Article: Qatar: Major boost for chemicals production

This was an intriguing article about the proactive position taken by the Qatari Government to boost petrochemical production.  The Government is planning to inject USD$25 billion to more than double production in the country in the next seven years.

A move to bring the marketing and sales side of Qatar’s chemical, fertiliser and polymer operations under one umbrella is an indication of the country’s plans to build a larger and more vibrant downstream petrochemicals sector, which is expected to see increased revenues from plans to more than double production by 2020.

While Qatar is already the world’s top exporter of liquefied natural gas (LNG), the government is keen to add value downstream and reduce the country’s economic dependence on gas and oil revenues in line with the state’s National Vision 2030, Global Arab Network reports according to OBG.

The Qatar Chemical and Petrochemical Marketing and Distributing Company (Muntajat), which was launched in December 2012, is expected to consolidate the marketing and sales activities of the country’s nine producers by mid-2013. The Minister of Energy and Industry, Mohammed Bin Saleh Al Sada, told local media the new company would “…position Qatar as the world’s pre-eminent chemical and petrochemical hub”. Muntajat will hold exclusive rights to purchase, market, distribute and sell Qatar’s chemical and petrochemical products.

Under its long-term plans, the government is looking to boost production of petrochemicals from 10m tonnes per year to 23m tonnes by 2020 on the back of a $25bn investment in the industry, Al Sada said at Muntajat’s launch. The country will also use its hydrocarbon reserves to increase the focus on producing more complex chemicals and petrochemicals.

Data from the Gulf Petrochemicals and Chemicals Association show that Qatar boosted its capacity for the production of both petrochemicals and fertiliser by 13% and 15%, respectively, between 2007 and 2011. The industrial state giant, Industries Qatar (IQ), announced record revenues of QR18.7bn ($5.14bn) in 2012, up 13% year-on-year (y-o-y), which was attributed mostly to growth in the fertiliser sector.

Competition is growing in the global chemical and petrochemical industry following a boom in US shale gas production and a move towards self-sufficiency in China. However, readily available, competitively priced gas and full state coffers have given Qatar an edge in the field. “We have embarked upon a major expansion of our downstream sector to ensure greater diversification in monetising Qatar’s abundant natural gas resources,” Al Sada said in a speech to the Meed Qatar Projects 2013 conference.

Qatar Fertilizer Company (QAFCO), IQ’s joint venture with Norway’s Yara International, saw profits for 2012 rise 34% on the previous year’s results, driven largely by the completion of two new production facilities, local media reported. The new developments enabled QAFCO to increase its global market share of urea production to 15% and become the world’s leading producer of the chemical.

However, Qatar Petrochemical Company (QAPCO), a subsidiary of IQ, reported flat revenues and a 6% drop in profits for the year ending December 31, 2012. The company cited weak demand for the low-density polyethylene (LDPE) used in thermoplastic processing, pricing and lower sales volumes at the group’s fuel-additives joint venture as the reasons for the results.

Longer term, however, the future looks promising for Qatar’s petrochemicals industry on the back of rising demand. Industry analyst ChemSystems Global expects worldwide demand for polyolefins, which includes LDPEs, along with other Qatar-produced compounds, to reach 200m tonnes in 2020, up from 111m in 2006.

A wave of new petrochemical projects currently under construction will also support growth. In a separate initiative, for example, Qatar Petroleum has embarked on a joint venture with Shell to construct a $6.5bn petrochemical complex in Ras Laffan, local media reported in March.

Meanwhile, Qatar Fuel-Additives Company (QAFAC), another IQ subsidiary, recently began putting plans in place to roll out one of the world’s largest commercial-scale Carbon Dioxide Recovery plants. The facility, which is scheduled for completion next year, will break new ground in Qatar by capturing CO2 and injecting it into the existing methanol process to increase production capacity.

By 2017, Qatar will have invested $17bn of the $25bn earmarked for the petrochemicals sector, adding about 1.6m tonnes of intermediate products and around 1.5m tonnes of final products to current production capacity levels, according to QNB. “Qatar is moving up the value chain from basic petrochemicals to more complex products,” the bank said.

Muntajat’s CEO, Abdulrahman Ali Al Abdulla, told The Peninsula that he expected Muntajat to increase efficiency, reduce lead times and build strong relationships with customers. The firm assumed responsibility for the global marketing of Qatar Fuel Additives Company (QAFAC) in February, before completing the integration of marketing activities for QAFCO in March. Having now also taken over the sales and marketing of SEEF Limited and Qatar Vinyl Company (QVC) in April, Muntajat’s consolidation plans look to be well on track.

“Muntajat promises customers consolidated logistics for reduced lead times and reliability of supply to meet demand,” Al Abdulla told OBG. “Through the consolidation effort we are reaching a high-level scale that benefits our customers.”

The full article is visible below – Pankaj Oswal

http://www.english.globalarabnetwork.com/2013042712912/Energy/qatar-major-boost-for-chemicals-production.html

Article: Shell raises chemical production capacity by new investments in Singapore

Royal Dutch Shell is making a bold move into Singapore to fill a market need for high- purity ethylene oxide and ethoxylates.

Royal Dutch Shell, the Dutch- based energy giant, announced on Tuesday its new investments in Singapore, in order to “increase production capacity of high- purity ethylene oxide and ethoxylates to meet projected demand in Asia”.

The so-called high-purity ethylene oxide is used in a wide range of household and industrial application. It can process into alcohol ethoxylates, which represent key ingredients for a variety of products, such as detergents and personal care items like shampoo and body wash.

The energy major said the new investments include a high-purity ethylene oxide purification column with an initial capacity of 140,000 tonnes a year and two world-scale ethoxylation units with a combined capacity of 140,000 tonnes annually, as well as some associated facilities.

The new production units will add to Shell’s existing production capacity of high-purity ethylene oxide, which is currently at 65,000 tonnes per year, and alcohol ethoxylates capacity of 40,000 tonnes per year.

Shell didn’t reveal the total investment figure in the press release but said that they will be built over 35,000 square meters of land.

Together with the groundbreaking for these new plants on Tuesday, Shell also began its upgrading work of its polyols production facility here.

“The demand for alcohol ethoxylates in Asia is expected to increase at approximately 6-7 percent annually over the next five years. The key driver for this is the move by consumers from laundry powder and soap bars to liquid detergent and liquid soaps, especially in major markets like China, India and South-east Asia, ” said Graham van’t Hoff, Executive Vice President of Shell Chemicals.

“We are expanding to meet the growing needs of our existing and new customers,” he added.

The full article is visible via the link below – Pankaj Oswal

http://www.globaltimes.cn/content/775492.shtml#.UXCda8qxklA

Article: Global Petrochemical Prices Fell 5% in March on Weak Demand

A recent piece about the PGPI benchmarking of global average petrochemical prices falling 5% in March after a 6% increase in February.  This blog reported the increase then but it has been quickly undone.  This is due mostly to the decline in aromatics.  In particular, paraxylene fell 10% in the month, and toluene and benzine both fell 8% since the end of February and this had some effect on the PGPI.  Certain segments are volatile now and it’s an area to watch.

LONDON, April 10, 2013 /PRNewswire via COMTEX/ — Prices in the $3-trillion-plus global petrochemicals market fell 5% to $1,378 per metric ton (/mt) in March, according to the just-released monthly average of the Platts Global Petrochemical Index (PGPI), a benchmark basket of seven widely used petrochemicals. This followed a 6% increase in February.

On a year-over-year basis, petrochemical prices also were down 5% from the March 2012 average price of $1,445/mt, according to data published by Platts, a leading global energy, petrochemicals and metals information provider and a top source of benchmark price references.

Petrochemicals are used to make plastic, rubber, nylon and other consumer products and are utilized in manufacturing, construction, pharmaceuticals, aviation, electronics and nearly every commercial industry.

PLATTS GLOBAL PETROCHEMICAL INDEX IN DOLLARS PER METRIC TON The daily price reflected as a monthly average

        Mar-'13 Monthly Annual Mar-'12 Feb-'13 Jan-'13 Dec-'12 Nov-'12
                %       %
                Change  change
        $1,378  - 5%    - 5%   $1,445  $1,453  $1,425  $1,350  $1,323

The chart above shows the daily end-of-day Platts Global Petrochemical Index (PGPI) price in red and also displays the 20-day PGPI moving average (MA) in blue. If you have trouble viewing the graphic, visit this link: PGPI Averages

“Of the three groups of chemicals making up the Platts Global Petrochemical Index -aromatics, polymers and olefins – the aromatics posted the largest price decline in March,” said Jim Foster, Platts senior petrochemicals analyst. “Asian demand for xylenes wasn’t there last month, so toluene was not being converted to xylenes or benzene,” he explained. “Styrene plants were shut down, which resulted in length in the global benzene market.”

The average price of paraxylene was $1,472/mt in March, down 10% from the February level and marking the first decline since June 2012, when the average paraxylene price fell 16%. Toluene, which can be converted into xylene and benzene, fell 8% in March to $1,197/mt, on weakened Asian paraxylene demand.

Global benzene prices also posted an 8% decline in March, dropping to an average of $1,301/mt. Benzene is primary raw material input for styrene production. With several styrene plants shut during March for routine maintenance, demand for benzene declined.

Olefins prices were lower in March as downstream plastic demand ebbed and raw input costs dropped. The global propylene index in March fell 6% to an average price of $1,331/mt, following a February level of $1,411/mt. The price decline in propylene, which is used to produce polypropylene, also spurred a pull-back in the March global polypropylene price index, which slipped 3% to $1,528/mt.

Ethylene, the second olefin component of the PGPI, saw a 4% price index retreat in March to $1,349/mt, following the February average of $1,403/mt. Polyethylene, which is produced from ethylene, saw a similar price decline last month. It was down 3% to $1,538/mt.

Petrochemical prices moved counter to price trends in the global equity markets in March. The Dow Jones Industrial Average (DJIA) was up 4% last month, while the London Stock Exchange Index (FTSE) edged up 1% and the Nikkei 225 jumped 7%.

To access a summary of the March performance of each of the seven key petrochemicals included in the PGPI, visit this link: http://www.platts.com/newsfeature/2013/Petrochemicals/pgpi/index.

The PGPI reflects a compilation of the daily price assessments of physical spot market ethylene, propylene, benzene, toluene, paraxylene, low-density polyethylene (LDPE) and polypropylene as published by Platts and is weighted by the three regions of Asia, Europe and the United States. Used as a price reference, a gauge of sector activity, and a measure of comparison for determining the profitability of selling a barrel of crude oil intact or refining it into products, the PGPI was first published by Platts in August 2007.

Published daily in a real-time news service Platts Petrochemical Alert and other Platts publications, the PGPI is anchored by Platts’ robust and long-established price assessment methodology and the firm’s 100-year history of energy price reporting.

Platts petrochemicals experts are available for media interviews. A sample list of experts may be found at the Platts Media Center. For more information on petrochemicals, visit the Platts website at http://www.platts.com.

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts’ news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts’ coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of The McGraw-Hill Companies MHP -0.21% , Platts is headquartered in New York with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.

About The McGraw-Hill Companies: The McGraw-Hill Companies, to be renamed McGraw Hill Financial (subject to shareholder approval), is a powerhouse in credit ratings, benchmarks and analytics for the global capital and commodity markets. Leading brands include: Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and Associates, McGraw-Hill Construction and Aviation Week. The Company has approximately 17,000 employees in 27 countries.

The full article is visible via the link below – Pankaj Oswal

http://www.marketwatch.com/story/global-petrochemical-prices-fell-5-in-march-on-weak-demand-2013-04-10

Article: Wholesale Prices Favorable for Phosphates and Ammonia

This is an insightful piece about the current prices and key aspects of the more important petrochemicals.  The article points out that phosphates and ammonia prices are sliding making them appealing purchase options.  The article indicates that this trend is likely to continue.

World wholesale prices as reported by Mosaic show favorability for DAP/MAP producers, falling urea prices and a slight uptick in delivered potash on the wholesale market. Al three components of DAP fell week-over in wholesale action with phosphate rock from Morocco shedding as much as $13.00/ton. Ammonia eased by $10.00/ton and while sulfur remained unchanged during the week, the price of a ton of sulfur remains $22.00/ton below year-ago.

DAP processing margins rose slightly to $268/ton — a $4.00 increase year-over — and this is what producers need to see if production increases are to make gains to the lagging phosphate supply against the five year average.

Wholesale urea prices fell at Yuzhnny, the Middle East and in the U.S. Corn Belt and moved sideways at NOLA. Prices are well below last year’s price at this time and some would say that suggests room to the upside ahead. But I believe the year-over discrepancy is due to a correction and do not expect urea to move higher in wholesale action when ammonia still has so much to give compared to last year.

This week’s wholesale ammonia price was $10.00/ton less than the week before but remains $225.00 above year-ago. Ammonia certainly has more downside potential given the year-over comparison and that should keep urea and DAP from finding much upside action near-term.

Potash did move higher in Midwest wholesale markets, but this may be what Chip calls a ‘dead cat bounce’ — even a dead cat will bounce if you drop it from high enough. Prices are nearly $100.00/ton less than last year and this dead cat bounce could easily be looked upon as a timid correction.

Outlook —

With declining prices and downside room yet to give against last year, ammonia should continue to slide. This would give some traction to the downside for nitrogen products in particular, and especially urea. We may even see anhydrous fall if these declines continue.

Couple falling ammonia prices with declines in wholesale phosphate rock and sulfur and you’ve got a recipe for lower prices in finished phosphate products. This points to favorable pricing for end users and strong margins for upstream DAP/MAP production.

Despite potash’s upward nod, I don’t expect much to come of it anytime soon. Potash added $0.42 cents in last week’s Monitor Index, but Canadian supplies will continue to limit upside action here until further notice.

Article by Davis Michaelsen

The full article is visible via the link below – Pankaj Oswal

http://www.agweb.com/article/wholesale_prices_favorable_for_phosphates__ammonia_/

Article: U.S. ethane glut supports petrochemical industry

An article I came across about falling ethane prices and the capacity for petrochemicals to improve their profit margin from this cheapening in supply.

The U.S. will have 60,000 b/d of surplus ethane in 2013, according to ESAI Energy’s recently published Global Industrial Fuels Outlook. New natural gas liquids (NGL) fractionation capacity will boost ethane supply in 2013. Despite modifications to existing ethylene plants to process more ethane, however, the U.S. market will have an even bigger surplus than it did in 2012. This supply glut and restrictions on the amount of ethane that can be left in natural gas will significantly weaken ethane prices in 2013, helping the petrochemical industry.

In response to rising shale gas production, total NGL (natural gas liquids) fractionation capacity in the U.S. will grow to 2.6 million b/d in 2013, increasing by 575,000 b/d year on year. Increased fractionation capacity (that turns natural gas into various components like ethane) and rising NGL pipeline capacity to move natural gas liquids to the Gulf Coast will enable more ethane (a component of natural gas liquids) production in 2013. Ethane production in the U.S. is likely to grow to 1.11 million b/d in 2013, 125,000 b/d more than in 2012, according to the report.

However, petrochemical demand, the only market outlet for ethane, will not keep up with the flood of ethane supply. “Based on new capacity and announced modifications to existing capacity, ethane demand is projected to increase by 100,000 b/d to 1.05 million b/d”, says ESAI Energy analyst Vivek Mathur. This means there is about 60,000 b/d of surplus ethane this year. Of this, about 50,000 b/d could be left in the natural gas stream. But 10-15,000 b/d of ethane will struggle to find a home because of restrictions of how much ethane can be left in dry natural gas. Piped gas specifications generally allow for up to 12 percent of ethane in natural gas, but can vary depending on processing and commercial arrangements. This additional supply will depress U.S. ethane prices and support petrochemical margins.

The full article is visible via the link below – Pankaj Oswal

PTT Global Chemical enters into tentative Indonesian petrochemical complex deal with Pertamina

In a massive potential deal estimated to be worth between $USD4-5 billion Thai company PTT Global Chemical has entered into an arrangement with Indonesian Pertamina to develop a new petrochemical complex in Java.

The deal follows months of screening and careful selection by Pertamina and this point marks a major success for PTTGC.

Pertamina will hold a controlling 51% stake in the plant and PTTGC will hold the remaining 49% under the heads-of-agreement deal.

The facility is to house an olefin plant that will be capable of producing one million tonnes per year, a downstream polymer plant and a refinery.  According to Pertamina President and CEO Karen Agustiawan the olefin plant will be operational by 2017.

PTTGC Chief Executive Anon Sirisaengtaksin said that the plant will service the Indonesian market, particularly in polymer, as the Indonesian Government is seeking to reduce the total cost of imports.

Particularly given the magnitude of the deal this is a glowing endorsement for the product and technology (particularly olefin) but also the region.  Several of the recent posts on this blog have focused on South East Asia and this is continuing a clear trend that should attract the wise-eyes in the coming months and years.

PTTGC and Pertamina shake hands on the deal

By Pankaj Oswal