Renewable fuel companies are crowding out some processors

MOSCOW (MRC) -- Both renewable fuel processors and oil refiners are trying to profit off the growing market for sustainable fuel and renewable diesel, but high prices for feedstocks like soybean oil has been more of a hazard for refiners, as their most recent earnings showed, said Hydrocarbonprocessing.

These renewable fuel products are a fraction of overall sales of gasoline, diesel and other products, but it is growing. However, demand has helped cause the prices of the ingredients needed - like soybean oil and animal tallow - to rise sharply. Refiners were forced to put off plans for expansion into renewable fuel production, but competitors who specialize in such fuels were able to shift to processing lower-cost feedstocks.

"We are making sure we are not dependent on one or the other feedstock," said Peter Vanacker, Neste's chief executive, in an interview with Reuters. "In the future it's going to be more and more about margin management." Companies such as Renewable Energy Group Inc, Darling Ingredients Inc and Neste all beat estimates for second-quarter earnings even as refiners crowd into the market.

The companies have more flexibility to switch between feedstocks such as used cooking oil and animal fat to make in-demand renewable diesel, said Dhruv Kharbanda, an associate at investment bank Tudor, Pickering, Holt & Co.

"Darling, Neste and Renewable Energy Group benefitted from feedstock flexibility during the quarter, whereas (CVR Energy) and Marathon highlighted the weak economics of running soybean oil," the bank said in a research note.

Marathon Petroleum, which operates America's second-largest renewable diesel facility in North Dakota that primarily runs soybean oil, called the feedstock's economics "challenged" because the heightened prices coupled with the relatively higher carbon intensity of the oil limits the refiners' ability to profit on production.

Renewable Energy Group's gross profit, meanwhile, rose by more than 400% from a year earlier by processing a higher percentage of lower carbon-intensive materials, said the company's chief executive Cynthia Warner.

As MRC informed earlier, in May, 2021, US refiner Marathon Petroleum Corp said its board had approved the conversion of the Martinez refinery in California to a renewable diesel plant. Besides, the company made a final investment decision regarding this project. Martinez, once complete, will be one of the largest renewables facilities in the country.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC

MOSCOW (MRC) -- South Korean and Chinese refiners have snapped up at least 5 million barrels of US Mars crude loading in September, taking advantage of lower prices in recent weeks, reported Reuters with reference to industry sources.

The purchases could lift in September the volume of US crude loading for Asia, up from a 4-year low in the previous month when strong US crude prices curbed exports, Refinitiv Eikon data showed.

Other grades such as West Texas Intermediate (WTI) and West Texas Light (WTL) that regularly head east are also being booked for Asia, the sources said.

Ongoing production restraint by Middle East producers and a delayed return of Iranian barrels to international markets have also contributed to the rise in Asian buying interest for US high-sulphur crude, they said.

One South Korean refiner has bought 3 million barrels of the sour grade while Unipec, the trading arm of Asia's largest refiner Sinopec, has taken at least 2 million barrels, the sources said.

Unipec has chartered the supertanker Cosnew Lake to load sour crude from Louisiana on Sept. 23, according to two sources and Refinitiv Eikon data. The company is also looking to fix a Suezmax vessel for departure in early September, shipbrokers said. Earlier this week, Taiwanese refiner Formosa Petrochemical Corp had issued a tender to buy Mars crude but did not award it due to high offers.

There are still 2 million to 4 million barrels of Mars crude that have yet to trade and these could potentially come to Asia, said a Singapore-based trader.

"US crude has become quite cheap relative to the rest of the world and U.S. exports have picked up because of it," said Scott Shelton, an energy specialist at United ICAP.

Mars Sour crude's discount to US crude futures widened in late July to the most since April 2020, but has since narrowed due to the rise in export demand, traders said. Mars traded at the smallest discount to benchmark futures in 6 weeks on Tuesday. "We have been seeing sours bid east very aggressively," one U.S.-based source at a top exporter said.

"I think there are still good refinery runs, despite the China COVID noise and SPR stuff," he said, referring to reports about China releasing crude stocks from strategic petroleum reserves (SPR) and concerns about the recent lockdowns in China to curb the coronavirus Delta variant cutting its oil demand.

As MRC wrote earlier, Formosa Plastics Company (FPC), part of Formosa Petrochemical, took off-stream its No. 1 cracker in Mailiao, Taiwan for a scheduled turnaround on 8 June, 2021. This cracker with an annual capacity of 700,000 tons of ethylene and 350,000 tons of propylene is expected to remained shut unitl mid-July, 2021.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC

MOSCOW (MRC) -- Fitch Ratings (Thailand) has affirmed PTT Global Chemical Public Company Limited's (PTTGC) National Long-Term Rating and senior unsecured rating at 'AA+(tha)', the Outlook remains Negative, as per the agency's statement.

Fitch has also affirmed the National Short-Term Rating at 'F1+(tha)'. The rating actions follow the company's announcement that it intends to acquire Allnex Holding GmbH (Allnex) for EUR4.0 billion (THB148 billion) by end-2021 after obtaining regulatory and other necessary approvals.

The Negative Outlook reflects the risks that PTTGC's funds from operations (FFO) net leverage remains above our downgrade threshold of 2.5x beyond 2023 post-acquisition. Fitch sees the acquisition as credit accretive, aiding PTTGC's diversification into specialty products and new geographies. Fitch has consequently widened the financial metrics to FFO net leverage of 2.5x (from 2.0x earlier) to reflect the improvement in business profile. We expect PTTGC's FFO net leverage to fall below 2.5x by end-2023 from 3.8x in 2021 post-acquisition (2020: 4.1x).

The acquisition will be funded mainly by a shareholder loan (THB74 billion) from parent PTT Public Company Limited (PTT, BBB+/AAA(tha)/Stable), cash on hand (THB100.5 billion at end-1Q21) and the proceeds (THB23 billion) from the sale of a stake in associate Global Power Synergy Public Company Limited (GPSC, A+(tha)/Stable).

As MRC wrote previously, PTTGC abruptly shut down three crackers at its petrochemical complex in Map Ta Phut on 14 April 2021 after a thunderstorm caused a power outage. No. 1 and 4 crackers and the recently launched No. 5 cracker on the site were off-line for around one week. The production capacities of No. 1 and 4 crackers are 461,000 and 515,000 mt/year of ethylene, whereas the new cracker can produce 500,000 mt/year of ethylene and 260,000 mt/year of propylene.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC

MOSCOW (MRC) -- Amcor, a global leader in developing and producing a diverse offering of responsible packaging solutions, today announced the launch of a proprietary healthcare lidding technology that will be utilized for combination products – those consisting of two or more regulated components (device, drug or biologic), said the company.

This latest innovation from Amcor is based on a patented inert film development and laminate design. It provides a lidding solution that can withstand heat sterilization, the process of preserving and sterilizing items, while preventing drug uptake into the packaging. The packaging solution is ideal for combination healthcare products, such as devices with an Active Pharmaceutical Ingredient (API) that forms the basis of a medicine. It ensures machinability, integrity after sterilization, as well as a convenient peel opening for patients. The features of the new product complement Amcor’s existing healthcare portfolio, which range from lidding for demanding sterilization environments to high barrier overwraps protecting eye droppers and medications for the eye.

Amcor collaborated with Johnson & Johnson Vision over the course of several years to develop the lidding technology for use with contact lenses. Each company contributed specific skills and perspective, notably Amcor’s expertise with film extrusion, lamination and conversion for healthcare, and J&J Vision’s expertise on ophthalmic device packaging requirements.

Peter Konieczny, Amcor’s Chief Commercial Officer said: “We are bringing together industry-leading innovation and close customer relationships to develop the packaging solutions of the future. With this next-generation healthcare lidding technology we are opening a world of possibilities for products using active pharma ingredients. We look forward to extending this differentiated lidding technology to additional combination products in the future."

As per MRC, Amcor announced its support for the launch of the U.S. Plastics Pact’s Roadmap to 2025, an aggressive national strategy for how the U.S. Pact, Amcor and other signatory organizations – known as Activators – will achieve four 2025 targets.

According to MRC's ScanPlast, the estimated PET consumption in the first half of this year amounted to 411,200 tonnes, which is 12% more than the same indicator of the previous year. In June, Russian companies processed 62,910 tonnes of material against 85,890 tonnes a month earlier.

Amcor is a global leader in developing and producing responsible packaging for food, beverage, pharmaceutical, medical, home- and personal-care, and other products. Amcor works with leading companies around the world to protect their products and the people who rely on them, differentiate brands, and improve supply chains through a range of flexible and rigid packaging, specialty cartons, closures, and services. The company is focused on making packaging that is increasingly light-weighted, recyclable and reusable, and made using an increasing amount of recycled content.
MRC

MOSCOW (MRC) -- US ethylene exports have declined and shifted from Asia to Europe as US producers focus on restocking inventories in the aftermath of a deep freeze that hit the US Gulf Coast in mid-February and subsequent operational issues that squeezed output, reported S&P Global with reference toNavigator Gas CEO Henry Deans' statement Aug. 17.

"Although production rates have increased, they have not risen as quickly as predicted and have therefore taken some time to replenish the ethylene pipeline," he said during the company's Q2 2021 earnings call.

"This, coupled with production hiccups, patchy cracker reliability and strong domestic demand and pricing has favored just domestic supply over exports, which had an all-on impact on our shipping business," Deans said.

Navigator is a 50% partner in Enterprise Products Partners' 1 million mt/year ethylene export terminal on the Houston Ship Channel.

The freeze brought sustained subfreezing temperatures to the US Gulf Coast and much of the US in mid-February, forcing more than 70% of 40 million mt/year of US ethylene capacity offline for several weeks.

Subsequent production headwinds continued into Q3 2021, Deans said, "and currently show no signs of abating."

He said US ethylene inventories remain at five-year lows amid hurricane season, and producers remain focused on building inventory. August and September tend to be the months during the June-November US Atlantic hurricane season when major storms are most likely to develop and hit the US Gulf Coast.

As MRC informed previously, Enterprise Product Partners' PDH unit in Mont Belvieu was taken off-line for a turnaround in early February. Thus, the PDH unit was shut for scheduled maintenance on Feb. 1 for approximately six weeks. This PDH unit has the capacity of 750,000 mt/y of propylene.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC