China recovery raises hopes for US, Europe polyolefins, says LyondellBasell CEO

MOSCOW (MRC) -- Bob Patel, LyondellBasell's CEO, says polyolefins demand in China is recovering rapidly from the economic chaos created by the coronavirus disease 2019 (COVID-19) pandemic, reported Chemweek.

He is optimistic that both the US and European markets will return at a similar pace, and that the company's capacity utilization could near previous levels by the end of 2020.

"Demand is improving very well in China," Patel said during a webcast this morning with Lyn Tattum, vice president/events at IHS Markit and publisher of Chemical Week. "I read recently that oil consumption in China is back to almost 90% of the pre-pandemic level, and we see that in the demand for our products."

All of LyondellBasell's compounding plants in China are online and ramping up to full production rates, he noted. "So my hope is that the pace of recovery in China is something we can look forward to in Europe and the US as we follow the path China took, plus or minus."

Operating rates at the company's production units are "starting to move up slowly," says Patel. "I would expect that in the second quarter we could average 80% or so in US, and 85-90% in Europe on our cracker and polymer operating rates. I don't think we get back to full operating rates until later this year or perhaps even into Q1. Frankly, if we can retrace back to 90% of where we were before, I think that would be a very good recovery in 2020, and I think that's very possible."

The pandemic, which took grip outside China late in the first quarter, crippled large swaths of the economy, with divergent effects across LyondellBasell's business. Demand into packaging and medical applications, which account for about half of the company's revenue, has been resilient.

"Because of the lockdowns, people are doing more grocery shopping, so packaging has done quite well," says Patel. "And of course for medical applications, like the face masks and the disposable protective gear that healthcare workers wear, that comes from polyethylene and polypropylene, so those have done well."

The company's fuel business, which accounts for about a quarter of revenue, was hit hard. "That business really struggled in April and May with the lockdowns, but we can see that improving already as the miles driven is going up," says Patel.

Demand into automotive and durables, which contribute about a quarter of LyondellBasell's revenue, is lagging. "My guess is that auto and durables will follow, but a little bit later," he states.

Patel says all of LyondellBasell's manufacturing sites have remained online throughout the pandemic, and its Houston, Texas, headquarters staff has begun a phased return to the office. Of the company's roughly 19,000 employees, only 50 were diagnosed with COVID-19, and none of the cases was serious.

As MRC reported earlier, global petrochemical producer LyondellBasell has reduced rates across its system to accommodate lower demand wrought by shutdowns around the globe to stem the spread of the coronavirus pandemic, said the company's CEO Bob Patel. LyondellBasell's overall global petrochemical and refining assets were expected to operate at 60% to 80% of nameplate capacity through the second quarter, Patel said during the company's first-quarter earnings call. European crackers were seen running at 80% to 85%, while US crackers were expected to run at about 75%, he said.

We also remind that to further aid in the fight against the COVID-19 pandemic, LyondellBasell (LBI) donated a key ingredient to Huntsman Corporation to produce hand sanitizer for US first responders.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

MOSCOW (MRC) -- Dow Polyurethanes (PU), a business division of Dow (NYSE: Dow), is proud to announce a breakthrough in its RENUVA™ Mattress Recycling Program with a plan to install a pioneering industrial scale production facility at Orrion Chemicals Orgaform in Semoy, France, said the company.

The RENUVA™ Mattress Recycling Program will take discarded mattress foam and turn it back into raw material (polyol) through chemical recycling, the process of converting waste into feedstock. The new raw material can then be used in flexible or rigid foam products to go into applications such as building insulation boards and even back into new mattresses.

Every year, around 30 million mattresses are thrown away in Europe. If they were all stacked up, the pile would be 678 times the height of Mount Everest1. This new initiative will help enable a more circular economy for polyurethanes by ensuring the applications they are used in can be recycled, and it can help the EU reach its goal of having 65% of municipal waste recycled by 2030.

This new development builds on Dow’s existing collaboration with process know-how and turnkey installations provider H&S Anlagentechnik, announced in 2017.

"At Dow we’re passionate about integrating sustainability into all aspects of the Polyurethane lifecycle. This development will represent a significant step towards achieving circularity for a product which traditionally poses significant challenges for recycling,” said Ana Carolina Haracemiv, commercial director for Europe, Middle East, Africa, India (EMEAI)- Dow Polyurethanes.

“Through RENUVATM our ambition is to address some of the circular economy goals set out in the EU’s Green Deal and in national waste management strategies of countries like France,” stated Marcel Moeller, global marketing and sustainability director- Dow Polyurethanes.

“This new cooperation will reinforce Orrion Chemicals Orgaform’s commitment to sustainable development,” said Christian Siest, president - Orrion Chemicals Orgaform. “We will be proud to build an industrial scale production unit for recycling end-of-life foam and be selected as a partner by Dow. This will be a major investment that fits the growth strategy of our company.”

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.

Dow combines global breadth, asset integration and scale, focused innovation and leading business positions to achieve profitable growth. The Company’s ambition is to become the most innovative, customer centric, inclusive and sustainable materials science company. Dow’s portfolio of plastics, industrial intermediates, coatings and silicones businesses delivers a broad range of differentiated science-based products and solutions for its customers in high-growth market segments, such as packaging, infrastructure and consumer care. Dow operates 109 manufacturing sites in 31 countries and employs approximately 36,500 people. Dow delivered sales of approximately USD43 billion in 2019. References to Dow or the Company mean Dow Inc. and its subsidiaries.

MOSCOW (MRC) -- The UAE, OPEC's third-largest oil producer, pumped 2.4 million b/d in May, in line with its 2.446 million b/d OPEC+ quota as members within the 23-member alliance began a historic output curb, a source familiar with the matter told S&P Global on Sunday.

The UAE, which pumped a record 4.1 million b/d in April, has also pledged to trim an extra 100,000 b/d in June, on top of its OPEC+ commitments, as it joins Saudi Arabia's 1 million b/d additional curb and Kuwait's 80,000 b/d cut in attempts to help rebalance global oil markets.

The UAE turned up the taps in April after the breakdown of OPEC+ talks in early March, prompting the start of a price war between Saudi Arabia and Russia that flooded the market with crude. The oil deluge, which caused a price crash, led the OPEC+ coalition to an historic agreement to cut output starting in May and June with a 9.7 million b/d cut, with gradual easing of curbs through to April 2022.

OPEC+ ministers are considering moving up their meeting to June 4 instead of the previously scheduled June 9-10 so that July nominations can factor in any changes to oil production quotas, people familiar with the discussions told Platts on Saturday.

Holding the meeting that early would preclude any May production data from OPEC's six secondary sources, including Platts, from factoring into a decision. But nominations for term volumes by Saudi Arabia and other key OPEC members are typically announced by the first week of the preceding month.

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

We remind that 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 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) -- Crude oil futures were largely steady during mid-morning trade in Asia on June 5 as the market looks towards fresh supply cues from OPEC+, with uncertainty lingering over the upcoming meeting, said S&P Global.

At 10:35 am Singapore time, ICE Brent August crude futures was 6 cents/b (0.15%) lower from the settle on June 4 at USD39.93/b, while the NYMEX July light sweet crude contract was 13 cents/b (0.35%) lower at USD37.28/b.

Investors are still awaiting further clarity on the OPEC+ talks, which have yet to be scheduled on a fixed date. Talks have been bogged down over quota compliance, with Saudi Arabia insisting on firm commitments from other OPEC+ members to stick to their production quotas.

"The primary point of contention is centered on Iraq and Nigeria's long-standing non-compliance to virtually all of OPEC+ production deals," AxiCorp's chief global markets strategist Stephen Innes said in a June 5 note.

Saudi Arabia and Russia have been seeking guarantees from Iraq and other members such as Nigeria and Kazakhstan, to adhere to quotas and compensate for overproduction with deeper cuts in the coming weeks, Platts reported.

The deal to extend the alliance's hefty 9.7 million b/d production cut agreement through at least July still hangs on a balance for now, keeping sentiment uncertain. "The growing fear is that not only will a deal to extend the deep cuts not be reached, but producers may even relax their current over-compliance," ANZ analysts said in a June 5 note.

Sentiment was also weighed by stubbornly weak demand in the US, ANZ analysts added, citing the swell in gasoline inventories based on EIA data released on June 3. In recent US-China developments, China said on June 4 that it will ease restrictions on international air travel, hours after the US threatened to bar passenger flights from China from June 16, according to media reports.

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

MOSCOW (MRC) -- Imports of bottle grade polyethylene terephthalate (PET) in Ukraine increased by 8% year on year to 51,500 tonnes in the four months of the year from 47,800 tonnes a year earlier, according to MRC's DataScope report.

April imports amounted to 16,600 tonnes, 26% more than the previous month. External supplies of material were at the level of 14,100 tonnes in April last year. The volume of supplies of bottle grade PET from China to Ukraine over the fur months of the year fell almost three times: from 36,400 tonnes in January-April 2019 to 12,200 tonnes.

Nevertheless, the supply of Chinese PET chips to the Ukrainian market almost almost doubled in April and amounted to 5,500 tonnes compared to 2,900 tonnes a month earlier, compared to April last year, imports decreased by 45%. The share of imports from China in the total volume amounted to 33% in April against 22% a month earlier and 21% in April 2019.

The share of Chinese material decreased from 76% in the first four months of last year to 24%. The key suppliers of injection moulding Chinese PET chips to the Ukrainian market were producers Dragon, China Resources Chemicals and Yisheng Petrochemical.

At the same time, import of injection moulding PET chips from Lithuania grew three times in the four months of this year and amounted to 30,900 tonnes. This figure was at 10,100 tonnes in January- April 2019. The volume of foreign deliveries from Lithuania to Ukraine increased by 23% in April compared to March to 8,900 tonnes against 7,200 tonnes. In April of the previous year, imports of PET chips were 4,000 tonnes.

The volume of Lithuanian imports to the country in the total supply volume increased to 60% in he first four months of this year against 21% in January - April 2019. The main supplier of Lithuanian material is the manufacturer Neo Group (30,800 tonnes). The main buyers of Lithuanian bottled PET were Coca-Cola Beverages Ukraine Limited and Retal.

MRC