Oil rises above USD56 on Saudi export cut

MOSCOW (MRC) — Oil rose to above USD56 a barrel on Tuesday, supported by Saudi Arabian export cuts in November and comments from OPEC and trading companies that the market is rebalancing after years of oversupply, said Reuters.

Saudi Arabia has cut November allocations by 560,000 bpd, in line with its commitment to an OPEC-led supply reduction pact. In the United States, some production remains offline following Hurricane Nate, lending additional support. "Prices have been boosted by news that Saudi Arabia is planning to reduce its oil shipments to customers in November," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

Brent crude, the international price benchmark, was up 80 cents at USD56.59 a barrel at 1326 GMT. US crude gained 97 cents to USD50.55. The Organization of the Petroleum Exporting Countries, Russia and other non-member producers are cutting output by about 1.8 MMbpd until next March to get rid of a price-sapping supply glut.

OPEC is increasingly confident that the market is rebalancing fast, helped by the cutback as well as by stronger-than-expected growth in global demand. The chief executive of trading firm Gunvor, Torbjorn Tornqvist, also said the market was rebalancing, citing falling product stocks and crude held in floating storage clearing up.

"We don't see this market being out of balance one way or another," he told the Reuters Global Commodities Summit taking place this week. Overall crude stocks "are still high," he added, and OPEC needed to stick to its output curbs.

Short-term price support was coming from the United States, where 85% of US Gulf of Mexico oil production, or 1.49 MMbpd, was offline following Hurricane Nate, according to official figures. OPEC has managed record-high adherence to its supply cutting deal this year and is considering extending the deal beyond its March 2018 expiry. Some analysts have been concerned that a price recovery could tempt producers to open the taps again.

But analysts at JP Morgan said this was less of an issue, saying "concerns that OPEC compliance would fade into the fourth quarter now appear unfounded."

"Stronger-than-assumed economic growth offers the potential for tight market conditions to continue if OPEC extends the current deal for another nine months," the bank said.
MRC

MOSCOW (MRC) -- Shenhua Baotou has completed maintenance at the linear low density polyethylene (LLDPE) plant, as per Apic-online.

A Polymerupdate source in China informed that the company has resumed operations at the plant in end-September, 2017. The plant was shut for maintenance on September 12, 2017.

Located at Baotou City, China, the plant has a production capacity of 300,000 mt/year.

As MRC informed before, another Chinese petrochemical producer - Daqing Petrochemical - shut its high density polyethylene/LLDPE swing plant for a one-week maintenance turnaround on 6 September 2017. Located in Daqing city, China, the plant has a production capacity of 250,000 mt/year.
MRC

MOSCOW (MRC) -- Negotiations over prices of European polyvinyl chloride (PVC) for October shipments to the CIS markets were held last week. Most European producers further raised their PVC export prices, according to ICIS-MRC Price report.

The October contract price of ethylene was agreed up by EUR30/tonne from September, which presupposes the increase in PVC production costs by, at least, EUR15/tonne. At the same time, some producers slightly reduced their export prices and others decreased them more substantially than the rise in ethylene prices. Overall, the increase was EUR5-25/tonne.

Negotiations over October shipments of suspension PVC (SPVC) to the CIS markets were held in the range of EUR795-860/tonne FCA. Most producers' supply of PVC was sufficient, although some buyers reported tight supply of resin with K = 70 from some producers.
MRC

MOSCOW (MRC) - Russia's imports of polypropylene (PP) decreased to about 123,800 tonne in first nine months of this year, down 5% year on year, compared to the same period of 2016. Not all PP grades accounted for the decrease in shipments, according to a MRC's DataScope report.

Russian companies reduced polypropylene imports to 15,100 tonnes in September against 16,200 tonnes in August, local producers reduced purchases of PP block copolymers. In general, PP imports into Russia totalled 123,800 tonnes in January-September 2017, compared with 129,900 tonnes year on year. The reduction in external supplies was seen only for homopolymer PP and PP random copolymers, while imports of PP block copolymers and other propylene copolymers, on the contrary, increased.

Overall, the structure of PP imports by grades looked the following way over the stated period.

September imports of homopolymer PP into the country decreased to 3,600 tonnes, compared with 3,800 tonnes in August. Overall imports of this PP grade reached 40,800 tonnes in the first nine months of 2017, compared to 59,200 a year earlier.

September imports of PP block copolymers in Russia increased to about 3,700 tonnes against 5,300 tonnes in August. Local companies reduced purchasing of PP block copolymers for non-pressure pipes extrusion.

Imports of PP block copolymers into Russia reached 32,600 tonnes in January-September 2017, compared to 24,100 tonnes a year earlier.
Imports of PP random copolymer in September rose to 3,700 tonnes against 3,000 tonnes a month earlier, amid good demand and tight supply from Russian producers; local producers increased purchasing of PP for pressure pipes production. Total imports of PP random copolymers in Russia were 23,000 tonnes in January - September 2017, compared with 25,600 tonnes year on year.

Imports of other propylene polymers for the reported period increased to about 27,400 tonnes compared with 21,000 tonnes in the same time a year earlier.


MRC

September SPVC imports slumped to 432 tonnes from 2,500 tonnes a month earlier. Local companies almost completely ceased to purchase resin in foreign markets because of high export prices and sufficient supply from Russian producers. Thus, overall SPVC imports of resin to Russia were 42,400 tonnes in January-September 2017, compared to 117,600 tonnes a year earlier, with May accounting for the peak shipments, totalling 11,800 tonnes.

A major increase in the domestic production and further reduction of demand in the key processing segments led to a significant decrease in the dependence on PVC imports even in the period of high seasonal demand.

Chinese producers were traditionally the key foreign PVC suppliers for the past several years. Last month's overall imports of Chinese acetylene PVC fell to 58 tonnes from 2,300 tonnes a month earlier. Because of a major increase in export prices, Russian companies fully suspended their purchasing of resin in China back in the second half of July, and August shipments were, in fact, debts under contracts as of the first half of July. Thus, imports of Chinese resin were 39,500 tonnes in the first nine months of 2017, compared to 92,200 tonnes a year earlier. Imports of Chinese acetylene PVC are not expected to increase until the end of the year, even taking into account the October reduction in export prices.

European producers shipped small quantities of suspension, overall imports of European PVC fell to 2,400 tonnes over the stated period from 5,800 tonnes a year earlier.

MRC