South Korean export slump extends to ninth month amid gloom

MOSCOW (MRC) -- South Korea’s exports extended their slump in August as an escalating feud with Japan adds to uncertainties for the economy already elevated amid the U.S.-China trade war, said Bloomberg.

Exports fell 13.6% in August from a year earlier, a ninth consecutive month of contraction, data from the trade ministry showed Sunday. That compared with economists’ consensus for a 12.5% drop. Imports fell 4.2%, and the trade surplus was USD1.7 billion.

Export weakness has been the main drag on South Korea’s economy this year, weighing on companies’ investment and hiring. Headwinds from trade tensions remain high. Japan, a key supplier of materials and components, formally removed South Korea from its list of trusted trading partners on Aug. 28. The U.S. will start applying a new round of tariffs on some Chinese imports starting Sunday.

Exports fell in August due to deteriorating external trade conditions, base effect and a drop in operating days, according to a trade ministry statement. Impact from Japan trade sanctions seen limited so far, statement said.

South Korea’s trade data serve as a barometer of global demand due to its early release. The country is the world’s biggest source of memory chips, which go into everything from computers to smartphones.

“Global trade remains in a slump, and a turnaround is not around the corner,” said Howie Lee, an economist at Oversea-Chinese Banking Corp, before the data release. "There are some suggestions that the electronics market may have hit a bottom, and it will be interesting to see if this manifests."

The Bank of Korea held its benchmark interest rate on Friday, while noting that risks to its 2.2% growth forecast have increased.
MRC

MOSCOW (MRC) -- SIBUR and Tatneft has signed a letter of intent with respect to Togliatti-based petrochemical facilities, as per SIBUR's press release.

Under the deal, SIBUR plans to sell and Tatneft plans to acquire certain production and other assets that are currently registered in the name of SIBUR Togliatti and Togliattisintez legal entities.

The assets include production facilities for various types of synthetic rubber used by Russia's and the world's leading tire manufacturers, for MTBE (high-octane fuel component), butadiene, isoprene, and other intermediates, as well as infrastructure of the industrial park accommodating a number of chemical and other technological companies.

For Tatneft, the acquisition is an opportunity to strengthen the vertical integration of its KAMA TYRES business and increase its value. After the acquisition, Tatneft intends to further develop the assets in line with its gas and petrochemical strategy. SIBUR - with its focus on establishing and developing global scale production of basic polymers, high-potential medium-tonnage products and premium special chemicals – will continue to cooperate with the Togliatti-based companies as partners.

The deal is expected to be closed by the end of 2019, including all corporate procedures, antitrust approvals, and other statutory formalities.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,255,800 tonnes in the first seven months of 2019, up by 9% year on year. Shipments of all PE grades increased. Meanwhile, the estimated PP consumption in the Russian market was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

SIBUR is the largest integrated petrochemicals company in Russia. The Group sells its petrochemical products on the Russian and international markets in two business segments: Olefins & Polyolefins (polypropylene, polyethylene, BOPP films, etc.) Plastics, Elastomers & Intermediates (synthetic rubbers, EPS, PET, etc.). SIBUR’s petrochemicals business utilises mainly own feedstock, which is produced by the Midstream segment using by-products purchased from oil and gas companies. More than 26,000 employees working in SIBUR contribute to the success of customers engaged in the chemical, fast moving consumer goods (FMCG), automotive, construction, energy and other industries in 80 countries worldwide. In 2018, SIBUR reported revenue of USD 9.1 billion and adjusted EBITDA of USD 3.3 billion.
MRC

MOSCOW (MRC) -- South Korean oil refining companies imported more crude oil from the United States than from Kuwait in July, as per BusinessKorea.

South Korean oil refining companies imported 14.78 million barrels of crude oil from the United States and 11.03 million barrels of crude oil from Kuwait last month, when the former exceeded the latter for the first time in history. Their crude oil imports from Saudi Arabia added up to 24.7 million barrels during the same period.

Korea's crude oil imports from the United States almost tripled in one year from 5.37 million barrels. In addition, the value of the imports reached an all-time high of USD982.9 million.

This can be attributed to a decrease in the price of American crude oil led by shale oil development. As of July 1, the per-barrel WTI and Dubai crude oil prices were USD59.09 and USD65.06, respectively. This difference has been maintained last month as well.

American crude oil has a low sulfur content, which means its added value is high. Also, it can add to the companies’ profitability when mixed with cheaper Latin American crude oil, which is mainly heavy crude oil. Moreover, the ongoing trade disputes between the United States and China has led to a decrease in China’s American crude oil imports and a continuous oversupply.

Tax benefits applied to American crude oil are another reason for the increase. At present, a 3 percent tariff is applied to crude oil from the Middle East whereas no tariff is imposed on American crude oil in accordance with the KORUS FTA. In addition, the South Korean government gives a refund of 16 won per liter to non-Middle East crude oil importers in the interest of import source diversification.

SK Innovation is relatively more aggressive in importing crude oil from the United States. The company is using very large crude carriers (VLCCs) to import the oil via the Cape of Good Hope sea route. This means it is enjoying a stable supply with tensions between the United States and Iran escalating in the Strait of Hormuz region, through which Middle East crude oil is transported.

On the other hand, S-Oil and Hyundai Oilbank are more passive in that Saudi Aramco is the largest shareholder in the former and the second-largest shareholder in the latter. "The United States is currently building oil pipelines between the inland and the western coast for shale oil export and direct import via the Pacific Ocean is expected to become possible next year," said an industry executive.

As MRC informed earlier, SK Innovation, owner of South Korea’s top refiner SK Energy, said in February 2019, it saw a rebound in refining margins in 2019 supported by firm diesel demand in the second half of the year.
MRC

MOSCOW (MRC) -- Zhong An United Coal Chemical Co has restarted its polypropylene (PP) unit following an unplanned outage, as per Apic-online.

A Polymerupdate source in China informed that the company has resumed operations at the unit on August 24, 2019. The plant was shut owing to technical issues on August 10, 2019.

Located at Huainan, Anhui province, China, the PP unit has a production capacity of 145,000 mt/year.

As MRC reported earlier, the company also restarted its linear low-density polyethylene (LLDPE) unit, which was also shut on 10 August, because of the same reasonon 24 August, 2019.

According to MRC's ScanPlast report, Russia's estimated PP consumption was 796,120 tonnes in January-July 2019, up by 11% year on year. Shipments of PP block copolymer and homopolymer PP increased.

Zhongan United Coal Industry Chemical Co. Ltd. mines, processes, manufactures, and distributes coal products. The сompany produces brown coal products, bituminous coal products, hard coal products, coking coal products, and other related products. Zhongan United Coal Industry Chemical markets its products throughout China.
MRC

MOSCOW (MRC) -- Zhong An United Coal Chemical Co has restarted its linear low-density polyethylene (LLDPE) unit following an unplanned outage, according to Apic-online.

A Polymerupdate source in China informed that the company has resumed operations at the unit on August 24, 2019. The plant were shut owing to technical issues on August 10, 2019.

Located at Huainan, Anhui province, China, the LLDPE unit has a production capacity of 145,000 mt/year.

According to MRC's ScanPlast report, LLDPE shipments to the Russian market increased in the first seven months of 2019 by 8% year on year to 234,130 tonnes. Local producers increased their production by 24%.

Zhongan United Coal Industry Chemical Co. Ltd. mines, processes, manufactures, and distributes coal products. The сompany produces brown coal products, bituminous coal products, hard coal products, coking coal products, and other related products. Zhongan United Coal Industry Chemical markets its products throughout China.
MRC