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Flurry of US crude export fixtures offers glimmer of hope

June 01/2020

MOSCOW (MRC) -- A flurry of tentative bookings to export US crude oil from the Gulf Coast suggests demand is edging up after the coronavirus slammed energy consumption worldwide, reported Reuters.

BP, Trafigura and Equinor have all tentatively fixed vessels this past week to carry US crude to global destinations over the coming month, according to Refinitiv Eikon data and shipping sources.

Commodities merchant Trafigura and Occidental Petroleum are among companies looking to book vessels to ship crude from the US Gulf Coast to Asia, one shipbroker said. The US Gulf export market was particularly active last week, with around six ships confirmed with June loading dates, another shipping source said.

Occidental, Equinor and BP declined comment. Trafigura did not immediately respond to requests for comment.

US crude exports plunged as the coronavirus pandemic eroded global demand by 30% in April. Exports dipped to 3.2 million barrels per day (bpd) last week, lowest in a month, the US Energy Information Administration said.

While US crudes discount to Brent is still narrow, freight rates for supertankers from the US Gulf to Singapore  plunged more than 80% from early April to the lowest since August 2019 this month, Refinitiv Eikon data showed. Those rates are currently near USD5.75 million after peaking around USD20 million in late March, sources said.

"Vessel freight rates have been coming down over the last couple of weeks which is re-igniting interest in export opportunities," said Andy Lipow, president of consultants Lipow Oil Associates. He said demand in China and India is expected to keep rising as the countries contain the spread of COVID-19.

Taiwanese refiner CPC Corp purchased 6 million barrels of US West Texas Intermediate (WTI) Midland crude for delivery in August, traders said on Tuesday.

Markets are concerned about rising US-China tensions, traders said, specifically that Washington could slap trade sanctions on China following Beijings move to impose a new security law on Hong Kong.

As MRC wrote previously, CPC Corporation shut its No. 3 cracker for a scheduled maintenance turnaround in mid-February 2020. The cracker remained off-stream for around two months. Located at Kaohsiung, Taiwan, the No. 3 cracker has an ethylene capacity of 720,000 mt/year and propylene capacity of 370,000 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 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, PP block copolymer, homopolymer PP, propylene, LDPE, HDPE, ethylene, petrochemistry, BP Plc, CPC, Equinor, India, China, Rossiya, USA, Tayvan (Kitay).
Category:General News
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