Valero refineries to run up to 73% of combined capacity in Q2 2020

MOSCOW (MRC) -- Valero Energy Corp plans to operate its 15 refineries up to 73% of the combined total throughput capacity of 3.1 million barrels per day (bpd) in the second quarter of 2020, reported Reuters with reference to Homer Bhullar, vice president of investor relations.

Valero has reduced production at several refineries as demand fell because of stay-at-home orders to stem the spread of the coronavirus.

The company, which is the second-largest refiner in the United States by capacity, has begun to see an increase in demand in the US Gulf Coast and Midwest as states in those regions begin to lift stay-at-home orders.

"It kind of got to the point where we were seeing demand about 55% of what we would call normal," said Gary Simmons, executive vice president and chief commercial officer. "So already, it’s about a 9% increase of where we were in early April."

Overall, Valero expects gasoline demand to increase gradually, Simmons said.

"We see a fairly gradual recovery in demand, but gasoline demand getting back close to where it was the pre-COVID," he said. "On the jet side, I think we believe that the lower jet demand is probably here with us longer."

Ethan Bellamy of R.W. Baird sounded a cautious note about optimism for the recovery.

"There’s a rebellious attitude among the less infected areas as people demand to go back to work," Bellamy said. "That may backfire dramatically, or it could spark the recovery. I don’t think anyone really knows how that will play out."

COVID-19 is the disease caused by the coronavirus and has infected more than 1 million people in the United States and caused more than 58,000 deaths.

Among the steps Valero took to cut production as demand dropped off was to idle the 92,000-bpd gasoline-producing fluidic catalytic cracker (FCC) at its St. Charles refinery in Norco, Louisiana, said Lane Riggs, president and chief operating officer. The FCC had just finished an overhaul.

The company also pushed some discretionary maintenance projects at its refineries into 2021, Riggs said.

As MRC wrote previously, two workers at Valero's Port Arthur refinery were tested positive for the coronavirus in early April 2020. Valero, the second largest refinery company in the United States, cut nonessential work and related contractors in the first week of April after initiating temperature checks last week - much later than than its peers in the industry.

Besides, in late March 2020, an employee at Valero Energy Corp’s Meraux, Louisiana, refinery was tested positive for the coronavirus.

We also remind that 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.
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MOSCOW (MRC) -- Oklahoma’s governor has called on U.S. President Donald Trump to declare the coronavirus pandemic an “act of God,” a step to help oil-producing states contend with a crude glut that caused futures prices to close below USD0 last week for the first time, said Reuters.

“Over-production of oil continues to threaten the economy,” Governor J. Kevin Stitt said in a letter to Trump that Stitt posted on Twitter late on Saturday.

Declaring a “force majeure” or “act of God” would allow oil companies to halt operations without risking that land leases will be canceled for stopping production, Stitt said.

Oklahoma’s energy regulator said on Wednesday that producers could close money-losing wells without losing their leases, the first victory for struggling U.S. oil companies seeking relief from states after the market crash.

U.S. production reached a record-high of near 13 million barrels per day late last year, but the pandemic has cut global consumption by 20% to 30%, or up to 30 million bpd.

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) -- Hyosung Group has signed a Memorandum of Understanding (MoU) with Linde to build a liquid hydrogen plant in South Korea, according to Chemicals Technology.

The two companies also agreed to jointly invest KRW300bn (USD250m) by 2022 to create a value chain, involving liquid hydrogen production, storage, transport and recharging facilities.

The liquid hydrogen plant will be located on a 30,000m area within the site of Hyosung Yongyeon plant in Ulsan. The facility will have an annual production capacity of 13,000t of liquid hydrogen.

According to the company, the plant will be the single largest liquid hydrogen manufacturing facility in the world.

Construction work is scheduled to begin in the first quarter of next year and to be completed in 2022.

Meanwhile, Hyosung and Linde will invest in building liquid hydrogen recharging infrastructure. As agreed, the two companies will set up around 120 hydrogen recharging stations across the country, including 50 new units and 70 enlarged stations.

Hyosung Chairman Cho Hyun-joon said: "Hydrogen is an eco-friendly energy source that can change existing carbon-centred economic structure. Its possibilities are endless.
"The point of liquid hydrogen business sought by Hyosung is to store and transport hydrogen efficiently and safely. Investment this time will play a big role in invigorating the ecology of domestic hydrogen industry."

The new hydrogen plant will leverage Linde’s hydrogen liquefaction technology and system to produce liquid hydrogen.

Liquid hydrogen has several uses in mobility segments, including its use as a fuel for cars.

We remind that, as MRC informed earlier, LyondellBasell, the world’s largest licensor of polyolefin technologies, has recently announced that Hyosung Vina Chemicals Co., Ltd. will use the LyondellBasell Spheripol technology for a new facility. The process technology will be used for a 300 KTA polypropylene (PP) plant to be built in Cai Mep Industrial Zone, Vung Tau Province, Vietnam.

According to MRC's ScanPlast report, 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.

MOSCOW (MRC) -- Asian gasoil markets will continue to face headwinds over the next few months even as refineries cut processing rates further and economies gradually start picking up as the coronavirus pandemic becomes contained, Hydrocarbonprocessing said.

Sluggish industrial activity and travel restrictions due to extended lockdowns, alongside disruptions to global supply chains, could cut gasoil demand by more than 4 million barrels per day in the second quarter from the same period in 2019, depressing refiners’ margins, they said.

Refining margins, also known as cracks, for gasoil with a sulphur content of 10 parts per million (ppm) slid to a record low of USD2.83 a barrel over Dubai crude this week.

The gasoil crack, which until last month showed resilience when the downward spiral engulfed jet fuel and gasoline, is currently one of two oil products that yield positive margins in the refining complex. However, it has shed over 67% in the last one month, prompting refiners and traders to worry that the worst might be yet to come. Gasoil and jet fuel, or middle distillates, account for about 40% of refiners’ output.

“Weakening cracks, plus worries over the availability of off-takers, is prompting more Asian refineries to consider additional run cuts,” said Sri Paravaikkarasu, director for Asia oil at consultancy FGE.

“Even with this, Asian gasoil length should be some 900,000 barrels per day (bpd) higher y-o-y over May. Consequently, Singapore 10-ppm gasoil cracks should face more headwinds in the near term, before stabilizing in late-June/July."

An ongoing shift in refinery yields away from the beleaguered products such as jet fuel and gasoline partially offsets the reduction in gasoil output from ongoing refinery run cuts, analysts said.

Rystad Energy expects COVID-19 to remove nearly 4 million bpd of road diesel demand worldwide in the second quarter, and diesel demand in other sectors to drop by another 1.2 million bpd.

Subdued demand in major domestic markets including India and China would likely force these countries to export more fuel into the region, which is already grappling with supplies, trade sources said.

“The lockdown in India is expected to negatively impact diesel cracks in the region as the drop in domestic consumption will free more diesel for exports,” said Rystad senior oil market analyst Paola Rodriguez-Masiu. “The progressive recovery of China will offer some support to diesel cracks, but weakness is expected to persist until the end of third quarter 2020."

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) -- Construction on Nan Ya Plastics' 800,000 mt/year ethylene glycol plant in Texas has been suspended, and the company does not have a timeline to resume the work amid coronavirus pandemic uncertainty, reported S&P Global with reference to a spokesman's confirmation Tuesday.

"We are currently evaluating the schedule to resume construction on the new EG plant," Formosa Plastics USA spokesman Fred Neske said in an email. "A timeline is not yet available."

The new plant had been expected to come online in the third quarter of this year. Construction was halted in March.

Other companies that have suspended or slowed construction on large projects amid the pandemic include Shell at its new petrochemical complex in southwest Pennsylvania, NOVA Chemicals' new polyethylene (PE) plant and an ethylene expansion in Ontario and LyondellBasell's new propylene oxide/tertiary butyl alcohol facility near Houston.

The new glycols plant at Formosa's Point Comfort, Texas, complex will be owned by Nan Ya Plastics, a division of Formosa Plastics Group in Taiwan. Formosa Plastics Group also is Formosa Plastics USA's parent.

Nan Ya owns the complex's existing 370,000 mt/year glycols unit.

Neske also confirmed that 10 employees and seven contractors at the complex have tested positive for the novel coronavirus. The infections are being addressed through testing, tracing and isolation, he said, and the contractors are following their own company protocols, including isolation.

The employees who tested positive worked at the same unit, which Neske declined to identify. He said production rates have not been reduced, nor have shifts been eliminated, and the company has been able to adjust to staffing issues with existing personnel.

A source familiar with company operations said the affected employees were affiliated with a cracker at the complex, and colleagues they may have been in contact with were also self-isolating. However, the company's ongoing turnaround at its 680,000 mt/year Olefins 1 unit allowed existing staff to cover shifts of isolating employees without affecting output, the source said.

As MRC reported before, Formosa Plastics' new 1.5 million mt/year cracker in Point Comfort, Texas, came online in H1 January, 2020, and was seen ramping up through January.

Ethylene and propylene are feedstocks for producing 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.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
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