Total refining margin sinks to six-year low as sales slump, crude rebounds

MOSCOW (MRC) -- Total, Europe's biggest refiner, saw its average refining margin slump to the lowest level in six years during the second quarter when demand for fuels collapsed due to COVID-19 lockdowns while oil prices began to recover, reported S&P Global.

Total's "variable cost margin" for its European refineries in the second quarter fell to USD14.30/mt or about USD1.95/b, down from USD26.30/mt in the previous quarter and USD27.60/mt in the year-earlier period, it said July 15 in a trading statement.

The second-quarter average was the lowest since Q2 2014, when it was USD10.90/mt, although Total used a different methodology to calculate its margin at the time.

European refining margins had already begun to fall sharply in March as lockdowns tanked oil product demand globally, causing Q1 refining to shrink by around 20% from the previous quarter. Global oil demand shrank by 16.4 million b/d in the second quarter, according to the International Energy Agency.

Although European driving activity continues to rebound from lockdown lows in early April, Brent crude prices have surged by almost USD15/b over the same period to over USD40/b. Refining margins have also been hit by pressure from a global oil product surplus.

All of the IEA's margin indicators for Northwest Europe turned negative on a monthly average basis in May, with Brent cracking margins turning negative for the first time on a monthly basis since 2006.

Speaking at the end of May, CEO Patrick Pouyanne said he expects Total's refineries to operate at 70% of capacity this year, about 15 percentage points below the 2019 average, "which is going to impact the cash flow from refining."

Total's 93,000 b/d Grandpuits refinery in France restarted operations in early June after several months of outages and the company is contemplating the future of the site.

Last week, the IEA said the demand destruction caused by the coronavirus pandemic has set the refining sector back "by several years", with 2021 demand still forecast to be below that of 2017, while global refining capacity has increased.

It forecast global refinery runs in 2020 would fall by 6.4 million b/d to 75.3 million b/d, but increase by 4.7 million b/d in 2021.

BP's refining marker margins have continued to fall in the third quarter, and last week the major said its margins in Northwest Europe averaged USD4.40/b so far in the quarter, down from USD4.80/b in Q2.

Shell last month cut its long-term refining margin assumptions by around 30% to reflect a weaker, post-pandemic market outlook.

Over the second quarter, Total said its realized average liquids price was USD23.40/b, a USD10/b discount to the average Brent benchmark price of USD33.40/b for the period.

As MRC informed before, Total has recently disclosed that it is evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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.

Total S.A. is a French multinational oil and gas company and one of the six "Supermajor" oil companies in the world with business in Europe, the United States, the Middle East and Asia. The company's petrochemical products cover two main groups: base chemicals and the consumer polymers (polyethylene, polypropylene and polystyrene) that are derived from them.
MRC

MOSCOW (MRC) -- RusVinyl, joint venture of SIBUR and Solvay, has shut down its polyvinyl chloride (PVC) production for a scheduled turnaround, according to ICIS-MRC Price report.

The plant's customers said RusVinyl took off-stream its production capacities for maintenance, as planned, on 14 July. The outage will be short and will last for about two weeks. This is virtually the last shutdown at Russian PVC plants in this year.

As reported earlier, SayanskKhimPlast shut its PVC production for a 30-day turnaround on 8 July, whereas Kaustik Volgograd idled its production capacities in May-June. Bashkir Soda Company does not plan to shut its production for maintenance works this year.

RusVinyl was put into operation in the second half of 2014. The plant's design capacity is 300,000 tonnes/year of suspension polyvinyl chloride (SPVC) and 30,000 tonnes/year of emulsion polyvinyl chloride (EPVC). Its caustic soda production capacity is 225,000 tonnes/year.
MRC

MOSCOW (MRC) -- Overall polyethylene (PE) imports into the Ukrainian market rose in the first six months of 2020 by 4% year on year to 136,400 tonnes. Imports of high density polyethylene (HDPE) and low density polyethylene (LDPE) increased, according to MRC's DataScope report.

Last month's PE imports to Ukraine grew to 23,700 tonnes from 21,800 tonnes in May, local companies increased shipments of all grades of ethylene polymers partially because of easing of the quarantine in a number of regions. Thus, overall PE imports reached 136,400 tonnes in January-June 2020, compared to 131,100 tonnes a year earlier. HDPE and LDPE imports increased, whereas imports of other PE grades decreased.

The supply structure by PE grades looked the following way over the stated period.

Last month's HDPE imports into the country were 7,800 tonnes versus 7,900 tonnes in May, Ukrainian companies reduced their purchasing of film grade PE, whereas purchases of other HDPE grades increased. Overall HDPE imports exceeded 54,300 tonnes in the first six months of 2020 versus 48,800 tonnes a year earlier.

June LDPE imports were slightly over 7,700 tonnes, compared to 6,000 tonnes a month earlier, local companies raised their purchasing amid easing of the quarantine and under the pressure of seasonal factors. Overall LDPE imports reached 39,200 tonnes over the stated period, compared to 37,300 tonnes a year earlier.

Last month's linear low density polyethylene (LLDPE) imports were 7,100 tonnes versus 6,400 tonnes in May, with stretch films producers accounting for stronger demand for PE. Overall LLDPE imports reached 36,400 tonnes in January-June 2020, compared to 38,900 tonnes a year earlier.

Imports of other PE grades, including ethylene-vinyl-acetate (EVA), totalled 6,500 tonnes in the first six months of 2020, compared to 6,200 tonnes a year earlier.

MRC

1.PTTGCA moves forward on Ohio project as Daelim pulls out

MOSCOW (MRC) -- PTTGC (Bangkok) said it is moving forward with its much-delayed Ohio petrochemical project without its partner, Daelim Chemical USA (DCA), said Chemweek. Toasaporn Boonyapipat, PTTGC America (PTTGCA) president and CEO, said, “The Ohio petrochemical facility continues to be a top priority for PTTGC America. We are in the process of seeking a new partner whilst working toward a final investment decision [FID]. We look forward to making an announcement by the end of this year or early next year on this transformative project for the Ohio Valley Region." In a joint statement issued by PTTGCA and DAC, the companies said, "The COVID-19 pandemic and recent oil price volatility have caused significant impacts on businesses around the world. As a result of these factors, the Ohio petrochemical complex project being developed by PTTGC America… and Daelim Chemical USA…[would have encountered] a delay of about six to nine months compared to the previously announced timeline…Under this market situation, PTTGCA and DCA have been assessing the impact for major investment projects to ensure that our portfolio is well positioned for the future of petrochemical Industry. While we continue to believe in the long-term strategic importance of this project, DCA has taken the difficult but necessary decision to withdraw as equity partner from the project.



MRC

MOSCOW (MRC) -- Enterprise Products Partners (Houston, Texas) co-loaded olefins and natural gas liquids (NGLs) twice in July, the first time such cargoes have been loaded for export from the US, said Chemweek.

A VLGC (very large gas carrier) received propane and polymer-grade propylene (PGP) simultaneously into separate compartments at the Enterprise Houston Ship Channel terminal. Another vessel took on ethane and ethylene simultaneously at the company’s Morgan’s Point facility in Houston.

"This landmark accomplishment was made possible by our integrated midstream network, as well as the creativity and determination of our employees,” says AJ Teague, co-CEO of Enterprise’s general partner. “Loading ethylene and propylene on larger vessels from the US Gulf Coast substantially lowers freight costs and allows US Gulf Coast producers to supply distant markets, such as Asia, more competitively."

The Morgan’s Point terminal, a joint venture between Enterprise and Navigator Holdings (London), shipped its first cargo of ethylene in January. Earlier this month, Navigator said the terminal had gotten take-or-pay offtake commitments for about 95% of its 2.2-billion pounds/year (1-million metric tons/year) nameplate capacity.

As MRC informed earlier, Enterprise Products is expected to restart its propane dehydrogenation (PDH) unit in Mont Belvieu, Texas, from maintenance this week. This PDH unit has the capacity of 750,000 mt/y of propylene.

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

According to MRC's ScanPlast report, 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