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US Gulf Coast PGP Prices See Dramatic and Historic Movements

March 3, 2023

U.S. Gulf Coast polymer grade propylene prices rose drastically on Thursday in response to a stretch of tight supply amid steady demand. March MtB-EPC PGP closed on Thursday at 71cts/lb, representing an 11cts/lb increase from Wednesday's closing price of 60cts/lb, according to PetroChem Wire by OPIS, a Dow Jones company.

While the front month pricing increase this Thursday was spurred by physical bids in the broker market, the paper PGP market played a role in dramatically widening the March/April MtB-EPC PGP spread from an opening mark of 10cts/lb backward on Thursday morning to a historic level of 20cts/lb backward by market close that same day.

The significant widening in the March/April spread coupled with the massive jump in March pricing resulted in April MtB-EPC PGP's closing price only increasing 1ct/lb from Wednesday to Thursday, indicating that the market currently views the tight supply as a March concern.

The last time PGP prices peaked up to 71cts/lb was in early April 2022. Such a large intraday price movement is a rare occurrence in the PGP market, with only three other months in recent history experiencing this anomaly. PGP closing prices increased 11cts/lb from June 1 to June 2, 2021 when the market was responding to a tightness of supply when one of the three U.S. Gulf Coast propane dehydrogenation units was down for turnaround. That same year in February and March, PGP prices saw large price drops in the aftermath of Winter Storm Uri as prices came tumbling down from an historic high of 125cts/lb.

Front month pricing decreased 18.5cts/lb from Feb. 24 to 25, 2021 and another 11.5cts/lb from Feb 25 to 26. Another large decrease was seen between March 2 and 3 when PGP prices fell another 17cts/lb.

Prior to 2021, the only other time in PCW PGP pricing history that observed more than a 10ct/lb intraday price swing was in 2008. During that time, PGP prices would go for months without seeing any price movements before experiencing a major price adjustment, concurrent with volatility seen in energy markets.

For example, front month PGP prices were flat at 63cts/lb from Sept. 23 to Dec. 8 before dropping 45cts/lb to land at 18cts/lb on Dec 9. PCW's PGP price history dates back to July 2007.

The substantial spread widening and double-digit March/April spread are other anomalies present in the current market conditions. The first time PGP spreads ever moved into double-digit values was in February 2021 for a span of 11 days.

Prior to Thursday's closing mark of 20cts/lb backward for March/April, the widest spread (either backward or contango) seen in PCW's PGP pricing history was 19cts/lb on Feb. 23 in the wake of Winter Storm Uri.

In June, July and August of 2021 when supply was still strained from the previously mentioned PDH unit turnaround, there were another 10 days of double-digit spreads.

Recent PGP supply disruptions met with expected demand have been the catalyst for the sudden leap in pricing.

Invista's 1.45 billion lb/year PDH unit in Houston, Texas, was taken down for a planned outage in late November 2022. Restarts were attempted on the unit on Feb. 18 and Feb. 24 that were unsuccessful. According to a community hotline notice, the unit was attempting restart again on Thursday.

Enterprise Products Partners' 1.65 billion lb/year PDH unit in Mont Belvieu, Texas, restarted in early February after shutting down Dec. 12 "due to a faulty power turbine speed probe on Regen Air Compressor (RAC) Turbine 'A' which caused the gas turbine to trip offline," according to a Texas Commission of Environmental Quality filing.

Refinery utilization rates in the U.S. were at 85.8% for the week of Feb. 24, according to the Energy Information Administration, with U.S. Gulf Coast refineries reported at 86.2%.

Downstream, LyondellBasell Industries N.V. is in the process of commissioning its new propylene oxide and tertiary butyl alcohol plant, increasing the demand for PGP in the already tight market.

In the polypropylene market, which accounts for roughly half of Gulf Coast propylene consumption, participants noted that while January North American PP production did increase to around 79% of capacity, there was no clear improvement in resin demand to drive the uptick in propylene.

PP buyers were expected to purchase minimal quantities this month as they waited for monomer prices to moderate.

Reporting by Julia Giordano, jgiordano@opisnet.com

Editing by Donna Todd, dtodd@opisnet.com, and Michael Kelly, mkelly@opisnet.com

© 2023 Oil Price Information Service, LLC. All rights reserved.


Derailed Ohio Railcars No Longer Burning

February 8, 2023

The five railcars that were burning in East Palestine, Ohio, after they derailed Friday were extinguished Tuesday after controlled detonations Monday. The evacuation order remains in effect as officials test the area's air and water quality.

The Norfolk Southern train had more than 100 cars, of which 20 were carrying hazardous materials, according to the railroad. Ten of those cars derailed, according to the National Transportation Safety Board, which is in charge of investigating the accident.

Five of the derailed cars contained vinyl chloride monomer, known as VCM, which is the raw material used to produce the plastic polyvinyl chloride. PVC is a commonly used plastic from which construction materials such as pipe, siding, windows and doors, decking and railing, fencing, wire and cable coating and other products are made.

In North America, VCM is produced by Formosa Plastics Corp., Olin Corp., Occidental Chemical Corp. (known as OxyChem), Shintech Inc., and Westlake Chemical.

VCM is a colorless, extremely flammable gas at room temperature. At concentrations of about 3.6% VCM in air, VCM can be an explosion hazard. Direct contact with open flames or a high energy heat source will result in combustion and corrosive, noxious gases.

According to a product stewardship summary on the OxyChem website, several minutes of exposure to high but attainable concentrations (over 1,000 ppm) may cause central nervous system depression with effects such as dizziness, drowsiness, disorientation, tingling, numbness or burning sensation of the hands and feet, impaired vision, nausea, headache, difficulty breathing, cardiac arrhythmias, unconsciousness or even death.

Several PVC market sources said they believe the railcars contained VCM produced by OxyChem that was in transit from its plants in Texas to a PVC plant in the Northeast. They said the most likely destination was Pedricktown, N.J., to either the OxyChem PVC plant or the Vestolit PVC plant located there. OxyChem produces VCM at plants in Deer Park and La Porte, Texas, located on the Houston Ship Channel, and at Ingleside, Texas near Corpus Christi. OPIS PetroChem Wire reached out to OxyChem for comment but did not receive a response.

Reporting by Donna Todd, dtodd@opisnet.com

Editing by Anna Matherne, amatherne@opisnet.com, and Barbara Chuck, bchuck@opisnet.com

© 2023 Oil Price Information Service, LLC. All rights reserved.


US PET Imports in First 11 Months of 2022 Up 12.6% from 2021

January 13, 2023

The U.S. imported 1,327,224 metric tons of polyethylene terephthalate plastic in the first 11 months of 2022, up 12.6% from same period in 2021, according to the latest U.S. Customs data.

PET is the world's most heavily used plastic and is ubiquitous in water and beverage bottles, packaging such as clamshell takeout containers, curtains, carpeting, clothing and pillow and sofa stuffing.

"All the plastic you see walking around the grocery store, the bottles, cookie and bread trays, all that packaging stuff, most of that is PET," said a U.S.

importer of recycled plastic flake from South America. He sells the flake to U.S. plants that blend it with virgin PET to make new products. His current price is 60-63cts/lb delivered by truck to within 250 miles of ports including Mobile, Ala., and the New York/New Jersey area.

The 2022 imports equal an estimated 69,884 shipping containers at 19 mt/container. The U.S. Customs value of the 2022 imports was $2.1 billion, double the $1.01 billion value of the imports a year earlier.

The top source of the 2022 imports was Mexico at 281,911 mt or 21.2% of the total. Next was Taiwan (230,007 mt), Oman (212,361 mt), South Korea (147,064) and Vietnam (130,729 mt).

PET also is produced at plants in the U.S. owned by Mexico's Alpek (Dak Americas), Thailand's Indorama Ventures, and Taiwan's Far Eastern New Century Corp.

PET resin produced in the U.S. is now priced at 84-89cts/lb for railcars delivered to Midwest plants producing PET products, according to the PetroChem Wire Recycled Plastics Weekly Report assessment for Jan 12, down from 94-96 cts/lb a year ago. PetroChem Wire by OPIS is a Dow Jones Company.

PET imported from Asia to Southern California is about 10cts cheaper than PET produced in the U.S. An isolated deal was reported Friday at 70cts/lb for a bulk truck (45,000 lb) of PET delivered to the U.S. Northeast.

Reporting by Xavier A Cronin, xcronin@opisnet.com

 Editing by Donna Todd, dtodd@opisnet.com and Jeff Barber, jbarber@opisnet.com

© 2023 Oil Price Information Service, LLC. All rights reserved.


S Korea's Lotte Cuts Daesan Cracker Run Rate to 84%, Yeosu Cracker to 82%

January 10, 2023

South Korea's Lotte Chemical Corp. has further decreased the run rates at its two naphtha-fed crackers, located separately in Daesan and Yeosu, this month from an average of 85% capacity last month, said a source familiar with the matter.

Lotte is running its Daesan cracker, which has a capacity to produce 1.1 million metric tons (mt) per year of ethylene and 550,000 mt/year of propylene, at 84% capacity this month.

It is operating its larger Yeosu cracker, which has a capacity to produce 1.2 million mt/year of ethylene and 620,000 mt/year of propylene, at 82% capacity, the source said.

Lotte Chemical in early December decreased the average run rates at both crackers to 85% capacity amid the logistics bottlenecks caused by a nationwide cargo truckers' strike. The 16-day strike, the truckers' second major walkout in 2022, ended on Dec. 9.

It had planned to run both crackers at 90% capacity in December, unchanged from November.

Based on Chemical Market Analytics by OPIS' integrated cracker model, 77% of Asian steam crackers are operating below their breakeven point in January, according to the latest Asia Light Olefins weekly report.

Reporting by Trisha Huang, thuang@opisnet.com

 Editing by Hanwei Wu, hwu@opisnet.com

© 2023 Oil Price Information Service, LLC. All rights reserved.


Aramco, TotalEnergies Plan Cracker, Petrochemical Add-ons To SATORP

December 16, 2022

Saudi Arabia's Saudi Aramco and French oil supermajor TotalEnergies plan to build a new mixed-feed cracker with associated petrochemical units in Saudi Arabia's Jubail, which will be integrated with, and owned and run by existing joint venture SATORP, both companies announced on Dec. 15.

Construction of a 1.65 million metric tons (mt) per year cracker and petrochemical units will begin in the first quarter of 2023, with commercial operation targeted by 2027, said TotalEnergies in its statement.

This mixed feed cracker will be the first in the region to be integrated with a refinery, said Saudi Aramco in its press release.

Its petrochemical complex will include two polyethylene units (PE), a butadiene extraction unit, and other associated derivatives units, TotalEnergies said.

This $11 billion "Amiral' project will enable SATORP to convert internally-produced refinery off-gases and naphtha, as well as ethane and natural gasoline supplied by Aramco, into higher value chemicals, Saudi Aramco added.

Eventually, the complex will provide feedstock to upcoming petrochemical and specialty chemical plants in Jubail, precipitating production of carbon fibers, lubes, drilling fluids, detergents, food additives, automotive parts and tires.

Aramco and TotalEnergies will fund $4 billion in the project through equity in a 62.5:37.5 ratio.

Saudi Aramco TotalEnergies Refining and Petrochemical Company or SATORP, the first joint venture between Saudi Aramco and TotalEnergies, started up in 2014 with initial crude oil capacity at 400,000 b/d that increased to 460,000 b/d, said TotalEnergies.

Aramco said this project will help advance its liquids-to-chemicals strategy.

-- Reporting by Chuan Ong, cong@opisnet.com; Editing by Carrie Ho, cho@opisnet.com 

© 2022 Oil Price Information Service, LLC. All rights reserved.


China's Wanhua Chemical Plans Second-phase Cracker, Petrochemicals Units

December 15, 2022

China's Wanhua Chemical Group is planning to build a 1.2 million tons (mt) per year cracker along with associated downstream petrochemical units as part of its second-phase expansion, the company announced in a stock exchange filing on Dec. 14.

This cracker will consume ethane and naphtha, complementing its existing first-phase ethylene and propane dehydrogenation (PDH) project through feedstock diversification, said Wanhua Chemical.

In turn, the new cracker supplies downstream polyurethane and fine chemicals units, extending its value chain, the company said.

Wanhua said its new project can improve China's self-sufficiency, as sectors like polyolefin elastomers (POE) and cross-linked polyethylene (XLPE) are heavily import-dependent.

The company plans to connect its Shandong Yantai site through pipelines with another site in nearby Penglai, where an ethylene oxide unit is expected by 2025, according to data from Chemical Market Analytics (CMA).

Wanhua Chemical's 17.6 billion yuan project in Shandong's Yantai Industrial Park will include the following units:

- 1.2 million mt/year cracker
- 250,000 mt/year low-density polyethylene (LDPE)
- two 200,000 mt/year polyolefin elastomer (POE)
- 200,000 mt/year butadiene
- 550,000 mt/year pyrolysis gasoline hydrogenation (including 30,000 tons/year styrene extraction)- 400,000 mt/year aromatics extraction
- supporting auxiliary projects and facilities

CMA by OPIS is a Dow Jones company.

-- Reporting by Chuan Ong, cong@opisnet.com; Editing by Hanwei Wu, hwu@opisnet.com 

© 2022 Oil Price Information Service, LLC. All rights reserved.


European Commission Fines 5 Companies $162 Mn for Styrene Cartel Involvement

November 29, 2022

The European Commission has fined Sunpor, Synbra, Synthomer, Synthos and Trinseo a total of €157 million ($162 million) for participating in a cartel involving purchases on the spot styrene monomer (styrene) market, according to a news release Tuesday.

INEOS was not fined as it revealed the European cartel to the Commission under the leniency program. All six companies admitted their involvement and agreed to settle the case, according to the European Commission.

The six buyers of styrene exchanged sensitive commercial information and coordinated their negotiation strategy on the styrene monthly contract price.

This price is widely used as a reference price in the industry and often forms part of the pricing formula in styrene supply agreements. Unlike in most cartels where companies conspire to increase their sales prices, the six companies colluded to lower an element of the price of styrene, the Commission said.

"We fine six companies which participated in a purchasing cartel of styrene, a key input for many chemical products," executive vice-president of the European Commission Margrethe Vestager said in a statement on Monday. "The companies colluded and exchanged information on an industry reference price for styrene.

Their plan was to influence the reference price negotiations to their advantage to buy styrene at a lower price ... They distort the competitive process which should be based on companies' independent decisions, and we will not tolerate them."

The period under investigation was between May 2012 and June 2018, according to the Commission's statement.

Styrene is an intermediate chemical product that serves as a key input for many other chemicals, such as plastics, resins, rubbers and latexes.

--Reporting Rob Sheridan, rsheridan@opisnet.com; Editing by Yazdi Merchant, ymerchant@opisnet.com 

© 2022 Oil Price Information Service, LLC. All rights reserved.