US crude stockpiles surge to record high

MOSCOW (MRC) -- US crude oil stockpiles rose unexpectedly in the first week of June to an all-time high as refiners boosted imports, particularly from Saudi Arabia, while exports dropped to lows not seen since November, reported Reuters.

The Energy Information Administration also said on Wednesday that refined product demand ticked up, but still remained far below normal levels.

Crude inventories rose 5.7 million barrels in the week to June 5 to 538.1 million barrels, most in history, not including the US strategic reserves, EIA data showed.

Shipments booked during the Saudi-Russia price war from March and April, when the kingdom ramped up exports sending US prices to negative-USD40 a barrel, have been arriving in the United States. Refiners’ imports of Saudi barrels have averaged more than 1.5 million barrels per day (bpd) for three consecutive weeks, which has not happened since 2013.

Crude inventories in the Gulf Coast import-export and refining hub jumped 6.9 million barrels to a record 303.7 million barrels. US exports fell to 2.4 million bpd, their lowest since November, so overall net crude imports rose by 1 million bpd, the EIA said.

"These are bearish numbers really. Crude (stocks) rose again despite being stymied by subdued demand. We are down significantly from a year ago today and saw builds in products as well," said Matt Smith, director of commodity research at Clipper Data.

Gasoline inventories rose 866,000 barrels, compared with analysts’ expectations for a 71,000-barrel rise. Distillate stockpiles, which include diesel and heating oil, increased by 1.6 million barrels.

Product supplied, a proxy for demand, showed gasoline consumption rebounded to 7.9 million bpd, still roughly 20% below the year-ago period, but an improvement from recent weeks. Overall gasoline demand is down 16% from a year ago.

Refinery utilization rates rose by 1.3 percentage points to 73.1% of capacity.

The market was lower after the data. US crude futures fell 2% to USD38.18 a barrel, while Brent was down 1.4% to USD40.60 a barrel.

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 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) -- The US spot benzene market has been under tremendous pressure over the last two months as energy prices sank and derivative demand disappeared for many segments as COVID-19 forced lockdowns in North America, said Chemweek.

After being dragged down by a confluence of factors, prices may have begun to stage a rebound that could be sustained for the next few months. In April and May, refineries in North America opted to run their reformers harder than other units within the refinery, while lowering operations at their crude distillation units and fluid catalytic crackers to roughly 70%, according to data from the US Energy Information Administration (EIA). As a result, aromatics extraction units maintained operating rates of 80% and above despite downstream styrene, cyclohexane, and methylene di-para-phenylene isocyanate (MDI) plants curtailing their rates due to poor demand.

Even with prices sinking in the US, a worldwide glut of benzene inspired a flood of imports to the US Gulf Coast (USGC) in April that arrived in May. By the end of May, benzene was trading at a discount to RBOB gasoline, something that has not happened since March 2009.

Unable to work cargoes into the depressed US market, producers in Asia sent benzene to China instead.

In May, Korea loaded less than 25,000 metric tonnes of benzene to send to the USGC and in the first 10 days of June there was no loading for the USGC. The last time South Korea did not load benzene during the first 10 days of the month loading window was in January 2019. The USGC is expected to see record-low benzene imports from Asia over the next three to four months.

Market sources agree that the key indicator being watched this month is the operating rate at downstream plants in the US that consume benzene. One styrene unit is restarting by the end of this month and propylene oxide-styrene monomer (POSM) plant rates are also increasing.

Styrene has been reportedly sold out through July, but if North America producers can’t export because customers in Asia stop buying it, plants in the US could lower rates again, limiting benzene’s rebound.

As MRC informed earlier, Russia's production of benzene was 110,000 tonnes in April 2020, compared to 133,000 tonnes a month earlier. Overall output of this product reached 505,000 tonnes over the stated period, up by 1.7% year on year.

Benzene is a feedstock for the production of styrene monomer (SM), which, in its turn, is a feedstock for manufacturing polystyrene (PS).

According to MRC's ScanPlast report, April estimated consumption of PS and styrene plastics in Russia was 36,170 tonnes, down by 12% year on year. Russia's estimated consumption of PS and styrene plastics totalled 157,110 tonnes in January-April 2020, down by 5% year on year.
MRC

MOSCOW (MRC) -- LyondellBasell, the world’s largest licensor of polyolefin technologies, says that Sinopec Hainan Refining & Chemical will use its Hostalen Advanced Cascade Process technology for a new 300 kilotonnes/year high density polyethylene (HDPE) facility to be built in Yangpu, Hainan Province, China, said Eog-asia.

"Multi-modal HDPE resins play a key role in addressing the growing demand for higher value polyethylene products,” said Neil Nadalin, Director of Licensing at LyondellBasell. Nadalin added: “The Hostalen ACP process is the leading low-pressure technology to deliver those benchmark polymer products."

The Sinopec Hainan HDPE plant will commence operations using Avant Z501 and Avant Z509 catalysts to produce a full range of multi-modal HDPE products.

With these new capacity additions, LyondellBasell says it has licensed over 8,500 kilotonnes/year of benchmark multi-modal HDPE resins.

The Hostalen ACP low-pressure slurry process technology manufactures high performance, multi-modal HDPE resins with an increased stiffness/toughness balance, impact resistance and high stress-cracking resistance used in pressure pipe, film and blow-molding applications.

According to MRC' ScanPlast, Russia's April estimated consumption of HDPE fell to 69,130 tonnes compared to 78,220 tonnes a month earlier. ZapSibNeftekhim significantly increased export sales to China. In the first four months of the year, the total supply of HDPE to the Russian market amounted to 377,450 tonnes, which corresponds to the figure a year earlier. Production volumes have grown significantly, and exports have also grown almost five times.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

MOSCOW (MRC) -- MEGlobal has announced that its Asian Contract Price (ACP) for monoethylene glycol (MEG) to be shipped in July 2020, according to the company's press release.

Thus, on 11 June the company said ACP for MEG will be USD590/MT CFR Asian main ports for arrival in Julyl 2020, up by USD20/MT from June.

The July 2020 ACP reflects the short term supply/demand situation in the Asian market.

As MRC reported earlier, MEGlobal announced its June ACP for MEG at USD570/MT CFR Asian main ports, up by USD10/tonne from May.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to ICIS-MRC Price report, in Russia, spot PET prices continued to go down. June formular prices for contract customers were in the range of Rb67,500-69,500/tonne CPT Moscow, including VAT. Formular prices are expected to decrease further next month.

MEGlobal is a fully integrated supplier of monoethylene glycol (MEG) and diethylene glycol (DEG), collectively known as ethylene glycol (EG).
MRC

MOSCOW (MRC) -- Taiyo Petrochemical continues to operate its styrene monomer (SM) plant at curtailed capacity levels in June 2020, as per Apic-online.

A Polymerupdate source in Japan informed that the company is likely to operate its plant at around 80% of production capacity rates in month of June 2020. The lower run rate has been attributed to commercial reasons.

Located at Ube, Japan, the SM plant has a production capacity of 370,000 mt/year.

As MRC informed previously, Taiyo Petrochemical took off-stream its SM plant in Ube for maintenance in October 2015. The shutdown lasted for around one month.

SM is the main feedstock for the production of polystyrene (PS).

According to MRC's ScanPlast report, April estimated consumption of PS and styrene plastics in Russia was 36,170 tonnes, down by 12% year on year. Russia's estimated consumption of PS and styrene plastics totalled 157,110 tonnes in January-April 2020, down by 5% year on year.
MRC