Sharq MEG Plant at Optimum Level, but Cracker yet to Start

SINGAPORE (ICIS news)--Eastern Petrochemical (Sharq)’s new 700,000 tonne/year monoethylene glycol (MEG) plant in Saudi Arabia is running at optimal levels, after starting up about two weeks ago, sources close to the company said on Thursday.

"The feedstocks were put in earlier this month, and gradually the operating rates were raised," said one of the sources familiar with the operations of the Al Jubail-based producer.

Another source said the greenfield 1.3m tonne/year cracker and other downstream facilities adjoining the so-called No 4 MEG facility had yet to start up.

"We are now using ethylene inventories from previous months to run the new MEG plant, but hopefully we would have the cracker up and running by September," the second source said.

Both sources refused to discuss what could happen to the MEG operations if the new cracker failed to start up by the end of September. The whole complex had previously faced several delays in starting up in the past year.

Sharq, a joint venture between petrochemical giant SABIC and a Japanese consortium of companies led by Mitsubishi Chemical, operates three existing MEG lines with a total nameplate capacity of 1.4m tonnes/year at Al Jubail.

A third source said operations at the three units had not been at full capacity since earlier this month but gave no other details. There was no immediate official comment on the operating rates.

Besides the new MEG plant, other new capacities downstream of the greenfield cracker include a 400,000 tonne/year high-density polyethylene (HDPE) line and a linear low-density polyethylene (LLDPE) unit of similar capacity, due to start up by the end of this year.

quoted from: ICIS.com

Read more...

LyondellBasell Targets €125/t Hike for Sept PP on High Propylene

LONDON (ICIS news)--Major plastics producer LyondellBasell is targeting a €125/tonne ($179/tonne) increase for September polypropylene (PP) in Europe following the unexpectedly high propylene settlement, a company source said on Friday.

The move came after propylene was agreed up €93/tonne at €778/tonne FD (free delivered) NWE (northwest Europe) on Thursday.

Another major PP producer said it would be looking for a €125/tonne increase also, as this would cover the propylene hike and also add some margin.

PP availability was tight, mainly due to reduced output rather than very strong demand.

Demand had improved during the second half of 2009, however, and PP producers were confident of achieving big increases in September.

Most buying sources acknowledged that they would have to pay a lot more for their material in September.

“We will have to live with these prices. It is the reality,” said one large PP buyer.

PP and polyethylene (PE) producers in Europe include LyondellBasell, Borealis, SABIC, Total Petrochemicals, Dow Chemical, Repsol, INEOS Olefins and Polymers, Polychim and Domo.

quoted from: ICIS.com

Read more...

US Inherently Safer Technology Mandate Seen as Unlikely

WASHINGTON (ICIS news)--US chemical sector officials are increasingly confident that an inherently safer technology (IST) mandate will be stripped from new antiterrorism legislation pending in Congress, sources said on Friday.

New and permanent legislation designed to replace the existing but temporary Chemical Facility Anti-Terrorism Standards (CFATS) has been approved by a key House committee.

That measure, HR-2868, “The Chemical Facility Antiterrorism Act of 2009”, does include an IST mandate, giving the Department of Homeland Security (DHS) authority to order changes in a chemical plant’s storage capacities, feedstocks, processes or products if deemed necessary to deter a potential terrorist attack.

However, that provision likely will not survive in a final bill, said Jim Cooper, vice president for petrochemicals at the National Petrochemical & Refiners Association (NPRA).

Cooper noted that two top Homeland Security Department officials in the Obama administration have spoken against an IST mandate and the White House has pointedly declined to endorse the House bill.

“If they thought the pending bill was what they wanted, they would have endorsed it,” Cooper said, referring to Obama administration officials.

In addition, the Obama administration does support language in the DHS appropriation bills already approved by both the House and Senate that extends the existing regulations for another year. The existing rules would otherwise expire on 30 September.

“The fact that the administration wants to give CFATS another year of operational life we see as indication from Obama that an IST mandate is not the right type of method to ensure facility security,” Cooper said.

Scott Jensen, a spokesman at the American Chemistry Council (ACC), also said he sees strong signals from the department and the White House that they prefer the existing site security measures.

“You can just go back and look at the DHS testimony to the House Homeland Security Committee earlier this year, and it is clear that the administration sees substantial progress with the current law and they want to continue to implement the programme without major changes,” Jensen said.

The House and Senate are expected to convene a conference committee in September to shape a final DHS appropriations bill, with the one-year CFATS extension intact, and send it on to the White House for final action by the president.

With the existing regulations safely extended into late 2010 and with major legislative issues such as health care and climate change crowding the congressional calendar, action on a new chemical facility security bill is likely to be postponed to next year, Cooper said.

quoted from: ICIS.com

Read more...

Economy to See Growth in Q4: Al Mansouri

DUBAI — The UAE economy has overcome the worst phase of the global financial crisis and will see growth by the last quarter of this year, Minister of Economy Sultan Al Mansouri said on Sunday. 


Al Mansouri cited an increase in UAE consumer confidence over the last quarter, together with slowing inflation in the first half of the year, as additional positive signs of the nation’s imminent recovery. Inflation in the UAE cooled to 3.4 per cent for the first six months compared with 11 per cent during the same period of last year, he said. 

“The UAE has emerged from the most difficult phase of the crisis with minimal losses. Our key indicators show that economic growth will be back on track by the last quarter of 2009 and start of 2010,” the Minister said in a statement.

He said that the federal government’s efforts to develop the national economic infrastructure and help individual emirates cope with global economic changes were yielding “tremendous results, even over the traditionally slower summer months.” 

Government initiatives to try to create a more investment-friendly environment, including the scrapping of capital requirements for most start-up firms, and the creation of a national statistics centre have helped the economy overcome the worst phase of the crisis. The government also is working on a broad plan to develop small and medium-sized enterprises by setting pro-growth policies and providing incentives to attract entrepreneurs, Al Mansouri said. 

These steps are aimed at improving “the standing of the UAE national economy on the global map,” he added.

The minister singled out several bilateral agreements initiated over the last few months with “market leaders” from Europe, North Africa, North America and the Middle East. His ministry has also enhanced its relationships with counterparts in Azerbaijan, Turkmenistan, the US and Portugal, in areas ranging from energy and Islamic finance to innovation and technology, he said. 

His ministry would continue to ensure market stability and consumer protection. Field visits by ministry personnel are continuing throughout Ramadan to monitor prices and products. 

issacjohn@khaleejtimes.com

quoted from: Khaleej Times

Read more...

Challenges Await Japan’s New Government Under DPJ

SINGAPORE (ICIS news)--Discontent over economic plight ended more than half-a-century rule of the Liberal Democratic Party (LDP) in Japan, but a new government does not guarantee its problems will be solved immediately, economists said on Monday.

LDP conceded defeat to opposition party – the Democratic Party of Japan (DPJ) - led by Yukio Hatoyama, which won a historic victory in the country’s general elections.

Japanese citizens went out to vote over the weekend following data showing the country had a record unemployment rate in July at 5.7%.

“It certainly is a significant historical event but as far as the economy is concerned, it will face the same constraint, [Japan’s] budget deficit is widening,” said David Cohen, Singapore-based regional economist at consultancy firm Action Economics.

The link between the election outcome and the worst crisis Japan has faced since the Second World War has been “pretty direct”, he said. 

Japan, the world’s second biggest economy, has been the worst hit when global demand collapsed. Most analysts expect the Japanese economy to contract by 5.0-6.0% this year. 

Economists said DPJ would likely build on the measures implemented by the LDP in stimulating the domestic economy.

“I don’t see a significant change [in policy]. Their first priority is the recovery of the economy,” said Naito Toshihiko, Tokyo-based economist at rating firm Japan Credit Ratings (JCR).

DPJ has the aim to do a structural shift to ensure the domestic economy would fuel growth and not exports going forward.

“[The policies] are clearly well-intentioned. The issue investors are waiting to see now is how these policies will get funded,” said Lim Su Sian, Singapore-based economist at DBS Bank. 

Japan has the biggest deficit to GDP ratio estimated to hit 9% in the fiscal year ending March 2010, which would constrain the government’s ability to shell out more funds to pump-prime the economy, analysts said.

The government has had to give up its initial target of achieving fiscal balance, when revenues would match expenses, by 2011. 

With hefty government spending needed to continue spurring economic activities, JCR’s Toshihiko said a more realistic target of achieving fiscal balance would be in 2017-2018.

There were also concerns that the change in government would distract Japan from its focus on recuperating from the recession, analysts added.

Economic numbers have so far been encouraging, with manufacturing output on its fifth month of growth in July.

But the story remains the same – Japan’s recovery hinges on recovery of global demand.

Consumer and business spending account for about three-fourths of the Japanese economy but it was exports that had been driving growth, which proved to be the country’s Achilles heel when the global financial and economic meltdown struck in late 2008.

This economic model will have to be recast based on DPJ’s policy but economists said this was more a long-term goal.

The country’s demographics, with its ageing population, also posed a problem in the planned shift of focus on the domestic economy, said Action Economics’ Cohen.

“I don’t want to say they can’t play that game anymore, but part of the consumer side is demographics. That makes it more difficult to light a fire,” he said.

Over the past 10 years, domestic demand in Japan had been very sluggish as strong profits generated by bigger companies due to robust exports failed to translate to higher wages, economists said.

“That has been the biggest problem in Japan. Owing to certain rigidities in the labor market, wages did not rise. [They] have been stagnant for the past decade,” Lim of DBS Bank said.

Analysts are still waiting for DPJ’s full range of policies that it hopes to implement over time.

quoted from: ICIS.com

Read more...

Sidpec Restarts HDPE Unit but Delays Commercial Output

LONDON (ICIS news)--Egypt’s Sidi Kerir Petrochemicals Co (Sidpec) has restarted its high density polyethylene (HDPE) blow-moulding production line but will not begin commercial production until the end of the month due to difficulties with the restart, a source close to the company said on Tuesday.

“Following last week’s failed restart, the unit is now back up but will not return to full capacity [and commercial production] until the end of the month,” the source said.

The production line at the 150,000 tonne/year facility at Ameriya, Egypt, had been down for scheduled maintenance, which began on 16 July and was expected to last for around one month.

Production of HDPE injection and film was running successfully, the source added.

HDPE availability continued to be short in Egypt, but demand had fallen since the start of the Ramadan holy month.

Demand and prices for HDPE during the two weeks before Ramadan were high as availability then was also short, according to one source.

HDPE prices in northern Africa are currently assessed at $1,250-1,300/tonne CFR (€875-910/tonne) (cost and freight).

Egyptian sellers said that they had sold material as high as $2,000 CFR Egypt due to the tight supply in the country. This, however, was unconfirmed on the buy side.

quoted from: ICIS.com

Read more...

Europe September P-Wax Prices to Rise on Demand - Sources

LONDON (ICIS news)--European paraffin wax (p-wax) prices will increase by €20-30/tonne ($29-43/tonne) in September due to high demand, as suppliers reported successfully implementing further price rises over the course of August, sources said on Tuesday.

Prices were rising in line with feedstock costs and because of increased demand due to high season in the candle market, sources said. However, a trader noted that demand was still poor due to the vast amount of players on holiday.  

“Demand for candles is down in comparison to previous years and the market will take longer to recover after the summer holiday lull,” the trader said.

A candle maker said that 56-58°C grade material was at a minimum of €960/tonne FD (free delivered) NWE (northwest Europe). 

“There were successful increases throughout August, although there are not expected to be any significant price movements in September,” the source said.

Another candle maker said: “An increase of €40/tonne had been successfully implemented over the course of the month and producers will wait until the end of September before making any further price announcements.”

The majority of participants believed that a rise of between €20-50/tonne in September would incorporate the increases seen throughout the month of August.

Prices for 52-54°C material were assessed at €830-870/tonne FD NWE, 56-58°C grade was at €880-920/tonne FD NWE and 60-62°C product was at €940-980/tonne FD NWE, according to global chemical market intelligence service ICIS pricing.

P-wax is used in the production of candles as well as in the food, packaging and petroleum-jelly industries.

quoted from: ICIS.com

Read more...

Sub-$3 US Natural Gas Will Not Last - Sources

HOUSTON (ICIS news)--US natural gas trading at seven-year lows below $3/MMBtu has underscored low market fundamentals - record supply overhang, poor demand and depressed production - but sources said on Tuesday that prices will break upward by the end of the year.

"The market's view is that the current overhang is temporary," said Jeff Fetterly, a natural gas analyst with CIBC World Markets in Calgary. 

NYMEX contracts for September settled on Tuesday at $2.882/MMBtu, lows not seen since August 2002. But a contango in futures has November prices trading in the low-$4s/MMBtu. 

Further out, the first few months of 2010 have futures prices in the low-$5/MMBtu.

"The market is thinking there will be a balancing early next year at some point," said Eric Nuttall, an associate portfolio manager at Sprott Asset Management in Toronto. "I don't think those prices are unrealistic. If there's a drop in rig count, there is going to be a dramatic drop in production."

North American gas drilling activity is down by 56% from the same time last year when the rig count was at nearly 1,600 wells, according to the latest weekly data from oil and gas service firm Baker Hughes. 

Analysts said the reduced output - down year over year by about 1bn cubic feet (bcf)/day in July - will start to free up pipelines in the coming months, especially when large amounts of natural gas are taken out of storage in November and into early 2010. 

"That's what the futures curve is looking at," Fetterly said.

But prices at a level that dissuades capital investment from drillers, the question comes down to at what price do gas producers restart production at substantial levels.

"At five dollars they start," Nuttall said. "At six dollars they really start and seven dollars it's really game on again."

Fetterly said that even though demand for natural gas has seen a recent uptick from the electrical power sector, the fuel's wider recovery hinges on a comeback in industrial use. 

The fall out in industrial demand as the economic slump set in worldwide was what prompted commodity prices to drop quickly off their all-time highs in July, when natural gas futures topped out at $13.694/MMBtu. 

But enough gas production continued and US underground storage continued to pile up at a rapid pace.

Pipelines have bulged from newly-tapped shale fields boosting US output while a falloff in industrial use has put demand in a rut.

Unconventional production of natural gas from shale fields such as the Barnett in the Dallas-Forth Worth, Texas area; Fayetteville in Arkansas; Haynesville in Louisiana and east Texas; and Marcellus in the northeast accounted for 1,200 bcf of gas in 2007, according to the Energy Information Administration (EIA). 

The government agency projected shale output will make up 18% of total US production, at 4,200 bcf, by 2030.

"Everything has come together for natural gas to really hammer it," said Phil Flynn, senior research analyst at PFG Best, a brokerage in Chicago. "All of this stuff is having a major impact on the marketplace. We are trading in a totally different market than a few years ago."

Back then, US natural gas players were panicking about the domestic supply situation and the prospects of being an importing nation while prices stayed high, Flynn explained.

Now, domestic supplies are well above 3,000 bcf, the traditional storage benchmark that the industry considers ample enough to handle the winter heating season. The US market hit that number at the end of July, the earliest in history by a month's time.

The EIA said in its short-term energy outlook that total storage would reach around 3,800 bcf by the end of October, when weekly storage reports start recording draws for the cold weather instead of injections. 

But Nuttall said no one truly knows what maximum storage is in the US. 

Estimates are that it is between 3,800 and 3,950 bcf, Nuttall said, but the US natural gas market has never been in the supply position to really test its limits.

Flynn predicted storage might get close to 4,000 bcf, which he said "is unheard of".

The worst-case scenario is that pipelines become so backed up with fuel that operators force producers to stop sending in material, rig activity comes to a halt and spot natural gas prices could slide down to $1/MMBtu or lower, Nuttall said.

But Nuttall said that is highly unlikely and would be a short-term phenomenon as heating needs would free up pipelines as inventory starts to pare down amid light production.

Petrochemical chemical producers have taken advantage of the soft natural gas as prices go in the opposite direction of strengthening crude oil values.

More petrochemical crackers are switching feedstocks from oil-based raw materials such as naphtha to natural gas liquids (NGL) like ethane. 

In an opposite reaction to the lower natural gas prices, a move to lighter feedstocks pushed lower crude C4 output and caused prices for a C4-dependent chemical like butadiene to rise. 

Natural gas is also a major power fuel for the US petrochemicals industry and downstream chemicals manufacturers.

quoted from: ICIS.com

Read more...

NE Asia Ethylene Heads Southeast on Weak China Demand

SINGAPORE (ICIS news)--China’s weak demand for ethylene has paralysed trading activity in northeast (NE) Asia and cargoes have started heading towards the southeastern part of the region, where the material currently commands better prices, market sources said on Wednesday.

“The cargoes have all gone to southeast Asia,” said a Taiwanese buyer in Mandarin.

Talks with traders had lapsed due to a wide buy-sell gap, he added. 

Selling ideas were pegged at up to $1,020-1,030/tonne (€714-721/tonne) CFR (cost and freight) NE Asia for cargoes arriving in September while buying ideas in the region hovered in the low to mid $900s/tonne CFR NE Asia, market sources said.

The lack of demand from China – Asia’s largest importer of ethylene – had left the northeast Asian market without direction over the past three weeks, they said.

End-users in the country were sufficiently covered as domestic crackers were running at high operating rates averaging 90-100%, industry sources said.

Shanghai Secco Petrochemical was running its newly expanded 1.2 m tonne/year cracker in Caojing at close to full rates, market sources said.

Impending cracker start-ups had also contributed to expectations of ample domestic supplies and Chinese buyers had no incentive to seek spot cargoes, they added.

Fujian Refining and Petrochemical Co (FREP) is expected to start up its new naphtha cracker – an 800,000 tonne/year facility in Quanzhou, southern China by the end of the month.

Spot ethylene prices slipped $10/tonne at the top-end of the range to $950-970/tonne CFR NE Asia last week due to limited buying interest, according to data from global chemical market intelligence service ICIS pricing.

Prices in southeast Asia, on the other hand, rose $20-40/tonne to $1,030-1,060/tonne CFR over the same period, based on the same data.

Demand was comparatively healthier in southeast Asia partly due to the continued delays in the delivery of term cargoes from Iran due to cracker shutdowns early this month.

Iran is the largest Middle-eastern supplier of ethylene to the region. It exported 680,000-700,000 tonnes of ethylene in 2008 but sales volumes are expected to fall to 450,000-500,000 tonnes this year due to planned and unplanned cracker outages.

Gas feedstock shortage at Assaluyeh in southern Iran had also capped plant operating rates at 50-60% for the most part of 2009, traders said.

During the week, a 3,500-tonne ethylene cargo was heard sold on formula to a buyer in Indonesia for loading in the first half of September from Japan or Korea.

Spot supply from Korea was limited with bulk of its ethylene output being fed into derivative polymer plants that were running hard on the back of healthy export demand but Japan has cargoes available due to turnarounds at downstream plants in September and October, market sources said.

Discussions between producers and traders were heard in the low $900s/tonne on FOB (free on board) basis although some market participants said there had been deals done below these levels.

“September is (the end of) the first half accounting period in Japan so inventories should be reduced,” said a domestic producer currently in talks to sell some spot ethylene cargoes.

quoted from: ICIS.com

Read more...