Chinese March styrene exports surge past total for 2020 amid global supply tightness

MOSCOW (MRC) -- China's exports of styrene monomer (SM) have surged in the first quarter amid tight global supply, accelerating its shift from net SM importer to exporter despite being the world's major demand center, reported S&P Global.

More than 60,000 mt of SM has been scheduled to date to load from China in March, according to market estimates. This is nearly 160% higher than China's total styrene exports of 27,020 mt over the full year 2020, customs data showed. Another 10,000 mt has already been scheduled to load for export in April, market sources said.

China is the world's key demand center for styrene, consuming 11.92 million mt and importing 2.83 million mt in 2020, according to S&P Global Platts estimates and customs data.

Of the 27,020 mt exported in 2020, more than 85% was supplied to South Korea, where plant outages and turnarounds shortened domestic supply in the second half of the year.

Demand for China's styrene exports is being driven by production losses due to turnarounds in Asia and plant outages in the US and Europe. In Asia, a heavy turnaround season over February to June and unplanned maintenance in Northeast Asia have tightened supply in the region.

Several Asian countries including South Korea and India typically rely on US-origin supply, but this is expected to remain scarce in Asia in the near term as the polar vortex takes its toll on styrene production. More than 2.5 million mt/year of styrene production capacity was offline in the US on Feb. 26 due to severe weather, according to Platts estimates.

The cargo shortage has exacerbated already tight fundamentals and boosted prices in the US and European markets, but price increases have lagged in China where supply remains available amid high run rates. Domestic prices in East China are also lower than import prices at present, which is further encouraging exports and curbing imports.

"China prices are depressed and have become the lowest among the three regions," a trader said.

The market has prompted traders to work a "reverse arbitrage" by moving China cargoes to Europe, where prices are currently at a premium of more than USD300/mt to CFR China values. Considering freight at USD100/mt, the spread is attractive to Asian sellers.

As such, market participants expected to see continuing interest in selling Chinese cargoes on an FOB basis to balance out the shortage in other regions, with active FOB China trading heard in H2 February. This trade flow is likely to increase in frequency as China's production expands at incredible speed, with 1.22 million mt/year of capacity slated to come online in H2 March and April.

As MRC informed earlier, LyondellBasell and Covestro's jointly-owned propylene oxide (PO)/SM unit at Maasvlakte, Netherlands, remains offline following an incident at the site on 10 February, 2021. The site produces 313,000 metric tons/year (mt/y) of PO and 680,000 mt/y of styrene.

Styrene is the main feedstock for the production of polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics totalled 520,630 tonnes in 2020, which corresponded to the same figure a year earlier. December estimated consumption of PS and styrene plastics grew by 5% year on year to 47,490 tonnes.
MRC

MOSCOW (MRC) -- LyondellBasell and Covestro's jointly-owned propylene oxide (PO)/styrene monomer (SM) unit at Maasvlakte, Netherlands, remains offline following an incident at the site on 10 February, reported Chemweek.

The site produces 313,000 metric tons/year (mt/y) of PO and 680,000 mt/y of styrene. A three-week turnaround is planned at the site, beginning in the second half of March, a market source told OPIS (part of IHS Markit data).

As MRC wrote previously, LyondellBasell and Covestro declared force majeure on SM supplies from their joint PO/SM plant at Maasvlakte, Netherlands, on 11 February, 2021, because of a mechanical failure, which caused the shutown of the plant.

We remind that LyondellBasell (Houston, Texas), one of the largest plastics, chemicals and refining companies in the world, reports fourth-quarter net income of USD855 million, up 40% year-over-year (YOY) from USD612 million on higher polyolefin volumes and margins. A USD147 million non-cash, lower-of-cost-or-market (LCM) inventory valuation benefit increased net income by USD119 million, or USD0.36 per share. Sales totaled USD7.937 billion, down 3.0% YOY from USD8.179 billion. Adjusted earnings per share of USD2.19 increased 15% YOY from USD1.91 and beat the consensus of USD1.31 as compiled by Zacks Investment Research.

Styrene is the main feedstock for the production of polystyrene (PS).

According to MRC's ScanPlast report, Russia's estimated consumption ofPS and styrene plastics totalled 520,630 tonnes in 2020, which corresponded to the same figure a year earlier. December estimated consumption of PS and styrene plastics grew by 5% year on year to 47,490 tonnes.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges, like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road, and ensuring the safe and effective functionality in electronics and appliances. LyondellBasell sells products into more than 100 countries and is the world"s largest producer of polymer compounds and the largest licensor of polyolefin technologies. In 2020, LyondellBasell was named to Fortune Magazine"s list of the "World"s Most Admired Companies" for the third consecutive year.
MRC

MOSCOW (MRC) -- Brent crude futures surged above USD70 a barrel for the first time since the COVID-19 pandemic began, while U.S. crude touched its highest in more than two years, following reports of attacks on Saudi Arabian facilities, said Hydrocarbonprocessing.

Brent crude futures for May hit USD71.38 a barrel in early Asian trade, the highest since Jan. 8, 2020, and were at USD70.96 a barrel by 0611 GMT, up USD1.60, or 2.3%. U.S. West Texas Intermediate (WTI) crude for April rose USD1.47, or 2.2%, to USD67.56. The front-month WTI price touched USD67.98 a barrel earlier, the highest since October 2018.

Asian stocks also rose after the U.S. Senate approved a USD1.9 trillion stimulus bill while positive economic data from the United States and China bode well for a global economic rebound. Yemen's Houthi forces fired drones and missiles at the heart of Saudi Arabia's oil industry on Sunday, including a Saudi Aramco facility at Ras Tanura vital to petroleum exports, in what Riyadh called a failed assault on global energy security.

"We could see further upside in the market in the near-term, particularly as the market probably now needs to be pricing in some sort of risk premium, with these attacks picking up in frequency," ING analysts said in a report, noting that this was the second attack this month following an incident in Jeddah on March 4.

RBC Capital's Helima Croft said the latest incident underscored just how dangerous the security environment remains in the region nearly 18 months after the September 14, 2019 Iranian strikes that temporarily took offline half of the kingdom's oil output. Brent and WTI prices are up for the fourth consecutive session after OPEC and its allies decided to keep production cuts largely unchanged in April.

China's crude shipments in the first two months of 2021 are up 4.1% on year after the world's top importer expanded its refining capacity and as its fuel demand continued to grow. Despite fast-rising crude prices, Saudi Arabia's oil minister has voiced doubts on demand recovery.

"The decision to keep quotas unchanged signals the group’s intent to drawdown inventories further, without concern of overtightening the market," ANZ analysts said in a note. "It also suggests they see little threat from rising output elsewhere." However, the energy minister in the world's third-largest crude importer, India, said higher prices could threaten the consumption led-recovery in some countries.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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). Supply of exclusively PP random copolymer increased.
MRC

MOSCOW (MRC) -- Honeywell announced that Lukoil-Nizhegorodnefteorgsintez, a subsidiary of Lukoil, will use a range of Honeywell UOP process technologies at its Kstovo refinery to produce cleaner-burning high-octane fuels that comply with Euro-V and Class 5 standards in Russia, according to Hydrocarbonprocessing.

UOP will provide technology licensing, design services, key equipment and state-of-the-art catalysts and adsorbents for the project at the refinery in the Nizhny-Novgorod region in central Russia. When completed, the production capacity of the unit will exceed 215,000 metric tons per year of methyl tert-butyl ether (MTBE), a high-octane gasoline additive that reduces emissions in automobile exhaust.

The project includes the installation of a new UOP Ethermax unit that converts isobutylene and methanol into a high-octane MTBE blending agent that contains no benzene or aromatics. Earlier in 2020, UOP completed the revamp design for two existing Fluid Catalytic Cracking (FCC) units and Merox unit to increase production of propylene at the refinery while maintaining high yield of gasoline production.

“These technologies will allow Lukoil to increase production of additives for cleaner-burning gasoline and meet Euro-V emission standards,” said Bryan Glover, vice president and general manager, UOP Process Technologies. “Lukoil elected to integrate the Ethermax technology into its existing FCC complex to reduce operating and capital costs, and begin operations more quickly.”

The Ethermax technology delivers a high MTBE yield and is extensively used worldwide. MTBE is produced from a chemical reaction between methanol, and isobutylene,. Due to its high octane number, MTBE is an effective anti-knocking fuel additive to produce cleaner-burning gasoline.

The project also includes revamping existing Selective Hydrogenation (SHP) units and process revamp study of hydrofluoric alkylation units to maximize the production of alkylate, which produces cleaner-burning fuels.

The Euro V standard limits sulfur content to less than 10 parts per million in transportation fuels and restricts emissions of carbon monoxide, hydrocarbons, nitrous oxides and particulate matter from gasoline and diesel vehicles and will improve overall refinery emissions.

Lukoil-Nizhegorodnefteorgsintez is one of the largest petroleum refineries in Russia and has been operating in the Nizhny Novgorod region since 1958. It is the largest refinery operated by PJSC Lukoil, a Russian multinational energy corporation headquartered in Moscow, specializing in the business of extraction, production, transport, and sale of petroleum, natural gas and petroleum products.

As MRC reported earlier, Russian energy major Lukoil (Moscow) is studying several potential petrochemical projects in Russia and Bulgaria, with investment decisions expected to be made on two of them in 2021.

Thus, Lukoil announced an investment decision in June, 2019, to proceed with a 500,000-metric tons/year polypropylene (PP) plant at its Kstovo refinery. In September this year it selected Lummus Technology’s Novolen PP technology and basic design engineering for the facility’s production unit. Kstovo is one of Lukoil’s largest crude refineries in Russia with a throughput of 17 million metric tons/year, with the company recently adding a catalytic cracking unit that almost doubled the refinery’s production of propylene feedstock to 300,000 metric tons/year.

At Budennovsk in Russia’s far south west, the company’s Stavrolen petchems complex currently has the capacity to produce 350,000 metric tons/year of ethylene, 300,000 metric tons of polyethylene (PE), 120,000 metric tons/year of PP, and 80,000 metric tons of benzene. Lukoil has for several years been considering construction of a new gas chemicals plant at Stavrolen to crack more ethane extracted from associated petroleum gas produced by its oil and gas fields in the north of the Caspian Sea. The potential new plant would raise Stavrolen’s ethylene and PE output to around 600,000 metric tons/year each, and increase PP production to 200,000 metric tons/year.

Ethylene and propylene are feedstocks for producing PE and 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). Supply of exclusively PP random copolymer increased.

Lukoil is one of the leading vertically integrated oil companies in Russia. The main activities of the company include exploration and production of oil and gas, production and sale of petroleum products. Lukoil is the second largest privately-owned oil company in the world in terms of proven hydrocarbon reserves. Lukoil's production capacities include polyethylene polypropylene. The structure of Lukoil includes one of the largest petrochemical plant in Russia - Stavrolen.
MRC

MOSCOW (MRC) -- A group of state treasurers are pressuring Marathon Petroleum to end a lockout at a Minnesota refinery that has left 200 union members out of work for two months, reported Reuters with reference to a letter the officials sent to the company.

Marathon has brought in out of state workers to operate its St. Paul Park refinery as it negotiates with members of the Teamsters Local 120 over new proposals by management that employees say threaten their jobs.

The union says the replacement workers have not been properly trained. The company denied this claim.

In the letter reviewed by Reuters, the Democratic state treasurers of Illinois, Maine, Maryland, Massachusetts, and Oregon told Marathon’s sustainability chair they are concerned that the lockout will have a long-term impact on safety and reliability.

“With the potential for losses of lives [at the refinery] there is great exposure for these companies in terms of lawsuits and reputational harm,” said Illinois state treasurer Michael Frerichs.

Minnesota politicians, including Governor Tim Walz, have previously urged the US refiner to end the prolonged lockout, saying it could create safety problems at the refinery.

Frerichs told Reuters the group of treasurers are working together on sustainability issues, and some have investments in the refiner, he added without elaborating. The group has requested a meeting with Marathon’s sustainability chair, Abdulaziz F. Alkhayyal.

The union opposes Marathon’s proposals that could cut some 50 jobs at the plant and subcontract out maintenance work. The company is the second-largest independent US refiner, with plants in Illinois, Minnesota, and other states.

“By locking us out they’re showing us this is what they’re going toward, that we’re not coming back,” said Matthew Foss, a St. Paul Park firefighter employed at the refinery for more than 22 years. He said workers risked coronavirus infection to keep the refinery operating through the pandemic.

The 102,000 barrel-per-day plant is currently being staffed by “trained and qualified Marathon Petroleum personnel,” Marathon said. The company said it does not foresee supply disruptions in its operating regions.

“We have continued negotiating in good faith with representatives of the Teamsters Local 120 throughout their strike, and we look forward to additional opportunities to work toward reaching agreement on the company’s and the union’s proposals,” a spokesman for Marathon said last week.

As MRC informed earlier, most units were shut on Sunday night and Monday morning (15-16 February) at Marathon Petroleum Corp's 585,000 barrel-per-day Galveston Bay Refinery in Texas City, Texas, as temperatures plunged due to a Arctic cold front reaching the Gulf Coast.

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). Supply of exclusively PP random copolymer increased.
MRC