Operations at US Gulf Coast petrochemical facilities have not fully recover after freezing temperatures

MOSCOW (MRC) – Last month’s winter storm paralyzed the US petrochemical industry, said Hydrocarbonprocessing.

Operations at US Gulf Coast petrochemical facilities have yet to fully recover one month after freezing temperatures triggered wide-spread power outages and plant shutdowns. Wood Mackenzie’s olefins, polyolefins, paraxylene and purified terephthalic acid (PTA) experts look at ongoing disruptions and what they mean for the country’s petrochemical operations and supply chains.

More than 80% of US olefins capacity was immediately offline following the peak of extreme weather conditions in mid-February. During that time, Wood Mackenzie noted it could take weeks to recover given that disruptions across the value chain would lead to a staggered and complex restart, setting the stage for volatility in supply and prices amid stronger demand.

As of mid-March, the US olefins industry has yet to regain its footing with only 60% of capacity back in operation, according to data from Genscape, a Wood Mackenzie company. Several facilities in both the Houston and Corpus Christi metropolitan areas remain shut. Those further west appear to be experiencing longer outages, likely due to encountering relatively colder temperatures during the winter storm.

While the supply of these important chemical building blocks dropped during outages, demand for their end-use products has not. Ethylene prices have responded to this imbalance by reaching almost seven-year highs, according to Wood Mackenzie’s price history. Polymer grade propylene prices touched all-time highs immediately following the freeze but have since fallen and stabilized at near three-year highs. High olefin prices are expected to continue after the restart process is fully complete as the units work through a backlog of pent-up derivative demand.

During January, chemical production grew across all regions. Headline global production was up 9.5% year-over-year (Y/Y) on a three-month moving average (3MMA) basis. Global output stood at 129.0% of its average 2012 levels. Output was down a year ago due to the onset of the COVID-19 pandemic.

As MRC informed earlier, sales of high density polyethylene (LDPE) in the United States and Canada rose 3.8% in January 2021 compared to the same month a year earlier. While the production of LDPE grew by 5.2% over the same period of time. Total sales increased by 2.3%, despite a 0.7% decline in export sales.

At the same time, high-density polyethylene (HDPE) sales in the United States and Canada were up 5% in January 2021 from the same month in the prior year. HDPE production increased by 1% over the same period. Domestic demand for HDPE has strengthened in recent months as demand for consumer durables has been strong since the second half of 2020 amid continued growth in manufacturing activity in the United States.

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.
MRC

MOSCOW (MRC) -- Versalis, the chemicals subsidiary of Italian energy major Eni (Rome, Italy), has declared a force majeure (FM) on its low density polyethylene (LDPE) deliveries from its plant in Ragusa, Italy, according to NCT with reference to sources familiar with the matter.

Thus, the FM was declared at the company's plant with the capacity of 110,000 tons/year of LDPE on March 5. 2021.

The force majeure was caused by technical issues, sources said.

It has been unclear so far when the FM will be lifted, while the company could not be reached for confirmation.

As MRC reported before, in early February 2021, Versalis S.p.A. licensed to Enter Engineering Pte. Ltd. an LDPE/ethyl vinyl acetate (EVA) swing unit to be built as part of a new Gas-to-Chemical Complex based on MTO-Methanol to Olefins technology to be located in the Karakul area in the Bukhara region of the Republic of Uzbekistan. The plant is part of a global complex that will have a major importance in Central Asia due to its size and the technologies involved.

According to MRC's ScanPlast report, January estimated LDPE consumption in Russia grew to 61,210 tonnes from 43,090 tonnes a year earlier. Russian producers increased their capacity utilisation, and export LDPE shipments decreased. Russia's estimated LDPE consumption was about 563,730 tonnes in 2020, up by 1% year on year.

Eni is an Italian multinational oil and gas company headquartered in Rome. It has operations in in 79 countries, and is currently Italy's largest industrial company. The Italian government owns a 30.3% golden share in the company, 3.93% held through the state Treasury and 26.37% held through the Cassa depositi e prestiti. Another 39.40% of the shares are held by BNP Paribas.
MRC

MOSCOW (MRC) -- Yemen’s Houthi group said on Friday it hit a facility belonging to the state-controlled oil giant Saudi Aramco in Riyadh, in an attack comprising six drones., said Reuters.

Yahya Sarea, a spokesman for the Iran-aligned group’s military did not give further details about the targets he said were hit. The refinery is operated by state-controlled oil giant Saudi Aramco. The attack, which happened at 6:05 a.m. Saudi time (0305 GMT), did not result in injuries or deaths, and did not disrupt the supply of oil or oil derivatives, the energy ministry said.

Sarea said operations against Saudi Arabia will continue and escalate as long as Saudi “aggression” against Yemen continues. Saudi Arabia leads a military coalition which intervened in Yemen in March 2015 against Houthi forces, which ousted the internationally recognised Yemeni government from power in Sanaa in late 2014.

The Houthis have stepped up attacks into Saudi Arabia, the world’s No. 1 oil exporter, in recent weeks. On March 7, the coalition said a barrage of drones and missiles had been intercepted en route to targets including an oil storage yard at Ras Tanura, the site of a refinery and the world’s biggest offshore oil-loading facility. A residential compound in Dhahran used by Saudi Aramco was also targeted.

As MRC informed earlier, 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. 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.

As MRC reported before, a number of Saudi Arabia's companies, such as Tasnee, Sadara, Advanced Petrochemical and Saudi Kayan, announced a curtailment of feedstock to their petrochemical plants, including polyethylene (PE) and polypropylene (PP) facilities, by an average of 30-50% due to the attacks on key Saudi Aramco facilities in September 2019.

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.

MRC

1. Global chemicals output rose 1.4% in January

MOSCOW (MRC) -- Global chemicals production rose 1.4% in January, a slightly slower pace than December and continuing the global recovery that began in June, according to data collected and tabulated by the American Chemistry Council (ACC). During January, chemical production grew across all regions. Headline global production was up 9.5% year-over-year (Y/Y) on a three-month moving average (3MMA) basis. Global output stood at 129.0% of its average 2012 levels. Output was down a year ago due to the onset of the COVID-19 pandemic.



MRC

MOSCOW (MRC) -- SK Advanced is planning to start up the new polypropylene (PP) plant in Ulsan, South Korea on 23 March 2021, reported CommoPlast with reference to market sources.

The construction works were nearly completed in late January 2021. The initial start-up date was 20 March. Thus, the company will delay tha launch of the new plant by 3 days.

The PP unit is a joint venture between PolyMirae and SK Advanced, using the “Spheripol” process of LyondellBasell, and have an annual output of 400,000 tons/year.

The unit will be utilizing the propylene output from SK’s 600,000 tons/year propane dehydrogenation (PDH) unit at the same complex. It is expected that SK Advanced would have a smaller propylene allocation for export once the new PP line comes online.

As MRC wrote previously, in October, 2020, Advanced Petrochemical signed an amendment to the partnership agreement between its subsidiary, Advanced Global Investment Co. (AGIC), and SK Gas Petrochemical Pte. Ltd. (SKGP), a unit of SK Gas Co. Ltd.. Under the amendment, an isopropanol (IPA) plant with a capacity of 70,000 tons per annum will be added, along with the Propane Dehydrogenation (PDH) and Polypropylene (PP) plants that were already announced earlier. The company said in a bourse statement that by adding the IPA plant with an estimated cost of SAR 300 million (USD80 million), the total cost of the project for the three factories is currently estimated to be approximately SAR 7.05 billion (USD1.88 billion).

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.

Advanced Petrochemical Company (before Advanced Polypropylene) is a Saudi Joint Stock Company, established in October 2005. The company was initially launched by National Polypropylene Limited, jointly owned by Mr. Khalifa Al Mulhim, the chief executive officer of Advanced, and Mr. Monther Laheeq, who negotiated all the main deals related to the project, either before or after the establishment of Advanced Petrochemical. Currently, National Polypropylene Limited controls 7.9% of Advanced Petrochemical. Advanced Petrochemical started the construction of its plants in May 2005. The company produces 455,000 tons per year of propylene and 450,000 tons per year of polypropylene from its production facility located in Jubail Industrial City, in the Eastern coast of the Kingdom of Saudi Arabia.
MRC