Rusian prices of pipe HDPE increased in August

MOSCOW (MRC) -- A tightened supply of pipe polyethylene and surge in buying activity resulted in the price increase in the market. The availability of pipe HDPE is unlikely to improve in the nearest two months, according to MRC analysts.

The demand for pipe PE was seriously cut in H1 2012 due to cold winter and low investments from the Russian State. High competition in the market of ready pipes made local producers buy the polyethylene under the current needs, which limited the growth of feedstock prices.

In July, the demand for pipe polyethylene grew in the Russian market. At the same time Kazanorgsintez had to limit production of cloloured PE100 because of mechanical problems. However, despite these factors, many local makers of plastic pipes did not hurry to form additional inventories of feedstock.

August is the last month before the scheduled turnarounds of Kazanorgsintez and Nizhnekamskneftekhim. Local producers of pipes on oncoming increase in demand for finished products and turnarounds of major producers began actively replenishing their inventories. The limited supply of pipe PE and increased demand led to a small deficit in the market and price increase. As Russian producers expectedly have announced an increase in contract prices of pipe polyethylene for delivery in August.

The price quotations of the Russian coloured PE100 rose to Rb70,000-71,000/tonne, including VAT and delivery to the central part of RF. There were no offers of Asian and European black PE100 in the spot market.

In the next few months, the situation in the Russian market of coloured pipe PE100 is unlikely to change. The offers of the Russian material will be limited due to the upcoming stops on turnarounds. European makers have already sold almost all of their quotas for August, some market participants have reported they managed to contract PE only for September. Asian producers also sold all their August quotas for pipe PE yet in July.
MRC

(Reuters) - Taiwan's Formosa Petrochemical Corp has delayed the restart of a No. 1 naphtha cracker by a few days after mechanical problems prevented it from resuming operations over the weekend, traders said on Monday.

The 700,000 tonnes per year (tpy) cracker was shut on June 19 for maintenance and was to restart on Aug. 5.

The delay should be brief as Asia's top naphtha buyer aims to restart the unit within the week, traders added.

It has two other crackers that are in operation. But the 1.03 million tpy No. 2 cracker will be taken offline on Aug. 15 for 30 days for inspections as required by the authorities as the Mailiao site was hit by fire last year.

The company has another 1.2 million tpy No. cracker.
MRC

(Reuters) - A massive fire struck at the core of Chevron Corp's large Richmond, California, refinery on Monday, spewing flames and a column of smoke into the air, threatening a prolonged outage that may increase prices of the costliest U.S. gasoline.

The fire was contained, but not extinguished, according to the company. The fire has blazed more than three hours after it erupted at the refinery in a densely populated industrial suburb of San Francisco. Smoke could be seen billowing over the Bay Area and four train stations were shut.

The fire had started in the No. 4 crude unit, the only one at the plant, at 6:15 p.m. shortly after a leak was discovered, Chevron said. As the leak grew, workers were evacuated, plant manager Nigel Hearn told journalists at the site. He said some units were still operating, but gave no details.

It was not immediately clear when the fire would be put out and the extent of damage to the plant was not known.

Crude distillation units (CDUs) break down oil into feedstock for other units in a refinery. It can take months to repair a CDU at a large plant, during which operations are typically severely limited.

Any lengthy disruption in production could affect the supply of fuel in the West Coast, particularly gasoline, due to the difficulty in meeting California's super-clean specifications. The region also has few immediate alternative supply sources.

"Chevron will have a hard time finding replacement barrels in an already short market," said Bob van der Valk, a petroleum industry analyst in Terry, Montana.

"Refineries are already drawing down summer blend inventory in anticipation of the switch back to winter blend gasoline."
MRC

(Reuters) - Germany's Lanxess, the world's largest maker of synthetic rubber, posted better-than-expected underlying core earnings in the second quarter on currency effects and as it passed higher feedstock prices along to customers.

Quarterly earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for special items, gained 6.8 percent to 362 million euros (USD449.4 million) more than the 355 million euros expected on average in a Reuters poll of 11 analysts.

Lanxess, which competes with Exxon Mobil in the rubber market, said it continues to expect adjusted EBITDA in 2012 to rise 5-10 percent. (USd1 = 0.8056 euros)
MRC

(Canadian Plastics) -- Dow Chemical, Formosa Plastics, and Chevron Phillips Chemical have recently unveiled their expansion plans in North America. It's only been a few short years since the energy industry began tapping deposits in the Marcellus Shale Formation in New York, Pennsylvania, and Ohio, but natural gas reserves in the USA have already increased by almost 30 per cent and chemical suppliers are rushing to exploit this new wellspring.

ExxonMobil is also considering building two new polyethylene lines in Mont Belvieu, Texas, as well as a new ethane cracker in Baytown, Texas.

Nova Chemicals has a series of growth projects of its own in development in Ontario’s Chemical Valley, including the possible construction of a new world-scale polyethylene plant in Sarnia-Lambton.

Analysts see the moves by Nova and other domestic resin producers as attempts to develop low-cost feedstocks and create more widespread reshoring of manufacturing to North American suppliers before outside pressures reign them in.
MRC