COVID-19 - News digest as of 20.10.2021

1. September crude throughput in China dips to 17-month low

MOSCOW (MRC) -- China's September crude oil throughput extended its downtrend to dip 0.7% from August to a 17-month low of 13.7 million b/d amid a slow down in the economy and product destocking activity, reported S&P Global with reference to data from the National Bureau of Statistics on Oct. 18. The country's crude throughput was last lower at 13.16 million b/d in April 2020. This led China's third-quarter 2021 throughput to average 13.83 million b/d, which was the lowest quarterly volume since Q2 2020 when it stood at 13.68 million b/d.



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LyondellBasell to upgradeat six chemical sites in Texas and Iowas to reduce air pollution

LyondellBasell to upgradeat six chemical sites in Texas and Iowas to reduce air pollution

MOSCOW (MRC) -- Three US subsidiaries of Dutch chemical giant LyondellBasell Industries N.V. (LBI) have agreed to make upgrades and perform compliance measures estimated to cost USD50 million to resolve allegations they violated the Clean Air Act and state air pollution control laws at six petrochemical manufacturing facilities located in Channelview, Corpus Christi, and LaPorte, Texas, and Clinton, Iowa, according to the Department of Justice and the US Environmental Protection Agency's (EPA) statement.

LyondellBasell will also pay a USD3.4 million civil penalty. The settlement, announced last week by EPA, will eliminate thousands of tons of air pollution from flares.

According to the complaint, the companies failed to properly operate and monitor their industrial flares, which resulted in excess emissions of harmful air pollution at five facilities in Texas and one in Iowa. LBI’s subsidiaries regularly “oversteamed” the flares at their facilities and failed to comply with other key operating constraints to ensure the volatile organic compounds (VOCs) and hazardous air pollutants contained in the gases routed to the flares are effectively combusted.

The EPA identified potential environmental justice concerns at the two Channelview facilities for exposure to particulate matter (2.5 micron), ozone, toxic cancer risk, and respiratory hazard. The significant emissions reductions of VOCs, HAPs, and greenhouse gases that today’s settlement secures at the Channelview facilities serve to reduce exposure in the community to some of the same air pollutants that they are disproportionately exposed to.

The settlement requires the companies to install and operate air pollution control and monitoring technology to reduce flaring and the resulting harmful air pollution from 21 flares at the six facilities. Once fully implemented, the pollution controls are estimated to reduce emissions of climate-change-causing greenhouse gases, including CO2, methane, and ethane, by almost 92,000 tons per year. The settlement is also expected to reduce emissions of ozone-forming VOCs by almost 2,700 tons per year and of toxic air pollutants, including benzene, by nearly 400 tons per year.

LBI will take several steps to minimize the waste gas sent to its flares at each facility. At certain facilities, LyondellBasell will operate flare gas recovery systems that recover and “recycle” the gases instead of sending them to be combusted in a flare. The flare gas recovery systems will allow Lyondell to reuse these gases as a fuel at its facilities or a product for sale. Lyondell will also create waste minimization plans for each facility to further reduce flaring. For flaring that must occur, the agreement requires that Lyondell install and operate instruments and monitoring systems to ensure that the gases sent to its flares are efficiently combusted.

LyondellBasell will also perform air quality monitoring that is designed to detect the presence of benzene at the fence lines of the six covered plants. Monitoring results must be publicly posted, providing the neighboring communities with more information about their air quality. The monitoring requirements also include triggers for root cause analysis and corrective actions if fence line emissions exceed certain thresholds. Flare compliance is an ongoing priority for EPA under its National Air Toxics Initiative.

As MRC informed earlier, LyondellBasell aims to sell its Houston crude oil refinery as quickly as possible. The company said in early September, 2021, it is considering strategic options for the refinery, including a potential sale. US refiners last year suffered deep losses as the coronavirus pandemic slashed demand for motor fuels.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 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, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances. LyondellBasell sells products into more than 100 countries and is the world"s largest producer of polymer compounds and the largest licensor of polyolefin technologies. In 2020, LyondellBasell was named to Fortune Magazine"s list of the "World"s Most Admired Companies" for the third consecutive year.
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US refiners set for higher earnings in Q3 2021 on higher fuel margins

US refiners set for higher earnings in Q3 2021 on higher fuel margins

MOSCOW (MRC) -- US refiners are expected to show higher earnings for the third quarter as margins to sell gasoline and diesel have improved despite the surging cost of crude oil, reported Reuters with reference to analysts.

After more than a year of depressed fuel demand, gasoline and distillate consumption is back in line with five-year averages in the United States, the world's largest fuel consumer. That has boosted margins on refined products to more than double what those companies were making at this time a year ago.

The seven largest independent US refining companies, including giants Marathon Petroleum and Valero Energy , are projected to post an average earnings-per-share gain of 66 cents, versus a loss of USD1.32 for the third quarter of 2020, according to IBES data from Refinitiv.

Those gains are driven by the 3-2-1 crack spread, a proxy for refining margins, which assumes a barrel of crude oil is refined to three parts gasoline, two parts diesel and one part jet fuel. That spread is currently at USD21 per barrel, compared with around $9 a year ago.

Energy demand has recovered swiftly from the worst days of the pandemic in 2020, and Brent and US crude oil prices have reached multi-year highs in recent days. But product demand has also increased, and that has helped boost margins.

Product supplied - a proxy for US refined product demand - was 21.5 MM barrels per day (bpd) in the most recent week, slightly higher than the same period in 2019, prior to the onset of the pandemic, according to the US Energy Information Administration (EIA).

"The market is getting back in equilibrium," Credit Suisse analyst Manav Gupta said in a note.

Refiners are also benefiting from lower inventories of their products as recent storms and the pandemic knocked refining capacity offline. Approximately 2.5 MMbpd of refining capacity has been shut since the start of the pandemic, which is almost four times the 10-year average, according to Credit Suisse's Gupta.

Delta Air Lines' refinery in Monroe, Pennsylvania, earned nearly USD100 MM last quarter, its first positive results since the first quarter of 2020, according to figures released last week. Tudor Pickering Holt analysts cited strong gasoline and diesel crack spreads as helping the refiner recover.

Jet fuel demand is still below pre-pandemic levels, but international flights are expected to resume to Europe in November. The spot price of US Gulf Coast kerosene-type jet fuel is USD2.10 dollars per gallon, the highest since October 2018, despite demand still 12% below 2018 levels, per EIA data.

Analysts have also been raising estimates for refiners such as PBF Energy and HollyFrontier due to declining costs of complying with the nation's biofuels laws. Refiners are required to blend ethanol into the nation's gasoline pool or buy credits for others who can.

As MRC informed earlier, in May, 2021, US refiner Marathon Petroleum Corp said its board had approved the conversion of the Martinez refinery in California to a renewable diesel plant. Besides, the company made a final investment decision regarding this project. Martinez, once complete, will be one of the largest renewables facilities in the country.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
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Ineos to invest over USD2 bln in green hydrogen in Europe

Ineos to invest over USD2 bln in green hydrogen in Europe

MOSCOW (MRC) -- UK-based chemicals company Ineos plans to invest EUR2 billion (USD2.3 billion) in renewable hydrogen production across Europe in the next 10 years, including a 100-MW plant in Germany, as per the company's press release.

Ineos plans to build production facilities in Norway, Germany and Belgium, with additional investment in the UK and France.

"Green hydrogen represents one of our best chances to create a more sustainable and low carbon world," Ineos Chairman Jim Ratcliffe said.

The company will first construct a 20-MW electrolyzer for hydrogen production in Norway, powered by renewable electricity.

The project will reduce CO2 emissions by around 22,000 mt/year at Ineos' Rafnes chemicals plant, and act as a hydrogen hub for local transport applications.

In Germany Ineos plans to build a larger scale 100MW electrolyser to produce green hydrogen at its Koln site. The development will further support decarbonisation of INEOS operations at the site. Hydrogen from the unit will be used in the production of green ammonia.The Koln project will result in a reduction of carbon emissions of over 120,000 tonnes per year. It will also open opportunities to develop E-Fuels through Power-to-Methanol applications on an industrial scale.

Ineos is developing other projects in Belgium, France and the UK and the business expects to announce further partnerships with leading organisations involved in the development of new hydrogen applications.

Ineos already operates electrolysis capacity through its Inovyn business, which produces chlor-akali and vinyl products.

As MRC reported earlier, in March 2021, Ineos and French power company Engie announced a pilot project to partially replace natural gas feed with hydrogen at Ineos’s phenol plant in Doel near Antwerp, Belgium. No investment figure has been given. Hydrogen will be used in a commercial-scale cogeneration plant designed to generate electricity and heat from natural gas. About 10% of the cogeneration plant's gas feed will initially be replaced by hydrogen, with this to then be increased to 20% in a gradual process. This is the first time that such tests have been carried out on an industrial scale in Belgium, says Ineos then. The cogeneration plant at the phenol site “has the ideal profile to realize this test," it says.

Phenol 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 overall estimated consumption of PC granules (excluding imports and exports to/from Belarus) fell in January-August 2021 by 14% to 62,000 tonnes from 72,100 tonnes a year earlier. .

Ineos Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.
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LANXESS expands production capacities in Asia

LANXESS expands production capacities in Asia

MOSCOW (MRC) -- LANXESS plans to expand production capacity for light-colour aminic antioxidants at its site in Kaohsiung, Taiwan, with the additional capacity expected to be available by the end of 2022, said the company.

Aminic antioxidants, which the Germany-based chemical company markets under the brand name Naugalube, are an additive in a range of transportation and industrial lubricants.

The expansion will be for several kilo tonnes, and the investment will be “an upper single-digit million Euro amount”, LANXESS said in a statement on Monday.

The investment would strengthen LANXESS’s “supply-chain resiliences” for the additive in Asia, North America and Europe, it said.

"We have seen rapid market growth in aminic antioxidants in the recent months and years,” says Martin Saewe, Head of LANXESS’s Lubricant Additives Business (LAB). “With our strategically located three assets in Canada, Italy and Taiwan and our backwards integration into the key raw material, we stand for supply resilience in the industry. We intend to use the additional capacity to strengthen our market position and to grow with our customers."

Veronika Sauer, Head of Marketing Lubricant Additives, says “To be ahead of the curve, we continue to develop safer, more sustainable, and higher performing antioxidants that are capable to meet changing market requirements. We are evaluating to offer some of these from our Taiwan site as well”.

LANXESS markets its aminic antioxidants under the brand name Naugalube.The investment at its Taiwan site will support globally harmonized specification of its flagship product Naugalube 438L – all sites will produce the antioxidant in light color. The liquid antioxidant is used in a broad range of transportation and industrial lubricants. With excellent high temperature performance, Nauglaube 438L reduces oil oxidation, prolongs lubricant life and extends service intervals.

As MRC reported earlier, LANXESS completed the second-largest acquisition in its history on August 3, 2021, with the takeover of Emerald Kalama Chemical. The US-based specialty chemicals manufacturer was majority-owned by affiliates of private equity firm American Securities LLC. All required regulatory approvals have been received. The enterprise value of Emerald Kalama Chemical was USD1.075 billion (EUR 900 million). After deducting liabilities, the purchase price was approximately USD 1.04 billion (EUR870 million), which LANXESS financed from existing liquidity.

Also recently, LANXESS and energy company bp are entering into a strategic partnership for the use of sustainable raw materials in high-tech plastics production. bp will supply sustainably produced cyclohexane to the LANXESS’ production site in Antwerp, Belgium, starting in the fourth quarter of 2021. The sustainable origin of the raw materials is certified according to ISCC Plus rules.

LANXESS is a leading specialty chemicals company with about 19,200 employees in 25 countries. The company is currently represented at 74 production sites worldwide. The core business of Lanxess is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. Through Arlanxeo, the joint venture with Saudi Aramco, Lanxess is also a leading supplier of synthetic rubber.
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