Chemical industry outlook: slower growth amid near

MOSCOW (MRC) -- U.S. chemical production expanded at a slower pace in 2019 due to trade challenges and slower growth in several key end-use markets for chemistry, according to the American Chemistry Council’s (ACC) Year-End 2019 Chemical Industry Situation and Outlook, said ACCA.

Weakness in global manufacturing and uncertainty in trade policy will further moderate U.S. chemicals output growth in 2020. On the other hand, output from new capacity linked to the shale gas advantage will provide tailwinds.

“Due to slowing growth prospects across much of the globe and rising trade tensions, exports of chemicals and some chemistry-containing goods fell this year,” said Kevin Swift, ACC chief economist and Outlook co-author. Total U.S. chemicals trade is projected to contract by 3 percent to USD242 billion in 2019, then recover by 1 percent in 2020. Exports will fall 2.5 percent to USD137 billion in 2019 before expanding by 1.1 percent to USD138 billion in 2020. U.S. chemicals imports will fall 3.9 percent in 2019, to USD105 billion.

Industrial output decelerated sharply to a 0.9 percent gain in 2019 as trade tensions disrupted supply chains, energy investment eased, and slower growth in key trading-partner economies negatively affected demand for U.S. exports. Industrial output is expected to decelerate further in 2020 before strengthening in 2021, with growth of 0.5 percent and 1.4 percent, respectively. Growth in key end-use industries will be mixed for 2020, with the largest gains in construction materials, oil and gas extraction, refining, semiconductors, and aerospace.

U.S.-based chemical manufacturing has a competitive advantage in global markets due to abundant and affordable supplies of energy and feedstock. Since 2010, the industry has announced 340 projects cumulatively valued at $204 billion. Total chemical production volume (excluding pharmaceuticals) rose 0.6 percent in 2019 and is expected to grow by 0.4 percent in 2020 before strengthening to a 2.3 percent gain in 2021. Basic chemicals production is projected to increase by 0.7 percent in 2020 and 3.1 percent in 2021.

“American chemistry is expanding as shale-advantaged investments come online and additional capacity additions are planned,” said Martha Moore, senior director of policy analysis and economics at ACC and co-author of the Outlook. “The industry added high-paying American jobs for the seventh consecutive year. Continuing a tradition of innovation, companies remain dedicated to providing the essential materials for a growing population and finding sustainable solutions for the future."

Automotive and building and construction are key end-use markets for chemistry. U.S. light vehicles production eased from the robust pace of 2015-18, with sales expected to retreat to 16.9 million in 2019 and 16.5 million in 2020. Housing starts are set to edge higher to 1.26 million in 2019 and remain steady into 2020.

Solid growth in specialty chemicals continued this year. Many specialty market segments started to turn downward toward the end of 2019, with expected growth of 2.6 percent for the year. As end-use market demand eases further in 2020 and energy investment falls, a small decline of 0.4 percent in specialty chemicals production is expected. Specialties growth could resume as the industrial sector recovers in 2021 and beyond.

U.S. GDP is expected to grow 2.3 percent in 2019, down from a 2.9 percent gain in 2018. Trade-related uncertainty and a pullback in business investment have been only partially offset by favorable consumer spending. Deceleration to a 1.8 percent pace in 2020 is expected, with below-trend growth in 2021 as well. Long-term U.S. economic growth is projected to be more muted. The U.S. chemical industry will be a positive contributor as its customer industries recover and its feedstock advantage remains strong.

The business of chemistry is a USD553 billion enterprise and one of America’s most significant manufacturing industries, accounting for more than 10 percent of all U.S. exports and 14 percent of the world’s chemicals. More than 96 percent of all manufactured goods are touched by products of chemistry.

Prepared annually by ACC’s Economics and Statistics Department, the Year-End 2019 Chemical Industry Situation and Outlook is the association’s review of the U.S. and global business of chemistry and the macroeconomy. It offers global and domestic chemical industry data related to production, trade, shipments, capacity utilization, end-use markets, R&D spending, capital spending, employment and wages.

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) -- INEOS intends to close its Seal Sands, UK, acrylonitrile (ACN) plant, the office for a local Member of Parliament (MP) said, following a consultation on the future of the site launched by the petrochemicals producer earlier this year, said BBC.

A consultation over the future of the Ineos acrylonitrile manufacturing plant at Seal Sands had been launched in October. Alex Cunningham, the MP for Stockton North, told the BBC he had received an email from Ineos confirming the operation was to close early next year.

The firm, which belongs to Britain's richest man Jim Ratcliffe, has been approached for comment. Mr Cunningham said: "The company has made it clear it's a very old plant, it's outdated and needs huge investment in order to bring it up to modern standards.

"They're talking about hundreds of millions of pounds and say the plant doesn't make that much. "A week before Christmas, it must be devastating for the workers. They've got tremendous skills.

"The chief executive is one of the richest people in the world, but he prefers to invest his money in the Middle East rather than Teesside."

In the email sent to Mr Cunningham, Ineos said it had "reluctantly concluded that the plant should close", citing safety concerns for its employees handling "significant quantities of hazardous material".

The firm said it had invested almost €200m (GDP178m) in the site since it purchased it in 2008, but added it would require another EUR200m "to try to counter decades of underinvestment".

Staff would be supported through the firm's employee assistance scheme, it said, with the possibility some could transfer to other factories.

A second plant on the 268-acre site, which produces industrial nylon, will remain open. It is operated by Ineos on behalf of Basf.

ACN is a feedstock for the production of acrylonitrile-butadiene-styrene (ABS).

According to ICIS-MRC Price report, falling feedstocks prices for the production of acrylonitrile-butadiene-styrene (ABS) in Asia have been pushing prices of material in the Russian market down. Thus, LG Chem"s import prices for November quantities were at the following levels for Russian buyers in November: natural ABS - at USD1,400-1,420/tonne FOB Korea, black ABS - at USD1,610-1,630/tonne FOB Korea, white ABS - at USD1,640-1,660/tonne FOB Korea. December ABS prices might decrease by another USD30-50/tonne.
MRC

MOSCOW (MRC) -- ExxonMobil Pipeline in January will take over operations of the US Strategic Petroleum Reserve's 2-million-barrel capacity St. James, Louisiana, terminal that can distribute government-owned crude to Gulf Coast and Midwest refiners, reported S&P Global.

The Department of Energy said Monday that ExxonMobil signed a 20-year lease to operate the St. James marine terminal and 36-inch-diameter Redstick pipeline that connects to the Bayou Choctaw SPR facility. The lease will end Shell's 22-year operational control of the facilities.

St. James is the pricing hub for Gulf Coast benchmark Light Louisiana Sweet crude. In the event of an emergency SPR drawdown, the terminal can distribute crude from the SPR's Bayou Choctaw site to the Midwest via Capline, and to Gulf Coast refineries via Locap, Shell, NuStar and Plains terminals.

The St. James terminal has two marine docks and six storage tanks. It sits on the Mississippi River about 30 miles southeast of Baton Rouge.

In 2016, DOE considered retaking operational control of the St. James facility over concerns it would not be able to distribute government-owned crude without displacing commercial flows while a private company operated it.

"This lease helps ensure the free flow of crude oil in the Gulf region so we may continue to strive for energy independence and embrace America's energy renaissance," Energy Secretary Rick Perry said in a statement. "It's a win-win for producers, refiners, consumers, and taxpayers."

DOE operated the St. James facility from 1980 to 1997, before leasing it to Shell.

As MRC informed before, ExxonMobil's cracker at Notre Dame de Gravenchon, France, had an "unexpected stoppage" on Friday, 6 December, following a technical failure this October. An electric fire Saturday morning, 19 October, 2019, on the ExxonMobil facilities in Notre-Dame-de-Gravenchon (Seine Maritime) resulted in a plume of smoke, below the regulatory thresholds, which could remain visible for several days.

Besides, last week, ExxonMobil halted polyethylene (PE) production at its site in Notre Dame de Gravenchon, France due to commercial reasons, without providing further details. The site houses 500,000 tons/year of linear low density polyethylene (LLDPE) plant, including metallocene linear low density polyethylene (MLLDPE).

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

MOSCOW (MRC) -- Saudi Arabian Oil Company (Saudi Aramco) has completed, through its subsidiary Aramco Overseas Company B.V., the acquisition of 17% of Hyundai Oilbank from Hyundai Heavy Industries Holdings, for approximately USD1.2 Billion, as per the company's press release.

The completion follows receipt of all necessary regulatory consents and approvals.

The investment in South Korea’s Hyundai Oilbank supports Saudi Aramco’s Downstream growth strategy of expanding its global footprint in key markets in profitable integrated refining, chemicals and marketing businesses which enable Saudi Aramco to place crude oil and leverage its trading capabilities.

As MRC wrote previously, Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, is running its local refineries at full capacity and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia next year. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.

The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.

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.

Hyundai Oilbank is a private oil refining company established in 1964. The Daesan Complex, where Hyundai Oilbank’s major facilities are located, is a fully integrated refining plant with a processing capacity of 650,000 barrels per day. The business portfolio of Hyundai Oilbank and its five subsidiaries includes oil refining, base oil, petrochemicals and a network of gas stations.

Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.
MRC

MOSCOW (MRC) -- China will re-investigate anti-dumping duties it has imposed on some rubber products used for tires and hosepipes imported from ExxonMobil Corp, reported Reuters with reference to the Ministry of Commerce's statement.

In August 2018 China imposed anti-dumping duties on halogenated butyl rubber products from the United States, European Union and Singapore.

ExxonMobil Corp and ExxonMobil Chemical Ltd, hit with duties of 75.5% and 71.9% respectively, requested an re-investigation, the ministry said.

We remind that, as MRC informed earlier, ExxonMobil has halted PE production at its site in Notre Dame de Gravenchon, France due to commercial reasons, without providing further details. The site houses 500,000 tons/year of linear low density polyethylene (LLDPE) plant, including metallocene linear low density polyethylene (MLLDPE).

According to MRC's ScanPlast report, LLDPE shipments to the Russian market rose in the first ten months of 2019 by 11% year on year to 322,140 tonnes. Domestic producers increased their output by 30%, thereby reducing dependence on imports.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC