COVID-19 - News digest as of 14.05.2020

1. SOCAR to supervise OPEC+ oil production cut

MOSCOW (MRC) -- On 9 April 2020, 23 member countries of OPEC+ discussed the economic recession caused by Covid-19 pandemic and agreed to cut oil production by 9.7 million bpd from 1 May 2020, in order to balance supply and demand on the global market, according to WorldPipelines. The Republic of Azerbaijan, as a member of OPEC+, participated in the meeting and, along with other countries, committed voluntarily to production cuts in relevant proportions.


MRC

Formosa delays start-up of new LDPE plant in Texas

MOSCOW (MRC) -- Formosa Plastics USA, part of Formosa Petrochemical, has once again delayed the startup of its 400,000 tons/year low density polyethylene (LDPE) plant in Point Comfort, Texas, US, reported NCT with reference to market sources.

The plant is now expected to become on-stream by late July or early August. The decision reportedly came after some workers tested positive for the coronavirus, which led to a reduction in workforce.

The new LDPE plant was originally due to become operational by the end of 2019 but it has been delayed multiple times since then.

As MRC reported earlier, 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 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.

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).
MRC

ExxonMobil boosts production of PP for medical masks, gowns and hand sanitiser

MOSCOW (MRC) -- ExxonMobil said it has increased production of critical raw materials for masks, gowns and hand sanitiser used by medical professionals and first responders leading the efforts to combat the global Covid-19 pandemic, according to Refining&Petrochemicals.

The company has increased its capability to manufacture specialised polypropylene (PP), used in medical masks and gowns, by about 1,000 tonnes per month, which is enough to enable production of up to 200 million medical masks, or 20 million gowns.

Monthly production of isopropyl alcohol - a key ingredient in many disinfectant and hand sanitiser products - has been increased by 3,000 tonnes, which is enough to enable production of up to 50 million 4-ounce bottles of medical-grade hand sanitiser.

"We are increasing our manufacturing capabilities to meet this critical need to help keep doctors, nurses and first responders healthy and safe," said Karen McKee, president of ExxonMobil Chemical Company. "Our team has been working around the clock, applying our engineering and technical know-how and working with our customers to make this happen. We are committed to doing our part to support the global response to the Covid-19 pandemic."

The additional PP will be made at sites in Baytown, Texas; Baton Rouge, Louisiana; and Singapore and help meet high demand for other critical hygiene and health care items. Production of isopropyl alcohol, also known as rubbing alcohol, is being maximised at the company’s site in Baton Rouge.

Meanwhile, the company is supporting development of innovative new products to help in the pandemic response. Working with the Global Center for Medical Innovation, ExxonMobil earlier this month announced multi-sector and joint-development projects to rapidly redesign and manufacture reusable personal protection equipment, such as face shields and masks, for health care workers.

As part of that effort, ExxonMobil is applying its deep knowledge and experience with polymer-based technologies, in combination with the centre, to facilitate development and expedite third-party production of safety equipment that can be sterilised and worn multiple times.

The centre is awaiting approval from the US Food and Drug Administration for a new face mask design, which features a replaceable cartridge system that includes a filtration fabric. When approved, production will begin immediately and could produce as many as 40,000 ready-to-use masks and filter cartridges per hour.

Given the unprecedented global pandemic, isopropyl alcohol and polypropylene are being prioritised at chemical manufacturing facilities; however, ExxonMobil anticipates it will continue to meet its contractual commitments to manufacture other chemical products.

As MRC informed before, in September 2019, ExxonMobil announced plans to spend GBP140 million over the next two years in an additional investment program at its Fife ethylene plant, which has a capacity of more than 800,000 t/y.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world's oil and about 2% of the world's energy.
MRC

LyondellBasell cuts rates across system on lower demand amid coronavirus

MOSCOW (MRC0 -- Global petrochemical producer LyondellBasell has reduced rates across its system to accommodate lower demand wrought by shutdowns around the globe to stem the spread of the coronavirus pandemic, reported S&P Global with reference to CEO Bob Patel's statement.

LyondellBasell's overall global petrochemical and refining assets were expected to operate at 60% to 80% of nameplate capacity through the second quarter, Patel said during the company's first-quarter earnings call. European crackers were seen running at 80% to 85%, while US crackers were expected to run at about 75%, he said.

"Everything was fine until mid-March when durable demand stopped as social distancing mandates were enforced," Rob Stier, senior manager of petrochemical analytics at S&P Global Platts, said after the call.

LyondellBasell was among several global petrochemical producers to announce quarterly results on Friday. Others included ExxonMobil, Phillips 66 and Eastman Chemical. As expected, efforts to adapt operations and cut costs as the pandemic crushed oil demand and bruised the energy complex were common themes for those four and others who already have unveiled first-quarter results.

"Q1 was normal with increasing consumer packaging demand," Stier said. "However, Q2 will not be normal and economic run cuts are already being announced as expected to manage inventories."

Petrochemical producers have seen strong demand for some plastics used for food packaging and medical devices, such as melt-blown fabric medical face masks. But automotive plant shutdowns and sharp slowdowns in construction crushed for plastics used in vehicles and homebuilding or butadiene to make rubber.

Phillips 66 CEO Greg Garland said the Chevron Phillips Chemical, the joint venture of Phillips 66 and Chevron, aimed to run its plants at 90% capacity through the second quarter. However, he also said CP Chem and Qatar Petroleum had delayed a final investment decision on a new petrochemical facilities, including crackers and derivative plants, on the US Gulf Coast and in Qatar, to 2021 from this year given pandemic uncertainties.

ExxonMobil CEO Darren Woods said the company's petrochemical complex in Baton Rouge, Louisiana, had reconfigured operations to produce, blend, package and distribute medical-grade hand sanitizer and was designing new reusable face masks and face shields to combat the virus.

And Eastman CEO Mark Costa said the company was "adjusting our operations to the current demand environment" reducing spending and deferring some turnarounds on expectations of volumes falling 15% to 20% in the second quarter.

"There's just a phenomenal amount of uncertainty when we don't even know when the US and Europe are going to restart yet," Costa said. "We can get people back to work in a lot of companies, but it's really a question of what consumers are going to do. Are they going to go back to restaurants, back to their normal life activities, travel, shop in retail stores, buy cars?"

Those behaviors will dictate when auto and tire plants start up and how housing markets will play out, he said.

Patel said consumer-driven demand for resins used in packaging and healthcare, such as food packaging and test kits, supported relatively stable polyethylene margins as virus responses spread worldwide. LyondellBasell ramped up its new 500,000 mt/year polyethylene plant in La Porte, Texas, in the first quarter.

The need for plastic packaging switched to smaller sizes in grocery stores rather than bulk as restaurants shut down, leaving consumers to buy groceries and takeout, Patel said. Demand for frozen, dairy and packaged food has risen 30%, he added.

But demand for oxyfuels and intermediates plunged as shutdowns sharply reduced driving, reducing the need for fuel additives and plastics used in vehicle manufacturing.

That leaves LyondellBasell wary of taking too much advantage of naphtha, the chief feedstock for crackers in Asia and Europe, which has become much more competitive with ethane as a cracker feedstock. Naphtha is priced off of oil, so the oil price plunge brought naphtha down with it.

US and Middle East crackers favor ethane, a natural gas liquid priced off of natural gas. As oil and gas production has declined amid much weaker demand and shrinking storage availability, less ethane availability has boosted prices, leaving it less competitive with naphtha.

LyondellBasell's cracker network has flexibility to increase naphtha and liquefied petroleum gas runs while reducing ethane feeds. But while ethane yields mostly ethylene, used to make resins that are used to manufacture the most-used plastics in the world, naphtha yields less ethylene per gallon and more coproducts that are low in demand in the coronavirus environment. One of those coproducts is butadiene, a building block for tires.

"We'll crack liquids up to a point where we can move the butadiene and I think that's already globally been restricting the amount of naphtha that's being cracked," Patel said.

Even though some pandemic-related shutdowns have begun to ease, leading to more driving and tire replacement, Patel sees potential butadiene oversupply from naphtha cracking "to be a constraint through most of this year."

As 350,000 b/d of US ethane production has been rejected before oil and gas producers started pulling back on output, he said. The amount rejected would be the first to decrease with output cuts. If supply were still seen "snug" with rising prices, crackers with flexibility would switch to other feedstocks, such as liquids and LPGs, Patel said.

"Beyond that, some of the exports could even get shut off for ethane," he said. "So it seems to me that what we're really trying to think through is could we have another spike as opposed to a sustained period of high ethane prices. In the end, we continue to believe that there's an abundance of ethane available in the US and higher prices will just attract more investment and more supply of ethane over the long term."

As MRC wrote before, to further aid in the fight against the COVID-19 pandemic, LyondellBasell (LBI) donated a key ingredient to Huntsman Corporation to produce hand sanitizer for US first responders.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

Formosa plans maintenance at No..1 SM plant in Taiwan

MOSCOW (MRC) -- Formosa Chemical and Fibre Corp (FCFC), part of Formosa Petrochemical, is likely to undertake a planned shutdown at its No. 1 Styrene monomer (SM) unit in Mailiao, according to Apic-online.

A Polymerupdate source in Taiwan informed that, the company has scheduled to start a turnaround at the unit by mid-May, 2020. The unit is likely to remain under maintenance for about 45 days.

Located in Mailiao, Taiwan, the No. 1 unit has a production capacity of 250,000 mt/year.

As MRC informed 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 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.

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).
MRC