Sale of shut Philly refinery to real estate developer delayed

MOSCOW (MRC) -- The closing of a USD252 million sale of the Philadelphia Energy Solutions (PES) oil refinery to a Chicago-based real estate developer has been delayed, reported Hydrocarbonprocessing with reference to a city official and source with knowledge of the agreement.

Hilco Redevelopment Partners won an auction in January to purchase the 1,300-acre site along the Schuylkill River in south Philadelphia. The companies were scheduled to close on the purchase agreement by the end of this month.

City of Philadelphia officials were told the closing was delayed, a city spokesman said by email. He did not offer additional details. Another source with knowledge of the deal said it was postponed this week.

Hilco and PES did not respond to requests for comment about the cause and duration of the delay.

The 335,000 barrel-per-day oil refinery shut last summer after a fire destroyed a section of the plant and released toxic chemicals into the air.

PES filed for Chapter 11 bankruptcy in July and put its refinery, which was the largest and oldest on the US East Coast, up for sale. More than 1,000 full-time workers were laid off, including 640 United Steelworkers.

The United States Bankruptcy Court for the District of Delaware in February approved the transaction with Hilco, whose plan has been to transform the site into a mixed-use industrial park, and seemingly secured the permanent end to operations at the plant.

The bankruptcy judge also signed off on a backup bidder, developer Industrial Realty Group, LLC, in case the deal with Hilco fell through.

PES’ unsecured creditors and union representatives initially opposed the sale to Hilco and pushed for Industrial Realty Group, which had entertained the possibility of leasing part of the site for refining.

Whoever purchases PES will face liabilities tied to cleaning the deeply-contaminated site, an issue that scared away potential buyers earlier in the sale process.

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.
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Petrobras CEO says oil storage not an issue for company

MOSCOW (MRC) -- Oil stocks held by Brazilian state-run oil firm Petroleo Brasileiro SA are “paradoxically” very low, Chief Executive Roberto Castello Branco said, as the company has strong demand for its products overseas, reported Reuters.

During the event hosted by Rio de Janeiro think tank Fundacao Getulio Vargas, Castello Branco said Petrobras had invested heavily in its overseas trading arm since he took over in January 2019, which was paying off in the form of increased oil and fuel exports.

As MRC informed earlier, the chief executive of Brazilian state-run oil firm Petroleo Brasileiro said in December 2019 he wants to sell the company's stake in petrochemical company Braskem within 12 months.

Besides, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
MRC

Divergent forward pricing hints at brighter prospects for US olefins

MOSCOW (MRC) -- Backwardation in the forward price curves of natural gas liquid (NGL) feedstocks and carries in the price curves of olefin products may signal an inflection point for the US Gulf Coast (USGC) market, OPIS data show, said Chemweek.

The front month–next month spread for ethylene has been in contango for much of May, while the same spread for feedstock ethane has consistently been backwardated. Further out, ethane's shape is largely flat, with backwardation resurfacing in early 2021. Ethylene, however, shows a relatively pronounced contango shape.

However, ethane's backwardation might be more the result of a contraction in current supply—driven by field shut-ins—than of any prospective increase in feedstock demand. Gulf Coast steam cracker operating rates are struggling at 80–85%, versus peak levels of 90–95%, and this is estimated to have crimped demand for ethane feedstock by around 300,000 barrels per day (b/d).

Therefore, ethylene's ability to capitalize on ethane's backwardation might ultimately come down to how fast world economies recover and/or cracker utilization improves, and competition from other feedstocks.

This implies that indicative early 2021 margins for ethylene improved even further toward the end of May compared with what forward curves suggested earlier in the month. Regardless of the time frame, this also suggests an advantage to petrochemical operators, in the sense that forward prices for the end product appear more favorable than those for the feedstock. However, if cracker rates fail to improve, ethane's backwardation may get more pronounced, but this is unlikely to benefit ethylene producers in the absence of stronger demand.

A similar case can be seen in feedstock propane and product propylene, although the relationship is fundamentally not as tight, propane having many alternative uses and propylene being less dependent on production from propane.

Both propane and propylene's forward curves were in full contango throughout the 2020 market during the first half of May, but the trends diverged, propane flattening with pockets of backwardation while propylene’s contango grew steeper.

Ethylene and propylene are feedstocks for producing PE and PP.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.


MRC

PP production in Russia up by 27% in Jan-Apr 2020

MOSCOW (MRC) -- Russia's overall polypropylene (PP) production grew in first four months of 2020 by 27% year on year, totalling 602,500 tonnes. ZapSibNeftekhim accounted for the main increase in the output, according to MRC's ScanPlast report.


Russian producers reduced their total PP production to 129,600 tonnes in April 2020 from 146,600 tonnes a month earlier, as SIBUR Tobolsk shut its production capacities for scheduled maintenance works and Poliom reduced its capacity utilisation. Russia's overall PP production reached 602,500 tonnes in the first four months of 2020, compared to 473,800 tonnes a year earlier. Four out of eight producers increased their capacity utilisation, with a new producer - ZapSibNeftekhim - accounting for the main increase in capacity utilisation.

The structure of PP production by plants looked the following way over the stated period.


SIBUR Tobolsk shut down its production capacities for slightly more than a one-month turnaround in mid-March. The plant's April output was 17,500 tonnes, compared to 22,900 tonnes a month earlier. The Tobolsk plant's overall PP production reached 130,100 tonnes in January-April 2020, down by 17% year on year.

ZapSibNeftekhim, the second Tobolsk producer, produced 32,600 tonnes of PP in April versus 37,500 tonnes in March. The plant's overall output totalled 149,000 tonnes in the first four months of 2020.

Omsk Poliom reduced its capacity utilisation in April, having produced about 13,000 tonnes of PP, compared to 18,000 tonnes a month earlier. Overall, the Omsk plant produced 64,500 tonnes of PP in January-April 2020, down by 10% year on year.

Nizhnekamskneftekhim produced about 18,000 tonnes of propylene polymers in April versus 19,100 tonnes a month earlier. The Nizhnekamsk plant's overall output of polymer exceeded 73,100 tonnes in the first four months of 2020, compared to 68,800 tonnes a year earlier.

Tomskneftekhim produced 13,300 tonnes of propylene polymers in April versus 13,400 tonnes a month earlier. The Tomsk plant's overall PP output reached 51,300 tonnes in January-April 2020, up by 4% year on year.

Ufaorgsintez's production was 11,200 tonnes of PP in April, which virtually corresponded to the figure of March. The Ufa plant's overall output of polymer reached 43,600 tonnes in January-April 2020, down 3% year on year.

Neftekhimiya (Kapotnya) produced 12,600 tonnes of PP in April, compared to 13,100 tonnes a month earlier. The plant's overall PP output reached 49,500 tonnes in the first four months of 2020, up by 2% year on year.

Stavrolen (Lukoil) produced 11,300 tonnes of propylene polymers in April versus 11,500 tonnes in March. The Budenovsk plant's overall output of propylene polymers reached 41,300 tonnes in the first four months of 2020 versus 33,500 tonnes a year earlier.

MRC

COVID-19 - News digest as of 02.06.2020

1. 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.



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