FREP shuts No. 3 PP unit for unplanned maintenance

MOSCOW (MRC) -- Fujian Refining & Petrochemical (FREP) has undertaken an unplanned shutdown at its No. 3 polypropylene (PP) unit, according to Apic-online.

A Polymerupdate source in China, informed that, the company has halted operation at the unit for unplanned maintenance on June 1, 2020. The unit is likley to restart by this weekend.

Located in Fujian province, China, the No. 3 PP unit has a production capacity of 220,000 mt/year.

As MRC reported earlier, FREP restarted its No.3 PP plant in Fujian Province on November 2, 2019, following an unplanned outage. The unit was taken off-line on October 27, 2019. Located in Fujian province, China, the No. 3 PP plant has a production capacity of 220,000 mt/year.

According to MRC's ScanPlast report, 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.

FREP is a joint venture between Fujian Petrochemical Co. (50%), ExxonMobil China Petroleum and Petrochemical Co. (25%) and Saudi Aramco Sino Co. (25%). Fujian Petrochemical is a 50:50 JV between Sinopec and the Fujian provincial government.
MRC

MOSCOW (MRC) -- The Food and Drug Administration (FDA) in a guidance document late Monday updated its policy on the use of ethanol in hand sanitizers for a third time in the last two months as part of its effort to ensure adequate supply of the product during the coronavirus disease 2019 (COVID-19) pandemic, reported Chemweek.

The agency says its updated guidance further clarifies the manufacturing and compounding of certain alcohol-based hand sanitizer products to prevent harmful levels of impurities from making their way into sanitizers.

Biofuels advocates - including US Senators Chuck Grassley and Joni Ernst, both Iowa Republicans - have urged the FDA to ease restrictions on allowing ethanol producers to supply alcohol for hand sanitizer production.

In a letter last week, the senators called the FDA's 15 April revision of its 27 March guidance on the use of ethanol for sanitizer production "inexplicable" and said submitted samples of ethyl alcohol have been rejected, possibly based on levels of acetaldehyde, a substance that occurs naturally in the distillation process.

FDA's March guidance declared that ethanol used for hand sanitizer production does not need to meet the U.S. Pharmocopeia (USP) or Food Chemical codex (FCC) standards provided that other purity standards were satisfied. The senators said that based on that guidance, biofuels producers made investments and began production of alcohol for hand sanitizer.

However, the agency's April revision said ethanol used in hand sanitizers must adhere to USP or FCC standards unless otherwise approved. FDA asked that ethanol companies submit data regarding any impurities.

FDA on Monday said the temporary guidance from April was based on concerns that at least some fuel ethanol products may contain harmful chemicals, including gasoline and benzene. FDA said it is working with the industry to ensure that harmful levels of impurities are not present in ethanol used in hand sanitizer products.

"Based on careful review and consideration of available data, we are specifying interim levels of certain impurities that we have determined can be tolerated for a relatively short period of time, given the emphasis on hand hygiene during the COVID-19 public health emergency and to avoid exacerbating access issues for alcohol-based hand sanitizer," FDA says.

Renewable Fuels Association (RFA) president and CEO Geoff Cooper says the latest guidance is still too restrictive.

"While we appreciate that FDA responded to RFA's request for more clarity and specific interim impurity limits, we do not believe the new guidance will help alleviate the hand sanitizer shortage in any meaningful way," Cooper says. "We welcome the specificity in the new guidance, but the new interim limits for certain impurities are overly restrictive and create a roadblock for producers who could otherwise supply huge volumes of safe, clean, high-quality ethyl alcohol to hand sanitizer manufacturers."

"For example, FDA's new limits for certain impurities are eight times more restrictive than what is typically found in a glass of red wine and twenty times more restrictive than what has been allowed in hand sanitizer by other countries, including Canada, during the COVID-19 pandemic," according to a statement.

Cooper adds that the US has had to ramp up imports of hand sanitizer from China and other countries, calling the imports "unfortunate" considering abundant supplies of "high-purity American-made ethanol could be used instead."

As MRC informed earlier, the US ethanol industry is showing some signs of recovery as government officials ease stay-at-home orders that depressed fuel demand, while a vote Friday in Congress could bring the industry one step closer to federal aid, industry officials said in late May. Fuel demand collapsed by about a third with the spread of the novel coronavirus this spring, and US ethanol production capacity halved as around 150 facilities either idled or reduced rates. Now as restrictions ease and gasoline demand inches higher, about 140 facilities are idled or running at reduced rates, Renewable Fuels Association President Geoff Cooper said on Friday.

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 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.
MRC

MOSCOW (MRC) - Quarantine restrictions have led to a reduction in demand for low density polyethylene (LDPE) due to the coronavirus pandemic. The scheduled maintenance works of one of the producer did not allow balancing the market, and, as a result LDPE prices had decreased by more than Rb8,500/tonne by the beginning of June, according to the ICIS-MRC Price Report.

LDPE prices reached their highest level in the late of March on the back of high demand and supply disruptions from some producers. The situation began to change dramatically in the second half of April due to the coronavirus pandemic. Demand for LDPE began to decline, and prices fell.

The prices of polyethylene continued to go down during May, and Russian producers announced a significant reduction in prices for June deliveries. Kazanorgsintez shut part of its facilities for scheduled maintenances in the end of April. But the shutdown of the second-largest producer of LDPE in Russia did not affect the market balance; a drop in demand due to quarantine restrictions levelled this factor.

The demand for LDPE began to gradually increase in the late May, although still quite far from last year's figures.
Angarsk Polymers Plant plans to shut its capacities for 30 day's turnaround from 22 April.

Gazprom neftekhim Salavat will shut down its HDPE production from 1 July. The 108th LDPE was the most scarce in March; prices reached Rb76,000/tonne CPT Moscow, including VAT by the end of March.

But in the second half of April, the situation changed significantly, and prices of this polyethylene began to go down more rapidly than others. Prices of 108 LDPE from some sellers decreased to the level of Rb59,000/tonne CPT Moscow, including VAT by 1 June.

The situation was similar in the market of the 158 LDPE, which by the end of March has risen in price to Rb84,000/tonne CPT Moscow, including VAT and above. Sellers announced prices for June delivery at the level of Rb74,000/tonne CPT Moscow, including VAT.

MRC

MOSCOW (MRC) -- Enterprise Products Partners (Houston, Texas) reports first-quarter net income of USD1.375 billion, up 7% year-over-year (YOY) from USD1.280 billion, according to Chemweek.

Sales totaled USD7.482 billion, down 12% YOY from USD8.544 billion. Adjusted earnings per share of USD0.53 were in line with the average analyst estimate of USD0.52 as compiled by Refinitiv (New York). The company also says it has increased its credit access and lowered capital spending plans in response to the coronavirus disease 2019 (COVID-19) pandemic.

“The first quarter began with good momentum, and this translated into our solid operational and financial results for the first quarter of 2020,” says A. J. Teague, co-CEO of Enterprise’s general partner. However, conditions have deteriorated rapidly since early March owing to economic disruption related to the pandemic, says Teague, and the situation has been exacerbated by the OPEC+ price war. The recent OPEC+ agreement to reduce production “is too little, too late,” he adds.

“The speed and intensity of this economic sudden stop for developed countries has been breathtaking,” says Teague. “We expect natural gas, NGL (natural gas liquids), and crude oil production to decline more rapidly than in previous supply shock cycles. We have not yet seen a material change to volumes across our system; however, we will not be immune. In past cycles, our integrated system and storage assets have provided our customers valuable flexibility as well as being a reliable hedge by allowing us to use uncontracted capacity to capture regional price spreads and contango opportunities to partially offset headwinds in some of our fee-based businesses due to declining production. We continue to see good demand pull from our petrochemical customers and in LPG exports.”

In response, Enterprise has reduced its planned 2020 growth capital investments by approximately USD1 billion and a reduced sustaining capital spending by postponing USD100 million in discretionary, non-integrity related projects. The company also acquired an additional USD1.0 billion 364-day bank credit facility in early April, increasing its liquidity to about USD8.0 billion on a pro forma basis.

Enterprise reported total gross operating margin of USD2.0 billion for the first quarter of 2020 compared to USD2.1 billion for the first quarter of 2019.

The NGL pipelines & services segment reported gross operating margin of USD1.0 billion, up YOY from USD959 million. Total fee-based processing volumes declined 2%; equity NGL production decreased 9%; and NGL pipeline transportation volumes increased 9%. NGL marine terminal volumes increased 37%. Total NGL fractionation volumes increased 17% to a record 1,133 MMb/d.

The crude oil pipelines & services segment turned in gross operating margin of USD453 million, down YOY from USD662 million. Crude oil pipeline volumes increased 7% to a record 2.4 million BPD; crude oil marine terminal volumes increased 11%.

The natural gas pipelines & services segment reported gross operating margin of USD284 million, up YOY from USD264 million. Natural gas transportation volumes declined 2%.

The petrochemical & refined products services segment reported gross operating margin of USD279 million, up 15% YOY from USD243 million. Segment pipeline transportation volumes declined 12%, and refined products and petrochemical marine terminal volumes declined 20%. The contribution from octane enhancement and related plant operations, which includes the new isobutane dehydrogenation (iBDH) plant, totaled $69 million, up YOY from USD24 million on higher sales volumes and higher average sales margins; however, demand for octane enhancement products “has materially decreased” this quarter owing to pandemic-related decline in travel, says Enterprise. The propylene business’s contribution increased $6 million YOY as higher margins and volumes for the company’s propane dehydrogenation (PDH) unit were offset somewhat by maintenance downtime for a Mont Belvieu propylene splitters. Total propylene production volumes were 98 MMb/d, up YOY from 90 MMb/d.

As MRC reported earlier, Enterprise Products Partners and LyondellBasell Industries said in September 2019 they had executed long-term contracts to support construction of EPD's second propane dehydrogenation plant at the Mont Belvieu, Tex. complex. The decision to build the PDH 2 plant stems from recently executed long-term polymer grade propane (PGP) supply contracts between Enterprise and LyondellBasell Industries N.V.

Besides, we remind that Enterprise Products Partners' Mont Belvieu PDH in Texas restarted from planned maintenance in the first week of December, 2019. The PDH unit went offline for maintenance on November 13, 2019. That day, the company said in a filing with the Texas Commission on Environmental Quality that the RAC "B" turbine shut down, which resulted in flaring. The flaring was estimated to last 72 hours. The unit has a capacity of 750,000 mt/year.

Propylene is the main feedstock for the production of polypropylene (PP).

According to MRC's ScanPlast report, 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.

Enterprise Products Partners L.P. is an American midstream natural gas and crude oil pipeline company with headquarters in Houston, Texas. It acquired GulfTerra in September 2004. The company ranked No. 105 in the 2018 Fortune 500 list of the largest United States corporations by total revenue
MRC

MOSCOW (MRC) -- Top oil exporter Saudi Arabia is expected to raise its official selling price (OSP) for all grades it sells to Asia in July, to track a jump in Middle East benchmarks although overall weak refining margins could cap price gains, industry sources said, as per Hydrocarbonprocessing.

Saudi Arabia is expected to increase the July OSP for Arab Light crude by $3.80 a barrel on average, a survey of five refinery sources showed. Forecasts ranged from an increase of USD2-USD3 a barrel to as much as $5 a barrel, as refiners’ margins weakened in May while a stronger DME Oman crude price, one of two underlying benchmarks for Saudi crude in Asia, has increased refiners’ feedstock costs, they said. “Refining margins actually worsened” by close to USD1 a barrel in May, one of the respondents said.

The DME Oman crude price was on average about USD3 a barrel more expensive than cash Dubai and Oman prices set by S&P Global Platts last month, according to Reuters calculations, pushing up costs for Asian buyers of Saudi Arabian and Kuwaiti oil.

Production from the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, fell to their lowest in two decades in May and has strengthened Middle East crude prices. OPEC and its allies including Russia are considering bringing forward a meeting to this week to discuss an extension of production cuts beyond June.

Tight Middle East crude supply has narrowed cash Dubai’s prompt contango price spread by USD6.60 a barrel in May from April. Spot prices are lower than those in future months in a contango market. In addition, light crude, such as Arab Extra Light, are expected to rise more than heavier grades as gasoline and naphtha cracks have improved, two of them said.

Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia. State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices. Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.

As MRC wrote earlier, in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.

Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.

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