Issue 15/2021 - Global Chemicals Quick Review

Weak earnings have forced Asian pyrolysis plants to reduce LPG feedstock

According to the latest IHS Markit survey report, Asian cracker operators will reduce the processing of liquefied petroleum gas (LPG) feedstock for the second consecutive month, due to the dual impact of deteriorating earnings and the successive commissioning of
new capacity in Northeast Asia.
Asia's crackers, which can use both naphtha and LPG, are said to crack 315,000 mt of LPG in August, down 14% from 367,000 mt in July, after 399,000 mt of LPG
were cracked by cracker operators surveyed in June.
A cracker operator in Northeast Asia said: "Margins on naphtha-based ethylene production are declining sharply, and LPG-based ethylene production margins are falling even more, although production margins for ethylene and propylene derivatives remain strong
.
" ”

The United States continues to lead global oil and gas production

Although U.
S.
oil and gas production declined in 2020 compared to the record production in 2019, it still outpaces any other country (a trend that began in 2014).

Total U.
S.
oil and gas production in 2020 was 66.
9 trillion tu, surpassing Russia's 45.
5 trillion British heat and Saudi Arabia's 26.
5 trillion British heat
.
Oil and gas production declined in 2020 in the United States, Russia and Saudi Arabia due to a rapid drop in demand during the coronavirus pandemic, which led to a consequent decline in crude oil prices, particularly in the first quarter
of 2020.
As part of the OPEC+ deal, Saudi Arabia and Russia agreed to reduce crude production, but in the United States, the cut was mainly due to lower investment in tight oil due to oil prices and, to a lesser extent, unplanned shutdowns
.

Southeast Asia's petrochemical downstream industries have reduced production

Amid the rapid spread of the Delta coronavirus variant and the slow rollout of vaccines, demand in Southeast Asia's petrochemical downstream industry has been poor, capacity has been declining, and recent restrictions to curb the strong momentum of the coronavirus infection have forced some downstream end-market producers in Southeast Asia to either close their plants or reduce plant operating rates due to reduced on-site manpower
.
However, most petrochemical plants in Southeast Asia are still in operation, as the petrochemical industry is considered an "important industry"
in the region.
An Indonesian source said: "Many factories have reduced operating rates due to the resurgence of the new crown pneumonia epidemic, and some factories have cut capacity by as much as 50%.

Downstream plastics processors, in particular, are in a more difficult situation, telling many sad stories
.
”

Sales of lubricant additives rebounded in the United States

According to recent statistics released by the US Chemical Industry Commission (ACC), sales of lubricant additives in the United States rebounded
in May.
On a seasonally adjusted basis, U.
S.
lubricant additive sales rose 0.
6 percent in May from April, after contracting 0.
4 percent
in March-April, the ACC said.
Total U.
S.
specialty chemicals sales rose 0.
7 percent in May, after falling
in March-April.
The ACC attributed its decline to harsh winter weather, including an unusual winter storm in February that caused widespread power outages and commercial shutdowns
in Texas.
In addition, both U.
S.
specialty chemicals and lubricant additives have rebounded
significantly from the impact of last year's coronavirus pandemic.
From January to May, the sales volume of lubricant additives in the United States increased by 3.
6% year-on-year, and the sales volume in May increased by 18.
2%
year-on-year.