U.S. oil refiners are set to post their first quarterly profit since the COVID-19 pandemic

MOSCOW (MRC) -- U.S. oil refiners are set to post their first quarterly profit since the COVID-19 pandemic, even though higher oil prices and weaker margins in June have tamed analysts' optimism fostered by the rebound in fuel demand, said Hydrocarbonprocessing.

U.S. gasoline and diesel fuel demand has nearly recovered to 2019 levels following the plunge in travel and business activity during the worst of the coronavirus pandemic in 2020. Refiners ramped up processing on the back of the resurgence in activity, but are also grappling with higher crude oil prices, which have surged 48% this year.

The top three U.S. independent refiners - Valero Energy Corp , Phillips 66 and Marathon Petroleum Corp - are projected to report combined net income of about USD675 million in the second quarter. That would be down from USD1.3 billion in profit forecast just 30 days ago, and analysts are concerned that the resurgence in coronavirus cases will undermine economic demand.

"There is a fear that second quarter could be peak earnings for the group this year," said Cowen and Co analyst Jason Gabelman. U.S. crude has rallied nearly 24% in the quarter, and while prices of transportation fuels tend to pick up in tandem, prices of other products like naphtha, asphalt and propane tend to lag the increase, squeezing margins.

The U.S. Energy Information Administration earlier this month forecast U.S. liquid fuels consumption in 2021 to rise by 1.5 million barrels per day from 2020. Gasoline product supplied rebounded in the second quarter to levels not seen since prior to the pandemic's beginning.

That has analysts optimistic about coming reports, after the top three refiners lost USD1.3 billion in the first quarter, according to Refinitiv IBES data. Valero reports its earnings on Thursday, followed by the other two next week. Going forward, the spread of the highly transmissible COVID-19 Delta variant is threatening the nascent recovery in travel, with the United States saying this week that it will not lift any existing travel restrictions "at this point."

Refining margins started to decline in June, falling to about USD19.11 per barrel at the end of the month, compared with USD20.42 at the end of the first quarter, Refinitiv Eikon data showed. In the second quarter, blending ethanol into gasoline also hurt margins as price for the corn-based fuel was at a rare premium to gasoline, analysts said.

Refiners also had to pay more for U.S. renewable fuel credits, which touched a record $2 in the quarter. The cost for Renewable Identification Numbers (RINs) - the credits used for compliance with U.S. biofuels blending laws - increased by 22 cents each to USD1.54 at the end of June from USD1.32 at the end of the first quarter.

Refiners are required, by law, to blend biofuels into their gasoline pool, or pay up so others can do the same. The pandemic has reduced blending activity generally, and as a result, fewer credits have been issued, increasing their costs.

Delta Airlines' refinery in Trainer, Pennsylvania, in early July posted a USD157 million operating loss in the second quarter, in part due to the higher costs associated with blending biofuels into its products. "The demand trends have been pretty encouraging and unless there is another set of lockdowns. That's not really the problem. The problem has been a bit more on the RIN cost side of things" said Matthew Blair, analyst at Tudor Pickering Holt and Co.

As MRC informed earlier, at least two people are dead and six others are injured after a chemical leak at LyondellBasell's Texas facility on Tuesday. Emergency officials responded to a "mass casualty" incident at the LyondellBasell complex in La Porte, just after 7:30 p.m., according to the Harris County Fire Marshal. LyondellBasell said in a statement that its complex experienced an acetic acid leak, which occurred within its acetyls unit area that had been shut down earlier in the day for planned maintenance.

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 density 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) -- LyondellBasell announced that Jiangsu Sailboat Petrochemical Co. Ltd. will use again LyondellBasell Lupotech T high-pressure polyethylene technology at their facility located in Lianyungang City, Jiangsu Province, P.R. of China, said the company.

The process technology will be used for a 200 KTA ethylene vinyl acetate copolymer (EVA) and low-density polyethylene (LDPE) line to produce EVA products with vinyl acetate comonomer.

"Growth of EVA and LDPE applications remain strong in particular in higher value applications such as solar panel lamination and encapsulant which are growing contributors in the energy transition,” said Neil Nadalin, Director Global Licensing and Services at LyondellBasell. Nadalin added, “The technology of choice for producing both EVA and LDPE applications in high demand, remains our high-pressure tubular Lupotech T process offering lowest operating and balanced investments costs to our customers."

Mr. Bai Wei, General Manager of Jiangsu Sailboat Petrochemical Co., Ltd stated, “This is already the second Lupotech T line and our third polyethylene line based on LyondellBasell’s proprietary technology allowing us to produce EVA copolymers and high-quality LDPE products. We are very satisfied with the production capability and plant performance of the Lupotech T technology. Therefore, selecting LyondellBasell’s technology was again a natural choice for expanding our production capability with this additional project."

Decades of experience in high-pressure application design makes the Lupotech T process the preferred technology for EVA/LDPE plant operators. High reliability, unmatched conversion rates and effective process heat integration are key attributes of the Lupotech T process, designed to ensure this technology’s on-going energy efficiency.

More than 13,000 KTA of Lupotech T EVA/LDPE production capacity has been licensed by LyondellBasell in over 70 lines around the world. New licensees take advantage of LyondellBasell’s in-house expertise of continuous production improvement, product development according to the latest environmental regulations, and our knowhow in high pressure design, by optionally joining our Technical Service program.

In 2013, Jiangsu Sailboat Petrochemical Co. Ltd. (JSPCL) also selected LyondellBasell’s Lupotech T and Lupotech A process technologies for a new plant scheduled to be built in Lianyungang, China.

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 density 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.

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.
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MOSCOW (MRC) -- Linde announced it has started up its new on-site facility in Qinzhou, China, supplying oxygen and other industrial gases to Shanghai Huayi's new chemical complex, said the company.

The new facility is comprised of three air separation units which will supply up to 7,500 tons per day of oxygen and 5,000 tons per day of nitrogen. Linde's advanced technology and operational expertise will ensure the safe and reliable supply to Shanghai Huayi through Linde's pipeline at the new chemical complex. By supplying the various Shanghai Huayi companies from one central facility, Linde will operate more efficiently, lowering its energy consumption and carbon emissions. The total investment for this new facility was approximately USD200 million.

"The start-up of our Qinzhou facility is a significant milestone in our long-standing relationship with Shanghai Huayi and we are proud to support its continued growth," said Will Li, Head of Greater China, Linde. "With the new project on stream, we look forward to opening new avenues of cooperation between Linde and Shanghai Huayi as we continue to increase our network density in China."

The new facility has three air separation units (ASUs) which will supply up to 7,500 tonnes/day of oxygen and 5,000 tonnes/day of nitrogen to supply the new Shanghai Huayi chemical complex via pipeline. The pipeline supplying various Shangai Huayi companies from one central facility will enable Linde to operate more efficiently with lower energy costs, and fewer carbon emissions.

As per MRC, Nizhnekamskneftekhim and Linde signed a contract for the construction of EP-600 olefin complex. The planned completion date for the construction and installation works of the olefin complex is July 2023.

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 density 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) -- A bipartisan group of US senators introduced legislation that would eliminate a national mandate requiring oil refiners to blend corn-based ethanol into their fuel mix - a proposal that would slam corn growers and is likely to face vehement opposition from the farm lobby, reported Reuters.

Republican Senator Pat Toomey from Pennsylvania and Democratic Senator Bob Menendez from New Jersey, part of the group introducing the bill, represent states with oil refineries that claim the mandates are expensive and threaten refinery jobs.

Lawmakers from both states have been pushing the Biden administration to relieve refineries of their obligations under the US/ Renewable Fuel Standard, which was enacted to expand the market for US renewable fuels and boost energy independence.

Democratic Senator Dianne Feinstein from California and Republican Senator Susan Collins from Maine joined Toomey and Menendez in introducing the bill. They say that other biofuels have lower greenhouse gas emissions, though ethanol proponents argue the product is a good option to help fight climate change now.

The senators claim the bill would help reduce carbon emissions from transportation fuels by removing volume requirements for corn ethanol, while leaving in place obligations for other biofuels and biodiesel.

Under the RFS, refiners must blend some 15 billion gallons of ethanol into their fuel each year - a huge boost to the corn industry - along with billions of gallons of other types of biofuels.

As MRC informed before, earlier this month, Royal Dutch Shell agreed to sell its stake in eastern German refinery PCK Schwedt, the latest in a string of refinery disposals as part of the Anglo-Dutch company's energy transition strategy. Shell said in a statement that it will sell its 37.5% share in the refinery for an undisclosed sum to Vienna-based Alcmene GmbH, part of the Liwathon Group, an integrated logistics and investment business headquartered in Estonia. The deal is expected to close in the second half of 2021, pending approval by cartel authorities and its partners, Russia's Rosneft and Italy's Eni.

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) -- SK Innovation Co Ltd, the owner of South Korea's top refiner SK Energy, said refining margins were likely to gradually improve in the second quarter due to recovering demand as the impact of COVID-19 eases, according to Hydrocarbonprocessing.

The company posted an operating profit of 503 billion won (USD444.88 million) in the January-March quarter, compared with an operating loss of 1.8 trillion won in the same period a year earlier.

Revenue declined 16% to 9.2 trillion won from a year earlier. That compares with the 9.9 trillion won forecast of analysts in the Refinitiv SmartEstimate. "Despite the resurgence of COVID-19 in some regions and countries, as vaccinations in the United States and Europe continue, expectations about demand recovery are growing," Lee Dong-yeol, the head of SK Energy's corporate planning office, said in a earnings conference call.

Lee added that refining margins, especially for gasoline, are expected to improve backed by the start of the US driving season in May, while refining margins of jet fuel and diesel are expected to recover in the second half of the year when the United States is set to achieve a 50% vaccination rate.

SK Innovation, which has a total refining capacity of 1.115 million barrels per day (bpd) at plants in Ulsan and Incheon, said it operated at 63% of capacity on average in the first quarter, down from 89% during the same period a year earlier.

As MRC reported earlier, SK Advanced managed to produce on-specification polypropylene (PP) at its new plant in Ulsan, South Korea in the week ending 9 April, 2021. The construction works were nearly completed in late January 2021. The initial start-up date was 20 March, but the company delayed tha launch of the new plant by 3 days until 23 March, 2021. The PP unit is a joint venture between PolyMirae and SK Advanced, using the “Spheripol” process of LyondellBasell, and have an annual output of 400,000 tons/year. The unit is utilizing the propylene output from SK’s 600,000 tons/year propane dehydrogenation (PDH) unit at the same complex.

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