LPG trade in NW Europe falls as petchems feedstock demand eases

MOSCOW (MRC) -- Total liquefied petroleum gas (LPG) cargo trade for September in northwest Europe fell 10% to an estimated 680,000 metric tons compared to August, amid falling intake as petrochemical feedstock, which declined 18% month-on-month to 450,000 metric tons, according to OPIS records, said Chemweek.

Total LPG imports into the region totaled 200,000 metric tons in September, well below this year’s highest monthly total of 650,000 metric tons, in the wake of the peak period to date for the COVID-19 pandemic across Europe. The propane/naphtha spread narrowed across September, as the CIF NWE naphtha price outpaced that of CIF ARA propane, narrowing from minus USD62/metric ton at the start of the month to minus USD26/metric ton by the end of September, OPIS pricing data showed.

North Sea LPG supplies entering the petrochemical feedstock pool totaled 250,000 metric tons for September, equivalent to 56% of the total petchem intake for the month, compared to 37% in August. September feedstock intake from the US East Coast was 23%, up from 21% in August, while imports from the US Gulf Coast were down to 15% from 38%.

The retail and refining sector saw LPG intake almost double to 150,000 metric tons in September compared to August, according to OPIS records. Exports out of NWE in September fell by a third to 85,000 metric tons, with cargoes moving to the Baltic and Turkey. Two areas appeared to be notable for a changing pattern of trade in September. Intake of LPG to Antwerp picked up considerably to an estimated 190,000 metric tons, from 85,000 metric tons in August. A new 80,000-metric ton butane storage tank in Antwerp holding supplies for Ineos was completed last month, while further storage facilities were completed this year in Antwerp with a 70,000-metric ton propane tank for BASF, according to market sources.

The second area seeing an increase in trade are North Sea LPG exports into the Baltic. The cargoes have appeared alongside similar timing for reduced exports from the Russian Baltic port of Ust-Luga. From May to September, an estimated 160,000 metric tons of LPG cargo has moved from North Sea ports including Braefoot Bay in Scotland, and Karsto and Mongstad in Norway, into Finland, Sweden, and Poland. Imports to the southern Swedish port of Karlshamn are understood to be facilitating a re-export, or break-bulk trade, onto coasters to supply local Baltic outlets.

A further 120,000 metric tons of LPG has been supplied into the Baltic from the US over the same five-month timeframe. Exports of LPG from Ust-Luga in the Russian Baltic have reduced from an estimated 100,000 metric tons in May to 36,000 metric tons in September, according to OPIS records. In September last year exports of LPG from the port were an estimated 160,000 metric tons. Work at key production facilities in a petchems complex at Tobolsk, Russia, thought to be utilizing LPG as part of the feedstock intake, were completed mid-May, according to OPIS records.

We remind that Russia's output of products from polymers grew in August 2020 by 4.1% year on year. However, this figure increased by 1.9% year on year in the first eight months of 2020, reported MRC analysts. According to the Russian Federal State Statistics Service, August production of unreinforced and non-combined films rose to 126,300 tonnes from 118,200 tonnes a month earlier. Output of films products grew in January-August 2020 by 8.3% year on year to 863,200 tonnes. August production of non-porous polymer boards, sheets and films exceeded 38,700 tonnes versus 36,400 tonnes in July. Thus, overall output of these products reached 271,900 tonnes over the stated period, up by 3.5% year on year.
MRC

MOSCOW (MRC) -- A USD14 billion investment plan unveiled by the Mexican government focuses energy outlays on the refining business of Petroleos Mexicanos (Pemex), aiming to boost the state oil firm’s ability to process heavy crudes, reported Reuters.

The plan, which comprises some 99 billion pesos (USD4.65 billion) in energy projects, did not appear to include new major oil exploration and production investments, despite Pemex’s declining crude output and private sector lobbying for them.

The top item is a 54.7 billion peso project to complete a partly-built coking plant at Pemex’s Tula refinery in central Mexico. The project was begun by the previous government.

The so-called deep conversion refining project would allow more output of higher-value motor fuels like gasoline and diesel from Pemex’s mostly heavy crude production, while minimizing less valuable fuel oil.

The plan pledges 15.4 billion pesos for upgrades to Pemex’s existing coking plant at its northern Cadereyta refinery.

Another 25.2 billion peso investment is slated for a project to build a natural gas liquefaction plant at the southern port of Salina Cruz, where Pemex’s biggest refinery is.

Two smaller energy projects announced by officials include a Pemex ethane terminal at the Gulf Coast port of Pajaritos, as well as a new fertilizer plant.

The investment plan was announced by President Andres Manuel Lopez Obrador and business leaders on Monday to help to lift Mexico’s ailing economy.

As MRC informed earlier, Pemex is advancing a refinery rehabilitation program that will enable it to process 1.2 million b/d of crude oil by the end of 2020 and evaluating a reconfiguration of its petrochemical facility at Cangrejera, Mexico, into what would be its eighth refinery.

We also remind that in 2016, Pemex shut its steam cracker at its Cangrejera complex for maintenance on February 15. The cracker was idle for about 14 days. The conducted repairs at the cracker were a part of planned maintenance.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).
MRC

MOSCOW (MRC) -- Nigeria aims to end the country’s so-called oil-for-fuel swaps system in the near future and rely instead on oil products from local refineries, which it hopes to have running again by 2023, reported Reuters with reference to the head of Nigeria’s national oil company NNPC.

The oil-for-swap deals, in operation since 2016, provide virtually all Nigeria’s gasoline and some of the diesel and jet fuel. NNPC exchanges around 300,000 barrels per day (bpd) of oil for the imported fuels.

While NNPC has refineries with a combined nameplate capacity of 445,000 bpd, decades without regular maintenance or investment leaves the oil exporting country almost wholly reliant on imports for refined products. Nigeria closed its ailing oil refineries in April until they can be fixed.

NNPC chief Mele Kyari told a virtual panel at the African Refiners & Distributors Association annual conference that while the swaps had saved the country roughly USD1 billion a year, they could soon be scrapped.

“I don’t see an extension of that process in the near future as we progress and transit into more production locally,” he said.

Kyari said he expected NNPC’s refineries to be fully revamped and running again by 2023. NNPC has said it will partner with private companies to upgrade the refineries and then run them as part of a drive to process its own oil and cut reliance on imported fuels.

“Our plan is to deliver all of them by 2023,” Kyari said. He did not name any companies that have expressed interest in the upgrade and repair projects.

“Our banking partners are on top of this. It is a schedule we have agreed with our partners and we believe we can deliver on this,” he said.

As MRC informed previously, in mid-April, 2020, Shell lifted a force majeure on exports of Nigeria’s Forcados crude oil after the pipeline transporting it reopened. The removal of force majeure followed the reopening of the Trans Forcados pipeline by operator Heritage Energy Operational Services Limited, a spokeswoman for the Shell Petroleum Development Company of Nigeria said on Monday. The pipeline was shut down on April 4, Shell said in a previous statement. It declared force majeure on April 6.

We remind that Shell Singapore restarted its naphtha cracker in Bukom Island in early December, 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

MOSCOW (MRC) -- Canada-based oil refinery operator Irving Oil announced it has terminated an agreement for the purchase of North Atlantic Refinery Limited, said Hydrocarbonprocessing.

Irving made the announcement on its website. In May, it had agreed to buy the owner of the idled 135,000 barrels per day Come-by-Chance refinery in Newfoundland, for an undisclosed price. According to industry sources, Irving walked away from the purchase and share agreement shortly before it was set to close in mid-October.

“North Atlantic is actively looking for alternate buyer, but the market is very challenging,” said a source familiar with the matter. North Atlantic declined to comment on internal matters. U.S.-based energy company Origin International said it remained interested in purchasing Come-by-Chance after June media reports that it was interested in restarting fuel processing there in “a more environmentally sustainable model."

“We await further clarity on the status of Come by Chance,” an Origin spokesperson told Reuters. The spokesperson said Origin has not done due diligence and was unaware “if any new sale process has begun." It is too soon for Newfoundland and Labrador to consider whether to buy the refinery since Origin is interested, said the province’s Industry, Energy and Technology Minister Andrew Parsons.

Parsons said Canada’s Competition Bureau had never decided whether Irving would have been permitted to buy North Atlantic. Federal Natural Resources Minister Seamus O’Regan said he was monitoring developments and would be there for workers “no matter what the final outcome,” according to a statement from spokesman Ian Cameron.

“In the face of this global pandemic too many businesses are being closed and too many projects are being put on hold all over the world. And it’s workers who are bearing the brunt of it all,” Cameron said. Come-by-Chance was the first North American refinery to close as fuel demand collapsed during the coronavirus pandemic. It supplied major U.S. East Coast harbors including New York and Boston.

Refining margins have been pressured by lower processing rates due to an oversupply of distillate stocks, which include jet fuel. The crack spread - the difference between crude and fuel - is hovering around USD10.50 a barrel. The plant has been idled since early April. It was nearly sold in 2018, with Irving Oil as the leading bidder, but the two former oil traders at the helm of the refinery disagreed on the sale price and the sale subsequently fell apart.

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) -- Nouryon is celebrating two years as a stand-alone company. During that time, it has made significant progress in driving efficiencies and increasing profitability while continuing to invest in supporting the growth of its customers. Now, the company is taking a further step to accelerate growth with a new company strategy that aims to exceed customer expectations, outgrow the competition, and increase the share of specialties in its portfolio, as per the company's press release.

“We have achieved phenomenal success during the past two years,” said Charlie Shaver, Nouryon’s Chairman and CEO. “We have set up a new organizational structure that allows our Businesses, Operations and Functions to focus on what they do best. That new structure, combined with our continued efforts to drive efficiencies has allowed us to increase our profitability, even in the challenging business environment of today.”

The company has taken several steps to further optimize its portfolio. These include three significant acquisitions; Brazilian peroxides producer Polinox; Chinese metal alkyls maker Zhejiang Friend Chemical; and the carboxymethyl cellulose (CMC) business of J.M. Huber, along with the divestment of its Elotex business. It has also continued investing to support the growth of its customers, with more than 20 capacity expansion projects announced or completed and the introduction of 20 new products with clear sustainability benefits.

“We are now ready to take the next step in our growth journey with a new strategy that will target the most attractive growth sectors and increase the focus on key emerging markets,” Shaver said. “With this stronger market focus, we want to transition from being an ingredient supplier to a true solution provider to our customers. At the same time, we will continue to execute successfully on the cost and productivity initiatives that will enable us to keep growing profitability.”

The new strategy will increase the focus on the following four segments: Agriculture, Buildings & Infrastructure, Cleaning goods and Personal care, as well as on emerging markets including China, Southeast Asia and India. Plans include growing in new applications and geographies through M&A and partnerships; further expanding the company’s sustainable product offering; and maximizing capacity utilization and flexibility of its manufacturing plants.

As MRC wrote previously, in February 2019, Nouryon (formerly AkzoNobel Specialty Chemicals) announced that it would license its innovative continuous initiator dosing (CiD) technology to Karpatnaftochim, Ukraine’s largest polyvinyl chloride (PVC) producer. Nouryon’s patented CiD technology allows PVC producers to increase reactor output by up to 40 percent, improve product quality, and make the production process intrinsically safer - all with minimum capital expenditure.

According to ICIS-MRC Price report, last week, Karpatneftekhim finalised prices for PVC shipments to the domestic market in October. Because of the situation in foreign markets, Ukrainian PVC significantly raised its prices, deals were negotiated in the range of USD1,095-1,120/tonne FCA, excluding VAT, for K 67, and USD1,150-1,170/tonne FCA, excluding VAT, for PVC K70. PVC in September was by USD150-200/tonne cheaper.
MRC