HDPE imports into Russia fell by 4.3% in the first eight months of 2017

MOSCOW (MRC) - Production of high density polyethylene (HDPE) in Russia decreased to about 647,100 tonne in the first eight months of 2017, down 4.3% year on year. Gazprom neftekhim Salavat and Nizhnekamskneftekhim reduced their output, according to MRC's ScanPlast Report.

August HDPE production in Russia grew to 73,800 tonnes, whereas this figure was about 72,700 tonnes a month earlier. Overall HDPE production reached 647,100 tonnes in the first eight months of the year, compared to 676,200 tonnes a year earlier. Kazanorgsintez and Stavrolen's higher output did not allow to offset the reduction in production at the other two plants.

Structure of HDPE production over the reported period looked as follows.

Russia's August HDPE production at Kazanorgsintez increased to 47,000 tonnes from 46,800 tonnes a month earlier. The producer's total HDPE production was 363,300 tonnes in the first eight months of the year, up 10% year on year.

August HDPE production at Stavrolen reached about 25,400 tonnes against 25,800 tonnes in July. Stavrolen shut its capacity for two months of maintenance works for the modernisation of part of the facilities from 16 September. The plant's HDPE output reached 193,600 tonnes in the first eight months of 2017, up by 7% year on year.

Gazprom neftekhim Salavat shut down its HDPE capacities on 1 July for long-term turnaround, which lasted until the year end. Thus, for a few days of work in August, the producer managed to produce 1,400 tonnes of HDPE. Overall HDPE production at Gazprom neftekhim Salavat reached 52,900 tonnes in the first eight months of 2017, down by 28% year on year. Such a noticeable decrease in the volume of output was a result of long preventive maintenance, whereas last year the company worked without long-term turnaround.

Nizhnekamskneftekhim in late June, switched to the production of linear polyethylene and plans to resume the production of HDPE only on 15 September. Overall HDPE production at the plant in January-August was 37,100 tonnes compared with 92,500 tonnes year on year. Such a tangible reduction in output was a result of the increase in the share of LLDPE in total production.


MRC

MOSCOW (MRC) - DowDuPont, formed through the merger of chemical giants Dow Chemical and DuPont, is shifting some operations in the three units it plans to create, potentially averting a prolonged fight with activist investors over its post-merger plans, said Reuters.

Dow and DuPont will split into three companies focusing on agriculture, specialty chemicals and materials, but some investors including Nelson Peltz’s Trian Partners and Daniel Loeb’s Third Point LLC urged the companies to take another look at the way business units are aligned.

The company said on Tuesday its would now move businesses totaling more than USD8 billion in annual sales from its materials science division to the specialty-chemical unit, including water purification and automotive systems. “We expect that this updated portfolio was seen by legacy Dow as the bare minimum to avoid an activist fight," Bernstein analyst Jonas Oxgaard wrote in a client note.

DowDuPont’s shares rose 2.5 percent on the New York Stock Exchange in late-afternoon trading. The changes were the result of a four-month review led by consultancy firm McKinsey & Co, which talked to 25 of the company’s biggest shareholders, Andrew Liveris, executive chairman of the combined company said in an interview. Liveris was formerly chief executive of Dow, and is set to retire from DowDuPont next year.

Loeb’s Third Point, which has been critical of Liveris’ leadership, said in May the companies could unlock USD20 billion in additional value by tweaking the original spinoff plan. As part of the revised plan, DowDuPont will split the old Dow Corning and distribute its lucrative silicone business among the materials and specialty companies.

Earlier, this business was expected to stay under the materials science division - which will account for more legacy Dow businesses and retain the Dow brand. The business produces silicon-based products for aerospace, automotive and electrical industries.
MRC

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.
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