COVID-19 - News digest as of 12.01.2021

1. Pandemic hastens threat of closure for struggling oil refineries

MOSCOW (MRC) -- The collapse in oil demand from the COVID-19 pandemic is hastening the reckoning for those refiners already struggling as new capacity overtakes demand, posing an existential threat to many, particularly Europe’s ageing plants, said Chemweek. Even before the pandemic struck, which at its height destroyed over 20% of global oil demand, analysts expected global refining capacity would have to rationalize, particularly in Europe. According to consultants WoodMac, 1.4 million barrels per day, or around 9%, of refining capacity is under threat of rationalization in Europe in 2022-2023. WoodMac declined to name specific refineries, but in a list sent to its clients and seen by Reuters, BP’s 377,000 bpd Rotterdam refinery, Total’s 102,000 bpd Grandpuits refinery in France and Petroineos’ 200,000 bpd Grangemouth refinery in Scotland were among 11 plants mentioned. The three companies did not immediately reply to a Reuters request for comment. Last week, energy trader Gunvor said it was considering mothballing its loss-making Belgian refinery.


MRC

MOSCOW (MRC) -- India's HPCL-Mittal Energy Ltd (HMEL), will shut its 226,000 barrels per day (bpd) Bathinda refinery in northern Punjab state for about 40 days from end-January for maintenance, two sources said, said Hydrocarbonprocessing.

During the shutdown HMEL will also carry out work to be able to hook petrochemical units, including a 1.2 million tons a year ethylene cracker, sources with knowledge of the plan said.

The 40-day shutdown is expected to start around Jan. 25-26, said one of the sources, adding the company plans to commission petrochemical units in September-October.

The sources declined to be named as they are not authorized to speak to media. HMEL's chief executive Prabh Das said 'no comments' when asked about the shutdown plan.

Indian refiners have turned their focus to raising production of petrochemicals to cater for rising demand and help hedge against lower refined fuel margins.

State-refiner Hindustan Petroleum Corp and Mittal Energy Investments Pvt Ltd own 49 percent stake each in the project.

As per MRC, HPCL-Mittal Energy Limited (HMEL) plans to commission a new polypropylene (PP) plant in Bhatinda, Punjab, India in 2021. The capacity of the new enterprise will be 500,000 tonne/year of PP. The company already operates an operating PP plant with a capacity of 440,000 tonnes per year at this site, which was launched in 2012.

According to MRC's ScanPlast report, Russia's polypropylene (PP) shipments to the Russian market reached 1 090,900 tonnes in the first eleven months of 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.
MRC

MOSCOW (MRC) -- Rohm (Darmstadt, Germany) has put methyl methacrylate (MMA) and all its other methacrylate monomer products in Europe on sales control with immediate effect, said Chemweek.

The sales control measure has been imposed due to a shortage of raw material, it says. The company has also separately announced it will carry out planned maintenance on four of its MMA and methacrylate production facilities in Germany, China, and the US in the first half of 2021.

Rohm’s plant at Worms, Germany, is scheduled to be shut down from 10-22 March, while its facility at Fortier, Louisiana, will also be closed in March but with no specific start date given for the two-week maintenance program. The MMA plant at Wesseling, Germany, is scheduled to be shut down from 19 May-26 June, with Rohm’s MMA plant at Shanghai, China, planned for a 10-day closure starting “mid-June,” it says.

In December 2020 Rohm raised its prices for MMA and other methacrylate monomer products, effective as of 1 January 2021. It also hiked prices for the same products in October and November.

In a market update earlier in December it highlighted a tightening of the MMA market, with “prices surging in Asia and continuously firming in Europe” on strong demand in critical end-user applications such as coatings, construction, and healthcare. The market was also suffering from production and supply issues that are limiting availability, with prices for raw materials such as acetone also on the rise, it said.

In October 2020 Rohm lifted sales control in Europe for MMA after resuming production following annual maintenance at its Worms plant, having imposed it mid-September due to increased demand and limited availability of raw materials. The Worms plant has a production capacity of 225,000 metric tons/year of MMA, while the Wesseling facility has a nameplate capacity of 95,000 metric tons/year of MMA.

As per MRC, despite the coronavirus pandemic, the demand for unmixed polyvinyl chloride (PVC) in Russia did not decrease at the end of 2020, but actually remained at the level a year earlier. At the same time, prices hit record highs and continue to rise.
MRC

MOSCOW (MRC) -- Piedmont Lithium says it has agreed to invest USD12 million acquiring an ownership stake in lithium and spodumene developer Sayona Mining (Paddington, Queensland, Australia) and its wholly owned Canadian subsidiary Sayona Quebec, as well as entering into a supply agreement for at least half of Sayona Quebec's planned spodumene concentrate production, said Chemweek.

Piedmont will buy an initial 9.9% ownership stake in Sayona for approximately USD3.1 million and two unsecured convertible notes for USD3.9 million that on conversion would result in it buying an additional 10% interest. It will also buy a 25% stake in Sayona Quebec for approximately USD5 million in cash as a "project investment," and has entered into a binding agreement with Sayona for the Quebec company to supply Piedmont with the greater of either 60,000 metric tons/year or 50% of the spodumene concentrate it produces at market prices on a life-of-mine basis, it says.

The share placement and notes issue are expected to close this week, while the Sayona Quebec project investment is expected to close in February 2021, it adds.

Sayona has assets in a “favorable location” in the Val-d’Or region of central Quebec, Canada, with the investments being made at an attractive valuation, according to Piedmont’s CEO Keith Phillips. “The investments are additive to Piedmont from a resources and reserves perspective, and the spodumene supply agreement will offset our Tesla commitments in the near term and position us for longer term growth in lithium hydroxide production,” he says. Quebec is “poised to become an important lithium hydroxide production center,” he adds.

Piedmont is under way with initial development plans for a 160,000-metric tons/year spodumene mine and 22,700-metric tons/year lithium hydroxide project in North Carolina, with an integrated definitive feasibility study due to start in the first quarter of this year. In September it signed a five-year deal with Tesla to supply spodumene concentrate for high-nickel batteries.

As MRC informed earlier, Piedmont Plastics (Charlotte, North Carolina) say it has acquired rival plastics distributor Empire Plastics (Sioux Falls, South Dakota), marking the company’s expansion into the Upper Midwest region of the US. Terms of the transaction, including purchase price, were not disclosed. Empire also increases the number of Piedmont branch locations in North America to 50.

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.

MRC

MOSCOW (MRC) -- ExxonMobil Corp signaled in a regulatory filing that higher oil and gas prices and improved chemicals margins would aid fourth quarter results, but the gains would be overshadowed by an up to USD20 billion asset writedown, reported Reuters.

The largest US oil producer has posted losses in the first three quarters of 2020 on an ill-timed spending increase that collided with a downturn in fuel demand and prices. It faces a proxy fight next year by an activist investor calling for deeper cuts, new directors and a refocusing on cleaner fuels.

The filing after the market closed on Wednesday showed Exxon expects higher prices will sequentially lift its oil and gas operating results by between USD200 million and USD1 billion. That business suffered a USD383 million operating loss in the third quarter.

The filing also signaled another operating loss in refining, but higher chemicals margins drove operating profit in that unit by between USD200 million and USD400 million. In the prior quarter, refining posted a USD231 million loss while chemicals turned a USD661 million profit.

The writedown of mostly natural gas properties was previously estimated at between USD17 billion and USD20 billion and the filing narrowed the range of the impairment charge.

Exxon last year began providing a snapshot of its key businesses after the end of each quarter to give investors insight into operations. Many of those prior updates led Wall Street to lower profit forecasts.

Official results are scheduled to be released Feb. 2.

During the final quarter, the company outlined plans for deeper cost cuts that will chop capital spending by at least USD10 billion this year and next, and the first stages of a 15% workforce reduction that will continue through next December.

Adjusted fourth-quarter loss could hit USD3.47 billion, or 61 cents per share, according to Refinitiv IBES data, compared with a year-earlier profit of USD5.69 billion, or USD1.33 per share.

Exxon posted the details after the market close. Its shares finished up 33 cents at USD41.60 but are down 41% year to date.

As MRC informed before, ExxonMobil is planning to shut its aromatics unit in Rotterdam-Botlek, Netherlands, for six weeks of maintenance between March and April 2021, according to market sources. This work is part of a larger turnaround program at ExxonMobil's interconnected 191,000-b/d Botlek refinery and Rotterdam aromatics plant beginning in the first quarter, OPIS reported in October.

Benzene is the main feedstock for the production of styrene monomer (SM), which, in its turn, is used for manufacturing polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 454,990 tonnes in the first eleven months of 2020, which corresponds to the figure a year earlier. November estimated consumption of PS and styrene plastics grew by 4% year on year to 45,830 tonnes.

ExxonMobil Chemical Company is one of the largest petrochemical companies worldwide. The company holds leadership positions in some of the largest-volume and highest-growth commodity petrochemical products in the world. ExxonMobil Chemical Company has manufacturing capacity in every major region of the world, serving large and growing markets. More than 90 percent of the Company’s chemical capacity is integrated with large refineries or natural gas processing plants.
MRC