U.S.jet fuel demand seen back to pre-pandemic levels by late 2022; Dow posted $14.8 billion net sales revenue for July-Sep 2021; Braskem gets creditors approval for Mexican contract changes; Mexico’s Alpek to increase PET recycling capacity

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U.S. jet fuel demand seen back to pre-pandemic levels by late 2022

The Valero Energy Corp. refiner’s chief commercial officer Gary Simmons said that 2022 will bring back gasoline and diesel demand to pre-pandemic levels, with jet fuel catching up later in that year.

“It's the latter part of the year before jet demand recovers to pre-pandemic levels.” Simmons said, according to a transcript of the Oct. 21 call by The Motley Fool.

“And when you look at the fourth-quarter turnaround activity, it's difficult for us to see that we're going to replenish clean product inventories before next year,” he said.

Valero’s refining segment reported $835 million of operating income for the third quarter, compared with a loss of $629 million a year ago.

The San Antonio, Texas-based company’s capacity utilization was 91% in the third quarter, compared to 80% in the third quarter of last year, according to Simmons.

A shortage of truck drivers held back a faster diesel demand recovery this year and jet fuel may see strong demand for this holiday season, he said.

“The nominations that we're seeing from the airlines that we supply seem to show that they're anticipating a pretty heavy holiday travel season.  And so, we would expect the uptick there with jet demand,” he added.

A refiner had expressed cautiouness during an April interview regarding the 2021 demand outlook for refined fuels.

Dow posted $14.8 billion net sales revenue for July-Sep 2021

Dow posted July-September 2021 net sales revenue of $14.8 billion, a 53% increase from a year ago and 7% from the previous three-month period “with gains in all operating segments and regions.”

“Dow achieved top and bottom-line growth, both year over year and sequentially,” said Dow’s CEO Jim Fitterling on Oct.21, according to the release.

The packaging and specialty plastics segment reported net sales of $7.7 billion, 69% higher than last year.

Fitterling also anticipated lower feedstock costs ahead, according to a transcript of the call by Motley Fool.

As natural gas prices moderate, “we're going to see that the ethane and propane advantage in the U.S. Gulf Coast is going to be there,” he said, according to the call transcript.

U.S. natural gas prices have been volatile. They reached $6.37 per MM Btu in early October. On Oct. 23 they traded at $5.3 per MM Btu. Back in April prices had been as low as about $2.5 per MM Btu in April.

U.S. resin producers that use ethane and propane from shale gas have had for most of the past decade a feedstock price advantage over other world regions where petrochemical producers rely on other sources like naphtha from crude oil.

U.S. producers saw their ethane advantage eroded particularly early in the pandemic in 2020 when fuel demand collapsed amid Covid lockdowns and this sent oil prices lower.  

Braskem gets creditors approval for Mexican contract changes

Braskem, Latin America’s biggest petrochemical company, got creditor approval for changes agreed in late September to its contract with Pemex related to Mexican ethane supplies, and completed a refinancing with longer maturities.

Braskem owners and creditors approved recent “adjustments” to the long-term ethane supply delivery contract for Braskem-Idesa’s 1.1 million-tonne polyethylene plant and ethylene cracker complex in Veracruz.  

Braskem agreed to the changes after over a year of negotiations and following a forced temporary shutdown of the plant.

The company also obtained all needed approval for additional accords related to infrastructure in Mexico for importing ethane to cover Mexican production shortfalls.

The new terms call for Braskem Idesa to accept deliveries in line with the Mexican production capacity.

“Braskem Idesa, a partnership led by Braskem with Mexican Grupo Idesa as minority partner, completed its plan to refinance $1.35 billion for new debt with longer maturities.

That would release $358 million held as collateral, it said.

Mexico’s Alpek to increase PET recycling capacity

Mexico-based petrochemical producer Alpek said on Oct. 20 in comments along its financial statements for the third quarter that the company plans to increase its recycling capacity of polyethylene terephthalate (PET) bottles.

Alpek plans to take its PET bottle recycling capacity to 300,000 annual tonnes by 2025, the company said.

Revenue during the quarter ended in September was $2.1 billion or 13% more than during the preceding quarter.

Alpek produces of PET and its intermediate purified terephthalic acid, as well as of expandable polystyrene.

The Monterrey, Mexico-based company is also the largest recycled PET producer in the Americas, and the only Mexican polypropylene producer.

By Reuters Events Downstream