Hurricane Delta shuts 29% of U.S. Gulf offshore crude oil production

MOSCOW (MRC) -- Strengthening hurricane Delta forced the closure of 29.2% of offshore crude oil production in the U.S.-regulated northern Gulf of Mexico by midday Tuesday, regulator U.S. Bureau of Safety and Environmental Enforcement (BSEE) said, as per Reuters.

The storm, already a dangerous category 4, also turned off 8.6% of natural gas output from the Gulf of Mexico, BSEE said.

As MRC informed earlier, hurricane Sally crawled offshore along the US Gulf Coast on Wednesday, moving away from oil fields while soaking the region with heavy rains that could dampen fuel demand in the US southeast. The hurricane has shut more than a quarter of US offshore Gulf of Mexico oil and gas production and stirred heavy seas that closed ports from Louisiana to Florida. It moved at a snail's pace toward a Wednesday landfall on the coast between Mississippi and Florida.

As MRC wrote earlier, US Gulf of Mexico producers have shut in roughly 27% of offshore oil and natural gas output ahead of the landfall of Hurricane Sally, which was slowly heading towards the Alabama coast Sept. 15, according to the US Bureau of Safety and Environmental Enforcement. Producers have shut in 497,072 b/d of crude and 760 MMcf/d of gas output, 26.87% and 28.03% of total offshore US Gulf output, respectively. A total of 152 platforms and rigs were evacuated, according to BSEE.

Ethylene and propylene are feedstocks for producing 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

Weir Group to sell oil & gas division to Caterpillar, shares surge

MOSCOW (MRC) -- Weir Group Plc announced it had agreed to sell its oil and gas division to US heavy equipment maker Caterpillar Inc for USD405 million in cash, as the engineering company focuses on its mining business, as per Hydrocarbonprocessing.

Shares of Weir surged 22.5% to 1,568p, on track for their best day in more than 20 years.

The deal, which follows a collapse in global oil prices and a swathe of bankruptcies in the sector, will have a USD70 million US cash tax benefit for Weir, the company said.

In July, Illinois-based Caterpillar, considered a bellwether for economic activity, warned of continued sluggishness in equipment sales due to the coronavirus pandemic, with its main customers in highly cyclical businesses such as mining and construction.

In a separate statement, Caterpillar said the deal covered more than 40 Weir Oil & Gas manufacturing and services locations and about 2,000 employees.

“This acquisition will expand our offerings to one of the broadest product lines in the well service industry,” Joe Creed, Vice President of Caterpillar’s Oil & Gas and Marine Division said.

The transaction includes Weir’s North American and international oil and gas operations, comprising its Pressure Pumping and Pressure Control business units, and associated after-market spares among other things.

Weir Group Chief Executive Officer Jon Stanton said the deal was a major milestone as the group transforms into a premium mining technology business.

The deal is expected to close by the end of the year and Weir said it would help strengthen its balance sheet for future investments.

Jefferies analyst Andy Douglas said the deal removes a “problem child”, leaving Weir with a “very strong” business. He added that the price was higher than Jeffries had expected.

Weir said its oil and gas business had gross assets of $966.61 million at June 30.

As MRC wrote before, global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

Earlier this year, 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 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

Apex to purchase new site in Thailand for PCB capacity expansion

MOSCOW (MRC) -- Taiwan-based PCB maker Apex International is stepping up construction of new production facilities in Thailand seeking to meet ever-expanding demand resulting from supply relocation to Southeast Asia, according to DigiTimes.

Apex's board of directors has just approved a plan to purchase a plot of land in Sinsakhon Industrial Estate for THB290 million (USD9.21 million) to house new production lines in Thailand, according to a company statement.

Apex has invested big in expanding capacities of its two existing wholly-owned plants in Thailand, with one of them dedicated to production of TV PCBs for major brand vendors and the other for manufacturing PCBs for other applications. A third plant, now under construction, will be for rolling out automotive PCBs and some high-end boards, according to company sources.

Southeast Asia is gaining momentum as a new production base for notebook, networking and DRAM module boards amid the intensifying US-China trade tensions and Korean memory makers strengthening production deployments in the region, industry sources said.

Now among the top-10 PCB makers in Thailand, Apex has landed stable orders from many ODMs and terminal clients as a result of its long-term deployments there, the sources said. The company is poised to see more growth momentum in the wake of global supply chain diversification through building new production facilities in Southeast Asia, the sources indicated.

As MRC reported earlier, Covestro has launched a new production line for polycarbonate (PC) films in the Map Ta Phut Industrial Estate in Thailand. With the new capacity, the company aims to meet the rapidly growing demand in the Asia-Pacific region and to strengthen its own position as a market leader in this field. The films are mainly used in the automotive, telecommunications, medical technology and ID document sectors. The project is the first step in a global expansion of Covestro's plastic film production. The total investment of more than 100 million euros also includes an expansion of the associated infrastructure and logistics to shorten delivery times. More than 100 new jobs will be created worldwide.

According to MRC's ScanPlast report, overall estimated consumption of PC granules in the Russian market reached 58,000 tonnes in January-July 2020, up by 22% year on year (47,500 tonnes).
MRC

Asia Distillates-Jet cracks ease from multi-week high as aviation demand struggles

MOSCOW (MRC) -- Asian refining margins for jet fuel dipped on Wednesday after hitting a more than two-month high in the previous session as aviation demand continued to struggle amid surging COVID-19 cases in several countries, said Hydrocarbonprocessing.

Refining profit margins or cracks for jet fuel in Singapore slipped 3 cents to USD2.05 per barrel over Dubai crude during Asian trading hours.

The cracks hit their strongest since July 28 on Tuesday, thanks to tightening supplies. The jet fuel cracks, which have gained about 58% since the end of last week, however, are at their weakest seasonal levels on record, Refinitiv Eikon data showed. Industry analysts said the profit margins were likely to remain a fraction of long-term averages for now as a substantial recovery in aviation demand was not expected until the second half of next year due to reimposed coronavirus restrictions in many markets.

"Strict mitigation measures are being eased in certain markets... although those over the aviation sector will probably be the last ones to go, with imported cases posing real threats to undo individual government efforts to contain local outbreaks," said Peter Lee, a senior oil & gas analyst at Fitch Solutions. "Essential travels and select category of business travels are being permitted in more markets, but the same for leisure flights is perhaps not on the cards, until a vaccine is made available." Cash discounts for jet fuel widened to 52 cents a barrel to Singapore quotes on Wednesday, compared with a 50-cent discount per barrel a day earlier.

As MRC informed earlier, European petrochemical industry faces short-term and longer-term challenges caused by or exacerbated by the COVID-19 pandemic. Speakers on Monday at the European Petrochemical Association’s (EPCA) 54th annual meeting, being held in a virtual format, said the crisis had been a learning experience for the industry.

According to MRC's DataScope report, Russian companies significantly raised their purchasing of PP in foreign markets in August partially because of a major increase in demand, imports were 21,200 tonnes versus 17,200 tonnes a month earlier. Thus, overall PP imports into Russia reached 143,200 tonnes in January-August 2020, compared to 120,100 tonnes a year earlier.
MRC

North America weekly rail up YOY on Canada, Mexico surge

MOSCOW (MRC) -- During the week ended 3 October, chemical railcar traffic in North America increased 1.5% year-over-year (YOY) on gains in Canada and Mexico. Volume totaled 44,993 carloads, up 3.9% from the previous week, according to Chemweek with reference to data released on 7 October by the Association of American Railroads (AAR).

On a four-week basis, volume was down 2.8% from 2019 and 5.9% from 2018, about the same as the previous week (chart). For the year to date, chemical railcar traffic in North America was down 4.4% from 2019 and 5.8% from 2018.

Chemical railcar traffic in the United States contributed 31,377 carloads to the total, down 3.8% YOY and up 4.3% from the previous week. For the year to date, US chemical railcar traffic is down 5.1%.

Canadian chemical rail traffic totaled 12,673 carloads, up 16.7% YOY and up 3.6% from the previous week. For the year to date, Canadian chemical railcar traffic is down 2.5%.

Chemical railcar traffic in Mexico totaled 943 carloads, a YOY increase of 11.5% and a sequential decrease of 3.9%. For the year to date, Mexican chemical railcar traffic is down 6.2%.

As MRC informed earlier, Russia's August output of chemical products rose by 5% year on year. At the same time, production of basic chemicals increased in the first eight months of 2020 by 5.3% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-August output. Thus, August production of primary polymers rose to 888,000 tonnes from 838,000 tonnes in July due to increased capacity utilisation at ZapSibNeftekhim, Stavrolen and Gazprom neftekhim Salavat. Overall output of polymers in primary form totalled 6,630,000 tonnes in January-August 2020, up by 15.2% year on year.

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