Brent crude rebounds from 1999 lows, US oil up more than 25% in wild trade

MOSCOW (MRC) -- Brent crude oil rebounded from two days of losses and US futures surged on Wednesday, bolstered by tentative discussions of additional supply cuts from OPEC producers and US inventory builds that were less dire than some anticipated, reported Reuters.

Oil trading has been more volatile than ever in recent days, as the market has become overwhelmed by a growing supply glut and catastrophic declines in demand as governments order people to stay at home, restricting travel and halting daily life, to stop the spread of the coronavirus.

US futures fell deep into negative territory on Monday, closing a record minus USD37.63 a barrel, while Brent touched its lowest level since June 1999 early Wednesday.

As of 1:20 p.m. EDT (1720 GMT), Brent was up USD1.54, or 8%, at USD20.87 a barrel. Earlier in the session, the global benchmark fell to USD15.98, its lowest since June 1999.

US West Texas Intermediate (WTI) crude futures for June delivery rose USD3.09, or 26.7%, to USD14.66 a barrel.

Since the start of the year, Brent has fallen more than 65%, while WTI has dropped around 75%.

The world’s major oil producers, led by the Organization of the Petroleum Exporting Countries and its allies, attempted to wrest control of spiraling inventories by announcing a collective cut of 9.7 million barrels per day in supply in early April.

But those cuts will come too slowly to offset rising inventories, which hit 518.6 million barrels in the United States last week, just 3% off an all-time record, the Energy Department said.

"If storage continues to increase at the end of the day, which seems likely considering all these Saudi barrels knocking at the door, then we are going to get to maximum storage sometime in the not so distant future," said Bob Yawger, director of futures at Mizuho in New York.

Saudi Arabia on Tuesday said it was ready to take extra measures with other producers and Iraq made similar comments. The next formal meeting by OPEC and allies, a group known as OPEC+, is in June.

Even without another formal agreement, decreasing storage capacity and falling demand could force producers to cut more. An OPEC source told Reuters it was "logical" to expect the market to force more cuts on OPEC+ producers.

US crude inventories rose 15 million barrels last week, in line with analysts’ expectations, though some even predicted a build of more than 20 million barrels.

Meanwhile, US gasoline stocks rose by just 1 million barrels, less than expected, while product supplied, a proxy for demand, increased modestly for the first time in weeks.

"It wasn’t the disaster that the market had been expecting," said Phil Flynn, an analyst at Price Futures Group. "There were rays of hope in the report that maybe we’re stabilizing on the demand destruction."

This week the front-month US contract fell below zero for the first time ever ahead of its Tuesday expiry as panicking traders paid customers to take oil off their hands so they would not have to take delivery with nowhere to store the surplus.

Inventories at the Cushing, Oklahoma, delivery hub for WTI are nearly full, at almost 60 million barrels, with much of the rest leased already.

As MRC informed earlier, global oil consumption cut by up to a third. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

We remind that earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

We also remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
MRC

MOSCOW (MRC) -- To further aid in the fight against the COVID-19 pandemic, LyondellBasell (LBI) donated a key ingredient to Huntsman Corporation to produce hand sanitizer for US first responders, as per LBI's press release.

Huntsman recently delivered a 5-ton shipment of hand sanitizer to Huntsman Cancer Institute (HCI) and the associated medical facilities at the University of Utah to help protect healthcare workers treating COVID-19 patients.

Huntsman approached LyondellBasell to request a shipment of isopropyl alcohol (IPA), which is a key ingredient in hand sanitizer. Knowing that the request was to assist with first responders at HCI and the University of Utah, LyondellBasell agreed to donate enough IPA to support the cause.

"This is a critical time where industry players can work hand-in-hand to help safeguard our healthcare workers," said CEO Bob Patel. "We are proud to have played a role in the fight against this pandemic."

Many products that LyondellBasell makes are being used to fight the pandemic. From products that provide filtration in facemasks, to breathable films for protective suits, medical syringes, medical test kits, soaps, disinfectants, and many other products, TeamLYB is on the front lines against the virus.

"We are so grateful to Huntsman Corporation and LyondellBasell for making this donation," said University of Utah President Ruth V. Watkins. "This is an incredible example of how leading companies are stepping up to address vital needs of health providers who are on the front lines of battling the coronavirus pandemic."

We remind that, as MRC reported earlier, in January 2020, Indorama Ventures Public Company Limited (IVL), a global chemical producer, completed its acquisition of Huntsman’s world-class integrated oxides and derivative businesses, including a large flagship site on the US Gulf Coast (USGC) at Port Neches, as well as Chocolate Bayou and Dayton in Texas, Ankleshwar in India, and Botany in Australia, as per IVL's press release.

The acquisition is a profitable and growing end applications business along with unique products and geographical profile among the crowded olefins space. It has a well-integrated assets base with an extensive infrastructure and future expansion possibilities. The area is adjacent to many USGC feedstock suppliers. The cash value of USD2.0 billion makes it the largest acquisition by Indorama Ventures ever and now our capital employed is nicely spread over plastic, chemicals and fibers. The transaction value translates to an EV/EBITDA of ~5.7x and is expected to add substantial synergies to Indorama’s existing 450kta Ethane/Propane Cracker and our 550kta EO/EG. IVL will now be integrated from Ethane to PET as well as the high-margin EO and PO derivative businesses.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2017 revenues of more than USD8 billion. Its chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. The company operate more than 75 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 10,000 associates within its four distinct business divisions.

LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.
MRC

MOSCOW (MRC) -- Overall imports of general purpose polystyrene (GPPS) and high impact polystyrene (HIPS) into Ukraine dropped in the first quarter of 2020 by 12% to 5,100 tonnes from 5,700 tonnes a year earlier, according to MRC's DataScope report.

March GPPS and HIPS imports into the country rose by 14% from February: from 1,690 tonnes to 1,920 tonnes. Imports of these grades of material were at 1,790 tonnes in March 2019.

Imports of Russian GPPS and HIPS of Nizhnekamskneftekhim to Ukraine grew in January-March 2020 by 4% year on year to 2,700 tonnes. This figure was at 2,600 tonnes in the first quarter of 2019.

The share of Nizhnekamskneftekhim's material grew to 54% in the overall structure of imports to the Ukrainian market in the first three months of 2020 from 46% in January-March 2019.

Last month's imports of material from Russia decreased by 16% from February to 920 tonnes. The share of Nizhnekamskneftekhim's GPPS and HIPS was 48% in March versus 58% a year ealrier.

MRC

MOSCOW (MRC) -- Taiwan VCM Corporation has shut its vinyl chloride monomer (VCM) unit in Linyuan, Taiwan following a gas leakage that injured at least ten personnel on the site, reported CommoPlast with reference to market sources.

The initial investigation by The Labour Inspection Office found that accident might be a result of the leakage of residual dichloroethane in the pipeline. The plant was under maintenance when the leakage occurred.

The company has a production capacity of 485,000 tons/year of VCM. Taiwan VCM Corporation supplies its VCM output to China General Plastics Corporation (CGPC), which operates a 220,000 tons/year polyvinyl chloride (PVC) plant in the adjacent location.

Sources believed that the impact on the market could be minimal given the sluggish demand across the Asia region. The downward pressure remain relatively strong in the near term, especially in the absence of Indian buyers.

According to MRC's DataScope report, exports of suspension polyvinyl chloride (SPVC) from Russia totalled 45,600 tonnes in the first three months of 2020, down by 4% year on year. Imports increased, but still remained at a low level. Last month's exports of Russian suspension (excluding shipments to the countries of the Customs Union ) were about 12,500 tonnes, compared to 15,900 tonnes in February. Some producers slightly reduced their exports in March due to weaker demand for resin in foreign markets. Thus, overall exports totalled 45,400 tonnes in the first three months of 2020 versus 47,300 tonnes a year earlier.

Taiwan VCM Corporation, is the first petrochemical company in Taiwan to adopt Ethylene Process to manufacture vinyl chloride monomer (VCM), as raw material for the manufacturing of PVC related products, and 32% industrial grade hydrochloric acid (HCl).
MRC

MOSCOW (MRC) -- Mitsui Chemicals, Inc. has announced that it will establish a new plant within Osaka Works, Takaishi, Osaka Prefecture, to produce the APEL series of cyclic olefin copolymers, according to Chemical Engineering.

With its major application in smartphone camera lenses, APEL has seen demand driven by a recent trend toward multi-lens cameras in these devices. Mitsui Chemicals is therefore looking to set up a supply system able to deal with this increased demand.

By establishing the new plant, Mitsui Chemicals’ production capacity for APEL will rise by approximately 50%. Construction on the new plant is starting this month and is slated to wrap up in March 2022.

Plans going forward are to further grow Mitsui Chemicals’ APEL business by capturing new demand in applications, such as automotive cameras, head-mounted displays and the medical sector.

Mitsui Chemicals is positioning its Performance Polymers Division - which includes APEL and is focused on ICT - as a growth sector. Through this latest production capacity increase, Mitsui Chemicals expects that it will be able to continue meeting increased demand here for the time being. But to properly respond to further demand growth going forward, Mitsui Chemicals will now begin to also consider its next production increase for the series.

As MRC informed before, Mitsui Chemicals restarted its naphtha cracker in Japan on 11-12 May, 2019, following an unplanned outage. The cracker was shut in end-April, 2019 owing to power failure. Located at Chiba in Japan, the cracker has an ethylene capacity of 600,000 mt/year and propylene capacity of 331,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.

Mitsui Chemicals is a leading manufacturer and supplier of value added specialty chemicals, plastics and materials for the automotive, healthcare, packaging, agricultural, building, and semiconductor and electronics markets. Mitsui Chemicals is a Japanese Chemicals company, a part of the Mitsui conglomerate. The company has a turnover of around 15 billion USD and has business interests in Japan, Europe, China, Southeast Asia and the USA. The company mainly deals in performance materials, petro and basic chemicals and functional polymeric materials.
MRC