Future US-China trade deal could fundamentally change Turkish polymer trade flows: sources

MOSCOW (MRC) -- Any future phases of the US-China trade deal could fundamentally change Turkish polymer trade flows, reported S&P Global with reference to Turkish traders' statement.

The Phase 1 trade deal signed mid-January between Washington and Beijing has had a minimal impact on tariffs, according to the American Chemistry Council. However, Turkish traders say any future trade deal phases may result in lower US volumes and greater Iranian volumes into the key Turkish polymer market.

"That is important the US-China agreement so more US material will go to China. Iran will get some problems with exports from this, they have not so many places to move material so Turkey will be increasingly important for Iranian material," a Turkish trader said.

Europe has been a major destination for US polymer production since China imposed retaliatory tariffs on selected US-origin goods in response to 2018 and 2019 US tariffs. US material accounted for some 16% of Turkish polyethylene imports through 2019 to November, with US LLDPE material some 28.9% or 141,160 mt of LLDPE imports, according to Turkish statistics agency Turkstat.

Chinese tariffs on US-origin material in 2018 caused competitively priced US material to be available in Turkey, providing greater competition for Iranian material. Iran's share of LLDPE imports by Turkey shrank to 9.59% in 2019 from 20.65% in 2016, according to Turkstat data.

Sources said Iran was facing further challenges caused by US sanctions and entities which trade with Iranian companies.

"The loser [from the deal] is Iran. It means more US material to the Far East so Iranian material cannot come so often to China. They will have to sell more to Turkey or Eastern Europe instead," a second trader said.

Traders said those dealing with Iranian producers were exercising extra caution due to the potential for further sanctions ahead.

"With the Iranian crisis there is limited information about Iranian producers. They are shipping existing orders, but for new orders sellers are hesitant to give offers as they do not know what material will still be coming with any new sanctions," a trader said.

Iran was a significant origin of Chinese polymer imports during 2019, with Iranian material accounting for some 18.63% or 1,352,787 mt of Chinese HDPE imports to November according to Chinese customs data. Iranian material also accounted for some 22.02% or 688,001 mt of Chinese LDPE imports, but market sources said this would be less affected by any trade deal due to lower US LDPE production.

China is set to remain the world's top demand center for polyethylene during the 2020s, according to S&P Global Platts Analytics, with demand in Asia projected to grow 5.3% a year in theregion up to 2027. The US is set to bring some 13.5 million mt/year of new polyethylene capacity online by 2029 to capitalize on increased volumes of cheap ethane from the US shale gas boom.

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.
MRC

MOSCOW (MRC) -- HollyFrontier has chosen Haldor Topsoe’s HydroFlex™ sustainable renewable fuel technology to produce extremely clean renewable diesel from various feedstocks, as per Hydrocarbonprocessing.

Under the agreement with Artesia Renewable Diesel Company LLC, a subsidiary of HollyFrontier, Topsoe will license and supply basic engineering, proprietary equipment, catalysts, and technical services. The project is based on HydroFlex™, a world-leading, industry-proven Topsoe technology that produces renewable fuels, such as gasoline, diesel and sustainable aviation fuel, from all renewable feedstocks.

The contract was awarded after an in-depth feasibility study, involving competing technologies.

Every year, the United States Environmental Protection Agency (EPA) sets an annual quota for how much biofuel must be blended into gasoline and diesel sold in the US market. RIN (Renewable Identification Number) credits represent a volume of biofuel blended into fossil fuel and are used to ensure compliance with the quota. RIN credits can be traded, so companies that do not produce renewable fuels can buy RIN credits to meet their individual quota of renewable fuel.

"We are very proud that a market leader such as HollyFrontier has chosen HydroFlex™ for their strategic expansion into renewable fuels. HydroFlex™ is the preferred choice for refiners leading the industry transition into producing renewable fuels,” says Henrik Rasmussen, Vice President of Haldor Topsoe.

As MRC informed earlier, in August 2019, Haldor Topsoe, Mitsubishi Heavy Industries Engineering, and GTM ONE have signed a licence agreement for the design, construction, and operation of a 3000 tpd methanol plant based on Topsoe’s SynCOR MethanolTM technology. The plant will be erected at the Khimprom site in Volgograd, Russia.

HydroFlex™ can be deployed in both grassroots units and revamps for co-processing or stand-alone applications.
MRC

MOSCOW (MRC) -- Russia's output of chemical products rose in December 2018 by 1.2% month on month.
Production of basic chemicals increased by 3.4% in 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 polymers in primary form. Thus, 264 ,000 tonnes of ethylene were produced in December, compared to 255,000 tonnes a month earlier. Thus, 2,984,000 tonnes of this olefin were produced in January-December 2019, down by 0.2% year on year.

December production of benzene was 132,000 tonnes, compared to 134,000 tonnes a month earlier. Overall output of this product reached 1,470,000 tonnes over the stated period, down by 4.2%year on year.

December production of sodium hydroxide (caustic soda) was 110,000 tonnes (100% of the basic substance) versus 109,000 tonnes a month earlier. Overall output of caustic soda totalled 1,289,000 tonnes over the stated period, compared to 1,279,500 tonnes a year earlier.

1,931,000 tonnes of mineral fertilizers (in terms of 100% nutrients) were produced in December versus 1,953 mln tonnes a month earlier. Overall, Russian plants produced over 23,588,000 tonnes of fertilizers last year, up by 3.2% year on year.

Last month's production of polymers in primary form increased to 928,000 tonnes, up 24.3% from November. Such a high rate in December was due to an increase in production volumes at the new Zapsibneftekhim site.

Overall output of polymers in primary form totalled 8,759,000 tonnes over the stated period, up by 6.5% year on year.
MRC

MOSCOW (MRC) -- Shell's upstream oil production increased by 6% on the year to 1.77 million b/d in the fourth quarter of 2019, contributing to what CEO Ben van Beurden insisted is a "very strong upstream business," even as profits plummeted on the back of low commodity prices and financial impairments, said the company.

Shell's oil output was boosted by new developments ramping up in Brazil, the US Permian basin and the US Gulf of Mexico, although a 9% reduction in its upstream gas output resulted in flat overall production, of 2.81 million b/d of oil equivalent.

Van Beurden said further production growth was expected from Shell's newly producing Appomattox oil field in the Gulf of Mexico, which came on stream last May. The facility is producing 75,000 b/d from four wells, with another 14 to come on stream, he said, adding that Shell was also ramping up at its liquids-rich Permian assets in the US.

Chief Financial Officer Jessica Uhl highlighted Shell's rising Brazilian production, including the latest floating production facility to come on line, in the Berbigao-Surura area, describing Brazil as an upstream "heartland," with 16 such floating facilities now producing 400,000 boe/d for the company.

Shell's upstream division, however, plunged to a USD787 million loss in the quarter, on the back of weak prices, decommissioning costs and a USD1.65 billion impairment in the value of its US unconventional assets, notably its Marcellus and Utica shale production in Pennsylvania. Van Beurden added that part of the conventional business -- not including deepwater or shale -- continued to experience "challenges."

The company's overall fourth-quarter profit was down 88% on the year at USD871 million. Excluding "identified items" -- mainly impairments -- Shell's profit was down 48% at USD2.9 billion.

"Frankly speaking, all macro-economic indicators are working against us," Van Beurden said in a call with journalists. However, he went on to describe 2019 as "a year of progress" and said Shell would continue to sustain upstream investment at around USD11 billion-13 billion annually.

Overall capital expenditure this year would be at the low end of a USD24 billion-29 billion range, but even the bottom of that range would be $4 billion more than needed to ensure growth, Van Beurden said.

Shell signalled it would be going slow on share buy-backs, while a $20 billion two-year divestment program begun at the start of last year would continue, with half of the target already achieved. There would be no rush to sell based on a need for "early cash," Van Beurden said.

On the issue of resilience, he said the average breakeven oil price for projects approved by Shell for development last year was under USD30/b, and noted a desire to increase investment in electricity projects.

As MRC informed earlier, Shell Singapore restarted its naphtha cracker in Bukom Island in early December 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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.

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)-- PKN Orlen’s fourth-quarter 2019 net profit fell 15% year on year to zloty (Zl) 771m (USD198m), with the group experiencing its lowest model petrochemical margin in nearly five years at the end of 2019, the Polish producer said.

Cleaned LIFO EBITDA before impairments came to PLN 1.4 bln, Orlen's investor relations informed market participants separately. The tally came 21% below the market consensus.

LIFO EBITDA ex-impairments fell by more than half q/q or 26.3% y/y to PLN 1.08 bln. Management cited a PLN 907 mln impact versus the prior year period from deteriorating macro factors, chiefly margins on middle distillates, heavy fractions, olefins, PTA and PVC, partially offset by better margins on light distillates, fertilizers and weakening of the Polish zloty. Increased volumes had a PLN 300 mln positive impact versus the prior year period.

Downstream sales of 8.2 mln tons were down 4.1% y/y and 5.0% q/q. Sales volumes rose in petchems, were the margin decline was mildest. Sales volumes were down across the board in fuels, even most deeply in the light distillates where margins gains could have been captured.

The upstream segment suffered a q/q decline in EBITDA LIFO to PLN 69 mln in Q4 from PLN 85 mln in Q3, while in annual terms the line was flat.

The segment results were supported by positive macro factors including an increase in crude oil, gas and NGL prices in y/y terms, which still failed to compensate for the negative impact from lower sales volumes that followed a decrease in the average production in Canada by 1.7k boe/d on an annual basis, Orlen said in the presentation. The average production in Poland grew by 0.2k boe/d y/y.

As MRC informed earlier, Polish oil refiner PKN Orlen, said it would increase monthly crude oil purchases from Saudi Aramco to 400,000 from 300,000 tons as part of its efforts to diversify supply. Poland’s biggest oil refiner, which buys most of its oil from Russia via pipeline, has been receiving oil from Saudi Aramco since 2016.

As MRC informed earlier, in H1 September 2019, Honeywell announced that PKN ORLEN had licensed the UOP MaxEne process, which can increase production of ethylene and aromatics and improve the flexibility of gasoline production. The project, for the PKN ORLEN facility in Plock, Poland, currently is in the basic engineering stage. Honeywell UOP, a leading provider of technologies for the oil and gas industry, first commercialized the UOP MaxEne process in 2013. The process enables refiners and petrochemical producers to direct molecules within the naphtha feed to the processes that deliver the greatest value and improve yields of fuels and petrochemicals.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 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.

PKN ORLEN would be the first refining and petrochemicals company in Europe to use the Honeywell UOP MaxEne technology for molecule management of a naphtha stream to produce high-quality products including olefins, aromatics and gasoline.
MRC