Advanced Petrochemical profits down 36% in Q1

MOSCOW (MRC) -- The estimated financial results of Advanced Petrochemical Company showed a 35.75% drop in net profit over the first quarter (Q1) ended on 31 March 2020, said Zawya.

The profits amounted to SAR 104 million in Q1-20, compared to SAR 161.88 million in Q1-19, according to a stock exchange filing on Sunday.

The lower earnings are due to a decrease in polypropylene sales volume and prices by 8.1% and 10.3%, respectively, and an increase in propane consumption by 10.3%.

Furthermore, the petrochemical company registered a share of losses from SK Advanced Co. of SAR 18.19 million in the Q1-20 when compared to a share of profit of SAR 20.70 million in the same quarter last year.

On a quarterly basis, the profits retreated by 45.84% when compared to the previous quarter where they totalled SAR 192 million.

It is worth pointing out that in 2019, the company’s profits went up by 5.8% to SAR 759 million from SAR 716.96 million in 2018.

As MRC informed earlier, Subsidiary AGIC and SK Gas have formed a joint venture named Advanced Polyolefins Company to work on the project. Saudi Arabian Stock Market-listed Advanced Petrochemical Company has signed a deal with South Korea’s SK Gas to construct and operate a propane dehydrogenation (PDH) and polypropylene (PP) plants in the kingdom’s Jubail Industrial City, with the project value being USD1.8bn (SAR6.8bn).

As MRC informed before, in September 2019, SK Advanced signed a joint venture agreement with South Korea’s Polymerae Ltd. to establish a polypropylene plant in South Korea with an annual design capacity of 400,000 metric tons. The facility is expected to launch commercial operations in 2021.

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) -- Brazilian state-run oil firm Petrobras is cutting its utilization rates at refineries from an already depressed level of 60%, a government official said, as demand for fuel plummets, said Reuters.

In an interview with radio personality Jose Luiz Datena, Brazilian Mines and Energy Minister Bento Albuquerque said April orders for Petrobras diesel, gasoline and jet fuel had fallen by 50%, 60% and 86%, respectively. Petroleo Brasileiro SA , as the firm is formally known, was further cutting utilization rates as a result, he said.

As MRC wrote previously, the chief executive of Brazilian state-run oil firm Petroleo Brasileiro said in December 2019 he wants to sell the company's stake in petrochemical company Braskem within 12 months.

Besides, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

MOSCOW (MRC) -- China has increased U.S. crude purchases with some buyers snapping up cargoes at the widest discounts ever as sellers seek to offload excess supplies in Asia, reported Reuters with reference to six trade sources.

China started processing in March applications from its companies to waive import tariffs on U.S. energy goods as part of the Sino-U.S. Phase 1 trade deal and they have since bought liquefied natural gas (LNG) and liquefied petroleum gas (LPG) from the United States.

The world’s largest crude importer is boosting U.S. energy imports at a time when the world is swamped with excess supply after the Organization of the Petroleum Exporting Countries (OPEC) and Russia failed to extend production cuts and as measures to curb the spread of the coronavirus undermined demand.

Cheap U.S. energy supplies will help China lower its import costs, but the deep discounts will add further pressure on U.S. producers to shut in production after U.S. crude futures CLc1 slumped to their lowest since 2002.

U.S. Mars Sour crude has been sold to Chinese buyers at discounts between USD7 and USD9 a barrel to September ICE Brent futures for July arrival while the discounts for West Texas Intermediate crude (WTI) in Midland were between USD6 and USD7 a barrel, the sources told Reuters.

BP (BP.L) and Equinor (EQNR.OL) may have sold some of these cargoes, they said, while the buyers were not immediately known. BP declined to comment while Equinor could not be immediately reached for comment outside office hours.

"Only the Chinese are buying and the rest of the world are selling," a Singapore-based trader said, leading to some “very aggressive offers” for U.S. crude into that market even though the oil’s benchmark is already at the lowest in 18 years.

In early March, independent refinery Panjin Haoye Chemical Co bought Mars crude from PetroChina in one of the first signs of Chinese refiners resuming U.S. crude purchases. Mars and WTI were then offered at spot premiums to benchmarks.

U.S. crude is mired in deep discount as producers, forced to clear pipelines stuck with unsold oil, are now flooding the U.S. gulf coast with cheap crude.

Strong demand to ship out excess U.S. crude to China has also caused freight rates to surge, with costs jumping to $8-$10 per barrel, two of the sources said.

At least 9 Very Large Crude Carriers (VLCCs) have been booked by traders and refiners to load crude from the U.S. over the next two months for Asia, four of which could be bound for China, according to a shipbroker’s reports.

(Graphic: Supertanker freight rates from U.S. to Singapore link: here)

Other Asian importers of U.S. crude such as India and Thailand are reducing refinery utilization rates to cope with a sudden plunge in domestic demand as their governments impose more stringent coronavirus lockdown measures.
Chinese refiners are gradually ramping up output after sharp cuts in February although they have yet to return to levels before the outbreak as demand recovery is still slow, the sources said.

“Demand is bad globally. Only China seems relatively OK,” said a source at a Shandong-based refinery.

“We are steadily increasing operation rates.”

As MRC wrote before, in mid-February 2020. Asia's largest oil and gas firm PetroChina resumed construction of its oil refinery and petrochemical project in southern Chinese province of Guangdong, as the number of new coronavirus cases fell for a second straight day.

We also remiand that Sichuan Petrochemical (part of PetroChina) undertook an emergency shutdown at its naphtha cracker in Sichuan province of China on July 11, 2018 owing to a gas leak at its natural gas supply pipeline. Further details on duration of the outage could not be ascertained. Located at Sichuan province of China, the cracker has an ethylene capacity of 800,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Italian energy group Eni said most of its oil refineries in Italy were working at around 60% of their capacity as the coronavirus emergency continues, reported Reuters.

The pandemic has shut down large parts of economies across the globe and prompted many governments to slap tough restrictions on travel, triggering a steep fall in the demand for refined oil products.

In emailed comments, Eni said its biggest refinery Sannazzaro, in northern Italy, was running at around 50% of its capacity since it was also impacted by planned maintenance work.

It said maintenance work at its Taranto plant in southern Italy had been completed and the units involved were gradually being turned on.

“Eni is monitoring developments in the market so as to be able to make any eventual adjustments to supply,” it said.

State-controlled Eni distributes the fuels and lubricants it produces at its six Italian refineries across more than 4,000 service stations in Italy.

As MRC informed earlier, Italian energy group Eni said in mid-March all its refineries in Italy were working normally except for two which had partially cut their volumes for maintenance work.

Besides, operations at Italian petrochemical producer Versalis (part of Eni) have not affected by emergency quarantine measures in the country. Italian Prime Minister Giuseppe Conte extended its emergency coronavirus measures Wednesday evening and announced the closure of "non-essential" commercial businesses. This follows the announcement of a nationwide lockdown on Monday, limiting movement for around 60 million people. Under these measures people will only be allowed to leave their homes for work or health reasons. Versalis has three steam crackers in Italy, capable of producing 1.675 million mt of ethylene, 750,000 of propylene and 285,000 mt of butadiene a year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Oriental Union Chemical Corp (OUCC), has restarted its Monoethylene glycol (MEG) unit following a turnaround, as per Apic-online.

A Polymerupdate source in Taiwan informed that, the company resumed operations at the unit on April 1, 2020. The unit was shut for maintenance in mid-March 2020.

Located at Linyuan, Taiwan, the unit has a production capacity of 260,000 mt/year.

MEG is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

As per MRC's ScanPlast report, the estimated PET consumption in Russia increased in January 2020 by 9% year on year. Totally, Russia recycled 55,390 tonnes of PET chips in January (excluding shipments of Russian material to the countries of the Customs Union). Russia's PET chips production totalled 43,200 tonnes in January 2020.
MRC