Sinopec posts loss in H1 2020

MOSCOW (MRC) -- China Petroleum & Chemical Corp. or Sinopec Corp. reported first-half 2020 net loss of RMB 22.9 billion compared to a profit of RMB 31.3 billion last year, according to Markets Insider.

On a per share basis, loss totaled RMB 0.189 versus a profit of RMB 0.259 in the prior year period.

Net loss attributable to equity shareholders of the company was RMB 24.4 billion or RMB 0.202 per share versus a profit of RMB 30.5 billion or RMB 0.252 per share earned a year ago.

Turnover and other operating revenues for the period amounted to RMB 1,034.2 billion, 31% lower than the previous year's RMB 1,498.9 billion.

As MRC reported earlier, Sinopec Shanghai Petrochemical, a refining subsidiary of Asia's top refiner Sinopec, plans to raise daily crude oil throughput by 7.8% in the second half of 2020. The Chinese company aims to process 7.68 million tonnes of crude oil in July-December, equivalent to 304,700 barrels per day.

We remind that Sinopec Zhongyuan Petrochemical, also 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.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

MOSCOW (MRC) -- World oil demand will fall more steeply in 2020 than previously forecast due to the coronavirus and there are doubts about next year’s recovery, OPEC forecast, potentially making it harder for the group and its allies to support the market, reported Reuters.

World oil demand will tumble by 9.06 million barrels per day (bpd) this year, the Organization of the Petroleum Exporting Countries said in a monthly report, more than the 8.95 million bpd decline expected a month ago.

Oil prices have collapsed as the coronavirus curtailed travel and economic activity. While some countries have eased lockdowns, allowing demand to recover, fear of new outbreaks has kept a lid on prices and OPEC expects this to persist.

“Crude and product price developments in the second half of 2020 will continue to be impacted by concerns over a second wave of infections and higher global stocks,” OPEC said in the report.

OPEC stuck to its forecast that in 2021 oil demand would rebound by 7 million bpd but said the outlook was subject to large uncertainties that might result in “a negative impact on petroleum consumption”, such as demand for air travel, more fuel-efficient cars and more competition from other fuels.

“Almost all forecasters expect jet fuel in 2021 to struggle making up for lost demand,” OPEC said. “Gasoline demand will face pressure to return to 2019 levels.”

Oil stocks have built up due to the demand collapse. OPEC said inventories in developed nations rose in June to stand 291.2 million barrels above the five-year average, a yardstick that OPEC before the pandemic saw as a desirable level.

Crude rose above USD45 a barrel in mid-August, but remained below levels that many OPEC members need to balance their budgets.

To tackle the drop in demand, OPEC and its allies, known as OPEC+, agreed to a record supply cut of 9.7 million bpd that started on May 1, while the United States and other nations said they would pump less.

In the report, OPEC said its output rose by 980,000 bpd to 23.17 million bpd in July, largely because Saudi Arabia and other Gulf members ended extra voluntary cuts they had made in June.

That amounted to 97% compliance with the pledges, according to a Reuters calculation - lower than June’s figure of well above 100%.

OPEC is set to boost output further this month as the 9.7 million bpd cut tapers to a reduction of 7.7 million bpd from Aug. 1. A monitoring panel of OPEC+ ministers meets next Tuesday to discuss the market, and so far there is no suggestion of tweaking the agreement.

The report also forecast that demand for OPEC crude will be lower than expected this year and next, as supply increases from outside the group and because of the reduced demand outlook for 2020.

OPEC said demand for its crude this year will average 23.4 million bpd, down 400,000 bpd from the previous forecast. That suggests the market could move into surplus should OPEC’s output rise in August, as called for by the OPEC+ agreement.

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

MOSCOW (MRC) -- The US plastics recycling industry is struggling to regain its footing as the coronavirus pandemic upended its business model, potentially leaving many recyclers at risk of shutting down, reported S&P Global.

When the pandemic prompted widespread shutdowns in late March and April, millions of workers left office buildings to work from home, cutting off sources of bulk supply of plastic bottles - made from polyethylene terephthalate (PET) - from businesses.

Since lockdowns began, large consumer beverage brands have seen significant declines in away-from-home volume sales. The dearth of sporting events, concerts and other crowd-heavy gatherings, as well as closures or limited operations of bars and restaurants, have slashed bottled drink purchases across the US. Additionally, at-work sales remain sluggish as well since many offices have yet to return to capacity, if at all.

For instance, Coca Cola reported in early April a 25% year-on-year decrease in away-from-home sales, translating into a heavy decline in on-the-go packaging demand. As some economies slowly began to reopen, those sales volumes recovered 10% by June, bringing the total second quarter company losses to 16% on the year.

Despite a recent slowdown in volume loss, CEO James Quincey said uncertainty caused by the pandemic remains significant as regions experience resurgence in infections, prompting renewed shutdowns or slowing emergence from them.

Recycling markets do not follow the typical supply-demand trends. Consumers control the supply of curbside PET available for processing, commodity value having no influence over behavior. And because municipalities or local governments control how that supply is collected and entered into the value chain, the entire recycling system is dependent on community programs that are oftentimes only funded by taxpayers.

This leaves curbside recycling programs very vulnerable to budget cuts that are felt up the entire value chain. In addition, residential recycling costs are oftentimes subsidized by commercial recycling customers as they usually generate far larger loads than households.

For recycling and waste management companies, business and restaurant closures directly impacted the number of commercial volumes available for recycling, with some of the largest haulers in the country seeing significant declines in early spring. Waste Management, the top waste hauler in the US, saw an overall 25% reduction in total commercial volumes, said Brent Bell, company vice president of recycling, in a July 8 webinar.

On the other hand, residential tonnages have surged since the start of the pandemic-related lockdowns as more people work from home and buy consumer goods and products online, Bell added.

Additionally, because dine-in services remain limited in most parts of the US, takeout orders from restaurants are surging. Restaurants that traditionally serve over-the-counter fountain drinks to customers are switching to bottled beverages for takeout. As delivery orders spike, so too has food-packaging waste, including PET, found in recycling bins.

However, because many municipalities suspended recycling programs at the height of shutdowns on labor shortages or tax dollars redirected to other services, such as traditional trash pickup, a lot of this supply never found its way into the recycling system.

As municipalities reopen, some local governments have permanently shut down curbside recycling programs, rendered too expensive amid shrunken tax revenues. Therefore, a lot of recyclables are now being landfilled, as landfilling fees are typically cheaper than the cost of processing recycled material.

Despite these disruptions, the curbside post-consumer PET bale market, the feedstock for recycled PET flake, did not see prices rise as any supply tightness was met with incredibly weak downstream demand for rPET fiber, often used as a polyester replacement and primarily produced in the Midwest.

Demand for bottle bale feedstock has slashed as global manufacturing came to a near stoppage in May. Most of the demand for this material comes from the textile, carpet, pipe, and automotive industries concentrated in the Southeast region of the US

The recycled PET fiber market is more cost-sensitive than the bottle-to-bottle market as it is a low-cost, low-margin business.

"Half of our rPET goes into fibers," said Darrel Collins, executive director of the National Association for PET Container Resources. "Both the strapping and carpet business has been very poor, especially in May. If you're really only focused on apparel fibers or strapping, you're in trouble."

As more curbside collection programs resume, recyclers are now finding themselves with too much supply amid limited demand. In addition, some large carpet manufacturers are suspending their nationwide voluntary subsidy programs for carpet recycling, taking even more money out of the value chain, and pushing some processors and many carpet collection companies out of business.

As MRC informed before, Indorama owns a third of a major PET and upstream purified terephthalic acid (PTA) complex under construction near Corpus Christi, Texas. In March, Indorama and its partners, Mexico's Alpek and Taiwan's Far Eastern New Century, suspended spending on the project through the rest of 2020 because labor costs on the US Gulf Coast had exceeded previous budget estimates.

We remind that Indorama on Aug. 12 noted that the company remains committed to increasing its recycled PET capacity of 750,000 mt/year by 2025 to meet customer demand. The company announced Aug. 4 it had agreed to buy IMP Polowat, a PET recycling facility in Poland, with capacity to produce 23,000 mt/year of PET flakes and 4,000 mt/year of recycled PET pellets. The deal, for which terms were not disclosed, is slated to close in the third quarter.

According to MRC's ScanPlast report, Russia's estimated PET consumption totalled 367,720 tonnes in the first six months of 2020, up by 19% year on year. Russian companies processed 62,910 tonnes in June.
MRC

MOSCOW (MRC) -- Motiva Enterprises plans to start bringing production units at its 607,000 barrel-per-day (bpd) Port Arthur, Texas, refinery back on-line early this week after they were shut for Hurricane Laura, reported Reuters with reference to sources familiar with plant operations.

Production of finished motor fuels will depend on the length of time needed to restart all units from the cold shutdown of the refinery on Aug. 18, when Laura menaced the US Gulf Coast.

As MRC wrote before, Motiva Chemicals at Port Arthur, Texas, began shutting down light olefin operations last Monday to prepare for the arrival of Tropical Storm Laura.

Ethylene and propylene are feedstocks for producing 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.

Motiva Enterprises, LLC, is a fully owned affiliate of Saudi Refining Inc. and headquartered in Houston, Texas, United States with revenue of USD24 billion. Previously, it was a 50–50 joint venture between Shell Oil Company (the wholly owned American subsidiary of Royal Dutch Shell) and Saudi Refining Inc. (controlled by Saudi Aramco).
MRC

MOSCOW (MRC) -- Refineria di Korsou, owner of the 335,000-barrel-per-day (bpd) Isla refinery on the Caribbean island of Curacao, is suing former operator Petroleos de Venezuela for USD51 million in New York State court, reported Reuters with reference to a filing dated Aug. 26.

Refineria di Korsou said PDVSA had failed to make monthly payments to RdK from early 2018 to December 2019 as required under the two companies’ contract. PDVSA’s deal to operate the refinery expired at the end of 2019, and RdK is currently seeking a new operator.

Neither PDVSA nor Venezuela’s oil ministry immediately responded to requests for comment.

The refinery was largely idled during the period in which PDVSA did not make the utility payments, as an economic crisis in Venezuela and collapse in PDVSA’s crude output led it to reduce the amount of crude it sent to the Isla refinery, RdK said in the filing.

The plant’s total production over the final 22 months of PDVSA’s lease was 235,000 barrels total, or less than a day’s worth of output at its nameplate capacity, RdK said.

RdK obtained a judgment in Curacao court in March ordering PDVSA to pay, and is suing in New York in an attempt to enforce that ruling.

As MRC informed before, Russian state oil company Rosneft's decision to cease operations in Venezuela and sell its assets there to a Russian government-owned company was a "maneuver" made in reaction to collapsing oil prices, a US State Department official said earlier this year.

We remind that Angarsk Polymers Plant, part of Russian oil giant Rosneft, shut down its low density polyethylene (LDPE) production for a scheduled turnaround on 22 June. The outage was scheduled to last for one month. The plant"s annual production capacity is about 75,000 tonnes.

According to MRC's ScanPlast report, June estimated LDPE consumption in Russia grew to 55,260 tonnes from 45,490 tonnes a month earlier. Kazanorgsintez raised its PE output after a spring shutdown for a scheduled turnaround. Russia's estimated LDPE consumption rose to 291,270 tonnes in January-June 2020, up by 5% year on year. Russian producers raised their production, and LDPE imports also increased.
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