Asia naphtha premiums remain high amid demand loss from cracker cuts

MOSCOW (MRC) -- Asia will lose more than 300,000 tonnes of naphtha demand this month as petrochemical makers cut output to combat weak margins, but refinery maintenance is reducing supply of the plastics and chemicals building block, holding premiums steady, reported Reuters.

Run cuts at crackers - units that break down naphtha into components to make plastics and chemicals - have historically pulled spot prices for the feedstock into discounts to benchmark prices in Japan. The last time petrochemical makers took such a step was during the 2008 financial crisis.

But a number of refineries are now in turnaround in the Middle East, Asia’s top naphtha supplier, underpinning prices for the product.

"The several refinery turnarounds in Saudi Arabia and (United Arab Emirates) will lower (Middle Eastern) exports and offset some of the demand reduction due to cuts in crackers runs," said Matthew Chew, principal oil analyst at IHS Markit.

Saudi Aramco Total Refining and Petrochemical Company (SATORP), for example, has said it will conduct scheduled maintenance on Train 2 units from Jan. 13 to Feb. 29.

Abu Dhabi National Oil Company (Adnoc) as well said in a statement last month that its Ruwais facility would undergo routine maintenance in early 2020.

Naphtha traders have said at least two more facilities in Saudi Arabia, Rabigh and Ras Tanura, are also scheduled to undergo maintenance in the first quarter. This could not be confirmed with Saudi Aramco, which has declined to comment.

The effect of these turnarounds is reflected in data from Refinitiv Oil Research showing that Middle East naphtha slated to arrive in North Asia and Singapore in February is about 1.8 million tonnes so far, sharply lower from January’s scheduled volumes of almost 2.3 million tonnes.

That has helped to hold naphtha spot premiums relatively high, with benchmark open-specification grade sold to Yeosu, South Korea, last week at about USD18.50 a tonne to Japan quotes on a cost-and-freight (C&F) basis.

Although this was down nearly 40% from multi-year highs of USD30 a tonne in October, it was more than 18 times higher versus the same period in 2019.

"People often say the naphtha market is weak. But South Korea paid an USD18.50-a-tonne premium ... how is that weak?" said an industry source who tracks deals.

Naphtha crackers across Asia, including in South Korea, Japan, Indonesia, Singapore and Malaysia, have cut runs by 5%-10%. The Philippines has decided to extend the shutdown of its sole cracker following planned maintenance.

This translates to a net demand loss of 300,000 to 350,000 tonnes for January, said Sri Paravaikkarasu, director for Asia oil at consulting firm FGE.

Chew of IHS estimated the demand loss this month at 100,000 to 200,000 barrels per day (bpd) (approximately 11,100 tonnes to 22,200 tonnes per day).

As MRC informed earlier, in July 2018, SATORP selected Axens to evaluate, develop, and implement an Advanced Process Control (APC) system for its aromatics complex ParamaX producing high purity paraxylene and benzene.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC

MOSCOW (MRC) -- A massive explosion at a petrochemical plant in northeastern Spain killed one person and gravely injured at least six others on Tuesday, reported The Telegraph with reference to regional authorities' statement.

A local government spokesman for the port city of Tarragona, where the plant is located, said a preliminary investigation indicated the force of the blast killed an individual in a nearby neighborhood.

The spokesman said he had no further details. He spoke on condition of anonymity in keeping with City Hall regulations.

The interior minister of Spain's Catalonia region, Miquel Buch, tweeted that the explosion caused one death and left six people injured while one person remained missing.

The civil protection agency in the Catalonia region called the blast a "chemical accident" and warned people in parts of the city of 800,000 and in nearby towns to refrain from going outside as a precaution.

Emergency services said that two of the injured were being treated for major burns.

Buch said the smoke from the resulting fire was not toxic but he also advised residents to remain inside.

The blast took place on the premises of Iqoxe, according to a woman who answered the phone at the company and who quickly hung up the phone without giving her name.

According to the company's website, Iqoxe is Spain's sole producer of ethylene oxide, a chemical compound used for making detergents, solvents and other products, as well as glycol, one of the main raw materials in the production of plastics.

Local residents posted videos showing the aftermath of the blast, with flames and a big column of black smoke emerging from an area dotted with big industrial tanks.

Fire departments sent 24 brigades to the area, the regional emergency service said.

Some local residents told Tarragona Radio that the blast could be heard from miles away.

Tarragona is located 115 kilometers (71 miles) southwest of Barcelona, the regional capital of Spain's Catalonia region.

Since 2015, the city has housed a 1,200-hectare (2,965-acre) "chemical hub," ChemMed, that was described as the largest of its kind in southern Europe.

The government said Prime Minister Pedro Sanchez had been in contact with the regional president of Catalonia, Quim Torra to inquire about the blast and offer any help needed.

Tuesday's explosion comes just over a month after a Dec. 11 blaze at a solvent and industrial residues recycling plant in the northeastern town of Montornes del Valles. After that blast, which caused no casualties, authorities had to cordon off an area of some 500 meters (550 yards) in radius around the plant.

As per MRC's ScanPlast reported, imports of PET chips into Russia increased by 13% year on year in the first eleven months of 2019, reaching 130,800 tonnes, versus 116,100 tonnes a year earlier (excluding shipments from Belarus). Russia's PET imports almost doubled to 12,300 tonnes in November 2019 from 6,300 tonnes in October 2019, imports of material were 8,200 tonnes in November 2018. The share of Chinese material was 78% (9,600 tonnes) in November versus 92% (5,800 tonnes) a month earlier.

IQOXE (part of PlastiVerd Group, Barcelona) produces ethylene oxide (EO) and monoethyleneglycol (MEG). The company’s plants serve for two lines of production and a set of services needed for it to function. One production plant is used to manufacture ethylene oxide and glycols on a continuous basis. It can produce up to 140,000 t/y of EO of which 80,000 t/y can be used to transform 106,000 t/y of MEG-F. Three batchtype production plants are used to fabricate ethylene oxide and propylene oxid: PEG, polyols and ethoxylates.
MRC

MOSCOW (MRC) -- It is reported that Sasol has taken its newly constructed low density polyethylene (LDPE) plant in Lake Charles off-stream following an explosion and fire occurred on 13 January 2020, reported CommoPlast.

The unit was under trial operation at the time of the incident and has yet to reach on-spec cargoes.

The LDPE plant has an annual capacity of 420,000 tons/year and at the time of this report, the company has not announced the restart schedule.

Meanwhile, other units at the same site including the ethane cracker and the linear low density polyethylene (LLDPE) lines are not affected by the fire and currently operating at the normal rates.

As MRC wrote before, Sasol announced that its world-scale US ethane cracker with the capacity of 1.5 mln tonnes per year reached beneficial operation on 27 August 2019. Sasol’s new cracker, the heart of its Lake Charles Chemicals Project (LCCP), is the third and most significant of the seven LCCP facilities to come online and will provide feedstock to our six new derivative units at the company's Lake Charles multi-asset site.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

MOSCOW (MRC) -- The Abu Dhabi Polymers Company Ltd (Borouge), a joint venture between Abu Dhabi National Oil Company (ADNOC) and Austria-based Borealis, has awarded the France-based Axens a licensing contract to supply a MTBE unit coupled with1-Butene production unit and 1-Hexene unit for the Borouge 4 project in Ruwais-Abu Dhabi, UAE, said Hydrocarbonprocessing.

For over a decade, Axens has built a strong and trustful relationship with Borouge, involved in technologies, catalysts and services supply. It has supported Borouge through different projects, and notably its on-purpose 1-Butene production units which were installed in Borouge-1 and Borouge-3 plants using the AlphaButolTM technology.

As part of the new Borouge 4 project, Axens will provide the following technologies:
-a 124ktpa MTBE and a 50ktpa 1-Butene unit
-a 75ktpa unit for the production of high purity 1-Hexene through ethylene trimerization (AlphaHexolTM)
-Downstream the new steam cracker: a Methyl Acetylene and Propadiene (MAPD) hydrogenation unit, a C4 hydrogenation unit and a Pygas 2-stages Hydrogenation unit.

The scope of Axens’ work includes the supply of process books, catalysts & adsorbents, proprietary equipment, trainings and technical services. Axens’ Process Licensing Global Business Unit Executive Vice-President Patrick Sarrazin said: “Today marks a significant step towards the expansion of Borouge’s facilities. We are delighted to be the partner of choice for this project and grateful for the trust put into Axens technology, in particular in AlphaHexolTM, which will allow Borouge to benefit from Axens’ strong experience in homogeneous catalysis for the production of on-purpose 1-Hexene by ethylene trimerization. This investment will support the continued growth of UAE petrochemicals, and create a lot of value for the country. Our extensive technology expertise, global capabilities in the basic design, catalysts, equipment and services supply make Axens the ideal partner to deliver this important contract for Borouge."

Operating and maintaining a petrochemical complex located in the Ruwais industrial area of Abu Dhabi that is considered the world’s largest integrated polyolefin complex, Borouge plans to more than double the current capacity of its facilities of 4.5 tonnes per year by 2030.

To reach this objective, Borouge started construction of its new Borouge 4 complex which will include the world’s largest mixed-feed cracker on the same location of its three existing plants.

Borouge 4 complex will consist of a number of production units. The primary products will be ethylene, propylene, butadiene, MTBE, 1-Butene, Pygas,1-Hexene and benzene from the new mixed-feed cracker and its derivative units. The ethylene and propylene will be converted into polyethylene and polypropylene products.

As MRC informed earlier, Borouge (part of Borealis) brought on-stream its No. 3 cracker following a maintenance turnaround in March 2019. The company has completed turnaround at its cracker last week. The cracker was shut for maintenance on January 5, 2019. Located at Ruwais, Abu Dhabi in UAE, the No.3 cracker has a production capacity of 1.5 mmt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
MRC

MOSCOW (MRC) -- Plastics company Victrex said it had formed a joint-venture with Yingkou Xingfu Chemical Company to build a polymer factory in Liaoning, China, said Stockmarketwire.

Victrex would have a 75% share of the facility and contribute GDP32m, comprising around GDP28m of capital expenditure and GDP4m of start-up costs.

Commissioning of the factory, capable of producing up to 1,500 tonnes of product a year, was anticipated in early 2022, subject to conditions, including finalising land purchase and permit applications.

Chief executive Jakob Sigurdsson said the investment would differentiate the company's range of plastic grades.

It would also set the stage, he added, for specific geographic growth, whereby Victrex could can capitalise on significant opportunities in China and the Asia Pacific region by having a manufacturing presence there.

'Overall, we believe this is a good entry point to a China manufacturing operation, working with an established partner and offering an attractive returns profile,' Sigurdsson said.

As MRC informed earlier, Victrex and Tri-Mack Plastics Manufacturing Corporation have established a joint venture, TxV Aero Composites, to accelerate the commercial adoption of polyketone (PAEK) composite applications within the aerospace industry, through the manufacture of parts utilizing new and innovative processes.

As MRC informed earlier, Russia's output of chemical products dropped by 3.2% in November 2019 month on month.
However, production of basic chemicals increased by 3.6% in the first eleven months of 2019, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, the largest increase in production volumes on an annualized basis accounted for mineral fertilizers and polymers in primary form. Last month, 255,000 tonnes of ethylene were produced versus 210,000 tonnes in October; by November, Russian producers had completed all their scheduled works. Thus, 2,721,000 tonnes of this olefin were produced in January-November 2019, up by 0.3% year on year.

Victrex plc is a United Kingdom-based holding company. The Company is engaged in the manufacture and sale of various polymers. The Company's operating segments include Industrial (Victrex Polymer Solutions) and Medical (Invibio Biomaterial Solutions). The Victrex Polymer Solutions segment focuses on automotive, aerospace, electronics and energy markets.
MRC