rongsheng petrochemical linkedin pricelist

The newly-built highly-integrated mega Chinese refinery-cum-petrochemical complexes are immensely more efficient than the 50-60 year-old clunkers that they are replacing across the globe spanning from the U.S. west coast to the Philippines, bringing a new paradigm to the oil market, they said.

Even though Chinese refineries are built primarily to cater to the domestic market, the export market is a safety valve whenever there is an imbalance in fuel or petrochemical demand, which easily amounts to 1 million b/d in an average month. Such volumes weigh heavily on inefficient, standalone sites that are increasingly exposed and consequently shuttered.

The new sites coming onstream in China typically have processing capacities of 300,000 b/d or more and are integrated with petrochemical units that allow them to swing from a so-called petrochemical to an oil-product mode as the economics dictate.

One of the export quota recipient, Zhejiang Petrochemical Corp. (ZPC) was given 1 million mt. The company, which is majority owned by Rongsheng Petrochemical Co., is in the final stages of getting the second phase of its 800,000 b/d refinery up and running.

In the petrochemical sector, demand for polyester, derived from purified terephthalic acid (PTA), paraxylene and mixed xylene (MX), could improve as a life returns to normal, a petrochemical producer said.

A bumper 10 million-barrel spot crude oil purchase by Rongsheng Petrochemical suggests it is keen to get the second phase of its massive 40 million mt/yr, or 800,000 b/d, refinery and chemical project at subsidiary Zhejiang Petrochemical Co. Ltd (ZPC) running in the coming months, trading sources said.

Rongsheng announced in August plans to begin trial runs at the second 400,000 b/d tranche of the project in the fourth quarter of 2020 and looks set to achieve this aim despite COVID-19-related construction delays due to social distancing restrictions earlier in the year.

Market participants said Rongsheng was absent from the spot market for a couple of months and returned this week to buy the medium-sour Middle East cargoes, which led some to believe it was restocking but added that the scale of the purchase does point to some use in the new facility.

The petrochemical units include a 1.4 million mt/year ethylene and a 4 million mt/year paraxylene plants as well as related downstream polymer and polyester units. It also has a 600,000 mt/year propane dehydrogenation (PDH) unit.

Phase II is centered around a similar 400,000 b/d CDU as the first phase, placing ZPC in conjunction with Hengli Petrochemical as operators of the largest independent refining-cum-petrochemical complexes in China. Once completed there will be two such 800,000 b/d sites in the country.

On Wednesday, Hanwha Total Petrochemical (HTC) bought HFRN for H1 Nov. to Daesan at a discount of $5/mt or larger to Japan prices, said sources. An HTC company source declined to comment.

The U.K.-based Grangemouth petrochemicals plant operated by Ineos will shut down at the beginning of October, according to sources with links to the plant Tuesday.

Naphtha usage as petrochemical feedstock was crimped by poor aromatics margins as downstream polyester and other derivative demand started to slow down in the face of the prolonged economic downturn wreaked by COVID-19. However, consumption in China for use in olefin production remains robust, a source said.

YNCC settled at a premium of around $7/mt to Japan naphtha price, two sources said. LG Chem concluded at plus $6-$7/mt while Korea Petrochemical Industry Co. settled at around plus $3/mt, according to several sources. Formosa Petrochemical Corp. (FPCC) bought cargoes for Oct. 2020-Sept. 2021 at plus $4-$5/mt.

Asia naphtha demand as a petrochemical feedstock will continue to grow as new crackers begin operations even as below-capacity refinery utilization rates in some countries squeeze supply further, they said.

Buyers currently in 2021 CFR term discussions include Hanwha Total Petrochemical for splitter grade, or heavy full range naphtha (HFRN), and Lotte Chemical Titan for light naphtha, sources said

Asian petrochemical makers plan to use more liquefied petroleum gas (LPG) in August for a second straight month as gas cracking economics improved following a jump in naphtha prices due to strong downstream and gasoline demand.

The petrochemical manufacturers had planned to crack 310,000 mt in July, according to the previous poll published on June 5. They used 306,000 mt in June.

Hanwha Total Petrochemical Corp. (HTC) bought one 22:22 lot for end-July delivery to Daesan via a tender with propane at a single-digit discount to the Far East quotes and butane at a discount of $30s/mt to the Japan naphtha quotes, according to sources.

Mitsubishi Chemical, Maruzen Petrochemical and Mitsui Chemicals are on track to restart their crackers over the next two weeks after completing scheduled maintenance works, as reported earlier.

Mitsubishi Chemical will crank-up its 539,000 mt/year plant in Kashima this week, while Maruzen Petrochemical will resume its 525,000 mt/year unit in Ichihara next week. Mitsui is also on track to complete maintenance at the 500,000 mt/year Osaka facility on July 20.

Asian naphtha markets strengthened with the CFR Japan price on Monday reaching a four-month high of $406.500/mt, according to OPIS data, supported by healthy petrochemical demand, tight supply and increased gasoline consumption following relaxations of lockdowns over the coronavirus disease 2019 (COVID-19).

Methodology: OPIS collects Asian petrochemical companies" plans for the current month and the next month, as well as actual cracking volume in the previous month. OPIS, a unit of IHS Markit, checks if any manufacturers revise their plans for the current month and if any manufacturers crack more or less than initial plans in the previous month. OPIS contacts feedstock procurement officers of each companies for the survey by phone, email or messengers in the last week of previous month or the first week of the current month. OPIS surveys 16-20 companies a month.

Supply of all naphtha grades tightened as refiners worldwide operated at below capacity to counter the loss in fuel demand stemming from coronavirus disease 2019 (COVID-19) mobility restrictions. At the same time, resilient petrochemical demand kept Asia cracker run rates at more than 85%, widening the supply shortfall, they said.

Growing buyer resistance to the naphtha price escalation is seen in the recent withdrawal of H1 and H2 Aug. purchase tenders by Hanwha Total Petrochemical, Yeochun NCC and LG Chem.

Prices of naphtha and gasoline rose on the back of easing coronavirus disease 2019 (COVID-19) lockdown measures that rekindled road transportation fuel demand, with naphtha buoyed by both stable intake as a petrochemical feedstock and its diversion into the gasoline pool as a blendstock, they said.

"The steps to destroy unwanted jet stream is to first blend it into diesel up to the upper limit, blend it into cracker (petrochemical) feedstock, switch to dumbbell-like crude slate...if these are not enough then a refiner may need to lower runs as a last resort," she said.

Ethane prices will be driven higher by increasing outright natural gas prices due to the loss of associated gas production and the need to drill for gas from drier fields. Demand will be flattish in 2020 before recovering through to 2025 on growing US petrochemical consumption and boosted by new export capacity to start up at the end of the year.

As crude oil prices recover, the favourability of ethane over LPG and naphtha as a petrochemical feedstock to produce ethylene will exist for US Gulf Coast crackers even with the increases in ethane prices, said Mehta. Still, there will be some periods, especially during the summer months, when LPG prices become more favourable.

Energy Transfer"s Orbit ethane export facility in the US Gulf Coast, the group"s joint venture with China"s Satellite Petrochemicals, will be in service in the fourth quarter. The export terminal will have the capacity to export 180,000 b/d alongside 800,000 bbl of refrigerated ethane storage, the group said at the conference.

Supply of all naphtha grades tightened because of lower global refinery runs due to fuel demand loss stemming from coronavirus disease 2019 (COVID-19) mobility restrictions. At the same time, resilient petrochemical demand has kept Asia cracker run rates at more than 85% in recent months, widening the supply shortfall, they said.

For H1 August delivery, Hanwha Total Petrochemical (HTC) and GS Caltex bought HFRN at premiums of $11-$13/mt while Korea Petrochemical Industry Co. Ltd. (KPIC) paid $13-14/mt for light naphtha with minimum 70% paraffin, as reported.

LPG"s competitiveness as a cracker feedstock has increased although the gas can only replace up to 20% of naphtha, according to the latest Asian Petrochemical Feedstock Market Outlook weekly report.

The restart of the 300,000 b/d Petronas-Saudi Aramco joint venture Pengerang Refining and Petrochemical (PRefChem) facility after an explosion was pushed back due to manpower issues leading to the sale of several million barrels of crude oil that were in floating storage, trading sources said.

The refinery also provides feedstock to an integrated petrochemical complex with a nameplate capacity of 3.3 million mt/year. The cracker has a capacity to produce 1.26 million mt/year of ethylene, 600,000 mt/year of propylene and 180,000 mt/year of butadiene, according to IHS Markit data.

Propane"s discount to CIF NWE naphtha deepened for July, ending at minus $46/t mid-week, from minus $8/t at the start of June, according to the data in the OPIS Europe LPG & Naphtha Report. Early-June bidding for CIF ARA propane by a petrochemical major in NW Europe had continually pitched buyside levels between $10 and $15/mt deeper when compared to propane/naphtha spreads at the time.

Northwest Europe naphtha values strengthened against the refinery complex in April and May, with support coming from higher arbitrage flows to Asia alongside burgeoning petrochemical feedstock demand, while other refined products in Europe saw demand crumple due to the confinement measures brought about by the coronavirus 2019 disease (COVID-19).

Naphtha did not experience the same demand crushing effect COVID-19 lockdown measures had on transport fuels in April and first-half May as support came from the petrochemical sector amid discounted prices to rival gas liquids feedstocks.

Paraffinic naphtha sank to discounts of minus $18/t to parity with the flat price in April before partially recovering to the minus $7.50/t to plus $2/t band in May, with more buying interest from the petrochemical sector compared to OSN due to its higher paraffin content.

The petrochemical sector in northwest Europe continued to cut its intake of LPG feedstock in May as propane values maintained significant premiums to rival feedstock naphtha, leading to a slash in LPG import flows from the U.S.

CIF ARA propane prices extended its two-month run holding a premium to CIF NWE naphtha, with propane/naphtha trading at +$53/mt at the start of May, down from a high of +$131/mt recorded on April 21, but still atypical going into the summer months when propane usually trades at a discount due to the lack of heating demand. By comparison, the propane/naphtha spread was minus $139/t in May 2019. A petrochemical producer with feed-flexible coastal facilities in the Netherlands and Spain made repeated propane cargo resale attempts last month.

Demand attrition for finished goods in the petrochemical chain due to coronavirus disease 2019 (COVID-19) gathered pace in May, with Dow Chemical among other producers announcing the idling of some downstream chemical units (see OPIS alert April 30, 2020).

Petrochemical operators relied more on local North Sea supply, with 81% of their May LPG intake from North Sea countries Norway and the U.K., while 11% came from the Russian Baltic region and 8% from the U.S. East Coast.

Looking ahead, LPG has come back into favor as a petrochemical feedstock as naphtha prices have rebounded harder on rising Brent crude oil values. The propane/naphtha spread tipped negative for the first time in two months to minus $6/t on May 26, and has since deepened to minus $24/t at last look, spurring a petrochemical producer to resurface seeking propane cargoes.

Asian petrochemical producers plan a modest increase of liquefied petroleum gas (LPG)cracking in July from the lower levels intended this month, while gas usage will grow further in August when demand for heating fuels in the northern hemisphere eases, according to a poll.

The petrochemical manufacturers had planned to crack 350,000 mt in June, according to the previous survey published on May 13. They used 321,000 mt in May, lower than initial plans of 357,000 mt.

A petrochemical producer in Northeast Asia raised cracker runs to full in June from around 90%, given the strong market, an official at the company said.

Methodology: OPIS collects Asian petrochemical companies" plans for the current month and the next month, as well as actual cracking volume in the previous month. OPIS, a unit of IHS Markit, checks if any manufacturers revise their plans for the current month and if any manufacturers crack more or less than initial plans in the previous month. OPIS contacts feedstock procurement officers of each companies for the survey by phone, email or messengers in the last week of previous month or the first week of the current month. OPIS surveys 16-20 companies a month.

Plans by the Chinese provincial Shandong government to build a mega refining-cum-petrochemical complex is unlikely to lead to a glut of oil products due to its high integration and the probable closure of several teapot plants as part of a consolidation exercise, analysts and trading sources said.

The Yulong project will be the most sophisticated yet in the string of mega refineries that have come onstream in the past year including the 400,000 b/d each of Hengli Petrochemical and Zhejiang Petrochemical (ZPC), according to IHS Markit.

The Yulong complex is designed to convert over 60 % of a barrel of crude into petrochemical products and feedstocks through a combination of hydrocracking and intensive catalytic cracking technologies, IHS Markit said.

"If such design is carried through, China will be able to take its crude-oil-to-chemicals (COTC) achievements one big step forward from where the operating Hengli and ZPC currently stand, consolidating the country"s world leading position in the realm of refining and petrochemical integration," it said in the report.

Nayara Energy restarted a 110,000 b/d unit at Vadinar in late April after a over two-week closure, Bharat Petroleum Corp. Ltd resumed operations at its 100,000 b/d crude unit in Kochi this week following a three-week shutdown, while Mangalore Refinery & Petrochemicals Ltd also did the same after works at a 144,000 b/d unit for about a month, the report showed.

Overall oil consumption in China is forecast to contract by more than 1 million b/d in 2020 from a year ago due mainly to the drag in transport fuels while demand for petrochemical feedstocks, including naphtha and liquefied petroleum gas (LPG), are expected to post modest growth, the IHS report showed.

Nghi Son Refinery and Petrochemical (NSRP), for example, will not export any spot diesel cargoes in May and June, according to sources with knowledge of the matter.

While many petrochemical markets have been affected by demand that dropped rapidly amid quarantines around the world related to the coronavirus disease 2019 (COVID-19), toluene has been hit particularly hard.

LPG usage for petrochemical production in June is set to decline 2% on-month to 350,000 mt, according to an OPIS poll completed on May 11. Revised figures show that in May, gas cracking volume is to fall to 357,000 mt from 436,000 mt in April, according to the survey.

Maruzen Petrochemical also idled its 525,000 mt/year cracker in Ichihara on May 11 for scheduled turnaround expected to last two months, according to a company source.

Some petrochemical makers in Asia maintained lowered runs on expectations that downstream demand may weaken again with the COVID-19 hurting the global economy. The Asian Manufacturing PMI, compiled by IHS Markit, fell to 43.9 in April, the lowest since March 2009, from 48.3 in March, indicating a deterioration in regional business conditions.

"We are considering further run cut, even probably to around 80%," said the buyer at a petrochemical manufacturer in Northeast Asia, adding their cracker has been operating at around 90%.

Methodology: IHS Markit OPIS collects Asian petrochemical companies" plans for the current month and the next month, as well as actual cracking volume in the previous month. IHS Markit OPIS checks if any manufacturers revise their plans for the current month and if any manufacturers crack more or less than initial plans in the previous month. IHS Markit OPIS contacts feedstock procurement officers of each companies for the survey by phone, email or messengers in the last week of previous month or the first week of the current month. IHS Markit OPIS surveys 16-20 companies a month.

In northwest Europe, LPG cargo trade over the course of April began to react to the coronavirus disease 2019 (COVID-19) related lockdowns across Europe and resulting fall in demand for products and goods. The effects on LPG were latterly felt the most in the petrochemical feedstocks sector and followed an abrupt fall in demand for distillates, mainly gasoline.

Overall LPG trade was down by an estimated 23% compared to March, with intake as petrochemical feedstock down by 19% at 515 kt. Despite the intake fall, the level was considered fairly robust, as the same period saw more severe demand falls in other products sectors such as gasoline and naphtha.

Since gasoline demand has tumbled, naphtha is not going into the gasoline blending pool, said a Singapore-based market source, adding that naphtha barrels were being pushed to Asia for petrochemical use.

Asian petrochemical manufacturers plan to crack less liquefied petroleum gas (LPG) in May for a second straight month, but this is unlikely to support naphtha consumption much with the coronavirus disease 2019 (COVID-19) denting downstream demand.

LPG usage for petrochemical production in May is set to fall 6.8% on-month to 449,000 mt, according to an IHS Markit OPIS completed on April 7. This month, gas cracking volume is to decline 7.7% to a revised 482,000 mt from 522,000 mt in March, according to the poll.

Petrochemical producers typically find it more attractive to crack naphtha instead of LPG when the ratio rises above 90%. But that"s not the case now as the COVID-19 hit the global economy and consumption, analysts and traders said.

"In theory, lower LPG cracking volume may support naphtha consumption, but overall petrochemical demand is too weak to see solid naphtha demand," said Matthew Chew, principal researcher at IHS Markit in Singapore.

Naphtha prices tumbled on poor gasoline and petrochemical demand with the CFR Japan naphtha falling on April 1 to $165.750/mt, the lowest on the IHS Markit OPIS data going back to July 2014.

"Cracking margins are good in numbers, but we cannot raise runs due to the slowing economy," said a feedstock procurement manager at a petrochemical producer in Northeast Asia, which has been operating its cracker at 90% since January.

Methodology: IHS Markit OPIS collects Asian petrochemical companies" plans for the current month and the next month, as well as actual cracking volume in the previous month. IHS Markit OPIS checks if any manufacturers revise their plans for the current month and if any manufacturers crack more or less than initial plans in the previous month. IHS Markit OPIS contacts feedstock procurement officers of each companies for the survey by phone, email or messengers in the last week of previous month or the first week of the current month. IHS Markit OPIS surveys 16-20 companies a month.

Oil product exports in the first 25 days of March rose 33.8% in terms of volume and petrochemical shipments grew 17.5%, although overseas sales for the whole month in terms of value fell 5.9% and 9%, respectively, in line with the price crash seen across the energy complex, data from the ministry showed.

--The U.K."s largest oil refinery, the 270,000-b/d Fawley plant, has cut runs but remains online after discussions between operator ExxonMobil and British government officials. ExxonMobil cut refinery runs at Fawley by around 70,000-b/d at the beginning of the week after taking the Pipestil 1 unit offline. Fawley is a critical part of the U.K."s energy infrastructure because of its links to the nation"s largest cities and airports. Eighty-five percent of the refinery"s output is pumped through underground pipelines as far away as London, Birmingham and Bristol. Pipelines connect the refinery to Heathrow and Gatwick airports. Diesel represents 29% of the refinery"s output, while gasoline, jet and petrochemical feedstocks make up 28%, 11% and 9% of output.

Among refiners that are now considering cuts include Taiwan"s CPC Corp. while others such as Shell in Singapore, SK Energy in South Korea and Trans Pacific Petrochemical Indotama (TPPI) have scheduled maintenance shutdowns, according to industry sources.

Formosa Petrochemical (FPCC) already closed an 84,000 b/d residue fluid catalytic cracking (RFCC), a 180,000 b/d crude distillation unit (CDU) and an 85,000 b/d residue desulfurization unit (RDS) for maintenance works earlier this month, as reported earlier.

Asian petrochemical producers may consume less liquefied petroleum gas (LPG) than originally planned in the coming months as cracking economics shift in favor towards naphtha, market sources said .

"Naphtha looks more economical than LPG right now as the propane/naphtha ratio is high," said a senior feedstock procurement official at a Northeast Asian petrochemical company that had participated in the cracking survey.

Petrochemical producers typically find it more attractive to crack LPG instead of naphtha when the ratio dips below 0.90. The ratio surged to 1.039 on Monday, the highest since Oct. 30 2017, IHS Markit OPIS data showed.

Cracker operators meanwhile have been cutting run rates in face of weak downstream demand. Taiwanese private sector refiner Formosa Petrochemical Corp (FPCC) reduced the average run rates of its three naphtha crackers in Mailiao to around 90% from March, down from around 99% to 100% in January and February respectively, a company official said.

South Korea"s LG Chem reduced run rates at its crackers in Daesan and Yeosu from March 1, while YNCC is planning to cut the run rate for its No.2 cracker in Yeosu for 2-3 weeks, according to IHS Markit"s Asia Light Olefins Weekly published on March 6. Fellow South Korean petrochemical producer shut a 1.1 million mt/year cracker after an explosion on March 4.

Japan"s Maruzen Petrochemical and Keiyo Ethylene were due to cut run rates in March, while Mitsui Chemicals reduced run rates in late February, according to industry sources.

"The probability of downside risk for petrochemical products, which already have been impacted by COVID-19, has increased further after the plunge in oil prices," IHS Markit said in a report on March 10.

Methodology: IHS Markit OPIS collects Asian petrochemical companies" plans for the current month and the next month, as well as actual cracking volume in the previous month. IHS Markit OPIS checks if any manufacturers revise their plans for the current month and if any manufacturers crack more or less than initial plans in the previous month. IHS Markit OPIS contacts feedstock procurement officers of each companies for the survey by phone, email or messengers in the last week of previous month or the first week of the current month.

--Petrochemical companies in Japan and South Korea have scaled back their naphtha crackers amid COVID-19 concerns. This has caused a potential market for U.S. propane to dry up.