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Supertanker rates slump as virus hits Chinese oil demand

February 06/2020

MOSCOW (MRC) -- Freight rates for supertankers on the Mideast Gulf and U.S. Gulf routes to Asia have fallen to their lowest since mid-September as the coronavirus outbreak hit Chinese oil demand, ship brokers told Reuters.

Chinas Sinopec Corp, Asias largest refiner, and so-called "teapot" independent refineries have reined in operations in the face of plunging consumption.

"The market has gone back to what it was before the COSCO sanctions came in," one ship broker said, referring to U.S. sanctions on subsidiaries of the state-owned Chinese shipping company.

"All the other variables have gone away, such as IMO 2020 congestion at ports, movement of low-sulphur fuel and industrial action in Europe."

Freight rates shot up in late September on the back of the COSCO sanctions and again in December because of logistics snags related to the switch to cleaner shipping fuels with the introduction of the new IMO 2020 regulations.

The United States partially lifted sanctions on COSCO last Friday.

Ship broker Braemar on Monday said that the rate for a very large crude carrier (VLCC) from the U.S. Gulf to Asia had fallen to USD8 million, the lowest since Sept. 19. Another broker said a similar voyage was quoted at USD7.5 million.

Riverlake, another ship broker, said the world scale rate for the Middle East route was at its lowest since Sept. 16.

Sinopec is cutting throughput this month by about 12%, or 600,000 barrels per day, in its steepest cut in more than a decade.

The companys Unipec trading arm has stopped buying West African crude and is re-selling at least five cargoes of Angolan crude.

Separately, major independent refineries in east Chinas Shandong province, which collectively make up a fifth of Chinas oil imports, have cut operations by 30-50% to less than half of their capacity, a level not seen since at least 2015.

As MRC informed before, Sinopec Qilu Petrochemical, the subsidiary of one of the world's largest energy and chemical companies, Sinopec, plans to shut the cracker  unit in Tianjin in northeast China for scheduled repairs on 15 June, 2020. This cracking unit with a capacity of 900,000 tonnes of ethylene per year and 480,000 tonnes of propylene tons per year will be closed for scheduled repairs until 24 June, 2020.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

Sinopec corp. is one of the world's largest integrated energy and chemical companies. Business Sinopec Corp. includes oil and gas exploration, production and transportation of oil and gas, oil refining, petrochemical production, production of mineral fertilizers and other chemical products. In terms of refining capacity, Sinopec Corp. ranks second in the world, in terms of ethylene capacity - fourth.


mrcplast.com
Author:Margaret Volkova
Tags:Asia, PP, PE, crude and gaz condensate, PP random copolymer, propylene, ethylene, petrochemistry, Sinopec, China, Russia, USA.
Category:General News
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