Asia Distillates-Jet fuel cracks post biggest weekly gain in 2 months

MOSCOW (MRC) -- Asian refining margins for jet fuel rose on 5 February, posting their biggest weekly gain in two months, while cash discounts for the aviation fuel narrowed amid limited supplies, reported Reuters.

The regional jet fuel market is expected to pick up further strength gradually as countries ease travel restrictions in coming months, although the usual seasonal boost during the Lunar New Year holidays would mostly remain dampened this year, trade sources said.

Refining margins, or cracks, for jet fuel rose to USD4.43 per barrel over Dubai crude during Asian trading hours, the strongest since Jan. 18. The cracks have gained 25.5% this week, the steepest weekly rise since Dec. 4. "Our forecast is for traffic to return to half of 2019 levels in 2021," Alexandre de Juniac, director general and chief executive of the International Air Transport Association (IATA) said in a statement this week. "But the proliferation of restrictions on travel that we have seen since the beginning of the year could make even that modest outlook very challenging," he added.

Global air passenger demand in 2020 was 65.9% lower than 2019 levels, while global air cargo demand last year was about 11% below 2019, IATA data showed on Wednesday. Some market watchers believe aviation passenger demand might see a surge soon after the majority of travel restrictions are lifted as a lot of people are bored of not travelling. Cash differentials for jet fuel were at a discount of 15 cents per barrel to Singapore quotes on Friday, compared with a 21-cent discount a day earlier.

ARA STOCKS - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 3.4% to 2.7 million tonnes in the week to Feb. 2, data from Dutch consultancy Insights Global showed.

The data showed ARA jet fuel inventories climbed 3.8% to 937,000 tonnes.

Sri Lanka's Ceylon Petroleum Corp (Ceypetco) is seeking gasoil for delivery into Colombo over the eight months between May and December this year.

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 polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
MRC

MOSCOW (MRC) -- Borealis (Vienna, Austria) has declared force majeure on “certain polypropylene (PP) grades and related compounds” at its production site in Kallo, Belgium, according to Chemweek.

The company made the declaration on 5 February due to “a technical incident outside the scope of our control,” a spokesperson tells Chemweek.

“Affected customers have been informed accordingly. At this point, we are unable to predict when exactly the force majeure can be revoked,” she says.

As MRC reported previously, Borealis began to restart of its 625,000-metric tons/year steam cracker at Stenungsund, Sweden, in early January, 2021, but the declaration of force majeure remained in place then. The process of restarted lasted for several weeks. Force majeure at Stenungsund was declared after a fire started at the cracker on 10 May last year. A restart of the cracker was initially planned for the fourth quarter of 2020. The force majeure was lifted on 29 January, 2021.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
MRC

MOSCOW (MRC) -- About 600 gallons of petroleum and water mixture that leaked from Chevron Corp's wharf at its Richmond, California, oil refinery has been contained, reported Reuters with reference to the regional air pollution regulator's official twitter account.

The investigation is ongoing, the Bay Area Air Quality Management District (BAAQMD) said in a tweet.

Chevron in an emailed response said a sheen was observed at around 3 p.m. (2300 GMT) on the water near the wharf at its 245,271 barrel-per-day Richmond refinery. The release was stopped, while clean up was ongoing, it added.

“We have issued a community notice and ask the public to remain clear of the area so crews can quickly contain and clean up the released volumes,” the company said, adding it is working with the US Coast Guard and the Office of Spill Prevention and Response (OSPR).

The spill triggered a “Level 2” incident alert and health advisory from the Contra Costa Health Department for residents of Richmond, North Richmond and San Pablo, according to local media reports.

California State Assembly member Buffy Wicks plans to introduce a bill to increase fines and penalties in order to provide more effective deterrence, Contra Costa County Supervisor John Gioia tweeted.

“Park District closed local beaches and petroleum washed ashore along South Richmond shoreline which will harm wildlife and marine life,” Gioia said.

As MRC informed previously, in December 2020, Chevron Corporation made a 2021 organic capital and exploratory spending program of USD14 billion and lowered its longer-term guidance to USD14 to USD16 billion annually through 2025. This capital outlook will continue to prioritize investments that are expected to grow long-term value and deliver higher returns and lower carbon, including over USD300 million in 2021 for investments to advance the energy transition.

We remind that in March 2018, Chevron Phillips Chemical Company LP successfully introduced feedstock and commenced operations of a new ethane cracker at its Cedar Bayou facility in Baytown, Texas. At peak production, the unit will produce 1.5 million metric tons/3.3 billion lbs. per 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 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

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

MOSCOW (MRC) -- During the week ended 6 February, chemical railcar traffic in North America increased 4.1% year-over-year (YOY) on gains in Canada and Mexico, said Chemweek.

Volume totaled 46,250 carloads, down 4.3% from the previous week, according to data released by the Association of American Railroads (AAR). On a four-week basis, volume increased 5.4% from 2020 and 4.5% from 2019 (chart). For the year to date, chemical railcar traffic in North America is up 5.2% from 2020 and 4.4% from 2019.

Chemical railcar traffic in the United States contributed 33,581 carloads to the total, up 2.8% YOY and down 1.3% from the previous week. For the year to date, US chemical railcar traffic is up 4.1%.

Canadian chemical rail traffic totaled 11,795 carloads, up 9.6% YOY and down 11.4% from the previous week. For the year to date, Canadian chemical railcar traffic is up 9.8%.

Chemical railcar traffic in Mexico totaled 874 carloads, a YOY decrease of 12.4% and a sequential decrease of 10.7%. For the year to date, Mexican chemical railcar traffic is down 9.2%.

As per MRC, Chemical rail traffic in North America closed January strong, pushing year-to-date volume up 5.7% from 2020 and 5.5% from 2019. During the week ended 30 January, volume totaled 48,312 carloads, up 5.2% from the previous week and up 4.4% year-over-year (YOY), according to data released by the Association of American Railroads (AAR). On a four-week basis, volume increased 5.6% from 2020 and 3.7% from 2019.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% 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-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1% year on year.

MRC

MOSCOW (MRC) -- Iraq expects total oil production to average 3.6 million barrels per day (bpd) in February if the autonomous Kurdistan region abides by OPEC+ oil production cuts, reported Hydrocarbonprocessing with reference to Oil Minister Ihsan Abdul Jabbar's statement.

An average of 2.9 million bpd in exports were expected, he told a news briefing in Baghdad.

The minister said he anticipated an oil price of USD58 to USD63 in 2021. He also said OPEC and its allies were expected to keep their output policy, to which Iraq remains committed, unchanged during their next meeting.

He said Iran might return to the oil market if everything remained "normal", without elaborating.

As MRC wrote before, Indian Oil Corp (IOC) , the country's top refiner, has loaded its first cargo of Iraq's newly introduced Basra Medium crude grade, according to ship tracking data from Refinitiv Eikon. IOC loaded the cargo onto Minerva Kalypso, a suezmax-sized vessel, which left Iraq's southern port of Basra on Jan. 4, the data showed. The ship was expected to arrive at Chennai port in southeastern India for IOC's subsidiary Chennai Petroleum Corp (CPCL) around Jan. 14.

We remind that India’s top refiner Indian Oil Corp has been operating at 100% capacity since early November, 2020, as local fuel demand has recovered, its chairman S.M. Vaidya said late last year. IOC has been gradually raising crude runs at its plants, which plunged to about 39% at the beginning of April, 2020, when a nationwide coronavirus lockdown hit fuel demand.

We also remind that IOC is expanding its petrochemical capacity by more than 70% from its current 3.2 million tonnes a year. It is also on new technologies that reduces the cost of producing petrochemicals.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
MRC