the terms of the agreement, Sikkens will continue to be the approved partner for paint repairs in China and the preferred paint partner in Indonesia for the next four years. As well as offering proven performance and a premium quality refinish system, AkzoNobel is a leader in the development of innovative digital color tools. The partnership means customers can benefit from MIXIT, a cloud-based color retrieval application which gives instant access to more than two million color formulas. In combination with the compact, hand-held Automatchic spectrophotometer, any paint job can be done quicker, more accurately and with less waste.

Customers can also benefit from AkzoNobel’s business services, including the Carbeat digital bodyshop workflow solution, which helps to increase production management efficiency and reduces cycle times. Meanwhile, for the Chinese market, the company recently introduced a range of new low VOC products.

“The continuation of our partnership agreement shows great recognition for AkzoNobel’s dedicated vehicle refinish teams in the region,” adds Baron Schreuder, Regional Commercial Director Asia for the company’s Automotive and Vehicle Refinish business. “Asia is an extremely important region for both parties and we’re proud to continue providing a first class service experience throughout China and Indonesia."

The four-year extension means AkzoNobel continues to be a Mercedes-Benz partner in 26 markets: Abu Dhabi, Austria, Bahrain, China, Costa Rica, Croatia, Denmark, France, Germany, Greece, Indonesia, Jordan, Kuwait, Lebanon, Morocco, the Netherlands, Oman, Poland, Russia, Saudi Arabia, South Africa, Spain, Sweden, United Arab Emirates, the US and Yemen.

As per MRC, AkzoNobel N.V. no longer intends to acquire Tikkurila following a higher competing offer from US paints and coatings producer PPG Industries. Akzo Nobel submitted a binding proposal to acquire Tikkurila for EUR31.25 per share on January 28, 2021, having conducted customary due diligence to confirm potential synergies. The company no longer intends to pursue this acquisition, following a competing, higher, offer for Tikkurila. Despite a strong cultural fit - and more synergies than any other combination with Tikkurila - the intended transaction no longer meets AkzoNobel’s criteria for superior value creation.

As per MRC, March production of polymers in primary form was 958,000 tonnes versus 861,000 tonnes in February. Overall output of polymers in primary form totalled 2,740,000 tonnes over the stated period, up by 8.5% year on year. 151,000 tonnes of synthetic rubbers were produced in March, compared to 141,000 tonnes a month earlier. Overall, Russian plants produced about 447,000 tonnes of synthetic rubbers in January-March 2021, up by 10.2% year on year.
MRC

MOSCOW (MRC) -- Honeywell's cloud-based Honeywell Enraf Inventory Calculation Module (HEICM) has been integrated into Royal Vopak’s MyService Terminal Management System (TMS), according to Hydrocarbonprocessing.

Developed in cooperation with Royal Vopak, MyService is used at Vopak terminals to facilitate the safe, clean and efficient storage and handling of bulk liquid products and gases.

HEICM was developed using agile software development principles. It accurately calculates inventories and product movement quantities for a massive range of liquid products stored at the sites. All the calculations provided meet major international, recognized standards and publications, including those of American Society for Testing and Materials, American Petroleum Institute and Gas Processors Association.

“Integrating Honeywell's measurement modules with our bespoke MyService software is creating a competitive advantage for Vopak's services,” said Leo Brand, CIO Royal Vopak. “Honeywell’s legal metrology expertise and long experience providing compliant, accurate liquid stock accounting made it an ideal strategic partner for our digital transformation program.”

HEICM will enable Royal Vopak terminals to perform consistent and efficient terminal inventory calculations and compliance-related verifications, contributing to operational excellence.

Honeywell plans to make HEICM available to other terminal operating companies around the world for similar TMS integrations, as well as a stand-alone/cloud version which can be used by independent surveyors.

As MRC reported earlier, in Marhc 2021, Honeywell announced that Hengli Petrochemical Co. Ltd. successfully used Callidus burner technology from Honeywell UOP to minimize nitrogen oxide (NOx) and carbon monoxide (CO) emissions in China, and reduce the impact of these emissions while ensuring safe and stable operations.

Besides, in November, 2020, Honeywell announced Zhenhua Petrochemical Co. Ltd will use Honeywell UOP’s C3 Oleflex technology for propane dehydrogenation to process 1 million metric tons per year of polymer-grade propylene for a proposed plant in Dongying City, Shandong Province, China.

Propylene is the main feedstock for production of polypropylene (PP).

According to MRC's ScanPlast report, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- Finnish energy company Neste warned of a drop in sales and profit for the third quarter as it deals with higher feedstock and crude oil prices as well as planned refinery maintenance, sending its shares down more than 5%, reported Reuters.

Major sources of biofuel feedstock such as waste and residue have seen a steady increase in prices, given the growing emphasis on renewable energy globally. A rise in crude oil prices due to production cuts by the OPEC+ countries and recovering demand driven by the vaccine rollouts is also expected to weigh on its refining business.

The company, however, reported a rise in second-quarter operating profit, which rose to EUR463 million (USD546.2 million) from EUR208 million a year ago on gains in inventory valuations.

The company's revenue also rose 17% to EUR3.02 billion, while analysts had expected it to drop to 2.55 billion euros.

While oil products accounted for just EUR8 million, renewable products, such as biodiesel and aviation fuel, turned an operating profit of EUR443 million.

However, when cleared from inventory valuation gains, comparable operating profit for renewable products fell 5.5% from a year earlier to EUR241 millions.

The oil product unit saw its operating profit fall to EUR8 million from EUR40 million due to a 12-week maintenance turnover at Neste's oil refinery in Porvoo in southeast Finland.

It also said a turnaround at Neste's Singapore refinery will cut operating profit by EUR90 million and a catalyst change at its Rotterdam facility will lower operating profit by EUR50 million.

As MRC informed earlier, Neste and LyondellBasell has recently announced a long-term commercial agreement under which LyondellBasell will source Neste RE, a feedstock from Neste that has been produced from 100% renewable feedstock from bio-based sources, such as waste and residue oils and fats. This feedstock will be processed through the cracker at LyondellBasell’s Wesseling, Germany, plant into polymers and sold under the CirculenRenew brand name.

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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.

Neste (Helsinki) creates solutions for combating climate change and accelerating a shift to a circular economy. The company refines waste, residues and innovative raw materials into renewable fuels and sustainable feedstock for plastics and other materials. The company is the world’s leading producer of renewable diesel and sustainable aviation fuel, developing chemical recycling to combat the plastic waste challenge. In 2020, Neste's revenue stood at EUR 11.8 billion, with 94% of the company’s comparable operating profit coming from renewable products.
MRC