Petrochemical trends H2 2022

Construction on a major polyethylene terephthalate complex in Texas will resume in August after a pause of nearly five years, Mexico's Alpek and Thailand's Indorama Ventures said July 18. Alpek, Indorama, and their partner—Taiwan's Far Eastern New Century—expect to bring the complex online in early 2025. The complex near Corpus Christi, Texas, includes a 1.1 million mt/year PET unit and a 1.3 million mt/year upstream purified terephthalic acid facility. The partners bought the complex out of M&G Chemical's bankruptcy in 2018 after M&G halted construction in October 2017. The partners repeatedly delayed a final investment decision on the project while evaluating costs. Alpek CEO Jose de Jesus Valdez said in April that the partners had a "very clear definition" of costs going forward. Indorama said July 18 that throughout pandemic-related disruptions. the partners "firmly resolved to continue planning amid continued robust demand for PET packaging and the need for shorter supply chains." They had previously expected the PET plant to be completed first, followed by the PTA unit a year later. The schedule, announced July 18, has both plants completed by early 2025. The partnership, dubbed Corpus Christi Polymers LLC, will function as an independent tolling company in which each partner will procure its own raw materials and will receive one-third of PTA and PET produced at the site. Each partner also will sell and distribute that output independently of each other. Each partner will be responsible for producing 367,000 mt/year of PET and 433,000 mt/year of PTA. "The strategic location on the US Gulf Coast will facilitate competitive raw material procurement and distribution cost, as well as scalability across Alpek's sites in the Americas," Alpek said. The US is a net PET importer, and the new complex will reduce import needs, but not eliminate them. The latest data from the US International Trade Commission showed that the US imported nearly 2.25 million mt of PET in the first five months of 2022, up 43% from nearly 1.57 million mt in the year-ago period. Annual imports in 2021 reached nearly 4.39 million mt, up from 3 million mt in 2019, the data showed. PET is used to make plastic bottles and polyester fiber, and PTA is its immediate precursor. US subsidiaries of each partner make up Corpus Christi Polymers. Those are DAK Americas, a subsidiary of Alpek; Indorama Ventures Corpus Christi Holdings; and APG Polytech USA Holdings, a subsidiary of Far Eastern New Century.

Platts, part of S&P Global Commodity Insights, has launched FOB Rotterdam methanol assessments for two front months. First published on July 11, 2022, the new M1 and M2 assessments reflect the value of methanol based on spot pricing data for 1,000 mt barges loading during the front and second months on a Eur/mt FOB Rotterdam basis, up to the close of the assessment process at 4:30 pm London time. Platts has also started publishing the $/mt equivalent of these assessments on July 11, 2022. The new assessments complement Platts' existing suite of methanol assessments. Platts also currently publishes an assessment for methanol loading 5-30 days forward from the date of publication, from Rotterdam. The new assessments mirror the specifications of the existing FOB Rotterdam assessment for loading 5-30 days forward from the date of publication, and reflect T2 product conforming to the International Methanol Producers and Consumers Association (IMPCA) Reference Specification with a minimum purity of 99.85%, maximum water content of 0.1% by weight and maximum ethanol content of 50 mg/kg. The assessments roll over five business days (inclusive) before the end of the month. For example, in July 2022, the M1 assessment reflects material loading any time in July. On July 25, the M1 assessment will roll over to reflect methanol loading in August. The new assessments follow the London publishing schedule. Platts first proposed publishing these assessments in a subscriber note published May 5, 2022: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/050522-platts-proposes-new-m1-and-m2-methanol-fob-rotterdam-assessments . Platts also published a decision note on June 16, 2022: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/061622-platts-to-launch-fob-rotterdam-methanol-assessments-for-two-front-months . The new assessments are published in the Europe and Americas Petrochemicalscan and Solventswire publications, Platts Petrochemical Alert pages 1160, 346 and 432, on the Petrochemical service on Platts Dimensions Pro and in the Platts price database under the following codes: MEFRA01 Methanol FOB Rotterdam Eur/mt Mo01 EUR/MT MEFRA14 Methanol FOB Rotterdam Eur/mt Mo01 WAvg EUR/MT MEFRA13 Methanol FOB Rotterdam Eur/mt Mo01 MAvg EUR/MT MEFRB01 Methanol FOB Rotterdam $/mt Mo01 USD/MT MEFRB14 Methanol FOB Rotterdam $/mt Mo01 WAvg USD/MT MEFRB13 Methanol FOB Rotterdam $/mt Mo01 MAvg USD/MT MEFRA02 Methanol FOB Rotterdam Eur/mt Mo02 EUR/MT MEFRA24 Methanol FOB Rotterdam Eur/mt Mo02 WAvg EUR/MT MEFRA23 Methanol FOB Rotterdam Eur/mt Mo02 MAvg EUR/MT MEFRB02 Methanol FOB Rotterdam $/mt Mo02 USD/MT MEFRB24 Methanol FOB Rotterdam $/mt Mo02 WAvg USD/MT MEFRB23 Methanol FOB Rotterdam $/mt Mo02 MAvg USD/MT Please send any questions or comments to petchems@spglobal.com and pricegroup@spglobal.com For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

Platts, part of S&P Global Commodity Insights, has started publishing new daily assessments for styrene monomer on FOB China basis from July 1, 2022. This follows Platts observation of an increase in SM exports from Chinese ports over the last two years. Platts first proposed launching the new assessments in a subscriber note published May 11: http://plts.co/FLVf30skhqw. The new assessments, in $/mt, reflects 3,000-5,000 mt SM cargoes loading from Jiangyin, Nantong, Zhangjiagang and Changshu in East China in the second and third half-month forward cycles from the date of publication. The assessments also reflects bids, offers and trades on a letter of credit at sight basis, and quality specifications conforming to latest edition of international standard ASTM D-2827. Platts will take into consideration price information sourced from the market up to the close of the assessment process at 4:30 pm Singapore time (0830 GMT) for the new FOB China SM assessments. The assessments follows the Singapore publishing schedule. Platts will also take into consideration price information for cargoes of other sizes loading from other Chinese ports, including north China ports, as well as non-standard credit usance, and will normalize them to the standard for the assessment. The assessments and its associated symbols appear in Asian Petrochemicalscan, Platts Petrochemical Alert pages 340, 215, 412, 413, 542, 449 and 436, and in the Platts price database under the following codes: Assessment Code Styrene Monomer FOB China Marker STYFC00 Styrene Monomer FOB China Marker MAvg STYFC03 Styrene Monomer FOB China Marker WAvg STYFC04 Styrene Monomer FOB China W2 STYFD00 Styrene Monomer FOB China W3 STYFE00 Please send all comments, feedback and questions to petchems@spglobal.com and pricegroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

A number of Asian petrochemical markets were expected to be supported over June 13-17 by persistently high feedstock costs and tight supply. A flurry of arbitrage cargoes from Asia to the US and Europe due to wide price gaps were also expected to lend support, although this was likely to be countered by demand concerns, a stronger US dollar and inflation fears adding downward pressure. Toluene ** Asian toluene prices were seeing continued strength from strong buying interest from gasoline blenders in Southeast Asia, trading sources said. The rise in MTBE prices has further increased interest in toluene as its price continues to lag behind other solvents and mixed xylenes, industry sources said. ** The FOB Korea toluene marker extended its nine-year high to $1,300/mt June 10 while the FOB US Gulf price assessment was 703 cents/gal ($2,143/mt), resulting in a wide price spread of $843/mt between the two regions. ** Asian toluene prices enter the June 13-17 week at an all-time high against naphtha, with the spread between the two hitting $489.13/mt June 10 amid tight toluene supply and weak naphtha demand. MTBE ** The Asian MTBE FOB Singapore marker has been on an uptrend on the back of lucrative MTBE blending values amid bullish upstream crude and gasoline markets. The MTBE gasoline blending value was estimated at $322.51/mt June 10, according to S&P Global Commodity Insights data, softening from a near nine-year high of $377.63/mt on May 27, but still at a level deemed lucrative by the market. ** Malaysia's Pengerang Refining and Petrochemical, or PRefChem, restarted the 750,000 mt/year MTBE plant at its integrated RAPID refinery complex in Johor in early June after postponing earlier plans to restart it in the first quarter, a source close to the company said June 7. The plant was currently ramping up run rates, the source said, without providing further details. The MTBE plant was taken offline in March 2020 after full operations had been delayed since its startup in April 2019 due to glitches, including fires, at the integrated refinery. Methanol ** The Asian methanol market was seen long over June 13-17 as ample supply from Iran and the Middle East cargoes continued to weigh on prices. Shipping inquiries for around 100,000 mt of methanol loading from Saudi Arabia, Qatar and Oman in June to China, Taiwan and South Korea were heard in the week to June 10. ** However higher global crude oil prices and feedstock coal prices in China will cap the downside, and prices were expected to remain elevated in the near term as oil refineries globally grapple with the loss of Russian crude, market sources said. Propylene ** The Asian propylene market was expected to receive some support over June 13-17 from an increase in demand after lockdown restrictions in Shanghai were eased June 1. Some sellers said it would take time for the propylene market to recover fully, but increases in run rates by downstream producers was likely to lend some support in the near term. ** Propylene was assessed up $5/mt week on week at $1,030/mt CFR China June 10. PP ** After a week of cautious optimism, polypropylene market sentiment in China could be impacted by reports June 13 that authorities had reimposed some COVID-19 restrictions in several districts of Shanghai and Beijing, market sources said. Any bearish sentiment was expected to have a knock-on effect on prices in Southeast Asia as overall demand continues to lag. R-PET ** Recycled PET prices enter the June 13-17 trading week on a stable note as producers find it difficult to pass on higher production costs by raising prices amid buyer cautiousness and general stagflation. Bale supply remains tight, while export opportunities remain open between Southeast Asia and Europe.

US polyethylene exports have nearly recovered to pre-pandemic levels despite logistics and supply chain snags, Dow Chemical CEO Jim Fitterling said June 2. He said at an energy conference that US outflows have reached about 35% of domestic production, which is near the 40% that was moving out in March 2020 before COVID shutdowns pinched demand and squeezed outflows. Exports had largely recovered by early 2021 when a deep freeze in mid-February forced widespread weeks-long petrochemical shutdowns, which left inventories depleted. PE producers also reduced exports through the summer of 2021 to restock ahead of August and September, which typically are the most hurricane-prone months. The US exported 6 million mt of PE in 2020, and outflows fell 18% to 4.98 million mt in 2021, US International Trade Commission data showed. In the first three months of 2022 the US exported nearly 1.48 million mt of PE, up slightly from 1.47 million in Q1 2021, and down 10% from 1.64 million mt in pre-pandemic Q1 2020, the data showed. "It's been uneven, but we have been seeing improvement in the supply chain, our ability to ship out of the US," Fitterling said. "We're kind of back to March 2020 levels, which is, I think, a good sign." Market participants say US resin exports have been stymied as an influx of containerized imports have commanded an already short supply of chassis and truck drivers to move containers. That has left packaged resin stuck in warehouses waiting to be loaded into empty containers and transported to ports to be loaded onto ships. PE demand seen up to 1.5 times GDP Fitterling said PE demand was still growing at 1.3 to 1.5 times GDP, and domestic consumption was seen up 7% to 8% from year-ago levels. That demand stems from packaging, lightweighting vehicles, plastic covering for cables in 5G infrastructure, construction and packaging for health and beauty products as workers return to offices. He said higher energy and raw material costs were being passed to consumers. The company was watching those dynamics, particularly how long prices can stay at current levels and at what point prices siphon demand. He said domestic PE price increases of 7 cents/lb for May and 7 cents/lb for June remain unsettled, and in Europe PE prices rose Eur50/mt in April. Europe and Asia have seen production costs rise with crude and naphtha, as those regions largely depend on naphtha to produce ethylene feedstock for PE, while the US depends largely on cheaper ethane. He said Asian PE margins "right now are under water" and Dow was watching to see how long Asian producers operate at negative cash margins and whether emerging from COVID shutdowns would increase domestic demand and boost prices. He also said Dow has been operating PE plants in the 90%-plus range across its global operations. The company's project to retrofit one of its Louisiana crackers to add propylene cracking capability was on track to start up in the second half of 2022. "It's basically in the finishing stages right now," Fitterling said, noting it would reach startup mode by the end of Q3 and begin production in Q4. The project used Dow technology for a reactor based on fluid catalytic cracking, a mainstay of refineries for gasoline production. The 1 million mt/year, mixed-feed cracker in Plaquemine, Louisiana, to enable production of more than 100,000 mt/year of on-purpose propylene.

Abu Dhabi National Oil Co. and Austria's petrochemical company Borealis have raised over $2 billion from the initial public offering of their joint venture as the UAE's state-owned oil producer boosts spending to finance its energy projects. ADNOC and Borealis sold a 10% stake in their joint venture Borouge, the UAE's biggest petrochemical company, and will list the unit on the Abu Dhabi Securities Exchange June 3, the oil producer said in a May 31 statement. ADNOC will continue to own a majority 54% stake in Borouge following its listing, while Borealis will hold a 36% stake. In April, ADNOC said it had bought a 25% stake in Borealis from the UAE sovereign wealth fund Mubadala Investment Co. Mubadala holds a 24.9% stake in Austria's OMV, which will own the remaining 75% interest in Borouge. Since 2019, ADNOC has been monetizing its oil and gas assets as it seeks to unlock cash to fund strategic projects, including increasing oil output capacity to 5 million b/d by 2030, from about 4 million b/d, currently. ADNOC is forging ahead with an expansion of its hydrocarbons and low-carbon businesses under a plan to spend Dirham 466 billion ($127 billion) over 2022-2026. The company's previous five-year capital expenditure plan was for $122 billion. Fourth IPO The Borouge IPO is ADNOC's fourth flotation of a unit. ADNOC has already sold stakes in its fuel retail arm ADNOC Distribution, ADNOC Drilling and fertilizer company Fertiglobe as it seeks to raise money to spend on growth projects. Earlier this year, ADNOC and Borealis announced the startup of a new polypropylene unit that will boost total polymer capacity of polyolefins by 11% at Borouge, ahead of a 2024 launch of a $6.2 billion expansion. The commencement of operations at its fifth PP unit will boost the commodity's production capacity by 25% to 2.24 million mt/year and its total polymer capacity of polyolefins by 11% to 5 million mt/year. The Borouge 4 project, which is expected to become operational in 2025, includes the construction of a 1.5 million mt/year ethane cracker and two polyethylene plants. The project will become the world's largest single-site polyolefin complex at 6.4 million mt/year. Platts assessed PP Injection grade CFR Far East Asia at $1,100/mt at the Asian close May 30, unchanged on the day, S&P Global Commodity Insights data showed.

In this special episode of the Commodities Focus podcast from S&P Global Commodity Insights, Vincent Valk, senior editor of Chemical Week, and Luke Milner, managing editor of the EMEA olefins and polymers team, discuss the impact of Russia’s invasion of Ukraine on European polymer markets, whether buyers in Europe are avoiding Russian material and the impact of the recent reduction in demand. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

The outlook for gasoline-related petrochemicals such as toluene, xylenes and MTBE remains relatively firm amid strong gasoline margins, while demand for most petrochemicals in key market China remains sluggish amid COVID-19 related lockdowns. Isomer-MX ** June demand appears firm this week as cargo supply is reduced amid turnaround at Japanese producer Taiyo Oil's 700,000 mt/year isomer-MX capacity as well as producers prioritizing gasoline production over aromatics due to strong margins. ** The paraxylene-MX spread narrowed to $62.67/mt May 6, the lowest since $61.50/mt on May 29, 2020, S&P Global Commodities Insights data shows. The spread is vital, especially for non-integrated producers of PX, that must source MX externally. If the spread remains around such levels, PX producers may be forced to consider run cuts or even idling plants, which in turn could negatively affect MX demand. ** China's MX demand remains sluggish and the East China inventory increased 22.6% week on week to 96,000 mt May 6. Toluene ** Asian toluene prices will continue to be well-supported this week amid tight inventories across Northeast and Southeast Asia, and continued strong buying from South Asia, trading sources said. There is no spot cargo available for June from Malaysia, Singapore and Thailand. ** There are several traders sourcing for cargoes particularly with paraxylene-toluene and benzene-toluene spreads still wide, making it favorable for TDP and MTPX producers in South Korea and the US to produce PX and benzene, trading sources said. ** China has been quiet on the import front as COVID-19 related lockdowns and restrictions hampered domestic operations. The initial wave of exports have now been placed to Korea, and supplies are being cautiously held back as there was an expectation that the lockdowns would be lifted soon, sources said. The driving and summer demand season for gasoline see economical margins with gasoline-Brent cracks and gasoline-naphtha spreads wide, sources added. Benzene ** Outlook in the Asian benzene market to remain mixed this week, although turnarounds in June would likely continue to keep fundamentals buoyed. ** Platts assessed FOB Korea benzene at $1,176.33/mt May 6, highest level in more than a month, S&P Global data showed. MTBE ** Asia's FOB Singapore MTBE marker was on an uptrend, bolstered by a bullish upstream energy complex along with newly announced EU sanctions on Russian oil, which sparked concerns over tight supply. MTBE supplies tightened on the back of lower run rates amid high feedstock costs. Methanol ** Asian methanol is expected to trade at stable to slightly softer levels this week as lockdowns in China weigh on consumer and crude oil demand, though upside could come from unexpected supply disruption in global oil and natural gas markets. ** While methanol demand in China was heard to be healthy among methanol-to-olefin plants, in some sectors, finished goods manufacturers faced delays in shipping their product out and this caused one or two methanol-to-olefin units to reduce their operating rates, sources said. ** CFR China was assessed $1/mt lower day on day at $347/mt May 6. Butadiene ** Asian butadiene will likely remain bearish the week of May 9, hit by slowing demand. Downstream market outlook such as styrene-butadiene-rubber will likely be weak as the lockdowns in China slowed economic activity, including automobile production. Market participants are also closely monitoring steam cracker operations in May. ** Butadiene supplies in Southeast Asia are seen increasing as well. In Malaysia, Pengerang Refining and Petrochemical, or PRefChem, aims to restart its 180,000 mt/year butadiene plant in the southern state of Johor in June. All of the company's supply will be sold in the spot market as it does not have a butadiene downstream plant. Propylene ** The propylene market is slated to remain under pressure this week as Chinese buyers continue to eye domestic material to meet their production needs. Shandong propylene hit Yuan 8,750/mt ex-tank May 6, up Yuan 375/mt from the week before. Buying interest for imports remain muted due to the extended lockdown of Shanghai. Polypropylene ** Asian PP is expected to remain rangebound this week on weak market sentiment. Last week, modest price gains were made in China on higher crude oil prices and the easing COVID-19 situation in Shanghai, but overall demand remains low as recovery is uncertain. ** Prices at major importer Vietnam continue to slide, capped by low domestic prices and inflows of competitively priced Chinese cargoes. PVC ** Trading activity will likely be limited this week as fresh offers for June are due to be released in the next few weeks. Market participants expect fresh offers to be reduced again in a bid to compete with China-origin cargoes after a $50-$80/mt month-on-month drop for May. ** Market participants are closely monitoring port operations in China as lockdowns slowed container shipping operations significantly. Oxo-alcohols ** The 2-Ethyl Hexanol CFR China marker is likely to be supported this week as replenishing needs and shutdown among production majors lend support. ** The tradable price for 2-EH China was heard at Yuan 13,000-13,300/mt in Shandong and east China, respectively, in the week to May 5, up Yuan 800-900/mt week on week. ** Supply from other producers in Northeast Asia remained tight due to planned shutdown among the majors. South Korea's Hanwha Solutions is restarting its 160,000 mt/year oxo-alcohol plant at Yeosu on May 19, following a planned turnaround, while LG Chemical is planning to shut its 2-EH Naju plant from early May. PTA ** Market sentiment is likely to remain mixed this week amid upstream volatility and the COVID-19 situation in China. Participants are adopting a wait-and see approach, seeking clarity regarding market outlook before conducting negotiations. ** Fundamentals are likely to remain stable this week given weak demand from downstream polyester and tighter supply from scheduled turnarounds by various PTA producers. R-PET ** Feedstock prices look set to remain elevated this week as demand continues to outstrip supply. High European prices and low collection rates for post-consumer bottles likely to keep outlook bullish.

Enterprise Products Partners will expand its 1 million mt/year ethylene export terminal 50% by the second half of 2023 and double it to more than 2 million mt/year by 2025, the company said May 2. The second expansion will coincide with an expansion of ethane export capability as well in 2025, according to Enterprise's presentation that accompanied the company's first-quarter 2022 earnings call. According to Chris D'Anna, the company's senior vice president of petrochemicals, the terminal, a joint venture with Navigator Gas, has been operating at 125% of its nameplate capacity, or 1.25 million mt/year. A 50% expansion of that level of output would push capacity to 1.875 million mt/year, and doubling the current beyond-nameplate output by 2025 would push capacity to 2.5 million mt/year. Co-CEO Jim Teague said during the May 2 call that Enterprise has seen some economic run cuts at crackers amid logistics logjams that have hindered downstream resin exports. "You're definitely seeing the supply chain somewhat concentrated," Teague said. 'We're realizing some economic run cuts in ethylene plants as they're stacking up polyethylene." Market sources have seen similar backups for other resins, including construction staple polyvinyl chloride. Market sources have said resin packaging warehouses were full or nearly full, leaving rail cars with new cargoes waiting to unload for packaging. Sources had expected those holdups to prompt resin and ethylene producers to reduce rates until the clogs can clear. "But that ultimately gets resolved," Teague said of logistics holdups. "And this is still the most price-advantaged market in the world." Teague referred to the US ethane feedstock advantage over crackers in naphtha-dependent regions, namely Asia and Europe. Naphtha prices have risen sharply alongside crude prices after Russia's Feb. 24 invasion of Ukraine, raising ethylene production costs in Asia and Europe, and widening the cost advantages of using ethane feedstock for US crackers. During the company's April 12 analyst meeting, D'Anna said operating the ethylene export terminal at 125% of its nameplate capacity was not enough. "The terminal is full as the rest of the world is struggling with high energy and feedstock prices. They want more across the dock. Both our US ethylene producers and our international customers want more." Enterprise secures sufficient long-term support for ethane export capacity expansion Teague also said during the analyst meeting that Enterprise has secured a long-term agreement with INEOS that supports a second ethane terminal along the US Gulf Coast "somewhere along our ethane header system" between Corpus Christi, Texas, and New Orleans. "When INEOS approaches us with this opportunity, they were adamant that a second terminal was needed to be able to step up their commitments," Teague said. "They're developing markets around the world and supporting our value chain via their waterborne logistics." He said the company was still working on the final site location. Justin Kleiderer, vice president of natural gas liquids marketing and supply, said during the May 2 earnings call that Enterprise has seen spot ethane volume availability rise in the last 12-18 months. The company's current ethane terminal can load 10,000 barrels/hour at the same site along the Houston Ship Channel, which is home to the ethylene export facility.

Abu Dhabi National Oil Company has bought a 25% stake in Austria's Borealis from the UAE's sovereign wealth fund Mubadala, the company said in a statement April 29. The investment will allow ADNOC to expand into the chemical and petrochemical sectors in Europe and the Americas, the company said in a statement. The transaction comes ahead of the planned listing of a 10% stake in Borouge, a joint venture between ADNOC and Borealis. The transaction will not have an immediate impact on Borouge's shareholding structure, according to an ADNOC spokesman. Borouge is made up of Borouge ADP, its production entity and Borouge Pte, which is the sales and marketing company. ADNOC holds a 60% interest in Borouge ADP and half of the stake in Borouge Pte. ADNOC, Mubadala and Borealis declined to comment on the financial details of the stake sale. Austria's OMV will own the remaining 75% of the company following the completion of the transaction, which is pending regulatory approvals. Mubadala is also one of OMV's shareholders, retaining a 24.9% stake in the company. Earlier this year, ADNOC and Borealis announced the startup of a new polypropylene unit that will boost total polymer capacity of polyolefins by 11% at their petrochemical joint venture in the UAE ahead of a 2024 launch of a $6.2 billion expansion. Joint venture Borouge has commenced operations at its fifth polypropylene unit, which will boost the production capacity of the commodity by 25% to 2.24 million mt/year and its total polymer capacity of polyolefins by 11% to 5 million mt/year. Expected to become operational in 2025, the Borouge 4 project includes construction of a 1.5 million mt/year ethane cracker and two polyethylene plants. It will make the site the world's largest single-site polyolefin complex at 6.4 million mt/year.

With roots in Germany's industrial heartland dating back to 1865, chemicals giant BASF is readying itself for carbon neutrality. As it builds a foothold in the renewable energy space, the company is morphing from buyer to producer of green electricity. Boasting a market capitalization of nearly Eur47 billion, BASF makes products including fertilizers, industrial gases, electronic-grade chemicals and glues, which it manufactures at production hubs in Texas, Belgium, Malaysia, China and other global locations. The company has committed to buy electricity from multiple European wind and solar farms, has taken an equity stake in a Dutch offshore wind farm, is bidding for another one and in January established a dedicated renewables division. In setting up BASF Renewable Energy, the company is making renewables part of its core business. "This is the extension of our existing approach of integrating ourselves in the value chain for key inputs," Horatio Evers, CEO of the new division, told S&P Global Market Intelligence. BASF, which already generates most of its own electricity through steam and gas turbines, has a goal is to "provide a secure, ideal portfolio of renewables," Evers said. Its "make and buy" strategy includes building up its own capacity while buying electricity through long-term power purchase agreements. Such activities have accelerated in recent months. In November 2021, the company signed a 25-year PPA for green electricity with French utility Engie, encompassing up to 20.7 TWh of power. This came after buying a 49.5% stake in the Hollandse Kust Zuid offshore wind farm in the Netherlands from Vattenfall, of which BASF agreed to sell half to German insurer Allianz at the end of the year. More recently, BASF bought a stake in a company called Vattenfall Hollandse Kust West VI, with Vattenfall and BASF confirming April 22 that they will bid for the 700 MW Site VI concession in the Netherlands' Hollandse Kust West offshore wind tender. The tender opened April 14 and closes May 12, with the winners set to be announced after the summer. Having a more involved BASF in the construction and planning of offshore wind farms would be a welcome development, according to Martin Neubert, chief commercial officer at Danish wind developer Ørsted. "There is a huge amount of [interest] from industry to directly secure, procure and be part of development," Neubert said at industry group WindEurope's annual conference in Bilbao, Spain, on April 6. "I think it's good, in terms of how we best allocate resources, capabilities, but also risk. An open-door approach empowers the industry to ramp up." Ørsted will sell 186 MW of output from its 900 MW Borkum Riffgrund 3 wind farm in Germany's North Sea coast to BASF under a 25-year PPA. The project is expected online in 2025. Buying green power under long-term PPAs allows BASF to secure the required volumes at predictable prices, Evers said. The deals also help reduce BASF's direct Scope 1 and 2 greenhouse gas emissions -- those associated with its own production and purchased energy -- which stood at 21.8 million mt of CO2 equivalent in 2020, according to S&P Global Trucost, having barely changed since 2016. German utility RWE more than halved its direct emissions during that time. BASF wants to reduce its Scope 1 and Scope 2 emissions by 25% by 2030, compared with 2018 levels. For those scopes, the company is targeting net-zero by 2050. Home country Germany, by comparison, has a net-zero target of 2045. To support its goals, BASF wants to spend around Eur4 billion on low-carbon technologies by 2030. The company does not have a target for Scope 3 emissions, which arise from customers using its products, but said it aims to be "among the first companies to provide large volumes of as many products as possible with reduced carbon footprints." 'Precious hydrogen' Renewable electricity will help to decarbonize the company's activities, but many processes rely on natural gas or gas-derived hydrogen and cannot be directly electrified. Fertilizer ingredient ammonia, for instance, is made using gray hydrogen, produced with natural gas, including by BASF. The company uses around 1 million mt of hydrogen per year across its global operations, and flagship location Ludwigshafen in western Germany makes around a quarter of this hydrogen. To clean up these polluting operations, EU policymakers want chemicals companies to switch to green hydrogen, which is made with renewables and electrolysis. BASF's renewables unit welcomes this plan, Evers said, while calling for a targeted approach and focus on specific use cases. "Hydrogen alone will not solve all of our problems," the executive said. "For the production we will also need vast amounts of renewables that we currently do not have." As a result, deployment of hydrogen needs to happen in areas that are directly reliant on hydrogen, such as chemicals and steel, Evers said. Policymakers ought to prioritize these sectors over power generation or heating, where sufficient alternatives exist. "Precious hydrogen should not be wasted," Evers said. As the market and production capacity for green hydrogen ramps up, BASF also wants production to take place near existing hubs like Ludwigshafen, while a gas network for long-distance transport is built up for the medium to long term. To that end, the company will build an electrolyzer in Ludwigshafen starting this year, subject to subsidy approvals. "We know how power-intensive electrolysis is," Evers said. BASF is testing a supplementary method of hydrogen production at the site, called methane pyrolysis, which the company says uses less electricity. The process splits gas into hydrogen and solid carbon and produces no greenhouse gas emissions if run on renewables, according to BASF. The approach is not without critics. "Methane pyrolysis is almost as bad as the current major process of producing hydrogen," Mark Jacobson, professor of civil and environmental engineering at Stanford University, said in an email. This is chiefly because of gas leakage in the value chain, while the green energy required to power pyrolysis is prevented from replacing coal and gas in power generation, Jacobson said. Europe's industries will also tap hydrogen in a pivot from Russian gas usage, with the EU committed to stopping all imports by 2027 in light of Russia's invasion of Ukraine. This shift will be felt strongly in German industry, as the country is heavily reliant on Russian gas, importing more than half of its supplies from there via pipelines. BASF's stock declined sharply as Russia invaded Ukraine and is down 18% in the year to date as of April 13. The company also owns a majority stake in Wintershall Dea, one of the financiers of the now-shelved Nord Stream 2 gas pipeline; Wintershall took a Eur1 billion impairment on that project.

Russian rubber will face an additional import tariff of 35% when imported into the UK, the British government said April 21, as part of a second round of import sanctions against Moscow following its invasion of Ukraine. The UK government on March 15 said that Russian tires would face an additional 35% import tariff. The sanctions this time, part of a GBP150 million sanctions package, extends the same measure to a wider group of "rubber and articles thereof" products under the HS code 4001, 4002, 4005, 4008, 4009, 4010, 4015, 4016. Commodities including butadiene rubber, styrene-butadiene rubber, nitrile-butadiene rubber and isoprene rubber are included under HS code 4002. The announcement did not provide a clear timeline and overall scope on implementing these measures, stating "legislation will be laid in due course to implement these measures. The overall scope of products affected by existing and planned tariff increases will remain under review." The full list of affected Russian imports under the second round of sanction measures include commodities such as sugar, wood products, silk, cotton, as well as other products like diamond, toys and furniture. Tires are the primary consumer of styrene-butadiene rubbers and other synthetic rubbers while also using materials such as carbon black and steel.

Developments in recycling, the barriers and opportunities the industry faces and the role of recycling and bioplastics in Europe’s sustainability journey are discussed by Ton Emans, President of Plastic Recyclers Europe, here in conversation with Luke Milner, Managing Editor of EMEA Olefins and Polymers at S&P Global Commodity Insights.

Taiwan's CPC has declared force majeure on isomer mixed xylenes and toluene cargoes for April loading, a company spokesperson told S&P Global Commodity Insights April 18. Industry sources said the force majeure was in response to the closure of aromatics units No. 3 and No. 7, earlier announced due to a coronavirus positive case, with letters issued to customers from April 13-14. "Mixed xylenes buyers have arranged vessels to load cargo but [CPC] can't deliver cargo in April ... toluene and MX will be deferred to May or June," a source close to the company said. "Actual quantity is not confirmed. Toluene about 13,000 mt," the source added. Trading sources said the isomer-MX quantity was around 9,000 mt. Supplies of isomer-MX and toluene have been tight following several operating run in from Southeast Asia and Northeast Asia since March, trading sources said. The force majeure will further add to lack of availability, they said. The No. 3 aromatics unit can produce 25,000 mt/year of benzene, 136,000 mt/year of toluene and 150,000 mt/year of mixed xylenes, industry sources said, while the No. 7 unit can produce 208,000 mt/year of benzene and 104,000 mt/year of toluene. CPC is able to produce 274,000 mt/year of benzene, 321,000 mt/year of toluene and 507,000 mt/year of xylenes annually. The toluene FOB Korea marker was assessed at $1,065/mt April 18, $20/mt higher day on the day, gaining more than the adjacent aromatics prices and upstream naphtha prices, S&P Global data showed. This was largely attributed to the tight supplies and further curtailments in availability from Taiwan CPC's force majeure declaration on toluene cargoes. Some traders had also heard the possibility of term commitments being postponed as well. Benchmark naphtha C+F Japan was assessed higher by $14.50/mt day on day at $957.50/mt, while the adjacent downstream CFR Taiwan/China paraxylene price was assessed up $12.83/mt day on day at $1,213.33/mt. China has supplies but no ships to transport the cargoes, industry sources said. Several traders have been caught off guard due to the shortage, amid commitments in India and Vietnam, sources said. A trader said that he was unable to find ships to load cargoes from China and send to West Coast India. Vessels were stuck in India due to a lack of cargoes to send to Asia, he added.

Chinese refineries will slash throughput in April and lift oil product exports from initial plans to compensate for falling domestic demand due to COVID-19 lockdowns. As a result, 10 refiners from the 11 polled Sinopec and PetroChina refining sources said they have cut their April throughput by 30,000-100,000 mt from their initial planned volumes or plan to reduce. These include Sinopec's 14 million mt/year Shanghai Petrochemical, which has been locked down since late March. It will lower throughput by 40,000 mt to 1.19 million mt in April. The neighboring 8 million mt/year Anqing Petrochemical plant has trimmed throughput several times since April 1 to get the current target of about 550,000 mt from an initial 650,000 mt. Another neighbor, the 16 million mt/year private greenfield Shenghong Petrochemical has further delayed its startup, with no fixed commission schedule, given high oil prices coupled with weak product demand, according to a company source. Down south in Guangzhou, oil product sales are also slow. The 13.2 million mt/year Sinopec plant has cut throughput by 40,000 mt from planned to 990,000 mt in April. In eastern China's Shandong province, independent refineries have even cut their average utilization rates to 49.4% as of April 6, against 57.1% a month earlier, according to local information provider JLC. In northeast China, three of PetroChina's refineries in Liaoning province have reduced their April throughput by 30,000-50,000 mt from original plans, according to sources with the plants. Meanwhile, Russian crude imports by China's independent refiners slumped 44.4% year on year to a 10-month low of 1.5 million mt in March as a regular buyer ChemChina shut for maintenance its Huaxing Petrochemical. The volume is expected to fall further as a few independent refineries step away from Russian cargoes amid uncertainties in payment and shipping amid the ongoing Russia-Ukraine war and negative refining margins. Japan's largest refiner ENEOS does not plan to sign any Russian crude oil import contracts following Russia's invasion of Ukraine, ENEOS Holdings Chairman Tsutomu Sugimori said March 22. "Following the Ukraine invasion, we have not signed any contracts [for Russian crude]," Sugimori told an online press conference as the president of the Petroleum Association of Japan. "We do not expect to import [Russian crude] for the moment." ENEOS, however, will receive a few ships carrying Russian crude cargoes until April from its purchase contracts signed prior to the invasion in February, Sugimori said. Japan's second largest refiner Idemitsu Kosan has decided to suspend new Russian crude oil trades for imports amid uncertainty over payment and logistics disruptions, a company spokesperson told S&P Global Commodity Insights March 23. Cosmo Oil, Japan's third largest refiner, does not currently procure Russian crude oil, and it does not have any plans to procure the barrels, a Cosmo Energy Holdings spokesperson said March 23. Japanese refiner Taiyo Oil is currently seeking clarity about whether it can continue to lift term crude oil supply from Russia, which it relies on for 20%-30% of its crude procurement, amid uncertainty over payment settlements and shipping, a company spokesperson said April 4. Meanwhile, Japan's Ministry of Economy, Trade and Industry revoked March 31 Taiyo Oil's safety inspection permission at its sole 138,000-b/d Kikuma refinery at Shikoku in western Japan following its violations of safety regulations. Following the revocation, Taiyo Oil will now have to conduct a refinery maintenance program every year and get it approved by the local authorities until the company restores the permission, a METI official said. Prior to the suspension of its safety inspection permission, Taiyo Oil planned to shut two crude distillation units at the Kikuma refinery over May 30-Aug. 17 for a large scheduled maintenance program that takes place every four years. Separately, Japan's largest refiner ENEOS said March 28 it restarted the 170,000 b/d No. 2 crude distillation unit at the Kawasaki refinery in Tokyo Bay on March 25 after it was shut March 16 due to earthquake-led power outages. ENEOS said April 4 that it plans to restart the distillation unit at the Sendai refinery in the northeast and the Chiba refinery in Tokyo Bay in mid-April. At the Sendai refinery, all refining units were shut while all refining units at ENEOS's Chiba Refinery and the No. 2 crude distillation unit at the 247,000 b/d Kawasaki refinery, both in Tokyo Bay, were suspended. In other news, China aims to develop renewables-based hydrogen and curb fossil fuel-based hydrogen production which currently dominates the nation's hydrogen supply, according to its hydrogen industry development plan. The development plan jointly released by China's top economic planner National Development and Reform Commission, or NDRC, and energy regulator National Energy Administration lays out high-level guidelines for its hydrogen supply chain from 2021 to 2035. China has already become the world's largest hydrogen producer with 33 million mt/year of supply, but 63.5% of this is produced from coal, 21.2% as industrial byproduct, 13.8% from natural gas and only 1.5% from water electrolysis that is not fully powered by renewables-based electricity, according to the China Hydrogen Alliance. Quantitative targets are only set up until 2025, including building up 100,000-200,000 mt/year of renewables-based hydrogen production, realizing 1 million-2 million mt/year of CO2 emissions reduction and 50,000 hydrogen fuel cell vehicles or FCEVs by 2025, the report said. By 2030, the plan aims to build up a more comprehensive supply system for clean hydrogen and enable broad applications of hydrogen in different sectors to support China's carbon peaking 2030 target. By 2035, the plan expects to have a more sophisticated ecosystem for hydrogen, covering diverse applications in transportation, energy storage, industrial and other sectors. Renewables-based hydrogen will occupy a significantly increasing share in China's energy consumption mix and become an important backbone for the nation's energy transition, the plan said. NEW AND ONGOING MAINTENANCE Refinery Capacity b/d Country Owner Unit Duration Negishi 270,000 Japan ENEOS Part Closure'22 Wakayama 127,500 Japan ENEOS Full Closure'23 Kikuma 138,000 Japan Taiyo Oil Full May Hainan 184,000 China Sinopec Full Mar Jinzhou 150,000 China Petrochina Full Apr Yangtz 290,000 China Sinopec Full Mar Tahe 100,000 China Sinopec Full Mar Huaxing 140,000 China ChemChina Full Apr UPGRADES Zhenhai 230,000 China Sinopec Expansion NA Jinling 420,000 China Sinopec Upgrade NA Haiyou 70,000 China Haiyou Upgrade On hold Huizhou 440,000 China CNOOC Upgrade NA Chiba 190,000 Japan Idemitsu Upgrade 2020 Changling 230,000 China Sinopec Upgrade NA Qinzhou 240,000 China Guanxi Upgrade 2023 Fujian 280,000 China Sinopec Upgrade NA LAUNCHES Tangshang 300,000 China Xuyang Group Launch 2021 Jieyang 400,000 China Guandong Launch 2021 Huajin Aramco 300,000 China Joint Launch 2024 Lianyungang 320,000 China Shenghong Launch Launched Yulong 400,000 China Yulong Launch 2022 Near-term maintenance New and revised entries Japan ** Japan's Cosmo Oil shut one of two crude distillation units at its 177,000 b/d Chiba refinery in Tokyo Bay after a fire at a furnace April 2, a company spokesperson said April 5. The fire broke out at around 6:15 pm local time (0915 GMT.) April 2, and the local fire department confirmed that it was put out at 11:45 pm, the spokesperson said. No one was injured, and it was not clear when Cosmo would be able to resume the CDU, the spokesperson said. China ** PetroChina's Yunnan Petrochemical refinery in southwestern Yunnan province, which shut its 4 million mt/year residual hydrogenation unit and some of its relative downstream facilities due to a blast in December, is fully back online. ** ChemChina has shut for maintenance its Huaxing Petrochemical. Works started on March 15. Existing entries China ** Sinopec Hainan plans to completely shut for nearly two months of scheduled maintenance March 15-May 10, and there will no oil products exports in April. The Hainan refinery plans to process 370,000 mt of crude oil in March, which would be equivalent to about 47% of its nameplate processing capacity, down from 102% in February. ** PetroChina's Liaohe Petrochemical will shut for maintenance over April-June. ** Sinopec's Yangtz Petrochemical is scheduled to shut the entire refinery for maintenance over March-April. ** Sinopec's Tahe Petrochemical is scheduled to shut for maintenance from mid-March to late April. Japan ** Japanese refiner Taiyo Oil plans to shut two crude distillation units at its sole Kikuma refinery over May 30-Aug. 17 for scheduled maintenance, a company spokesperson said March 8. It will halt a 106,000 b/d No. 1 CDU and a 32,000 b/d No. 2 CDU. "This will be a large-scale planned maintenance [which is done] every four years, and we plan to shut the No.1, the No. 2 CDUs and the [32,000 b/d] RFCC at about the same time," the spokesperson said. ** Japan's largest refiner ENEOS will decommission the sole 127,500 b/d crude distillation unit at its Wakayama refinery in western Japan in October 2023. ** Japan's ENEOS 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. Upgrades Existing entries ** Sinopec plans to add a petrochemical plant to its Fujian refining complex as part of its phase two expansion plans, according to a company source. "An ethylene plant will likely be added," said the source, without giving more details as the plans are still in early stage. The adding of the new chemical plant, will likely help lift the overall run rates at the refinery, sources said. On March. 8, Saudi Aramco and Sinopec said they would study possible capacity expansion at the Fujian refinery. The two companies will undertake a feasibility study looking into "optimization and expansion of capacity", Saudi Aramco said in a statement. ** Chinese Sinopec's refinery Zhenhai Refining and Chemical 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. The company aims to grow its refining capacity to 60 million mt/year and 7 million mt/year of ethylene by 2030. ** PetroChina's Guangxi Petrochemical in southern Guangxi province planned 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. ** Japan's Idemitsu Kosan plans to start work on raising the residue cracking capacity at its 45,000 b/d FCC at Chiba. ** Axens said its Paramax technology has been selected by state-owned China National Offshore Oil Corp. for the petrochemical expansion at the plant. The project aims at increasing the high-purity aromatics production capacity to 3 million mt/year. The new aromatics complex will produce 1.5 million mt/year of paraxylene in a single train. ** Construction of a new 1 million mt/year coker at Chinese independent refinery Haiyou Petrochemical, in eastern Shandong, has been put on hold. ** Sinopec's Jinling Petrochemical refinery in eastern China will build a new 600,000 mt/year VDU. Launches New and revised entries ** Private greenfield Shenghong Petrochemical has further delayed its startup, with no fixed commission schedule, given high oil prices coupled with weak product demand. The refinery initially planned to start up in end August, but this was postponed to end-December and then to January. ** PetroChina has started constructing a low sulfur bunker fuel oil project with 2.6 million mt/year production capacity at its upcoming Guangdong Petrochemical. PetroChina targets to commission Guangdong Petrochemical by end-2022. The Guangdong plant is PetroChina's latest greenfield integrated refinery in southern China Jieyang city, featured with a 2.6 million mt/year aromatics unit and a 1.2 million mt/year steam cracker. Existing entries ** Saudi Aramco said it has "taken the final investment decision" to participate in the development of a major refinery and petrochemical complex in China which is expected to be operational in 2024. The complex will be developed by Huajin Aramco Petrochemical Company (HAPCO), a joint venture between Aramco, North Huajin Chemical Industries Group Corporation and Panjin Xincheng Industrial Group. The decision is subject to finalization of transaction documentation, regulatory approvals and closing conditions. The project represents an opportunity for Aramco to supply up to 210,000 b/d of crude feedstock for the complex. The complex involves a 300,000 b/d refinery, 1.5 million mt/year ethylene-based steam cracker and a 1.3 million mt/year PX unit, S&P Global Commodity Insights has reported previously. ** 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/year 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 was 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. ** 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.