Japanese oil refiners keep running even as coronavirus curbs fuel sales

MOSCOW (MRC) -- Sales of petroleum products are slumping in Japan as the coronavirus outbreak worsens in the world's fourth-biggest importer of crude, but the country's biggest refiners say they are not planning to cut production, reported Reuters.

Oil product sales, including gasoline and jet fuel, slumped more than a quarter last week, the most recent period for which figures are available. Jet fuel sales sunk nearly 80% as Japanese and global airlines cancelled flights to China and other destinations.

The coronavirus outbreak that started in China late last year is spreading across the world at an increasing rate, with Japan now one of the worst affected countries and streets in Tokyo, the world's biggest urban centre, largely empty.

"We estimate domestic Japanese oil product demand in the first quarter will fall by an average of 7-8% year-on-year, both as a result of slowing economic activity as well as a result of the battle against coronavirus," said Aaron Cheong, an oil products analyst at Energy Aspects."The spread of COVID-19 in Japan, should it be prolonged, will likely weaken demand further, with the largest impact already seen in the jet market," he said.

Gasoline sales fell 2.3% to 750,000 barrels per day (bpd) in the week through Feb. 29, while bunker fuel was down more than 20% for A-fuel and naphtha sales were off by 84%.

Japan's refinery run rate was at 82.2%, compared with 84.3% the previous week.

"Demand for jet fuel for international flights has dropped," said a spokesman at Japan's second-biggest refiner, Idemitsu Kosan, told Reuters.

"But we have not seen any specific impact on demand for jet fuel for domestic flights and we are still examining how much impact it has had on local gasoline demand," he said.

Idemitsu is not planning to shut any of the crude distillation units at its refineries and said they are operating as normal.

A spokesman at JXTG, Japan's biggest refiner with a roughly 50% market share, said by phone: "For our fuel stocks and facilities, there is no effect right now. We don't think there is a huge impact on our market."

A spokesman at Cosmo Energy Holdings, Japan's third-biggest refiner, declined to comment on demand or whether the company had cut crude runs but said all units were operating normally and it had no plans to shut any refining operations. Still, oil traders said that Idemitsu and other Japanese refiners were cutting runs due to lower demand and margins.

As MRC wrote before, seven naphtha crackers in Japan were expected to be shut in 2018 for scheduled maintenance.

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) -- U.S. production of major plastic resins totaled 7.9 billion pounds during January 2020, an increase of 5.4 percent compared to the same month in 2019, according to statistics released today by the American Chemistry Council (ACC).

Sales and captive (internal) use of major plastic resins totaled 7.8 billion pounds during January 2020, an increase of 6.3 percent from the same month one year earlier.

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) -- Kuwait National Petroleum Co (KNPC) on Thursday announced the operation of naphtha conversion unit number 107 in the Mina Al-Ahmadi refinery with a production capacity of 30,000 bpd, reported Reuters with reference to state news agency KUNA.

As MRC informed earlier, in November 2018, Kuwait Petroleum Co prepared a study to transform its al-Zour refinery into a commercial one to increase its profitability.

We also remind that Kuwait Olefins Co (TKOC) brought on-stream its cracker in H2 November, 2017, following a maintenance turnaround. The cracker was taken off-line in end-October 2017. Located at Shuaiba in Kuwait, the cracker has a ethylene production capacity of 850,000 mt/year.

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) -- The Trump administration has decided to drastically scale back the US Environmental Protection Agency's program exempting small oil refineries from the country's biofuel regulations after a court case cast doubt on the legitimacy of the program, reported Reuters with reference to a person familiar with the matter.

The agency, meanwhile, is discussing the possibility of instituting a cap or other restrictions on the price of biofuel blending credits, called RINs, that refiners must acquire to show compliance with the biofuel regulations, two other sources said. Such a move would serve as compensation to the oil industry if the lucrative waiver program went away.

The sources said the possibility of price controls was discussed in an EPA meeting earlier this week with officials from the White House, the Department of Energy, and the Department of Agriculture, but it was unclear if the administration would ultimately adopt the idea.

An EPA spokeswoman did not immediately respond to a request for comment.

The potential changes mark the latest twist in the controversial US biofuel program, which has driven a wedge between the oil industry and Big Corn - two crucial political constituencies for Republican President Donald Trump as he seeks reelection.

The US Renewable Fuel Standard requires refineries to blend billions of gallons of biofuels such as ethanol into the country's fuel pool, or buy credits from those that do, something that has created a valuable market for corn but which refiners say is too costly.

Since the adoption of the RFS, the EPA has granted waivers to small refiners exempting them from their obligations if they prove compliance would cause them financial distress. The Trump administration has roughly quadrupled the number of exemptions since it took office.

In January, the US Court of Appeals for the 10th Circuit cast doubt on the program, saying the EPA overstepped its authority to grant several waivers in the states where it has jurisdiction because the refineries had not received exemptions the previous year.

The court said the RFS wording requires that any exemption granted to a small refinery after 2010 must take the form of an extension.

The bulk of waivers granted to oil refineries by the EPA in recent years do not meet that standard. According to EPA data, the agency granted seven biofuel waivers in 2015. That number rose to 35 in 2017 - meaning 28 waivers were handed out without having been given in a previous year.

Senators representing the oil industry have urged the EPA to appeal the decision, saying that if the court's opinion is applied nationally, only two refineries would qualify for waivers.

EPA Administrator Andrew Wheeler had told lawmakers during a hearing on Wednesday morning that the agency expects to make an announcement on the waiver program soon and that he hoped the decision would "quell" the market for RINs.
MRC

MOSCOW (MRC) -- ACC reiterated its support for bipartisan policies aimed at modernizing our national recycling infrastructure in testimony before the House Committee on Energy and Commerce Subcommittee on Environment and Climate Change, said ACC.

Keith Christman, ACC’s managing director of plastics markets, told the Subcommittee that plastics producers are deeply committed to ending plastic waste in the environment and have set goals to reuse, recycle or recover all plastic packaging in the United States by 2040 and to make all plastic packaging recyclable by 2030.

"We believe these challenges, while significant, are ultimately solvable," said Christman, noting that recent disruptions have also led to significant domestic opportunities.

"In less than three years, we have seen more than USD4.2 billion in new investments in mechanical and advanced plastics recycling with potential to convert 6 billion pounds of plastics into new products,” Christman said. “These technologies offer significant economic and environmental potential."

ACC projects that the United States could support up to 260 advanced recycling facilities, generating 39,000 jobs and nearly USD10 billion in economic output. Christman told the Subcommittee that unlocking further opportunities will require a range of actions from bipartisan policies to innovation and public-private investments.

ACC and America’s plastics makers strongly support the Save Our Seas Acts, the RECOVER Act, the RECYCLE Act, and the PLASTICS Act. “But we must oppose proposals that would ban many plastic products, or impose a moratorium on new plastics facilities,” Christman told the Subcommittee members. “Those policies would increase environmental impacts."

Recent studies have shown that replacing plastics with alternative materials would result in increased greenhouse gas emissions, energy use and waste. A study by Trucost found that the environmental costs of alternatives to plastic in 16 consumer goods sectors were nearly four times greater than the environmental cost of plastic.

ACC’s members, who include the nation’s largest plastic producers, are leading in the deployment of system improvements and technology advances to convert a variety of used plastics into resources to make new plastics and other valuable materials. Last year companies from across the globe and throughout the plastics value chain, from manufacture through disposal, announced the creation of the Alliance to End Plastic Waste, a nonprofit that is committing USD1.5 billion over five years to help end plastic waste especially in areas where it is needed most.

Earlier it was reported that in January of this year, the index of production of chemicals in the Russian Federation grew by 3% compared with the same month a year. Over the past year, the release of basic chemicals showed an increase of 3.4%. The largest increase in production in January came in primary form polymers.
MRC