North Korea fuel prices soar after U.N. sanctions capping supply

MOSCOW (MRC) — Gasoline and diesel prices rose sharply in North Korea after its sixth nuclear test and as the U.N. Security Council imposed new sanctions capping fuel supply, as per Hydrocarbonprocessing.

The Security Council unanimously passed a resolution on Sept. 11 banning exports of condensates and natural gas liquids to the North and capping the annual supply of refined petroleum products at two million barrels and crude at its current levels.

The price of gasoline sold by private dealers in the capital Pyongyang and northern border cities of Sinuiju and Hyesan spiked to USD2.51 per kg as of Sept. 13, up 45.1% from USD1.73 per kg on Sept. 5, according to Reuters analysis of data compiled by the Daily NK website.

The website is run by North Korean defectors who collect prices via phone calls with traders in the North. Diesel prices also surged 61.5% from USD1.30 per kg to USD2.10 per kg during the same period.

Lee Sang-yong, who speaks regularly to sources inside the North and supervises market data from them, said the price hikes were caused primarily by a cut in supplies as the regime scrambles to hoard fuel, wary of a potential fuel crunch.

“North Korean authorities are likely to have intentionally reduced supplies in the market after the nuclear test, thinking the U.N. Security Council sanctions would affect their own repository,” Lee said. “In addition, astute traders are cutting their supplies on the expectations that the prices would go up further, while there’s some psychological effect among ordinary citizens who worry about war."

U.N. Ambassador to the United Nations Nikki Haley said on Sunday the Security Council has run out of options on containing the North's nuclear programmer and Washington may have to turn the matter over to the Defense Department. North Korea launched a missile over Japan into the Pacific Ocean on Thursday in defiance of the new Security Council.

White House national security adviser H.R. McMaster said on Friday, after the latest North Korean missile launch, that the United States was running out of patience: "We've been kicking the can down the road, and we're out of road."

The latest gasoline price represents a 70.7% and 153.5% surge compared with statistics posted on June 8 and Dec. 1, respectively, less than one week after the Security Council adopted its last two resolutions on North Korea.

North Korea gets most of its fuel from China and some from Russia. US and South Korean officials have said the North imports some 4.5 MMbbl of refined petroleum products and 2 MMbbl of crude oil each year.
MRC

MOSCOW (MRC) -- China’s first private-led refinery complex in the eastern province of Zhejiang is expected to start operations in 2020, reported Reuters with reference to China Securities News, citing a provincial governor, a timeline behind what the company had earlier predicted.

The refinery complex has seen total investments of USD26.42 B, said the report, without giving further details.

Chinese chemical giant Zhejiang Rongsheng Holding Group plans to start up a 400,000-bpd refinery complex, under phase-I of the mega project, in late 2018, Reuters has reported. The refinery will be built on an island in the Zhoushan archipelago.

Rongsheng has plan to double the plant’s capacity to 800,000 bpd in 2020.

As MRC informed before, in December 2016, China's Sinopec Group began construction of a long-planned refinery and petrochemical complex in the southern city of Zhanjiang. The first phase of the mega projects includes a 10 million tonnes per year refinery and an 800,000 tonnes per year ethylene complex that produces plastics, synthetics, rubber and fibre.
MRC

MOSCOW (MRC) — US diesel stockpiles did something this year that has never happened in the summer before: They shrank. And that was even before Hurricane Harvey landed, knocking out a quarter of US refining capacity, crippling production of fuel products, said Reuters.

Thanks to surprising summer demand, particularly from exports, inventories of diesel, jet fuel and heating oil were heading into the busy winter at their lowest levels in 3 yr. Harvey's effects cost refiners even more production of fuel, raising the possibility of shortages and higher prices if the United States suffers another major disruption or an unexpectedly frigid winter.

Since 2000, between June and September distillate inventories have risen by an average of 10%, but this year, they fell by 2.2%, the first decline since 1982 when record-keeping began, a Reuters analysis of US Energy Information Administration data shows.

The summer is typically when refiners build stocks of distillates to meet growing fall and winter demand for heating oil and crop harvesting. “If we get another hurricane or similar event, things could get real tight,” said Robert Campbell, head of oil products markets at London-based Energy Aspects.

Inventories typically remain flat or rise modestly through September, and while some refiners delayed scheduled work, the loss of the Gulf has hit overall US refining. As a result of Harvey, distillate stocks fell another 4.6 MMbbl in the first two weeks of September, EIA data shows.

US distillate stocks are now at three-year lows for this time of year, and 5.2% below their historical average. The last two winters have been among the warmest ever recorded, but forecasters this year are predicting a colder, more typical season, according to Reuters data.

Profit margins have jumped to 5-yr highs as a result, which should incentivize US refiners to run plants at full tilt and thwart any supply concerns, but an unexpected event could change things. Several refineries are still in the midst of restarting plants in the US Gulf, where 4.4 MMbbl of capacity was taken down due to Harvey.

US supply issues could test the resiliency of an export market that is expected to grow in upcoming months. The International Energy Agency said on Wednesday that global fuel stocks could soon fall below five-year averages "because of the impact of Hurricane Harvey."

The unusual inventory drawdown was fueled in part by growing demand in Latin America, which could feel the sting of reduced availability of Gulf products. Harvey's impact is also being felt in Europe, a big export market for the United States. European diesel stocks are expected to fall at the fastest rate in at least three years in September as US imports slow, traders have told Reuters.

Gulf exports to Europe are expected to drop to about 500,000 t in September, far lower than the 1.5 MMt to 2 MMt seen in previous months, according to traders and shipping data.

The inventory also sets the stage for a bullish run in the diesel market. The 3-2-1 crack spread, a measure of the profit refineries make from converting three barrels of oil into gasoline and diesel, is at USD20.63/bbl, the highest level seasonally since 2012, and more than USD6 above the average during that time.

In addition, future-dated diesel contracts are trading at a lower rate than the current spot price, also known as backwardation, which incentivizes refiners to supply the market and not put product in storage to sell later. The reverse condition, contango, would motivate refiners to store product. "Inventories are looking pretty healthy and without any contango there is not much in storage," one trader said.
MRC

MOSCOW (MRC) -- Since North American operations have been doing well recently, Veka Inc (Fombell, Pennsylvania / USA) – a subsidiary of German PVC profiles producer Veka (Sendenhorst) – is planning to set up a fourth production facility in the US, said Plasteurope.

Three existing plant properties in North and South Carolina have been narrowed down as possibilities for the new site, with each facility having over 14,864 m? of floor space. The new location will have as many as 30 extrusion lines and also include manufacturing support, offices and warehouse space.

Veka’s North American president, Joe Peilert, says the new extrusion location is scheduled to open in 2018. With this step, Veka will grow to have four production plants in North America. Since closing production in Edmonton, Alberta / Canada, Veka has been manufacturing extruded profiles in the US at Fombell, Pennsylvania, Reno, Nevada, and Terrell, Texas.

The company plans to strengthen its Latin America presence too. A warehouse and a logistics centre are to be set up in Mexico in the fourth quarter of 2017, with an exact location not yet disclosed. Veka also has sales offices in Argentina and Chile.
MRC

MOSCOW (MRC) -- BASF has again been included in the Dow Jones Sustainability World Index (DJSI World). This year, the chemicals group has been especially recognized for its comprehensive innovation management, environmental and social reporting as well as its focused materiality assessment, as per the company's press release.

The DJSI World is one of the most renowned sustainability indices. It represents the top 10% of the largest 2,500 companies in the S&P Global Broad Market IndexSM based on their sustainability performance.

BASF has now been included in the DJSI World for 17 consecutive years. The selected companies must demonstrate continuous improvement with regard to sustainability and are assessed by analysts from asset manager RobecoSAM.

“We are very pleased about the result. We are continuously working to improve our sustainability performance and being listed for the seventeenth time in a row confirms that we are on the right track,” says Dirk Voeste, Vice President Sustainability Strategy at BASF.

BASF is also again listed in the FTSE4Good Index Series. Only companies that meet stringent criteria in social, environmental and corporate governance (ESG) and manage to continuously confirm or develop these in regularly conducted assessments are listed in these indices. BASF is top class in terms of ESG among chemical companies belonging to the index.

We remind that, as MRC informed before, within the next five years, BASF plans to invest globally more than EUR200 million in its plastic additives business, approximately half of which in Asia, focusing on capacity expansions and operational excellence. Plastic additives improve product properties such as scratch resistance or light stability, and optimize plastics manufacturing processes. As the leading global supplier of plastic additives with manufacturing assets in all regions, BASF is a major partner to the plastics industry.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC