rongsheng refinery start up for sale

SINGAPORE, Oct 14 (Reuters) - Rongsheng Petrochemical, the trading arm of Chinese private refiner Zhejiang Petrochemical, has bought at least 5 million barrels of crude for delivery in December and January next year in preparation for starting a new crude unit by year-end, five trade sources said on Wednesday.

Rongsheng bought at least 3.5 million barrels of Upper Zakum crude from the United Arab Emirates and 1.5 million barrels of al-Shaheen crude from Qatar via a tender that closed on Tuesday, the sources said.

Rongsheng’s purchase helped absorbed some of the unsold supplies from last month as the company did not purchase any spot crude in past two months, the sources said.

Zhejiang Petrochemical plans to start trial runs at one of two new crude distillation units (CDUs) in the second phase of its refinery-petrochemical complex in east China’s Zhoushan by the end of this year, a company official told Reuters. Each CDU has a capacity of 200,000 barrels per day (bpd).

Zhejiang Petrochemical started up the first phase of its complex which includes a 400,000-bpd refinery and a 1.2 million tonne-per-year ethylene plant at the end of 2019. (Reporting by Florence Tan and Chen Aizhu, editing by Louise Heavens and Christian Schmollinger)

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State oil giant Saudi Aramco plans to ink an agreement later on Thursday to take a stake in a refinery-petrochemical project in eastern China, a senior official said on Thursday.

"We will have a signing ceremony later today with the Zhejiang government to invest in the Zhejiang refinery-petrochemical project," Aramco"s Senior Vice President of Downstream, Abdulaziz al-Judaimi told an industry event.

Zhejiang Petrochemical, 51 percent owned by textile giant Rongsheng Holding Group, plans to start its 400,000-barrels-per-day refinery-petrochemical project in eastern China in late 2018.

Meanwhile, feedstock consumption at China"s independent refineries in eastern Shandong province fell a marginal 0.4% year on year to 121.3 million mt in 2021, data from local information provider JLC showed. However, crude feedstock consumption fell 4.6% to 111.53 million mt over the same period as fewer crude import quotas were allocated to Shandong"s independent refineries in 2021, with four receiving no allocation in the last batch announced in mid-October. To address the feedstock shortage, fuel oil and bitumen blend were imported and cracked as supplement feedstocks in 2021, with 8.5 million mt cracked by Shandong independent refineries in the year, surging from a small volume the year before.

The integrated Zhejiang Petroleum & Chemical refinery continued to raise its crude throughput to around 2.84 million mt in December, up 7.2% from 1.72 million mt in November, which was up 54% from October, according to JLC data. The refinery ramped up throughput after it was allocated more quotas in late October.

The Hengli Petrochemical (Dalian) Refinery in Liaoning province also raised its throughput by 3.6% month on month to 1.7 million mt in December. This comes after the completion of the maintenance at its secondary units, according to refinery sources.

However, Shandong independent refineries have gradually started to cut crude throughput from around Jan. 22 in response to a directive to cap utilization below 70% during the Winter Olympics, as Beijing aims to ensure that emissions remain under control, refinery sources told S&P Global Platts. But some refinery sources believe the overall impact will not be much more than what occurs every year since the Winter Olympics will be held around the Lunar New Year holidays, when independent refineries are forced to cut crude throughput due to logistics and manpower constraints.

In other news, Sinopec"s Hainan Petrochemical refinery in southern China is expected to export about 50,000 mt of refined oil products in January 2022, according to a refinery source. This was down 55% from 110,000 mt planned for export in December 2021.

PetroChina"s West Pacific Petrochemical Corp. refinery will skip gasoil exports in January after skipping them in December and November due to good demand in the domestic market.

PetroChina"s flagship refinery Dalian Petrochemical in northeastern Liaoning province will raise its gasoline exports to 160,000 mt in January, according to sources with knowledge of the matter. This will be about 357% higher than its planned exports in December. Dalian will double jet fuel exports to 80,000 mt in January, from 40,000 mt last month. Dalian plans to process around 1.3 million mt of crudes in January, translating to 75% of its nameplate capacity, stable on the month.

** Sinochem has been in the process of starting up its 12 million mt/year CDU and related refining units at its Quanzhou Petrochemical facility in southern Fujian province, according to a source with knowledge of the matter Jan. 19. The refining and petrochemical units were shut at around Dec. 1, 2021 for maintenance, which lasted for about 40-50 days, according to the maintenance schedule. The refinery will likely process about 450,000 mt to 500,000 mt of crudes for the remainder of February, compared with around 1.2 million mt during normal months.

** Sinopec"s Guangzhou Petrochemical restarted its 8 million mt/year CDU on Dec. 21 following the completion of a scheduled maintenance which started late October, a company source said. With its resumption, the refiner lifted December throughput to 840,000 mt from 440,000 mt in November, the source said. Moreover, the S-zorb that caught fire Nov. 27 during maintenance was fixed and resumed operation, the source added.

** Sinopec"s Fujian Refining and Chemical Co. refinery in southeastern Fujian province has been in the process of restarting from a scheduled maintenance this week, according to a source with knowledge of the matter Jan. 19. The refinery was expected to return to normal operations around Jan. 20, about nine days behind schedule, mainly due to the slow progress in procuring some parts, the source added. The 4 million mt/year crude distillation unit, as well as some secondary units, including the aromatics units, were to be restarted along the way. Following the restart of the CDU, the crude throughput at the refinery will likely increase to around 750,000 mt in January, or 63% of its nameplate capacity. This compares with a run rate of 56%, or 660,000 mt, in December 2021.

** Japan"s ENEOS said Dec. 28 it plans to shut the sole crude distillation unit at its Marifu refinery in the west in late January for scheduled maintenance until early March 2022.

** Idemitsu Kosan restarted the sole 160,000 b/d crude distillation unit at its Aichi refinery in central Japan on Dec. 5 after completing planned maintenance, a spokesperson said Dec. 20.

** PetroChina"s Yunnan Petrochemical refinery in southwestern Yunnan province, has shut its 4 million mt/year residual hydrogenation unit and some of its relative downstream facilities due to a blast. The blast hit the residual hydrogenation unit Dec. 13 morning, according to a press release issued by the Anning city local government in Yuannan. A refining engineer said the closure of residual hydrogenation unit would cut about 30% of the refinery"s daily production.

** Sinopec"s Hainan Petrochemical refinery in southern China plans to completely shut for scheduled maintenance over March-April 2022, a source with the refinery said. This is a routine maintenance that is normally carried out by Chinese refineries every three to four years, according to the source. Sinopec Hainan refinery last carried out complete maintenance over November 2017-January 2018.

** Japan"s ENEOS said it will decommission the 120,000 b/d No. 1 CDU at its 270,000 b/d Negishi refinery in Tokyo Bay in October 2022. It will also decommission secondary units attached to the No. 1 CDU, including a vacuum distillation unit and fluid catalytic cracker. ENEOS will also decommission a 270,000 mt/year lubricant output unit at the Negishi refinery.

** Sinopec is looking to launch its 2 million mt/year crude distillation unit expansion at Luoyang Petrochemical in central China in January, with a new crude pipeline able to supply sufficient feedstock, a refinery source said late December. "We have reconfigured an existing crude pre-treater into a 2 million mt/year CDU to increase the primary capacity to 10 million mt/year. The start-up will be in the next month with the crude pipeline having been put into use in November," the refinery source said. The expansion was initially set to be put into use in H2 2020, but was delayed to H1 2021 due to construction of the 10 million mt/year Rizhao-Puyang-Luoyang crude pipeline and weak demand in oil product market, Platts reported. The source said the expansion needs more crude supplies discharged from Rizhao port in Shandong province and transmitted through the Rizhao-Puyang-Luoyang crude pipeline.

** Chinese Sinopec"s refinery Zhenhai Refining and Chemical currently has a 27 million mt/year refining capacity and a 2.2 million mt/year ethylene plant, after its phase 1 expansion project of 4 million mt/year crude distillation unit and a 1.2 million mt/year ethylene unit was delivered end-June.

** PetroChina"s Guangxi Petrochemical in southern Guangxi province plans to start construction at its upgrading projects at the end of 2021, with the works set to take 36 months. The projects include upgrading the existing refining units as well as setting up new petrochemical facilities, which will turn the refinery into a refining and petrochemical complex. The project will focus on upgrading two existing units: the 2.2 million mt/year wax oil hydrocracker and the 2.4 million mt/year gasoil hydrogenation refining unit. For the petrochemicals part, around 11 main units will be constructed, which include a 1.2 million mt/year ethylene cracker.

** Sinopec"s Changling Petrochemical in central Hunan province plans to start construction for its newly approved 1 million mt/year reformer in 2021 and to bring its port upgrading project online by end-December.

** China"s privately held refining complex, Shenghong Petrochemical, is likely to start feeding crudes into its newly built 16 million mt/year crude distillation unit, according to a company source in early January. The refinery initially planned to start up at the end of August, but this was postponed to the end of December due to slower-than-expected construction work, and then again to around the Lunar New Year. The construction of the complex started in December 2018. Located in the coastal city of Lianyungang in Jiangsu province, the company"s 16 million mt/year CDU is the country"s single biggest by capacity.

** Chinese privately owned refining and petrochemical complex Zhejiang Petroleum & Chemical has fully started up commercial operation at it 400,000 b/d Phase 2 refining and petrochemical project, parent company Rongsheng Petrochemical said in a document Jan. 12. There are two crude distillation units in the Phase 2 project, each with a capacity of 200,000 b/d. ZPC started trial run at one of the CDUs in November 2020. Due to tight feedstock supplies, the refiner could not feed the other CDU until the end of November 2021, when it gained crude import quota for the project. The nameplate capacity of the company doubled to 800,000 b/d in Phase 2. It will run four CDUs at about 82% of nameplate capacity in January. Rongsheng said Phase 2 adds 6.6 million mt/year aromatics and 1.4 million mt/year ethylene production capacity.

** Saudi Aramco continues to pursue and develop the integrated refining and petrochemical complex in China with Norinco Group and Panjin Sinchen. The joint venture plans to build an integrated refining and petrochemical complex in northeast China"s Liaoning province Panjin city with a 300,000 b/d refinery, 1.5 million mt/year ethylene cracker and a 1.3 million mt/year PX unit.

** Honeywell said China"s Shandong Yulong Petrochemical will use "advanced platforming and aromatics technologies" from Honeywell UOP at its integrated petrochemical complex. The complex will include a UOP naphtha Unionfining unit, CCR Platforming technology to convert naphtha into high-octane gasoline and aromatics, Isomar isomerization technology. When completed Yulong plans to produce 3 million mt/yr of mixed aromatics. Shandong"s independent greenfield refining complex, Yulong Petrochemical announced the start of construction work at Yulong Island in Yantai city at the end of October 2020.

Construction work is expected to be completed in 24 months. The complex has been set up with the aim of consolidating the outdated capacities in Shandong province. A total of 10 independent refineries, with a total capacity of 27.5 million mt/year, will be mothballed over the next three years. Jinshi Petrochemical, Yuhuang Petrochemical and Zhonghai Fine Chemical, Yuhuang Petrochemical and Zhonghai Fine Chemical will be dismantled, while Jinshi Asphalt has already finished dismantling.

** PetroChina officially started construction works at its greenfield 20 million mt/year Guangdong petrochemical refinery in the southern Guangdong province on Dec. 5, 2018.

** China"s coal chemical producer Xuyang Group has announced plans to build a greenfield 15 million mt/year refining and petrochemical complex in Tangshang in central Hebei province.

According to the European Chemical Industry Council, a trade association, global chemical output declined by 0.1% in 2020. The industry basically ended up where it started.

Oil prices tell some of the story. Early last year, as the economy froze up and people stayed home, crude prices crashed, dragging chemical prices down with them. Petrochemical volumes, however, were relatively strong because some products, such as polyethylene, saw an uptick in demand.

Indeed, COVID-19 affected the chemical industry unevenly. For instance, chemical companies that sell materials to aerospace and automotive customers were hit hard. But suppliers of materials for food packaging and personal protective equipment saw strong sales.

Now that it is breaking out chemical sales again, Shell rejoins the Global Top 50 this year after a 5-year hiatus. Rongsheng Petrochemical, which makes polyester chemicals, debuts this year. The former DowDuPont agricultural chemical business, Corteva Agriscience, made the cut as well.

The $9.4 billion petrochemical complex that Formosa Plastics is planning in St. James Parish, Louisiana, is in hot water. It faces fierce opposition both locally from community organizations worried about pollution and nationally from environmental groups that wish to stop the mounting production of plastics. Sharon Lavigne, head of the local group Rise St. James, recently received the prestigious Goldman Environmental Prize for her efforts, a sign that the Formosa project has high-profile opposition. The project also faces practical hurdles. Notably, the US Army Corps of Engineers suspended a permit for the facility in November. Formosa Plastics had better luck in Point Comfort, Texas, where it started up an ethylene cracker and low-density polyethylene unit last year.

LG Chem and another South Korean firm, SK Innovation, settled a battery technology dispute in April that threatened to snarl US production of electric vehicles. LG had accused SK of trade secret theft and will now get a $1.8 billion cash payment and future royalties. SK nearly abandoned plans to produce batteries in Georgia over the conflict. The settlement was important enough that US president Joe Biden weighed in, noting in a statement that the US needs “a strong, diversified and resilient U.S.-based electric vehicle battery supply chain.” In other news related to batteries, LG announced in April that it had more than tripled its capacity in Yeosu, South Korea, to make carbon nanotubes, used as a conductive additive.

Linde is gearing up to bring its industrial gas and engineering expertise to bear on sustainable chemistry. At a coal-fired power plant in Springfield, Illinois, it is installing a carbon-capture pilot plant. In Burghausen, Germany, Linde aims to make methanol from green hydrogen and carbon dioxide in partnership with Wacker Chemie. And a joint venture between Linde and ITM Power is planning a hydrogen-producing electrolyzer, dubbed the world’s largest to be based on proton-exchange membranes, by 2022. Linde is also working with BASF and Sabic to develop cracking furnaces that run on electricity furnished by alternative energy rather than fossil fuels. With Shell, the company is working on a catalytic oxidative dehydro­genation process to make ethylene.

Most large chemical companies nowadays are plunging into plastics recycling to counter public backlash, and Lyondell­Basell Industries is at the front of the pack. CEO Bob Patel is one of the founders of the Alliance to End Plastic Waste, formed by industry to address the recycling problem. And Lyondell has its own initiatives. It and the waste management firm Suez bought the plastics recycler Tivaco and are combining it with Quality Circular Polymers, a recycling venture Lyondell and Suez started in 2018. Quality Circular has some high-profile clients. For example, Samsonite is using its resin for a line of sustainable suitcases. Meanwhile, Lyondell continues to grow its core petrochemical business, often on the cheap. In December, the firm bought, for the bargain price of $2 billion, a 50% interest in a new ethylene cracker and two polyethylene plants that the struggling Sasol had built. Similarly, it bought into an ethylene cracker joint venture already under construction in China.

While oil companies such as Shell and BP were redefining themselves as alternative energy players in recent years, ExxonMobil stuck with petroleum. The firm was taking what it considered a realistic position. Oil and gas are cheap and convenient, it argued, and would be hard to dislodge from the energy market for the next few decades. But COVID-19 hit the oil and gas business hard. ExxonMobil racked up a gaping corporate loss of $28 billion in 2020, even as its chemical unit earned an operating profit of $2.7 billion. The company is facing shareholder pressure to change, and it is starting to respond. For example, in April, it outlined a $100 billion plan to store 100 million metric tons per year of carbon dioxide in the Gulf of Mexico. The new environmental consciousness trickles down into chemicals. At a complex in France, ExxonMobil Chemical plans to host a pyrolysis plant that breaks down waste plastics into chemical raw materials. And at its Baytown, Texas, chemical facility, it is testing a plastics recycling process. Separately, in a rare move, ExxonMobil is divesting a business, selling its Santoprene thermoplastic vulcanizate operation to Celanese for $1.15 billion.

As DuPont separated from DowDuPont in 2019, observers wondered how long the company would last. DuPont executive chairman Ed Breen once presided over the breakup of the industrial conglomerate Tyco, causing some to reckon he had similar plans for DuPont. It now appears that DuPont is here to stay, with Breen satisfied that the company has done enough portfolio restructuring to stand on its own. The largest of those moves came in February, when the company completed the sale of its Nutrition & Biosciences division to International Flavors & Fragrances. The sale yielded $7.3 billion in proceeds. DuPont also agreed to sell its biomaterials business, a producer of 1,3-propanediol, and it divested its stake in the polysilicon maker Hemlock Semiconductor. Breen elected to keep DuPont’s electronic materials business, which he had been considering selling. In fact, DuPont is adding to this business, agreeing in March to purchase Laird Performance Materials, which makes materials for heat management in electronics, for $2.3 billion.

Hengli Petrochemical’s growth has been amazing. Last year, the company came out of nowhere to debut at 26 in the Global Top 50. In 2020, and despite the COVID-19 pandemic, the Chinese petrochemical maker’s chemical sales grew by a whopping 46%. Construction at an almost unbelievable pace is responsible for this growth. In 2020 alone, Hengli started two large production lines for purified terephthalic acid (PTA), a polyester raw material, in Dalian, China. The lines, which use technology from Invista, bring Hengli’s PTA capacity to 12 million metric tons (t) per year. In November, Hengli signed a licensing agreement, also with Invista, for two more PTA lines at its site in Huizhou, China. In addition, the company plans to build a plant in Dalian to make a biodegradable plastic from PTA, adipic acid, and 1,4-butanediol. Hengli says the plant will have 450,000 t of annual capacity, a large figure for a biodegradable plastic.

The Japanese chemical maker has emphasized green projects of late. In June, it signed an agreement to use Ginkgo Bioworks’ synthetic biology capabilities to improve the production of an undisclosed biobased chemical and to make other Sumitomo Chemical products. Sumitomo’s similar relationship with Zymergen resulted in a biobased film for displays and touch screens. Sumitomo is also building a pilot plant in Chiba, Japan, that will make ethylene from ethanol supplied by Sekisui Chemical. In addition, Sumitomo is planning a facility in Singapore that will make methanol from carbon dioxide and hydrogen. To investigate even more technologies with low environmental impact, Sumitomo is building a research facility in Chiba.

Recently, Evonik Industries has been favoring small acquisitions that provide access to new technology. In June, it inked an agreement to buy Infinitec Activos for an undisclosed sum. Infinitec specializes in delivery methods—such as peptide-studded gold and sapphire nanoparticles, lipid vesicles, and nanoscale alginate hydrocolloid capsules—for cosmetic ingredients. In November, Evonik bought Houston-based Porocel Group, a provider of refinery catalysts and catalyst regeneration services, for $210 million. Evonik has built a burgeoning business in lipids for the delivery of messenger RNA (mRNA) used as a COVID-19 vaccine. And it recently launched a collaboration with Stanford University to develop a degradable polymer–based system for delivering mRNA therapeutics. In more traditional industrial chemistry, the company is building a $470 million plant in Marl, Germany, for making nylon 12, a high-end polymer critical for automotive applications such as brake lines. Evonik is considering the sale of its superabsorbent polymer unit, which employs 800 people.

Shell Chemicals returns to the Global Top 50 after a 5-year hiatus because it is disclosing its chemical sales figures again. The return comes as the larger Shell organization plans massive changes that will profoundly impact both its chemical and oil businesses. Shell plans to achieve net-zero carbon emissions by 2050, meaning it will have to reduce, or offset, all its greenhouse gas emissions. It will redefine itself as something other than an oil company. Its 13 refineries will become 6 energy and chemical “parks” that will increasingly supply renewable energy and chemicals produced from alternative feedstocks. Shell is part of a consortium that will build a water electrolysis plant in Germany to make green hydrogen. The firm is replacing 16 ethylene steam cracker furnaces in Moerdijk, the Netherlands, with 8 new ones to reduce carbon emissions by 10%. Shell is collaborating with Dow to replace conventional gas-fired ethylene furnaces with electrically heated ones that run on renewable power. And it is starting to use synthetic crude oil derived from waste plastics at its ethylene cracker in Norco, Louisiana.

Many people would think of Dow and BASF as the technology giants in industrial chemistry. But Braskem, a Brazilian petrochemical maker, is a technological heavy hitter too. It is partnering with the University of Illinois Chicago on a route to ethylene based on the electrochemical reduction of carbon dioxide from flue gas. At its chlor-alkali complex in Maceió, Brazil, Braskem will host a pilot plant to make ethylene dichloride using a novel process developed by the start-up Chemetry. In this energy-saving process, called eShuttle, chloride ions react with cuprous chloride (CuCl) to form cupric chloride (CuCl2), which reacts with ethylene to form the polyvinyl chloride raw material. In Pittsburgh, Braskem recently completed a $10 million expansion of its technology and innovation center to allow work on recycling, 3D printing, and catalysis.

One again, Syngenta is involved in merger and acquisition activity. ChemChina, which already owned the Israeli generic crop protection chemical maker Adama, bought Syngenta in 2017 for $43 billion. Now ChemChina is merging with another Chinese firm, Sinochem, to form a conglomerate with about $160 billion in annual revenue. Chinese authorities approved the deal earlier this year. But the impact on Syngenta will likely be minimal. ChemChina and Sinochem had already combined their agricultural operations into an organization called Syngenta Group.

In June 2020, Bayer attempted to ensure its financial stability by settling 125,000 lawsuits claiming its Roundup glyphosate herbicide, which it acquired with its 2018 purchase of Monsanto, contributed to defendants’ non-Hodgkin lymphoma. Bayer is now trying to limit future liability related to the product. It is considering withdrawing glyphosate from the residential lawn and garden market, which has spurred the “overwhelming majority of claimants,” the company says. Bayer may form a scientific panel to review Roundup-related safety information, and it is launching a new website where it will host studies related to the product.

The Chinese polyurethane raw materials supplier bucked the general trend of sales decline in 2020 with a nearly 8% increase in chemical sales and a 10% rise in profits. After a weak first half of the year, demand bounced back in the second half, the company says. The COVID-19 “pandemic in China was rapidly and effectively controlled,” Wanhua Chemical says in its annual report. “Domestic market demands and the downstream export overseas were resumed rapidly, and growth of prices of chemical products was recovered.” Wanhua sought to build a beachhead in the US with a $1.25 billion project to build a methylene diphenyl diisocyanate plant in Louisiana. But US-China trade friction and a jump in construction costs appear to have prompted the firm to shelve the initiative.

Indorama built itself up into one of the world’s largest chemical companies via aggressive growth in the polyester chain, both by buying businesses and by constructing massive new plants. Now the Thai company is looking to diversify. In 2020, it bought Huntsman’s intermediates and surfactant business, which makes surfactants and ethanolamines. And it is negotiating the purchase of Oxiteno, the specialty chemical arm of the Brazilian conglomerate Grupo Ultra and the second-largest producer of ethoxylates in the world. Indorama is also developing its capabilities in recycling. It is buying CarbonLITE’s polyethylene terephthalate (PET) recycling plant in Dallas and building a US PET depolymerization plant with the Canadian start-up Loop Industries.

The South Korean chemical producer has been stepping up its plastics sustainability efforts. In April, Lotte announced plans for a plant in Ulsan, South Korea, that will break down postconsumer polyethylene terephthalate (PET) waste into bis(2-hydroxyethyl) terephthalate, which it will use to make new PET. The plant, a first for the country, will cost about $90 million. The company also has an agreement with SPC Pack to develop packaging made from PET derived from sugarcane. With Korea Container Pool, Lotte created an expandable polypropylene container for the home delivery of food. The company says the plastic insulates better than polystyrene or paper and is readily recyclable.

Johnson Matthey’s chemical sales edged up by over 12% during its fiscal year, in part owing to strong prices for precious metals such as platinum, which the company uses to make catalytic converters. JM, however, has been trying to evolve. Similar to how big oil companies like Shell are redefining themselves as alternative energy firms, JM is trying to pivot toward batteries and hydrogen. Earlier this year, for instance, the company announced it will build a second plant, in Vaasa, Finland, for a cathode material that contains lithium, cobalt, and nickel and that will be used in lithium-ion batteries. Additionally, JM is undertaking a “strategic review” of its pharmaceutical chemical business, which makes drug ingredients.

The Belgian firm, which focuses on metal-based chemicals, is undergoing changes. Its board appointed Mathias Miedreich to succeed Marc Grynberg as CEO later this year. Miedreich is an executive with the auto parts supplier Faurecia, where he led the Clean Mobility division. Consolidation in Umicore’s nickel and cobalt chemical business will see the company shed about 200 jobs. Much like its rival Johnson Matthey, Umicore has been trying to diversify away from catalytic converters for gasoline vehicles and focus on electric cars. In May, it signed a cross-licensing agreement with BASF covering more than 100 families of patents relating to battery cathode active materials and their precursors. Umicore is also working with the firm Anglo American to develop platinum-group-metal-based catalysts that aid the storage of hydrogen in fuel-cell vehicles. The technology stores hydrogen with a chemical carrier rather than compression.

The Dutch company has been steering away from traditional chemical sectors and toward nutrition and health. In April, DSM sold its resin and functional materials business to Covestro for $1.8 billion. The unit makes 3D-printing materials, antireflective coatings for photovoltaic panels, acrylic resins for paints, and optical fiber coatings. DSM is holding on to its engineering resin business, which makes nylon and other high-end polymers, as well as its Dyneema ultra-high-molecular-weight polyethylene fiber business. These operations make up less than 20% of DSM’s overall sales. After the Covestro transaction, DSM invested $100 million in the personal nutrition start-up Hologram Sciences. In March, it agreed to acquire Amyris’s fermentation-derived flavor and fragrance ingredient line for $150 million.

Hanwha Solutions has been growing prodigiously recently, mostly owing to its burgeoning solar materials business. The South Korean company is also branching out into other sustainable activities. For instance, it will begin supplying process water—heated to about 95 °C—to Lotte Chemical’s Ulsan, South Korea, plant, where the water will provide the energy for an absorptive refrigeration system. The companies say the setup will cut carbon dioxide emissions. In its core materials business, the company says it will double the production of for hydrogenated resins—used in adhesives—by the end of this year. The company entered that business only in 2019 to compete with the big players ExxonMobil and Eastman Chemical.

Recent years have seen Chinese petrochemical producers, often involved in the polyester supply chain, join the Global Top 50. Hengli Petrochemical is one of those firms. And now Rongsheng Petrochemical is another. The company is one of the largest producers of purified terephthalic acid in the world, with 13 million metric tons of capacity at plants in Dalian, Ningbo, and Hainan, China. It also makes polyester resin and fiber. It is an investor in Zhejiang Petrochemical, a large oil refinery and petrochemical complex that is currently starting up.

Sustainability continues to be a focus for the Austrian petrochemical maker. In June, the company signed an agreement to buy oil from Renasci Oostende Recycling, which uses a thermal process to break down postconsumer plastic. Borealis will turn this feedstock into plastics again at its complex in Porvoo, Finland. Borealis also started up a demonstration unit at its polyethylene plant in Antwerp, Belgium, to test a heat-recovery technology developed by the start-up Qpinch. The technology is modeled on the adenosine triphosphate–adenosine diphosphate cycle in biology. Separately, Borealis put its fertilizer business up for sale in February.

Sasol ended a saga in November when it started up a low-density polyethylene plant in Lake Charles, Louisiana. The unit was the last of the plants the South African company built as part of a $12.8 billion petrochemical complex. The project went $4 billion over budget, leading to the ouster of its co-CEOs. To strengthen its balance sheet, Sasol aims to divest $6 billion in assets. To that end, the company formed a joint venture with LyondellBasell Industries to run the ethylene cracker and two polyethylene plants it built in Lake Charles, essentially selling half these operations for $2 billion. Sasol is keeping alcohols, ethylene oxide and ethylene glycol, and ethoxylation plants at the site. Separately, Sasol sold its 50% interest in the Gemini HDPE high-density polyethylene joint venture with Ineos for $400 million.

Nutrien got a new CEO in May when Mayo Schmidt replaced Chuck Magro. Schmidt had been chair of the Canadian fertilizer maker’s board since 2019 and before that was CEO of the Canadian agribusiness Viterra. Magro had led Nutrien and its predecessor Agrium since 2014. Because of tight supplies of potash, Nutrien pledged in June to raise production at its six potash mines. Like a few other big fertilizer makers, Nutrien is developing low-carbon ammonia as a fuel. It is one of 15 partners, led by the nonprofit RTI International, working with the US Department of Energy to develop a demonstration facility for low- and zero-carbon ammonia. Nutrien already produces about 1 million metric tons of low-carbon ammonia annually in the US and Canada.

In a rather bucolic sustainability initiative, Tosoh is using wood from trees pruned at public facilities in Shunan City, Japan, to generate power in its nearby chemical plant. The Japanese company is making the environment a priority in its broader business as well. It plans to spend $90 million to renovate and expand its Tokyo Research Center by 2026. The upgrade will include a building dedicated to advanced organic materials research. And citing heightened environmental regulations, the company says it will end production next year of chlorinated paraffins, which are used as flame retardants and plasticizers.

The agrochemical and seed maker, formed through the merger of Dow and DuPont’s agrochemical units, joins the Global Top 50 for the first time. James C. Collins Jr. became Corteva Agriscience’s first CEO in 2019. Now Collins is retiring under fire after a 37-year career with DuPont and Corteva. An activist investor, Starboard Value, sought his removal along with eight Corteva directors for what it said was underperformance. Corteva agreed to put three of Starboard’s nominees on its board to make peace. Collins’s departure was announced a few months later.

Saudi Aramco today signed three Memoranda of Understanding (MoUs) aimed at expanding its downstream presence in the Zhejiang province, one of the most developed regions in China. The company aims to acquire a 9% stake in Zhejiang Petrochemical’s 800,000 barrels per day integrated refinery and petrochemical complex, located in the city of Zhoushan.

The first agreement was signed with the Zhoushan government to acquire its 9% stake in the project. The second agreement was signed with Rongsheng Petrochemical, Juhua Group, and Tongkun Group, who are the other shareholders of Zhejiang Petrochemical. Saudi Aramco’s involvement in the project will come with a long-term crude supply agreement and the ability to utilize Zhejiang Petrochemical’s large crude oil storage facility to serve its customers in the Asian region.

Phase I of the project will include a newly built 400,000 barrels per day refinery with a 1.4 mmtpa ethylene cracker unit, and a 5.2 mmtpa Aromatics unit. Phase II will see a 400,000 barrels per day refinery expansion, which will include deeper chemical integration than Phase I.

More details have been released about Shandong province’s plan to dismantle several low-profit oil refineries and establish a new refining giant to tackle oversupply and improve dwindling profit margins. However experts suggest that intense competition in China’s petrochemical market may make finding customers difficult.

A refinery’s success relies on stable downstream demand, which for Chinese refineries usually comes from their shareholders. Hengli Petrochemical, which has 20 million tons of annual capacity, is majority owned by Hengli Group Co. Ltd., which specializes in producing chemical fibers for which refined oil is a key ingredient. Zhejiang Rongsheng Holding Group, which invests in petrochemical, logistics and real estate businesses, holds a 51% stake in Zhejiang Petrochemical, a refinery with 40 million tons of capacity.

However, the biggest shareholder of Yulong Petrochemical is metal manufacturer Nanshan Group Co. Ltd., with a 71% stake. It produces aluminum products and operates wool textile and travel businesses, none of which generated petrochemical demand. Wanhua Chemical Group, which has a 20% stake, does however have some petrochemical interests.

Abu Dhabi National Oil Company signed an agreement with Rongsheng Petrochemical of China to explore domestic and international opportunities as it seeks to sell more products to customers in East Asia.

"The agreement covers domestic and international growth opportunities across a range of sectors, which have the potential to open new markets for our growing portfolio of products and attract investment to support our downstream and gas expansion plans," said Dr Sultan Al Jaber, Adnoc Group chief executive and UAE Minister of State.

"The strategic co-operation with Adnoc will ensure that our ZPC project, which will have a refining capacity of up to 1m barrels per day of crude, has adequate supplies of feedstock," Li Shuirong, chairman of the Rongsheng Group, said.

National oil companies such as Adnoc have started negotiating and signing long-term contracts for products with buyers in East Asia in a push to secure market share and pivot business strategies to focus more on high-value downstream products.

The construction works started recently. The volumes from the additional capacity are expected to be available from the end of 2021 and are dedicated to mainly serve European customers as well as the rapidly growing Asian market.

"We want to meet our customers" growing demand for high-quality, sustainable and high-performance technologies in the best possible way now and in future. To achieve that, we continuously invest in expanding our capacities and production technologies. To this end, we acquired an innovative process approach for producing MSA from Grillo-Werke AG in mid 2019 to strengthen our own R&D activities and to accelerate the development of a new manufacturing process for methane sulfonic acid. In doing so, we support as reliable partner the growth of our customers across the world," said Ralph Schweens, President Care Chemicals, BASF.

As MRC wrote previously, BASF, the world"s petrochemical major, restarted its No. 1 steam cracker on September 30, 2019, following a maintenance turnaorund. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

According toMRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.

BEIJING (Reuters) — A group of independent Chinese oil refiners is clubbing together to survive an onslaught by state-owned giants and the rise of private chemical giants, but industry analysts said the new alliance may find it hard to stick.

The new alliance, to be called the Shandong Refining & Chemical Group, is to be headquartered in the provincial capital Jinan, and as envisioned will be an upgrade on a crude-buying federation set up in early 2016 by some of the same members.

The new group of "teapot" refiners aims to pool funds and resources to produce fuels and chemicals more efficiently as they battle stiff competition in an increasingly saturated market and under tightened environmental and tax scrutiny.

"We see the need to advance to the next stage as we face competition from both the national team and the provincial team. We can"t afford operating like a plate of scattered sand," said Zhang Liucheng, a vice president of Shandong Dongming Petrochemical Group, one of the initiators of the stronger alliance.

But while Shandong Dongming and fellow founding member Qingyuan Group are trying to build a more formal structure, including registering the new company as early as next week with a capitalisation of $7.7 B, there are few details such as a list of members and when they will start to commit funding.

"The new group shall have bigger political bargaining power ... but it will be hugely difficult to align all the various interests," said Harry Liu, of consultancy IHS Markit.

That was reflected in the comments of an executive of a teapot refiner that was a member of the crude buyers" club: "Each plant has its unique product lines and marketing strategies, and every new investment is a result of thorough market studies. How would you expect the new group to coordinate?"

The planned group would have a combined crude oil import quota of over 50 MMtpy, or 1 MMbpd, an amount on par with smaller state companies like Sinochem and China National Offshore Oil Company (CNOOC).

The need for the independent refiners to club together is heightened by the emergence of new rivals, such as provincial government-backed private chemical giants like Rongsheng Holding Group and Hengli Group that are building or planning refining complexes on China"s eastern coast.

The changing roles played by China’s independent refineries are reflected in their relations with Middle East suppliers. In the battle to ensure their profitability and very survival, smaller Chinese teapots have adopted various measures, including sopping up steeply discounted oil from Iran. Meanwhile, Middle East suppliers, notably Saudi Aramco, are seeking to lock in Chinese crude demand while pursuing new opportunities for further investments in integrated downstream projects led by both private and state-owned companies.

Four years later, the NDRC adopted a different approach, awarding licenses and quotas to teapot refiners to import crude oil and granting approval to export refined products in exchange for reducing excess capacity, either upgrading or removing outdated facilities, and building oil storage facilities.[10] But this partial liberalization of the refining sector did not go exactly according to plan. Swelling with new sources of feedstock that catapulted China into the position of the world’s largest oil importer, teapots increased their production of refined fuels and, benefiting from greater processing flexibility and low labor costs undercut larger state rivals and doubled their market share.[11]

2021 marked the start of the central government’s latest effort to consolidate and tighten supervision over the refining sector and to cap China’s overall refining capacity.[14] Besides imposing a hefty tax on imports of blending fuels, Beijing has instituted stricter tax and environmental enforcement[15] measures including: performing refinery audits and inspections;[16] conducting investigations of alleged irregular activities such as tax evasion and illegal resale of crude oil imports;[17] and imposing tighter quotas for oil product exports as China’s decarbonization efforts advance.[18]

The politics surrounding this new class of greenfield mega-refineries is important, as is their geographical distribution. Beijing’s reform strategy is focused on reducing the country’s petrochemical imports and growing its high value-added chemical business while capping crude processing capacity. The push by Beijing in this direction has been conducive to the development of privately-led mega refining and petrochemical projects, which local officials have welcomed and staunchly supported.[20]

Yet, of the three most recent major additions to China’s greenfield refinery landscape, none are in Shandong province, home to a little over half the country’s independent refining capacity. Hengli’s Changxing integrated petrochemical complex is situated in Liaoning, Zhejiang’s (ZPC) Zhoushan facility in Zhejiang, and Shenghong’s Lianyungang plant in Jiangsu.[21]

As China’s independent oil refining hub, Shandong is the bellwether for the rationalization of the country’s refinery sector. Over the years, Shandong’s teapots benefited from favorable policies such as access to cheap land and support from a local government that grew reliant on the industry for jobs and contributions to economic growth.[22] For this reason, Shandong officials had resisted strictly implementing Beijing’s directives to cull teapot refiners and turned a blind eye to practices that ensured their survival.

But with the start-up of advanced liquids-to-chemicals complexes in neighboring provinces, Shandong’s competitiveness has diminished.[23] And with pressure mounting to find new drivers for the provincial economy, Shandong officials have put in play a plan aimed at shuttering smaller capacity plants and thus clearing the way for a large-scale private sector-led refining and petrochemical complex on Yulong Island, whose construction is well underway.[24] They have also been developing compensation and worker relocation packages to cushion the impact of planned plant closures, while obtaining letters of guarantee from independent refiners pledging that they will neither resell their crude import quotas nor try to purchase such allocations.[25]

To be sure, the number of Shandong’s independent refiners is shrinking and their composition within the province and across the country is changing — with some smaller-scale units facing closure and others (e.g., Shandong Haike Group, Shandong Shouguang Luqing Petrochemical Corp, and Shandong Chambroad Group) pursuing efforts to diversify their sources of revenue by moving up the value chain. But make no mistake: China’s teapots still account for a third of China’s total refining capacity and a fifth of the country’s crude oil imports. They continue to employ creative defensive measures in the face of government and market pressures, have partnered with state-owned companies, and are deeply integrated with crucial industries downstream.[26] They are consummate survivors in a key sector that continues to evolve — and they remain too important to be driven out of the domestic market or allowed to fail.

In 2016, during the period of frenzied post-licensing crude oil importing by Chinese independents, Saudi Arabia began targeting teapots on the spot market, as did Kuwait. Iran also joined the fray, with the National Iranian Oil Company (NIOC) operating through an independent trader Trafigura to sell cargoes to Chinese independents.[27] Since then, the coming online of major new greenfield refineries such as Rongsheng ZPC and Hengli Changxing, and Shenghong, which are designed to operate using medium-sour crude, have led Middle East producers to pursue long-term supply contracts with private Chinese refiners. In 2021, the combined share of crude shipments from Saudi Arabia, UAE, Oman, and Kuwait to China’s independent refiners accounted for 32.5%, an increase of more than 8% over the previous year.[28] This is a trend that Beijing seems intent on supporting, as some bigger, more sophisticated private refiners whose business strategy aligns with President Xi’s vision have started to receive tax benefits or permissions to import larger volumes of crude directly from major producers such as Saudi Arabia.[29]

The shift in Saudi Aramco’s market strategy to focus on customer diversification has paid off in the form of valuable supply relationships with Chinese independents. And Aramco’s efforts to expand its presence in the Chinese refining market and lock in demand have dovetailed neatly with the development of China’s new greenfield refineries.[30] Over the past several years, Aramco has collaborated with both state-owned and independent refiners to develop integrated liquids-to-chemicals complexes in China. In 2018, following on the heels of an oil supply agreement, Aramco purchased a 9% stake in ZPC’s Zhoushan integrated refinery. In March of this year, Saudi Aramco and its joint venture partners, NORINCO Group and Panjin Sincen, made a final investment decision (FID) to develop a major liquids-to-chemicals facility in northeast China.[31] Also in March, Aramco and state-owned Sinopec agreed to conduct a feasibility study aimed at assessing capacity expansion of the Fujian Refining and Petrochemical Co. Ltd.’s integrated refining and chemical production complex.[32]

Commenting on the rationale for these undertakings, Mohammed Al Qahtani, Aramco’s Senior Vice-President of Downstream, stated: “China is a cornerstone of our downstream expansion strategy in Asia and an increasingly significant driver of global chemical demand.”[33] But what Al Qahtani did notsay is that the ties forged between Aramco and Chinese leading teapots (e.g., Shandong Chambroad Petrochemicals) and new liquids-to-chemicals complexes have been instrumental in Saudi Arabia regaining its position as China’s top crude oil supplier in the battle for market share with Russia.[34] Just a few short years ago, independents’ crude purchases had helped Russia gain market share at the expense of Saudi Arabia, accelerating the two exporters’ diverging fortunes in China. In fact, between 2010 and 2015, independent refiners’ imports of Eastern Siberia Pacific Ocean (ESPO) blend accounted for 92% of the growth in Russian crude deliveries to China.[35] But since then, China’s new generation of independents have played a significant role in Saudi Arabia clawing back market share and, with Beijing’s assent, have fortified their supply relationship with the Kingdom.

Smaller Chinese independents have been less fortunate, hit hard not just by tougher domestic regulation but by soaring crude oil prices.[36] US-led sanctions flowing from the war in Ukraine have compounded the pressure on teapots, which prior to the conflict had sourced about a fifth of their crude oil from Russia. Soaring oil tanker freight rates and the refusal of Chinese banks to issue letters of credit for Russian crude have choked off much of this supply, though some private refiners have compensated by using cash transfers to pay for Russian ESPO blend crude.[37]

Meanwhile, though, enticed by discounted prices Chinese independents in Shandong province have continued to scoop up sanctioned Iranian oil, especially as their domestic refining margins have thinned due to tight regulatory scrutiny. In fact, throughout the period in which Iran has been under nuclear-related sanctions, Chinese teapots have been a key outlet for Iranian oil, which they reportedly unload from reflagged vessels representing themselves as selling oil from Oman and Malaysia.[38] China Concord Petroleum Company (CCPC), a Chinese logistics firm, remained a pivotal player in the supply of sanctioned oil from Iran, even after it was blacklisted by Washington in 2019.[39] Although Chinese state refiners shun Iranian oil, at least publicly, because of US sanctions, private refiners have never stopped buying Iranian crude.[40] And in recent months, teapots have been at the forefront of the Chinese surge in crude oil imports from Iran.[41]

As Chinese private refiners’ number, size, and level of sophistication has changed, so too have their roles not just in the domestic petroleum market but in their relations with Middle East suppliers. Beijing’s import licensing and quota policies have enabled some teapot refiners to maintain profitability and others to thrive by sourcing crude oil from the Middle East. For their part, Gulf producers have found Chinese teapots to be valuable customers in the spot market in the battle for market share and, especially in the case of Aramco, in the effort to capture the growth of the Chinese domestic petrochemicals market as it expands.

(Bloomberg)As storm clouds gather over the world’s top oil-consuming region, OPEC and its allies would be advised to pay close attention as they prepare to make a key decision on output curbs early next month.While the Saudi Arabian-led efforts to restrain supply amid surging North American shale production have hogged headlines, a sense of malaise is quietly creeping across Asia. With the U.S.-China trade war now almost a year old and showing no signs of ending, its impact is manifesting itself in everything from profit warnings by Japanese car makers to sagging Chinese diesel consumption.From Ulsan in South Korea to Mailiao in Taiwan, the region’s big oil processors are cutting run rates as weak demand for fuel products erode their margins. To make matters worse, a wave of Asian mega-refineries is coming on stream this year, flooding the market with cheap fuel and setting off a price war.

It’s a bleak reality that could confound the Organization of Petroleum Exporting Countries and its partners as they try to figure out how best to balance the market. Geopolitical tension and supply-side disruptions are supporting oil prices for now, but a failure by the group to properly gauge demand for their crude in the biggest markets risks undermining their efforts.

“It feels like demand is very, very weak,” said Michal Meidan, head China analyst at Energy Aspects Ltd. “On the supply side, the consensus really was OPEC rolling over the supply cuts,” so it’s quite surprising that prices haven’t risen further, especially with all the geopolitical stress, she said.

Chinese fuel demand appears weak since the start of the year, the International Energy Agency said in its June report, and Japanese and South Korean oil consumption dropped more-than-expected in March and April, respectively. Vehicle sales in Asia’s largest economy fell 13% in January through May from a year earlier, official data show.

As refiners in South Korea and Taiwan struggle to break even, new plants that were commissioned in better times are starting up. Hengli Petrochemical Co.’s. 400,000 barrel a day refinery in Dalian is already at full capacity. Rongsheng Petrochemical Co.’s similar-sized plant in Zhoushan, has begun partial operations, while Hengyi Petrochemical Co. is set to start a smaller refinery in Brunei in the third quarter.

“The start-up of Rongsheng’s refinery in Zhoushan, near major oil-consuming cities such as Shanghai and Hangzhou, will intensify a price war among coastal refineries hoping to market fuel into urban areas,” said Li Li, an analyst at commodities researcher ICIS-China. This will further squeeze the independent refineries and potentially lead to industry consolidation, she said.

The IEA cut its 2019 forecast for worldwide oil demand growth for a second straight month in June, to 1.2 million barrels a day, citing the slowdown in global trade. Wall Street is more pessimistic, with Morgan Stanley seeing an expansion of 1 million barrels a day and JPMorgan Chase & Co. projecting 800,000 barrels. While the IEA predicts growth will improve to 1.4 million barrels a day next year, it also sees supply jumping by 2.3 million barrels.

Not everyone is bearish though. Goldman Sachs Group Inc. said in a June 17 note that infrastructure spending and interest-rate cuts in response to the trade war were setting the stage for a rally in investment and manufacturing next quarter that would boost commodity prices. Citigroup Inc. is more bullish, and forecasts Brent crude may rise to $75 a barrel — from around $65 now — over the northern hemisphere summer.

The ratcheting up of tensions between the U.S. and Iran has added another dimension to the situation, complicating OPEC+’s rebalancing task. The risk is the group focuses too much on the Persian Gulf and not enough on the negative demand signals coming from Asia and elsewhere.

“The political risks are obviously mainly to the upside,” but the fundamental economics for oil are quite bearish, Erik Norland, a senior economist at CME Group, which owns derivatives and futures exchanges, said in a Bloomberg TV interview Monday. “You still have soaring supplies in the U.S., and you have demand that’s not really keeping pace.”