Reliance reports YOY fall in petchem profit, revenue; sequential improvement

MOSCOW (MRC) -- Reliance Industries says that EBDITA dropped 33% year on year (YOY) at its petrochemicals business to 59.64 billion Indian rupees (USD802.79 million) in the fiscal second quarter ended 30 September. Quarterly sales for this sector were Rs296.6 billion, down 23% YOY, said Chemweek.

The company says, however, that compared with the preceding quarter, prices of polypropylene (PP), polyethylene (PE), and polyvinyl chloride (PVC) strengthened by 13%, 17%, and 25%, respectively, due to tight supply with regional turnarounds and an improvement in demand. With increased feedstock prices, para-xylene (p-xylene) prices firmed 10% quarter on quarter (QOQ) and purified terephthalic acid (PTA) and ethylene glycol prices increased by 4% and 10%, respectively. Naphtha prices increased by 56% QOQ because of healthy demand.

Reliance says that its steam-cracker margins improved QOQ due to the feedstock mix and “favorable economics for ethane cracking.” Its crackers operated at near 100% utilization during the quarter. The company recorded higher QOQ production volume and higher volume placement in the domestic market.

"Domestic demand has sharply recovered across our oil-to-chemicals business and is now near pre-COVID levels for most products,” says Mukesh Ambani, chairman and managing director at Reliance.

PP margins declined 21% QOQ to USD126/metric ton due to higher feedstock prices despite robust demand from health and hygiene applications. PE margins remained stable with firm demand from the packaging sector. PVC margins improved by 14% to USD546/metric ton led by a strong demand recovery in agriculture and the construction sector.

Reliance says that PTA margins declined by 14% QOQ to USD107/metric ton “in well-supplied markets.” P-xylene and PTA markets were also hurt by the start-up of new capacities in China, it adds.

Domestic polymer and polyester demand improved with the easing of lockdown and revival of downstream operations with improved labor availability. The company says it achieved its highest-ever quarterly polymer sales in India through leveraging the domestic supply chain, multimodal logistics, and a nationwide warehousing facility. Reliance placed higher volumes of polyester products in the domestic market with improved operating rates for spinning and texturizing units, it adds.

The company’s other business units include refining, oil and gas, retail, digital services, financial services, and others. Reliance's second-quarter group net profit was Rs95.67 billion, down 15% YOY, on 22% lower sales of Rs1.2 trillion.

As per MRC, Reliance Industries (RIL) is on track to restart its polypropylene (PP) unit in Jamnagar, India as the company is completing the 20 days maintenance works. The unit was taken offline on 15 October and would come back online on 5 November 2020. The plant has an annual capacity of 480,000 tons/year.

According to MRC's ScanPlast report, 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.

Reliance Industries is one of the world's largest producers of polymers. Thus, the company produces among others polypropylene, polyethylene and polyvinyl chloride.
MRC

MOSCOW (MRC) -- SK ie technology, a producer of lithium-ion (Li-ion) battery capacitors and an affiliate of SK Innovation, will built an additional Li-ion separators production line in Poland, said Chemweek.

The new facility is scheduled for mass production in the first quarter of 2023. The company is currently building a production facility in Poland with the aim of mass production in the third quarter of 2021.

Currently it produces 360 million square meters of Li-ion separators at Jeungpyeong, South Korea, and the completion of plants in China and Poland will increase SK Innovation's production capacity to 1.2 billion square meters/year.

Earlier this year in September, SK Innovation decided to sign a deal with a private equity fund for a pre–initial public offering (IPO) of SK ie technology. SK ie technology will issue 6.27 million new shares or 10% of its total shares and sell the stake to the local private equity firm for 300 billion South Korean won (USD258 million). The deal would reduce SK Innovation's stake in its subsidiary to 90%.

SK Innovation in April 2019 spun off its material business to launch SK ie technology.

As MRC informed earlier, SK Global Chemical (SKGC), one of the largest producers of petrochemical products in South Korea, plans to permanently close cracking unit No. 1 in Ulsan (Ulsan, South Korea) on December 8 this year.
According to a letter from the company to its customers, production at this 190,000 tonnes of ethylene and 135,000 tonnes of propylene per year will be halted due to unfavorable market conditions. However, SKGC will continue to supply ethylene to its domestic customers from other crackers.

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.

SK Global Chemical is a division of SK Group, Korea's first refinery with over 50 years of experience. SK Group has over 70 thousand employees working in 113 offices around the world. Its largest enterprises produce mainly petrochemical products.
MRC

MOSCOW (MRC) -- The US became China's fourth biggest crude supplier in September in terms of volume, and inflows from the producer is expected to be ample in the fourth quarter as the Phase 1 trade deal between Beijing and Washington provides impetus to the flow of crude and energy products into China, according to S&P Global.

However, low crude oil prices will continue hindering Beijing's 2020 energy purchase targets and temper the impact of heightened flows, particularly when translated into value terms.

Crude oil is considered a key product to complete China's annual energy purchase commitments due to the commodity's typically higher value and volume compared with other energy products.

According to the Phase 1 trade deal struck in January, Beijing had committed to buy USD18.5 billion more of US energy products in 2020 than it bought in 2017, and USD33.9 billion more in 2021 over 2017 levels, with expectations of similar levels through 2025.

China's crude import volume in September surged 75.3% month on month to a record high of 3.9 million mt, or 952,254 b/d, showed data from the General Administration of Customs, or GAC, on Oct. 26.

The previous high was at 3.67 million mt, or 866,793 b/d in July, according to GAC data.

The import volume was within expectations as Sinopec took a majority of the arrivals while CNOOC, Zhejiang Petroleum & Chemical as well as independent refineries in Shandong also received shipments from the US, S&P Global Platts reported.

After a slight month-on-month contraction in October, China's crude imports from the US is likely to hit 908,000 b/d in November, data intelligence firm Kpler said on Oct. 26.

The September volume brought imports from the US at 10.92 million mt, or 292,236 b/d in January-September, more than double from 5.18 million mt in the same period of last year.

However, the value of the US crude imports in the first three quarters was merely USD3.32 billion, translating into an average CFR price of USD41.51/b with a conversion of 7.33 barrels/mt, according to GAC.

In comparison, China in 2017 imported about 153,000 b/d of US crude oil that was worth USD3.2 billion at an average price of about USD57.59/b, GAC data showed.

"Due to low crude price, it is unlikely to meet the trade deal, despite China increasing purchases and the monthly volumes keep hitting highs," a Beijing-based analyst said.

Crude imports from Saudi Arabia rebounded 48% from August at 7.78 million mt, or 1.9 million b/d, in September after a three-month-fall.

The strong recovery led to its return to the top spot in September.

Moreover, China also boosted crude imports from the Middle East, with shipments jumping 18.9% year on year at 5.16 million b/d in the first three quarters. The Middle East accounted for 46.3% of the market share compared with 43.8% in the same period last year.

In contrast to notable volume increases from the Middle East and North America, imports from Africa and South America fell 12.4% and 8% at 1.6 million b/d and 1.27 million b/d, respectively, in January-September, GAC data showed.

As MRC reported earlier, PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company’s biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year’s level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia’s top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

MOSCOW (MRC) -- ExxonMobil posted chemical earnings of USD661 million, up from USD240 million in the same year-ago quarter, reported Chemweek.

The gain reflected stronger margins and volumes as well as aggressive cost reduction, ExxonMobil said. Chemical sales volumes were higher than the second quarter, benefiting from resilient packaging demand and recovering automotive and construction markets. Chemical prime product sales of 6.62 million metric tons in the quarter were up 2.2% YOY.

ExxonMobil said that its Corpus Christi, Texas chemical complex joint venture with Sabic is approximately 80% complete and “under budget and ahead of schedule.” Startup activities are expected to commence in the fourth quarter of 2021.

ExxonMobil overall posted a $680 million loss in the quarter on heavy losses in upstream and downstream compared with net income of USD3.2 billion in the year-ago quarter. Results improved USD400 million from the second quarter "driven by early stages of demand recovery." ExxonMobil said it was on track to exceed reduction targets for 2020 capital and cash expenses with further reductions anticipated in 2021. The company said it would reduce its 2020 capital spending program from USD33 billion to USD23 billion with a further reduction in 2021 capital spending to USD16 billion-USD19 billion.

As MRC informed earlier, Exxon Mobil Corp has also recently announced it will lay off about 1,900 employees in the United States as the COVID-19 pandemic batters energy demand and prices.

We remind that ExxonMobil has undertaken a planned shutdown at its cracker in Singapore. The company halted operations at the cracker for maintenance on September 14, 2020. The cracker is expected to remain off-line till end-October, 2020. Located at Jurong Island, Singapore, the cracker has an ethylene production capacity of 1 million mt/year and a propylene production capacity of 450,000 mt/year.

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.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.
MRC

MOSCOW (MRC) -- Chevron Lummus Global (CLG) announced they have been awarded a contract by China's largest oil and gas producer and distributor, PetroChina Company Limited, for the supply of its proprietary ISOMIX-e reactor internals for two of their RDS units in Liaoning Province, said Hydrocarbonprocessing.

CLG's high-performance ISOMIX-e® internals will help PetroChina facilitate maximum utilization of catalysts in their RDS reactors due to uniform process distribution and better product yield structure. At the same time, CLG’s state-of-the-art internals will promote safe operations with better reactor temperature management which will increase catalyst life and reduce turnaround times. With this project, PetroChina will avail of the benefits of CLG's high-performance reactor internals, thereby helping them get better product yields and longer run times per catalyst fill.

This win is significant as it enhances CLG's reputation as a supplier of locally fabricated, high-performance reactor internals, bringing significant benefits to regional oil producers.

As MRC reported earlier, Chevron Phillips Chemical, part of Chevron Corporation, still has not lifted force majeure on its polyethylene (PE) products after assessing the impact of Hurricane Laura to its Gulf Coast PE operations. The force majeure circumstances were declared on 1 September, 2020. CP Chem operates a 420,000 mt/year high-density polyethylene (HDPE) plant in Orange, Texas, and an 855,000 mt/year cracker in Port Arthur. The company plans to minimize the impact of the event and return to full PE deliveries as soon as possible.

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.

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