Turkey stays top destination for Russian June diesel loadings

Turkey will again be the top destination for Russian diesel exports in June, while total shipments are set to rise after seasonal refinery maintenance, traders said and Refinitiv Eikon data showed, said Reuters.

Russia's estimated offline primary oil refining capacity for June could total 4.029 million tons versus 4.95 million tons in May, Refinitiv data shows. Since the full EU embargo on Russian oil products took effect on Feb. 5, traders have diverted diesel export supplies from Russian ports to Africa, Asia and the Middle East instead of Europe, which was previously the main buyer.

In June to date, Russia has sent about 0.9 million tons of diesel to Turkey versus 1.0 million tons the previous month, Refinitiv data shows. About 320,000 tons of that are still in transit with the port of discharge not yet confirmed.

Brazil is also among the top destinations of Russian seaborne diesel exports, totaling about 280,000 tons since the start of this month versus 450,000 tons in May, according to Revinitiv data. In June to date, about 550,000 tons of diesel have headed from the Russian ports to Africa, mainly to Ghana, Morocco and Togo.

In May, diesel loadings from Russian ports to Africa totaled about 575,000 tons, Reuters calculations based on Refinitiv data showed.

Nearly 375,000 tons of Russian diesel are destined in June for ship-to-ship loadings near the Greek port of Kalamata and also near Malta, Refinitiv data shows. The final destinations for these cargoes are not yet known. Most of those cargoes end up in Turkey and Middle Eastern countries, market sources said.

In May Russia sent about 410,000 tons of diesel to Saudi Arabia, but so far in June there is no sign of cargoes to this destination, Refinitiv data indicated.

We remind, PAO Novatek plans to build a small-scale LNG plant in Russia’s Tula region, said the company.
A cooperation agreement signed by Leonid Mikhelson, chairman of the management board of Novatek, and Alexei Dyumin, governor of the Tula Region, at the St. Petersburg International Economic Forums in mid-June, provides for construction of a 126,000 tonnes/year LNG plant on the territory of the special economic zone Uzlovaya.

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LG Chem said Monday that it has begun mass production of high-nickel single-crystal cathode materials for next-generation batteries at its plant in Cheongju, North Chungcheong Province, making it the first Korean company to do so, said Koreaherald.

"High-nickel single crystal cathode materials are an innovative solution that will transform the landscape of the future battery material market and address customers' needs,” said Vice Chairman and CEO Shin Hak-cheol. Cathodes are a core component that determines the power of lithium-ion batteries and account for about 40 percent of battery production costs.

Single-crystal cathode materials are made from various metals such as nickel, cobalt and manganese that are fused into a one-body form. They are considered the key to solving the core challenges of next-generation batteries, namely lifespan and capacity.

Conventional cathode materials have a polycrystal structure where metal particles aggregate into smaller clusters. As charging and discharging cycles repeat, this leads to gas generation between the particles and a gradual reduction in battery lifespan. This problem has been a barrier to the widespread adoption of electric vehicles and a main concern for clients.

LG Chem plans to remedy this issue by using durable single-crystal cathode materials. Doing so would minimize gas generation, resulting in more stability and extending battery lifespan by over 30 percent compared to conventional materials. In addition, these materials allow for higher density, increasing battery capacity by over 10 percent compared to conventional materials.

In the initial stages of production, LG Chem plans to mix single-crystal cathode materials with conventional cathode materials in a ratio of 2 to 8, then gradually transition to 100 percent single-crystal cathode materials. These materials will be applied to various products as well, including pouch-type batteries and 46-millimeter-wide, 80-millimeter-long cylindrical batteries.

The first batch of the cathodes will be shipped to client companies starting in July, the company said. LG Chem also plans to expand its production line for single crystal cathode materials at its plant in Gumi, North Gyeongsang Province, by 2027 and increase the production capacity to over 50,000 metric tons.

We remind, LG Chem has started recruiting young talent in Japan, indicating its intention to take advantage of thawing bilateral relations between Seoul and Tokyo, as other Korean companies are also doing. The chemical unit of LG Group said Friday that its top executives including CEO Shin Hak-cheol participated in the Business & Campus Tour event at the InterContinental Tokyo Bay on Thursday, to hire Japanese scientists and engineers.

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A Chinese company plans to invest USD1.5 billion in a cathode factory in Hungary, the latest big-ticket investment that the government says will make the eastern European Union nation a hub for the electric car industry, said Bloomberg.

Zhejiang Huayou Cobalt Co. will set up its first European factory in Hungary, Foreign Minister Peter Szijjarto told reporters on Wednesday. Hungary has become a meeting point for premium German car manufacturers such as Mercedes-Benz Group AG and BMW AG and Asian battery makers, mostly from China and South Korea. The government in Budapest says these investments, beyond helping to meet climate goals, also serve as a model for East-West economic cooperation at a time of tension.

But its close business ties with Russia and China, as well as a record of vetoing statements critical of Beijing, have led to criticism of Prime Minister Viktor Orban’s administration from key allies such as the United States and the European Union. As with some eastern European peers, Hungary has been a key car manufacturing site since the transition from communism more than 30 years ago.

Hungary has now vaulted to the regional lead when it comes to the transition to electric vehicles, with four of the 10 largest battery makers now having factories in the country or in the process of setting one up, Szijjarto said. In the past seven years, Hungary has announced 51 investments in the electric vehicle industry valued at 4 trillion forint, or almost USD12 billion, he said.

The biggest was from Contemporary Amperex Technology Co. Ltd, which last year announced plans to build a EUR7.3 billion (USD8 billion) battery plant in the eastern Hungarian city of Debrecen, in partnership with Mercedes Benz. The company cited the plant’s proximity to BMW, Stellantis NV and Volkswagen plants for the decision.

We remind, MOL’s Q1 2023 clean current cost of supplies (CCS) earnings before interest, taxes, depreciation and amortisation (EBITDA) for its petrochemical division slumped year on year to a loss of $48m as margins remained under substantial pressure. MOL’s petrochemical integrated margin fell 33% to EUR329/tonne in the first quarter of 2023 from EUR488/tonne in the first quarter of 2022. In the fourth quarter of 2022, it stood at €398/tonne. By April 2023, it was recorded at EUR371/tonne.

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Korea's leading petrochemical firms are reorganizing their business portfolios, as uncertainties around the recovery of global manufacturing industries continue, according to Koreatimes.

LG Chem is reportedly considering redeploying workers of its second naphtha cracking center in Yeosu, South Jeolla Province, which halted its operation recently. Earlier this month, the company also decided to sell its in vitro diagnostic device business to Glenwood Private Equity.

In addition, the chemical unit of LG Group is pushing ahead with the sale of its cathode materials factory in Iksan, North Jeolla Province, to New Power Plasma, a local semiconductor manufacturing equipment supplier.

The series of restructuring measures came after LG Chem CEO Shin Hak-cheol repeatedly emphasized the company's plans to focus on three new growth engines: battery materials, eco-friendly materials and innovative novel drugs.

"Due to the structural oversupply amid the sluggish global demand for petrochemical products, it is difficult to predict the timing of a recovery," LG Chem petrochemical business head Noh Kug-lae said in an email to employees last Monday. "We will reform our business structures and redeploy the workforce."

LG Chem is not ruling out the possibility of selling around a 2 percent stake in LG Energy Solution to secure around 2 trillion won (USD1.5 billion) worth of cash for investments. The chemical firm currently holds an 81.84 percent stake in the battery maker.

We remind, Lotte Chemical decided recently to sell its entire 75 percent stake in its purified terephthalic acid manufacturing subsidiary in Pakistan to a local company there. Through the deal, the Korean firm is looking to secure around 200 billion won in order to invest in its new growth engines of hydrogen and battery materials.

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Indonesia plans to raise its mandatory palm oil-based biodiesel blending to 40% in the next few years, but for now will keep it unchanged at 35%, said Reuters.

The world's biggest palm oil producer raised mandatory blending from 30% to 35% in February, however it has not been fully implemented in some areas. "Right now we stay with B35, and then we do preparation for B40. When we feel (it is) ready, then we launch," Indonesian Energy Minister Arifin Tasrif told Reuters in an interview on the sidelines of the Energy Asia conference on Monday.

Arifin said Indonesia wants to maximize the use of domestic resources and reduce dependency on crude oil, and authorities have completed research and road tests for B40. Eddy Abdurrachman, CEO of Indonesia's CPO fund agency that is in charge of providing biodiesel subsidy, said the B35 mandate had not been fully implemented as there were issues with some blending facilities that need to be upgraded. The ministry is pushing the B35 mandate to be fully implemented by Aug. 1.

Energy ministry official Edi Wibowo said biodiesel consumption as of June 25 stood at 5.2 million kiloliters, of 13.15 million kiloliters allocated for this year. Indonesia's biodiesel policy and the likely emergence of the El Nino weather pattern could further strain global inventories of the most used cooking oil, lifting palm oil prices this year, according to leading industry officials and analysts.

We remind, Germany has asked the European Commission to investigate the flow of allegedly fraudulent biofuels into the European Union, a spokesperson for the German Environment Ministry said, stepping up scrutiny on trade in the fuel that has rattled the industry.

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