Cabot operatis with skeleton staff due to coronavirus pandemic

MOSCOW (MRC) -- US carbon black producer Cabot (Boston, Massachusetts) apparently has to put restrictions in place, at least to a certain extent. The company says its coronavirus emergency plans have taken effect to ensure that only personnel critical to production are still working at its European and North American facilities, said Plasteurope.

However, a spokesperson told Plasteurope that there will be no allocations, as the company expects to have sufficient capacities to supply all customer requests.

CEO Sean Keohane is anticipating solid figures for the first quarter. The low demand in China between January and March was balanced out by strong order activity in the rest of the world.

However, due to the challenging situation in the next weeks as well as the accompanying insecurity in demand, Keohane has revised the full-year outlook, which had previously not taken the virus pandemic into account. He expects decreases in both sales and earnings in the third quarter, presumably among other things because of the falling oil prices that will reduce raw material costs – see Plasteurope.com of 19.12.2019.

Apart from the initiated takeover of carbon nanotube producer Shenzhen Sanshun Nano New Materials, which is set to be complete in April 2020, Cabot intends to reduce capital expenditures. Dividend payouts, however, will not be suspended.

Carbon black is used in plastics, among other things.

As MRC informed earlier, Cabot Corporation has announced a planned investment in new capacity to enhance its production capabilities for plastic formulations specifically for conductive compounds and masterbatches for engineering thermoplastic applications.

As MRC informed earlier, in February of this year, the index of production of chemicals in the Russian Federation grew by 9% compared with the same period a year earlier. Thus, the cumulative release for the first two months of 2020, the release of basic chemicals showed an increase of 6%, follows from Rosstat materials. According to the Federal State Statistics Service of the Russian Federation, the largest increase in production volumes in January - February came from polymers in primary form.

Cabot Corporation is an American specialty chemicals and performance materials company headquartered in Boston, Massachusetts. The company operates in over 20 countries with 36 manufacturing plants, eight research and development facilities and 28 sales offices.
MRC

MOSCOW (MRC) -- European refiners have requested less Russian oil via the Druzhba pipeline for April as they cut output due to sharp falls in demand for fuel amid the coronavirus outbreak, reported Reuters with reference to four traders.

The Druzhba pipeline, which can pump 1 million barrels per day (bpd), connects Russian oil fields with refinery plants in Germany, Poland, Czech Republic, Hungary and Slovakia.

Refiners in Eastern Europe connected to the Druzhba pipeline, including Total’s Leuna refinery in Germany and Rosneft’s Schwedt as well as Poland’s PKN Orlen and Mol’s Slovnaft, have cut their runs in the last two weeks by 20-30% from normal throughput, which resulted in lower purchases of oil via the pipeline, traders said.

‘Now 20-30% run cuts are ‘norma’ for most of refineries in Europe. Wonder how it will look in May’, a trader with a major said.

Total and MOL Group declined requests to comment on the figures. MOL added that ‘group refineries are running to ensure the safe supply of their operating countries’.

PKN Orlen and Rosneft did not respond to requests for comment.

Germany and Poland, both connected to the northern Druzhba route, have been in quarantine for several weeks now, which resulted in a sharp fall in demand for oil products, traders said.

The Schwedt refinery owned by Russia’s Rosneft has cut runs by some 70,000 bpd, nearly third of its capacity, according to two traders.

Total’s 241,000-barrel-per-day Leuna refinery cut its production by some 25%, another market source familiar with the cut told Reuters.

According to the sources both refineries cut their request for April by 100,000-200,000 tonnes from normal intake.

Poland’s PKN Orlen refinery in Plock has also decreased runs by 25%, two traders familiar with the refining data said. It was not clear if PKN Orlen adjusted its requests for Urals supplies via Druzhba in April. At the same time PKN refused to purchase extra Saudi crude oil for April loading.

‘We are all running as low as we can to operate normally, but to produce less’, a source with a major oil refinery in Europe said.

Hungary’s Mol, which receives oil via southern route of Druzhba pipeline, cut its oil purchases by some 30% from its normal level for its refineries in Hungary and Slovakia for April, two industry sources said.

“They bought some 200,000 tonnes less for April than we expected. It was not a dramatic slash, but lower,” one of the sources said.

Traders said that although April looks more or less understandable in terms of oil placement, they are bracing themselves for May as the spread of the virus suggests more production cuts by the refineries, while oil supply is only expected to rise.

“We are watching fuel sales closely. If they fall more, we’ll have to consider turning off one of the CDU (crude distillation) units,” a source with a European refiner which buys Urals told Reuters.

As MRC reported before, Total is evaluating new gas cracker project in South Korea as part of petchems growth strategy.

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) -- U.S. gasoline consumption fell to its slowest rate for more than a quarter of a century last week as epidemic controls brought much of the economy and transportation system to a sudden stop, reported Reuters.

Estimates for the volume of gasoline and other petroleum products supplied to the domestic market, published on Wednesday, provide the first clue to the epidemic’s impact on the oil market.

Gasoline supplied fell to 6.66 million barrels per day (bpd), down from 9.70 million bpd two weeks earlier, and the slowest rate since 1994, data from the U.S. Energy Information Administration (EIA) showed.

Gasoline supplied, a proxy for the amount consumed by motorists, is very volatile from one week to the next, which is why the EIA recommends focusing on the four-week running average.

But the decline in gasoline supplied over the last two weeks is unequalled in the three decades since the EIA started estimating this series, and is almost certainly unequalled in the history of the oil industry.

The two-week decline in the volume of gasoline supplied between March 13 and March 27 was equivalent to more than eight times the typical change over a similar period.

Gasoline was the hardest hit of the main petroleum products in the United States, but there was also a substantial decline in the volume of jet fuel supplied and smaller declines in some other products including diesel.

The total volume of petroleum products supplied decreased by 3.6 million bpd over the two-week period, the largest drop for more than 30 years, and equivalent to more than 4 standard deviations.

The collapse in fuel consumption is causing petroleum stocks to build all along the supply chain, with large increases in both crude and products being stored at refineries and tank farms around the country.

Total U.S. stocks of crude and petroleum products, excluding the government’s strategic petroleum reserve, jumped by 21 million barrels last week.

It was the third-largest increase in the last 30 years, a rise that has been exceeded on average only once in every 800 weeks.

With much of the economy at a standstill because of restrictions introduced to control the spread of the new coronavirus, while production has yet to fall significantly, stocks are likely to continue rising rapidly.

U.S. gasoline consumption accounts for almost one in every ten barrels of oil consumed each day around the world.

But the U.S. experience is almost certainly replicated across the major refining and consumption centres of Europe and Asia, though data for those areas will not become available for another couple of months.

Rising global stocks of crude and products are likely to exhaust available storage capacity within the next few months, unless oil production and refining is curbed, or travel restrictions are eased.

“The global oil industry is experiencing a shock like no other in its history,” the International Energy Agency wrote in a note published on Wednesday.

“The scale of the collapse in oil demand ... is well in excess of the oil industry’s capacity to adjust.”

As MRC informed earlier, US-based Phillips 66 is delaying three sizeable scheduled shutdowns at its refineries this year, the company said last week, because of concerns that coronavirus could spread among the refineries' workers if the maintenance goes ahead.

We also reminad that 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).
MRC

MOSCOW (MRC) -- INEOS FPS has today responded to requests from customers and delayed its planned summer shut down of the Forties Pipeline System, as per the company's press release.

The decision has been taken in the face of the growing Corona Virus pandemic and the need to avoid bringing together large numbers of people

INEOS will continue to work with our Government and customers to provide more information as soon as is practical.

INEOS FPS has today written to all its customers saying that there will be a delay to the FPS Summer Shutdown that was planned for June 16th 2020. The Shutdown will not now start before August 2020 at the earliest.

INEOS is also mindful of the benefits of completing this project work to the future operation of FPS and the risks of not going ahead. However, it recognises the importance of maintain a flow of oil and gas through FPS during the current situation. The company found that there was an overwhelming desire to delay the shutdown by its customers which it is responding to.

In the coming days INEOS will continue to have discussions with its customers and other stakeholders to define the best dates to plan these projects.

As MRC informed before, in January 2019, INEOS announced Antwerp as the location for its new petrochemical investment. The EUR3 billion investment will be the biggest ever made by INEOS and is first cracker to be built in Europe in 20 years. The investment is a game changer for the chemical sectors and will bring huge benefits to the Belgium and wider European economies.

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.

INEOS is a global manufacturer of petrochemicals, specialty chemicals and oil products employing 22,000 people. It has 34 businesses, with a production network spanning 183 manufacturing facilities in 26 countries.
MRC

MOSCOW (MRC) -- The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), fell 2.6 percent in March on a three-month moving average (3MMA) basis following a downwardly revised 0.1 percent gain in February. On a year-over-year (Y/Y) basis, the barometer fell 1.3 percent in March, said Americanchemistry.

The unadjusted data shows an 8.0 percent decline in March following a 1.1 percent decline in February and a 1.2 percent gain in January. The unadjusted decline in March is the largest in the post-World War II period. The diffusion index slumped to 27 percent in March. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for February was revised downward by 1.13 points and that for January was revised downward by 0.38 points.

"The CAB signals recessionary conditions in U.S. commerce,” said Kevin Swift, chief economist at ACC. “ACC believes a recession to be occurring when the barometer declines for three consecutive months and falls 3.0 percent or more from the peak. As of March, the CAB has declined for two straight months and fallen 8.9 percent from the peak."

The CAB has four main components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators. Production-related indicators generally declined in March. Trends in construction-related resins, pigments and related performance chemistry were generally negative. Plastic resins used in packaging and for consumer and institutional applications were generally negative. Performance chemistry was negative and U.S. exports were weak. Equity prices collapsed, but are improving this week. Product and input prices declined. Inventory and other supply chain indicators were negative.

The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the U.S. economy’s business cycle, and this barometer can be used to determine turning points and likely trends in the broader economy. Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.

Applying the CAB back to 1912, it has been shown to provide a lead of two to 14 months, with an average lead of eight months at cycle peaks as determined by the National Bureau of Economic Research. The median lead was also eight months. At business cycle troughs, the CAB leads by one to seven months, with an average lead of four months. The median lead was three months. The CAB is rebased to the average lead (in months) of an average 100 in the base year (the year 2012 was used) of a reference time series. The latter is the Federal Reserve’s Industrial Production Index.

As MRC informed earlier, in February of this year, the index of production of chemicals in the Russian Federation grew by 9% compared with the same period a year earlier. Thus, the cumulative release for the first two months of 2020, the release of basic chemicals showed an increase of 6%, follows from Rosstat materials. According to the Federal State Statistics Service of the Russian Federation, the largest increase in production volumes in January - February came from polymers in primary form.
MRC