China set to expand commercial crude storage capacity by 15.11 mil cu m in 2020

MOSCOW (MRC) -- China is set to expand its commercial crude storage capacity by at least 15.11 million cubic meters, or 95.04 million barrels, by the end of 2020, reported S&P Global with reference to company sources and media reports.

The new capacity, which will create more space to stockpile imports, comes as recent customs data showed China's crude imports hit an all-time high of 11.37 million b/d in May.

Data from trade flow and inventory tracker Kpler showed that China's crude stocks have been rising since the week starting May 10 and hit a record high of 831 million barrels in the week starting May 31. This was up 6.8% from the previous all-time high of 778 million barrels recorded in the week starting June 9, 2019.

Among the new storage facilities, Hengli Petrochemical (Dalian) will have the biggest capacity at 3.6 million cu m, or 22.64 million barrels, a company source told S&P Global Platts.

Hengli started construction of the storage tanks in late first-quarter of 2020 and plans to complete in the shortest time possible by July so that it can start storing crude at current low prices. Typically, a storage facility of this size takes more than a year to complete.

Hengli will construct a total of 24 new crude storage tanks, each of 150,000 cu m capacity. "We plan to start up six of the new tanks (or 900,000 cu m) in July, and gradually put the rest into use in the second half of the year," the company source with Hengli said.

Located on the Changxing Island in Northeast China, the Hengli storage facility currently has 32 crude storage tanks, each of 100,000 cu m. With the addition of the 24 new tanks, Hengli's total storage capacity will be more than doubled to 6.8 million cu m.

Chinese refiner Sinopec started operations at its new Baisha Bay Phase II storage facility in Shanghai from June 1, according to Shanghai Petrochemical's WeChat platform.

In addition to the 950,000 cu m of storage that is already under operation at the site, the startup of the Phase II storage facility brings the total capacity of the Baisha Bay facility to 1.4 million cu m, Shanghai Petrochemical said.

Sinopec also completed construction of a 800,000 cu m storage facility in central China's Luoyang city in May. This is expected to be online from second-half of 2020, Platts has reported. Another 800,000 cu m of storage capacity will be added to the Luoyang site by June 2021.

The Luoyang storage facility will support Sinopec Luoyang Petrochemical's requirements as it expands refining capacity from the current 160,000 b/d to 200,000 b/d in 2021.

Sinopec also started operating its storage tanks - with capacity of 1.6 million cu m - at Dongjiakou port in east China's Shandong province from March.

With all these additions, Sinopec's total commercial crude storage capacity is set to increase by at least 2.85 million cu m, or 17.93 million barrels, in 2020.

Most of the new storage capacity will be added in the Shandong province - long considered the Texas of China and home to about 80% of China's small independent refiners.

The province will see its crude storage capacity rise by 10.26 million cu m, or 64.54 million barrels, by the end of 2020, Platts has reported.

As MRC reported earlier, Sinopec Zhongyuan Petrochemical, part of Sinopec Group, is in plans to bring on-stream its cracker following a maintenance turnaround. The company is likely to resume operations at the cracker by mid-September, 2020. The cracker was shut for maintenance on August 1, 2020. Located at Henan in China, the cracker has a ethylene capacity of 220,000 mt/year and propylene capacity of 95,000 mt/year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- A limited reopening of Libyan oil terminals could allow the export of some crude oil and condensate stored at Es Sider, Brega, Zueitina and Hariga, but leaves a months-long blockade of the ports in place, oil engineers say, said Hydrocarbonprocessing.

East Libyan authorities said on Wednesday they would permit exports of the stored products in an effort to ease an electricity supply crisis that has resulted in increasingly lengthy power cuts. The ports have been blockaded since January by east Libyan factions as part a wider conflict, leading to the loss of most of Libya’s oil production and billions of dollars in income.

A build-up of gas by-products at the terminals and a drop in local refining has led to shortages of fuel for local power generation. The possible export of condensate and crude stored at Brega and Zueitina ports would allow some oil and gas production by Sirte Oil Co to supply power stations, a local engineer said. Several petrochemical products would also be exported, he said.

Ongoing diplomatic pressure and appeals from the National Oil Corporation (NOC) in the capital Tripoli over lost revenue and damage to idled facilities has failed to lift the oil blockade. NOC, which handles all exports, is yet to comment on the move. It has also previously warned of a risk of accidents or attacks at the ports amid military mobilisation in the area.

Officials at Ras Lanuf told Reuters this week that products including highly flammable ethylene were safely stored, even though many workers have left the port due to the blockade and restrictions to counter the new coronavirus. It was not immediately clear how much crude and condensate is stored at the ports. The NOC has struggled to maintain infrastructure in the area during years of fighting and past blockades.

Es Sider has 19 tanks with a storage capacity of 6.2 million barrels of oil, and Waha Oil Co has been working to repair previously damaged tanks and expand storage capacity, an official from the company said.

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.

And 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

MRC

MOSCOW (MRC) -- California-based biofuels producer Aemetis has become the latest US ethanol producer to modify its operations to produce high-grade alcohol for the hand sanitizer and disinfectant market, said Chemweek.

CEO Eric McAfee told OPIS this week that upgrades are underway at the company's Keyes, California, plant to produce 65 million gal/year of US Pharmacopeia (USP) grade alcohol by the first-quarter of 2021. A new subsidiary, Aemetis Health Products, will blend gel and liquid sanitizer for delivery in bulk as well as packaged form to customers, the company said.

McAfee in a prepared statement said the upgrades will make Aemetis "the largest producer of high-grade sanitizer alcohol in the western United States." Demand for high-grade alcohol for sanitizer production jumped earlier this year in response to the COVID-19 pandemic, leading a number of ethanol companies to expand their production of high-grade alcohol.

Green Plains last week said it had signed a deal to supply high-grade alcohol through 2021 to Reckitt Benckiser, which makes disinfectants under the Lysol brand. The deal follows a May announcement that Green Plains would provide Xerox Holdings with Food Chemical Codex-grade high-grade alcohol from its beverage ethanol plant in York, Neb. And in early June, the company signed an agreement with GE Connect for joint production of cleaning products and disinfectant.

Green Plains in July also said that it plans to install a 25-million-gal/year industrial alcohol facility at its Wood River, Neb., ethanol plant, boosting the company's annual production of high-grade alcohol at the two plants to 75 million gal/year. It is upgrading both facilities to produce USP-grade alcohol.

In addition, South Dakota-based ethanol producer POET said it plans to increase output of industrial- and beverage-grade alcohol at plants in Indiana and Ohio by a combined 70 million gal/year to help meet growing demand. In June, Archer Daniels Midland said it was "significantly boosting" output of industrial alcohol at its Clinton, Iowa, facility in order to speed efforts to produce pharmaceutical-grade, alcohol-based hand sanitizer. A number of smaller ethanol producers have announced similar projects.

Separately, McAfee told OPIS that the pandemic has delayed until early 2021 project financing for the planned construction of a 12-million-gal/year cellulosic ethanol facility in Riverbank, Calif. In February, McAfee said that the company expected to complete engineering and procurement work on the facility in time to begin construction this year. Construction is expected to take about 18 months to complete.

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.

And 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Crude oil futures dipped on Aug. 14 as a wave of reports last week painted a gloomier economic outlook with slower demand recovery as the coronavirus pandemic continued to take its toll, reported S&P Global.

Despite more bullish US news this week in the form of weaker crude production and falling storage volumes, the global picture remained more bearish, with forecasts of lower-than-expected worldwide demand as the OPEC+ alliance increases its output, more US shale producers reverse curtailments and more tankers unload their stored oil.
NYMEX September WTI fell by 23 cents and settled at USD42.01/b, while ICE October Brent dipped by 11 cents to reach USD44.85/b. Crude prices have remained tightly rangebound since late June.

"Oil prices are stuck in end-of-summer mode as the global economic recovery shows signs of slowing," said Edward Moya, senior market analyst with OANDA. "China's recovery is uneven, and the US outlook is dwindling as widespread joblessness persists and an ineffective Congress is failing to deliver much needed aid to the economy."

A deadlocked US Congress adjourned this week until Sept. 8 without approving a new economic stimulus package as planned.

On Aug. 13, the International Energy Agency lowered its estimates for world oil demand in 2020 and 2021, along with its estimate of the "call" on OPEC crude, due to a slower-than-expected recovery for mobility and aviation. The IEA lowered its 2020 world oil demand estimate by 140,000 b/d compared with its previous forecast to 91.95 million b/d. This would put demand 8.1 million b/d below 2019 levels.

North American jet fuel demand remained about 40% below pre-pandemic levels, and US air carrier American Airlines announced this week it was canceling services to more US cities.

But the IEA also cited reduced road transportation fuel demand estimates, particularly for gasoline, on an upswing in worldwide novel coronavirus cases.

"Resurgences of the coronavirus will likely thwart the travel plans for many individuals until a vaccine is readily available," Moya added.

As for products, NYMEX September RBOB rose by 0.98 cent to US1.2446/gal while September ULSD fell 0.14 cent to USD1.2367/gal.

There also is the issue of hundreds of millions of barrels of crude and fuel sitting in tankers that were essentially converted to offshore storage facilities. The volume of crude and refined products being stored on tankers peaked June 30 at around 380 million barrels, according to S&P Global Platts Analytics. Most of those volumes are expected to be unloaded by the end of the year, tanker companies said this week during earnings calls.

"When the dust of positivity subsides, the market always sees what lays behind. And a grim demand recovery outlook is a clear background now on a global level," said Rystad Energy oil markets analyst Paola Rodriguez-Masiu. "Under the current supply-demand trends, we see prices unable to record further sustainable gains for a few months – until supply deficits return during the last quarter of the year."

The US Energy Information Administration provided some bullish data this week that showed crude stockpiles continued to wane and US production volumes were weaker than expected.

US crude output fell from an all-time high of nearly 13 million b/d before the pandemic to a May average of just 10 million b/d. The EIA most recently estimated US production averaged 10.7 million b/d in the week ended Aug. 7.

However, Rystad said Aug. 14 that most US onshore operators will restore nearly all shut-in oil volumes by the end of September, with only a handful maintaining some level of curtailment for the rest of the year, according to an analysis of 25 public producers' second-quarter 2020 earnings statements.

Those 25 producers shut in nearly 775,000 b/d of oil in April and May, but that less than 75,000 b/d will remain offline by the end of August. And nearly all of those last barrels will be returned in September.

The bigger losses for US production, though, will come from the natural decline rates of shale wells as greatly reduced new drilling will fail to keep up with the so-called "treadmill" of activity needed to keep pace with the faster-depleting shale wells, said Colton Bean, energy analyst with Tudor, Pickering, Holt & Co.

The US oil and gas drilling rig count was relatively stable at 288 for the week ended Aug. 12, said rig count provider Enverus. But that was still steeply below the more than 900 rigs in service a year ago.

"We're only just starting to see some completions crews come back to help stem the tide," Bean said.

As MRC informed before, US crude oil inventories moved sharply lower during the week ended July 24 as exports and refinery demand climbed to multi-month highs, US Energy Information Administration data showed July 29. Commercial crude stocks fell 10.61 million barrels to 525.97 million barrels that week, EIA data showed. While the draw pushed stockpiles to 14-week lows, they remained more than 17% above the five-year average for this time of year.

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.

And 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Siegfried (Zofingen, Switzerland) says net profit for the first half of 2020 shrunk 33.2% year on year (YOY) to 20.67 million Swiss francs (USD22.62 million) on revenue that was slightly lower at SFr388 million, down 1.4% YOY, said Chemweek.

The fall in profit is due mainly to higher cost of sales and negative currency effects, while the more resilient revenue performance is attributed to the company's crisis management that began in January, it says. Siegfried was able to largely maintain its production activities at all sites, it adds. Operating profit was down 24.9% for the period, to SFr30.79 million.

The company has "coped well with the significant challenges posed by COVID-19," says Wolfgang Wienand, Siegfried's CEO. Multiple national governments identified the company as a manufacturer of essential pharmaceutical products, creating the basis for the continued operation of its plants during the crisis, he says.

Sales of drug substances, a growth driver for Siegfried in 2019, were affected by COVID-19 but were still nearly 1% higher YOY in local currencies, the company says. Sales in the field of drug products grew by about 7% in local currencies, supported mainly by the business with aseptic filling, it says. Siegfried is currently generating three quarters of its sales from active pharmaceutical ingredients and intermediates, and about one quarter with finished formulations, it notes.

Siegfried has confirmed its outlook for the full year 2020, expecting low single-digit percentage sales growth in local currencies and a stronger second half-year with a slight expansion of the core EBITDA margin, it says. Its medium-term expectations have also been confirmed, with expected growth in line with the market and an ambition to outgrow it in local currencies, it says.

As MRC informed earlier, Russia's output of chemical products rose by 4.4% year on year in May 2020 . Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May. Production of benzene was 110,000 tonnes in May 2020, which equalled the figure a month earlier. Overall output of this product reached 615,000 tonnes over the stated period, up by 1.7% year on year.
MRC