North American chemical railcar traffic rose

MOSCOW (MRC) -- North American chemical railcar traffic rose for the first time in 10 weeks, with loadings for the week ended 22 July up 1.3% year on year to 45,218, according to the freight rail data of Association of American Railroads.

In Canada, rail traffic continued to be affected by a strike from 1-13 July at the Vancouver and other west coast ports, as well as by ongoing wildfires in parts of the country.

Although port workers are back at their jobs, rail carrier Canadian National (CN) and manufacturing trade groups have warned it could take up to two months for logistics chains to normalise.

For the first 29 weeks of 2023 ended 22 July, North American chemical rail traffic was down 2.8% year on year to 1,307,547 - with the US down 4.0% to 901,353 loadings, and Canada down 1.3% to 381,075.

In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest. In Canada, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail.

We remind, North American chemical railcar traffic fell for a ninth straight week, with loadings for the week ended 15 July down 2.0% year on year to 44,025. The decline was led by a 10.8% drop in Canada where railways embargoed certain cargoes because of a port strike at Vancouver and other west coast ports. For the first 28 weeks of 2023 ended 15 July, North American chemical rail traffic was down 2.9% year on year to 1,262,326, with the US down 4.2%, to 870,044 loadings.

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MOSCOW (MRC) -- China boosted its stockpiling of crude oil to the highest level in three years in June, taking advantage of cheap Russian crude to bolster inventories and add flexibility to future import requirements, said Reuters.

The world's biggest oil importer added 2.1 million barrels per day (bpd) to commercial or strategic stockpiles in June, according to calculations based on official data.

This was up from the 1.77 million bpd added in May and the most since June 2020, when imports surged as Chinese refiners lifted imports as crude prices slumped to the lowest in three decades as global demand collapsed during the initial stages of the COVID-19 pandemic.

China doesn't disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output.

China's refiners processed 60.95 million metric tons in June, equivalent to 14.83 million bpd, according to data released on July 17 by the National Bureau of Statistics. This was up 10.2% from the same month in 2022, and was the second-highest monthly total, eclipsed only by the 14.91 million bpd in March.

The volume of crude available to refiners was 16.93 million bpd, consisting of imports of 12.67 million bpd and domestic output of 4.26 million bpd. Subtracting the refinery throughput from the total crude available leaves a surplus of 2.1 million bpd that was available for storage.

Over the first five months of the year China has added about 950,000 bpd to inventories, an increase of 28% from the 740,000 bpd added over 2022 as a whole. What the storage numbers show is that China has been building up ample stockpiles in the first half of the year, even as refinery processing has increased.

The question for the market is what will Chinese refiners do with all the extra oil in their storage tanks, and the answer is likely to be largely dependent on what happens to global prices. The prevailing market narrative for 2023 so far has been widespread expectations of a strong rise in global crude demand, led by China, and especially in the second half of the year.

The International Energy Agency trimmed its forecast for global demand growth to 2.2 million bpd in 2023 on July 13, down 220,000 bpd from its prior estimate, citing economic headwinds. However, growth of 2.2 million bpd is still robust and implies a substantial tightening of the oil market in the second half.

The OPEC+ group of producers, led by Saudi Arabia and Russia, has been cutting output in efforts it describes as moves to stabilize the market, although it's widely believed the exporting alliance aims to keep oil prices at least $75 a barrel, if not higher.

We remind, Russia is considering limiting the number of companies allowed to export oil products in a bid to curb illegal exports of fuel intended for the domestic market. The Kommersant newspaper reported earlier that Russia was looking at creating a list of approved refiners to combat so-called "grey exports" of subsidised domestic fuel.

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MOSCOW (MRC) -- French-U.S. climate tech start-up Dioxycle said it has raised USD17 MM in funding to help develop sustainable ethylene from recycled carbon emissions, said Reuters.

The raise comes as investors increasingly look to profit from steps to green high-emitting but hard-to-abate sectors across industry that will be crucial for the world to hit its climate goal but which have, to date, received less capital.

The Series A round was co-led by venture capital firms Lowercarbon Capital and Breakthrough Energy Ventures Europe, with participation from Gigascale Capital, it said in a statement. "Global ethylene supply chains face two critical problems: dependence on volatile fossil fuels and highly centralized production. Dioxycle is solving both of those problems at the same time," said Clea Kolster, partner at Lowercarbon Capital.

Launched in 2021, Dioxycle aims to make the chemical, used widely in the production of textiles and plastics, at a price equal to or lower than the current cost of production from fossil fuels, a market it says is worth USD180 bn. As the world's most used organic chemical, removing fossil fuels from its production would cut global carbon emissions by 800 million tons a year, or more than 2% of the world's annual output, it said.

Using a low-temperature electrolyzer, the company said it is able to extract chemicals including ethylene from carbon emissions, water and renewable electricity. Going forward, the company would look to expand its product range, it added. It intends to use the money raised to build its first on-site demonstration project and an industrial prototype.

"Dioxycle is the most exciting electrolysis-based carbon capture and utilization company we have come across," said Carmichael Roberts of Breakthrough Energy Ventures. "The team has developed a low-temp electrolyzer to convert carbon emissions into commodity chemicals with impressive economics unlocking the potential to disrupt the $5 T-plus commodity chemical & fuel industry."

We remind, Britain is sticking to its plan to ban the sale of new petrol and diesel cars from 2030 but some measures to reduce the carbon footprint of residential homes will be relaxed. Britain's green agenda has been thrown into question after the governing Conservatives won a vote for a parliamentary seat last week by attacking London's flagship anti-pollution policy. That risks sparking uncertainty for companies producing everything from electric vehicle infrastructure to heat pumps at a time when the United States and European Union are seeking to spur investment and decarbonize their economies.

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MOSCOW (MRC) -- U.S. refining capacity increased slightly for the first time since the COVID-19 pandemic, as of January 1, 2023, reversing two years of decline, according to our annual Refinery Capacity Report, said Hydrocarbonprocessing.

Operable atmospheric crude oil distillation capacity, our primary measure of refinery capacity in the United States, totaled 18.1 million barrels per calendar day (b/cd), a 1% increase from 2022.

We publish two measures of U.S. refinery capacity: barrels per calendar day (b/cd) and barrels per stream day (b/sd). Calendar-day capacity represents the operator’s estimate of the input that a distillation unit can process over a 24-hour period under usual operating conditions, and stream-day capacity reflects the maximum input that a distillation facility can process within a 24-hour period when running under ideal conditions with no allowance for downtime. Stream-day capacity is typically about 6% higher than calendar-day capacity.

The number of operable refineries in the United States decreased to 129 at the beginning of 2023, down from 130 refineries at the beginning of 2022. The single refinery closure reflects the loss of a small facility in Santa Maria, California, that had 9,500 b/cd of crude oil distillation capacity. Despite the loss of the Santa Maria plant, total U.S. capacity increased because PBF Energy reactivated a previously retired crude oil distillation unit at its refinery in Paulsboro, New Jersey. The unit’s crude oil capacity increased from 100,000 b/cd in 2022 to 160,000 b/cd in 2023.

The 2023 Refinery Capacity Report does not reflect changes in U.S. refining capacity after January 1, 2023. ExxonMobil announced the completion of a major refinery capacity addition in mid-March, boosting the facility’s total crude oil distillation capacity by 250,000 barrels per day (b/d) to 630,000 b/d, according to the announcement. This new estimated capacity is reflected in our monthly data as of our May Petroleum Supply Monthly, and we will include an exact measure in calendar-day capacity and stream-day capacity in next year’s Refinery Capacity Report.

Additional recent expansion projects include a smaller crude oil capacity expansion at Marathon’s Galveston Bay refinery and a coker expansion project at Valero’s Port Arthur refinery, which are also not reflected in this year’s report. Phillips 66 has announced plans to stop refining petroleum at its 120,200-b/cd Rodeo refinery in California while the facility transitions to refining biofuel, but it had still not terminated its refining operations as of January 1, 2023. LyondellBasell had previously announced that its 263,776-b/cd refinery in Houston would close by the end of 2023, but the company recently announced that it will delay the facility’s shutdown until 2025, according to reports in late May 2023.

We remind, U.S. refining profits are expected to fall from last year's records but remain strong as domestic refining outages and increased foreign competition pose challenges. Refiners have come off a wave of favorable pricing and strong demand after pandemic-era plant closings and Russia's invasion of Ukraine boosted margins. Slowing economic activity and an increase in global refining capacity has brought the market down from last year's highs.

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MOSCOW (MRC) -- An oil products spill in the Northern Dvina river in Russia's Arkhangelsk region has resulted in a large oil slick on the water surface, the head of environment watchdog Rosprirodnadzor said on Wednesday, as per Reuters.

The fuel spilled while a vessel was being filled, Svetlana Radionova wrote on the Telegram messenger app, adding a slick 4.0 kilometers long and 500 meters wide had been detected.

"We are accessing the exact scale of pollution and taking samples to calculate the damage to nature," she said.

We remind, Russian oil exports from western ports are set to fall by some 100,000-200,000 barrels per day next month from July levels, a sign Moscow is making good on its pledge for fresh supply cuts in tandem with OPEC leader Saudi Arabia. OPEC and major producers including Russia, together known as OPEC+, have been cutting supply since November to support prices. Moscow this month pledged to cut exports by 500,000 bpd in August, while Saudi Arabia extended its 1 million bpd output cuts.

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