Fire at Philippines JG Summit Petrochemical has no impact on units

MOSCOW (MRC) -- A fire at Philippines JG Summit Petrochemical's Batangas complex on Sept. 26 did not have any impact on the olefins production units, company sources told S&P Global.

The company plans to restart its naphtha-fed steam cracker later in the week ending Oct. 3. The company's cracker and polymer units were undamaged by the fire that occurred at an effluent containment area of the complex, the sources said.

"The polymer units are running; while, the expected restart of the cracker is within the week," said a company source, adding that the fire occurred near the pier area and did not spread to the main manufacturing sites.

"The cracker was shut for a short while for other reasons even before the fire, and the fire has no relation to cracker operations," said another company source.

JG Summit plans to run the cracker at full capacity after the restart, the first source said. Asia's steam crackers have mostly been operating at full or close to full capacity to capitalize on positive olefin margins.

The spread between CFR Northeast Asia ethylene and feedstock CFR Japan naphtha physical assessments widened USD3.75/mt week on week and USD120.50/mt, or 35.77%, since Sept. 1, to a 13-month high of USD457.375/mt at the Asian market close on Sept. 28, Platts data showed.

The spread was last higher on Aug. 12, 2019, at USD458.50/mt. Since Sept. 3, the spread had risen above the typical breakeven spread of USD350/mt, as per market sources and Platts data. It has remained above integrated producers' breakeven spread of around USD250/mt since May 12.

The company's naphtha-fed steam cracker at Batangas can produce 216,000 mt/year of pyrolysis gasoline, or pygas; 320,000 mt/year of ethylene, 190,000 mt/year of propylene; and 110,000 mt/year of mixed C4.

At the Batangas complex, JG Summit has new projects in the pipeline to expand its olefins capacity and produce aromatics. The company plans to complete a 250,000 mt/year high density polyethylene plant by the fourth quarter of 2021. In addition to the new HDPE plant at Batangas, the capacity of an existing polypropylene plant at the same site will be upgraded to 300,000 mt/year from 190,000 mt/year. There are currently two existing HDPE /linear low density polyethylene swing plants at Batangas with a combined nameplate capacity of 320,000 mt/year.

Construction of the company's maiden benzene-toluene-xylenes unit had been delayed due to the spread of COVID-19 in the Philippines, as the works were initially planned to be completed by June, but is now planned for the first quarter of 2021.

However, broadly, fundamentals on the aromatics markets were still mixed. Lower run rate in some refineries in the region was described to be lending some support by slowing the previous supply overhang.

As MRC informed earlier, a fire struck the plant of the JG Summit Petrochemicals Group, a Gokongwei company, in Barangay Simlong in Batangas City on Saturday night, according to the Batangas City Fire Station. It was the police that informed firefighters about the blaze, which started at around 10 p.m. One person was reported injured, according to Col. Rex Malimban.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

JG Summit's BTX unit would have a production capacity of 126,000 mt/year of benzene, 76,000 mt/year of toluene, 46,000 mt/year of mixed xylenes, 29,000 mt/year of non-aromatics with some 21,000 mt/year materials of mixed aromatics, including C9+, all derived using the pygas feedstock produced from the existing steam cracker.
The Batangas PE facility is a joint venture between JG Summit Holdings and Marubeni Corp.
MRC

MOSCOW (MRC) -- U.S. oil refiners are starting to make progress towards eliminating excess stocks of middle distillates by restraining crude processing and switching equipment to maximize gasoline production, said Hydrocarbonprocessing.

U.S. distillate fuel oil inventories stood at 176 MM barrels at the end of last week, which was 37 million barrels or 21% above the five-year seasonal average. In absolute terms, stocks are unchanged from early June, when they were also 176 MM barrels. But the surplus over the five-year average has shrunk from 42 MM barrels, or 29%.

Refiners have stabilized bloated distillate stocks over the summer and into early autumn, a time when they would normally be rising, accumulated as a by-product of driving-season gasoline production plans.

Refinery processes and equipment have been reconfigured to maximize production of gasoline and minimize output of mid-distillates such as fuel oil and jet kerosene. Last week, refiners produced 1.77 times as much gasoline as distillate fuel oil and jet fuel combined, one of the highest gasoline ratios for a quarter of a century.

Gasoline-distillate ratios have only approached similar levels a few times, including 2010, 2005 and 1998, when distillate stocks were also far above normal. Even more importantly, refiners have trimmed total crude processing to reduce the production and supply of all fuels (in effect cutting everything to bring distillate stocks under control).

U.S. refiners held crude processing 16% below the five-year average last week and by the same proportion over the last four weeks as a whole. By comparison, the total volume of petroleum products supplied to the domestic market, a proxy for actual consumption, was 10% below the five-year average last week and 13% below average for the last four weeks.

The result is that distillate production has been reduced in line with consumption, while gasoline has been under-supplied for months, leading to a sustained drawdown in stocks. Gasoline stocks have fallen by 36 million barrels since late April, when they were 12% above the five-year average, and are now less than 1% above average.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

MOSCOW (MRC) -- Merck KGaA says that Stefan Oschmann, the company’s chairman and CEO since 2016, will hand over his responsibilities to Belen Garijo on 1 May 2021, said Chemweek.

Garijo has been appointed Merck’s new chair and CEO by the company’s board of partners. Garijo is currently vice chair of Merck’s board and deputy CEO, as well as CEO of the company’s healthcare business. Oschmann will leave the company as planned after 10 years on the board, five of them as chairman and CEO, to turn to other tasks, the company says.

Johannes Baillou, chairman of Merck's board of partners, says that Garijo “has done excellent work in transforming our healthcare business sector. Belen Garijo and Stefan Oschmann have been collaborating closely and trustfully for many years. This will ensure a seamless transition and continuity in corporate management,” he says.

Peter Guenter will join the Merck board, effective 1 January at the latest, the company says. He will assume board responsibility for the healthcare business sector and be located at Merck's Darmstadt, Germany, headquarters. Matthias Heinzel will also join the company’s board, effective 1 April 2021 at the latest, Merck says. He will assume board responsibility for Merck’s life science business sector and be located at Burlington, Massachusetts, and Darmstadt.

Kai Beckmann and Marcus Kuhnert will remain board members, Merck says.

As MRC wrote previously, Merck KGaA has announced the opening its M Lab Collaboration Center in Shanghai, China. Merck Innovation Hub, the first in China, started in late 2019, with the company announcing a 100 million renminbi (USD14 million) seed fund injected into the China Innovation Hub.

We remind that Merck celebrated the opening of its new packaging center at the science and technology company’s headquarters in Darmstadt, Germany, in October, 2018. The new 161,458-square-foot facility is dedicated to the packaging and shipping of Merck’s current portfolio of pharma medicines in more than 90 countries and help meet increasing patient needs for flagship medicines Glucophage, Concor and Euthyrox in the areas of diabetes, cardiovascular diseases and thyroid disorders respectively. It will also provide capacity for potential future pharma products currently in clinical development such as evobrutinib in the area of neurology-immunology or tepotinib in the area of oncology.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

MOSCOW (MRC) -- Siemens says that its digital industries business is teaming up with Lianhetech Seal Sands (Middlesbrough, UK), a contract manufacturer of fine chemicals for use in the crop protection, pharmaceutical, and performance chemicals industries, to double the overall capacity of the Lianhetech plant at Seal Sands near Middlesbrough. Lianhetech Seal Sands is a subsidiary of Lianhetech (Taizhou, China), said Chemweek.

Lianhetech has committed to a multimillion-pound expansion of its site and the collaboration with Siemens will help it to carry out digitization on a large-scale expansion at the site, which will enable Lianhetech to create a digital production facility that uses data to drive decision making and share real-time information with its customers; double its fine chemical manufacturing capacity to meet demand from customers in the UK, Europe, and worldwide; improve production efficiency and quality; and futureproof the plant, which employs more than 350 people, Siemens says.

Lianhetech is taking a modular approach to design and commissioning of the project to achieve its target opening of May 2021, Siemens says. There are also longer-term plans to expand into other parts of the site, which could quadruple production capacity, it says. The development is expected to create 80 jobs, Siemens says.

"For decades the industry has become increasingly reliant on a supply chain from the east—China and India—which has led to a huge decline in UK manufacturing,” says Julian Lightwing, operations director at Lianhetech Seal Sands. He notes that “we currently have four production buildings, the large expansion on the existing site, and land we can expand onto. It means we can start from scratch at grassroots level to create a digital enterprise building, and involve Siemens from day one."

Siemens has a long-standing relationship with the Seal Sands facility through the site's previous owner Fine Organics, prior to its acquisition by Lianhetech two years ago.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

MOSCOW (MRC) -- The tax office in China’s Shandong province has urged refiners in the oil hub to make payments to a government risk reserve fund to cover periods when oil prices fell below USD40 a barrel this year, in line with government policy, said Hydrocarbonprocesing.

Global oil prices held below that level for more than three months and the payments due are estimated to be in the billions of yuan. Beijing set a policy in 2016 that required refiners to pay their profit margins to the central government fund whenever crude fell below USD40 a barrel, which is the floor price for retail gasoline and diesel.

If the payments are made, analysts say they would likely cut into the already narrowing margins of the mostly independently run plants and curb their appetite for crude imports for the rest of the year. “All companies that are registered in Shandong, but not including Qingdao city, and produce or process gasoline and diesel are obliged to make payment to the risk reserve fund,” the Shandong tax bureau said in a statement.

The central government has direct control of taxes in Qingdao. Companies that choose to pay quarterly will have to submit payments for the first two quarters before the end of October and those that opt for annual payments will have to complete the process by the end of February next year, it said.

The fund aims to improve fuel quality, help firms to reduce emission and ensure the national oil supply, but analysts worry the payments will put a short-term burden on refineries. "Refining margins have declined sharply since the third quarter due to tepid fuel demand. The fund collection is another pour of cold water," said Wang Yanting, Shandong-based analyst at consultancy JLC.

State refiner PetroChina said in August it would have to pay nearly 13 billion yuan (USD1.9 billion) to the government fund for the first half of 2020.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.

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

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC