Asia distillates-Jet fuel cracks hover near multi-month peak as aviation demand ticks up

MOSCOW (MRC) - Asia's refining margins for jet fuel dipped on Tuesday but remained within close sight of multi-month highs touched last week, supported by seasonal heating demand for kerosene and a slow but gradual recovery in regional aviation demand, Reuters.

However, a fast-spreading new coronavirus strain that has shut down much of Britain has prompted several countries to reimpose travel curbs on UK routes, triggering worries about fuel demand recovery and near-term air travel outlook. Refining margins, or cracks, for jet fuel slipped 24 cents to $4.36 per barrel over Dubai crude during Asian trade on Tuesday.

The jet cracks, which also determine the profitability of closely-related kerosene, have gained 37% in the last month, Refinitiv Eikon data showed. Cold season in the northern hemisphere typically brings peak demand for kerosene in Japan and Korea, where the fuel is used as a heating oil to fend off winter chill.

Temperatures in Seoul are expected to stay mostly below normal over the next 15-day period, while temperatures in Tokyo are predicted to be lower than normal in the first week of January, weather forecast models on Refinitiv Eikon showed.

Meanwhile, supporting a steady uptick in aviation demand, scheduled flights operating globally were 40.5% lower in the week to Monday, an improvement from 43.5% a week earlier, according to aviation data firm OAG.

Flights in India were down 34.2% year-on-year in the week to Dec. 21, compared with a 36.4% drop in the preceding week, while flights in Australia were 38% lesser from the corresponding period last year, as against a 45.5% drop in the previous week, OAG data showed.

As MRC informed earlier, Asia's cash differentials for 10 ppm gasoil firmed to their highest level in four-and-a-half months on Monday, while refining margins for the industrial fuel slipped despite weaker prices of raw material crude. Cash discounts for gasoil with 10 ppm sulphur content narrowed by a cent to 4 cents a barrel to Singapore quotes, the smallest discount since differentials plunged into a negative territory on Aug. 11.

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 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- Solvay says it has appointed Philippe Kehren, currently head of the company's Soda Ash Europe business, as president of its global business unit Soda Ash & Derivatives, according to Chemweek.

He will start from 1 January 2021.

Kehren succeeds Christophe Clemente, who is leaving Solvay after nine years with the company, the last six of which have been as president of Soda Ash & Derivatives.

As MRC reported earlier, in August, 2020, through the acquisition of the Solvay polyamide (PA) business, BASF enhanced its R&D capabilities in Asia Pacific with new technologies, technical expertise, and upgraded material and part testing services. BASF is planning to integrate the R&D centers from Solvay into its R&D existing facilities in Shanghai, China, and Seoul, Korea. The enhanced capabilities will boost BASF’s position as a solution provider to develop advanced material solutions for key industries.

We remind that BASF-YPC, a 50-50 joint venture of BASF and Sinopec, undertook a planned shutdown at its naphtha cracker on 30 April 2020. The company initially planned to start turnaround at the cracker on April 5, 2020. The plant remained under maintenance unitl 18 June, 2020. Located in Jiangsu, China, the cracker has an ethylene capacity of 750,000 mt/year and propylene capacity of 400,000 mt/year.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- During the week ended 19 December, chemical railcar traffic in North America totaled 45,883 carloads, down 1.2% from the previous week and up 0.6% year-over-year (YOY), according to Chemweek with reference to data released on 23 December by the Association of American Railroads (AAR).

On a four-week basis, volume was up 6.1% from 2019 and down 4.6% from 2018 (chart). For the year to date, chemical railcar traffic in North America was down 2.8%, even with the previous week and the highest figure since mid-May, when volume for the year to date was down 2.4%.

Chemical railcar traffic in the United States contributed 33,276 carloads to the total, up 2.7% YOY and up 2.1% from the previous week. For the year to date, US chemical railcar traffic was down 3.5%.

Canadian chemical rail traffic totaled 11,820 carloads, down 3.5% YOY and down 8.8% from the previous week. For the year to date, Canadian chemical railcar traffic was down 0.9%.

Chemical railcar traffic in Mexico totaled 787 carloads, a YOY decrease of 17.3% and a sequential decrease of 13.0%. For the year to date, Mexican chemical railcar traffic was down 2.3%.

We remind that Russia"s output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% 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-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.

We also remind that Russia's output of products from polymers grew in October 2020 by 6.3% year on year.
However, this figure increased by 1.5% year on year in the first ten months of 2020. According to the Russian Federal State Statistics Service, October production of unreinforced and non-combined films rose to 124,000 tonnes from 117,600 tonnes a month earlier. Output of films products grew in January-October 2020 by 8.5% year on year to 1 104,900 tonnes.
MRC

MOSCOW (MRC) -- UPM (Helsinki, Finland) says it has agreed to buy the entire annual lignin production of Domtar Paper Co.’s plant at Plymouth Mill, North Carolina, starting in January 2021, said Chemweek.

The 20,000-metric tons/year of lignin will enable UPM to increase its existing supplies and expand its role in the growing lignin business and different application segments, it says. Part of the additional lignin supply will be used to complement UPM’s BioPiva products brand.

The agreement with Domtar “enables us to expand our lignin business in the growing biochemicals market before the start-up of our biorefinery in Leuna, Germany,” says Juuso Konttinen, vice president/biochemicals at UPM. Demand for sustainable lignin solutions has been increasing steadily, according to the company.

Lignin products can be used as a renewable alternative to fossil-based products in a growing range of applications, including lignin-based phenolic resins.

UPM is building a EUR550-million (USD652 million) biochemicals refinery in Leuna, Germany, to produce up to 220,000 metric tons/year of biobased monoethylene glycol, monopropylene glycol, and industrial sugars as well as renewable functional fillers and lignin, using sustainably sourced hardwood as feedstock. The biorefinery is scheduled to start operations by the end of 2022.

As mRC informed earlier, Neste, a leading producer of renewable diesel and sustainable aviation fuel and a forerunner as a provider of renewable and circular solutions for the petrochemical industry, and LG Chem, South Korea’s largest diversified petrochemicals company and a leading manufacturer of lithium-ion batteries for energy solutions, have announced their aim to build a strategic long-term partnership to develop and grow the biopolymers and biochemicals market globally, and more specifically, in the LG Chem’s home market Korea.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- Johnson Matthey and ThyssenKrupp have agreed to renew their collaboration around ammonia process and catalyst supply, said Chemweek.

Under the terms of the partnership, founded 20 years ago, ThyssenKrupp exclusively uses Johnson Matthey’s catalysts for plants built using ThyssenKrupp’s Uhde ammonia process.

ThyssenKrupp is “licensor of the largest ammonia plants in the world," Johnson Matthey says. "The Uhde ammonia technology has ultra-low energy consumption and enables the highest production in a single-train unit, thus minimizing investment costs, and is suitable for small-to-large-scale capacity plants of up to 5,000 metric tons/day."

ThyssenKrupp has built 21 ammonia plants with a total capacity of 40,000 metric tons/day using Johnson Matthey catalysts, representing almost 9% of worldwide nitrogen fertilizer production, Johnson Matthey says.

As MRC informed earlier, Thyssenkrupp Industrial Solutions said it has won an order from Turkish packaging producer Koksan Pet Packaging Ind Co to build a polyethylene terephthalate (PET) plant in Gaziantep, in the southeast of the country. Thyssenkrupp will supervise the construction and commissioning of the plant and provide the main equipment, engineering works, licence and staff training.

According to ICIS-MRC Price report, in Russia, December contract PET prices were in the range of Rb68,100-71,000/tonne CPT Moscow, including VAT. Most producers raised their prices of material in the second week of December and expect further price increases by the end of this month.
MRC