ADNOC takes proactive steps to capture returning Asia crude demand

MOSCOW (MRC) -- UAE's ADNOC is keeping a beat ahead of the OPEC+ members by ensuring customers of its crude oil in Asia of sufficient supplies as demand for Middle East sour crude returns, market sources told S&P Global Platts.

The announcement came unexpectedly early, said a crude trader based in Singapore, adding that "buyers have not even nominated volumes yet."

While OPEC+ members discuss whether to meet on June 4 or June 10, and whether to continue cutting at 9.7 million b/d or not, the Abu Dhabi oil producer has already informed its customers that it will cut its crude exports by only 5% for July loading barrels.

ADNOC's announcement was issued to certain customers late in the week ended May 30, several market sources based in Asia told Platts. The move was seen as a competitive edge for the emirate's marketing entity as refineries shuttered in recent months prepare to restart for summer production, said market participants in the East.

ADNOC declined to comment on the matter.

The cuts - 5% for volumes of Murban, Das Blend, Umm Lulu and Upper Zakum in July - are expected to have a lighter effect on the market than those for June.

"They are supplying higher volumes in July compared to June," said a source with an Asian refiner.

Last month, ADNOC announced cuts of 20% to June loading Murban and Upper Zakum cargoes, while Umm Lulu and Das Blend were cut by 5% each respectively.

This is in keeping with ADNOC's commitment to OPEC+, which will see members collectively retract 9.7 million b/d over May and June, but then whittle that figure down to 7.7 million b/d starting July.

Other producers are not far behind, however, with an earlier OPEC+ meeting now highly likely in order to gain more clarity on H2 2020 production cut quotas before the monthly crude trading cycle kicks off in Asia.

The alliance is now expected to meet June 4 instead of the previously scheduled June 9-10, so that July nominations can factor in any changes to oil production quotas, Platts reported May 31.

Depending on the outcome of the meeting, ADNOC's 5% could be called into question, said several market sources in Asia.

While confirming that they had received the notice of the cuts from ADNOC end-May, a Japanese refiner pointed out that buyers would be keeping an eye on the results from the meeting, as ADNOC's committed volumes could vary post-meeting.

Major Asian crude importers such as China, Japan and Korea are showing preliminary signs of returning demand as countries relax coronavirus-linked restrictions on work and travel, Platts data showed.

Crude demand from China, which has kept a few notches ahead of the rest of Asia even in the depths of the pandemic, is expected to continue at an upbeat pace during June and July, said traders based in the country.

In Japan, gasoline demand is expected to recover over the summer months after contracting heavily over May, gasoline traders told Platts.

Meanwhile in South Korea, refiners have said they are planning to import full term contractual volumes of crude from Saudi Aramco for June and beyond.

A company source at the country's SK Innovation said it plans to receive full term supply for July from other major Middle Eastern suppliers including ADNOC and SOMO.

Other South Korean refiners including GS Caltex and Hyundai Oilbank declined to comment on their term Saudi and Abu Dhabhi crude supplies for June and July, but the companies indicated that they plan to ramp up refinery run rates from Q3 and Middle Eastern term supply nomination cuts, if any, would be minimal for the South Korean customers.

As MRC informed earlier, in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

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

Celanese, Chinese firms sign agreement to commercialize acetic acid-to-acrylic acid technology

MOSCOW (MRC) -- Celanese Corporation, a global chemical and specialty materials company, today announced that its subsidiary, Celanese (Nanjing) Chemical Co. Ltd., has recently signed a tri-party agreement with SOUTHWEST INSTITUTE OF CHEMICAL CO., LTD. (SWCHEM), based in Chengdu, China, and YANKUANG LUNAN CHEMICAL CO., LTD. (LUNAN), based in Teng Zhou, China, to build a Pilot Scale-up Unit (PSU) in Teng Zhou, China, to test industrial scale production of acrylic acid using acetic acid as the principal raw material, said Chemweek.

"The successful commercialization of this technology will promote organic growth of the acetic acid industry and LUNAN is proud to be part of this effort."

Celanese and SWCHEM are jointly developing an innovative technology of producing acrylic acid with the process of acetic acid formaldehyde condensation based on Celanese’s original proprietary research in this field. Under the terms of the agreement, LUNAN will build an industrial scale pilot plant to finish commercial production trials.

"I am delighted that the collaboration between Celanese and SWCHEM has enabled us to reach such a critical milestone in the development of this new technology to produce acrylic acid from acetic acid. This could create additional demand for acetic acid while also improving the supply options for acrylic acid consumers," said John Fotheringham, Senior Vice President of Celanese’s Acetyls business.

"SWCHEM has a longstanding relationship with Celanese dating back to 2008,” said Mr. Chen Jiang, President of SWCHEM. “This agreement marks the expansion of our cooperation into deeper value chain of the acetyls industry."

"We are excited to be part of a winning team,” said Mr. Liu Qiang, President of LUNAN. “The successful commercialization of this technology will promote organic growth of the acetic acid industry and LUNAN is proud to be part of this effort."

Financial details of the agreement are not being disclosed at this time.

As MRC informed earlier, Celanese Corporation, a global specialty materials company, has increased May list and off-list selling prices for Vinyl Acetate Monomer (VAM) sold in China. The price increase was effective for orders shipped on or after 22 May, 2020, or as contracts otherwise allow, and is incremental to any previously announced increases. Thus, May VAM prices rose for the Chinese region by RMB350/mt.

According to MRC's DataScope report, February EVA imports to Russia rose by 9,83% year on year to 3,107 tonnes from 2,829 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation increased in January-February 2020 by 8,36% year on year to 6,194 tonnes (5,716 tonnes a year earlier).

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC

Altivia acquires KMCO and its ethoxylation assets at Crosby, Texas

MOSCOW (MRC) -- Altivia Oxide Chemicals (Houston, Texas), an affiliate of Altivia Petrochemicals, has announced that it has acquired KMCO and its associated chemical ethoxylation manufacturing assets at Crosby, Texas, reported Chemweek.

The facilities, located on 160 acres near Houston, include 31 reaction and distillation trains with capacity for ethylene and propylene oxide reactions as well as a broad range of organic reactions including polymerization, neutralization, and condensation. Products include surfactants, lubricant additives, fuel additives, and a variety of ethoxylation and propoxylation based intermediates. Its products service the coatings, automotive, fuels and lubricants, and surfactant industries.

Altivia plans a USD25-million process safety and control systems upgrade to the facilities and will start production in two new oxide reactors by the end of this year. "The reaction chemistries in Crosby are complementary to Altivia’s current product offerings and will provide our customers important sourcing options," said Altivia CEO J. Michael Jusbasche. "The market for oxylation tolling and custom manufacturing services will now have available a state-of-the-art facility on the US Gulf Coast."

As MRC reported before, Altivia Ketones & Additives, LLC an affiliate of Altivia Petrochemicals, has acquired Dow’s Acetone Derivatives Business and associated chemical manufacturing assets at Institute, W.Va., as well as the Institute Industrial Park. Altivia successfully assumed operations and product distribution without delay on November 1, 2-19.

We also remind that Dow Chemical began major maintenance on the LHC 1 cracker at Terneuzen, Netherlands from 9 September, 2019. More than 1,500 extra employees from various external companies carried out maintenance works in the subsequent period.

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

Shell Norco, La. refinery restarts crude unit, coker, cat cracker

MOSCOW (MRC) -- Royal Dutch Shell Plc restarted the crude distillation unit, coker and gasoline-producing cat cracker at its 225,300 barrel-per-day (bpd) Norco, Louisiana, refinery, reported Reuters with reference to sources familiar with plant operations.

Shell is restarting the hydrocracker, while the reformer and naphtha hydrotreater will remain shut for previously planned work, the sources said. The coker is scheduled to undergo planned work beginning next week, but is expected to remain in operation.

As MRC wrote before, Pilipinas Shell Petroleum Corp said it will shut down its 110,000-barrel-per-day Tabangao refinery in the Philippines for one month from mid-May as the coronavirus pandemic has hammered oil demand.

We also remind that Shell Singapore restarted its naphtha cracker in Bukom Island this week following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

Global chemicals output falls in April

MOSCOW (MRC) – Data collected and tabulated by the American Chemistry Council (ACC) show that with stabilizing activity in China partially offsetting widespread weakness due to COVID-19, global chemicals production fell 1.3 percent in April, an improvement from the 3.3 percent decline in March and 2.1 percent decline in February, said Americanchemistry.

During April, chemical production fell in every region. Headline global production was off 5.8 percent year-over-year (Y/Y) on a three-month moving average (3MMA) basis and stood at 110.2 percent of its average 2012 levels.

During April, global capacity rose by 0.2 percent and was up 3.3 percent Y/Y. With the decline in production, capacity utilization in the global chemical industry fell 1.2 points, to 75.6 percent. This is down from 82.8 percent last April, below the long-term (1987-2017) average of 86.5 percent, and is the lowest level since April 2009.

Among chemical industry segments, April results were negative across most segments, with some gains in plastic resins, synthetic rubber, and manufactured fibers – primarily in China. Considering year-earlier comparisons, growth was present only in synthetic rubber.

ACC’s Global Chemical Production Regional Index (Global CPRI) measures the production volume of the chemical industry for 33 key nations, sub-regions, and regions, all aggregated to the world total. The index is comparable to the Federal Reserve Board (FRB) production indices and features a similar base year where 2012=100. This index is developed from government industrial production indices for chemicals from more than 65 nations accounting for about 98 percent of the total global chemical industry. This data set is the only timely source of market trends for the global chemical industry and is comparable to the U.S. CPRI data, a timely source of U.S. regional chemical production.

As MRC informed earlier, Russia's output of products from polymers grew in April 2020 by 11.2% year on year due to quarantine restrictions. However, this figure increased by 3.4% year on year in the first four months of 2020. According to the Russian Federal State Statistics Service, April production of unreinforced and non-combined films decreased to 107,000 tonnes from 110,400 tonnes a month earlier. Output of films products grew in the first four months of 2020 by 12.5% year on year to 402,800 tonnes.
MRC