Sinopec discussing petrochem investment with Singapore s development

Transcription

1 Sinopec discussing petrochem investment with Singapore s development board ( ) China Petroleum & Chemical Corp (Sinopec) is in talks with Singapore's Economic Development Board for petrochemical investment in the island nation. The talks could result in a possible major project in Singapore, and is approximated to involve a number of projects in the petrochemical and refining space. It is reported that Sinopec is exploring options of building a large refining and petrochemical complex on Jurong Island, including a crude oil reserve depot, a large refinery and a lubricant plant. The nod for investment in Singapore by State companies was approved in January 2010 by China's top economic planning agency, the National Development and Reform Commission, when it gave the go ahead for Sinopec to invest in and build a lubricant project in Singapore. Lackluster demand keeps PVC prices down in ASIA PVC deals are settling with rollovers to slight decreases in Asia when compared with the previous month despite higher ethylene feedstock costs and firmer prices in China s domestic PVC market, as per Chemorbis. Players pointed to relatively weak demand as the main factor weighing down on prices, with many sellers complaining of not being able to sell their normal monthly allocations this month. In China, May offers for mainstream Asian origins and for American cargoes were announced last week with rollovers from sellers initial April offer levels and slight increases from the April done deal level. Sellers attributed their stable pricing strategies to poor demand, with many adding that they were not able to sell their normal monthly quantities in China for April. This week, a major Taiwanese producer reported to have concluded deals for around 10,000 tons of material for May at prices stable to US$20/ton lower than their initial offers for the month. The producer is still negotiating with some of their customers looking for larger discounts. The domestic PVC market has gained some ground over the past week in China, with prices rising around CNY50-100/ton (US$7-15/ton) and sellers reporting that they are seeing better demand from downstream buyers these days. However, some of this pick up in demand for domestic cargoes could be the result of import substitution, as the prevailing import prices carry premiums of around US$150/ton when compared with the current domestic prices after customs and anti-dumping duties are taken into consideration. In Southeast Asia, May import offers have yet to be announced as players in Thailand have only returned to the market following last week s New Year holidays. Thai producers had concluded their April business prior to the holidays at prices US$15-30/ton below their March done deal levels, as producers were willing to accept relatively lower prices in April to be able to conclude their monthly business prior to the holidays. The week-long holiday period in Thailand has also resulted in slower than normal PVC consumption in the region. Producers in Indonesia and Vietnam reported settling their April business with discounts of US$20-40/ton from their March done deal levels, with producers in these countries complaining of comparatively slow domestic demand and weaker demand from export markets in the Mediterranean owing to higher freight costs. In Malaysia, the done deal levels reported in the past two weeks stand around MYR70-150/ton (US$22-47/ton) lower than the early April offers announced in the country, with some converters in the country commenting that their PVC consumption is down around 20% for the month of April

2 Cray Valley: Second Price Increase on Resins for Composites 19 Apr Cray Valley announced a second price increase of 10%, unless specific agreement, effective for all orders shipped on or after April 19, 2010, on all UPRs and their derivates sold to the Composites and Cast Polymer Industries in Europe, North Africa and Middle East. Philippe Vindevoghel, Commercial Director Composites Europe, explains: "The first increase announced earlier this year has not compensated for the sharp increase in prices of the main raw materials used to manufacture polyester resins. The tight supply of feed stocks, linked to strong Asian demand is driving all key feed stocks prices upwards In very difficult market conditions, Cray Valley is making every effort to avoid any further increases and ensure a consistent supply of our key raw materials to guarantee security of supply to their customers. Our commercial teams throughout Europe are available to give our customers further background to this price increase." US ethylene prices sliding back in line with prices in Europe, Asia ( ) After opening the month of April with a large premium over prices in Europe and Asia, US ethylene prices are losing their premium over these regions as May approaches, as per Chemorbis. European contracts have rolled over for May while spot prices in Asia are firming up heading into May after losing considerable ground in the month of March. At the beginning of April, US spot ethylene prices held a premium of US$435/ton over spot prices in Europe and US$395/ton over spot ethylene prices in Northeast Asia. In the first week of April, spot prices in the US soared by US$ /ton as fears of reduced availability owing to some turnarounds in the country that prompted buyers to conclude deals. Higher spot ethylene prices created difficulties for American PE exporters, as they found themselves unable to compete with mainstream Asian producers in the Chinese market at a time when Asian producers were able to competitively enter the Latin American market. With spot ethane prices down nearly 40% from the peak levels seen in February, operating rates at of US crackers averaging nearly 85% and inventory levels building up, American ethylene prices moved down this week, with downward movement expected to continue into the next month. After losing US$145/ton over the past week, spot ethylene prices have shed another US$70/ton since Monday to bring current spot offers to around US$ /ton FD USG. At the same time, spot prices in Asia have picked up speed, with late April gains in spot prices erasing the losses recorded over the month of March. Spot ethylene prices in Northeast Asia declined by US$70/ton over the month of March, but have gained US$120/ton from the beginning of April. Since Monday, spot prices on a CFR Northeast Asia basis have moved up US$20/ton on the week to reach US$1270/ton CFR Northeast Asia. Tight supplies were cited as the main factor supporting higher ethylene prices as a number of Asian crackers are currently undergoing turnarounds. This rise in ethylene costs now has Asian PE producers facing difficulty making sales, as buying interest in Asia s PE markets is generally too weak to support prices capable of covering producers theoretical costs based on spot ethylene values. Meanwhile, the European ethylene market has remained largely stable on the week as sellers have been able to take advantage of unexpected export opportunities to Latin America to keep their inventory levels balanced with regional demand. From the start of April, spot ethylene prices are up around 20/ton (US$27/ton). With supply and demand dynamics remaining largely in balance in the European market, the May contract price was settled with a rollover from April.

3 Conoco withdraws from a 400,000 bpd Saudi refinery project due to reduced d... ( ) USA s third largest oil company ConocoPhillips has pulled out of a new plant with Saudi Aramco in the Middle East. The chief reason behind the withdrawal is its strategy to reduce its refinery operations on demand erosion by the global economic slowdown. The two partners had plans to build a 400,000 bpd refinery in Yanbu Industrial City, Saudi Arabia. Yanbu accounts for just under a quarter of Saudi plans to add around 1.7 mln bpd refining capacity, as per Reuters. Conoco, like other major oil refiners, has seen profits shrink at its plants producing gasoline and diesel fuel from crude oil. The US oil major decided that the project was not consistent with its current strategy to reduce downstream footprint. Conoco sold its stake in a Canadian oil sands project to Sinopec for US$4.65 bln as part of its program to sell US$10 bln in assets to help reduce its heavy debt burden. Since Conoco is looking to make upstream 85% of its business, they will benefit from the cancelled project. Aramco plans to go ahead with the plant despite Conoco's withdrawal SE Asian petrochemical majors set up hub at Dubai Multi Commodities Centre ( ) Three major petrochemical companies from South East Asia have begun operations from Dubai as DMCC-registered members. PTT Polymer Marketing DMCC, Titan DMCC and SCG Plastics Co DMCC will use the Dubai Multi Commodities Centre (DMCC) free zone in Dubai as their Middle East base, to further develop and establish new regional business opportunities, reinforcing the emirate s growing importance as a hub for Energy and petrochemical companies. Dr David Rutledge, Chief Executive Officer, DMCC, said: As a major producer and exporter of petrochemicals and plastics, the Middle East offers the most costeffective feedstock for petrochemical companies. In addition to a strategic location between the African, European, Middle East and Asia-Pacific markets, the bunkering facilities around Dubai prove to be an attractive value proposition for energy companies to establish their base here. We are pleased to welcome these prominent petrochemical companies to Dubai and DMCC. James Bernard, Associate Director-Commodities, DMCC, said: According to recent market studies, Middle East plastic feedstock exports are expected to increase from 4.3 mln tons in 2008 to 11.7 mln tons in 2013, an increase of nearly 172%. Such encouraging figures highlight the immense opportunities in the region for plastics and petrochemical companies. The DMCC free zone continues to witness considerable interest from global energy-related industries, wishing to exploit these facilities and target regional partnership opportunities to further grow their market share. Companies like PTT, Titan and SCG Plastics find it very reassuring to be in an established and well regulated environment situated in the industrial hub. PTT Polymer Marketing DMCC is fully owned by PTT Polymers whose parent company is the PTT Group. The company will focus mainly on the Polymer business which is increasing rapidly within the region. This will be the second PTT company to be established in the DMCC Free zone with PTTT DMCC being the first. PTTT is involved with petroleum trading, mainly within East Africa and the Middle East. PTT Group is using its strategic base in Dubai to facilitate the supply of crude, refined products and petrochemicals to Southeast Asia, primarily Malaysia, the Philippines, Singapore, Vietnam and Thailand. TITAN International Corp DMCC is fully owned by Titan Chemicals Corp, Malaysia's first and largest integrated producer of olefins and polyolefin's, and one of the largest producers of polyolefin's in South-East Asia. SCG Plastics DMCC is the marketing arm for polyethylene and polypropylene products for SCG Chemicals, which manufactures and supplies a full range of upstream and downstream petrochemical products.

4 SCG Chemicals is one of the largest integrated petrochemical companies in Thailand and a key industry leader in the Asia-Pacific region. The DMCC offers resident companies highly attractive benefits, including a 50- year guaranteed tax holiday, 100% business ownership, and full ownership of business premises under a free zone status. The DMCC energy division currently has well over 100 member companies, involved with a huge range of products such as oil, gas, petrochemicals and plastics. Court approval for LyondellBasell s proposed restructuring plan to exit ban... ( Bankrupt petrochemicals major LyondellBasell has received approval for its proposed restructuring plan to exit bankruptcy from the court for southern district. The court has approved its reorganization plan and it is expecting to come out of the Chapter 11 protection on April 30. The company has raised US$3.25 bln through debt along with the issue of securities on private placement basis which would be used to come out of bankruptcy. The US$3.25 bln first priority debt includes US$2.25 bln and 375 mln offering of senior secured notes in a private placement and borrowings of US$500 mln under a senior term loan facility as part of its exit financing. China oil demand up on double-digit growth HONG KONG China's demand for oil rose 12.8 percent in March as the Chinese economy returned to rapid growth and refining capacity expanded, according to a report Tuesday. Apparent oil demand rose to 8.12 million barrels per day over the year ago March according to an analysis of official data by Platt's, the energy information arm of McGraw-Hill Cos. It was the seventh month in a row of double-digit increase in demand for China. But it was short of the all-time high in February of 8.5 million barrels per day. Platt's said the increase was helped by new refining capacity at state-owned companies like Sinopec, PetroChina and China National Offshore Oil Corp. Also driving demand was the resurgence of the Chinese economy, which posted gross domestic product growth of 11.9 percent in the first quarter. Industrial production and gasoline demand were also up during that time.

5 PET prices rise in Europe, mostly flat at firm levels in Asia In Europe, overall PET availability continues to be very snug, pushing spot prices higher. Now, the level of /ton on FD NWE basis has started to be spoken for May in the spot market although there are no materials physically available in the market currently. Some market sources even claim that the prices are no longer an issue when purchasing as buyers first wants to be able to obtain materials. The current tightness in supply levels, lack of imports and approaching high season for PET applications are causing European buyers to search for materials eagerly. The overall spot market is up by 35-65/ton from the beginning of April and 75-95/ton when compared to early March. Meanwhile, the current market level is reaching the last peak in prices seen in August In feedstock news, spot PX prices recorded $65/ton increases with respect to the beginning of March and a $25/ton increase compared to the beginning of April at $1045/ton on FOB NWE basis. In production news, La Seda has started to supply from their El Prat facility with 170,000 tons/year PET capacity although their supplies will not be sufficient to satisfy the market s needs, especially when considering there is an upcoming shutdown from Novapet in June, according to sellers in the region. The company will halt their operations at their 130,000 tons/year PET plant for about 5 weeks at end June and they will not be restarting until the end of July. In China, import PET prices from South Korean producers were pegged at $ /ton on FOB Bussan basis, up by $10/ton at the low end of the range while remaining stable at the high end on week over week basis. Most major Korean producers offers were reported to be focusing at the top end of the range while the low end is available in exchange for firm bids. Meanwhile in the export market, offers were reported at $ /ton on FOB China, cash basis, up by $20/ton at the low end on the week. However, this increase is stemming from the fact that there were done deals concluded in the range of $ /ton during the previous week for large volumes. These figures have not been reported again and the overall range therefore represented a $20/ton increase at the low end. Iranian PE offers announced higher in China Players in China report that offers for Iranian PE products have been adjusted upwards this week. As offers for Iranian cargoes tend to make up the lower end of the overall offer range in China, especially now that American cargoes have been driven out of the market by higher ethylene feedstock costs in the US, this increase in offers for Iranian cargoes also resulted in upward movement at the lower ends of the overall offer ranges. This week, offers for Iranian materials were reported at $ /ton for LDPE film, $ /ton for HDPE film and at $ /ton for LLDPE film, all on a CFR China, cash basis. When compared with the previous week, these offer ranges represent an increase of $10-20/ton for LDPE film and HDPE film and $20-40/ton for LLDPE film. Traders commented that they are taking a firmer stance on their offers this week as they are expecting to see higher replacement costs based on surging spot ethylene prices

6 Saudi SIIG profit up in Q1 on stronger styrene prices The Saudi Industrial Investment Group (SIIG) reported a net profit of $38 million (Riyals 142 million) in the first quarter of this year, after posting a net loss of $13 million (Riyals 50.5 million) in the same period of last year. The company attributed this good result to the stronger petrochemical prices. During the first three months of 2010, the company s income reached $47 million (Riyals 180 million). However, the company had posted an operating loss of $9 million (Riyals 35.4 million) for the same period of last year. According to industry sources, SIGG produces mostly styrene. The company has a 50% stake in a 750,000 tons/year styrene plant in Jubail, Saudi Arabia, which is operated by Jubail Chevron Company, a joint venture between SIIG and Arabian Chevron Phillips Petrochemical, a subsidiary of Chevron Phillips Chemical Company. Sinopec Zhenhai starts up 1 mil tons/year cracker in China China s Sinopec Zhenhai Refining and Chemical Company has started up its new cracker at Ningbo city as of today. The startup of the 1 million tons/year cracker was originally planned for April 10, However, the company had failed to start up its new site on time due to some technical issues. Additionally, the company s downstream units, including a 450,000 tons/year LLDPE plant as well as a 400,000 tons/year MEG unit, were also brought online. These plants are currently running smoothly, market sources reported, while the company would be able to start selling new materials from these plants next week, assuming no further any problems. The new LLDPE capacity in China is expected to affect the supplies, some sources commented, and prices may see decreases for this product consequently, particularly at a time when LLDPE demand traditionally slows down in May through July. SABIC s net profit rises in Q1 after last year s loss Saudi Arabia s major petrochemical company SABIC s net profit rose to $1.45 billion (5.43 billion riyals) in the first quarter of 2010 driven by higher petrochemicals and plastics prices, the company announced at the weekend. However, SABIC had seen a net loss of $258 million dollars (970 million riyals) in the same period of When compared with the fourth quarter of 2009, SABIC s profit was also up 18.6% from the 1.22 billion dollars (4.58 billion riyal), since the prices of the company s products continued to rise. SABIC s gross profits for the first quarter of this year were 3.26 billion dollars (12.22 billion riyals), compared with 965 million dollars (3.62 billion riyals) of the same quarter last year, the company reported. The company attributed this improvement to the high volume of production and sales as well as a marked improvement in the prices of most petrochemical products and plastics compared to the fourth quarter of Chief executive Mohammed Al-Mady expects that the company will benefit from new capacities starting up in eastern Saudi Arabia and in China this year, coinciding with signs of improvement in the global economy and the easing of the financial crisis.

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