Baltic Chemical Complex (BCC) and China National Chemical Engineering No. 7 Construction Company (CC-7) have agreed an amendment No. 3 to an EPC contract for a gas chemical complex as a part the one in Ust-Luga to process ethane-containing gas. BCC Managing Director Konstantin Makhov and CC-7 Chairman of Board long Haiyang signed the document.

Under the agreement, the contractor shall do the required paperwork, place orders and purchase materials and equipment, protect copyright, do all the construction and pre-commissioning works. Amendment No. 3 (stage 3) is the final document under the EPC contract BCC and CC-7 inked in October 2019. The parties entered into stage one and stage two agreements in November 2019 and August 2020 respectively.

The land development, the pile installation, the steel reinforcement cage tying and the foundation concreting are underway on the site now. The contractor is also building construction camps, temporary access and on-site roads and power infrastructure facilities.

The complex for processing of ethane-containing gas is a unique world-scale project in Ust-Luga, Leningrad Oblast, Russia, under development by RusGazDobycha and Gazprom with assistance from the state corporation VEB.RF. The complex will include a natural gas processing chemical plant (45 million m3 per year), Europe's largest LNG facility (13 million t per year) and the unique world's largest PE one (up to 3 million t per year). It is also an integrated production complex, which minimises construction, maintenance and procurement costs.

On 11 January, INEOS Olefins and Polymers Europe, one of the largest European petrochemical producers, announced its decision to develop circular food-grade recycled polypropylene from Post-Consumer Recycled (PCR) packaging in partnership with NEXTLOOPP, consortium of global consumer brands, packaging converters, material suppliers, waste recyclers, legislators and academia from the UK’s PP supply chain that joined forces to develop the food-grade recycled polymer.

INEOS will be one of the main companies that will consult on the building of a demonstration plant with the annual capacity of 10,000 t of food-grade recycled PP in the UK as a part of a two-year project. INEOS will make food-grade recycled PP at its manufacturing complex in Grangemouth, Scotland, by blending it with virgin PP, which allows the producer to modify mechanical and processing properties of the polymer to the specific needs of converters. The PP plant in Grangemouth has the annual capacity of 285,000 t.

The main goals of this project are the validation of food-grade recycled PP manufacturing process by other producers and Food Standard Agencies and its commercial viability. NEXTLOOPP representatives believe that recycled PP will help to reduce the world’s reliance on virgin plastics, create a more circular economy and cut CO2 emissions.

   Styrene prices were varying widely from $883/t up to $1,388/t CFR China in 2021 to reach the year's highest level in mid-May because of a post-Labour Day reduction in Asia’s supply and heavy exports from China to countries worldwide. In 2020, they were ranging from $540/t to $1,160/t CFR China. Last year, the virus spread and lockdowns across Asia weakened the downstream industries, keeping SM prices well below the 2021 level.

   In Q1 2021, sentiments, fuelled by an SM supply crunch, were bullish in Asia. Feedstock appreciation and, accordingly, squeezed margins made some Asian producers decrease the output in early 2021. Besides, Asia was short of imports from the USA. In mid-February 2021, a devastating snow storm disrupted operations of several benzene and two styrene facilities in the USA. In March, South Korea, India and Taiwan ceased import from the country where prices exceeded those in Asia.

   Q2 2021 brought a structural shift to the Asian market, with Chinese SM suppliers strengthening their positions abroad. Inside the country, supply improved owing to a few SM unit startups in Q1 2021. The plants that Anhui Jiaxi New Material, CSPC and Sinochem Quanzhou Petrochemical commissioned in January and March 2021 added 1.5 million tpy to the country’s SM capacity. Reminder: the latter rose by 2.6 million tpy in 2020 after four units came on stream. Unlike China, Turkey, India, South Korea and Brazil were lacking the US material earlier this year. As a result, China’s styrene exports reached an all-time high of some 104,700 t in April 2021*, causing the commodity stocks in the country’s east to hit bottom of 40,300 t for the year on 19 May.

   In Q3 2021, prices were stable-to-soft as new capacity in China, the key market in Asia, and renewed import from the USA increased supply. The launch of Gulei Petrochemical’s 600,000-tpy plant in August and a plunge in downstream production with the imposition of ‘dual control’ of energy consumption weakened SM market in China. The authorities of several provinces introduced power rationing in early September to meet their annual energy targets. As a result, the main downstream industries cut their output to comply with the new policy. This, along with congestion in ports and inability to dispatch finished goods from plants, dampened buying interest in Asia this autumn.

   Supply was outstripping consumption across Asia for most of Q4 2021. Chinese customers retreated to the sidelines until Wanhua Chemical launches SM production at the 650,000-tpy plant in late December 2021. In Q4 2021, consumption was lagging behind SM production as derivative facilities were still operating at reduced capacity because of the energy intensity caps. As a result, styrene plummeted in value. Uneconomic production was the main concern to most Northeast Asian companies. Non-integrated plants had to decelerate operations or suspend them. South Korean SM producers also had to resort to these measures. LG Chem, for instance, had to close its 180,000-tpy unit permanently due to poor margins. Production hiccups in Europe strengthened the market there. Therefore, the arbitrage window between Asia and Europe opened up widely, bringing about SM export negotiations. However, difficulties with the commodity shipping and a lack of suitable vessels have delayed most arrivals from China, Taiwan and South Korea in Europe and the Mediterranean Sea region until January 2022.

   Given a rise in Chinese SM production and a slowdown along supply chain, 2021 has appeared to be turbulent year for the Asian monomer market. Market sources believe that 2022 may bring even more challenges. Trade may slacken at the beginning of 2022 because of environmental restrictions related shutdowns of SM and downstream plants in a few provinces around Beijing where the Winter Olympics will begin in February. China’s new policy may also limit typically active restocking before the Lunar New Year in January 2022. Going ahead, prices may be under pressure from the further boost in SM production in key Asian market. In fact, the launch of several facilities is expected to add some 4.2 million tpy to the China’s monomer manufacturing.

 

* According to the General Administration of Customs of the People’s Republic of China