Crude quality issues on TMX pipe may hamper flows from Canada to U.S. West Coast refiners

U.S. oil refiners and West Coast traders are flagging concerns about the quality of crude shipped on the newly completed Trans Mountain pipeline expansion (TMX), warning that high vapor pressure and acidity limits could deter purchases of Canadian heavy barrels, said Hydrocarbonprocessing.

The $24.84-B (C$34 B) expansion started operations last month and has nearly tripled shipping capacity to Canada's Pacific Coast to 890,000 bpd. The roughly 2.5-MMbpd U.S. West Coast refining market is expected to be a major outlet for Canadian heavy oil shipped via Trans Mountain, but questions over crude quality could dampen demand for the barrels. That could weigh on prices or push more oil onto rival Canadian export pipelines with lower vapor pressure and acidity limits.

Several West Coast refiners have raised concerns in recent weeks about the initial volumes' high sulfur content, acidity and vapor pressure, conditions that could damage refining equipment or increase air pollution, according to regulatory complaints and three people familiar with the matter, though thus far it has not affected demand.

The Trans Mountain pipeline historically has had higher vapor pressure limits than other export pipelines because it shipped refined products as well as crude oil. Although the expanded line mainly ships heavy crude, it carried over the same limits.

Ten companies and industry associations including Canadian Natural Resources Ltd., U.S. oil major Chevron and refiner Valero Energy have written to the Canada Energy Regulator (CER) to complain about high vapor pressure limits and have asked for the pipeline's technical specifications to be narrowed.

Trans Mountain said its current vapor pressure and acidity specifications were developed though a shipper consultation process and have been in place since March 2023.

"Prior to the filing of the current complaint, Trans Mountain was aware of newly raised shipper concerns and had engaged in an updated consultation process with shippers which is ongoing," the company told Reuters in an email.

Vapor pressure limits, which measure the volatility of crude, are "wholly inappropriate" for West Coast refining markets, Valero wrote to the CER last month. It and other West Coast refiners are expected to be top buyers of TMX barrels.

Chevron separately told the CER the vapor pressure limit exceeds the regulatory limit set for storage tanks at both its California refineries. High pressures cause more vapors to leak from tanks into the atmosphere.

The higher vapor limit also means more lower-value light oil could be blended into Trans Mountain crude, reducing its value, wrote oil producer Canadian Natural, a major shipper on the pipeline. The TMX crudes are more acidic, Chevron wrote, a trait that can corrode processing equipment and cause damage.

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Sika AG announced the opening of a new plant in Liaoning province, China. The new plant will produce mortars, tile adhesives and waterproofing solutions, said the company.

The new facility also provides office spaces, laboratories, warehousing and logistics. The plant will produce a range of mortar products that incorporate up to 20% recycled raw materials during the manufacturing process, such as waste dust and mineral waste residues. In addition, Sika has launched an initiative to transition from natural to alternative sands.

In 2023, Sika in China had already reached a 13% alternative sand ratio in its mortar production, with half of the plants contributing to this initiative. Sika in China plans to replace 50% of its overall sand consumption with alternative options by 2028, it added.

The company said that the new plant will cater to customers in three provinces in northeastern China, with a population of more than 98 million, as well as in east-central Mongolia. Currently, Sika has 34 manufacturing sites in China.

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Saudi crude oil exports to China will fall in July for a 3rd straight month to about 36 MMbbl amid plant maintenance and as some refiners opted for other sources of cheaper oil, said Hydrocarbonprocessing.

The reduction underscores the challenge the world's top oil exporter faces in maintaining market share in the world's largest crude import market.

July exports are expected to be down from about 39 MMbbl in June, possibly the lowest levels for the year, the sources said. One state refiner and a private refiner cut nominations for Saudi crude in July vs. June, they added.

Chinese refiners are cutting imports from Saudi Arabia, China's No. 2 oil supplier, due to high term prices for Saudi crude and weak refining margins, sources said. This was despite Saudi Aramco cutting official selling prices for its crude exports in Asia in July for the first time in five months.

Sinopec, Asia's largest refiner and Saudi Arabia's biggest customer in China, is changing the volume little in July from the previous month but the volume is the lowest this year, the sources said.

China's Saudi oil imports fell 16.5% in the first four months this year to 26.13 metric MMt (1.58 MMbpd) while imports from top supplier Russia gained 16.6% to 37.79 metric MMt, customs data showed last month. Separately, Saudi Aramco will supply full contractual volumes to at least three other North Asian refiners in July, the sources said.

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The U.S. Plastics Pact has released its latest strategic plan to help companies change how they design, use and reuse plastics in their packaging, said Hydrocarbonprocessing.

Roadmap 2.0 is an actionable plan designed to transform the use of plastics, focusing on practical steps to create a circular economy where plastic packaging is reused, recycled, composted and kept within the economy instead of becoming waste. This comprehensive plan builds on the successes and lessons learned from the initial Roadmap to 2025, setting forth updated and ambitious targets to address plastic waste and drive systemic change.

Significant progress achieved in plastic waste reduction. The original Roadmap to 2025 was a bold initiative to catalyze immediate action in the absence of a federal strategy.

Emily Tipaldo, Executive Director of the U.S. Plastics Pact, stated: "The current reliance on virgin plastics is unsustainable. Roadmap 2.0 aims to make a tangible difference by changing how we design, use, and reuse plastics. The focus is on practical, achievable steps companies can take to contribute to a circular economy. Roadmap 2.0 is not just a continuation; it's an evolution. Our initial targets were intentionally ambitious to spark rapid change. With Roadmap 2.0, we're taking what we have learned and succeeded to the next level, focusing on innovative solutions and addressing broader impacts. We are committed to working collaboratively with our Activators and stakeholders to make these targets a reality."

Moving forward through collaboration and innovation. The U.S. Plastics Pact continues to work as part of the Ellen MacArthur Foundation's Plastics Pact Network and other global initiatives to harmonize efforts and share best practices. Roadmap 2.0 emphasizes the importance of action cross-sector collaboration and innovation to achieve these ambitious goals.

Roadmap 2.0 begins on January 1, 2026. By releasing it 18 months in advance, the U.S. Plastics Pact can provide its activators ample time to prepare for these new challenges and objectives. This roadmap will continue fostering a culture of trust, transparency and collaboration, ensuring that efforts are aligned and impactful. By prioritizing sustainable design and reuse and reducing plastic waste, companies can significantly contribute to a circular economy.

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Styrene monomer (SM) prices gain in Asia, said Polymerupdate.

An industry source in Asia informed a Polymerupdate team member, "Prices journeyed northward on account of higher upstream benzene prices coupled with bullish buying sentiments in the region."

On Wednesday, FOB Korea SM prices were assessed at the USD 1170-1180/mt levels, a rise of USD (+10/mt) from Tuesday's assessed levels.

CFR China SM prices on Wednesday were assessed at the USD 1080-1090/mt levels, a day on day gain of USD (+10/mt).

Meanwhile, upstream benzene prices on Wednesday were assessed at the USD 1050-1060/mt FOB Korea levels, up USD (+5/mt) from Tuesday.

According to the ScanPlast, total estimated consumption of polystyrene and styrene plastics in Russia decreased by 14% шт January compared to January last year and amounted to 42,260 tonnes. A decrease in estimated consumption is observed for all types of PS compared to the same indicator last year.

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