US crude stock draw likely extends amid strong exports, refinery runs

MOSCOW (MRC) -- US crude oil inventories likely extended their slide last week amid an uptick in refinery demand and strong export activity, S&P Global analysis showed Monday.

Commercial crude stocks are expected to have fallen 3 million barrels to around 443.8 million barrels during the week ended December 20, according to analysts surveyed by Platts Monday. The draw would pare the nationwide supply overhang for a second week, leaving stocks around 2.4% above the five-year average of US Energy Information Administration data.

The EIA inventory report is delayed until Friday due to the midweek Christmas holiday.

Crude inventories typically decline this time of year as refiners come back from fall turnaround work. But refiner activity has been historically weak lately, and instead recent crude draws have been predicated in large part on exports.

Refiners are expected to have raised utilization rates around 0.5 percentage point to 91.1% of total capacity last week, analysts said. The expected uptick would still leave run rates 2.4% below the EIA five-year average and more than 4% under year-ago levels. Approximately 1.34 million b/d of crude distillation capacity was slated to be offline last week for turnaround work, up from just 862,000 b/d offline during the same period last year, S&P Global Platts Analytics data showed.

Exports are expected to remain steady at around 3.6 million b/d last week, data from cFlow, Platts trade flow software showed. US exports were at an eight-week high 3.63 million b/d during the week prior, EIA data showed.

Export volumes to Europe slipped 4.84 million barrels to 8.47 million barrels last week, snapping three consecutive weeks of higher transatlantic flows, cFlow data showed. This decline was mostly matched by a 3.25 million-barrel uptick in Asia-bound volumes to 8.48 million barrels.

US exports to Singapore jumped to 2.77 million barrels last week, up from zero the week prior, according to cFlow. Exports to Singapore have significantly strengthened in the final weeks of 2019. To date in December they just shy of 4 million barrels to date in December and reached 4.33 million barrels in November, according to cFlow, compared with zero barrels in October and just 721,000 barrels in September.

Attractive refining margins for US light sweet crudes in Singapore is likely to support continued exports to the Asian refinery hub in the coming weeks. Margins for Platts WTI MEH and Eagle Ford crudes in Singapore have averaged at USD2.74/b and USD2.77/b to date in December, according to Platts Analytics data, compared with minus USD2.96/b for North Sea Forties and minus USD3.92/b for Arab Light.

Analysts expect nationwide gasoline stocks to have risen 1.5 million barrels last week to 238.8 million barrels, and distillate inventories to edge about 200,000 barrels higher to 125.3 million barrels. The expected build would leave gasoline stocks about 5.2% above the five-year average, while distillate inventories are expected to hold at around 7.4% under the five-year average.

Product stocks have steadily built as refiners have returned from maintenance, but so far this growth has been tempered by strong demand. Total refined product supplied during the week ended December 13 jumped 3.4 million b/d to 21.8 million b/d, EIA date showed, around 3.3% stronger than the five-year average for this time of year.
MRC

MOSCOW (MRC) -- Sumitomo Chemical has completed construction of two catalyst manufacturing lines in its Chiba Works location (Ichihara, Chiba) to meet the demand of companies licensing its polypropylene (PP) and propylene oxide (PO) manufacturing technology, in order to enhance its licensing business, said the company.

Sumitomo Chemical’s PP production technology has a proven track record of successful operations at various locations in the world, such as the Company’s Chiba Works in Japan and licensee companies overseas, including its affiliates, namely, The Polyolefin Company (Singapore) Pte Ltd and Petro Rabigh in Saudi Arabia, offering high quality products while maintaining stable plant operation over a period of time. As far as PO is concerned, the Company's production technology is based on a PO-only process, in which PO alone is manufactured without any accompanying coproducts by recycling cumene. The cumene method, which Sumitomo Chemical was the first in the world to commercialize, has the distinct advantage of achieving a high PO yield, when combined with the use of the Company's proprietary high-performance epoxidation catalyst, while ensuring superior stability in plant operation. It was licensed to S-OIL Corp. of South Korea and a subsidiary of PTT Global Chemical Public Company Limited of Thailand, in addition to the company’s affiliate Petro Rabigh. Furthermore the company signed a technology licensing agreement with Bharat Petroleum Corporation Limited of India in July 2019.

Sales of catalysts to licensing partners are expected to generate stable revenue that is unlikely to be affected by the market environment, as demand increases as more technology licensing agreements are signed. Sumitomo Chemical is committed to sustaining revenue by not only obtaining one-time technology licensing fees, but also through the sale of catalysts and providing technical support after licensing.

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.

Sumitomo Chemical intends to work with its global licensing partners and expand the business portfolios in its Petrochemicals & Plastics Sector.
MRC

MOSCOW (MRC) -- Shandong Chengtai Chemical has shut its methyl tertiary butyl ether (MTBE) unit for a brief maintenance, according to Apic-online.

A Polymerupdate source in China informed that the company has halted operations at the plant on December 17, 2019. The unit is likely to restart on December 24, 2019.

Located at Jinshanwei, Shanghai, China, the MTBE unit has a production capacity of 135,000 mt/year.

Shandong Chengtai Chemical Co., Ltd. is based in China. The head office is in Weifang. The enterprise operates in the Other Chemical Product and Preparation Manufacturing industry. The company was established on April 02, 2011. It currently has a total number of 291 (2018) employees. From the latest financial highlights, Shandong Chengtai Chemical Co., Ltd. reported a net sales revenue increase of 12.83% in 2018. Its’ total assets recorded a negative growth of 25.57%.
MRC

MOSCOW (MRC) -- Gazprom and Sinopec discuss potential avenues for cooperation, said the company on its website.

A working meeting between Alexey Miller, Chairman of the Gazprom Management Committee, and Li Yong, Vice President of China Petrochemical Corporation (Sinopec Group), took place in St. Petersburg.

The parties discussed their potential areas of cooperation.

Gazprom and China Petrochemical Corp (Sinopec) are the top spenders among global oil and gas companies, in terms of new build capital expenditure (capex) to be spent on planned and announced projects across the oil and gas value chain during 2018–2025.

As MRC informed earlier, Gazprom Neft and the Abu Dhabi National Oil Company (ADNOC) have entered into a Framework Agreement on Strategic Cooperation. The companies will explore opportunities for implementing joint projects in the upstream and downstream sectors, as well as in information technologies, artificial intelligence, and other areas.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.
MRC

MOSCOW (MRC) -- LyondellBasell (LBI), one of the largest plastics, chemicals and refining companies in the world, has announced it has signed a Memorandum of Understanding (MoU) to form a 50:50 joint venture (JV) with China Petroleum & Chemical Corporation (Sinopec), one of the largest integrated energy and chemical companies in China, as per LBI's press release.

Under the non-binding MoU, the JV will construct a new propylene oxide (PO) and styrene monomer (SM) unit in Zhenhai, Ningbo, China to serve that country's domestic market. Once finalized, this JV will build upon the existing LyondellBasell / Sinopec PO/SM joint venture in the same location, which operates under the name Ningbo ZRCC Lyondell Chemical Company Limited.

"Joint ventures in strategic regions are an important part of our growth strategy," said Bob Patel, CEO of LyondellBasell. "As demand for construction materials, packaging and furnishings continues to grow, we see an opportunity to bring together our leading technology with Sinopec's operational capabilities to further serve the Chinese market."

"This cooperation on the second PO / SM unit between Sinopec and LyondellBasell is based on the successful partnership of the first unit," said Dai Houliang, Chairman of Sinopec. "It is in line with China's further opening-up policy, and is another achievement of international cooperation of Sinopec. The products will help meet the increasing demands from the domestic market."

"The formation of this JV with Sinopec, a highly respected Chinese company and an existing PO / SM partner, allows us to take advantage of the fastest growing market in the world for these products," said Torkel Rhenman, Executive Vice President of LyondellBasell. "We see tremendous opportunity to create additional value and grow the presence of LyondellBasell in this very important market."

The new facility is expected to produce 300 kilo tons per annum (KTA) of PO and 600 KTA of SM. Construction of the facility will begin in early 2020 with start-up expected in 2022. The facility will use LyondellBasell's leading PO / SM technology. Products produced will be marketed equally by both companies which will significantly expand their respective participation in the Chinese market for both PO and SM.

According to IHS Markit, China makes up more than 60 percent of the Asian chemicals market demand and represents 40 percent of global chemicals growth over the next decade. PO and SM are core products for LyondellBasell.

LyondellBasell operates five wholly-owned facilities in China which are located in Guangzhou, Suzhou, Dalian, Dongguan and Changshu. In addition, LyondellBasell is currently building the largest next generation PO / tertiary butyl alcohol (TBA) plant in the world near Houston, Texas.

As MRC reported earlier, Sinopec has just completed the central unit of the Al-Zour refinery project in Kuwait. As the largest refinery in the Middle East, it will make Kuwait the biggest clean oil-producing country in the region with an annual processing capacity of 3,150 tons.

Styrene monomer (SM) is the main feedstock for the production of polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 411,080 tonnes in the first ten months of 2019, which corresponds to the last year's level. October estimated consumption of PS and styrene plastics rose by 2% year on year, totalling 46,740 tonnes.

China Petroleum & Chemical Corporation or Sinopec Limited is a Chinese oil and gas company based in Beijing, China. Sinopec"s business includes oil and gas exploration, refining, and marketing; production and sales of petrochemicals, chemical fibers, chemical fertilizers, and other chemical products; storage and pipeline transportation of crude oil and natural gas; import, export and import/export agency business of crude oil, natural gas, refined oil products, petrochemicals, and other chemicals.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC