Asia to get 1.7 mln T naphtha from West, but more cargoes needed

MOSCOW (MRC) -- Asia is expected to receive up to 1.7 million tonnes of naphtha from the West, including Europe, the Mediterranean and the United States in January, which is more than 6% higher versus 2019's monthly average, reported Reuters with reference to industry sources' statement on Friday.

But low supplies from the Middle East, which is the largest naphtha supplier to Asia, will keep a supply crunch going for a while more, they added.

According to data from Refinitiv's Oil Research Team, up to 2.3 million tonnes of naphtha are expected in Asia from the Middle East, down from a monthly average of close to 2.5 million tonnes in 2019.

"We probably are still short of some 300,000 tonnes of naphtha next month," said one of the sources who tracks eastbound cargoes.

The supply crunch has persisted since September, when drone attacks hit Saudi oilfields.

That prompted Saudi oil giant Aramco to snap up available spot cargoes to meet customers' needs.

Refinery maintenance in the Middle East in the fourth quarter including facilities in Qatar and Saudi Arabia, and an upcoming turnaround in the United Arab Emirates added to the supply woes, industry sources said.

These factors have driven naphtha premiums to multi-year highs and crack spreads (the premiums of refining a barrel of Brent crude into naphtha) to a two-year high.

Asia's naphtha crack was near a two-year high on Thursday at USD124.60 a tonne but fell on Friday to a five-session low of USD116.15 a tonne.

That still contrasted with the situation in June when the value turned negative for the first time in a decade.

"Naphtha was extremely bearish for a long time but it's now overheated and petrochemical margins are so squeezed that makers are contemplating cracker run cuts," said a Singapore-based source.

Naphtha is a feedstock for plastics. The latter's prices typically have to be USD400 to USD450 above naphtha to reach a break-even point.

At present, plastics are sold between USD800 and USD900 a tonne on a cost-and-freight (C&F) Southeast Asia basis, depending on the grades, while naphtha is over USD600 a tonne.

"It's getting harder to keep crackers running at maximum mode given the naphtha prices," said a North Asian source, echoing the view of many other buyers.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,724,670 tonnes in the first ten months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market in January-October 2019 totalled 1,066,520 tonnes, up by 7% year on year. Supply of block copolymers of propylene (PP block copolymer) and homopolymer of propylene (homopolymer PP) increased, demand for statistical copolymers (PP random copolymer) decreased.
MRC

MOSCOW (MRC) -- Insurers of Philadelphia Energy Solutions (PES) have indicated they will make a second payment of USD15 million from its property policy in connection to the June fire and subsequent shutdown of the plant, court documents showedsaid Hydrocarbonprocessing.

The payout will be distributed among debtors who were insured under the company’s commercial property coverage policy, according to the documents.

Earlier this year, the insurers made an initial USD50 million payment to the refiner, which is currently navigating Chapter 11 bankruptcy.

PES entered bankruptcy a month after a June 21 fire and series of blasts destroyed an alkylation unit at its massive refinery complex. Shortly after the blaze, the company requested an advance payment on USD1.25 billion in property damage and business interruption insurance coverage, but it was denied.

The plant, which was the largest refinery on the U.S. East Coast, shut its last crude distillation unit in late July.

The refinery has since been put up for sale and has attracted interest from parties ranging from biofuels producers to real estate developers.

The company’s bankruptcy case hinges on receiving insurance proceeds for up to $1 billion for property damage and as much as USD250 million for loss of business after the fire, according to earlier filings with the U.S. bankruptcy court for the District of Delaware.

Without the payouts, PES could be forced into Chapter 7 liquidation.
MRC

MOSCOW (MRC) -- Over 2019 markets have been sliding around the world due to demand slowdowns, oversupply and wider business headwinds, said PRW.

Most engineering thermoplastics market participants will not have fond memories of 2019. Overall demand is down across the board for engineering thermoplastics in key downstream industry sectors, including automotive and construction.

The uncertainty surrounding demand has increased throughout out the year as a result of factors including the US-China trade war, Brexit, and a general global economic slowdown. A 40-day strike by General Motors workers in the US further dampened demand in the North American auto industry during September and October.

Engineering Thermoplastics market prices were firm throughout the first half of 2018, and value for some materials such as PA66 and polycarbonate were sharply higher. However, a steady decline since then has seen prices for some engineering plastics slump to multi-year lows. Feedstock volatility has been a constant problem with most, if not all, engineering resins experiencing squeezed margins over the past nine months, despite weaker demand.

Market conditions were not encouraging early in the fourth quarter. The North America PA6 resin markets showed little or no improvement in terms of demand during October and November, and market participants are not looking for much change during December.

PA6 prices in Europe have decreased in recent months, both for contractual deliveries and spot deals, with the latest drop in November taking confirmed spot prices below contractual figures. Taiwan spot semi-dull PA6 prices decreased to around USD1500/ton cfr in late November, down more than USD150/ton compared to October.

In China, a sharp decrease in feedstock benzene in November added more pressure to a market already struggling with oversupply. Prices for PA6 engineering resin were RMB11,500-12,000/ton, down almost 40% compared to the peak levels seen in the second half of 2018.

In the PA66 market, downward pressure on prices continued in November and another decrease was seen in freely-negotiated volumes in North America and Europe. It was understood supplies were readily available in the market and there was no pressure on consumers to pay higher prices.

Demand has continued to soften during the year and producers have trimmed output to match weaker buying interest. In China, however, PA66 engineering resin was showing signs of moderate recovery in demand during October and November. Some key feedstock prices were stabilising, lending additional support to PA66 prices. It is not clear if this trend will continue through the end of 2019 for the China market, however, as downstream consumers will be looking to de-stock inventories before the end of the year.

The polycarbonate market appears to be struggling in all regions. China has particularly suffered from oversupply and this reflects in a subdued outlook for the rest of the year. Market prices for polycarbonate in China started to soften in the last week ahead of the National Day holiday in early October and decreases accelerated after the long holiday because of weak purchasing interest and restart of local producers. Further price erosion was expected in December.

The US polycarbonate market was feeling the impact of the slowing global economy as market participants reported that demand started to slip in September. Market sentiment in the European polycarbonate market is downbeat, with participants reporting that the market is still suffering amidst a backdrop of low demand and oversupply.

The North American PBT market continues to soften and recovery is unlikely to take place in Q4 and potentially next year. Pricing discussions will be influenced by ongoing lengthy supply, domestically and internationally and stable-to-soft demand. The European PBT market was still hampered by lengthy supply and weak demand. Q4 is likely to be another bad period for market participants. In Asia, prices were slightly lower in November compared to October, as market sentiment for PBT resin still remains bearish.

The ABS market in North America did not improve due to low demand in November and the slow down in consumption was expected to continue through the end of 2019. In Europe, ABS supply levels remained steady but downstream demand in most sectors was weak. Feedstock prices have weakened as well, so margins were still under pressure.

ABS prices in China weakened during November, and consequently ABS prices in Asia also declined. Feedstocks of ABS are expected to weaken and that has a negative impact on market confidence.

According to MRC's DataScorpe report, overall ABS imports to the Russian market fell in the first ten months of 2019 by 2% year on year to 28,000 tonnes. This figure was 28,600 tonnes in January-October 2018. October ABS imports to Russia dropped by 4% year on year to 3,500 tonnes from 3,600 tonnes in October 2018. Imports of material into the country were 2,600 tonnes in September 2019.
MRC

MOSCOW (MRC) -- Wayne, Pa.-based packaging and tubing supplier Tekni-Plex Inc. is forming a medical business unit to facilitate the supply of what it calls “mission-critical, high-value components, materials, and solutions” to medical device manufacturers worldwide, said Canplastics.

Called “Tekni-Plex Medical”, the new operating unit will offer products and services formerly supplied separately by its Colorite, Natvar, and Dunn businesses.

In a Dec. 17 statement, Tekni-Plex asserted that medical device companies “will now have a dedicated sales and customer service team representing all product lines.”

“Our goal is to be a trusted advisor, helping our customers make the best decisions on their most important business issues through deep engagement, expertise, innovation and quality,” Tekni-Plex president and CEO Paul Young said. “Our globally integrated operations will help us provide better and faster solutions to meet customer needs.”

Manufacturing will continue in the same locations, with the ability to run the same material specifications on the same equipment around the world for multinational customers. Going forward the Colorite, Natvar, and Dunn names will be used as product brands.

The Colorite brand includes a line of PVC and TPE medical-grade compounds; the Natvar brand includes multilayer and multi-lumen tubing, as well as a range of value-added options including tapered, striped, thermoformed, special profile products for applications including intravenous therapy, dialysis, respiratory, and surgical equipment; and the Dunn brand features precision extruded tubing for endovascular catheters and minimally invasive devices, as well as custom medical tubing for diagnostic and interventional devices.
MRC

MOSCOW (MRC) -- KBR announced that it has been awarded a contract by Hainan Huasheng New Material Technology Co., Ltd. (Hainan Huasheng) to license Mitsubishi Chemical Corporation's (MCC) proprietary Bisphenol A (BPA) technology for a new plant in Dongfang City, Hainan Province, China, reported Hydrocarbonprocessing.

Under the terms of the contract, KBR will provide a Licensing and Basic Engineering Design (LBED) package to Hainan Huasheng for building a grassroots 240,000 tons per annum BPA plant. KBR will also provide commissioning, startup support, and training services for the project.

The BPA technology, licensed by KBR and owned by MCC, provides superior product quality with a minimum long-term cost of production. To date there are more than 600,000 tons per year of BPA produced using this technology.

"We are honored to be chosen to support this significant project," said Doug Kelly, KBR President, Technology Solutions. "Hainan Huasheng's BPA award to KBR extends KBR's excellence and growing capability in the entire phenolics value chain."

"The quality of BPA product is essential to our downstream non-phosgene based polycarbonate unit. By using this advanced BPA process, which combines MCC's operational knowledge and KBR's phenolic chain experience, we are confident this project will be a great success," said Yao Guangqian, GM of Hainan Huasheng New Material.

We remind that, as MRC informed earlier, in May 2015, another major petrochemical producer in China - Chang Chun Chemical (Jiangsu) Co. - started up its second BPA plant at Changshu in China's Jiangsu Province using proprietary technology from Badger Licensing.

BPA is the main feedstock for the production of epoxy resins and polycarbonate (PC).

According to MRC's ScanPlast report, Russia's overall estimated consumption of PC granules reached 66,100 tonnes in the first ten months of 2019, up by 14% year on year (57,900 tonnes).

KBR globally licenses and designs plants with proprietary technologies, including phenol/acetone, BPA and polycarbonate processes. KBR's integrated phenolic offering provides advantages in raw material, utility, OPEX and maintenance costs.
MRC