Supertanker rates slump as virus hits Chinese oil demand

MOSCOW (MRC) -- Freight rates for supertankers on the Mideast Gulf and U.S. Gulf routes to Asia have fallen to their lowest since mid-September as the coronavirus outbreak hit Chinese oil demand, ship brokers told Reuters.

China’s Sinopec Corp, Asia’s largest refiner, and so-called "teapot" independent refineries have reined in operations in the face of plunging consumption.

"The market has gone back to what it was before the COSCO sanctions came in," one ship broker said, referring to U.S. sanctions on subsidiaries of the state-owned Chinese shipping company.

"All the other variables have gone away, such as IMO 2020 congestion at ports, movement of low-sulphur fuel and industrial action in Europe."

Freight rates shot up in late September on the back of the COSCO sanctions and again in December because of logistics snags related to the switch to cleaner shipping fuels with the introduction of the new IMO 2020 regulations.

The United States partially lifted sanctions on COSCO last Friday.

Ship broker Braemar on Monday said that the rate for a very large crude carrier (VLCC) from the U.S. Gulf to Asia had fallen to USD8 million, the lowest since Sept. 19. Another broker said a similar voyage was quoted at USD7.5 million.

Riverlake, another ship broker, said the world scale rate for the Middle East route was at its lowest since Sept. 16.

Sinopec is cutting throughput this month by about 12%, or 600,000 barrels per day, in its steepest cut in more than a decade.

The company’s Unipec trading arm has stopped buying West African crude and is re-selling at least five cargoes of Angolan crude.

Separately, major independent refineries in east China’s Shandong province, which collectively make up a fifth of China’s oil imports, have cut operations by 30-50% to less than half of their capacity, a level not seen since at least 2015.

As MRC informed before, Sinopec Qilu Petrochemical, the subsidiary of one of the world's largest energy and chemical companies, Sinopec, plans to shut the cracker unit in Tianjin in northeast China for scheduled repairs on 15 June, 2020. This cracking unit with a capacity of 900,000 tonnes of ethylene per year and 480,000 tonnes of propylene tons per year will be closed for scheduled repairs until 24 June, 2020.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

Sinopec corp. is one of the world's largest integrated energy and chemical companies. Business Sinopec Corp. includes oil and gas exploration, production and transportation of oil and gas, oil refining, petrochemical production, production of mineral fertilizers and other chemical products. In terms of refining capacity, Sinopec Corp. ranks second in the world, in terms of ethylene capacity - fourth.
MRC

MOSCOW (MRC) -- Clearlake Capital Group LP is purchasing Innovative XCessories & Services LLC from private equity peer Olympus Partners, said Spglobal.

The target company operates through its Ground Effects and IXS Coatings divisions. It offers coating solutions and vehicle upfitting services to original equipment manufacturers, the automotive aftermarket and diversified industrial end markets. CEO Jim Scott, alongside the current management team, will continue to run the business.

The acquisition is expected to be finalized in the first quarter.

It has more than 20 company-operated facilities across the Americas, Asia-Pacific and Europe.

UBS was financial adviser to Clearlake. Jefferies LLC and Harris Williams & Co. were financial advisers to Innovative XCessories.

As MRC informed earlier, Clearlake Capital Group, L.P. (together with its affiliates, "Clearlake") in partnership with management announced that it has acquired Pretium Packaging ("Pretium" or the "Company") from Genstar Capital.

As MRC informed earlier, 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 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.

Clearlake Capital Group, L.P. is a leading private investment firm founded in 2006. With a sector-focused approach, the firm seeks to partner with world-class management teams by providing patient, long-term capital to dynamic businesses that can benefit from Clearlake's operational improvement approach, O.P.S.® The firm's core target sectors are industrials and energy; software and technology-enabled services; and consumer. Clearlake has managed over USD16 billion of institutional capital since inception and its senior investment principals have led or co-led over 200 investments.
MRC

MOSCOW (MRC) -- UK compounder Polystar Plastics has developed a new post-consumer waste polyethylene material containing up to 100% recycled materials, said Sustainableplastics.

PCWflexTM films incorporate UK sourced post-consumer waste (pcw), which is used to create the middle layers of a co-extruded film structure.

The company said it uses recipes that contain varying amounts of the recycled polymer to deliver the same robust performance, optical clarity and line efficiency as virgin grade PE.

The new grades can be applied across much of Polystar’s product range and are 100% recyclable.

Non-shrink films start at 30% but can contain up to 100% PCW polymers, while shrink film recipes can include up to 50% PCW polymers without losing any functionality.

"Our PCWflexTM films are some of the greenest products on the market. The development of this new material has been driven by customers who are under increasing pressure to reduce their carbon footprint and future tax liabilities," said Suchin Talwar, Polystar’s commercial director, commenting on the new product.

The materials, he said, significantly reduce the requirement for virgin grade PE.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
MRC

MOSCOW (MRC) -- Fluor Corporation announced that it was awarded a project management consultancy services contract by Bharat Petroleum Corporation Limited (BPCL) for its Polyols Petrochemicals Project at its existing integrated refinery and petrochemicals complex in Kochi, Kerala, India, according to Hydrocarbonprocessing.

Fluor’s scope of work includes front-end engineering and design of both the inside and outside battery limits as well as detailed design, engineering, procurement and construction management services for the facility’s utilities and offsites. Fluor booked its portion of the undisclosed contract value in the fourth quarter of 2019.

"Fluor is honored to be selected as the project management consultant for BPCL’s prestigious polyols project in Kochi," said Mark Fields, group president of Fluor’s Energy & Chemicals business. "We look forward to working with BPCL to deliver a world-class facility that will help meet growing domestic demand for polyols and reduce India’s dependence on petrochemicals imports."

Six new process units will be built as part of this project and integrated into the existing refinery. New process units will include propylene oxide, propylene glycol, polyols, ethylene oxide/monoethylene glycol (MEG), ethylene recovery unit and a cumene unit.

When complete, the Kochi complex will produce propylene glycol, ethylene glycol and various grades of polyols based on 250 kilotonnes per annum of polymer grade propylene. Polyols are used for a variety of applications in the automobile, textile and furniture industries. They are also widely used in construction as insulation and sealants.

“BPCL is making major advancements at its Kochi Refinery to produce niche petrochemicals that are extensively imported into India to manufacture polyurethanes used in footwear, foam and other items," said Mr. Murali Madhavan, executive director of BPCL’s Kochi Refinery. "We are happy that Fluor, an internationally reputed engineering and consultancy organization, has been selected as the project management consultant for the project."

Fluor's New Delhi office will lead project execution with support provided by Fluor’s network of global experts.

As MRC informed previously, BPCL plans to set up a petrochemicals unit at its Bina refinery in Madhya Pradesh as part of its Rs25,000 crore expansion plan for the refinery. The petrochemical unit, which will include a 1.5 mln tpa naphtha cracker, is expected to cost Rs6,000-7,000 crore.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

Bharat Petroleum Corporation Limited (BPCL) is an Indian state-controlled oil and gas company headquartered in Mumbai, India. Bharat Petroleum owns refineries at Mumbai, Maharashtra and Kochi, Kerala (Kochi Refineries) with a capacity of 12 and 9.5 million metric tonnes per year.
MRC

MOSCOW (MRC) -- German speciality chemicals company Evonik has completed the acquisition of US-based chemical manufacturing firm PeroxyChem for USD640m, said the company.

The deal was closed after a court in Washington DC dismissed the lawsuit filed by the Federal Trade Commission (FTC) to block the acquisition. Evonik executive board chairman Christian Kullmann said: “In its judgment, the court confirmed our view of the H2O2 and PAA market and, above all, the strong speciality focus of PeroxyChem’s portfolio.

"The acquisition unlocks additional growth opportunities for us, especially in the market for environmentally friendly disinfectants."

In 2018, Evonik entered an agreement with One Equity Partners to acquire PeroxyChem.

Headquartered in Philadelphia, PeroxyChem is involved in the manufacturing of hydrogen peroxide (H2O2) and peracetic acid.

Hydrogen peroxide is a sustainable and resource-efficient chemical that is converted into hydrogen and water during processing.

The anti-trust authorities outside the US had also given their clearance for the transaction. However, the FTC had filed a lawsuit to stop the completion of the acquisition in August 2019.

As MRC informed earlier, Evonik joined with other manufacturers in the High Phthalates Panel (HPP), a sector group of the American Chemistry Council (ACC), in a voluntary manufacturer request to the US Environmental Protection Agency (EPA) to conduct a broad-based risk evaluation of the uses of DINP. The EPA granted the request in early December 2019, a decision welcomed by Evonik. The EPA’s risk evaluation will be performed using the best available science and weight of scientific evidence. The process will be documented and open for public review and comment.

As per MRC's ScanPlast, Russia's overall production of polyvinyl chloride (PVC) reached 975,000 tonnes in 2019, up by 2% year on year. At the same time, not all Russian producers raised their output. December total production of unmixed PVC was about 81,400 tonnes versus 84,600 tonnes a month earlier, RusVinyl decreased their capacity utilisation in November. Overall PVC production reached 975,000 tonnes in January-December 2019, compared to 958,600 tonnes a year earlier. All plants raised their output, except for Kaustik Volgograd.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.
MRC