Formosa Plastics encountered cracked PP storage tank in Linyuan plant

MOSCOW (MRC) -- On 15 May 2020, a fire broke out at Formosa Plastics plant in Linyuan, Taiwan that was brought under control within twenty minutes, reported CommoPlast.

The initial investigation found that the fire was a result of a faulty safety valve at the granule storage tank at the polypropylene (PP) unit.

According to the company, the (T-913B) storage tank stowed PP pallets produced from 7 PM on 14 May 2020 to 6 AM on 15 May 2020.

There is no further information on the operation status of the plant at the time of the report, however, the company does not expect any major impact of the incident on the market as it has sufficient inventories to meet the market requirement.

As MRC informed earlier, Formosa Plastics, part of Formosa Petrochemical, conducted a scheduled turnaround at its PP plant in Linyan from mid-June to mid-July 2019.

According to MRC's ScanPlast report, Russia's 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

Brent oil market structure, physical rally could draw oil from storage

MOSCOW (MRC) -- The oil futures market is pricing in tighter supplies due to OPEC-led production cuts and recovering demand as lockdowns to contain the coronavirus outbreak are eased, suggesting a huge inventory buildup could slow and start to be drawn down, reported Reuters.

Brent crude futures for July are trading at the smallest discount to the contract six months in the future since March. A price structure where oil for immediate delivery is cheaper is called contango. A narrowing contango usually points to supplies becoming more constrained.

At the same time, the price of North Sea physical oil compared with dated Brent - the benchmark used to price most of the world’s cargoes - has recovered from historic discounts and is moving toward parity.

The changes arise against the backdrop of supply cuts led by the OPEC+ group of oil producers and reductions by other producers, such as the United States. Government lockdowns to limit the spread of the coronavirus have also begun to be eased, pointing to a recovery in fuel use.

"The supply and demand balance is tightening," said Olivier Jakob, analyst at Petromatrix. "The physical market is moving towards some rebalancing and away from the heavily over-supplied condition."

The record contango that arose due to the collapse in demand caused by the lockdowns had encouraged a vast buildup of oil in storage that had strained available storage capacity and led to a record amount held in ships at sea.

Now the incentive to keep adding to storage has weakened. Crude traders said demand for oil for immediate delivery had increased, as supply cuts had surprised on the upside.

"There is an improvement. People are getting back to work," a North Sea trade source said. "Hopefully we’ll see some crude that’s in storage being drawn on."

Another trade source said the narrowing contango was creating a temptation to offload some stored crude, or at least to swap the oil being held in tanks for another grade if it was in higher demand.

Still, the physical rally could have run too fast. Eugene Lindell, analyst at JBC Energy, said a drop in refinery profit margins could put a brake on the gains.

"The physical differentials are currently doing very well," said. The big fly in the ointment is that crude buying interest is ebbing given weak refinery margins on the back of elevated product stocks. Hence, we are cautious on the sustainability of this mini rally - at least in the short term."

As MRC informed previously, 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

COVID-19 - News digest as of 18.05.2020

1. Solvay to close composite plants amid deepening aerospace crisis

MOSCOW (MRC) -- Solvay SA said it will close two plants making composites for Airbus SE and Boeing Co. in a sign the deepening aerospace crisis is hitting suppliers of even the latest aircraft materials, reported Bloomberg. The Belgian chemical maker is adding to savings achieved in the past year following the grounding of Boeing’s 737 Max. The latest measures from Solvay Chief Executive Officer Ilham Kadri will lead to about 570 job cuts, or 20% of the workforce in Solvay’s composites unit, the Brussels-based company said Friday. The closure of sites in Manchester, England, and Tulsa, Oklahoma, mark the latest example of a permanent downsizing now taking place across in the aircraft industry.

MRC

Mitsubishi Chemical starts turnaround at Kashima cracker

MOSCOW (MRC) -- Mitsubishi Chemical has undertaken a planned shutdown at its naphtha cracker in Japan, according to Apic-online.

A Polymerupdate source in Japan informed that, the company commenced turnaround at the cracker on May 9, 2020. The cracker is likely to remain under maintenance till end-June, 2020.

Located at Kashima, Japan, the cracker has an ethylene production capacity of 540,000 mt/year and a propylene capacity of 270,000 mt/year.

As MRC reported previously, the company last started a two-month maintenance at this cracker in H1 May, 2018.

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.

Mitsubishi Chemical with headquarters in Tokyo, Japan, is a diversified chemical company involved in petrochemicals, polymers, agrochemicals, speciality chemicals and pharmaceuticals. The company's main focus is on three business pillars: petrochemicals, performance and functional products, and health care.
MRC

Sinopec SABIC Tianjin Petrochemical shut cracker for maintenance

MOSCOW (MRC) -- Sinopec SABIC Tianjin Petrochemical Co. (SSTPC), a 50-50 joint venture of Sinopec and SABIC, has shut its naphtha cracker in Tianjin on 1 May 2020 for routine maintenance work, reported CommoPlast.

The cracker is expected to remain off-line until early July 2020.

The naphtha cracker is designed to produce 1 million tons/year of ethylene, which supplies several local buyers in the Tianjin area.

Besides, the company is also planning to expand its cracker capacity to 1.3 million tons/year in 2021.

Thus, as MRC informed earlier, in October 2019, SSTPC began construction on an ethylene expansion project in Tianjin Province, China. The project will boost the company's ethylene capacity to 1.3-million t/y from 1-million t/y currently. Cost and a schedule for the project were not given.

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.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.

Saudi Basic Industries Corporation (Sabic) ranks among the world"s top petrochemical companies. The company is among the world"s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
MRC