PVC imports into Ukraine fell by 2% in Jan-March, exports up by 47%

MOSCOW (MRC) - Imports of suspension polyvinyl chloride (SPVC) into Ukraine increased by 2% in the first three months of this year, compared to the same period in 2019 and reached about 11,500 tonnes. At the same time, sales of Ukrainian PVC to foreign markets dropped by 47% year on year, according to a MRC's DataScope report.

Last month's SPVC imports into the Ukrainian market decreased to 3,700 tonnes from 4,200 tonnes in February, plastic products producers fell in purchases, including due to the spread of coronavirus.

Overall SPVC imports reached 11,500 tonnes in January-March 2020, compared to 11,300 tonnes a year earlier. The high level of capacity utilisation and the steady demand for polymer from foreign markets helped the Ukrainian producer to seriously increase export volumes.

The key suppliers of PVC to the Ukrainian market were producers from Europe, their share in total imports for the period under review amounted to about 76%. Producers from the USA with the share of about 23% were the second largest suppliers. The high level of capacity utilisation and good demand from India and Turkey allowed the local producer, Karpatneftekhim, to significantly increase export sales, although exports have sagged in the last two months.

Last month's exports of Ukrainian PVC were 12,100 tonnes versus 16,100 tonnes in February. Overall, about 54,500 tonnes were shipped for export in the first three months of 2020, compared to 37,100 tonnes a year earlier.

MRC

MOSCOW (MRC) -- The profound challenges facing the refining sector have never been more evident than during the present crisis. As countries go into lock down to slow the global coronavirus pandemic, demand for oil products is collapsing and with it, the market for oil, according to Hydrocarbonprocessing.

As we enter the second quarter of 2020, global oil demand could fall by almost 9 million barrels per day (b/d) from last year’s second quarter.

Alan Gelder, vice president, refining and chemicals, at global natural resources consultancy Wood Mackenzie, said: “Refinery utilisation - and profitability - is falling sharply in response. Refiners have started to reduce runs, margins are coming under severe pressure and some refineries will close, albeit temporarily.”

Could this be a foretaste of the future, as the energy transition and the prospect of peak oil demand combine to squeeze the sector?

Gelder said: “Since 1980, global refining has increased by 25%, but that growth has varied markedly by region. Investment has flowed where oil demand growth or imports of refined products have been strong; elsewhere, capacity has been either rationalised or closed.”

That same story will continue to play out over the next two decades. But sustained investment in additional refining capacity will be required during this period, according to Wood Mackenzie’s energy transition outlook.

He added: “Continued population growth and rising incomes in developing economies outweigh vehicle fuel efficiency improvements and the electrification of the transport fleet. These two factors displace over 10 million b/d of demand, but the outlook for overall growth suggests that, at present, the sector’s long-term viability is assured.”

More capacity will be needed in the Middle East and Asia to satisfy regional demand growth. In OECD countries, weak assets will close, as local demand falls due to fuel efficiency improvements and electrification of the vehicle fleet.

Gelder said: “Within the next five years, the risk of cannibalisation – when each new refinery project prompts the closure of assets elsewhere – within the sector will grow. World-scale refineries are getting bigger while the energy transition is weakening the global growth in oil demand.

“Any new refineries will need to be large coastal sites that are heavily integrated with petrochemicals to ensure they are highly competitive.”

OECD refiners need to adapt to declining local demand and a shifting social and political landscape. Business responses must extend beyond the traditional levers of selective investment and cost control to reduce carbon intensity in both operations and their supply of liquid fuels.

Gelder said: “The core competencies of operating integrated refinery petrochemical sites can be built on to create a central hub in a ‘low-emissions energy complex’ that brings together carbon capture and storage, chemical recycling, LNG and renewables.”

In a world aspiring to restrict the global temperature rise to less than 2o C, the disruption to the global refining industry could be even more severe. Wood Mackenzie’s accelerated energy transition sees much greater penetration of battery technology and hydrogen into the vehicle fleet.

Gelder said: “In such a scenario, localisation is a key theme – refiners working closely with the local community and their government to retain a social licence to adapt their business.

“Cost reduction, competitive position improvement and understanding the refinery’s carbon life cycle are obvious “no regret” moves. Beyond that, no one size fits all, so strategic reviews will be essential to establish a road map for the future.”

He added: “Refining is, after all, a conversion industry – one that must transition away from carbon-intensive feedstocks such as crude oil and into products and services that the consumer still values.”
MRC

MOSCOW (MRC) -- Employees at Valero Energy Corp’s Port Arthur, Texas, refinery expressed worries about the company’s slow response to keep the coronavirus from spreading there after two workers tested positive, reported Reuters with reference to four people familiar with the matter.

Valero, the nation’s second-largest refiner, started to cut non-essential work and related contractors only this week after starting temperature checks last week - much later than other major U.S. refiners, according to the people.

Valero spokeswoman Lillian Riojas said the company maintains the privacy of employee health information and as such would “not publicize individual cases of COVID-19.”

Riojas, however, outlined Valero’s response in case of a positive test, saying it included compliance and cooperation with the Centers for Disease Control and local health authorities, sterilization of affected areas and communicating with employees in ‘close contact’ with those affected.

That is “followed by implementation of appropriate quarantines, communication with our employees at the site, and, most importantly support of all affected employees.”

Globally, the coronavirus has infected over 1.3 million people and killed more than 74,000. The United States has the most number of cases, at more than 360,000.

The pandemic presents significant challenges to energy facilities like power generation plants, offshore drilling platforms and refineries, where remote operation is often not possible and some staffing is needed to run key units.

Refiners are still meeting customer needs for gasoline and jet fuel that have slowed to a trickle in the United States and globally as the pandemic keeps people at home.

The largest U.S. refiner Marathon Petroleum Corp, and Exxon Mobil Corp, the third largest, cut contract workers, who perform maintenance, two weeks ago.

Temperature checks for people entering refineries began about the same time at major U.S. refineries.

Unable to work from home, many Port Arthur refinery employees are indoors in shared control rooms and eat in common dining areas, placing them at greater risk of contracting COVID-19, the sources added on condition of anonymity because they are not authorized to speak to media.

The Port Arthur refinery processes 335,000 barrels of crude oil per day, though it has lately been running at reduced rates due to weakened demand for products.

The refinery employs more than 900 salaried and hourly workers. Its about 450 hourly workers are represented by the United Steelworkers union (USW). About 750 contract workers are employed by third-party companies Valero hires to perform maintenance in the refinery.

The first case reported at the refinery was a contract worker who had no contact with employees, but had contact with another contract worker who had access to a building used by employees, the sources said.

Employees were notified on March 28.

Temperature checks were implemented after employees were notified about the first case.

“In my opinion it was a very meager cover-your-ass by a company that has already had a contractor working inside the fence who tested positive for COVID-19,” one of the sources said of the temperature checks.

The second case was an employee, the sources said.

The company notified its employees on April 5, adding the affected person has not been in the refinery since March 27.

The two people and those who worked closely with that person were sent home for 14 days and the places where they were working underwent “enhanced cleaning,” according to the sources.

Officials with USW 13-423 in Port Arthur, which represents workers at the Valero refinery, declined comment.

In other recent incidents, BP Plc said some workers have contracted COVID-19, the respiratory disease caused by the coronavirus, on offshore platforms in the Gulf Coast and at a facility in Alaska.

As MRC reported before, Valero Energy Corp restarted the small CDU at its Port Arthur refinery after repairing a valve on 25 September 2019. And in late October 2019, Valero Energy Corp shut the small crude distillation unit (CDU) at its Port Arthur refinery. The 75,000-bpd AVU 147 CDU was shut to repair a heat exchanger.

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) -- Marathon Petroleum Corp said it would temporarily idle its 26,000-barrel-per-day Gallup, New Mexico, refinery beginning on April 15, amid slumping demand from the coronavirus pandemic, said Reuters.

The company said it intended to maintain regular employee staffing levels with employees assigned to tasks “necessary to support our idle status and eventual return to normal operations."

\\"“At this time, the duration of the idling period is unknown; however, it is our intent to return to normal operations as soon as demand levels justify doing so,” a company representative said in a email.

Refineries around the world have shut units or cut back to minimum processing levels because of a plunge in demand because of the coronavirus. The pandemic has caused the global aviation industry to virtually shut down and kept motorists off the roads.

Overall global fuel demand is expected to drop by 20% to 30% in April and remain weak for months after that.

Gallup will be the second North American refinery to idle amid the coronavirus pandemic. North Atlantic Refining Ltd’s 130,000-bpd Come-by-Chance refinery in Canada said it was pausing production at the end of March.

As MRC wrote previously, a portion of Marathon Petroleum Corp’s 363,000 barrel-per-day Carson refinery in California was shut in late February 2020, following a fire.

We also remind that the gasoline-producing unit at Marathon Petroleum Corp’s 585,000-barrel-per-day (bpd) Galveston Bay Refinery in Texas City, Texas, remained shut for six weeks for repairs in late Juney-early August 2019. The 140,000-bpd gasoline-producing Fluidic Catalytic Cracking Unit 3 (FCCU 3) was shut on June 29 2019 to repair a leak. The refinery’s 65,000 bpd reformer, called Ultraformer 4, was also shut down.

Propylene is the main feedstock for the production of polypropylene (PP).

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.
MRC

MOSCOW (MRC) -- Nigeria has decided to shut down all its oil refineries as it works to secure funding and a model to upgrade them, reported Reuters with reference to the head of Nigerian National Petroleum Corporation's (NNPC) statement.

The three refinery sites in Africa’s largest oil exporter have worked only sporadically due to years of underinvestment. It has been working to revamp them, but has struggled to find external financing to do so.

“Today, after proper scoping, which was not done in the past, we know exactly what to do to get them back on stream,” NNPC head Mele Kyari said.

Nigeria, Africa’s largest oil exporter, is scrambling to cut nearly USD5 billion from its budget amid an oil price crash brought on as coronavirus lockdowns slashed global demand and a market-share battle between Russia and Saudi Arabia flooded the world with oil. This week it also sought nearly USD7 billion from international lenders.

In statements posted on Twitter, Kyari said the oil industry will look to cut costs and extend payments wherever possible to survive oil prices that hit 18-year lows late last month.

Running Nigeria’s refineries is costly, as they are decades old and poorly maintained, and even world-class refineries are cutting output due to falling fuel prices.

While Kyari said they had secured funding without providing details, several previous deals - including with oil traders - to fund repairs have fallen through, and a source close to the discussions told Reuters other funding had yet to be confirmed.

Kyari said NNPC was pursuing “a different model” for the refineries, including the type used by Nigeria LNG, which is run by international companies such as Shell, Total and Eni alongside NNPC.

Price caps have forced NNPC to import nearly all the gasoline the nation comsumes. While Kyari also said Nigeria had eliminated subsidies, experts said that the retention of price caps meant the government could incur costs again when international fuel prices rebound.

Kyari also expressed optimism that a meeting this week between OPEC and other producers could yield a fresh deal to shore up oil prices. The group is due to hold a video conference on Thursday at 1400 GMT.

“We believe the ongoing engagements between global oil producers will bring back demand and once that happens, the market will balance and fully recover by year-end,” he said.

As MRC wrote before, Shell said Monday it will not move ahead with its planned equity interested in the Lake Charles LNG project in Louisiana, citing difficult market conditions, and that its partner, Energy Transfer, would instead take over as the project's developer.

As MRC informed earlier, 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