Petron to shut Bataan refinery very soon

MOSCOW (MRC) -- The closure of Petron Corp.’s refinery in Bataan is imminent if all industry players will not be accorded a level playing field, reported The Manila Times with reference to the company's top executive statement.

“Kailangan maging level playing field. Kung hindi maging level playing field ang Petron refinery with the importers, magsasara na rin kami sigurado. Kailan iyon? Very soon (We should be on a level playing field. If Petron will not have a level playing field with the importers, we will close our refinery for sure. When? Very soon),” Petron President and Chief Executive Officer Ramon Ang said in a virtual briefing.

Ang told reporters the listed oil company “will go to that direction” if the same situation persists.

Energy Secretary Alfonso Cusi said the Department of Energy (DoE) is yet to receive a notification from Petron on its supposed plan to permanently close its refinery in Limay town.

In a statement, Cusi said, “whatever business measures Petron will arrive at in the course of its discussion with the concerned parties, we at the DoE will respect the management’s decision.”

The point of contention, according to Petron’s top executive, is the double imposition of taxes: one on the imported crude oil upon its arrival and another on the finished product. On the other hand, importers are taxed once for selling petroleum products.

Sought for comment, Finance Secretary Carlos Dominguez 3rd said the refinery business is “a supply chain issue rather than a tax issue.”

But for Laban Konsyumer Inc. President Victorio Mario Dimagiba, the imposition of fuel excise taxes under the Tax Reform for Acceleration and Inclusion law makes refinery operations in the country no longer viable.

“We note that in the refinery, there might be market and timing issues including the importation of crude at a high price, then after refining the world crude prices might be lower, thus, refining margins could be lower,” Dominguez said in a message to reporters.

“On the other hand, an importer, who imports finished products can sell these products right away, making him less vulnerable to oil price movements,” he added.

Dominguez explained the excise tax (and duties) on importation of finished products is imposed upon importation and on locally refined products, it is imposed upon removal from place of manufacture.

So, at the time of marketing or sale, the excise tax in both instances should have already been paid, he added.

“Petron and Shell should have read this in 2018 that Train was not equitable tax policy at their end of the business,” said Dimagiba, a former Department of Trade and Industry undersecretary, referring to the Tax Reform for Acceleration and Inclusion law.

The 180,000 barrel-per-day oil refinery in Bataan, inaugurated in 1961, is now the lone refinery in the Philippines.

In August this year, Pilipinas Shell permanently shut its refinery in Tabangao, Batangas that would be transformed into a full import and storage terminal for finished products.

Chevron was the first to close its refinery in Batangas in 2003 and was subsequently converted into a finished-import terminal.

Should Petron decide to halt operations of the Bataan refinery for good, the country “will be at the mercy of foreign suppliers,” according to Petron.

Dimagiba shares the same sentiment, saying this “will make the country make us dependent to foreign supply and prices.”

Ang said the only way to achieve a level playing field is to go to Congress and have the existing tax laws amended even though this is a long and tedious process.

“The only way to save this is if we can go to Congress at ma-level playing field,” Ang said, adding all questions to be raised by legislators have to be addressed.

But Dominguez thinks otherwise.

“We don’t need to change our tax on this. It’s happening worldwide, refinery margins are getting squeezed. Big oil companies have been shutting down their refineries in various parts of the world,” he said.

Ang said, “iyong refinery business today nakapahirap talaga. Makita mo sa buong mundo marami na ang nagsasara (it is difficult to manage a refinery business today. Around the world, a lot of refineries have already shut down).”

Cusi said the Energy department is looking into the taxation concerns raised in coordination with the Department of Finance. “At the same time, we are also evaluating how a closure scenario would impact pricing, as well as the country’s energy security.”

Dimagiba is proposing that the government should mull buying back Petron, which he said was once a state-owned entity through Philippine National Oil Co.

“The environment where Covid-19 (coronavirus disease 2019) will linger should be a driving criteria. We should offer to buy back Petron from Ramon Ang,” Dimagiba said.

As MRC informed before, Royal Dutch Shell plc. said earlier this month that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant's costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

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

Altium Packaging buys blow molder SFB Plastics

MOSCOW (MRC) -- U.S.-based blow molder Altium Packaging LP has acquired the assets of SFB Plastics Inc., in Wichita, Kansas, a privately-held material handling and packaging manufacturer, specializing in HDPE blow molding of industrial containers, said Canplastics.

Atlanta-based Altium is a unit of publicly traded Loews Corp. The financial terms of the deal have not been disclosed.

Founded in 1970 as a provider of thermoformed plastic freezer spacers, SFB Plastics company expanded into rigid packaging in 1976 and has specialized in HDPE blow molding of industrial containers for over 40 years.

As per MRC, chemical railcar traffic in North America continued to strengthen during the week ended 21 November. Weekly volume totaled 44,843 carloads, up 5.8% year-over-year (YOY) and up 0.6% sequentially, according to data released on 25 November by the Association of American Railroads (AAR). On a four-week basis, volume was up 2.4% from 2019 and down 0.8% from 2018 (chart). By contrast, volume during the four weeks ending 14 November was up just 1.3% from 2019 and down 4.3% from 2018.

As MRC informed earlier, Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, 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-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.

Altium operates 65 packaging manufacturing facilities in the U.S. and Canada, two recycled resin manufacturing facilities, and has approximately 3,300 employees. The company specializes in customized mid- and short-run packaging solutions for the pharmaceutical, dairy, household chemicals, food/nutraceuticals, industrial/specialty chemicals, water, and beverage/juice segments.
MRC

Asia Distillates-Gasoil stays firm on U.S., Singapore stock drawdowns

MOSCOW (MRC) -- Asia's benchmark 10ppm diesel crack stayed above USD5 a barrel for a fourth day last Friday, following stock drawdowns in the United States and Singapore, reported Reuters.

Gasoil stocks held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub however rose 4% in the week to Thursday, data from Dutch consultancy Insights Global showed.

PetroChina's Yunnan refinery in southern China will shut a 260,000 barrels-per-day (bpd) crude oil processing facility for a 50-day planned maintenance starting in early December.

Jet volumes arriving in Northwest Europe (NWE) from the East of Suez are projected to rise over the coming weeks, said a report by Refinitiv Oil Research. - The report added that an estimated 322,000 tons of jet fuel is being floated aboard a few ships.

As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

We remind that 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

EU chemical production shows signs of recovery, COVID-19 second wave threatens another slowdown

MOSCOW (MRC) -- Production of chemicals in the EU showed signs of recovery in the third quarter of 2020 with a significant sequential increase of 6.1% compared with an 8.7% sequential decline in the second quarter, according to Chemweek with reference to Cefic’s latest quarterly report.

In the first nine months of the year, EU chemical production dropped 4.4% year on year (YOY), due mainly to the COVID-19 outbreak in Europe, the report says. Overall EU manufacturing output fell sharply, by 10.6% YOY, with automotive output losing more than 28%, Cefic says.

EU chemical producer prices were down 5.0% YOY with total industry sales of EUR318.2 billion (USD379.2 billion) in the first eight months of 2020, 9.0% down YOY, attributed to “the weak domestic demand in Europe and the deterioration of trade business environment,” Cefic says. EU chemical exports outside the EU reached EUR111.7 billion in the first eight months of the year, down 5.5% YOY, and chemical imports from outside the EU were down 3.9% YOY in the same period, to EUR86.4 billion.

Cefic notes that the recovery that started in May is showing signs of slowing as a result of the second wave of COVID-19 in European countries. It adds that the length and severity of the second wave will impact chemical production levels in the EU.

“This underpins the need for rapid approval and implementation of the EU Economic Recovery Plan, (which) needs to be firmly embedded in the EU Industrial Strategy and the Green Deal agenda. Only this will ensure that the recovery funding achieves an industrial transformation that will be sustainable and contributes to a resilient economy over time,” says Marco Mensink, director general at Cefic.

France and Italy were the EU countries with the biggest decreases in chemical output in the first three quarters of 2020, each down at least 10% YOY, followed by Spain, Belgium, and Portugal, according to Cefic. Poland was the least affected country, registering unchanged YOY output, and Germany and the UK saw production decline 3.6% and 1.7%, respectively, Cefic says. Capacity utilization in the EU is still 7.7 percentage points below the previous year’s level, it says.

Worldwide production of chemicals in the same period declined 1.8% YOY, with China the only big producer of chemicals posting an increase in output in the first nine months, 0.7% YOY. Cefic notes that China’s “output has already experienced the V-shape and the production level in September was the highest one ever.” Low demand from key customer sectors worldwide slowed down the growth of chemical production in all other countries, with India and Japan posting the steepest declines in output, 10.4% and 9.4%, respectively, according to Cefic data.

Cefic adds that the latest business survey data in the EU Chemicals Confidence Indicator show improvement for the sixth consecutive month in October, following a historic slump in March and April. Chemical production expectations for the months ahead registered a small decrease in October, the survey shows.

The Economic Sentiment Indicator in the EU remained unchanged sequentially, and consumer confidence slipped 1.6% with households reporting growing concerns about the expected general economic situation, Cefic says.

As MRC reported earlier, in mid-July, 2020, Cefic called on EU member states to agree urgently on a recovery plan to restart Europe’s economy and kick off investments toward a green and digital transition. The EU chemical industry is seeking investments in building renovation, clean mobility, the development of all forms of clean hydrogen, chemical recycling, and carbon capture and storage as well as carbon capture and utilization, Cefic said then.

We remind that in 2017, SIBUR joined the European Chemical Industry Council (CEFIC). SIBUR has also become a member of the European Committee of Ethylene Producers and Technology Suppliers (EEPC, part of CEFIC). Membership in the Council allowed SIBUR to take part in the work of 93 sectoral groups on more than 120 petrochemical products, in 90 strategic groups working on issues of sustainable development, innovation, trade, energy and law in the field of petrochemicals.

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, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

Magna brings EyeQ5-based driver assistance system to market

MOSCOW (MRC) -- Canada-based automotive parts supplier Magna International Inc. has brought its EyeQ5-based driver assistance system to market through an automaker in Europe, said Canplastics.

The Magna Gen5 “one-box” solution is a Mobileye EyeQ5-based system – one of the industry’s first where the forward-facing camera and related software are contained in a single assembly. Benefits include lower cost, simplified installation on the assembly line, and the ability for the technology to be applied to a wider range of an automaker’s lineup. The system will provide drivers with safety and convenience features such as adaptive cruise control, automatic emergency braking, and pedestrian detection.

As with previous generations, the system combines Magna’s electronics and camera technology with Mobileye’s system-on-chip (SoC) image-processing technology. The camera features a 120-degree, 8-megapixel optical path.

"We have been working with Magna on camera-based ADAS since 2007, and our collaboration continues to provide leading-edge driver-assistance features,” said Erez Dagan, executive vice president for products and strategy at Mobileye. “This latest system represents a new level of performance and functionality, and we’re already looking for ways to make subsequent generations even better."

Aurora, Ont.-based Magna provides global automakers with ADAS technologies – including the PACE Award-winning Trailer Angle Detection, Automatic Emergency Braking, and rearview object and pedestrian detection – to more than 250 vehicle models on the road.

As MRC informed earlier, Magna International Inc. will build a second paint shop 75 kilometers away in Maribor/Hoce, Slovenia. Aurora, Ont.-based Magna will spend approximately USD100 million on the new facility.

As MRC informed earlier, Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, 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-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.
MRC