Ukrainian PP imports fell by 5% in Jan-Feb 2021

MOSCOW (MRC) -- Ukraine's polypropylene (PP) imports to the Ukrainian market totalled 19,300 tonnes in the first two months of 2021, down by 5% year on year. Shipments of all grades of propylene polymers decreased with a few exceptions, according to a MRC's DataScope report.

February PP imports to Ukraine grew to 10,500 tonnes from 8,800 tonnes a month earlier, local companies increased their purchasing of propylene homopolymers (homopolymer PP) from Azerbaijan and Russia. Overall imports of propylene polymers reached 19,300 tonnes in January-February 2021, compared to 20,400 tonnes a year earlier.

The supply structure by PP grades looked the following way over the stated period.


Last month's imports of homopolymer PP to the Ukrainian market rose due to higher imports from Azerbaijan and Russia, totalling 8,800 tonnes, whereas this figure was 6,800 tonnes in January. Thus, overall homopolymer PP imports reached 15,600 tonnes in the first two months of 2021, up by 5% year on year.

Last month's imports of block propylene copolymers (PP block copolymers) were 600 tonnes, compared to 900 tonnes in January. 1,600 tonnes of PP block copolymers were imported over the state period, which is comparable to the last year's figure.

February imports of statistical propylene copolymers (PP random copolymer) dropped to 800 tonnes from 900 tonnes a month earlier. Overall imports of PP random copolymer reached 1,700 tonnes in the first two months of 2021 versus 2,000 tonnes a year earlier.

Overall imports of other propylene copolymers were less than 300 tonnes over the stated period.

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Crude oil down as inventories and COVID vaccine halt threaten demand

MOSCOW (MRC) -- Oil prices fell for a third day, as a recovery in demand was threatened by rising US inventories and moves by Germany, France and some other European states to suspend the use of a major coronavirus vaccine, reported Reuters.

Brent was down USD1.11 cents, or 1.6%, at USD67.77 a barrel by 1325 GMT. U.S. crude fell USD1.17, or 1.7%, at USD64.22.

Germany, France and Italy said they would suspend the use of the Oxford/AstraZeneca vaccine after reports about possible serious side effects, although the World Health Organization said there was no established link to the vaccine.

The moves deepen concerns about the slow pace of vaccinations in the European Union, threatening an economic recovery and fuel demand.

The pandemic eviscerated demand for oil. Prices have recovered to levels seen before the global health crisis, but gains have been capped as vaccine rollouts have proceeded slowly in many countries.

In the United States, crude inventories are also rising as refineries have taken time to recover fully from a "big freeze" that halted their operations in Texas and elsewhere.

"Short-term direction will be set by the weekly US inventory reports," PVM analysts said in a note, adding that the dollar's strength against other currencies also weighed on the oil price.

Analysts expect another week of inventory gains when the American Petroleum Institute, an industry group, reports on crude stockpiles on Tuesday, followed by official numbers from the Department of Energy on Wednesday.

Inventories rose by 12.8 million barrels in the week to March 5, against forecasts for a rise of less than 1 million barrels.

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 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
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US crude oil inventory builds likely extend as refinery runs hold below normal

MOSCOW (MRC) -- US crude oil inventory builds likely extended in the week ended March 12 as the Gulf Coast refinery complex continued to operate at reduced capacity in the wake of the February deep freeze, an S&P Global Platts analysis showed March 15.

Total commercial crude stocks likely climbed 400,000 barrels to around 498.8 million barrels last week, analysts surveyed by Platts said. The counter-seasonal build would leave stocks 6.5% above the five-year average of US Energy Information Administration data, opening the widest surplus since early January.

The expected increase comes as nationwide refinery runs continue to hold well below normal following the mid-February deep freeze that took as much as 4.4 million b/d of refinery capacity fully offline Feb. 18.

Nationwide refinery utilization is expected to average around 74% of total capacity, analysts said. While this is a 5 percentage point uptick from the week prior, it would leave utilization around 9 percentage points below pre-freeze levels and still more than 14% behind the five-year average.

While the bulk of the impacted refineries have seen at least partial restarts, at least eight facilities were still operating at less than full capacity last week, and at least two facilities comprising a combined 700,000 b/d of capacity had no estimated full restart date.

US crude production, which saw a sharp decline in February in the weeks following the winter weather, had recovered to pre-storm levels of around 10.9 million b/d in the week ended March 5, EIA data shows.

In total, the storm is likely to cost roughly 70 million barrels in lost refinery runs, according to S&P Global Platts Analytics, considerably overshadowing aggregate crude production losses of 20 million-25 million barrels.

US crude exports averaged 2.68 million b/d in the week ended March 12, according to data from cFlow, Platts trade-flow software, roughly flat from an EIA-reported 2.63 million b/d the week prior.

Refined products stock draws likely extended amid still-weak refinery runs, though strong margins likely incentivized production from operational facilities.

Total US gasoline inventories likely declined 1.4 million barrels to around 230.2 million barrels, analysts said, while distillate stocks were expected 900,000 barrels lower at around 136.6 million barrels. The draw would leave inventories respectively 5.7% and 3.4% behind their five-year averages.

US Gulf Coast cracking margins for WTI MEH averaged USD13.54/b in the five-days ended March 12, S&P Global Platts Analytics data showed, up from a February average of USD9.98/b. The strong margins come on the back of a steep rise in gasoline cracks.

The USGC unleaded 87 crack versus WTI MEH averaged USD19.26/b last week, up 65% from a February average of USD11.65/b. On the US Atlantic Coast, New York Harbor RBOB cracks versus Brent climbed above USD20/b and were the strongest since August 2018.

Gasoline cracks were further supported by upward trending demand. Apple Mobility data showed US driving activity in the week ended March 12 was up around 3% from the week prior and nearly 8% above year-ago levels.

As MRC informed before, the largest US refinery, Motiva Enterprises’ 607,000 barrel-per-day Port Arthur, Texas, plant, returned to normal operations. The refinery was shut on Feb. 15 when freezing temperatures, rarely seen on the US Gulf Coast, knocked out steam supply. Motiva began restarting the refinery on Feb. 24.

Motiva Chemicals has also resumed operations at its mixed-feed cracker in Port Arthur, USA. The process of restart of this cracker with the capacity of 635,000 mt/year of ethylene and 340,000 mt/year of propylene began on 27 February, 2021, and finished late last week. The cracker wa shut along with the refinery at the same site on 14 February, 2021, because of the deep freeze.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
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Axalta acquires leading Chinese wire enamels producer

MOSCOW (MRC) -- Axalta announced that it has acquired Anhui Shengran Insulating Materials Co., Ltd., a leading Chinese producer of high-quality wire enamels used in a wide range of consumer electronics, electric vehicle, and industrial applications, according to Kemicalinfo.

The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions. Financial terms have not been disclosed.

The acquisition will add new wire enamel products and capabilities to enhance Axalta’s offerings to customers across several end markets, including automotive, renewable energy, and consumer electronics.

“Anhui Shengran’s wire enamel products and capabilities are highly complementary to our growing Energy Solutions business,” said Shelley Bausch, senior VP of Global Industrial Coatings at Axalta. “This will be a solid platform for further specialization and growth as we support key customers in China. I am also excited to welcome the Anhui Shengran team to Axalta.”

“It was important to me that we were acquired by a company I could trust to treat my employees well, and I believe Anhui Shengran is in good hands,” said Zhangying Tu, executive director of Anhui Shengran. “We are excited to become part of Axalta, and we look forward to working together to add value and increase market share in the growing Energy Solutions market in China.”

With three distinctive product segments - wire enamels, impregnating resins and electrical steel coatings - Axalta’s Energy Solutions business provides a comprehensive portfolio of innovative and ecologically responsible insulating solutions for customers in new energy vehicles and other industrial markets.

As MRC informed earlier, in 2017, Axalta Coating Systems completed its previously announced acquisition of the Spencer Coatings Group, a leading manufacturer of high performance industrial coatings for heavy-duty equipment, general industrial, oil and gas, and glass coatings segments.

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.
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SK Global and Zhejiang Satellite to build C2 acrylic acid plant in China

MOSCOW (MRC) -- South Korean SK Global Chemical (SKGC) has signed a deal with Chinese producer Zhejiang Satellite to build a 40,000 tonne/year ethylene (C2) acrylic acid (EAA) plant at Lianyungang in eastern China, said Chemengonline.

SK Global Chemical (Seoul, South Korea), a subsidiary of SK Innovation, signed an MOU with Chinese company Zhejiang Satellite for the establishment of a joint company that will be responsible for the production and sales of ethylene acrylic acid (EAA), a type of adhesive copolymer.

This joint company will be established this year with the total investment of approximately KRW 200 billion, with six to four contributions of SK Global Chemical and Zhejiang Satellite, respectively. This move is aimed at preoccupying the Chinese and Asian markets through the strategic ties of SK Global Chemical’s EAA production technology and sales channels, and Zhejiang Satellite’s stable source of raw materials.

Ever since the acquisition of the EAA business from Dow Chemical Company in 2017, it had been SK Global Chemical’s goal to expand the high value-added packaging material business, mainly in emerging countries in Asia including China. By securing the EAA plant in Lianyungang, China, SK Global Chemical will be able to complete the triangular formation of global high value-added materials production bases in USA, Europe and Asia. Two other EAA plants of SK Global include one in Texas, the U.S., and one in Tarragona, Spain.

SK Global Chemical shared that this strategic investment reflects the surging demand for EAA materials in emerging Asian countries, including China. The packaging materials market for fresh food has been rapidly growing due to the high demand for boxed or delivered foods in China. SK Global Chemical’s EAA materials are renowned for their green packaging technologies in the growing fresh food packaging materials market.

Luanyungang, China, the new land for EAA factories, has recently started creating a massive eco-friendly chemical and industrial complex. It is expected to grow into the No. 1 chemical and industrial complex in China. The site has been selected for its advantageous location near the exporting and importing infrastructure and utilities such as the power grid and waste-water disposal, as well as a stable source of ethylene, one of the key ingredients.

As per MRC, SK Global Chemical (SKGC), one of the largest producers of petrochemical products in South Korea, closed its cracking unit No. 1 in Ulsan (Ulsan, South Korea) on a permanent basis on December 8, 2020. According to a letter from the company to its customers, production at this facility with a capacity of 190,000 tonnes of ethylene and 135,000 tonnes of propylene per year will be halted due to unfavorable market conditions. However, SKGC will continue to supply ethylene to its domestic customers from other crackers.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

SK Global Chemical is a division of SK Group, Korea's first refinery in operation for over 50 years. SK Group has more than 70 thousand employees working in 113 offices around the world. Its largest enterprises produce mainly petrochemical products.

(USD1 = W1,137)
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