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Spot Ethylene Prices Dip as New Steam Crackers Slowly Come Online

February 19, 2020


Spot ethylene prices in Texas and Louisiana have been slipping this month as the Gulf Coast market continued to slowly absorb new production that has finally started up after delays of more than a year for certain units.

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Shintech's new olefins unit at Plaquemine, LA was "on the verge of starting operation" in early February, according to a statement from the company. This plant has been expected to come online since 2Q 2019. The ethane cracker has the capacity to produce 1.105 billion lbs/yr of ethylene (31,000 b/d in ethane demand) and feeds an onsite VCM and PVC complex. 

Indorama announced that its Lake Charles, LA steam cracker had "reached beneficial operations" in late January. The company purchased an olefins plant in 2015 that had been idled by Equistar in 2001. At the time of the purchase, the company said the plant could start up by the end of 2017. That start-up target slipped to end-2018 and then mid-2019 and end-2019. The company announced on January 31 that the plant achieved commercial startup following protests by residence of Sulphur, LA over noise associated with activities at the plant. Its 970 million lbs/yr of ethylene is designated to feed its own ethylene oxide and ethylene glycol operations and support its global PET operations.

Sasol has also brought a 3.3 million lb/yr (93,000 b/d ethane demand) new world-scale olefins plant fully online after struggles in 2019 that escalated to a point where the company's executive management issued a statement in Octobere 2019 describing "a lack of competence" associated with the project that resulted in the departure of several executives at the time. 

Unlike Shintech and Indorama, Sasol has operated a world-scale olefins plant and complex of downstream chemical plants in the US since 2001 with its purchase of certain assets from Condea Vista. Sasol's new plant is on the company's Lake Charles, LA site. Its 2.2 billion lbs/yr of ethylene output feeds new downstream ethylene glycol and polyethylene plants. The steam cracker, which had been expected to start up in early 2019, started up in a limited capacity in August 2019. The company stated at the time that the plant would run at 50% rates as the capacity allocated to the onsite polyethylene units would not be used until those plants started up. The PE plants started up at the end of 2019 but a fire at one of the plants in January caused more delays at the site. As of mid-February, all units were said to be operating at normal rates with the exception of one low density PE plant.

Formosa's new Olefins III unit at Point Comfort, TX did not experience the long delays and challenges that other companies experienced in 2019. The company had originally targeted starting up during 2H 2019. In November 2019 the company issued a statement that the steam cracker would start up by the end of December. In mid-January, the company issued an update that the olefins unit and two polyethylene plants would start up by the end of the month. Formosa is also no stranger to US chemical manufacturing - it has been in Point Comfort since the early 1980s. It built its first cracker at the site in 1994 and built a second cracker there in 1998. The new plant's 2.75 billion lbs/yr ethylene capacity (77,000 b/d ethane demand) will feed new polyethylene plants. 

Coming up, Dow Chemical's TX-9 olefins plant at Freeport, TX is expected to start up new furnaces during 2Q 2020. The plant is one of the Gulf Coast's newer units, starting up in 2017. The new furnaces will increase the plant's ethylene capacity by 1.1 million lbs/yr, bringing it to 4.4 billion lbs/yr and making it one of the largest olefins units in the world. The addition represents only 31,000 b/d of new ethane demand yet to materialize.

Since the start of 2020, spot ethylene prices have moved from the 20-21 cts/lb range (an equivalent of 59.4-62.4 cts/gal) to 14-15 cts/lb (41.6-44.6 cts/gal), a loss of 30% in just six weeks. While low, current pricing is still above lows reached in 2019 of 12 cts/lb (35.6 cts/gal).

Spot ethylene's main price driver has been the balance of new production coming online with associated downstream units, primarily polyethylene, vinyls and ethylene glycol. The downstream markets have faced their own unexpected challenges in 2019 with trade wars between the US and China that have caused a number of tariffs to be enacted and have hampered export volumes from the US as a result. That said, Enterprise’s new ethylene export terminal has enabled regular loadings of cargoes since late December, mostly bound for Europe. This has tempered the threat of a glut of ethylene sitting in the US.

Even at these low prices, ethylene is still a profitable commodity. Ethane, the most popular and commonly used ethylene feedstock in the US, has generally been in the 13-16 cts/gal range, which translates to a cash cost of 7-8 cts/lb. Propane has moved in and out of favor as an ethylene feedstock and is currently gaining in popularity as its own cash cost is around 10 cts/lb, and its use yields more propylene from the cracker as a co-product. With spot propylene currently priced at 29-30 cts/lb, propane has overtaken ethane at certain sites that can switch furnace use to accept the feedstock. 

 

--Reporting by Kathy Hall, kathy@petrochemwire.com; David Barry, david@petrochemwire.com and Rajesh Joshi, rjoshi@opisnet.com;

--Editing by Joe Link, joe@petrochemwire.com

Copyright, Oil Price Information Service


Propane Comes Into Favor as Cracker Feedstock

February 18, 2020

A conceivable scenario may explain, at least in part, the large decline in propane-propylene inventories in last week's government data release that caught some market watchers by surprise.

According to this hypothesis, the steady creep of propane over the past month as the most advantageous feedstock at steam crackers finally might have worked its way into reported domestic demand and inventory numbers.

The distressed price of purity ethane at present would complete this jigsaw.

According to the Energy Information Administration's (EIA's) weekly data release last Wednesday, nationwide propane-propylene stocks declined by 6.18 million bbl in the seven days ending Feb. 7, from 83.45 million bbl to 77.27 million bbl. This represented a drop of some 7.4% in one shot.

A large portion of this draw, 4.35 million bbl, was in PADD3 (Gulf Coast). This already oversupplied region, which holds almost the entire year-on-year inventory surplus nationwide, saw stocks subside from 57.68 million bbl to 53.33 million bbl.

These numbers elicited more than one reaction of surprise among market watchers. But this magnitude of draw between the last week of January and the first week in February has not been that uncommon of late, both at the nationwide and PADD levels.

For example, in 2017, according to EIA historical data, the dip was larger than the one seen last week in absolute as well as percentage terms: a 6.88 million bbl (11%) draw, from 62.65 million bbl to 55.77 million bbl. Again, PADD3 accounted for much of the 2017 erosion -- a 4.69 million bbl draw, from 38.25 million bbl to 33.56 million bbl.

Corresponding January-into-February weekly draws were comparatively more moderate in 2019 and 2018 (nationwide declines of 4.38% and 7.77% respectively), but did not buck the trend.

Meanwhile, domestic demand in the Energy Information Administration's (EIA) Feb. 7 dataset, which is represented by the "products supplied" number in the report, rose a whopping 68%, or by some 850,000 b/d, from 1.24 million b/d in the Jan. 31 week to 2.09 million b/d in the Feb. 7 week.

Domestic production and exports for the Feb. 7 week were within the wheelhouse of recent averages. Besides, received wisdom in the market generally is that domestic demand for propane is at a plateau, and exports are the main avenue to lower stocks.

This made the latest demand number stick out, at least in arithmetical terms, as the apparent mover of the needle when it came to the outsized inventory draw.

However, it is equally interesting to note that EIA-reported demand has spiked from the last week of January to the first week of February in both 2019 and 2018. In fact, weekly demand from the first weeks in February for 2019 and 2018 was almost identical to this year's 2.09 million b/d: 1.99 million b/d (up 23.2% week on week) and 2.01 million b/d (up 31.1%), respectively.

Thus, it turns out that neither the inventory draw nor the surge in reported demand in the latest "surprise" EIA dataset was unprecedented. Nonetheless, this year's developments may have been tinged by a new and recent phenomenon: propane displacing purity ethane as economically the most viable feedstock at steam crackers -- of which almost the entire fleet in the United States resides along the Gulf Coast.

It is worth stressing at the outset that short-term variations in prices alone do not automatically lead to mass feedstock switching at crackers. This could be because of cracker specifications, feedstock storage availability at the operator, etc. Nonetheless, one can see the attraction of a switch to propane just by looking at spot market values for ethylene and propylene.

According to OPIS PetroChem Wire daily pricing data, spot ethylene has been in the 15-16cts/lb. range for much of February, while spot polymer-grade propylene has been in the 29-30cts/lb. range.

Propylene is generally at a premium to ethylene in the United States, as there is far less propylene production capacity than there is for ethylene. While steam crackers are designed to primarily produce ethylene, furnaces that can accept a variety of natural gas liquids (NGLs) can produce varying amounts of co-products.

Ethane is a feedstock that maximizes ethylene output: cracking it produces almost nothing but ethylene. On the other hand, cracking propane yields 15%-20% propylene, and reduces ethylene output to around 50% (the rest of the output is other co-products such as hydrogen).

Current OPIS PetroChem Wire-assessed ethane-based cash costs for olefins production stand at 7-8cts/lb. for February and March. These are handily lower than propane-based cash costs at 10-11cts/lb. However, the attractiveness of ethane based on these numbers alone may not be self-explanatory.

The more nuanced pursuit of limiting ethylene output and increasing availability of the much higher priced propylene might have tipped the scales in propane's favor, at least at the more flexible operators.

According to data from En*Vantage Inc., as of last week propane was the most preferred feedstock at high-severity cracking conditions, yielding a spot net margin of 8.5cts/lb. versus 7.3cts/lb. for ethane (based on a spot Mont Belvieu ethylene price of 15.5cts/lb.) Butane and naphtha yielded margins of 4.8cts/lb. and minus 14.2cts/lb., respectively.

OPIS-assessed spot Mont Belvieu prices provide context. According to the North America LPG Report on Feb. 14, the month-to-date average price for all three assessed grades of propane was 37.8626cts/gal, versus 64.4771cts/gal for the same day in 2019, i.e., a 41.3% decline year-on-year. Front-month WTI crude ended the respective sessions at $52.05/bbl this year and $54.41/bbl in 2019, i.e., only 4.3% lower this year, which highlights the depths to which Gulf Coast propane prices have currently fallen.

"It's real," one steam cracker industry expert said against this backdrop on Thursday last week. "With propane becoming the most favored feedstock a few weeks ago, it took a few weeks for all of us to get swapped over to more C3 feed."

Though the exact reason behind the 850,000-b/d increase in domestic demand from Jan. 31 to Feb. 7 this year may still be hard to pinpoint, he said this increase theoretically "is within the Gulf Coast cracker fleet's ability to switch from ethane to propane."

Alluding to the lag between the time this switch happened and when it actually began to show through in EIA statistics, he noted: "Big ships turn slowly."

In the same vein, he suggested that the 4.35-million-bbl draw in regional PADD3 inventories for the Feb. 7 week may have had to do with a couple of cracker operators moving barrels out of commercial storage (which the EIA reports cover) to proprietary storage (which the EIA reports do not cover) closer to their crackers, for ease of use.

This scenario may arguably be theoretical. But purity ethane is the unfortunate victim in real terms.

This is reflected in the Feb. 14 OPIS-assessed month-to-date average Mont Belvieu price of 13.8566cts/gal, compared with 32.1251cts/gal on the same day a year ago -- a 56.9% slide year-on-year.

Anecdotal comments from the market last month had suggested a potential hit of 50,000-100,000 b/d on regional feedstock demand for ethane because of the creeping attractiveness of propane.

However, purity ethane's current pricing woes stretch beyond this factor alone.

The product endured a stark second half of 2019, which saw the OPIS-assessed price dip below a dime for a brief while at the end of July, the lowest point since assessments began in 1984.

Ethane faces other headwinds on the Gulf Coast: surging inventories, weak natural gas values, the imminent arrival of new fractionation capacity, and not that many new steam crackers remaining for startups.

The challenge from propane does not come at a good time for ethane as a result.

Some pundits project that the Mont Belvieu price may test the 10cts/gal level again.

 

--Reporting by Rajesh Joshi, rjoshi@opisnet.com, Kathy Hall, kathy@petrchemwire.com;

--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com

Copyright, Oil Price Information Service


 

China moves to lower polyethylene, polypropylene tariff barriers

February 18, 2020


China’s finance ministry announced today that Chinese importers will soon be able to apply for tariff waivers on a list of 696 US and Canadian goods, including plastics such as linear low density polyethylene (LLDPE), high density polyethylene (HDPE) and polypropylene (PP).

While not a blanket lifting of the duties imposed in retaliation for US tariffs on Chinese goods, the tariff exemption applications could benefit North American PE producers, who are counting on emerging markets such as China to absorb much of the new capacity that was built in recent years.

Starting March 2, importers can apply to import specific amounts of items from the waivers list. Upon approval, importers would pay the baseline 6.5% duty for a year, without the additional tariffs imposed as part of the trade war. The tariff exemptions would only apply to approved volumes for a period of one year.

Westlake CEO Albert Chao made note of the tariff waivers during an earnings-related call Tuesday morning, but said it was unclear what demand there would be.

PE traders did not expect much near-term impact. The COVID-19 coronavirus epidemic has brought a dramatic slowdown in China's manufacturing activity and logistics, and domestic producers' polyolefins inventories are at record highs.

Chinese resin buyers will not be back in the international market for big volumes before April or May, one PE trader predicted.

US HDPE blow mold pricing has been steady at 32 cents/lb railcar FOB Houston for more than a month, after recovering from the high 20s cents/lb in late 2019.

--Reporting by David Barry, David@petrochemwire.com;

--Editing by Joe Link, Joe@petrochemwire.com

Copyright, Oil Price Information Service

Celanese Singapore Fire Adds Pressure to Global VAM Market

February 14, 2020

Vinyl acetate monomer (VAM) prices are rising partly as a result of a fire that broke out at U.S. producer Celanese’s Singapore plant on Feb. 7.

Other products produced at the complex, including acetic acid, butyl and ethyl acetate, are holding steady at this time, according to industry analysts.

“Spot VAM prices in Southeast Asia and elsewhere in Asia have risen as a result of the outage, but also as a result of VAM units in China having to decrease operating rates due to logistics restrictions caused by the coronavirus,” said Mike Nash, IHS Markit’s Vice President of Syngas Chemicals.    

Acetic acid, produced primarily by the carbonylation of methanol, is used in the production of PTA, a feedstock for polyester fibre and PET bottle chips. China accounts for 54% of world acetic acid capacity, according to IHS Markit.

Spot acetic acid prices fell this week despite the outage, partly based on the anticipation that the Singapore facility may restart shortly, Nash added.

At its Jurong Island, Singapore petrochemical facility, Celanese operates a 600,000 mt/year acetic acid unit, a 210,000 mt/year VAM unit as well as ethyl and butyl acetate units.

In a statement received by OPIS, Celanese confirmed the fatalities of two people, including a Celanese employee, as a result of the injuries from the incident.

“It is with deep regret and sadness that we share news of the fatalities of two people, including a Celanese employee, from our site in Singapore,” Travis Jacobsen, Celanese’s Director of Global Corporate Communications, said in an email to OPIS.

“Both suffered injuries in an accident that occurred on Feb. 7 while they were performing turnaround preparation work at the site,” Jacobsen said.

Singapore newspaper Straits Times reported that the dead were among a group of workers who were carrying out purging of a hydrocarbon pipeline when a fire broke out.

An investigation has been initiated with support from Celanese experts. The Singapore authorities have been on site and will be conducting a parallel, independent investigation.

“The site is secure, and at this time there are no additional safety concerns related to this incident or the operations of the site,” Jacobsen added.

The fire affected Celanese’s VAM unit and will potentially impact the availability and prices of VAM, buyers in Asia said, who have not been notified of any impending acetic acid or ethyl and butyl acetate supply cuts or shipment delays.

“Due to this incident, we are experiencing minor operational delays for customer shipments. We expect additional information from local authorities during the week of Feb. 15 which will help us determine any additional delays,” Jacobsen said. “We will work with our contract customers to source within our supply network to ensure there is minimal disruption to order delivery.”

The markets in South and Southeast Asia were relatively quiet in late January/early February due to the combination of the Lunar New Year holiday and the Covid-19 coronavirus outbreak, William Bann, Business Manager for Acetyls and Methanol for Technon OrbiChem told OPIS.

“Downstream customers covered requirements for the first half of February prior to the holiday period, so prices were stable during the extended holiday break.  There was not an immediate reaction in the markets, but I would expect to see spot prices for both acetic acid and VAM increase if downstream demand picks up to any extent or if Celanese is forced to halt production in Singapore while officials investigate the incident,” Bann said.

Regional shipments were not immediately expected to be impacted for some of the products produced at the complex as demand has been muted amid the virus outbreak.

“Their local representative has just confirmed that they can supply additional volumes of ethyl acetate for March loading,” a southeast Asian petrochemical importer said, who added that its shipments of the same products from China have been delayed by three weeks due to local transportation lockdowns amid the country’s wide-ranging Covid-19 coronavirus containment measures.

“Normally, we would expect the market to be strengthening as demand returns after the Lunar New Year holiday. This year, however, the coronavirus has led to weaker market sentiment, with end-users reluctant to purchase more than their immediate needs,” Nash said. “Some derivative units remain shut down from before the Lunar New Year holiday. Therefore, the impact of the Singapore outage has been less than it would have been in a seasonally typical market.”

Acetic acid buyers in India, the world’s biggest importer of the chemical, have not been notified of any disruption to supply from Celanese’s Singapore facility. Buyers on the west coast receive around 20,000-22,000 mt a month from the plant, said an Indian ethyl acetate producer.

“My understanding is that Celanese has a surplus of acetic acid because the fire broke out at the (downstream) VAM unit, which is likely to tighten VAM supply to India but will also result in an acetic acid supply overhang,” said an Indian buyer.

“China will be a bigger problem than Celanese, no vessels have loaded from China for the past 20 days,” said a separate Indian acetic acid buyer, referring to the domestic transportation shutdowns that have prevented Chinese producers from delivering product from their plants to shore tanks.

As much as 50% of India’s acetic acid imports come from China, the second acetic acid buyer added.

Nor have Indian acetic acid importers seen any increase in current or near-term prices.

“Acetic acid prices have been falling, methanol prices have crashed, PTA prices have crashed,” said the first buyer.

“If the units remain offline for an extended period, the impact could be greater depending on the progress of the coronavirus and on whether that coincides with other planned or planned outages,” Nash said. “In a steady state, there should be sufficient acetic acid and VAM to meet regional and global demand.”

A lengthy outage could be problematic for Celanese supplies globally as they only recently resumed full operations at Clear Lake, Texas, following a fire at that facility in the third quarter of 2019. The Texas unit produces 1.5 million mt/year of acetic acid and 460,000 mt/year of VAM, according to Technon Orbichem.

“Coincidentally, the Singapore plant was shut for planned maintenance at the same time, leaving Celanese very tight in its global network,” Bann said. “Celanese was able to move material out of China to cover some requirements in other regions, and re-directed some acetic acid meant for internal use to external contract customers. 

“It is understood they purchased large volumes of acetic acid in Q3/Q4 and/or swapped with other producers as well.  Celanese managed to keep its customers supplied and did not declare force majeure, which was quite an achievement,” Bann added.

However, with logistics and transportation disruptions ongoing due to the Covid-19 coronavirus outbreak, it is not clear whether Celanese will be able to load large cargoes from its 1.2 million mt/year Nanjing, China plant in the near-term. 

“Other producers in China could face the same limitations, and that would put further pressure on supplies in the region,” Bann said. “Added to the equation is the fact that Celanese has a long turnaround scheduled to begin in early second quarter at its Clear Lake facility, and it will need to start building inventories ahead of that shutdown.”

India is the largest net importer of acetic acid, and two of its main suppliers are China and Singapore.

“There is some flexibility for producers in the Middle East and Asia to offer additional cargoes to India, but I would expect to see higher offers in the Indian markets for March deliveries,” Bann said.

--Reporting by Trisha Huang Trisha.Huang@ihsmarkit.com, Heather Doyle Heather@petrochemwire.com;

--Editing by Joe Link Joe@petrochemwire.com

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U.S. polyethylene export growth surged in 2019

February 5, 2020

US polyethylene (PE) exports were up 11% in December to 858,634 mt, a new monthly high, according to Commerce Department data released today. For all of 2019, US PE exports totaled 9.33 million mt, 2.84 million mt (44%) higher than 2018.

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The export boom is a result of the dramatic expansion of North American PE capacity in recent years and the abundance of low-cost feedstock that has made PE exports competitive in the global market.

US PE export volumes to China fell by 9% to 584,157 mt in 2019, bucking the overall trend because of the trade war. However, US suppliers adjusted by selling more into Southeast Asia markets. Of the four fastest-growing PE export destinations in 2019, three were in Southeast Asia: Singapore, Malaysia and Vietnam, which collectively took in 845,888 mt more PE in 2019 versus 2018.

Belgium was the second fastest-growing PE export market for the US by volume, accounting for about 10% of the additional exports in 2019. Brazil was the fifth fastest-growing destination.

US PE export volumes will likely need to continue growing in 2020, with three new PE plants totaling 1.32 million mt of capacity scheduled to come online over the next few months and limited growth prospects for the domestic market.

Domestic demand weakened in 2019, according to preliminary data published in January by the American Chemistry Council (ACC). US and Canadian producers’ 2019 domestic sales totaled 31.6 billion pounds (14.3 million mt), down from 32.7 billion pounds (14.8 million mt) in 2018.


--Reporting by David Barry, david@petrochemwire.com 

--Editing by Joe Link joe@petrochemwire.com

 

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January U.S. Propylene Contracts Settle at a Rollover While Spot Prices Ease

January 24, 2020

January monthly contract prices for polymer grade propylene (PGP) were settling on January 24 at a rollover from December at 33 cents per pound (an equivalent of 143.6 cents per gallon).

The monthly contract price has been steadily falling since September 2019. The lowest contract price in 2019 was 33 cts/lb, reached in December. Prior to that, monthly contracts were last at 33 cts/lb in June of 2016. 

Monthly contract prices for propylene tend to be slightly higher than spot prices, and this trend continued in January. Spot polymer grade propylene began this month trading in a range of 31-31.5 cts/lb (134.9-137 cts/gal) and hit 28.5 cts/lb (124 cts/gal) on January 23, a low not seen since the end of 2016.

The declines in spot pricing come at a time when supply was largely considered to be balanced. No operating issues have been heard regarding any propylene splitters. Enterprise's propane dehydrogenation unit at Mont Belvieu was flaring after a product gas compressor and ethylene refrigerant compressor shut on Thursday. The unit is one of three in the US and it can produce 1.65 billion lbs/yr of chemical grade or polymer grade propylene.

Polypropylene plant operating rates were in the low 80s percent in late 2019 and demand has not been robust for propylene as a feedstock. However, there are signs of improving demand for polypropylene in early 2020. Falling domestic PP prices have made PP imports less competitive and spurred restocking activity by domestic buyers. The domestic resale spot price for HoPP injection was 44-48 cts/lb railcar delivered on Friday, down 10-11 cts/lb from a year ago.

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--Reporting by Kathy Hall, kathy@petrochemwire.com and David Barry, david@petrochemwire.com
--Editing by Joe Link   Joe@petrochemwire.com

Copyright, Oil Price Information Service


Chemical Groups Praise Senate Approval of New North American Trade Agreement

January 16, 2020

The U.S. chemical industry sees economic benefits in the new trade pact with Mexico and Canada that was approved by the Senate today by an 89-10 vote. The U.S. Mexico-Canada Agreement Implementation Act, or USMCA, now moves to President Trump for his signature.

The North American nations agreed to the deal more than a year ago but concerns about labor and environmental issues held up its approval.

The U.S. remains in a historic expansion with more than $200 billion in chemical manufacturing investments announced over the past decade. Much of that investment is export-oriented, meaning the industry must be able to capitalize on its competitive position and depends on a U.S. trade policy that opens rather than closes doors to new markets.

Mexico and Canada are the two largest trading partners for the U.S. plastics industry.

The USMCA maintains NAFTA's tariff-free status for the supply chains, which was a top priority for chemical industry groups.

There are a few changes, however, from the North American Free Trade Agreement (NAFTA) which took effect in 1994. USMCA has stricter rules for auto part rules of origin and requires at least 40% of the parts for a car to be produced in plants where workers make at least $16 an hour. Other changes include updating digital trade and copyright rules.

“We all win under this new agreement,” American Chemistry Council (ACC) President and CEO Chris Jahn said in a statement. “Our unanimous support for ratifying USMCA is a testimony to the collaborative, highly integrated North American chemical manufacturing sector that is uniquely positioned to continue to grow and create new jobs under the new North American trade pact.

The U.S. chemical sector has capitalized on duty-free trade under NAFTA ever since its inception, more than tripling U.S. chemicals exports to Canada and Mexico – from $13 billion in 1994, to $44 billion in 2018. Chemical exports are projected to grow to $59 billion by 2025, the ACC said.

“For the U.S. in particular, companies eyeing the U.S. shale gas revolution and chemical production boom should soon have even greater confidence to invest, knowing that they will be able to trade freely with our industry’s largest trading partners in Canada and Mexico,” Jahn said.

In 2018, U.S. chemical manufacturers exported $46 billion, or one-third of all U.S. chemicals exports, to Canada and Mexico. Around 44% of U.S. chemicals exported to Canada and Mexico are to related parties, according to the ACC.

Nearly a quarter of all U.S. chemical imports are from Canada and Mexico. 64% of those imports are from related parties, according to council.

“We’re thrilled at the prospect of Canada’s ratification of CUSMA to further minimize barriers to North American chemicals trade,” said Chemistry Industry Association of Canada (CIAC) President and CEO, Bob Masterson. “Eliminating tariffs and other barriers to trade has changed the conditions of doing business across borders in North America and encouraged regional investment and economic integration. Producers have become more efficient and more productive because they can benefit from vertical specialization and economies of scale. Canadian, Mexican, and U.S. goods – including chemicals, and goods that require chemicals as inputs – are competitive in the global marketplace because they are products of integrated North American supply chains,” he said.

Canada traded $65.1 billion in chemical products with the U.S. and Mexico in 2018, according to the ACC.

The region is currently experiencing its own renaissance of petrochemical investment.

Current chemical construction in Canada represents some C$10 billion and includes a polyethylene plant and ethane cracker expansion, as well as two separate polypropylene plant complexes each with its own propane dehydrogenation (PDH) units.

-- Heather Doyle  Heather.Doyle@IHSMarkit.com

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Canada Kuwait Petrochemical awards EPC contract for PDH plant


HOUSTON, January 8, 2020 (PCW)--Canada Kuwait Petrochemical Corporation awarded a lump sum EPC contract for its Alberta propane dehydrogenation (PDH) facility and said that the propylene/polypropylene complex is expected to be placed into commercial service by 2H 2023.

Once operational, its listed capacity will be 550,000 mt/yr of propylene, which will be fed from the PDH unit into the site's PP plant.

Previously, the in-service date was projected as mid-2023.

The contract, which was awarded to Heartland Canada Partners, a joint venture of Fluor and Kiewit, will fix approximately 60% of the cost of the PDH/PP facility so far. The contractor selection for the PP part of the complex is ongoing.

Pembina Pipeline Corporation, which together with Petrochemical Industries Company of Kuwait is developing the PDH/PP complex, has revised its proportionate share of the capital cost of the PDH/PP Facility, including the 100 percent directly-owned supporting facilities, to $2.7 billion. Nearly a year ago, Pembina's share was estimated at $2.5 billion.

The complex will be capable of converting about 23,000 b/d of propane into 550,000 mt/yr of PP.

The final investment decision for the PDH/PP complex was announced in February 2019. The facility will be located adjacent to the Redwater Fractionation Complex, just north of Fort Saskatchewan, Alberta.

– David Barry   david@petrochemwire.com

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October PGP contracts settle lower as inventories rise

HOUSTON, October 31, 2019 (PCW) – October polymer grade propylene (PGP) negotiated contracts have settled at 37.5 cpp, down 1.5 cpp from September. Chemical grade propylene (CGP) contracts also settled down 1.5 cpp at 36 cpp.

The October PGP contract price is the lowest since June, when PGP contracts settled at 36.5 cpp. PGP contract prices have fluctuated in a relatively narrow band of 35.5-40 cpp this year. By comparison, 2018 saw a PGP contract range of 42-61 cpp.

In the spot market, October PGP at the MtB-EPC hub traded Wednesday at 34.5-34.75 cpp for October delivery. It has traded in a range of 33.25-37 cpp this month.

The OPIS PetroChem Wire MTD 45-day weighted average for October PGP stands at 34.548 cpp, down 2.397 cpp from Sep.

US propylene inventories rise

Meanwhile, US nonfuel use propylene inventories climbed for a seventh straight week to a 23-week high of 5.031 million bbl, according to EIA.

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The EIA report for the week ending October 25 showed a 328,000 bbl (7%) inventory build, the largest weekly uptick since February 2019. Current propylene inventories are very close to the 52-week average of 5.021 million barrels.

The recent trend of rising propylene inventories and falling prices has occurred against a backdrop of lower supply but also weaker demand.

Gulf Coast refinery utilization has averaged 87.5% over the past four weeks; the five-year seasonal average utilization is 89.8%. Later in 4Q, Gulf Coast refinery utilization usually ramps into the low to mid-90s on a percentage basis.

Also on the supply side, several recent outages of Gulf Coast crackers and on-purpose propylene plants have pushed production down, although some of these units were understood to be restarting within the past week. Month-to-date maximum Gulf Coast operating rates for steam crackers and PDH plants were estimated at 90% as of October 25, according to OPIS PetroChem Wire.

Downstream, PP demand has been lackluster in recent months, with 3Q operating rates estimated in the mid- to upper 80s percentage. In October, the PP market has been balanced despite at least three PP suppliers carrying out planned maintenance work in October. HoPP raffia/injection exports have been reported at 41-45 cpp railcar FOB Houston, but traders suggested that prices at 40 cpp or lower would be needed to secure large-volume orders going forward.

There have also been reports that the propylene arb to Asia, which had been open late in 3Q, was closed again in October. 

– David Barry,  David@petrochemwire.com

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US PET resin exports, imports down; imports surge from S. Africa, Vietnam

pcw 1023HOUSTON, October 23, 2019 (PCW) -- US exports of PET resin totaled 47,647 metric tons in Jan-Aug 2019, down 7.6% from Jan-Aug 2018, the latest US Commerce Department data show. Malaysia was the second top export destination after Mexico.

US PET resin imports were also lower, at 569,083 mt in the first eight months of 2019, valued at $699.9 million, down 11.6% from the same 2018 period.

Mexico remained the top source of imports in the 2019 period at 139,080 mt, although this was down by 36.7% from Jan-Aug 2018. Imports from South Africa surged to 42,991 mt from 20,428 mt in Jan-Aug 2018; they were also up sharply from Vietnam at 45,796 mt, up from 1,513 mt in Jan-Aug 2018.

Most PET resin, produced by processing hydrocarbons, is used to make single-use plastic bottles, containers and packaging, and other products like strapping PET industrial tape.

 

 

-- Xavier A Cronin, xavier@petrochemwire.com

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US ethylene prices jump amid supply speculation; ethane eases

HOUSTON, October 17, 2019 (PCW) -- Spot ethylene prices jumped nearly 20% on Thursday in Texas and Louisiana to the mid-20cts/lb level (an equivalent near 75 cpg) as speculation emerged about tightening prompt supply amid ongoing plant outages and reductions. Spot ethane, meanwhile, stopped its ascent toward the 20 cts/gal mark (roughly 6.75 cts/lb equivalent) and drifted lower.
 
Against a backdrop of waiting for new ethylene production from Shintech and Indorama and full steam cracking rates from Sasol and the Lotte Chem/Westlake venture, availability has been reduced from ExxonMobil's Baytown site after one of its steam crackers shut related to a co-product tank fire at the end of July. Shell also continues to perform planned work at one of its steam crackers at Norco in Louisiana. Earlier this week, both of Ineos' units at Chocolate Bayou (Texas) experienced operational issues related to a steam supply interruption. 
 
The cumulative effect of these situations has kept the ethylene market speculating about the state of supply. Spot pricing for October ethylene at the Mont Belvieu-NOVA hub had been drifting lower in recent weeks, from 29 cts/lb (86 cts/gal) at the start of the month to 20 cts/lb (59 cts/gal) this past Monday. After a few days of low activity, ethylene roared back to life on Thursday morning, with Oct MtB-NOVA material trading three times at 24 cts/lb (71.3 cts/gal) and Oct material for delivery elsewhere in Texas trading up to 26 cts/lb (77.25 cpg), while Oct ethylene in the Choctaw (Louisiana) hub traded up to 25 cts/lb (74.25 cpg).
 
Downstream demand from the plastics market has not been stellar, but it has been consistently steady in the domestic market and has been battling weak demand from international markets. The recent return of Chinese buyers from the weeklong national holiday did not produce a surge of international demand, and market sentiment stayed weak overseas. Spot high density polyethylene prices in the bulk railcar market have dropped this month, but while ethylene shed 45% of its value in the first half of October, HDPE lost just 3%, moving from 33 cts/lb (98 cts/gal equivalent) to 32 cts/lb (96 cts/gal). 

--Kathy Hall, kathy@petrochemwire.com

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US PE producers react to ethylene, NGLs volatility and issue new price increase notices

HOUSTON, September 25, 2019 (PCW) -- US polyethylene producers have either high hopes to boost margins or strong safeguards to protect against a spike in ethylene prices. Contract PE sellers (who set a single price for a month that is typically communicated in a letter notifying customers of the increase delta) have an active 5 cents per pound (cpp) increase issued for September and many have issued a further increase of 8 cpp for October deliveries. 

At the heart of many of these efforts is the concern over ethylene pricing, as it makes up most of the cost to produce polyethylene. Spot ethylene, however, has been tricky to pin down for those trying to identify a trend.

pcw 0925

Early in September, spot ethylene prices in the Mont Belvieu area (the dominant benchmark price) were in the low 20 cpp zone and even dipped below 20 cpp by Sep 5. However, they steadily rose to 25.25 cpp by mid-month and shot to 27 cpp by Sep 18. However, by the time the PE producer letters began rolling out for October, spot ethylene had changed directions and was drifting down to 25 cpp. This morning, Oct Mont Belvieu ethylene traded multiple times at 24 cpp, its new low for the month.

Ethylene's drivers are fundamentally simple: NGLs pricing and ethylene supply availability. NGLs have been just as unpredictable, following energy markets that often surge on political news and wane on follow-up news.

Mont Belvieu ethane prices started September averaging above 20 cents per gallon (cpg) – price levels not seen since early June – as demand picked up from new and returning cracking capacity. One consultant estimated this capacity was near 1.7 million b/d at present, up 200,000 b/d from August. Yet supplies of ethane are still viewed as more than abundant, and this could lead to a supply/demand tug-of-war going forward. On Wednesday, ethane had backed off to 19-20 cpg from a midmonth average peak at 23.6875 cpg.

Propane and normal butane at Mont Belvieu, meanwhile, appeared more sensitive to the geopolitical moves in petroleum futures. Prices for both spiked on Sep 16 and have since been backtracking, though neither has pulled back to their early month lows. Between Sep 3-16, non-TET propane moved from 39.8125cts/gal to 50.0625cts/gal – including a 7cts one-day surge when news of the Saudi attacks hit – and were last seen around 45cts/gal. Non-TET normal butane peaked Sep 16 at an average 59.875cts/gal from just around 50cts/gal at the start of the month and were last seen around 55cts/gal.

Ethylene supply has not necessarily been tight inasmuch as most plants were operating well and the one storm that has swept through Texas appeared to cause two minor closures for petrochemical plants. The ongoing saga of waiting for new production to start up, however, weighs heavily on the ethylene market. Four new steam crackers have been expected to have started producing many millions of pounds of ethylene each day in the Lake Charles-Plaqumine region of Louisiana: Shintech, Sasol, Indorama and the Lotte-Westlake joint venture. Sasol's plant is running but is not yet at normal rates; the others are expected to start up shortly. As each week goes by without seeing this capacity, however, shifting balances in the Gulf Coast can agitate some to speculate on the state of future supply, which can inspire some testing of support and resistance levels. For Sep and Oct spot ethylene, this has been from the low to upper 20s cpp.

What that means for the polyethylene market in terms of the likelihood of their contract prices increasing remains to be seen. Spot PE has been largely indifferent to the upstream price swings, however, with the benchmark high density blow molding grade PE price staying firmly in the low to mid 30s cpp range and its companion linear low butene film grade PE staying in the low 30s cpp so far this month.

--Julia Giordano, julia@petrochemwire.com
--Xavier Cronin, xavier@petrochemwire.com
--Jessica Marron, jmarron@opisnet.com
--Kathy Hall, kathy@petrochemwire.com

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Spot petchem prices barely move as markets await impact of Imelda

HOUSTON, September 19, 2019 (PCW)--Spot olefins markets were silent in Texas, with no bids or offers seen at all for prompt material, following the news that ExxonMobil has completed shutdowns of the chemical plants at its Beaumont, Texas, site as Tropical Storm Imelda moves through the area. Spot ethylene has traded higher in recent days, with September reaching 27 cpp. Wednesday afternoon. Spot propylene has been steady this week at 36.5 cpp.
 
Spot benzene prices were up 1-2 cpg at 254-260 cpg DDP HTC for September and at 256-263 cpg for October delivery. An upcoming turnaround scheduled at ExxonMobil's refinery had limited the benzene market's expectations for product from the site this month; effects of the storm on nearby styrene production at Bayport also muted the effect of the Beaumont shutdown.
 
ExxonMobil's chemical assets at Beaumont include a world-scale olefins plant which has the capacity to produce 4.932 million pounds of ethylene per day, representing 3.2% of Texas ethylene capacity. The site also has the capacity to produces 1.2 million pounds of polymer-grade propylene per day and has six polyethylene trains with a total capacity of 5.6 million pounds per day.
 
Flooding was not just a concern for Beaumont -- the markets were keeping an eye on effects to the nearby Port Arthur area, which is home to several major refining and petrochemical sites, including the joint BASF/Total complex, as well as Chevron Phillips and Flint Hills Resources.
 
In the Houston area, a lightning strike Wednesday evening caused a brief power outage and process upset at Bayport Polymers' 1.1-billion-lb./yr PE facility in Pasadena, Texas. An update on the plant's status was not immediately available Thursday morning.
 
Process upsets were also reported Wednesday evening at LyondellBasell in La Porte, Texas, and American Acryl in Pasadena. No further details were confirmed.
 
Resin buyers were alerted to potential trucking delays around Houston due to roadway flooding, and Interstate 10 was closed west of Beaumont due to impassable flood waters, according to the Texas Department of Transportation.

--Kathy Hall, kathy@petrochemwire.com

--Julia Giordano, julia@petrochemwire.com

-- David Barry, david@petrochemwire.com

-- Kevin Wallman, kevin@petrochemwire.com 

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Dow plans more on-purpose propylene with cracker retrofit

HOUSTON, August 20, 2019 (PCW) – Dow Chemical announced today that it will retrofit its LA-3 cracker in Plaquemine, LA with fluidized catalytic dehydrogenation (FCDh) technology to produce more than 100,000 mt/yr of additional on-purpose propylene.

The project, which is expected online by the end of 2021, will not reduce the unit’s current ethylene production capacity of 1.066 million mt/yr. The LA-3 cracker underwent a 250,000 mt/yr expansion in 2016, which also increased its ethane cracking capability to 80%.

Dow said the retrofit will enhance asset utilization and help meet growing demand for its differentiated polyolefins products, citing consumer, infrastructure and packaging end-markets.

Propylene historically has been supplied as a byproduct of refineries or steam crackers, but the substitution of low-cost ethane for heavier cracker feedstocks has reduced the output of cracker byproducts, including propylene, creating the need for other sources of propylene to balance the market.

Because of the reduced byproduct propylene supply, the US Gulf propylene market in recent years has suffered from volatility and high prices, with OPIS PetroChem Wire’s monthly spot average for PGP topping out at a 45 cpp premium to ethylene in June 2018 and spot averages swinging as much as 15 cpp from one month to the next last year.

New propane dehydrogenation plants started up by Dow and Enterprise in the past few years have helped to smooth out the volatility and bring US Gulf propylene prices to more competitive levels in the global market.

Dow claims that its FCDh technology can reduce capital expense by up to 25% and lower energy usage by up to 20 percent compared to conventional PDH technologies. It recently licensed the technology to PetroLogistics II for a new stand-alone PDH facility that is planned for the Gulf Coast.

– David Barry,  David@petrochemwire.com

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Ethane Ships' LPG Voyages Highlight Cutthroat Feedstock Competition

August 6, 2019

Two multi-gas carriers that typically conduct "milk runs" carrying American ethane into charterer Ineos' European steam crackers have completed voyages to the Continent carrying propane and butane.

The dual cargo switch underscores two interlinked situations -- an over-supplied U.S. ethane market beset with low prices, and competition to ethane posed by compellingly priced LPG (i.e., propane and butane) for use as feedstock in steam crackers.

IHS Markit Waterborne data showed the multi-gas carrier JS Ineos Independence departing Enterprise Products Partners' export docks on the Houston Ship Channel on July 22 with a 149,040-bbl cargo of propane, and heading to Europe.

Sistership JS Ineos Ingenuity departed the Marcus Hook, Pa., export docks with a 161,400-bbl cargo of butane on July 25, also heading to Europe.

According to IHS Markit vessel-tracking data, the JS Ineos Independence appeared to be discharging its cargo in Antwerp, Belgium, at presstime. The JS Ineos Ingenuity had departed the Europoort terminal in Rotterdam in the Netherlands and was signaling Le Havre in France as its next destination.

The JS Ineos Independence cargo appears headed into tankage operated by SHV Energy, the anchor leaseholder for storage in Antwerp which imports for retail usage. The JS Ineos Ingenuity's discharge plans were less clear, though there are petrochemical feedstock outlets operated by LyondellBasell in Rotterdam and Total in Le Havre.

Both ships belong to the custom-built "Dragon Class" series of vessels, meant to fulfil Ineos' long-term U.S. ethane procurement contracts for crackers in Rafnes, Norway and Grangemouth, Scotland. Both vessels typically source ethane cargoes from Marcus Hook as well as Enterprise's ethane docks at Morgan's Point on the Houston Ship Channel.

However, since the ships' specifications allow them to carry a variety of natural gas liquid (NGL) cargoes, Ineos has the flexibility to deploy or freelance them into alternate trades if market conditions warrant such a switch.

A global macroeconomic snapshot of the prevailing economics for NGLs and olefins provide the backdrop to the dual cargo switch.

On the ethane front stateside, the OPIS-assessed price for Mont Belvieu purity ethane has slumped to just more than a dime a gallon from the end-2018 levels of 30cts/gal. This is attributed in part to surging ethane supplies that have swollen ethane inventories to long-term highs, along with weak natural gas prices that are incentivizing high ethane extraction in the field.

However, the lower ethane price has not translated into an advantage for that product as a feedstock for ethylene steam crackers. This, in turn, is because ethylene prices too are struggling and ethylene inventories also are high. This has seen existing crackers on the Gulf Coast moderate their operations while new crackers are coming on line only in slow motion, which means the hoped-for surge in demand for ethane has not yet materialized.

However, there is another major factor that is driving ethane's current weakness: competition from propane and butane as a feedstock.

Propane and butane inventories in the U.S., too, are above cyclical highs, and propane and butane prices, too, are struggling. The OPIS-assessed prices for Mont Belvieu non-TET (i.e., product stored in Enterprise Products Partners caverns) propane and butane yesterday were 44.125cts/gal and 50.1875cts/gal, compared with the end-2018 prices of 62.9375cts/gal and 75.375cts/gal, respectively.

Against this backdrop, propane and butane have established themselves as formidable feedstock competitors. Cracker economics in Europe show the same pattern, pitting ethane against an increasingly assertive slate of rivals.

In the U.S., the OPIS NGL Forwards Report yesterday noted that on cash cost basis relative to spot ethylene pricing, ethane, propane and butane all were profitable relative to U.S. spot ethylene, which was valued Tuesday morning at 18.5cts/lb. (roughly 55cts/gal) at Mont Belvieu and 24cts/lb. (71.25cts/gal) at Choctaw, La.

Most of the steam crackers in North America are "light" in terms of their feed slates, with most furnaces designated for ethane as opposed to heavier feedstocks such as propane or butane. Sources familiar with the steam cracking scene on the Gulf Coast have noted that at high severity cracking, butane in fact is the most preferred feedstock, generating a spot net margin of around 15cts/lb., versus around 11cts/lb. for ethane and 6cts/lb. for naphtha.

This has boosted petrochemical demand for butane, as cracker operators look to consume as much of it as their furnaces will allow. The measurable shift in switching from ethane to butane for a steam cracker is that the amount of ethylene is minimized. Cracking ethane can yield 75-80% ethylene; cracking propane or butane yields closer to 40% ethylene. Conversely, the opposite occurs with co-products, as cracking ethane yields less than 20% propylene and cracking propane or butane yields nearly 50% propylene.

However, while ethylene is abundant, propylene is fundamentally tight in the U.S. because there is much less of it. This is reflected in the current price of polymer-grade propylene of around 35cts/lb. ($1.50/gal). This offers more favorable bottom-line economics with the use of feedstocks other than ethane.

The substitution of ethane tankers to haul LPG instead has materialized on this canvas.

--Dermot McGowan, dmcgowan@opisnet.com

--Rajesh Joshi, rjoshi@opisnet.com

--Kathy Hall, kathy@petrochemwire.com

--Julia Giordano, julia@petrochemwire.com

WANT MORE EUROPE LPG PRICING NEWS?
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US polyethylene exports up 50% in 2019 YTD

HOUSTON, August 6, 2019 (PCW) -- US polyethylene exports during 1H 2019 surged to 4.34 million mt, up by 1.44 million mt (50%) from a year earlier, according to new Commerce Department data. That represents approximately 16,000 hopper cars worth of additional resin.

The markets attracting the most new volume have been Belgium, Vietnam and Malaysia, followed by Singapore, Brazil and Turkey.

China was one of the few countries to receive less PE volume in 1H 2019 than a year earlier. The US shipped 392,958 mt of PE to China/Hong Kong in 1H 2019, down 49,197 mt (-11%) from 1H 2018. Despite the ongoing trade war, China (including Hong Kong) was the third largest destination for US PE exports after Mexico and Belgium. 

PCW080619

--David Barry, david@petrochemwire.com

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ExxonMobil Baytown Olefins Plant fire makes for a busy day for ethylene trading

HOUSTON, August 1, 2019 (PCW) -- On Wednesday, July 31 at 11 am US Central Time, an explosion occurred at the ExxonMobil Baytown Olefins Plant (BOP) yesterday due to a loss of containment on the propylene recovery unit that resulted in a fire that burned a light hydrocarbon mixture of propane and propylene. A company spokesperson reported that the impacted unit has been shut down and stabilized and the rest of the complex is operating at reduced rates.

There are three olefins units at Baytown, known as BOP (Baytown Olefins Plant), BOP-X and BOP 2X. BOP has an ethylene capacity of 2.55 billion pounds per year (3.3% of US capacity), BOP-X has an ethylene capacity of 2.3 billion pounds per year and BOP-2X (a new plant that came online in 2018) has an ethylene capacity of 3.3 billion pounds per year. The Baytown site has three propylene units designed to upgrade propylene co-product from the steam crackers. They each have a polymer grade propylene capacity of 700 million pounds per year. The affected olefins unit is a flex-cracker, meaning that it cracks mostly ethane but it has furnaces that can accept heavier NGLs. The other olefins units are ethane crackers.

Spot ethylene prices did not immediately react to the incident Wednesday afternoon; values rose from 16.25 cpp (48.5 cpg equivalent) for Aug to end the day around 17.25 cpp (51.5 cpg). On Thursday morning, however, a flurry of spot activity saw 20 new ethylene deals get done within a two-hour period , and Aug prices popped to 19.5 cpp (57.5 cpg).

-Kathy Hall, kathy@petrochemwire.com 

-Julia Giordano, julia@petrochemwire.com 

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Although the indicent damaged a propylene unit at the site, the spot propylene market did not appear to react at all. Aug po

US nonfuel use propylene inventories drop to eight-month low: EIA

HOUSTON, July 24, 2019 (PCW) -- US nonfuel use propylene inventories fell by 239,000 barrels to 4.085 million barrels last week, the lowest level since November 2018, the Energy Information Administration said today.

Propylene inventories have dropped four weeks in a row, and are down in nine of the past 12 weeks.

While still higher by 50% versus a year ago, propylene inventories are 18% lower over the past four weeks and are more than 10% below their 52-week average.

Meanwhile, US Gulf refinery utilization was down 4.3 percentage points at 91.1% last week, which is below the five-year average for this time of year. 

pcw2

--David Barry, david@petrochemwire.com

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ExxonMobil Beaumont startup leads next wave of new Gulf Coast polyethylene plants

HOUSTON, July 23, 2019 (PCW) -- ExxonMobil notified customers Monday that it has begun production on a new 650,000 mt/yr (1.43 billion lbs/yr) PE unit in Beaumont, TX, the first of several new PE plants scheduled to start up along the US Gulf Coast during 2H 2019.

The new LLDPE/mLLDPE unit is similar to two units already in service in Mont Belvieu, TX since 2017; it will increase the Beaumont site’s capacity by 65% to 1.7 million mt/yr, with access to rail and packaging facilities.

A letter to customers said the expansion will help meet strong global demand growth for products used in liquid and food packaging, construction liners and agricultural films.

Prior to commercial sale of the new products, extensive testing will be performed to confirm functional equivalence in processing and performance, the company said.

Three other PE manufacturers have startups scheduled for 2H 2019:

  • Formosa in Point Comfort, TX (400,000 mt/yr LDPE and 400,000 mt/yr HDPE/LLDPE)
  • LyondellBasell in La Porte, TX (500,000 mt/yr HDPE)
  • Sasol in Lake Charles, LA (420,000 mt/yr LDPE)

Sasol and Formosa also have olefins plants under construction and scheduled to start up later this year in support of their new resin capacity.

--David Barry, david@petrochemwire.com

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Tropical Storm Barry closes in on Louisiana: Update 1

Tropical Storm Barry was moving at 5 mph with 40 mph winds towards New Orleans at 1 pm Central Time on Thursday (July 11). The NOAA's National Hurricane Center predicted that the center of Barry will be near the central or southeastern coast of Louisiana Friday night or Saturday. 

As of Thursday afternoon, the storm's path formed a wide cone that includes Louisiana's Norco, Plaquemine, Baton Rouge, and Lake Charles areas. The cone extends into east Texas, which includes the Port Arthur/Beaumont area and also north up to Memphis. 

CLICK HERE to view a map of the storm's path and chemical production sites in the region. 

Landfall is estimated to be in Louisiana late Friday or early Saturday. Tropical Storm warnings and Hurricane watches are in effect for much of the Louisiana coast. A State of Emergency for all of Louisiana was delared by the state's governor on Wednesday (July 10). 

The slow-moving nature of the storm has created expectations of sustained heavy rains and likely flooding in many areas. 

New Orleans-area railyards have issued embargoes for all railcar traffic. The New Orleans Public Belt Railroad will conclude operations at the close of business Thursday.

The Port of New Orleans container and breakbulk terminals ceased operations on Thursday. 

Phillip 66 was shutting its Alliance refinery at Belle Chasse, Louisiana in preparation for the storm's arrival. 
 
Petrochemical & plastic production sites in the projected path of the storm include: 

 

LOUISIANA

Americas Styrenics at St James
BASF at Geismar
Deltech at Baton Rouge
Dow at St Charles (Taft)
Dow at Plaquemine
Equistar at Lake Charles
ExxonMobil at Baton Rouge
Formosa at Baton Rouge
Indorama at Lake Charles
Lone Star at Geismar
Lion Copolymer at Geismar
Marathon at Garyville
Occidental at Geismar
NOVA at Geismar
Sasol at Lake Charles
Shell at Norco
Shintech at Plaquemine
Total at Carville
Westlake at Lake Charles
Westlake at Plaquemine

TEXAS

BASF at Port Arthur
Chevron Phillip at Orange
Chevron Phillips at Port Arthur
DowDuPont at Orange
ExxonMobil at Beaumont
Flint Hills at Port Arthur    
Honeywell at Orange
Huntsman at Port Neches
    
BASF's olefins production at Port Arthur had been shut in early April for maintenance; it remained shut.    

The sites listed above represent approximately:
    -- 72 million pounds of ethylene output per day (36% of Gulf Coast capacity)
   --  17 million pounds of PGP output per day (20%)
   --  6.5 million pounds of CGP output per day (19%)

Refineries with propylene production include sites at Chalmette, Norco, Meraux, Convent, Port Allen, Belle Chasse, Baton Rouge and Lake Charles, Louisiana and Beaumont and Port Arthur in Texas. Output of RGP mix at the Louisiana sites totals 120,000 barrels per day; RGP mix output from the Texas sites totals approximately 50,000 b/d. 

-- Kathy Hall, kathy@petrochemwire.com 

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Storm targets more than 30% of Gulf Coast ethylene production

HOUSTON, July 10, 2019 (PCW)--A tropical depression in the Gulf of Mexico may develop into a hurricane by the weekend, targeting an area of Louisiana rich with petrochemical plants, according to a forecast by the National Hurricane Center.

If storms with similar projected paths are an indicator or the plants at risk, more than 35% of the Gulf's ethylene capacity and 20% of finished grade propylene capacity could be affected. 

A hurricane watch has been issued from the mouth of the Mississippi River westward to Cameron, Louisiana, according to the Hurricane Center's latest advisory. A tropical storm watch has been issued from north of the mouth of the Mississippi River to the mouth of the Pearl River.

Steam crackers in eastern and central Louisiana include Dow at St Charles (Taft), Shell at Norco, NOVA at Geismar, Dow at Plaquemine, and ExxonMobil at Baton Rouge. These units represent a combined ethylene capacity of slightly more than 36 million pounds per day (13 billion lbs/yr), or 18% of Gulf Coast output. Polymer grade propylene production in this area represents a total of nearly 9 million pounds per day (3.2 billion lbs/yr), or 10% of Gulf Coast output. Chemical grade propylene production in this area represents slightly more than 6 million pounds per day (2.3 billion lbs/yr), or 7% of Gulf Coast output. Refinery grade propylene production in this area is concentrated at the refineries at Chalmette, Meraux, Norco, St Charles, Garyville, Convent and Baton Rouge, with a total output of nearly 100,000 b/d of RGP mix.

West of those in Lake Charles are Westlake's crackers and Sasol's cracker. These units represent a combined ethylene capacity of slightly more than 11 million pounds per day (4 billion lbs/yr), or 6% of Gulf Coast output. There is very little CGP or PGP production in Lake Charles, and the area represents just 1% of Gulf Coast output. Refinery grade propylene production in this area is about 20,000 b/d.

Across the Texas border are Flint Hills Resources, Chevron Phillips and BASF at Port Arthur, ExxonMobil at Beaumont and DowDuPont at Orange. These units represent a combined ethylene capacity of nearly 25 million pounds per day (9 billion lbs/yr), or 12% of Gulf Coast output. Currently, BASF's unit is shut as it began a scheduled turnaround in early April; it is past its previously expected restart timeframe of early June. Polymer grade propylene production in this area represents a total of 8.5 million pounds per day (3 billion lbs/yr), or 10% of Gulf Coast output. Chemical grade propylene production in this area represents nearly 3.5 million pounds per day (1.25 billion lbs/yr), or 4% of Gulf Coast output. Refinery grade propylene production in this area is concentrated at the refineries at in the Port Arthur and Beaumont areas totals a little more than 50,000 b/d of RGP mix.

On the natural gas liquid (NGL) front, the export main nerve center of the Houston Ship Channel appeared to lie outside the storm’s direct path as of Wednesday afternoon, though the LPG export hub in Nederland, along the Sabine Neches Waterway some 100 miles east of Houston, could see some impact. 

--Kathy Hall, kathy@petrochemwire.com
--Julia Giordano, julia@petrochemwire.com
--Rajesh Joshi, rjoshi@opisnet.com

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Chevron Phillips, Qatar Petroleum to build ethane cracker, HDPE units in Qatar

HOUSTON, June 24, 2019 (PCW) – A new 1.9 million mt/year ethane cracker and two HDPE derivative units with combined capacity of 1.68 million mt/year are planned for Qatar, Chevron Phillips Chemical announced today.
CPC said that it had partnered with Qatar Petroleum to build the petrochemical complex in Ras Laffan Industrial City. QP will have 70% ownership, CPC 30%. Planned startup is late 2025.
CPC said it is licensing its MarTECH loop slurry process for producing HDPE at the plant and that it would also provide project management, engineering and construction services.

-- Xavier A Cronin, xavier@petrochemwire.com 

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US polyethylene spot prices hit 10-year lows

HOUSTON, June 17, 2019 (PCW) -- US polyethylene (PE) spot prices fell to their lowest levels since January 2009 last week in reaction to over-capacity and falling feedstock costs.

HDPE blow mold in the Houston railcar market closed last Friday at 36.5 cpp, according to OPIS PetroChem Wire data. LLDPE butene film has also hit 10-year lows this month, closing last Friday at 36 cpp railcar FOB Houston.
Prices were last at these levels during a stretch from November 2008 to January 2009, when the US economy was in the Great Recession and NYMEX crude oil futures were trading in the $30s/bbl.

However, while the 4Q 2008-1Q 2009 PE market was driven by weak demand and falling feedstock costs, the industry today faces a new challenge from aggressive capacity expansion that has its roots in the shale gas boom earlier this decade.

According to preliminary figures from the American Chemistry Council (ACC), US and Canada PE production for January-May 2019 totaled 20.3 billion pounds, up 7% from the same period in 2018 and up 18% from 2017.
In addition, US PE producers are scheduled to bring online five new units during 2H 2019, representing 2.37 million mt/yr (5.22 billion lbs/yr) of new capacity, or a 10% expansion of existing US and Canada capacity.

All that additional output is going into the export market, because domestic sales through the first five months of 2019 are flat from 2017.

In the past month, there have been new signs that resin consumption in China is slowing down, including a sharp drop in polyolefin imports for April. This is blamed partly on US/China trade tensions.

Market sentiment is also depressed in Southeast Asia, which along with Europe is one of the fastest-growing markets for North American PE exports.

As PE buyers in other regions see ample offers and falling prices, the tendency is to put off orders for as long as possible to hedge against further downside price risk.

If overseas buyers remain in wait-and-see mode, it will be difficult for North American manufacturers to meet their end-of-quarter inventory targets in June without further discounts for export business.

Bids are already being discussed in the low 30s cpp railcar FOB Houston, but suppliers have so far shown no inclination to accept those prices. 

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-- David Barry, david@petrochemwire.com  

Copyright, Oil Price Information Service 


Propylene inventories drop for fifth week

 

HOUSTON, June 12, 2019 (OPIS PCW)--US nonfuel use propylene inventories trickled lower by 15,000 bbls (-0.3%) last week to 4.869 million bbls, the EIA said today. It was the fifth consecutive inventory draw, and propylene stocks have fallen in ten of the past 12 weeks. Propylene inventories are now only 539,000 bbls (12.5%) higher than their 52-week average of 4.33 million bbls. Meanwhile, US Gulf refinery utilization was off 0.2 percentage point at 94.2%, which is above the 5-year average for this time of year. 

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-- David Barry, david@petrochemwire.com  

Copyright, Oil Price Information Service 


US Spot Ethylene Hits New Low as Bearish Fundamentals Converge

June 4, 2019

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U.S. spot ethylene traded down to new lows on Monday, with a deal in Mont Belvieu at 11.75cts/lb. and Louisiana ethylene trading down to 12.125cts/lb. in the Choctaw hub.

These prices are the lowest recorded by OPIS PetroChem Wire; this data history dates back to July 2007.

The lows are not entirely surprising, as spot ethylene has steadily been trading down from 18cts/lb. at the start of the year. Driving the trend were the classic fundamentals of any bear market: increasing supply, decreasing demand and falling upstream prices.

As more ethylene and downstream capacity comes online, more power comes into the consumer side, which naturally leads to lower pricing. A few other factors have added to the bearish pall hanging over ethylene in recent months:

  • Ebbing downstream export demand. The U.S.-China trade situation has resulted in fewer exports of finished goods to the U.S. from China, and by extension, lower demand in China for U.S. polyethylene resin. While polyethylene producers report that domestic demand has been decent, 2.37 million mt/yr (5.22 million lbs./yr) of new capacity is scheduled to start up in 2H 2019. Export requests have slowed, and prices are falling worldwide. Facing the new supply hitting the market and holding onto material that was earmarked for export has created a nervous atmosphere in the plastics markets.
  • Domestic demand from construction stemmed by weather. Heavy rains, frequent storms and flooding have jammed up construction projects throughout the U.S. during its busiest season. Plastic pipe markets (PVC and polyethylene) in particular have been hit the hardest, as wet soil results in delays in not just construction activity but also in agricultural planting schedules. Pipe manufacturers report slowdowns in the municipal, conduit and irrigation pipe demand.
  • Slower demand from flooring, window, door, siding and decking sectors. Producers of these products report that changes in U.S. income tax returns have resulted in a drop of home improvement projects, and a need for their products during 2Q when most citizens typically receive (and spend) their tax returns.
  • Low feedstocks pricing. May was a brutal month for heavier NGLs, as propane slipped below 50cts/gal and butane dropped below 60cts/gal. Ethane has managed to stay above 20cts/gal. Ethylene production costs based on ethane as a feedstock were slightly above break-even levels (relative to spot ethylene) and were under water using propane or butane.

Propylene prices were also falling Monday, but were still significantly higher than ethylene and they remained attractive co-product markets. Polymer-grade propylene was offered down to 34.25cts/lb., 2cts/lb. below where it traded on Friday, but bids have not come above 33cts/lb. With propane in the mid-to-upper 40s cents per gallon range, ethylene at 11.75cts/lb. and refinery-grade propylene at 24cts/lb., PGP margins were relatively healthy using any production method (PDH, metathesis, splitting).

Butadiene pricing was also relatively strong, with June contracts set at 46cts/lb.

– Kathy Hall, kathy@petrochemwire.com  

Copyright, Oil Price Information Service