August LDPE prices rose in the Russian market by more than a quarter

MOSCOW (MRC) -- The Russian market saw a constant rise in low density polyethylene (LDPE) prices throughout August due to good demand and shutdowns for maintenance at some plants. The increase in prices of some grades exceeded 25% for the month, according to ICIS-MRC Price report.

The rise in LDPE prices in Russia began back in late June because of shutdowns for turnarounds at Angarsk Polymers Plant and Gazprom neftekhim Salavat. But in August, the dynamics of price growth increased significantly due to strong demand and the upcoming shutdowns for maintenance simultaneously at three plants in September. Polyethylene (PE) prices of some sellers grew by Rb20,000/tonne and more in the last summer month.

Angarsk Polymers Plant shut down its production capacities for a 30-day turnaround on 22 June, however, the plant had managed to resume its PE production after maintenance only by 3 August, and PE production was again taken-off stream on 10 August due to problems at the ethylene unit. The producer has not resumed its LDPE production so far.

A similar situation occurred with Gazprom neftekhim Salavat, the shutdown started on 1 July and was also planned to be conducted during the month, but the resumption of LDPE production started only 10 days after the scheduled date. At the same time, Salavat PE was virtually completely absent in the spot market in the second half of August.

It is also worth noting that Kazanorgsintez reduced its LDPE output in August due to a shortage of ethylene.

Many sellers limited their sales in the spot market throughout August, and prices were also adjusted on a weekly basis. In the contract market, consumers reported restrictions from producers. As a result, many converters were unable to build up additional LDPE inventories.

But September will be the most difficult month for consumers because of a series of shutdowns for maintenance at three more plants. Ufaorgsintez will be the first to start gradually shutting down its production for a turnaround from 29 August, the maintenance works are scheduled to be fully completed by 6 October.

Tomskneftekhim intends to shut down its production capacities for a two-week turnaround in early September. Kazanorgsintez will shut down its production capacities in several phases from 17 September, the outage will last until 10 October.

In late July, prices for 108 grade PE started from Rb74,500/tonne CPT Moscow, including VAT, and offer prices for 158 grade LDPE were at an average of Rb76,500/tonne CPT Moscow, including VAT. In late August, prices rose to Rb95,000/tonne CPT Moscow, including VAT, and Rb100,000/tonne CPT Moscow, including VAT, respectively.
MRC

MOSCOW (MRC) -- Russia's production of high density polyethylene (HDPE) totalled 1,040,000 tonnes in the first seven months of 2020, up by 84% year on year. ZapSibNeftekhim accounted for the main increase in the output, according to MRC's ScanPlast report.

July total HDPE production in Russia was 147,500 tonnes, whereas this figure was 114,400 tonnes a month earlier, the largest producer - ZapSibNeftekhim - raised its capacity utilisation after the shutdown for a scheduled maintenance in July. Thus, overall HDPE output reached 1,040,000 tonnes in January-July 2020, compared to 564,500 tonnes a year earlier. All producers raised their output, but ZapSibNeftekhim accounted for the greatest increase.

The structure of HDPE production by plants looked the following way over the stated period.

Kazanorgsintez reduced its HDPE production in July in favour of linear low density polyethylene (LLDPE), the total production was 41,500 tonnes, compared to 42,600 tonnes a month earlier. The plant's overall HDPE output reached 312,600 tonnes in the first seven months of 2020, down by 2% year on year.

Stavrolen shut down some of its HDPE production capacities last month due to technical issues, the total production was 22,800 tonnes versus 27,500 tonnes in June. The plant's overall output totalled 186,700 tonnes in January-July 2020, up by 2% year on year.

Gazprom neftekhim Salavat reduced its capacity utilisation in July, the plant's HDPE production dropped to 8,700 tonnes from 11,300 tonnes a month earlier. The Salavat plant's overall output of polyethylene (PE) reached 73,100 tonnes, up by 19% year on year, such an increase in production was caused by the absence of shutdown for maintenance this year.

ZapSibNeftekhim produced 74,600 tonnes last month versus 33,000 tonnes in June, the low figure of the first summer month was due to a two-week shutdown for a turnaround. The plant's overall production totalled about 468,000 tonnes over the stated period.

MRC

MOSCOW (MRC) -- LyondellBasell has shut multiple plants in Louisiana and Texas ahead of Hurricane Laura's landfall, reported S&P Global with reference to a spokeswoman's confirmation in an email Aug. 26.

Spokeswoman Chevalier Gray said the company had shut two polypropylene (PP) plants in Lake Charles, Louisiana; three PP plants in Alvin, Texas; and a high density polyethylene plant (HDPE) in Bayport, Texas, along the Houston Ship Channel.

The company operates 1 million mt/year and 400,000 mt/year PP plants in Lake Charles, which is among the cities in the storm's direct path.

Hurricane Laura strengthened to a Category 4 storm, packing winds up to a maximum of 140 mph, on Aug. 26 and was expected to make landfall near the Texas-Louisiana state line at midnight or shortly thereafter on Aug. 27.

The National Hurricane Center said Hurricane Laura's storm surge along the coastline could reach 15-20 feet at Calasieu Lake in Lake Charles.

Chevalier said a "ride-out crew," or a small team of Lake Charles workers, remain on site "to ensure the safety of the plant and our assets during the storm." Such ride-out crews are common at refineries and chemical plants when storms hit.

LyondellBasell's other shut assets include three PP plants at Bayport near the mouth of the Houston Ship Channel with capacities of 1.16 million mt/year, 455,000 mt/year and 235,000 mt/year. The shut HDPE plant in Alvin, Texas, can produce up to 180,000 mt/year.

As MRC reported previously, in early August, 2020, China’s Bora LyondellBasell Petrochemical, a JV between the privately owned Bora Enterprise Group and the world's petrochemical major - LyondellBasell, has started up its new steam cracker at the Panjin complex in northeast China. The steam cracker, when fully operational, is able to produce up to 1 mln mt/year of ethylene.

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.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

MOSCOW (MRC) -- Chevron Phillips Chemical is shutting down its Port Arthur, Texas cracker in preparation for Hurricane Laura, reported S&P Global with reference to sources' statement Aug. 26.

The unit's capacity of 855,000 mt/year, according to S&P Global Platts Analytics data.

Chevron Phillips is also shutting down its Cedar Bayou, Texas, crackers ahead of the storm, sources said.

The company's Cedar Bayou crackers 1 and 2 have capacities of 837,000 mt/year and 1.7 million mt/year, respectively, according to Platts Analytics data.

Chevron Phillips was not immediately available for comment Aug. 26, but said in a filing Aug. 25 with the Community Awareness Emergency Response online system there will be flaring at the Baytown facility.

Chevron Phillips' Cedar Bayou site was inundated with up to eight feet of water when Hurricane Harvey hit Houston, Beaumont, and Port Arthur in late August and early September 2017. The National Weather Service expects significant storm surges along the southeastern Texas and southwest Louisiana coasts with Hurricane Laura as well, prompting operators to shut even if they are not in the storm's direct path.

"Better safe than sorry. They're probably going to lose power, so it's better to shut down, and then they can restart quickly," said Rob Stier, senior lead for S&P Global Platts Analytics.

ExxonMobil is reducing operating rates at its Baytown, Texas, crackers in preparation for Hurricane Laura, sources said.

The company has three crackers at its Baytown facility with capacities totaling more than 3.7 million mt/year, according to Platts Analytics data.

ExxonMobil was not immediately available for comment Aug. 26, but said in a CAER filing Aug. 25 that there will be flaring at its facility in preparation for the coming severe weather.

As MRC informed earlier, on 18 August, 2020, Chevron Corp reported a fire at its 112,229-barrel-per-day (bpd) Pasadena, Texas facility. "At this time, flames, smoke may be noticeable to the community. We are coordinating with local officials, and working to resolve the issue as soon as possible," the company reported on August, 19.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
MRC

MOSCOW (MRC) -- BP remains committed to its fast-growing US onshore shale business despite ambitious targets to slash its dependence on carbon-intensive oil and gas over the next decade, reported S&P Global with reference to the company CFO Murray Auchincloss' statement earlier this month.

The investment rationale for BP's US shale oil and gas assets "remains strong," with expected cost savings set to boost earnings from the business, Auchincloss told analysts on a strategy presentation.

BP has been increasing activity and optimizing operations at its US shale acreage purchased from mining giant BHP in 2018 for USD10.3 billion.

Oil production from the US shale business, known as BPX, has tripled to 127,000 b/d after the purchase of BHP's assets mostly in the Eagle Ford and Permian shale basins.

"The reservoirs are better than we thought," Auchincloss said, "We're finding more zones than we thought originally...and obviously, the capital is deflating these days, service rates are down so when we start drilling again, service rates are going to be an awful lot lower."

Auchincloss said BP also expects to find additional cost savings to the targeted USD400 million in synergies at the time of the acquisition.

BP has said spending curbs during 2020 due to the pandemic will reduce its production by 70,000 b/d of oil equivalent this year, with most of the reduction to occur at the company's BPX shale business.

BP said earlier it expects to see its upstream global production fall by at least 40% by 2030 as it spends less on exploration and development and sells off some producing assets.

During the second quarter of 2020, BPX's total production slipped to 364,000 boe/d, down from 499,000 boe/d in the year-ago period reflecting a 26% fall in its shale gas production as drilling almost halted amid the coronavirus pandemic.

Earlier this year, as MRC wrote previously, 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