Saudi Aramco to cut 2020 capital spending; 2019 net profit falls 21%

MOSCOW (MRC) -- State oil giant Saudi Aramco will cut its spending this year due to the coronavirus pandemic, while it increases its dividend, the company said Sunday, as its share price continued to decline amid the Saudi regime’s price war with Russia, said The Wall Street Journal.

Saudi Arabia's decision last year to float shares in its state oil company - the most profitable company in the world - was one of the central elements in Crown Prince Mohammed bin Salman's program for economic and political reform.

The record-setting IPO was touted as making the world's biggest energy exporter more professional and transparent.

The 21% decline in net profit for last year means it fell short of analysts' forecasts for the period that culminated in the share sale, months before the coronavirus pandemic became a factor for oil prices.

In recent weeks, Riyadh has announced that it is ramping up production in an oil price war with Russia that has sent global prices plunging and contributed to the coronavirus rout on international financial markets.

The company said it expects capital spending for 2020 to be between USD25 billion and $30 billion in light of current market conditions and recent commodity price volatility, compared to USD32.8 billion in 2019.

Aramco has already taken steps to "rationalize" its planned 2020 capital spending, CEO Amin Nasser said in a statement. "The recent COVID-19 outbreak and its rapid spread illustrate the importance of agility and adaptability in an ever-changing global landscape," he said.

Aramco listed its shares in Riyadh in December in a record USD29.4 billion initial public offering that valued it at $1.7 trillion. Its shares fell below the IPO price last week for the first time, as oil prices crashed after the collapse of an output deal between OPEC and non-OPEC members. Oil prices have fallen nearly 50% from highs reached in January and had their biggest one-day decline on March 9 since the 1991 Gulf War.

As MRC informed before, in October 2018, Saudi Aramco and Total launched engineering studies to build a giant petrochemical complex in Jubail. Announced in April 2018, the world-class complex will be located next to the SATORP refinery, operated by Saudi Aramco (62.5%) and Total (37.5%), in order to fully exploit operational synergies. It will comprise a mixed-feed cracker (50% ethane and refinery off-gases) - the first in the Gulf region to be integrated with a refinery - with a capacity of 1.5 million tons per year of ethylene and related high-added-value petrochemical units. The project represents an investment of around $5 billion and is scheduled to start-up in 2024.

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) -- Finnish refiner Neste said it would delay the scheduled major turnaround at its Porvoo refinery due to the coronavirus outbreak, and can do only the most business critical maintenance works as planned, reported Reuters.

The company said maintenance works would hit its second-quarter comparable operating profit by 85 million euros (91 million). It had earlier estimated the major turnaround would dent its 2020 profits by 220 million euros.

"The rest of the turnaround works are expected to be finalised in 2021 and their related negative impact on the company’s comparable operating profit will be estimated in February 2021, at the latest," Neste said.

As MRC informed earlier, Neste, together with several European Union Member States and forerunner companies representing different parts of the European plastics sector, have signed the European Plastics Pact in Brussels, Belgium. The European Plastics Pact aims to accelerate cross-border exchange and collaboration on a pan-European scale to supplement and support the already existing European and global commitments as well as the existing national and company initiatives on the circularity of plastics value chain.

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) -- Asahi Kasei has decided to discontinue its business for the styrenic resins SAN (Styrene-acrylonitrile resin), ABS (Acrylonitrile butadiene styrene), and ACS, according to Kemicalinfo.

According to the company, the operations of SAN plant at Kawasaki Works will be closed in March 2021.

The business to be discontinued began with the 1962 start-up of the SAN plant in Kawasaki, now part of Asahi Kasei’s Kawasaki Works, followed by the 1964 start-up of the ABS plant at the same site (function transferred to Mizushima in 1978). The ACS business began in 1995.

The ABS plant at Asahi Kasei’s Mizushima Works, which started up in 1967, was closed in 2015 due to deteriorating profitability as domestic Japanese demand decreased significantly.

As per the company, the decision for business discontinuation was based on a judgment that there were no clear prospects to establish the superiority of Asahi Kasei’s products in the expanding global ABS market and that it would be difficult to formulate a future expansion strategy.

Under its Cs+ for Tomorrow 2021 medium-term management initiative, Asahi Kasei is prioritizing and allocating management resources to develop a business portfolio of sustainable and high value-added businesses.

The company said that the resources of the discontinued business will be reallocated to other businesses of Asahi Kasei.

We remind that, as MRC informed earlier, Asahi Kasei Mitsubishi Chemical Ethylene Corp, a joint venture of Asahi Kasei Corp and Mitsubishi Chemical Corp ,delayed the restart of a naphtha cracker in Mizushima, western Japan, to Jan. 28 from Jan. 24, 2020. The delay was due to a glitch in the steam system, which is operated in case of an emergency, Asahi Kasei said in a statement. The company shut the naphtha cracker on Jan. 14 after a malfunction in the refrigerant system. The naphtha cracker has a production capacity of 567,000 tonnes a year without any turnaround and 496,000 tonnes with turnaround, the firm said.

According to MRC's ScanPlast report, January 2020 estimated consumption of polystyrene (PS) and styrene plastics in Russia dropped by 10% year on year, totalling 41,420 tonnes. Russian plants' overall output also decreased (by 3%) year on year in January 2020 to 43,260 tonnes.
MRC

MOSCOW (MRC) -- Italy, which has become a major hotspot in the COVID-19 pandemic, has given its plastics machinery making sector the green light to continue building machines, said Canplastics.

A decree of the Italian President of the Council of Ministers (DPCM) issued on March 22 gives all Italian manufacturers of plastics and rubber machinery permission to continue their activity, since they belong to a production chain defined as necessary.

But as noted by the Italian trade association Amaplast, such factories will have to comply with a protocol signed on March 24 both by Government and social parties that lists all the measures that hinder and limit the spread of COVID-19 infection inside and outside the work sites and keeping the safety and the health of people involved in the production cycle as a priority.

“Moreover, companies are asked to give a sign of discontinuity as compared to the past, thus limiting production activity only to those units which activity is really essential,” Amaplast said in a March 23 statement. “As a consequence, workshifts will also have to be re-scheduled, based on real necessities."

"“As for the supply of materials and components, a few delays are now being registered but – at the moment – they are not affecting the the standard execution of production,” Amaplast said. “Similarly, deliveries of machinery and customers’ assistance are going on as usual."

As of March 23, Italy has reported a total of 6,077 deaths from the coronavirus, with a total of 63,928 cases of infection reported across the country.

As MRC informed earlier, the COVID-19 outbreak has led Shell Chemical to temporarily suspend construction on the massive plastics and petrochemicals site it's building in Monaca, Pa.

As MRC informed earlier, in mid-February 2020, Shell confirmed coronavirus case at its Singapore refining site. Namely, a contractor working at Shell's Pulau Bukom manufacturing site in Singapore contracted the new coronavirus.

We also remind that 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 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) -- Prices and profit margins for motor and aviation fuels globally are under pressure from a severe loss of demand as more countries enforce lockdowns and planes are grounded, forcing more refineries to reduce output, reported Reuters.

US ultra-low sulfur diesel was the latest product refined from crude oil to take a hit in its cash market last week, after refiners boosted production in a bid to flee poorer margins for other products more affected by coronavirus fallout.

Refining margins for gasoline and jet fuel have tanked because of decreased demand for transportation fuels, as the disease outbreak has forced businesses to close and governments to push residents to avoid travel and public places.

In Asia, profit margins for jet fuel turned negative for the first time in over a decade as global airlines canceled flights.

Emirates and Singapore Airlines were the latest carriers to announce huge cuts in their passenger flights.

European jet fuel prices last week plummeted to a near 17-year low, and for the past eight trading sessions European refiners have been producing gasoline at a loss.

For most of last week, U.S. diesel margins held up relatively well, as both trucking and farming, two sectors that rely on diesel, continued operating.

But refiners’ moves to divert production capacity previously devoted to other fuels to diesel is starting to cause oversupply in some regions, leading to a drop in cash prices, market participants said.

Cash prices for diesel in Chicago ULSD-DIFF-MC slid last week to 34 cents per gallon below the heating oil futures contract HOc1, the lowest seasonally since at least 2011, early Refinitiv Eikon data showed.

Elsewhere in the Midwest ULSD-DIFF-G3 and on the Gulf Coast ULSD-DIFF-USG, prices were the lowest seasonally since 2016.

That could augur declines in diesel refining margins HOc1-CLc1, which are still seasonally strong at USD18.53 a barrel.

Meanwhile, gasoline refining margins RBc1-CLc1 are at US3.55 a barrel, the lowest for this time of year since at least 2005, Refinitiv Eikon showed.

Underscoring falling demand, Colonial Pipeline Co said on Thursday it would cut volumes on its primary lines delivering gasoline and diesel fuel to the US East Coast from the Gulf Coast.

Refiners around the world have already started cutting output or are considering such measures as the coronavirus curbs travel and driving.

Exxon Mobil Corp cut production on Saturday at its 502,500 barrel-per-day-capacity Baton Rouge, Louisiana, said sources familiar with plant operations.

Taiwan’s state-owned oil refiner CPC Corp will cut crude throughput rates in April by less than 10% from around 70%-80% currently, as the coronavirus pandemic has lowered fuel demand, two sources familiar with the matter said on Monday.

As MRC informed earlier, ExxonMobil said last Monday that it is looking to reduce spending significantly as a result of market conditions caused by the coronavirus disease 2019 (COVID-19) pandemic and commodity price decreases.

We also remind that in September 2019, ExxonMobil announced plans to spend GBP140 million over the next two years in an additional investment program at its Fife ethylene plant, which has a capacity of more than 800,000 t/y.

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