Flurry of US crude export fixtures offers glimmer of hope

MOSCOW (MRC) -- A flurry of tentative bookings to export US crude oil from the Gulf Coast suggests demand is edging up after the coronavirus slammed energy consumption worldwide, reported Reuters.

BP, Trafigura and Equinor have all tentatively fixed vessels this past week to carry US crude to global destinations over the coming month, according to Refinitiv Eikon data and shipping sources.

Commodities merchant Trafigura and Occidental Petroleum are among companies looking to book vessels to ship crude from the US Gulf Coast to Asia, one shipbroker said. The US Gulf export market was particularly active last week, with around six ships confirmed with June loading dates, another shipping source said.

Occidental, Equinor and BP declined comment. Trafigura did not immediately respond to requests for comment.

US crude exports plunged as the coronavirus pandemic eroded global demand by 30% in April. Exports dipped to 3.2 million barrels per day (bpd) last week, lowest in a month, the US Energy Information Administration said.

While US crude’s discount to Brent is still narrow, freight rates for supertankers from the US Gulf to Singapore plunged more than 80% from early April to the lowest since August 2019 this month, Refinitiv Eikon data showed. Those rates are currently near USD5.75 million after peaking around USD20 million in late March, sources said.

"Vessel freight rates have been coming down over the last couple of weeks which is re-igniting interest in export opportunities," said Andy Lipow, president of consultants Lipow Oil Associates. He said demand in China and India is expected to keep rising as the countries contain the spread of COVID-19.

Taiwanese refiner CPC Corp purchased 6 million barrels of US West Texas Intermediate (WTI) Midland crude for delivery in August, traders said on Tuesday.

Markets are concerned about rising US-China tensions, traders said, specifically that Washington could slap trade sanctions on China following Beijing’s move to impose a new security law on Hong Kong.

As MRC wrote previously, CPC Corporation shut its No. 3 cracker for a scheduled maintenance turnaround in mid-February 2020. The cracker remained off-stream for around two months. Located at Kaohsiung, Taiwan, the No. 3 cracker has an ethylene capacity of 720,000 mt/year and propylene capacity of 370,000 mt/year.

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

Dow and Orrion to begin recycling polyurethane foam in 2021

MOSCOW (MRC) -- Dow has announced plans to install an "industrial-scale" facility for the chemical recycling of polyurethane mattress foam at Orrion Chemicals Orgaform’s site in Semoy, France, reported Chemweek.

The facility will produce polyols employing process technology developed in collaboration with H&S Anlagentechnik. Dow expects to begin producing the recycled polyols, which will be marketed under the tradename Renuva, during the first half of 2021.

About 30 million mattresses are discarded in Europe each year, says Dow.

"This development will represent a significant step towards achieving circularity for a product which traditionally poses significant challenges for recycling," says Ana Carolina Haracemiv, commercial director/Europe, Middle East, Africa, India at Dow Polyurethanes.

As MRC informed earlier, in mid-May 2020, USA based Dow Chemical announced plans to shut three polyethylene (PE) plants in the USA and Argentina to avoid piling inventories amid sluggish global demand conditions due to the COVID-19 related lockdown.

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.

The Dow Chemical Company is an American multinational chemical corporation headquartered in Midland, Michigan, United States. Dow is a large producer of plastics, including polystyrene (PS), polyurethane, polyethylene, polypropylene, and synthetic rubber.
MRC

BASF places chemical industry first green bond, anchors sustainability in its financing strategy

MOSCOW (MRC) -- BASF says it has successfully issued corporate bonds with a total volume of EUR2.0 billion (USD2.28 billion) on the capital market, including its first-ever placement of a green bond that will be used purely to finance sustainable products and projects, according to Chemweek.

The green bond placement has a term of seven years ending June 2027, a volume of EUR1.0 billion, and an annual coupon of 0.25%, it says. The green bond is the first to be issued by a chemical company, a BASF spokesperson confirms to CW. The other tranche also had an issue volume of EUR1.0 billion, but with a term of three years ending June 2023 and an annual coupon of 0.101%, and will be used for general corporate financing purposes, BASF says. The company was able to secure attractive conditions "thanks to its very solid financial structure and its leading sustainability position," it adds.

"The strong demand from investors for BASF bonds underscores the capital market’s confidence in our solid financial policies and our sustainability-driven corporate strategy," says Hans-Ulrich Engel, BASF’s chief financial officer. "The initial issue of a green bond now firmly anchors sustainability in BASF’s financing strategy as well," he says.

The company says it has established a framework for financing instruments based on sustainability criteria. The green finance framework will enable it to finance sustainable products or projects "offering a clear benefit to the environment and society" via green bonds on the capital market, and are fully aligned with BASF’s corporate purpose, it says.

Environment, social, and governance (ESG) principles are now a major theme in publicly traded chemical companies’ discussions with investors. Tim Balensiefer, BASF’s investor relations manager/sustainability, told CW in March that "financial markets recognize the opportunities of sustainable business approaches and investors are increasingly interested in sustainable business management. We can see a larger group of investors becoming more attached to the ideas of ESG investment."

As MRC reported earlier, BASF has recently announced the commercial launch of Fourtune which is a new Fluid Catalytic Cracking (FCC) catalyst product for gasoil feedstock. Fourtune is the latest product based on BASF’s Multiple Framework Topology (MFT) technology. It has been optimized to deliver superior butylene over propylene selectivity while maintaining catalyst activity and performance.

We remind that BASF has restarted its No. 1 steam cracker following a maintenance turnaorund. Thus, the company resumed operations at the plant on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

Ethylene and propylene are feedstocks for producing 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.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of EUR59 billion in 2019.
MRC

BP licenses PTA technology for large plant in China

MOSCOW (MRC) -- BP has entered into an agreement to license its latest generation technology for the production of purified terephthalic acid (PTA) to China’s Dongying Weilian Chemical Co., Ltd., said the company.

Weilian Chemical is a subsidiary of Dongying United Petrochemical Co., Ltd, one of the leading manufacturers and distributors of petroleum and petrochemical products in China. Weilian Chemical intends to build a 2.5 million tonnes per annum PTA production unit at the Dongying Port Economic Development Zone in eastern Shandong province, adding to Dongying United Petrochemical’s existing refineries and paraxylene (PX) facilities portfolio.

Weilian Chemical selected bp’s proprietary PTA production technology for its new PTA unit after a competitive, global bidding process initiated in 2019. The design phase for the unit is underway and is expected to be completed during the first half of 2020. First production is anticipated by the second quarter of 2022.

"We are pleased to be able to provide bp’s most advanced PTA technology, bpPTAg5, to Weilian Chemical, helping our partners to grow their business to meet the demand for high quality products with a lower carbon footprint. Together, we hope to lay strong foundations for future cooperation,” said Rita Griffin, chief operating officer, bp Petrochemicals.

"Adding a PTA production facility is an important step for our company to accelerate industrial transformation, while improving quality and efficiency. We are delighted to work together with bp, providing us with leading technology and services. With bp’s support, we believe our PTA project will start-up successfully, showcasing the fruitful cooperation between us,” said Li Zhanchen, chairman of Dongying United Petrochemical Co., Ltd.

The key characteristics of the technology licensed to Weilian Chemical have been proven at bp’s Zhuhai plant in southern China, bp’s largest PTA production facility worldwide so far. Based on internal comparisons with conventional PTA technology, there are significant reductions in both operational costs and capital costs, which should help achieve high investment returns. The electricity generated by the Zhuhai plant from applying bp’s technology is expected to result in a surplus that can be transmitted to the external power grid, supporting the energy needs of the local community. bp's anaerobic wastewater technology allows for increased treatment capacity, while its world-class compression process reduces land use.

The Zhuhai plant and technology have also been recognized for environmental performance, receiving Chinese government award. In July 2019, the facility was named “Energy and Efficiency Front Runner” by the China Petroleum and Chemical Industry Federation and was ranked first in China for PTA manufacturing.

China is the world’s largest PTA producer, a key feedstock for the production of polyester plastics, and accounts for more than half of global production.

PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, March estimated PET consumption in Russia was 65,3700 tonnes, up by 1% year on year. Russia's estimated PET consumption decreased in January-March 2020 by 3% year on year to 175,170 tonnes.
MRC

US crude, diesel stocks pile up on lackluster fuel demand

MOSCOW (MRC) -- US crude oil and distillate inventories rose sharply last week, the Energy Information Administration said, while fuel demand remained slack even as various states eased movement restrictions that were put in place to stem the coronavirus pandemic, reported Reuters.

Crude inventories posted a gain of 7.9 million barrels in the week to May 22, largely due to imports. That brought overall US stocks, excluding strategic reserves, to 534.4 million barrels, about 1 million barrels away from an all-time record.

Analysts expected stocks to fall by 1.9 million barrels.

Overall, weak consumer demand has kept stocks of crude and fuels brimming nationwide. Distillate stockpiles, which include diesel and heating oil, rose by 5.5 million barrels in the week, to levels not seen since 2017.

Despite the inventory increases, US oil futures rose. US crude futures jumped 3.2% to USD33.85 as of 3:00 p.m. ET (1900 GMT), while Brent gained 2.1% to USD35.48 a barrel.

"The data didn’t seem to indicate the optimism that we’re seeing from the market," said Regina Mayor, global and US head of energy at KPMG in Houston. "Generally speaking, the oil price indicates more optimism than frankly we’re sensing in the industry."

Crude stocks had been declining as refining picked up in recent weeks due to a recovery in fuel demand from a drastic fall in April.

Still, four-week moving average figures on products supplied, a rough proxy for demand, shows gasoline demand down 25% from the year-ago period, while diesel demand is off 14%.

Diesel product supplied fell in the most recent week while gasoline demand rose.

"The rally still has its legs on it but if there’s any deviation in any factors like demand returning or production being reduced, given how high global supply is, that could still change," said Gene McGillian, vice president of market research at Tradition Energy.

The big jump in crude inventories came even as stocks at the Cushing, Oklahoma, delivery hub for crude futures fell by 3.4 million barrels in the week, the EIA said. Total stocks rose due to a hefty jump in net crude imports of 2.1 million barrels per day.

Refinery utilization rates increased 1.9 percentage points to 71.3% of total capacity, the EIA said.

US gasoline stocks fell 724,000 barrels to 255 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for a 100,000-barrel rise.

As MRC informed previously, 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.

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