Chemical Industry Summary
The financial community’s consensus estimates for US chemical companies indicates that they are expected to reportQ1earnings most reports will be flat with last year. Companies leveraged to the olefins/polyolefins chain are seeing a relatively strong, but lower margins. Improvement is expected from US companies that are leveraged to the chlor-vinyl’s chain (including caustic, PVC and chlorine intermediates), and for those leveraged to TiO2 that have benefitted from the tailwind of global price improvement.
Global crude oil prices have strengthened to the mid-US$50’s per barrel not due to industry fundamentals, but more due to concerns associated with recent geo-political events. While OPEC’s compliance to the lower production targets set at December’s meeting in Vienna has been good, non-OPEC production curtailments have well below announced targets. Offsetting the positive impact of OPEC’s production costs has been accelerated US drilling activity and crude production from shale oil regions as producers have made continuing cost reductions. Crude inventories remain elevated and global supply/demand will not likely rebalance in 2017.
Macroeconomics and Geopolitics
Americas
The recent flow of positive economic news from the US took a bit of a pause in March. Auto sales, consumer spending, and manufacturing activity all eased this month from February levels. Economists have recently trimmed estimates for full-year US GDP growth in 2017/2018.The Conference Board’s forecast of US growth in 2017 is2.1% compared to1.6% in 2016. The shape of economic growth once again calls for growth to be back-end loaded in 2017. On April 7th, the Atlanta Fed slashed its first estimate if Q1 GDP to 0.6% from earlier estimates if 1.8% and 1.2%. Another weak start to the year is anticipated.
In March, the US jobs report came in at only 98,000 jobs added, down 54% from last year and about half of the average seen in the last six months. In addition, the January and February job addition numbers were revised downwards by a cumulative 38,000. Although a one-month number doesn’t constitute a trend, weakness was seen in several sectors. March construction may have been weather-impacted as February’s weather was abnormally good for an early start to the US construction season. The unemployment rate dipped down 0.2% to 4.5%, the lowest level in several years. However, this is not ‘full employment’ with the low current labor participation rate that hovers near63%, relatively low by historical standards.
In March, US sales of light cars and trucks were 16.53million units, down 5.4% from February and flat with last year. This result is also down 6% from the average of the last six months. In the US manufacturing activity slowed but was still in mild expansion territory. Markit’s US manufacturing PMI index slowed to 53.3, down from 54.2 seen in January. The result was due in part to lower export volumes resulting from the strong dollar and lower orders.
US housing starts in February were firm at 1,288thousand on a seasonally-adjusted basis, up 6.2% from last year. March numbers, expected to be published next week, are expected to remain firm. In its April forecast, the NAR (National Association of Realtors) is projecting2017 starts at 1.267 million, up 8% from 2016. The 2018 forecast calls for an additional increase of 8.7%. Average housing prices for existing home sales in JanuarywasUS$228,400, up 8.3% from last year. Per Freddie Mac, the average interest rate is still low at only 4.17%.
According to Markit, Mexico’s PMI in March improved to 51.5, up from 50.6seen in February. The growth was the fasted seen in six months driven by new orders. With manufacturing activity barely in expansion territory, US President Trump’s trade policies could prove to be significant for Mexico, the largest trading partner of the US. Canada’s March PMI of 55.7 was the highest in three and one-half years and well ahead of the 54.7level recorded in February.
Brazil’s manufacturing sector recorded a PMI of 49.6in March, the best result in 25 months, and just below the neural 50.0 level. This was an improvement from the 46.9 seen in February showing the first increases in orders in 26 months. The Brazilian manufacturing sector has been in contraction territory since the end of 2014.In its Q4forecast, the IMF expects Brazil’s GPD to fall 3.2% in2016, following a 3.8% drop last year. The IMF does not expect a return to 2% growth until 2019.
Europe
In total, the European economy continues to improve in part due to continued economic stimulus from the ECB. As a region, the Eurozone recorded a strong PMI result of 56.2 in March, up from 55.4 seen in February. Manufacturing activity in German has been especially strong with a March PMI of 58.3 recorded, a 71-month high. The European Central Bank extended its €2.3 trillion stimulus program in December, through the end of 2017.For 2017/2018 the IMF expects the EC’s GDP growth at 1.6% and 1.8%.
For March, Eastern Europe and Russia’s PMIs continued to be in expansion territory. Russia’s manufacturing PMI was recorded at 52.4 in March, flat with February. This expansion comes after registering a 70-month high at 54.7 in January. Poland’s manufacturing sector showed similar results to Russia, with relatively flat month over month result of 53.5. Poland has been in expansion for nearly two years.
Asia
China’s initial estimate of Q1 GDP growth has come in at 6.9%, the fastest growth in two years. The result was above the government’s target of 6.5%. The Chinese government is restructuring the economy to focus on consumer demand and growth without excessive debt, and away from exports and capital expansion-driven growth. China’s housing market is at a fast pace, but tightening short-term credit will likely cool activity later this year. February’s PMI index for China accelerated to 51.7, ahead of January’s 51.0 result. Higher exports and production activity drove early 2017 improvement. Chinese imports in February were quite high with an unusual deficit of US$9.15 billion recorded. This reflects stronger commodity pricing and good demand. Surveys of business optimism are positive in the near-term as the country restructures its economy and executes its anti-corruption policies.
China’s auto production in February was 2.16million vehicles, up 6.2%from the same month in 2016. On a year-to-date basis, auto production is up 11.3% and auto sales are up 9.1%. For the full year of 2016, auto sales of near 28million are up 14% from last year, a significant rebound from 2015 that saw 24.5 million vehicles produced.
Polyolefin prices in Asia remain stable reflecting stable oil-based feedstock pricing and firm demand. Thus, far in April, Far East Asian HDPE blow modeling prices have remained flat with March, to a range of US$1,150 to 1,200/MT. Spot ethylene prices for March and April in SEA have traded down from February but have recently traded in a relatively tight range.
In the last month, spot propylene and butadiene pricing in SEA have come off peak levels that were see in mid-March. Propylene spot prices are currently near US$825/MT, down US$125/MT from peak. Current injection molding PP in SEA remains in the range ofUS$1,050/ MT to US$1,100/MT providing a spread for PP of near US$225/MT. In April. SEA butadiene prices have continued to come down from peak levels of near US$3,000/MT seen in late February. Current prices are closer to US$1,350/MT.
Feedstock – Crude Oil
OPEC’s March crude oil production numbers have been released and the reported production at an average of 31.93 million barrels per day, a reduction of 153,000 barrels per day from February. Additional production cuts by Saudi Arabia plus operational issues in other member countries. Production at this level represents an 86% adherence level to the total target (1.2 million barrels per day) agreed to at the November 30 meeting in Vienna. The cuts were agreed to for a six-month period ending in May, at which point they could be renewed or modified.
OPEC reported that Russia’s production in March was10.8 million barrels per day. This result was approximately 130,000 barrels per day lower that December, and 43% of the pledged cut target of 300 barrels per day. The total non-OPEC cuts were targeted at 558,000 barrels per day is not likely to be achieved. Production from US shale oil formations was 9.2MM barrels per day in early April, an increase of 500,000 barrels per day from early December in response to higher prices. Higher US production blunts the impact of the OPEC production cuts.
As of April13th, WTI spot prices in the USwereUS$53.18per barrel, up about US$5/bbl.in recent trading. CMR believes that this is likely due in large part to global geo-political events rather that changing fundamentals. As mentioned above, both oil and gas pricing have been relatively stable, and some analysts suspect that oil prices may be range-bound to below US$60per barrel. For the week of April 7th, US crude inventories not in the SPR (Strategic Petroleum Reserve) were 533million barrels, an increase of 50million barrels, or 10% since the first of this year.US crude inventories and distillate products have remained stubbornly high despite high demand.
For the week ending April 13, Baker Hughes reported that the US total rig count(oil and gas directed)was 847, up substantially from last November’s count of near 570. Recently, US rig count has gone up an average of about 10 per week. Current rig count is over double the low mark of 404 seen as recently as May of2016. The higher oil pricing and improved drilling efficiencies including expanding lateral distances, increase number of wells per platform, more concentrated well spacing have led to the boom in production activity.
Feedstock – Natural Gas & NGLs
In the last month, US natural gas prices have stabilized to a level near US$3.00/MM BTU. This appears to reflect the relative balance for supply and demand in a ‘shoulder season ’and inventories that are well within seasonal norms. The week ending April 7thsaw total US inventories of 2.06 trillion SCF, down 17% from last year. While this level was 24% above the 5-year average of 1.6T SCF, it was lower than recent trends that have seen gas inventories at or above maximum seasonal levels. Current Injection/withdrawals have been near zero.
Ethane spot prices for MarchaveragednearUS$0.25per gallon, flat with February. The EIA reported ethane/ethylene inventories of 52.1 million barrels at the end of January, 57% higher than a year ago and near the record levels that were seen late in 2016. Ahead of new cracker capacity start-up, ethane rejection remains near 500k Bbl/d. With the current excess of ethane, prices tend to track natural gas on an energy-equivalent basis. With the start-up of Enterprise’s new ethane export terminal, export volumes are headed up and are expected to be 200,000 to 250,000 Bbl/d by the end of 2017. For all of 2016, ethane exports averaged95,000 barrels per day. The new Oxy/Mexichem cracker is in commissioning/start-up phase, and three more crackers are expected to follow by the end of this year. By the end of 2017, incremental ethane demand of 200,000 Bbls/d is anticipated for domestic crackers.US propane inventories have dropped sharply as new export facilities have been commissioned and seasonal global demand for exports has been seen. For the week ending April 7, the EIA reports that US propane/propylene inventories were 40.1million barrels, down40.7% from a year ago. US prices for propane are near US$0.69/gallon, up 44% from a year ago, but are still below international prices.
The oil-to-gas price ratio has remained near 16:1 since early April, reflecting the fact that both crude oil and natural gas prices have trended sideways. The economic equivalent price for cracker feedstock is near 8:1. US ethane crackers currently remain advantaged, but not by a large margin as in the near past.
US Olefins & Polyolefins
US contract ethylene prices for March settled down 5.75cents/lb., resulting in a net transaction price of 26cents/lb. for the month. This result reflected better availability, lower spot prices, and softer feedstock prices. This price is like that seen a year ago and is down after three months of increases that totaled 5.5cents/lb.US ethylene spot prices were in the mid-30’s in early February, but cooled to an average of 27cents/lb.in March and have currently recovered to near US$0.30/lb.
The strong turnaround activity for US crackers seen in Q1 has ended with 5.2% of US capacity idled during this period. In April, only 2% of US ethylene capacity will be off-line for planned outages, although unplanned outages are always a possibility. Improved availability has softened the market and has contributed to lower spot pricing. Planned US cracker outages are relatively light until the fall turnaround season.
US contract propylene prices for April have not yet settled but are expected to be down reflecting global price trends. In March, us chemical grade contract propylene was up4cents/lb.to 50.5cents/lb.This was the highest level since early 2015. Current spot prices for propylene are in the low US$0.50/lb.area, up approximately 0.25/lb.from December.
After hitting a peak of US$1.10/lb.in March, the US contract butadiene price settlement for April settled down 17cents/lb.to 93cents/lb.(US$2,050/MT).
For March, the consensus view is that US contract PE prices settledupUS$0.03/lb. This is half of the proposed industry increase of US$0.06/lb. The lower ethylene pricing seen in March proved to be a headwind to getting the full increase. However, with lower costs, integrated PE margins improved as if the entire increase had been successful.US exports of PE in February of 453thousand MT were up 9% from January, and flat with last year. However, imports of PE of 203 thousand MT were down 21% from a year ago. On a net export basis, PE exports were up 30% from February of 2016. Gross PE exports in 2016 represented from the US represented 27% of industry capacity February.
US polypropylene exports in February cooled significantly from January’s record pace and were at 116,000 MT, up 21%from last month. February imports of PP were flat from January at 12,000 MT, roughly one-third the level seen last February.
Contract prices for US PVC in March were up 1cents/lb., despite a proposed3cents/lb. Increase by the industry. Since ethylene was down 4cents/lb.and half of this value rolls through to lower cost, PVC producers essentially got all the increase on a cost-adjusted basis. Export pricing for both EDC and VCM have increased in the last month, with EDC up 22%in one month.
European Olefins & Polyolefins
In April, the European contract ethylene price rolled over settling again at €1,050/MT. Since the first of the year, spot prices for ethylene in NWE have firmed about €200/MT to the area of €1,120/MT. This level has been seen in the last two months. Contract European propylene prices for April were up€15/MT, and remain elevated at €880/MT. This the is highest contract price since August of 2015.European prices for PP homopolymer are up€50/MT since the beginning of March.
European contact butadiene prices for April remain at elevated levels, with a rollover of March pricing of€1,750/MT. However, spot prices in April appear to have come down from peak levels see in February that were near US$2,400/MT. Current spot pricing is now closer to US$1,850/MT.
The European benzene contract price for Aprilisdown€192/MT to a level €745/MT. However, this is still 21% higher than a year ago, and spot prices in the last two weeks have moved up US$100/MT reflecting recent strengthening of oil.
Since February, European high-density polyethylene prices in Europe remain elevated and stable. Prices for HDPE blow molding grade for Northwest Europe have stabilized at levels of near €1,250/MT, in a range of up €75/MT to €100/MT from the beginning of year.
Global Chlor-alkali
The US Chlorine Institute reported that US chlorine production in February was 0.89million short tons, down 7.6% from last year. The reported operating rate of 83% was relatively low and reflected shutdowns and operating issues. For the entire year2016, US chlorine production averaged 84% of effective capacity. Recent movements of export prices for caustic and the chlorine-containing PVC intermediates VCM and EDC have been positive.US caustic export prices averaged $350/DST in February, up $100/DST (40%) from a year ago. Producers were successful in implementation of most of theUS$40/ST increase announced for Q1 caustic, For Q2,an additionalUS$60/ST increase was announced for May. US export prices for caustic averaged US$369/ST in January, up about US$100/ST from last year.
Eurochlor reported chlorine production for Feb 2017 at 774,212MT,down 4% from last year. Operating rates were reported at 85.3%. Implied capacity from the reported operating rate was 907,000 MT for the month, down 8% from December on reduced capacity associated with mercury cell shutdowns. Caustic stocks rebounded from a low level seen at year’s end. Reported stocks of 224,700 MT were up 12% from the year-ending levels. CMR believes that during 2016 and 2017, 31% percent of European mercury cell capacity will be shut down, representing 8% of total European capacity. This will push operating rates up and likely will necessitate caustic imports.
AMERICAS
TOTAL, Nova, Borealis team up for ethylene/PE complex on USGC
TOTAL plans to form a joint venture with Nova and Borealis, aiming to build an ethane cracker and a new Borstar®polyethylene unit in Texas. The JV will include TOTAL’s existing 400KTAPE facility in Bayport, Texas and build a new 1,000KTAethane cracker in Port Arthur, Texas and a new 625KTABorstar®PE plant in Bayport, Texas. The proposed cracker is slated to start up in 2020, while the new Borstar®PE unit is subject to final investment decision to be made in late 2017.
Comments: The joint venture will bring three petrochemical giants together to take advantage of North America’s economic natural gas feedstock. It is now clear that producing polyethylene in North America gives producers a competitive edge over other regions for the foreseeable future. TOTAL had already made significant investments in shale gas and LNG in the US. Through the JV, TOTAL could strengthen its polyethylene business in North America by expanding its grade slate using proven Borstar®PE process. For Nova and Borealis, the joint venture gives an opportunity to expand their regional presence (into USGC) and leverage the region’s low-cost feedstock.
INEOS/Sasol targets late 2017 for start-up of Texas HDPE unit
INEOS/Sasol’s JV 470KTAHDPE facility in La Porte, Texas is on track to mechanically complete in third quarter of 2017. The HDPE unit is scheduled to come on-stream in fourth quarter of 2017.
Comments: Switzerland-based INEOS is the third largest HDPE and PP supplier in North America and one of fast-growing chemical companies in the world. With abundant cost-advantaged NGLs in North America, INEOS has strategically invested into capacity expansion of olefins (ethylene and linear alpha olefins) and associated downstream chemicals (HDPE and PP) as well as acquisition for growth opportunities to strengthen its market position. INEOS’ previous acquisition of HDPE pipe manufacturer WL Plastic was intended to strategically secure product destination for this new HDPE facility.
EUROPE
Serbia’s three state-owned petrochemical plants up for sale Serbia has invited potential investors for participation in privatization of chemicals group MSK Kikinda, petrochemicals producer HIP Petrohemija and chemical fertilizer producer HIP Azotara Pancevo. Potential investors will be able to submit their letters of interest by May 3rd.
Comments: The government of Serbia had implemented economic reforms during FY 2015 /2016 that increased revenues and controlled government expenditure. This resulted in higher than expected economic growth and increased investment confidence. Determined to sustain the future momentum, the government of Serbia intends to ease the burden of national debt by privatizing large state-owned firms, including petrochemical companies HIP Petrohemija, HIP Azotara and MSK Kikinda. HIP Petrohemija is the country’s largest integrated petrochemical complex that produces an array of materials including PE, SBR and MTBE compounds. HIP Azotara produces fertilizers, while MSK Kikinda produces methanol and acetic acid.
Turkey to cooperate with Singapore for petrochemical industrial park
Turkey is entering a partnership with Singapore for building a new petrochemical project. The project will be set up in Southeastern Turkey and serve as a model for further economic development.
Comments: Due to its geographic and geopolitical location linking Europe, Asia and the Middle East, Turkey has several key oil and gas pipelines passing through and is one of favorable destinations for global polymer market. Turkey currently consumes around 5,500KTAof polymers (PE, PP, PET, PS and PVC), of which more than 80% are imported. Petkim is the only domestic producer of commodity polymers in Turkey. Turkey has been seeking to increase the share of high value-added products in its economy via modern industrialization, transforming to become a leading world economy. Petkim has been long in talks with Singapore government to acquire “know-how” in setting up a petrochemical industrial zone, aiming to double its petrochemical capacity from currently at 320KTAto 600KTAby 2023.
Solvay sells polyolefin cross-linkable compounds business
Solvay has its decision to spin its polyolefin cross-linkable compounds business off to Finproject SpA for an undisclosed sum. Finproject is an Italy-based manufacturer of injection molded foam, polyolefin compounds and PVC compounds. The transaction is expected to close in 2Q 2017.
Comments: Finproject Group is involved in production of compact and expanded compounds, the manufacture and marketing of ultralight soles products for the top brands in the footwear market and in other industrial sectors like whirlpool and spa systems, automotive, furniture and the safety industry. Finproject group has nine production units. Four in Italy and five abroad (India, Mexico, Canada, Romania and China), including the North American division of Foam Creations. Acquiring Solvay’s polyolefin cross-linkable compounds business will be a logical step for Finproject in expanding its business. Finproject have their own line of cross-linking polyolefin compounds which they market under the name of Levirex®compounds. Levirex®is a closed cell foam material with a waterproof surface that is highly resistant to wear and deterioration caused by external agents, weathering and ultraviolet radiation. Solvay has Polidan®EC, Polideimme®G and Cogegum®GFR series of cross-linking polyolefin compounds which are used in applications such as wire & cable, film, injection molded compounds, pipe and fittings.
MIDDLE EAST & AFRICA
Oman Oil proposes a world-scale petrochemical complex at Duqm
State-controlled Oman Oil has announced plan to establish vertically-integrated petrochemical complex at Duqm Special Economic Zone (SEZ), including a green-field refinery and eventually as many as 10 world-scale petrochemical facilities. Oman Oil has formed a 50/50 joint venture with Kuwait National Petroleum Corporation (KNPC) to build a 230,000 bbl/day refinery, which is expected to become operational in 2020.
Comments: In response to oil depletion and price fluctuation of crude oil, oil producing countries in Middle East have been worked to diversify their economies away from crude oil production through vertical integration toward downstream activities. Except Oman Oil Corp, Oman’s another state-run giant, Oman Refinery and Petroleum (ORPC), also has several projects underway aiming to help itself transform from a refinery-focused company to a vertically-integrated petrochemical player. On the flip side, Kuwait undergoes refinery capacity expansion and modernization via Clean Fuels Project. Under Clean Fuels Project, Kuwait will close the poor performing, ageing 200,000 bbl/day Shuaiba refinery while modernizing the refineries in Mina Abdulla (MAB) and Mina Al Ahmadi (MAA). The Duqm refinery project will help Kuwait strengthen national goal to strategically upgrade downstream capacity as well as build economic ties with Gulf Cooperation Council (GCC) country.
Iran awards US$3.2B construction contract to Hyundai Engineering
Iran’s Ahdaf Investment Company has signed a US$3.2 billion deal with Korea’s Hyundai Engineering for construction of phase II of Kangan Petro-Refinery Project. The phase II of this project will include a 1,000KTA ethylene unit, a 500KTAMEG plant and 350KTA HDPE/LLDPE production facilities. The construction of phase II is expected to take four years to complete.
Comments: Kangan Petro-Refining Project is scheduled to be completed in two phases. Phase I is C2 Recovery and Fractionation Plant to recover valuable products such as Ethane, Propane, Butane and C5+ from rich natural gas. Phase II includes Ethane Cracker and Polymer plants such as: LDPE, LLDPE, HDPE, MEG and other products. The first phase of the Kangan project was 30% completed with an investment of nearly 120 million euros. The second phase of the project is where Hyundai Engineering Co., will play a major part. The deal with Hyundai Engineering Co. is one of the first major deals in Iran after the international sanctions were lifted. Despite the lifting of international sanctions against Iran in January 2016, Iranian officials have complained that remaining US sanctions have frightened away trade partners and robbed Iran of the benefits it was promised under its 2015 nuclear deal with world powers. Iran represents a huge opportunity for many investors and companies alike due to its large natural resources, but the looming cloud of international sanctions has many people in uncertain on entering the Iran market. This will be a first step towards easing such tensions.
ASIA PACIFIC
China releases directive for advancing coal chemical industry
China’s National Development and Reform Commission (NDRC) has recently released “Innovative Development of Modern Coal Chemical Industry Plan”. The plan lays out four fundamental developmental principles, eight emphasized missions to be executed during 13th Five Year Plan period (2016-2020) and six supporting measures aiming to reshape and advance China’s coal-to-chemical industry.
Comments: The development of China’s coal-to-chemical industry has slowed down due to the combination of environmental concerns and the lack of downstream product competitiveness. Under the latest national economic plan –13th Five Year Plan, the China government targets to upgrade coal-to-chemical industry via promotion of vertical integration toward new, high value-added downstream products as well as the deployment of clean coal technology. “Innovative Development of Modern Coal Chemical Industry Plan” provides more complementary details with respect to the development of coal-to-chemical industry between now and 2020. The focused missions include(1) upgrading outdated production technology, (2) enhancing vertical integration of coal-to-chemical production, (3) assisting transformation of coal-to-chemical players with potential advantages, (4) setting up demonstration zones of modern coal-to-chemical production, (5) developing western coal-orientated cities, (6) promoting international cooperation, (7) strengthening domestic technology suppliers’ technical capability, and (8) exploring carbon emission reduction technology.
China’s Hengyi to build petrochemical complex in Brunei
China’s Zhejiang Hengyi and Brunei’s Damai Holdings Limited have signed a cooperation agreement for an integrated petrochemical complex in Brunei. The JV project will be built in two phases. The phase I of petrochemical complex is worth US$3.445 billion and will include an 8,000KTAof refinery, a 1,500KTAnaphtha cracker, a 1,500KTA paraxylene unit, a 500KTA benzene unit and facilities for production of refined products, including diesel, jet fuel, and gasoline. The phase II of the project will, pending moving forward, involve further capacity expansion of olefins and aromatics, which is still under evaluation.
Comments: Brunei is the fourth largest oil producing country in Asia. The nation’s economy heavily depends on crude oil export with 90% of government budget coming from energy sector and 60% of GDP contributed by oil revenue. Brunei’s economy has fallen a victim of crude oil crash since 2014. On the top of that, Brunei’s crude oil reserves are nearing depletion. Diversifying economy away from crude oil is urgent for the tiny southeast nation. The petrochemical complex is expected to contribute as much as 40% of Brunei’s GDP, allowing Brunei’s economy to be more sustainable. As for the Chinese counterpart, Hengyi company is China’s largest polyester fiber producer. Aromatic outputs will help Hengyi company back integrate production activities and will be used as feedstocks in Hengyi’s assets in China.
LyondellBasell licenses PE process to China’s Shandong Yuhuang
Shandong YuhuangGroup has selected LyondellBasell’s Hostalen ACP PE technology for its new 200KTAHDPE facility. The HDPE plant will be built in Heze, Shandong province with scheduled start-up in 2018.
Comments: Shandong Yuhuang Chemical is a privately-owned chemical supplier that produces mainly C3 derivatives -gasoline additive methyl tert-butyl ether (MTBE)and propylene. The company has strategically invested into strong growing markets. LYB’s Hostalen ACP PE technology will enable production of high performance, multi-modal HDPE resin with a better combination of physical properties and processability, allowing Shandong Yuhuang Chemical to step into Chinese high value-added HDPE market where demand currently depends on imports. Meanwhile, Shandong Yuhuang Chemical currently has a gas-based methanol facility in Louisiana, USA underway. The methanol output will mainly be exported back to China for captive consumption, thereby improving production cost structure.
CB&I wins chemical projects contract in Tianjin
China’s Tianjin Bohua Chemical Development has awarded a contract to CB&I for three grassroots petrochemical facilities in Tianjin, China. The scope of this contract includes license and detailed engineering design of an ethylbenzene unit, a methanol-to-olefin (MTO) light olefin recovery unit and a polypropylene (PP) unit.
Comments: Tianjin Bohua Chemical Development is a subsidiary of Tianjin Bohai Chemical Group with product portfolio in basic chemicals such as acetic acid, methanol, ABS, PS and Propylene. The company set up 600KTA propane dehydrogenation (PDH) unit using CB&I technology in 2014. Tianjin Bohai Group also recently signed a PO/SM (propylene oxide/styrene monomer) technology license agreement with Repsol. Those technology license agreements with CB&I and Repsol will allow Tianjin Bohai Group expand its product portfolio into strong growing C3 derivatives, such as polypropylene (PP) and propylene oxide (PO), for growth opportunities.
Sinopec, SABIC to explore new petrochemical opportunities
Sinopec and SABIC have signed a strategic agreement to study joint opportunities both in China and Saudi Arabia.
Comments: The initial cooperation between Sinopec and SABIC started with the formation of SINOPEC SABIC Tianjin Petrochemical Company (SSTPC) in 2009. Further cooperation in their existing JV in China –SSTPC, aligns with China’s goal to upgrade petrochemical industry toward high value-added production. Under the first of its kind agreement, the two giants will explore Chinese investments in Saudi Arabia targeting downstream key markets, including automotive, electronics, lighting and building. This strategic move allows the two countries to synergistically meet their own master economic plans. China’s “One Belt, One Road” plan is to establish deep economic integration across Asia, Middle East, Europe, and Eastern Africa, while Saudi Arabia has “Saudi Vision 2030” aiming to reduce economic reliance on oil via economy diversification.
BIOBASED
BP, DuPont to set up bioisobutanol capacity in Kansas
Butamax Advanced Biofuels LLC, a 50/50 joint venture between BP and DuPont, has recently acquired Nesika Energy LLC with ethanol facility in Scandia, Kansas, and now starts the detailed engineering work to add bioisobutanol capacity to the site. The planned bioisobutanol will be served as demonstration plant for potential license.
Comments: Butamax was formed to develop and commercialize bioisobutanol for biofuel and chemical applications. Bioisobutanol can be used as a fuel at higher concentrations than ethanol in blends with gasoline without compromising performance or as an alternative to fossil-derived isobutanol in existing chemical processes. Bioisobutanol blends do not suffer from the water solubility issues of ethanol, which means they can be transported via existing fuel pipelines. So far however, isobutanol-blended gasoline has not been competitive with ethanol-blended gasoline. Butamax is focused on developing a technology licensing package for ethanol producers that would enable them to make bio-isobutanol. The recent value differential per gallon between ethanol and isobutanol has improved the economic fundamentals for such a retrofit. Butamax plans to use the Nesika plant as a demonstration facility for future licensees once the plant is capable of producing bioisobutanol.