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Petronas continues to ramp up polymer production

  • Market: Petrochemicals
  • 31/10/19

Malaysia's state-owned Petronas is continuing to ramp up polymer production at the 300,000 b/d Pengerang refinery in Johor state, ahead of its targeted start-up in November.

The refinery is a joint venture between Petronas and Saudi Arabia's state-owned Saudi Aramco. It can produce 750,000 t/yr of polyethylene and 900,000 t/yr of polypropylene.

The start-up of the facility is being keenly watched in Asia, given its size. The plant is expected to produce more volumes of on-spec polymers in November and December, with commercial output expected early next year.

The new production will make Petronas a dominant supplier in southeast Asia. Petronas is likely to aggressively target neighbouring countries, such as Indonesia and Vietnam, where it can sell at zero duty because of a regional free-trade agreement.

Petronas will be entering the polymer market during a likely period of oversupply, with new capacity scheduled to come on stream in South Korea, Oman and the US in 2020.


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19/09/24

Brazil hikes import tax on polymers, chemicals

Brazil hikes import tax on polymers, chemicals

Sao Paulo, 19 September (Argus) — Brazil's government increased import taxes of 30 polymers and chemicals to 20pc from 12.6pc this week, including polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC). Another 32 chemical products remain under evaluation by Gecex, the Brazilian committee for commercial trade management. With the 18 September decision, most rates will rise and will remain at this level for 12 months. Domestic manufacturers and chemical industries associations welcomed the decision, arguing that the measure will help level the playing field against foreign competitors who benefit from lower production costs. Brazil's chemical industry association Abiquim has been asking the government provide commercial protections for 62 products since May. Supporters of the tax hike, including Abiquim, say it will help create jobs and strengthen Brazil's domestic economy. They also said that the increased revenue from the higher taxes can be reinvested in infrastructure and public services, further benefiting the country. Brazilian petrochemical major Braskem said Thursday that it sees the tax increase as a positive step towards ensuring fair competition and fostering growth within the industry. Braskem produces basic chemicals, PE, PP and PVC. The most important aspect of the tax increase is not the number of products covered, but what it represents in value, said Abiquim's executive president Andre Passos Cordeiro. "These 30 products that were approved represent about 65pc of the import volume of this set of 62 products that we had proposed to the government," he said. "They also represent 75pc of the value of this same set of imports. The decision is welcome, well-founded technically, and brings relief to the chemical industry." The share of chemical imports in the Brazilian market soared in the last 20 years, according to Abiquim, reaching 47pc in 2023 from 21pc in 2000. In the first half of this year, the sector's trade deficit was close to $23bn, while the national industry's idle capacity reached its worst level ever. "We were losing strength with the closure of factories and loss of jobs," Cordeiro said. "I reiterate that the government's decision was essential for us, as an industry and as Brazilians. A strong industry presupposes a strong country." The Brazilian chemical industry is responsible for around 11pc of Brazil's GDP, according to Cordeiro Taxes could up consumer costs Critics of the tax hikes say they will increase costs for consumers and manufacturers who rely on imported polymers and chemicals. Brazil's plastic industry association Abiplast said it was concerned that the higher import taxes will increase production costs for plastic products, which could result in higher prices for end consumers. In a letter to associates, Abiplast said that the measure could hurt small- and medium-sized enterprises that do not have the same capacity as larger companies to absorb the increased costs. The tax hike could also negatively impact the competitiveness of Brazilian products in the global market, Abiplast said. By increasing the cost of raw materials, Brazilian plastic converters may find it more challenging to compete with foreign companies that have access to cheaper inputs. That could lead to a decrease in exports and a potential loss of market share internationally. Furthermore, opponents of the tax increase highlight that the measure could have unintended consequences on the broader economy. Higher production costs could lead to inflationary pressures, affecting the purchasing power of Brazilian consumers. They also point out that the tax increase may not necessarily lead to the desired boost in domestic production, as the domestic industry may not have the capacity to meet the increased demand for polymers and chemicals. The letter, signed by the chairman of the association's board Jose Ricardo Roriz Coelho, also said that despite exhaustive explanations to the government about the taxes' downsides, final approval [of the tax hike] still goes through Brazil's partners in trade bloc Mercosur — Argentina, Uruguay, and Paraguay. If validated, the measure is expected to go into effect in October and last for one year. Abiplast said it will continue battling to reverse the measure, which the association deems unreasonable. Higher domestic prices may follow The market is taking some notice of the new proposed measures. One US polymers exporter to Brazil told Argus that if the tax hike becomes effective, Brazilian polymers manufacturers are expected to immediately raise prices to recover their margins. "The timing for the tax hike announcement was fine-tuned to let local producers secure additional margins in a time that sales are expected to increase in Brazil due to Christmas and New Year celebrations," one market participant told Argus. But any drop in polymer imports into Brazil from the taxes should recover in he beginning of next year, the source said. "Brazil's polymers production is not enough to address local demand, so imports will always be needed," the source said. Brazil's January-August PE imports surged by 45pc from the same period in 2023, reaching almost 1.4mn metric tonnes. North America had a 79pc share, while South America had another 10pc. The country also buys from Asia and the Middle East. By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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LNG-burning vessels well positioned ahead of 2025


19/09/24
News
19/09/24

LNG-burning vessels well positioned ahead of 2025

New York, 19 September (Argus) — Vessels outfitted with dual-fuel LNG-burning engines are poised to have the lowest marine fuel expense heading into 2025 when the EU will tighten its marine EU emissions trading system (ETS) regulations and add a new regulation, " FuelEU", from 1 January 2025. Considering both regulations, at current price levels, fossil LNG (also known as grey LNG) will be priced the cheapest compared with conventional marine fuels and other commonly considered alternative fuels such as biodiesel and methanol. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. The FuelEU GHG intensity maximum is set at 85.69 grams of CO2-equivalent per MJ (gCO2e/MJ) from 2030 to 2034, dropping to 77.94 gCO2e/MJ in 2035. Vessel pools exceeding the FuelEU's limits will be fined €2,400/t ($2,675/t) of very low-sulphur fuel oil (VLFSO) energy equivalent. GHG emissions from grey LNG vary depending on the type of marine engine used to burn the LNG, but ranges from about 76.3-92.3 gCO2e/MJ, according to non-governmental environmental lobby group Transport & Environment. This makes a number of LNG-burning, ocean-going vessels compliant with FuelEU regulation through 2034. The EU's ETS for marine shipping commenced this year and requires that ship operators pay for 40pc of their GHG generated on voyages within, in and out of the EU. Next year, the EU ETS emissions limit will increase to 70pc. Even with the added 70pc CO2 emissions cost, US Gulf coast grey LNG was assessed at $639/t VLSFOe, compared with the second cheapest VLSFO at $689/t, B30 biodiesel at $922/t and grey methanol at $931/t VLSFOe average from 1-18 September (see chart). "In 2025, we expect [US natural gas] prices to rise as [US] LNG exports increase while domestic consumption and production remain relatively flat for much of the year," says the US Energy Information Administration. "We forecast the Henry Hub price to average around $2.20/million British thermal units (mmBtu) in 2024 and $3.10/mmBtu in 2025." Provided that prices of biodiesel and methanol remain relatively flat, the projected EIA US 2025 LNG price gains would not affect LNG's price ranking, keeping it the cheapest alternative marine fuel option for ship owners traveling between the US Gulf coast and Europe. LNG for bunkering global consumption from vessels 5,000 gross tonnes and over reached 12.9mn t in 2023, according to the International Maritime Organization (IMO), up from 11mn t in 2022 and 12.6mn t in 2021. The maritime port authority of Singapore reported 111,000t of LNG bunker sales and the port authorities of Rotterdam and Antwerp reported 319,000t in 2023 from all size vessels. Among vessels 5,000 gross tonnes and over, LNG carriers accounted for 89pc of LNG bunker demand globally, followed by container ships at 3.6pc, according to the IMO. The large gap between LNG global and LNG Singapore, Rotterdam, and Antwerp bunker demand, is likely the result of most of the demand taking place at the biggest LNG export locations where LNG carriers call, such as the US Gulf coast, Qatar, Australia, Russia and Malaysia. By Stefka Wechsler USGC bunkers and bunker alternatives $/t VLSFOe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Duqm plans key to Oman’s LPG export outlook


17/09/24
News
17/09/24

Duqm plans key to Oman’s LPG export outlook

The revival of a major petrochemical project could cap exports despite rising production, writes Ieva Paldaviciute Dubai, 17 September (Argus) — Production from the new Duqm refinery has boosted Oman's LPG output this year, and driven an 89pc year-on-year rise in exports to 371,000t for the first eight months of 2024, according to data from analytics firm Kpler. But plans for new petrochemical facilities linked to the refinery could put a cap on export capacity in the near future. Oman's LPG output has more than doubled within the past decade, from 420,000t (13,400 b/d) in 2015 — the earliest year for which energy and minerals ministry data are available — to around 990,000t last year. That is due in large part to the start-up of state-owned OQ's Salalah LPG extraction plant in the southern Dhofar governorate. The first-of-its-kind gas treatment project in Oman and now contributes close to 300,000 t/yr to the country's LPG output. The majority of Oman's LPG production now comes from downstream facilities operated by OQ — around 62pc of last year's output came from its 198,000 b/d Sohar and 106,000 b/d Mina al Fahal refineries. Another 30pc came from the Salalah LPG plant, and just 8pc from the upstream Bukha and West Bukha, Saih Rawl and Wadi Aswad fields. Shortly before the Salalah plant came on line, OQ in early 2021 started up its Liwa Plastics Industrial Complex (LPIC), whose 880,000 t/yr ethylene steam cracker would fast become a major LPG consumer. Output from the steam cracker, in turn, feeds the complex's 880,000 t/yr polyethylene and 300,000 t/yr polypropylene units. This contributed to a near collapse in Omani LPG exports in the first quarter of 2021, as OQ started diverting the Sohar refinery's LPG output to feed LPIC. But once the Salalah LPG plant began to ramp up, Oman managed to gradually resume exports, this time from Salalah port. This has enabled Oman to export refrigerated LPG cargoes on larger tankers, with Sohar previously only able to accommodate pressurised or midsize carriers. Oman is now a net LPG exporter, but still imports the occasional cargo when Sohar is unable to provide sufficient feedstock supply to LPIC — Sohar port received 104,000t of LPG between January and August, according to data from analytics firm Kpler. Both the Sohar refinery and LPIC are in northern Oman, far from the sultanate's other LPG production points. Chemical ambitions Oman's LPG output and exports have been lifted this year by new supply from the 230,000 b/d Duqm refinery, which at full capacity can produce up to 15,000 b/d of LPG. The facility was inaugurated in February but appears to have exported its first LPG cargo in September 2023, according to Kpler data, although this is not recorded in government data. But future exports could be capped if a new planned petrochemical complex, fed with naphtha and LPG produced at Duqm, is built alongside the refinery. Operator OQ8 — a 50:50 joint venture between OQ and Kuwait's state-owned KPI — initially had plans to build a 1.6mn t/yr petrochemicals complex, but design works were suspended in 2020, during the early part of the Covid-19 pandemic, because of the uncertain demand outlook. Plans appeared to have been revived in 2022, when OQ and KPI welcomed Saudi chemical giant Sabic onboard to develop a jointly owned petrochemical complex in Duqm. This project envisaged construction of a steam cracker and derivative units, as well as a natural gas liquid extraction facility. The three parties signed a non-binding agreement in late 2022, but a final investment decision has not yet been made. Oman LPG infrastructure Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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BZ Credits near 5 year high after 2023 blending


12/09/24
News
12/09/24

BZ Credits near 5 year high after 2023 blending

Houston, 12 September (Argus) — Higher volumes of ethylbenzene (EB) into gasoline blending a year ago has led to a credit shortage, pushing prices to their highest levels since March 2021. In 2022 and 2023, US Gulf coast (USGC) naphtha inventories were long as US naphtha exports declined from 400,000-500,000b/d pre-pandemic to 100,000-200,000b/d. Over the same span of time, refiners and blenders dropped excess naphtha, a sub-octane blendstock, into the gasoline pool. This blend of gasoline spurred demand for high-octane blendstocks like EB, toluene and mixed xylenes into gasoline blending. The US Environmental Protection Agency (EPA) requires gasoline with benzene content above a certain threshold to be offset by a credit generated by refining compliant gasoline. The elevated blending of EB exhausted the supply of benzene credits on the open market, which bled into 2024. Credits traded near 100¢/USG early in 2024 and rose to as high as 190¢/USG over the summer. Values now span buyer interest at 160¢/USG and seller interest at 190¢/USG. The compliance deadline for benzene credit submission is set for 31 March 2025, in which refiners must mass-balance their production over a given year and either face a credit surplus for being over-compliant or a shortage and therefore will need to procure credits on the open market. By Jake Caldwell and Matthew Cope Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Norfolk Southern replaces CEO with CFO


12/09/24
News
12/09/24

Norfolk Southern replaces CEO with CFO

Washington, 12 September (Argus) — Eastern Class I railroad Norfolk Southern (NS) has appointed a new chief executive, replacing former executive Alan Shaw after determining he violated company policies by having a consensual relationship with the company's chief legal officer. NS' board announced late Wednesday that it had promoted chief financial officer Mark George to replace Shaw. The board said Monday it was investigating Shaw for potential misconduct in actions not consistent with NS' code of ethics and policies, but did not provide details. The railroad yesterday clarified that Shaw's departure was not related to the railroad's "performance, financial reporting and results of operations". Instead, the board voted unanimously to terminate Shaw with cause, effective immediately, for violating policies by engaging in a consensual relationship chief legal officer Nabanita Nag. She was also dismissed by NS. Shaw worked at NS for 30 years and was appointed chief executive in May 2021, following six years as chief marketing officer. Earlier this year he led NS through a proxy fight with a group of activist investors that sought his replacement. The overall effort failed but the challengers secured three seats on the board . The investors had been displeased with the railroad's financial performance and "tone deaf response" to the February 2023 derailment in East Palestine, Ohio . New chief executive George had served as NS' chief financial officer since 2019. Prior to that, he held roles at several companies including United Technologies Corporation and its subsidiaries. "The board has full confidence in Mark and his ability to continue delivering on our commitments to shareholders and other stakeholders," NS chairman and former Canadian National chief executive Claude Mongeau said. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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