Three Russian car plants to suspend production on COVID-19, lack of components

MOSCOW (MRC) -- At least three car plants in Russia plant to suspend operations to prevent the spread of the coronavirus while they also struggle with a lack of components, reported S&P Global.

Volkswagen Group Rus, a Russian distribution and production unit of German automobile manufacturer Volkswagen ,will suspend operations at its plants in Kaluga and Nizhniy Novgordo from March 30 through April 10 due to a lack of components supplied from European plants, the company's spokeswoman told S&P Global Platts Wednesday.

Last year, the combined of the plants was 215,000 cars.

French multinational vehicle manufacturer Groupe PSA said it will suspend output at its plant in Kaluga region over April 1-10, citing the spread of COVID-19 in Russia and globally, the closure of major European car plants, the suspension of component supplies worldwide, potential risks for employees and the Russian government's recommendations.

Volkswagen Group Rus and Groupe PSA's Russian sites together provided roughly 13% of the country's overall car output in 2019. The latter saw output fall 2.5% year on year to 1.5 million cars, according to Russian automotive analyst Autostat.

New car sales in Russia this year are expected to be lower than the 1.6 million-1.7 million sold in 2019, mostly due to sharp depreciation of the ruble in February-March and expected subsequent weakening of solvent demand and car price inflation, both direct consequences of the currency depreciation.

Forecasts for new car sales this year point to a decline of 5%-15%, according to Autostat.

Steel demand from the auto industry may decline by 200,000-300,000 mt given that about 900 kg of steel goes into making one car.

Polypropylene (PP), polycarbonate (PC) and acrylonitrile-butadiene-styrene (ABS) are used in the production of automotive components.

According to MRC's ScanPlast report, 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. At the same time, overall ABS imports to the Russian market decreased in the first month of 2020 by 16% year on year to 2,300 tonnes, according to MRC's DataScope report. This figure was at 2,750 tonnes in January 2019. Imports of material dropped by 6% from 2,440 tonnes a month earlier. ABS imports to the country have continued to decline for the third month in a row.
MRC

Output of products from polymers in Russia up by 9.5% in Jan-Feb 2020

MOSCOW (MRC) -- Russia's output of products from polymers grew in February 2020 by 11.5% year on year.
And this figure increased by 9.5% year on year in the first two months of 2020, reported MRC analysts.

According to the Russian Federal State Statistics Service, February production of unreinforced and non-combined films was 100,300 tonnes, compared to 85,800 tonnes a month earlier. Last year's output of films products grew by 20.5% year on year to 185,800 tonnes.

Last month's production of non-porous boards, sheets and films rose to 32,000 tonnes from 28,400 tonnes in January. Thus, overall output of these products reached 60,400 tonnes over the stated period, up by 9% year on year.

February production of non-porous boards, sheets and films was 20,300 tonnes, up 5.7% a month earlier. Overall production of these products reached 38,900 tonnes in the first two months of 2020, compared to 39,600 tonnes a year earlier.

February production of plastic bottles and flasks grew to 1,553,000 items from 1,551,000 items a month earlier.
Overall output of these plastic products totalled 3,104,000,000 units over the stated period, compared to 3,138,000,000 units a year earlier.

Last month's production of polymer pipes, hoses and fittings was 46,100 tonnes versus 40,900 tonnes in January.
Overall output of these products was 87,000 tonnes in January-February 2020, up by 21.5% year on year.

February production of sacks and bags from ethylene polymers reached 2,550,000,000 units, compared to 1,884,000,000 units a month earlier. Overall output of these plastic products totalled 4,434,000,000 units in the first two months of 2020, compared to 3,997,000,000 units a year earlier.

Last month's production of linoleum and floor coverings was 12,600,000 square metres, compared to 8,800,000 square metres in January. Overall output of these products totalled 21,400,000 square metres in the two months of 2020 versus 16,900,000 square metres a year earlier.

February production of plastic windows and door blocks reached 1,556,000 square metres and 65,300 square metres, respectively, versus 2,154,000 square metres and 62,800 square metres a month earlier. Overall output of these plastic products totalled 3,709,000 square metres and 128,100,000 square metres, respectively, compared to 3,137,000 square metres and 119,100 square metres a year earlier.
MRC

Chevron leads another wave of massive oil-industry spending cuts

MOSCOW (MRC) -- Chevron Corp cut its capital spending budget by $4 billion, leading a wave of cost-cutting announcements across the reeling oil-and-gas industry as the coronavirus pandemic has slashed demand and triggered a dramatic slide in oil prices, reported Reuters.

Crude oil prices have crashed by 60% since January as Saudi Arabia and Russia pump full bore to grab share in a dwindling market, and gasoline and jet fuel use has slumped. Demand worldwide is expected to fall by more than 12 million barrels per day, more than 10% of daily demand.

The reset is being felt across the industry, as Chevron was joined on Tuesday in reducing expenses by Schlumberger, the world's largest oilfield services company, independent refiner Phillips 66, and Canada's Suncor.

"This is as unprecedented an oil price environment as I can recall seeing,” Chief Executive Michael Wirth said in an interview.

Chevron shares jumped 21% on Tuesday to USD65.73 as investors cheered the company's budget cut, which was twice as big as analysts expected, as a sign it would not incur debt to finance operations. Shares were also buoyed by a higher US stock market that was lifted by central bank stimulus measures.

Chevron will spend USD16 billion this year, down from a planned USD20 billion, halving its spending in the Permian Basin, the top US shale field. It is the lowest spending level for the company since 2005.

Chevron now expects to pump about 125,000 fewer barrels of oil and gas per day in the Permian Basin by the end of this year, down 20% from its 600,000 barrel per day target.

The field is its "most flexible" for spending reductions. Chevron has 16 drilling rigs at work in the field now, down from 20 last year, and will drop to fewer than 8, Wirth said.

This is the first indication from an oil major of how sharply it would pull back in the Permian, which has made the United States the world’s largest oil producer.

Dozens of other US shale companies have curtailed spending, and analysts at Goldman Sachs expect a roughly 35% drop in capital expenditure in 2020.

Chevron will cut USD2 billion from its Permian spending, from an expected pace of about USD4 billion per year.

Exxon Mobil, the largest US oil company, has vowed to make significant cuts this year, while Norway’s Equinor also reduced its share buyback program.

Chevron's reductions were "much deeper than expected," RBC Capital Markets analyst Biraj Borkhataria said.

Its USD5 billion annual share repurchase program was halted after USD1.75 billion of shares were bought back during the first quarter.

"Our focus is on protecting the dividend, prioritizing capital that drives long-term value, and supporting the balance sheet," said Chief Financial Officer Pierre Breber.

The cuts do not "completely close the post-dividend outspend," wrote analysts at Tudor, Pickering, Holt & Co.

The company would not consider an acquisition now, said Wirth, adding: "There will be a day when opportunities may present themselves. If we do the right things today we'll be in a position to consider that."

Chevron was already in the middle of a reorganization when oil prices plummeted, but Wirth would not say how many jobs it may cut.

As MRC informed earlier, US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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).

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
MRC

BPCL defers turnaround of units at refineries on shortage of labor

MOSCOW (MRC) -- India Bharat Petroleum Corp has deferred the shutdown of secondary units at its Kochi and Mumbai refineries due to shortage of manpower and material to carry out the turnaround job, its head of refineries R. Ramachandran said, as per Hydrocarbonprocessing.

“At this point of time we are not having the wherewithal to take any shut down because simply men power is not there material will not be available so we will be reviewing the shutdown plans as the situation evolves.. there will be no turnaround in the month of April,” Ramachandran told Reuters.

India imposed a sweeping lockdown of its 1.3 billion people on Wednesday for 21 days, and is only allowing the supply of essential commodities. The move prompted several industries to shut operations and some ports in the country to declare force majeure.

He said BPCL had plans to shut the continuous catalytic cracker and some other units at its 240,000 barrels per day (bpd) Mumbai refinery in western India and vacuum gasoil de-sulphuriser and some other units at 310,000 bpd Kochi refinery for two to three weeks in April.

Falling fuel demand has already prompted Indian refiners to reduce crude processing.

As MRC informed earlier, Bharat Petroleum Corporation Ltd (BPCL) will invest about Rs25,000 crore to set up an ethylene cracker plant at Rasayani, 50 kilometres from its Mumbai refinery, as the firm pushes further into the petrochemicals business to fuel growth.

BPCL will commission its Rs5,236 crore Propylene Derivative Petrochemical Project (PDPP) at Kochi refinery for manufacturing niche petrochemicals in the next six months. To expand its product portfolio further, BPCL is investing Rs11,130 crore to set up a facility in Kochi refinery for manufacturing Polyols, Propylene Glycol and Mono-Ethylene Glycol.

Ethylene and propylene are feedstocks for producing PE and polypropylene (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.

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

Xinneng Fenghuang shut methanol units for unplanned turnaround

MOSCOW (MRC) -- Xinneng Fenghuang (Tengzhou) Energy Company has taken off-stream its all methanol units in Tengzhou, Shandong province, reported Apic-online.

A Polymerupdate source in China informed that, the company has halted operations at the units on March 24, 2019 owing to technical issues. The units are expected to remain off-line for about 2-3 days.

Located in Shandong province, China, the units have a combined capacity of 920,000 mt/year.

We remind that, as MRC informed earlier, Sinopec Zhongyuan Petrochemical restarted its methanol-to-olefins (MTO) plant in China in mid-February 2019, following an unplanned outage. The was shut on November 5, 2018 owing to bearish market conditions. Located at Henan in China, the MTO plant has an ethylene and propylene capacity of 100,000 mt/year each.

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