Strategic Sourcing Pulse

 The resin cost calculation method is based on understanding the various stages of the manufacturing process, from crude oil to polypropylene (PP) or other resin products. This approach helps develop a more realistic price negotiation strategy by analyzing the actual costs at each stage, rather than simply accepting the market index price. 1. Key Components of Resin Cost Calculation The cost of resin is primarily determined by crude oil price, processing costs, and efficiency at each stage. The calculation follows these steps: Crude Oil Price : The production of PP and many other resin products starts with crude oil. The crude oil price is converted to naphtha, which is the key raw material for resin production. Global crude oil benchmarks, like Dubai Crude, are used to determine the price of crude oil, making it the most fundamental variable in cost calculation. Naphtha Conversion Rate : The conversion rate from crude oil to naphtha typically ranges between 7% and 10%. This rate r...

  Refining Industry Outlook Refinery Supply and Closures : In 2025, aging refineries in the U.S., Europe, and Japan are expected to gradually close, leading to reduced supply and improved refining margins. For instance, major refinery closures by Phillips 66, BP, and Shell are projected to reach 789,000 B/D in 2025, representing a 118% increase compared to this year. These closures signal a major shift in the industry, with reduced supply potentially driving up margins. The scale of refinery closures underscores the significant changes ahead for the sector. Crude Oil Production and the Permian Basin : On the other hand, U.S. crude oil production continues to rise, driven primarily by the Permian Basin, a key player in the nation's energy output. The U.S. Energy Information Administration (EIA) projects that U.S. crude oil production will reach 13.7 million B/D by 2025, with Permian Basin production alone expected to reach 6.6 million B/D. This growth will offset any supply shortfal...

 Recently, Saudi Aramco decided to suspend the planned construction of petrochemical projects within the country and explore expansion possibilities in Asia. This decision was influenced by changes in Saudi Arabia's economic situation and a strategic focus on securing long-term demand from China. In this blog, we will analyze the significance of Aramco's suspension and its impact. 1. Background of the Suspension of Middle East Petrochemical Projects Saudi Aramco has canceled or put on hold plans to build refining and petrochemical complexes, such as the Ras Al Khair Petrochemical Complex and the Jubail Petrochemical Project, in the country. This suspension is mainly due to two reasons. First, the increased financial burden from the Saudi government's growing deficit is the primary reason. It was determined that the financial capacity to maintain such large-scale infrastructure projects was insufficient. Additionally, Saudi Aramco's focus on securing strategic partnershi...

 In the quest to mitigate climate change and reduce our carbon footprint, it's crucial to understand the relationship between energy resources and CO2 emissions. As transportation and energy use are major contributors to global greenhouse gas emissions, there’s been significant focus on alternative energy sources like biodiesel and electric vehicles (EVs) . This blog aims to provide clarity on how each energy resource impacts the environment and which options might be the most sustainable in the long run. 1. Biodiesel: A Renewable Fuel with Diverse Sources Biodiesel is a renewable energy source produced from biological materials, such as vegetable oils, animal fats, or even waste cooking oil. It’s considered a more environmentally friendly alternative to fossil fuels because: Lifecycle CO2 emissions are reduced by 60-80% compared to traditional diesel​. Biodiesel is biodegradable and emits fewer harmful pollutants like sulfur dioxide and particulate matter. However, it’s import...