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  • 2023 March 17 14:25

    South Korea petrochemical makers, refiners turn to North African naphtha to replace Russian supplies - S&P Global Commodity Insights

    South Korean petrochemical makers and refiners plan to regularly import naphtha from North Africa throughout 2023 as Asia's fourth biggest economy completely shuns purchasing crude and oil products from Russia, though the downstream sector may often rely on LPG as its main feedstock amid volatile ethylene margins, market participants and industry sources said March 14-16, according to S&P Global Commodity Insights.

    Iran and Russia are among the world's top naphtha suppliers, but international sanctions have made it extremely difficult for South Korean downstream companies to procure light distillates from them. South Korean petrochemical players are putting in a lot of effort to diversify their feedstock naphtha supply sources and they plan to increase shipments from North African suppliers such as Algeria and Tunisia, an official at the Korea Petrochemical Industry Association told S&P Global Commodity Insights. 

    South Korea is Asia's biggest naphtha importer and typically received around 50 million barrels/year of naphtha from Russia prior to the Russia-Ukraine events. Its shipments of Russian naphtha tumbled 72% to 16 million barrels last year from 57.6 million barrels in 2021, according to latest data from the KPIA and Korea National Oil Corp. 

    Local refiners and petrochemical firms have indicated they have little to no interest in purchasing crude oil and naphtha from Russia in 2023 and shipments of oil products from the non-OPEC producer have stopped since July 2022, the data showed.  South Korea usually imports a well-balanced mix of both lighter grade cracker-feed naphtha and heavy full-range naphtha from Russia but has decided it is best to simply avoid all legal, price and logistics complications by completely cutting off purchases of all petroleum products from Russia, according to feedstock management sources at Hanwha TotalEnergies, Lotte Chemical and two major South Korean refiners. 

    In an effort to make up for the Russian supplies, the country's refiners and petrochemical makers imported 5.3 million barrels of naphtha from Algeria in January, a record monthly high for shipments from the North African supplier after inflows averaged just 1.7 million/month over the previous three years.  The country's downstream sector also received its maiden naphtha cargo from Tunisia in October 2022 and shipments from the North African nation have continued to arrive regularly since then, the KNOC data showed.

    The industry would take around 500,000-1 million barrels/month from Tunisia in the first half of 2023, according to trading sources at two major South Korean petrochemical firms.

    Refiners have also indicated that they would actively procure naphtha from a wide variety of supply sources including North Africa, the UAE and Qatar for gasoline blending as they prepare for the summer driving season, while those equipped with condensate splitters plan to also raise their own production of naphtha, according to refinery officials and linear programming model strategists based in Seoul, Incheon, Daesan and Ulsan. 

    Although South Korea's petrochemical sector is actively diversifying its naphtha supply sources, overall naphtha demand and imports could fall in 2023 as they could often switch to propane as their steam cracker feedstock in a bid to improve yields and margins that have stayed poor over the past two years, multiple sources at South Korean downstream companies including LG Chem and Lotte Chemical told S&P Global. 

    "Asia's ethylene-naphtha spread appears decent lately, but we are always flexible and ready to quickly shift to LPG whenever there is a need to tweak the feedstock economics strategy amid volatile market conditions," said an official at a major South Korean petrochemical maker. 

    The key spread between Asian ethylene and naphtha tracked by petrochemical producers has surged to a six-month high in recent days as increasing supply pressured naphtha prices lower while tight supply pushed ethylene prices higher. Platts assessed the CFR Northeast Asia ethylene-CFR Japan naphtha physical spread at $291.25/mt March 15, the highest since touching $307/mt on Sept. 19, 2022, S&P Global data showed. 

    Petrochemical makers may favor naphtha over LPG for the time being, but the preference could change in the second half of the year as the South Korean government plans to reinstate its 0.5% tariff on naphtha imports from July 1 from 0% currently, according to the downstream industry sources.  Naphtha demand could trend lower from late in the second quarter as it is possible for LPG prices to become more competitive once the winter and early spring heating requirements fade, according to downstream industry sources.  In addition, average run rates at the country's major naphtha cracking centers, or NCCs, have been gradually declining from 100% in Q4 2022 to around 80% currently due to the slowdown in the manufacturing and construction sectors that typically drive demand for various petrochemical products, industry sources said.     

2023 March 23

17:14 China’s crude oil imports in January-February 2023 fell by 1.3% YoY
17:10 CMA CGM commences the only direct Japan-U.S. East Coast Service
16:48 Admiralteiskie Verfi shipyard held the first start of the main engine on Mekhanik Sizov trawler of Project СТ-192
16:47 IMO Secretary-General updated on Black Sea Grain initiative
16:22 BV-classed hybrid ferries with battery and solar power to be deployed in Hong Kong
16:16 Finland lifts arrest of Russian fertilizers in the port of Kotka
16:03 Port of Cork accelerates digitalisation with new AI-powered port system
15:25 “K” Line to install automated kite system on the coal carrier Corona Citrus
14:22 Return of railway ferry Baltiysk to Ust-Luga-Baltiysk line postponed to April 2023
14:03 Samskip starts a new innovative project that will reduce CO2 emissions for its vessels
13:27 European Council and the European Parliament announces new agreement to decarbonise the maritime sector
12:50 Global decrease of investments in oil and gas sector to result in shortage of facilities in 3-5 years
12:43 Ports of Stockholm explores safety aspects of autonomous shipping in innovative research project
12:29 Six сompanies team up to build, operate Japan's 1st methanol-fueled coastal tanker
11:42 Port of Oakland joins clean energy trade mission
10:55 Russian ship carrying a cargo of fertilizers detained in the Finnish port of Kotka
10:41 Hamburger Hafen und Logistik revenue up by 7.7 percent to € 1,578.4 million in 2022
10:32 Russian Railways increased volume of Pacific seafood shipments from Primorye by 6% in January-February 2023
10:25 Hyundai Heavy achieves world's first 200 million BHP milestone
09:57 Agency for Strategic Initiatives to support production of high-speed hydrofoils
09:20 Nevsky Shipyard lays down third serial tanker of Project 23130 for RF Defence Ministry

2023 March 22

19:19 MSCC Bronka (Saint-Petersburg) sold to Moscow company NKK-Logistik
17:30 Direct service from China to Saint-Petersburg launched by Transit
17:06 JERA and Virya Energy reach an agreement for the acquisition of Parkwind by JERA
16:41 Alfa Laval completes acquisition of innovative friction reduction technology
16:24 State Duma passed in its first reading Northern Delivery Bill
16:08 OGCI, Stena Bulk, GCMD project gets go-ahead to use carbon capture on oil tanker pilot to decarbonize shipping
15:46 Grimaldi signs the purchase agreement for the acquisition of a majority stake in the Igoumenitsa Port Authority
15:03 Delo Group and China’s Shandong Port Group will jointly develop multimodal container transportation
14:32 Russia’s decision to voluntarily cut crude oil production by 500,000 bpd to remain in force until end of June 2023 — Alexander Novak
14:09 South Carolina Ports container volumes down 13% in Feb 2023
13:44 China Civil Engineering Construction Corporation wins Solomon Islands port project
13:25 GreenIT and Copenhagen Infrastructure Partners to develop three floating offshore wind farms in Italy with 2 GW capacity
12:59 Russia and China expand economic cooperation in the Far East
11:35 Thames Freeport given green light by UK Government
11:27 Problems with coal unloading in Posiet and Vanino ports entail loss of Russian Railways’ cargo base
11:08 Greece and Turkey agree to support each other in the UN’s Security Council and the International Maritime Organisation - EURACTIV
10:51 DNV and PETROJET sign MoU to support green hydrogen projects in Egypt
10:25 Hanwha gets Vietnam approval for Daewoo Shipbuilding takeover - Yonhap
10:10 Russia to supply grain to African countries at no expense if grain deal is not extended after 60 days — Vladimir Putin
09:49 Russia is a strategic supplier of oil and natural gas to China – Vladimir Putin
09:21 Atomflot to create digital ecosystem for NSR for RUB 3.8 billion

2023 March 21

20:56 Russia is ready to create, together with China, a working body for the development of the NSR – Vladimir Putin
18:37 GTT takes first place in the INPI's list of ETI patent applicants
18:07 Shell publishes the Energy Security Scenarios
17:34 Wartsila upgrades Wartsila 31 diesel engine
17:22 Cochin Shipyard bags order for world's first zero emission feeder container vessel
17:16 Shell revives German refinery sale as Russian ownership cleared - Reuters
16:47 Langh Ship switches to biofuel on its container vessel
16:02 Business costs soar as Russia sanctions bite - Reuters
15:40 Russia and China are preparing projects to boost freight traffic along the Trans-Siberian and Trans-Asian routes
15:14 Optimarin expands BWTS manufacturing into China
13:33 Russia suspends rapeseed exports
13:30 Brazil’s Porto Itapoá invests in equipment ‘firsts’ for Brazil
13:06 Petropavlovsk-Kamchatsky joins list of ports whose harbormasters register ships in Russian International Register of Ships
13:04 100 audits completed under IMO Member State Audit Scheme
12:50 Port of Antwerp-Bruges joins forces with Routescanner
12:36 Terminal Astafiev gets nod from Nakhodka Customs to store containerized freight
12:13 King Abdulaziz Port breaks container handling record
11:37 Redevelopment of the Nizhne-Kama Lock nears completion