BP Midstream pipeline volumes fall in second quarter, but revenues up

MOSCOW (MRC) -- BP Midstream Partners LP pipeline volumes fell roughly 10% in the second financial quarter as efforts to curb the spread of the coronavirus pandemic slashed fuel demand, reported Hydrocarbonprocessing with referemce to company executives.

Despite lower volumes, revenue of BP’s US pipeline unit rose to USD31.50 in the three months ending June 30 from USD28.6 million in the same period last year as it clamped down on expenses.

Onshore pipelines, including the BP2 crude oil line and the River Rouge refined products line, which connect to BP’s Whiting, Indiana refinery, saw 13% fewer barrels, the company said.

Volumes on offshore pipelines, including the 400,000 barrel-per-day Mars crude oil pipeline off the Louisiana coast, fell 8%. BP Midstream still plans to expand the Mars crude oil pipeline system starting next year.

Activity on those lines have picked up in the current quarter, company officials said.

"The impact of COVID-19 and broader market volatility on pipeline throughput was much more apparent across our portfolio in the second quarter compared to the first quarter, set against the backdrop of significant product demand destruction across the U.S.,” Craig Coburn, BP Midstream’s chief financial officer, said on a company earnings call.

“Industry-wide we saw reduced refinery utilization during the quarter,” Coburn said.

US refinery utilization fell from record highs to 68% of the 19 million barrels-per-day total capacity in April as states and local governments attempted to combat COVID-19 by restricting travel and business activity.

As MRC wrote before, BP reports a 43% year-on-year (YOY) decline to USD47 million in second quarter earnings for its petrochemicals business, which remains on schedule to be sold to Ineos for USD5 billion before the end of the year. BP says it received proceeds from divestments and other disposals in the quarter of USD1.1 billion, including “the first payment from the agreed sale of BP’s petrochemicals business to Ineos.”

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 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) -- Lotte Chemical has taken over a Vietnamese high-tech material company to attain its vision of becoming the seventh-largest chemical industry in the world, said Businesskorea.

The company is diversifying its overseas business portfolio, ranging from basic materials to high-tech materials.
Lotte Chemical acquired Vina Polytech in April. Vina Polytech produces materials for home appliances and mobile products. Lotte Chemical has invested billions of won to acquire it.

Shortly after the acquisition of Vina Polytech, Lotte Chemical set up a local corporation in Indonesia under the name of PT Lotte Chemical Engineering Plastic Indonesia. It established the company to build a compounding product plant that produces high-tech materials for automobiles. Lotte Chemical has expanded its business in Southeast Asia, which has been focused on basic materials, to include high-tech materials.

Southeast Asia is one of Lotte Chemical's key markets. Major Southeast Asian countries including Indonesia, Malaysia and Vietnam are home to production facilities of large companies from around the world. This explains why Lotte Chemical has established a base in Southeast Asia.

In 2010, Lotte Chemical knocked on the door to the Southeast Asian market by acquiring Malaysia's state-run petrochemical company Titan (currently Lotte Chemical Titan). Lotte Chemical is planning to create a large petrochemical complex in Indonesia by investing five trillion won. Tthe petrochemical complex, when completed, will produce one million tons of ethylene annually.

Lotte Chemical aims to become the world's seventh-largest chemical company with sales of 50 trillion won by 2030. For this, it has been expanding investment in the basic materials business, sharpening competitiveness and promoting growth in the high-tech material business. Lotte Chemical's sales in 2019 amounted to 15.12 trillion won. It needs to more than triple its sales over a decade to attain the goal.

We remind that, as MRC informed before, Lotte Chemical Titan Holding (Kuala Lumpur, Malaysia), an affiliate of Lotte Chemical (Seoul, South Korea), announced that the group's ethane cracker and ethylene glycol (EG) plant at Lake Charles, Louisiana, commenced commercial operations in August, 2019. Lotte Chemical USA, a 40/60 joint venture (JV) between Lotte Chemical Titan and Lotte Chemical, holds the Lotte group's stakes in the plants. The USD3.1-billion ethane cracker is an 88/12 JV between Lotte Chemical USA and Axiall, a subsidiary of Westlake Chemical. Lotte has invested about USD1.9 billion in the JV. Lotte Chemical USA owns 100% of the EG plant.

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 survey of UK chemical companies has revealed that 80% expect improved stability and a rise in domestic and international export sales over the next three months, with over 70% also seeing the same upward trend for exports to the EU, despite significant uncertainty remaining, said Chemweek.

The survey of its member companies by the Chemical Industries Association (CIA; London, UK) shows the majority also expect to see an improvement in capital expenditure, although around 10% of companies expect job losses and a reduction in R&D expenditure. The decline in industry sales came to a halt in the second quarter of 2020, with half of the companies surveyed now reporting “stability or improvement,” the CIA says. Exports to the EU and the rest of the world remained at current levels or improved during the quarter for half of those surveyed, as did capex and business utilization, it says. Stability and growth in employee numbers during the quarter, as well as spending on R&D, was reported by 80% of companies contacted, it adds.

"Given the huge challenges earlier in the year, it is good to see some stability has been reached. Our member data also confirms what we’ve seen in the official figures from the ONS [Office for National Statistics] for the first 5 months of the year,” says CIA chief executive Steve Elliott. “We cannot say yet that we are on an economic path to growth—the next quarter looks OK, but that is building on a very challenging second quarter and we can all see that sustained economic recovery is unlikely to be smooth or predictable."

For the next 12 months “some optimism remains but it is very hard to be clear,” Elliott says. While the majority of businesses are predicting a stronger export performance, stability, and a ramping up of new orders, production levels, and capacity utilization, “the uncertain outcome of the Brexit talks and any COVID-19 spike means the tremendous hard work shown by businesses in the sector could be at risk,” he says.

Elliott called for the UK government to deliver an autumn demand stimulus package for those manufacturing industries hit hardest by the pandemic and a successful conclusion to the trade talks between the UK and EU, including “tariff-free frictionless trade and regulatory consistency; taxation reform through a reduction in corporation tax; improved incentives for R&D, and a new green energy deal with a serious review of energy costs."

As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six 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-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.

MRC

MOSCOW (MRC) -- According to the American Chemistry Council (ACC), the U.S. Chemical Production Regional Index (U.S. CPRI), fell by 1.1 percent in June on a three-month moving average (3MMA) basis following a 2.0 percent decline in May and a 3.0 percent decline in April, said Americanchemistry.

During June, chemical output fell across all regions, with the steepest declines in the Gulf Coast, Midwest and West Coast regions.

Deemed an essential industry by the U.S. Department of Homeland Security, chemical production eased on a 3MMA basis, with declines in segments except chlor-alkali, industrial gases, other basic inorganic chemicals, and consumer products, which were slightly higher. Within several major segments, production of some chemical materials increased, including supply chains tied to PPE and disinfection products.

As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six 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-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.
MRC

MOSCOW (MRC) -- Brenntag says it has acquired the operating assets of Suffolk Solutions’ (Suffolk, Virginia) caustic soda distribution business. Financial terms of the deal have not been disclosed, said Chemweek.

"The business and the related terminals of Suffolk Solutions fit seamlessly into our ambitions to further link Brenntag’s caustic soda network in the eastern United States. There is great potential to strengthen our supply chain and expand our customer base in this geography,” says Steven Terwindt, Brenntag board member/North America.

Suffolk Solutions has access to a bulk terminal as well as to a rail transloading facility in Virginia. The acquired business generated sales of approximately $15.6 million in the 12 months ended 30 April 2020.

“Suffolk Solutions will strengthen Brenntag’s footprint in the Virginia market and thus will enable us to improve our logistical infrastructure throughout the region,” Anthony Gerace, managing director/mergers and acquisitions at Brenntag says. "It will provide us with greater supply flexibility, manoeuvrability, and additional storage capacity on the east coast of the United States."

As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six 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-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.
MRC