Russian idle oil refining capacity seen sharply falling in June

MOSCOW (MRC) -- Russian offline primary oil refining capacity is seen declining in June to 1.583 million tons from an upwardly revised plan of 4.168 million tons expected in May, reported Reuters with reference to energy ministry data, as seasonal maintenance comes off its peak.

The data for May was revised up from the previous plan of 3.5 million tonnes.

The data also showed idle capacity reached 3.551 million tonnes in April.

As MRC informed earlier, the rapidly rising price of Russia’s flagship Urals blend oil has forced European refineries to cut purchases from Moscow and look for crude supplies elsewhere.

We remind that Russia may further cut overseas supplies of its Urals oil next month due to rising demand from domestic refineries as coronavirus-related restrictions ease.

We also remind that global oil consumption cut by up to a third in Q1 2020. 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.

As MRC reported before, 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 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) – According to the American Chemistry Council (ACC), the U.S. Chemical Production Regional Index (U.S. CPRI) tumbled 3.1% in April following a 1.0% decline in March and a 0.4 percent decline in February, said Chemweek.

During April, chemical output fell across all regions, with the steepest decline in the Gulf Coast region. The lower level of chemical activity is directly related to supply chain disruptions and the lockdown of much of the U.S. economy during April.

Production fell across all chemical segments. Within several major segments, however, production of some chemical materials increased, including supply chains tied to personal protective equipment (PPE) and disinfection products.

As nearly all manufactured goods are produced using chemistry in some form, manufacturing activity is an important indicator for chemical demand. With many factories shut down during the month, overall manufacturing activity fell by 6.3 percent on a three-month moving average (3MMA) basis, with declines across all industry sectors – in some cases quite steep.

Compared with April 2019, U.S. chemical production was 5.3 percent lower, the eleventh and highest consecutive month of year-over-year declines. Chemical production was lower than a year ago in all regions, with the largest declines in the Northeast, Mid-Atlantic, and West Coast regions.

We remind that Russia's output of chemical products rose in May 2020 by 4.4% year on year. Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May.
MRC

MOSCOW (MRC) -- Dongguan Grand Resource Science and Technology Co Ltd (JuZhengYuan) is planning to shut its propane dehydrogenation (PDH) plant for scheduled maintenance by the beginning of July 2020, reported CommoPlast with reference to market sources.

Based in Dongguan, China, the company has a PDH plant with production capacity of 600,000 tons/year and two polypropylene (PP) plants with a combined production capacity of 600,000 tons/year.

As MRC informed earlier, Dongguan Grand Resource Science and Tech restarted its PDH plant on January 17, 2020. The plant was shut for maintenance on January 6, 2020.

Propylene is the main feedstock for the production of PP.

According to MRC's ScanPlast report, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Dongguan Grand Resource Science and Technology Co Ltd is owned by Juzhengyuan Energy (Shenzhen, Guangdong, China). On 26 October 2019, Dongguan Grand Resource’s (Dongguan, Guangdong, China) integrated complex for polypropylene production in Dongguan officially started up.
MRC

MOSCOW (MRC) -- Johnson Matthey (JM) announced that Ningxia Baofeng Energy Group has "successfully" commissioned a new methanol plant at Ningxia Baofeng's 600,000-t/y coal-to-olefins complex in Ningxia Province, China, according to Apic-online.

The 6,600-t/d methanol unit, based on technology from JM, utilizes syngas feedstock and combines advanced JM catalysts to produce stabilized methanol, which is used to produce olefins in a downstream facility.

"This project has incorporated processing technologies from the most advanced international and domestic coal-to-chemical units," said Liu Yuanguan, president of Baofeng Energy.

"The unit is the largest methanol plant for a single train with comprehensive advantages of high synthesis and energy efficiency and low OPEX and emissions, benefiting both our society and providing long-term value."

As MRC reported earlier, in late April, 2020, the first phase of Connell Chemical Industry Ltd.'s 600 KTA MTO complex, a 300 KTA MTO plant, successfully started up and produced on-spec ethylene and propylene. This project is the first large-size chemical project brought online during period when Chinais in the process of restarting the economy while fighting COVID-19 pandemic. The MTO plant started feed-in at 8:18 AM on April 15, produced on-spec propylene at 7:00 AM on April 18, and produced on-spec ethylene at 4:00 AM on April 20.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- Borealis, OMV, Verbund, and LafargeHolcim subsidiary Lafarge Zementwerke have signed a memorandum of understanding (MOU) for the joint planning and construction of a full-scale carbon-capture plant in Austria by 2030 that would process carbon dioxide (CO2) into renewables-based feedstock for olefins, plastics, and synthetic fuels, said Chemweek.

The proposed three-phase project, dubbed ‘Carbon2ProductAustria’ (C2PAT), would significantly cut emissions from cement production, establishing CO2 as a valuable raw material, they say in a joint statement. No investment figure for the project has been given at this time.

The collaboration aims to create a cross-sectorial value chain and the operation of a full-scale plant by 2030, with the facility planned to capture almost 100% of the 700,000 metric tons/year of CO2 emitted at a cement plant owned and operated by Lafarge in Mannersdorf, Austria.

The CO2 would, in combination with green hydrogen produced using renewable sources by Verbund, be converted by OMV into renewable-based hydrocarbons. These would then be used by OMV to produce renewable-based synthetic fuel, or renewable-based olefins at its Schwechat refinery to be utilized by Borealis as feedstock at its polymerization plant at Schwechat to manufacture value-added plastics, according to the companies. The partners “aim to investigate a truly circular approach: with Borealis being a key partner, the captured CO2 can be used for the production of renewable-based, value-added plastics. These plastics are especially suited for recycling at the end of their lifetime, and with this, enable a nearly closed CO2 loop,” they say.

The first phase entails the evaluation and development of a joint strategy for project development, business modelling, and process engineering. A second phase could see a cluster of industrial pilot plants in Austria developed by 2023, while the third phase would see a full implementation of the project to the industrial-scale 700,000-metric tons/year target, according to the consortium. The success of the project will “largely depend on whether the right financial and regulatory framework conditions are created both at the EU and Austrian national level," it says.

The project also demonstrates that “economic viability and climate protection go hand-in-hand based on new technologies. CO2 is not just a greenhouse gas that we have to reduce. It is also a valuable raw material from which we can produce synthetic fuels and feedstock for the chemical industry,” says Rainer Seele, chairman of OMV’s executive board and CEO.

“The plastics industry can be a powerful contributor to climate action, through materials replacement that reduces weight, by minimizing food waste, and by shifting to well-designed circularity that reduces CO2 emissions,” says Borealis CEO Alfred Stern.

Verbund, Austria’s largest electricity company, would supply the green hydrogen—produced when water is electrolyzed using electricity from renewable sources—to recycle the CO2. “Green hydrogen offers huge potential for decarbonizing CO2-intensive industrial processes. In order to reach our national and global climate goals we have to collaborate across sectors and join our efforts for decarbonization and climate neutrality,” says Verbund CEO Michael Strugl.

“We have worked consistently and successfully on the reduction of the CO2 footprint of our cement plants, products and solutions. Ultimately, CO2-neutral cement production can only be possible with the implementation of breakthrough technologies, like carbon capture, which is why we have great expectations for the C2PAT project,” says Lafarge CEO Jose Antonio Primo.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.

MRC