Hit by oil crash, Indonesia set to delay B40 biodiesel

MOSCOW (MRC) -- Indonesia is likely to delay plans to raise bio-content in palm oil-based biodiesel to 40%, and keep going with an already ambitious 30% content, a senior official said, amid speculation that low crude prices could force a government re-think, said Hydrocarbonprocessing.

The biodiesel programme is a key part of the government’s strategy to soak up excess supplies of palm oil and curb expensive fuel imports, one of the main contributors to the country’s current account deficit problem. Some traders had questioned whether it was still viable for the government to continue its programme following the historic drop in crude oil prices earlier this year.

But Musdhalifah Machmud, a deputy minister at the Coordinating Ministry of Economic Affairs said on Friday the policies were under discussions and would soon be disclosed by President Joko Widodo. “It will not be a single policy, but there will be several policies that are interrelated to one another,” Machmud said.

Late last year, Indonesia raised the bio-content in its biofuel mandate to 30% (B30), the highest palm-based content in biodiesel ever used. Machmud said the policies are aimed at keeping B30 going until 2021, while the plan to increase the bio-content to 40% (B40) will likely be delayed to 2022 due to disruption to world fuel demand caused by the coronavirus pandemic.

"We were preparing for B40, but the current situation is not conducive for investment in processing B40,” she said. “B40 will be delayed to 2022." In January, the energy ministry had planned to start road tests for B40 in April and had looked at rolling out the upgrade as early as next year.

“The schedule has been disrupted by work-from-home and movement restriction policies. We are waiting for conditions to return to normal to resume testing,” Dadan Kusdiana, head of research and development at the energy ministry, told Reuters.

Indonesia reported its first COVID-19 cases early in March and since then many areas, including the capital Jakarta, has imposed movement restrictions. In February, the government has said it was planning to raise palm oil export levies to support the biodiesel programme as the price gap between biodiesel and standard gasoil - as diesel is called in Asia - had widened.

Indonesia collects levies to help finance its palm oil programmes, including biodiesel subsidies and replanting programmes for smallholders. The Estate Crop Fund, an agency in charge of collecting and managing the levies, disburses funds to subsidise biodiesel makers.

Ethylene and propylene are feedstocks for producing PE and 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) -- JXTG Nippon Oil and Energy has brought on-stream its cracker following a turnaround, according to Apic-online.

A Polymerupdate source in Japan informed that, the company resumed operations at the cracker on April 28, 2020. The cracker was shut for maintenance on February 27, 2020.

Located at Kawasaki in Japan, the cracker has an ethylene production capacity of 460,000 mt/year and propylene production capacity of 235,000 mt/year.

As MRC reported earlier, JXTG Nippon Oil & Energy shut its cracker in Kawasaki on June 8, 2018 owing to technical issues. The cracker remained off-line for around 10 days. Located at Kawasaki in Japan, the cracker has an ethylene production capacity of 448,000 mt/year and propylene production capacity of 273,000 mt/year.

Besides, it was taken off-line on December 10, 2018 for maintenance work. The cracker is likely to remain off-line for around 8-10 days.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- At least three Indian refiners have curbed oil imports from Middle East producers, including Saudi Arabia, for May because of storage constraints as local fuel demand slumped following the coronavirus outbreak, reported Reuters with reference to company officials' statement.

This is the second consecutive month that Indian refiners have cut their long-term crude imports as space to store excess oil is running out because companies are cutting their processing as stay-home measures to curb the spread of the virus have slashed fuel demand.

One of the refinery officials said his company has cut May purchases from Saudi Arabia by about 80%, while an official at a second company said it will take 66% less oil from Saudi Arabia in May compared with their average monthly purchases from the country.

For crude supplied by Abu Dhabi National Oil Co, the first refinery official said his company will take just one cargo in May instead of an average of two each month, while the second refinery official plans to receive some deferred cargoes from April and has nominated only one cargo for May.

ADNOC has already reduced crude supplies for May after OPEC+ decided to cut output.

Both officials said their companies will take about 75% less crude from Kuwait Petroleum Corp (KPC) in May compared to their average monthly purchases.

"There is no demand, so purchases are low," said the source at the first refiner.

A source at the second Indian refiner said that Saudi Arabia is willing to accommodate demand for extra oil although his company doesn’t want more for May.

Iraq is also offering one less cargo than the second Indian refiner, which had a monthly requirement of three to four cargoes, a source at the company said.

An official from a third Indian refinery said his company would be taking less oil from the Middle East in May than their typical monthly average as demand has dwindled, without disclosing the volume.

"There is no demand...our tanks are full and crude processing has declined due to low demand," the source said.

State-run refiners have sold excess cargoes to the federal government for filling strategic reserves.

Many Indian refiners have issued prompt tenders to export fuel and have almost halved refinery runs after local demand slumped. India’s fuel demand fell by about 50% in the first half of April.

The Indian refinery sources declined to be named because of the sensitivity of the matter. Saudi Aramco and ADNOC declined to comment and KPC and Iraq’s oil marketing company SOMO did not respond to Reuters’ request seeking comments.

A source from one of the Middle East producers confirmed the lower demand for crude in India.

"Some Indian refiners have cancelled their shipments for April and May. They will take these cargoes in the later part of the year to meet their annual commitment," said the source.

"Some losses we will bear and some (losses) they (the buyers) have to share," he said.

Revenues of key oil producers have crashed after a plunge in oil prices as demand has shrunk due to lockdowns and economic slowdowns during the coronavirus pandemic. The Organization of the Petroleum Exporting Countries and its allies, including Russia, announced sweeping cuts in production, amounting to almost 10% of global supplies. Demand has dropped as much as 30%.

As MRC informed earlier, India to consider imposing a 15% "Covid-19" import tax on chemicals to help protect its domestic industry from major exporting nations in East and SE Asia. The domestic industry has been badly affected by a major demand slump as a result of nationwide coronavirus lockdown. The proposed tax will be added in addition to current import duties. The committee is also proposing that all duties and taxes on exports be refunded for domestic manufacturers.

With possible exemptions for ethylene, paraxylene (PX), ethylene dichloride (EDC) and vinyl chloride monomer (VCM), the recommendation covers all other chemicals and petrochemicals imported by India.

India is a major chemicals importer, including polymers, monomers and solvents. If introduced, the new tax would impact domestic importers and distributors.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- Oil rose above USD31 a barrel on Wednesday as hopes for a recovery in demand as some countries ease coronavirus lockdowns offset a report showing a higher-than-expected rise in US inventories, reported Reuters.

Brent crude has almost doubled since hitting a 21-year low reached on April 22, supported by expectations demand will recover and by a record supply cut led by the Organization of the Petroleum Exporting Countries.

Brent was up 79 cents, or 2.6%, at USD31.76 a barrel at 0930 GMT, having risen in the past six sessions. West Texas Intermediate (WTI) crude added 88 cents, or 3.6%, to USD25.44.

“Clearly, the optimism of the re-opening of the global economy has supported the oil rally,” said Naeem Aslam, analyst at Avatrade.

But in a reminder that a supply glut persists, the American Petroleum Institute said on Tuesday that US crude inventories rose by 8.4 million barrels last week, more than analysts expected.

"We’re talking about normalisation of supply and demand but we’ve got a long way to go," said Lachlan Shaw, National Australia Bank’s head of commodity strategy.

Italy, Spain, Nigeria and India, as well as some US states began allowing some people to go back to work and opened up construction sites, parks and libraries.

Germany’s federal government and 16 states have agreed on ways to ease the lockdown.

The easing of lockdowns should lead to a recovery in global oil demand, which in April was expected to collapse by at least 20%, an unprecedented drop, as governments told people to stay at home.

To tackle the resulting glut, OPEC and its allies agreed to a record oil output cut of 9.7 million barrels per day, about 10% of pre-coronavirus demand. That reduction began on May 1.

For now though, soaring inventories are a reminder of excess supply lingering in the market.

Traders will be looking for confirmation of the API’s inventory report when the official US government figures from the Energy Information Administration come out later on Wednesday.

"We would tend to agree that the market has bottomed out, but would caution against getting overly excited about this," said analysts at JBC Energy. "The data trundling in for April really is shockingly bad."

As MRC informed earlier, global oil consumption cut by up to a third. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- HollyFrontier has cut production at the independent U.S. refiner’s five refineries, with a combined crude oil throughput of 457,000 barrels per day (bpd), by an average 30% because of low demand amid the coronavirus crisis, a top executive said, said Hydrocarbonprocessing.

The company plans to operate its refineries at that level of production, which is in a range between 300,000 to 340,000 bpd, for the rest of the quarter, Senior Vice President Thomas Creery said.

U.S. refiners are cutting output, especially of gasoline, amid sharply lower demand for fuels due to travel and business restrictions due to the virus. On Tuesday, Marathon Petroleum Corp, the largest U.S. refiner by capacity, said it plans to run its 15-refinery network about 32% below its 3.02 million-bpd capacity. Marathon has idled two smaller refineries in California and New Mexico.

Fuel demand has plunged by as much as 30 million bpd - or 30% - as efforts to fight the COVID-19 pandemic have grounded aircraft, reduced vehicle usage and pushed economies worldwide toward recession.

The United States on Thursday reported the number of people applying for unemployment benefits rose 3.169 million in the week ended May 2, bringing the total seeking benefits to about 33 million since March 21.

Creery declined to say by how much gasoline demand fell in the mid-continent and Rocky Mountain markets that HollyFrontier supplies from refineries in those areas.

Gasoline demand has increased between 10% and 15% in the past few weeks, he said. “But the geography we serve tends to be opening more quickly than some of the coastal geographies,” Creery said. “So we see that as a positive, but it’s a tough call in terms of the pace or the trajectory."

Ethylene and propylene are feedstocks for producing PE and 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