Asian refiners may curb jet fuel output as coronavirus dents airline demand

MOSCOW (MRC) -- Asian refiners may curtail jet fuel output by partially reducing processing as the fuel's value versus diesel plunged after the United States said it would ban European travellers to prevent the spread of the coronavirus, reported Reuters.

The regrade, which is the price difference between jet fuel and diesel with a sulphur content of 10 parts-per-million (ppm), fell to a discount of USD3.86 a barrel on Thursday, the lowest since Aug. 13, 2015, according to data from S&P Global.

US President Donald Trump on Wednesday banned travel from 26 European countries for 30 days. On the same day, India said it will suspend the granting of visas to travel to the country.

As a result of the US ban, jet fuel demand may drop by between 200,000-250,000 barrels per day, split between the US and European markets over the 30-day ban, said Mark Williams, principal analyst, refining, at Wood Mackenzie.

"Refiners are also likely to lower jet yields and blend more jet fuel into the distillate pool to accommodate lower jet demand, adding further pressure to already weak distillate cracks," he said.

Refiners may deal with the lower jet fuel value by cutting their processing runs to make less of the fuel, which is typically produced during the initial distillation of crude into products.

Companies have already been cutting rates to deal with surplus aviation fuel because airline travel has declined as countries ban travel to halt the coronavirus spread.

"This (the US travel ban) is the end of jet (fuel) market and there will likely have to be run cuts from Europe," said a source from a South Korean refinery.

"This will have a spillover effect into Asian markets and refiners will likely have to consider run cuts," he added.

Jet fuel typically cannot be stored for long periods as its quality could degrade, increasing the incentive for refiners to produce less of the fuel.

As MRC informed previously, BP has recently said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent this year, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We also remind that in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
MRC

MOSCOW (MRC) -- Chester, N.S.-based GN Thermoforming Equipment has appointed Alberto Capodicasa as its new sales manager for Mexico and Central and South America, said Canplastics.

Based in Nova Scotia, Capodicasa is a native of Venezuela and fluent in English, Spanish, and Italian, has many years of experience in various sales positions, most recently as regional sales manager with LED Roadway Lighting Ltd.

"Alberto will travel extensively and work on the ground with our local agencies in the Mexican, Central and South American markets,” said Paul Phillips, GN’s sales and marketing manager. “GN has a lot of thermoforming machines in the region and Alberto is well equipped to support our agents and customers as we continue to grow."

As MRC informed earlier, extrusion machinery maker Davis-Standard LLC has acquired Thermoforming Systems LLC (TSL), a manufacturer of thermoforming equipment for the North American food packaging industry. The terms of the deal have not been disclosed.

As per MRC' DataScope, overall imports of PC granules to Russia (excluding shipments from Belarus) grew in the first month of 2020 more than by 3 times year on year to 2,590 tonnes. Imports of material into the country were 740 tonnes in January 2019. December 2019 imports of material to Belarus reached 2,850 tonnes. Extrusion grade PC accounted for the greatest increase in January imports. Their share rose significantly in the total imports of material into the Russian Federation to 82% (2,100 tonnes) from 44% (32,000 tonnes) in January 2019.

GN manufactures roll-fed thermoformers for the production of high-quality plastic packaging, and has installed more than 1,500 thermoformers in total. The company’s operation also includes a technical service and sales centre in Jihlava, Czech Republic.
MRC

MOSCOW (MRC) -- Libya’s National Oil Corp (NOC) said the North African state’s current levels of oil production are down to 97,508 barrels per day as of March 11, reported Reuters with reference to a statement on the state-owned company’s Facebook.

The decline in output, it said, resulted in losses exceeding USD3 billion since Jan. 17, following a blockade of ports and oilfields by groups loyal to eastern-based commander Khalifa Haftar.

As MRC wrote before, Eni’s oil production in Libya halved to around 160,000 barrels per day, according to the Italian major’s chief executive's February statement. Eni is the biggest foreign oil producer in Libya.

We also remind that in H1 September 2019, Italy’s Versalis (part of Eni) took its cracker in Dunkirk, France offline due to a fire which broke out at the company’s petrochemical plant. Local media sources also reported that the fire was brought under control with no reported injuries and the company is currently assessing the required repairs.The cracker has a production capacity of 380,000 tons/year of ethylene and 95,000 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 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
MRC

MOSCOW (MRC) - Russian production of household refrigerators and freezers in January 2020 amounted to 146 thousand units, which is 15.8% lower than manufactured products for the same period in 2019 and 24.1% lower than a month earlier, in December 2019, the Federal State Statistics Service (Rosstat) said in a statement on the production of certain types of plastic products for January 2020.

According to the agency, the index of production of rubber and plastic products in January compared with January 2019 increased by 7.3%, but decreased by 15.9% compared to December.

In January, 270 thousand units were produced of household washing machines, as a result, the decrease was 11.1% compared to the same period last year, and compared to the December indicator, the production of washing machines fell by 31.4%.

Furniture in plastic materials was manufactured in the amount of 48.1 thousand pieces in January, which is 4.7% lower than the January figure of 2019, but higher than furniture production in December by 12.3%.

It was previously reported that due to an outbreak of coronavirus, the global average utilization of chemical capacities decreased in January by 1.1% to 81.3%. Last January, the production load was 83.2%, the average figure from 1987 to 2017 - 86.5%.

The total global production of chemical products grew by 0.9% in January 2020 compared to last year. The industrial production index is calculated by the types of activities "Mining", "Manufacturing", "Production and distribution of electricity, gas and water" based on data on the dynamics of production of the most important representative goods (in kind or in value terms). The structure of gross value added by type of economic activity of the 2008 base year is used as weights. Adjusted for informal activities.
MRC

MOSCOW (MRC) - SIBUR will develop a feasibility study for the construction of a gas processing plant near Kazan by July 2020, Kommersant writes.

Based on the feasibility study, the company's shareholders will decide on the construction of the enterprise.

Leonid Alekhin, senior project manager of SIBUR Holding, does not disclose the proposed location of the enterprise, production volumes and final products. "There are gas pipelines through which gas can be supplied to the gas processing plant. The plant will start to extract ethane from the pipeline gas mixture and a wide fraction of light hydrocarbons - the most valuable raw materials for gas processing. Shareholders will decide what to do with NGL, whether to divide it into fractions or not, and ethane should “Dry gas will be returned to the pipeline and will be used later," he said.

SIBUR is the leader of the Russian petrochemical industry and one of the largest global companies in the sector with more than 23 thousand employees. In 2019, SIBUR's revenue amounted to USD8.2 billion, EBITDA - USD2.6 billion.

Over the past 10 years, SIBUR has implemented a number of large-scale investment projects worth about 1 trillion rubles. Every year, the company directs at least 70% of EBITDA to finance the investment program, while maintaining a balanced debt burden.

Earlier it was reported that SIBUR Holding on March 25 will early pay off bonds of the 12th series for 10 billion rubles. In particular, SIBUR Holding PJSC decided to early repay the 12th series bonds in the amount of 10 billion rubles, the company said. The repayment will take place on March 25, at the end date of the 7th coupon period.

SIBUR Holding PJSC is the largest petrochemical company in Russia and Eastern Europe with full coverage of the industry cycle from gas processing, production of monomers, plastics and synthetic rubbers to plastics processing. The main shareholder of SIBUR Leonid Mikhelson controls 48.48% of the company, Gennady Timchenko - 17%, Kirill Shamalov - 3.88%, the current and former management of the company (including SIBUR chairman of the board Dmitry Konov and head of Gazprom Neft Alexander Dyukov) - 10.6%, Chinese Sinopec and the Silk Road Fund - 10% each.
MRC