Ukrainian PE imports down by 5% in Jan-Feb 2020

MOSCOW (MRC) -- Overall polyethylene (PE) imports into the Ukrainian market dropped in the first two months of 2020 by 5% year on year to 39,900 tonnes. Linear low density polyethylene (LLDPE) and low density polyethylene (LDPE) accounted for the main decrease in shipments, according to MRC's DataScope report.

Last month's PE imports to Ukraine rose to 20,500 tonnes from 19,400 tonnes in January, local companies increased shipments of all ethylene polymers grades, except for ethylene-vinyl-acetate (EVA). Thus, overall PE imports reached 39,900 tonnes in January-February 2020, compared to 41,800 tonnes a year earlier.

The structure of PE imports by grades looked the following way over the stated period.

Last month's high density polyethylene (HDPE) imports grew to 8,100 tonnes from 7,800 tonnes, Ukrainian companies significantly raised their purchasing of film grade PE due to the shutdown of the domestic plant. Overall HDPE imports exceeded 15,900 tonnes in the first two months of 2020 versus 13,600 tonnes a year earlier.

February LDPE imports were slightly less than 6,500 tonnes, compared to 6,000 tonnes a month earlier, local companies raised their purchasing of LDPE in Russia before stronger demand in spring. Overall LDPE imports reached 12,500 tonnes over the stated period, compared to 12,800 tonnes a year earlier.

Last month's LLDPE imports were 5,200 tonnes versus 4,300 tonnes in January, with stretch films producers accounting for stronger demand for PE. Overall LLDPE imports reached 9,500 tonnes in January-February 2020, compared to 13,200 tonnes a year earlier.

Imports of other PE grades, including EVA, totalled about 2,000 tonnes over the stated period, compared to 2,300 tonnes a year earlier.

MRC

MOSCOW (MRC) -- DOMO Chemicals, a leading producer of high-quality engineering materials for a diverse range of markets, has announced plans for a new state-of-the-art plant in Zhejiang, China, as per the company's press release.

The new plant will be capable of producing 50,000 tons of sustainable and innovative engineered nylon compounds each year. The company signed a new factory project through “cloud contract” with PingHu DuShan port Economic Development District on February 20, 2020. Production is expected to commence in the fourth quarter of this year.

DOMO Chemicals will invest EUR12 million in the new plant, which will have more than 11,500m2 floor space. The company plans to install multiple production lines at the first stage of development, which would offer an estimated capacity of 25,000 tons/year. There will be enough additional space available to cope with future demand requirements. The move is in line with the company’s global growth strategy with a strong focus on the Asia Pacific (APAC) region.

Speaking during a video ceremony of the signing, Vice President Global Engineering Plastics, Mr. Ludovic Tonnerre stated: "DOMO Chemicals has only been operating in China since 2015, but we are growing rapidly. Despite the current coronavirus challenges, we are confident that China will lead the world in embracing a future generation of sustainability and e-mobility solutions. We are very grateful to the government and relevant departments for their patience and assistance and are confident in our long term cooperation, relationships and mutual opportunities."

The new plant will be located in the convenient transportation port area of DuShan Pinghu city, Zhejiang province, which is in close proximity to Shanghai and facing the East China Sea. The modern factory will integrate R&D, production, and sales. It will mainly develop and produce modified engineering plastics such as nylon 6, nylon 6.6* and high temperature nylon (HTN). These products meet the rising market demand for modified materials for the automotive, electronics and consumer industries.

DOMO will implement measures that exceed the requirements for environmental protection for the equipment, processes and technologies used at the new plant. The company will be investing in new air and water treatment technologies, and in the reduction of water and energy consumption. This is in line with the overarching DOMO Philosophy: "Caring is our formula."

The contract, which was signed remotely during the ongoing coronavirus situation, demonstrates DOMO’s long term commitment to the Chinese economy and the resilience of local Chinese colleagues and partners. DOMO has strictly complied with the government's protection requirements at all times and diligently checked on the wellbeing of the work personnel.

Fabrizio Cochi, General Manager Asia/Pacific at DOMO Chemicals concludes: "When DOMO Engineering Plastics started in China, we operated a small plant with two machines, with the aim of supplying our global automotive customers. In 2019, despite the slowdown of the Chinese economy, we were already selling 6,000 tons of engineering nylon compounds to diverse local applications. I believe that we are about to enter a period of rapid development in China once today’s hurdles are overcome. We remain strongly committed to China and the APAC region."

"DOMO does not sell or distribute any Technyl grades to customers and distributors outside the European Economic Area and Switzerland. TECHNYL is a registered trademark of Domo.

As MRC informed earlier, on January 31, 2020, BASF, the world's petrochemical major, closed the acquisition of Solvay's polyamide (PA 6.6) business. The transaction broadens BASF's polyamide capabilities with innovative and well-known products such as Technyl. This will allow BASF to support its customers with even better engineering plastics solutions, e.g., for autonomous driving and e-mobility. The transaction also enhances the company's access to growth markets in Asia as well as in North and South America.

We remind that, as MRC wrote before, BASF has restarted its No. 1 steam cracker following a maintenance turnaorund. Thus, the company resumed operations at the plant on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

Ethylene and propylene are feedstocks for producing 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.

Domo Chemicals, based in Leuna, Germany, is a leading highly integrated Caprolactam/nylon6 company serving a global and broad customer base with high quality products in the field of nylon intermediates (Phenol, Cyclohexanone, Caprolactam), nylon 6 polymers, engineering plastics, fertilizers, nylon 6 packaging film and distribution of petrochemical products.
MRC

MOSCOW (MRC) -- South African petrochemicals group Sasol said it would consider raising funds by selling additional shares and disposing of more assets amid growing investor concerns about its debt levels after a crash in the price of oil, reported Reuters.

Around 76.5 billion Rand (USD4.6 billion) was wiped off the company's market value last week, with Sasol's shares hitting a 21-year low last Thursday, falling as much as 42% as oil prices plunged before recovering slightly to end the day down 29.36% at 37.24 rand.

Barring a significant recovery, this will be Sasol's worst week since listing in September 1989. The unexpected fall in oil prices has rattled investors who were already concerned about the company's high debt after it renegotiated some debt covenants last November. Reacting to the frantic selling, Sasol said it would consider a potential equity issue, reduce costs, reschedule some capital expenditure, expand asset disposals in excess of the current $2 billion target and engage lending groups. The company said cash and available facilities stood at around $2.5 billion rand with no significant debt maturities before May 2021. It has just completed a review of its assets in a bid to reduce debt. Seeking to assuage investors' fears the company could break its debt covenants, it said that at the current oil price of approximately R580/bbl, it would be within current covenant levels at 30 June 2020. Sasol's newly appointed chief executive officer Fleetwood Grobler said it was critical the company acted quickly and decisively. "We are therefore working towards a package of measures to ensure that the business is profitable even at low oil prices and that we continue to have a strong balance sheet to support it," said Grobler.

Monday's crude price crash further hobbled a company already battling to restore shareholder confidence after delays and cost over-runs at its Lake Charles Chemicals project (LCCP) in Louisiana forced its joint chief executives to resign late last year. "With the oil price collapsing, it's eroded the margin they were expecting on the project," said an investor who sold his Sasol shares on Monday. The destruction of value at one of South Africa's biggest companies adds to headaches for a government already grappling with a heavily-indebted state power company and airline. Although not a state-run company, Sasol's two top shareholders are state agencies - State asset manager the Public Investment Corporation has a 15.05% stake, while local development finance institution Industrial Development Corporation holds 8.53%, according to Refinitiv Eikon. Sasol said it would update the market in a conference call on Tuesday.

As MRC reported earlier, in mid December 2019, Sasol announced that the LCCP Ethane Cracker was increasing production rates following the successful replacement of the acetylene reactor catalyst. Sasol’s Ethane Cracker with a nameplate capacity of 1.54 million tons per year achieved beneficial operation in August 2019 but has run approximately 50-60% of nameplate capacity due to underperformance of the plant’s acetylene removal system. The company stated that the issue had been resolved then.

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.

Sasol is an international integrated chemicals and energy company that leverages technologies and the expertise of our 31 270 people working in 32 countries. The company develops and commercialises technologies, and builds and operates world-scale facilities to produce a range of high-value product stream, including liquid fuels, petrochemicals and low-carbon electricity.
MRC

MOSCOW (MRC) -- U.S. gasoline refining margins fell a whopping 95% on Monday - even briefly turning negative - with the cost of gasoline plunging faster than crude oil in anticipation that the coronavirus will keep people off the road and in their homes, said Hydrocarbonprocessing.

The coronavirus pandemic has infected 180,000 people worldwide and caused over 7,000 deaths, prompting governments to order travel restrictions and business closures. U.S. gasoline demand is plunging as businesses shut and state and local governments advise people to stay home.

U.S. gasoline refining margins RBc1-CLc1 settled at 28 cents per barrel on Monday, their lowest since December 2008, another signal that economic activity appears to be contracting. “Oil prices have been dropping hard enough. For product prices to outpace them signals a huge shift in demand expectations,” said Matthew Smith, director of commodity research at ClipperData.

Refiners process crude oil into a number of products, chiefly motor gasoline, heating oil and diesel fuel. Normally, gasoline margins rise as driving season approaches, and distillate margins - for making heating oil and diesel - rise in the winter months.

The United States consumes about 9 million barrels per day of motor gasoline, but fuel demand is now expected to fall by roughly 2 million to 2.5 million bpd in the next three to four weeks, said Per Magnus Nysveen, senior partner at Oslo-based energy research firm Rystad Energy.

Congestion in major cities worldwide has been dropping sharply, according to TomTom, which makes navigation technology. Headed into the evening rush hour on Monday, congestion in New York City was down by 37% from last year’s average. In Chicago, it was down 24%.

Such declines have not yet shown up in U.S. official data. As of March 6, the four-week average for motor gasoline supplied by refiners - a proxy for demand - was up 1.7% from the year-ago period, according to U.S. Energy Department figures.

The margin to produce distillate products is at USD14.95 a gallon, a relatively healthy margin. Heavy-duty tractor-trailers use diesel, a sign that traders believe demand for shipped goods will be less affected as people take deliveries at their homes.

Oil prices have plunged both on the virus and the unexpected eruption of a price war between Saudi Arabia and Russia. U.S. crude futures have fallen more than 50% since the start of the year to USD28.70 a barrel. Gasoline futures have plummeted around 57% to nearly 69 cents a gallon. The steep drop in margins means that refiners may need to cut processing or temporarily shut to save money.

“This shows traders believe refiners could flood a shrinking market and sends them a strong signal to cut runs as soon as possible to prevent further losses,” said Sandy Fielden, director of oil and products research, at Morningstar in Austin, Texas.

Tracking the steep decline in U.S. margins, Northwestern European gasoline refining margins dropped to around -$6.6 a barrel on Monday, their lowest since January 2009.

As MRC informed earlier, oil rose more than USD1 as bargain hunters emerged after recent sharp falls due to the coronavirus pandemic and the price war between Saudi Arabia and Russia, but fears of a recession still dragged on the market. Brent crude was up by 3%, or 89 cents, to USD30.94 a barrel by 0746 GMT, after hitting a high of USD31.25. U.S. West Texas Intermediate (WTI) crude rose 4.7%, or USD1.36, to USD30.06, having come off a high of USD30.21.

As MRC informed earlier, 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. 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.

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) -- Colombia’s majority state-owned oil company Ecopetrol has cut its planned investment for 2020 by USD1.2 billion amid the outbreak of the novel coronavirus and an increase in global crude supply, the company said, as per Hydrocarbonprocessing.

The oil and gas company now sees its 2020 investment at between USD3.3 billion and USD4.3 billion.

Oil companies have been affected by a heavy drop in demand amid the coronavirus pandemic and a price war started by Saudi Arabia and Russia after they failed to agree to extend their pact to cut output to support the market.

Ecopetrol’s updated investment plan, where it will invest in early-stage opportunities, is aimed at preserving its production and cash flow, safeguarding its investments and committing to social investments, the company said.

Ecopetrol will also cut costs by 2 trillion pesos ($487.81 million) through austerity measures that prioritize its operating activities and will restrict travel, sponsorship, and participating in events among other things, it said.

With regards to dividends, the company plans to pay all of the dividends to minority shareholders on April 23 but will pay just 14% of dividends to the majority holder. It will pay the rest of the dividends to the majority holder in the second half of the year, it said.

Shares in Ecopetrol have fallen 47.9% so far in 2020 and closed on Monday at 1,725 pesos each on the Colombian stock exchange. Production for the year is still expected between 745,000 and 760,000 barrels of oil equivalent a day, the company said.

Ecopetrol on December 25 to resumed production of high-pressure polyethylene (LDPE) in the city of Barrancabermeja (Barrancabermeja, Colombia), previously closed due to a shortage of raw materials - ethylene. This roduction with a capacity of 23 thousand tons of LDPE per year was closed for repair on November 18.

It was previously reported that Ecopetrol intends to double sales by 2023. Ecopetrol sees opportunities to expand sales of aromatics, LDPE, solvents, base oils and asphalt in Colombia and other countries.

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.
MRC