Intake of LPG as petchem feedstock plunges to 3-year low in northwest Europe

MOSCOW (MRC) -- Liquefied petroleum gas (LPG) intake by coastal steam crackers in northwest Europe plunged to a three-year low in June, although a widening discount of propane to naphtha has drawn a fresh deluge of US imports to the region for July, reported Chemweek.

LPG intake as petrochemical feedstock was an estimated 280,000 metric tons in June, down by 32% from May, and at its lowest level since August 2017 when intake hit 258,000 metric tons. US LPG imports in June were 66,000 metric tons, up from a year-to-date low of 32,000 metric tons in May, but down 75% year on year.

Overall volumes of LPG cargo trade remain depressed, dropping 22% from May’s total to 580,000 metric tons in June, the lowest in OPIS-IHS Markit records, and in contrast to 810,000 metric tons traded in June 2019.

Petrochemical operators fell back to local North Sea-supplied LPG, with 190,000 metric tons sourced from the region, equivalent to 68% of the total intake for the month, compared to 81% in May. The remainder of the feedstock intake in June saw 23% from the US East Coast, up from 8% in May, and none from the US Gulf Coast, the second month running that this has occurred. Supply from the Russian Baltic made up 9% of total feedstock intake.

Meanwhile, LPG exports out of northwest Europe at 180,000 metric tons were over three times more than the same month last year, with cargoes moving to North Africa, the eastern Mediterranean—112,000 metric tons to Turkey alone—and to the US East Coast. The retail and refining sector intake was down by 50,000 metric tons to 115,000 metric tons in June.

A surge of import cargoes are programmed to arrive in northwest Europe in July, with 22,000 metric tons noted during mid-June rapidly escalating to 290,000 metric tons by month-end. “That is a hefty chunk of imports,” one broker remarks. “(I) would expect some second-half (July) arrivals to come into the mix ... still early days,” comments another market source. Sailing times from the US East Coast and US Gulf Coast to northwest Europe require 10 days and 14 days, respectively.

As MRC wrote previously, unplanned outages at Sabic's Wilton, UK, cracker and Borealis' Stenungsund, Sweden, cracker may cause availability shortages in the European propylene coastal market. The Wilton cracker, which has an annual propylene capacity of 415,000 mt was shut on June 17 due to technical issues and was off-line for another two weeks. Borealis' Stenungsund cracker unit has remained offline longer than initially anticipated, after it was shut following a force majeure declaration at the site on May 11. Sources said that the unit has been offline longer than initially expected with no confirmed startup date.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

US crude stockpiles drop sharply as imports fall, refining rises

MOSCOW (MRC) -- US crude oil stockpiles dropped sharply from record highs, as refining activity picked up and imports fell, reported Reuters with reference to the Energy Information Administration's statement.

Crude inventories fell by 7.2 million barrels in the week to June 26 to 533.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 710,000-barrel drop. Inventories are down from an all-time record of 540.7 million barrels set in mid-June, but remain 15% higher than the five-year average for this time of year.

Net US crude imports fell last week by 506,000 barrels per day, the EIA said. Imports had been elevated in recent weeks due to a flood of shipments arriving from Saudi Arabia that were booked as the kingdom boosted activity in April. Saudi imports came to 826,000 bpd in the most recent week, their lowest in six weeks.

“As OPEC+ continues to cut, the probability of reduced imports into the United States will remain,” said Tony Headrick, energy markets analyst at CHS Hedging.

Refinery crude runs, meanwhile, rose by 193,000 bpd and refinery utilization rates rose by 0.9 percentage point to 75.5% of overall capacity, the data showed.

Demand slipped in the most recent week, and the four-week average of product supplied still showed that figure off by 16% from the year-ago period.

Gasoline supplied was down by 15% from a year earlier, and traders worried that surging coronavirus cases in the United States would cut off the steady rebound in demand from April and May’s slump.

Crude futures were higher, but retraced some gains from prior to the data release. US crude gained 23 cents to USD39.51 a barrel by 11:17 a.m. ET (1517 GMT) while Brent rose 43 cents to USD41.70 a barrel.

“The main reason oil is pulling back is disappointing gasoline demand,” said Phil Flynn, senior analyst at Price Futures in Chicago.

Distillate stockpiles, which include diesel and heating oil, fell by 593,000 barrels in the week to 174.1 million barrels.

US gasoline stocks rose by 1.2 million barrels, the EIA said, compared with expectations for a 1.6 million-barrel drop.

As MRC informed before, 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 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

Seqens lifts force majeure on IPA

MOSCOW (MRC) -- Seqens (Ecully, France) lifted its force majeure on isopropyl alcohol (IPA) on Wednesday, company sources tell IHS Markit, as per Chemweek.

It declared force majeure on IPA production at Roussillon, France, in mid-March after the French government advised the company to supply IPA to end-users and distributors that supply hand sanitizer to hospitals following the outbreak of COVID-19. Seqens has not provided an explanation for lifting the force majeure.

Seqens is France's only dedicated producer of IPA with 60,000 metric tons/year of capacity at Roussillon. The company announced plans in April to add 50,000 metric tons/year of IPA capacity at the site for startup in 2021. It operates a phenol/acetone unit at Roussillon that supplies acetone to the IPA plant. Seqens cut phenol production in March due to low demand, limiting the company's ability to produce IPA.

IPA prices spiked in Europe during March and April because of rising demand for hand sanitizer, but fell €200-200/metric ton from their peak in April to €2,200-2,800/metric ton del. northwest Europe in late May, IHS Markit understands.

As MRC informed earlier, in late April, French acetone maker Seqens announced force majeure for deliveries from its Peage plant. The plant's capacity is 108 thousand tons of acetone per year. It was the third acetone producer in Europe to announce force majeure since the beginning of the year.

Acetone, along with phenol, is the main raw material component for the production of bisphenol A (BPA, by condensation), which, in turn, is used to produce polycarbonate (PC).

According to MRC's ScanPlast, in Russia the total estimated consumption of PC granules for the four months of 2020 (excluding imports and exports to Belarus) amounted to 30.5 thousand tons, which is 20% higher than last year (25.3 thousand tons).
MRC

Group welcomes Equinor plan to build new clean hydrogen plant at Saltend Chemicals

MOSCOW (MRC) -- Owner operators of the Saltend Chemicals Park, px Group, welcomed the news Equinor plans to build a world-leading clean hydrogen plant at the Park, which they believe can be the first step in the creation of a decarbonized industrial cluster in the Humber region, said Hydrocarbonprocessing.

Called Hydrogen to Humber Saltend (H2H Saltend), the new plant will produce hydrogen from natural gas in combination with carbon capture and storage (CCS). Initially the plant will allow industrial customers in the Saltend Chemicals Park to switch over to hydrogen and will reduce the amount of fossil fuels going into the Park’s power plant, thus cutting emissions by nearly 900,000 tons of CO2 per year.

H2H Saltend will in later phases have the potential to expand services to other industrial users in the Saltend Chemicals Park and across the Humber region. Locating the new plant in the Humber Estuary, commonly known as the UK’s Energy Estuary, puts the region in the forefront of the Government's ambitious plan to establish at least one decarbonized industrial cluster by 2030 and ultimately the world first net zero cluster by 2040.

Geoff Holmes, CEO of px Group, said: “This is a significant step forward in a transition to alternative energy and lower carbon production - we are delighted to be helping lead the charge." “px Group is committed to playing its part in this important development and shares the vision of creating a world beating decarbonized industrial cluster on the Humber Estuary. We’re looking forward to working and innovating alongside all the partners involved in this project."

H2H Saltend will be part of the Humber alliance’s application for public co-funding in the second phase of the Industrial Strategy Challenge Fund, which launched on 23 June 2020. A short distance away from the City of Hull, Saltend Chemicals Park is ideally placed to support the project. The Park provides the perfect base for the thriving super-cluster of truly sustainable world-scale chemicals and energy operations around the Humber.

Saltend Chemicals Park is a 370-acre industrial park and Top Tier COMAH site that produces over a million tons of chemicals every year and was acquired by px Group from BP Chemicals in 2018.

Established over 25 years ago, px Group is a leading, fully integrated infrastructure solutions business. Along with its industrial powerhouse Saltend Chemicals Park, px provides performance-driven solutions across power, onshore and offshore gas, chemical and industrial parks, waste processing, bioenergy, biofuels, fuel storage, and combined heat and power (CHP).

As MRC informed earlier, in March 2018, Norway’s Statoil announced plans to change its name to Equinor, reflecting its commitment to become a broad energy company rather than one focused only on oil. Equinor holds an 82-percent stake in the methanol plant, while ConocoPhillips owns the rest.

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

Chinese industry federation joins the Alliance to End Plastic Waste

MOSCOW (MRC) -- The Alliance to End Plastic Waste (the Alliance) today announced a strategic partnership with China Petroleum and Chemical Industry Federation (CPCIF) to jointly promote the reduction and elimination of plastic waste in the natural environment in China, said Endplasticwaste.

The new partnership will bring together the Alliance’s 47 leading global member companies and the strengths of CPCIF to jointly formulate a strategic approach to identify and collaboratively implement local solutions in China to address the plastic waste challenge.

"No one country, company or community can solve the plastic waste challenge on their own. The Alliance believes in the collaboration of governments through public-private partnerships and long term commitment focused on acting locally through projects that address a city’s specific challenges,” said Jacob Duer, President and CEO, Alliance to End Plastic Waste. “We are excited to have CPCIF as our partner and endeavour to make a meaningful and valuable contribution to China’s national effort to eliminate plastic waste from leaking into the environment."

"Advocating green development and promoting circular economy is one of the key tasks of China’s petroleum and chemical industry,” said Li Shousheng, Chairman of China Petroleum and Chemical Industry Federation. “We firmly believe that since we invented plastic, we will also bound to find solutions to the plastic waste problem. CPCIF is willing to give full play to its industry advantages, work with stakeholders in the industry value chain and international partners, such as the Alliance, who shares the same vision as CPCIF, to jointly and effectively promote the plastic circular economy, improve and solve plastic waste problems.

In addition, the partnership will open up opportunities to prove and accelerate solutions that will unlock capital investments, which are necessary to tackle the plastic waste challenge in China.

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