COVID-19 - News digest as of 02.06.2020

1. Global chemicals output falls in April

MOSCOW (MRC) – Data collected and tabulated by the American Chemistry Council (ACC) show that with stabilizing activity in China partially offsetting widespread weakness due to COVID-19, global chemicals production fell 1.3 percent in April, an improvement from the 3.3 percent decline in March and 2.1 percent decline in February, said Americanchemistry. During April, chemical production fell in every region. Headline global production was off 5.8 percent year-over-year (Y/Y) on a three-month moving average (3MMA) basis and stood at 110.2 percent of its average 2012 levels.



MRC

MOSCOW (MRC) -- Crude oil futures were steady to marginally higher in mid-morning trade in Asia June 2 as traders looked toward a possible extension of output cuts by OPEC+ in an upcoming meeting, reported S&P Global.

At 09:55 am Singapore time (0155 GMT), ICE Brent August crude futures were up 19 cents/b (0.50%) from June 1's settle at USD38.51/b, while the NYMEX July light sweet crude contract was 8 cents/b (0.23%) higher at USD35.52/b.
"Expectations of an extension of the current supply cuts by OPEC+ when they meet this week is keeping prices buoyed," OCBC analysts said in a note Tuesday.

"If OPEC+ can deliver on the reported extension, we expect Brent to possibly test USD40/b," the analysts added.

US President Donald Trump and Russian President Vladimir Putin spoke June 1 about the importance of implementing the OPEC+ oil supply cuts and stabilizing global oil prices, the Kremlin said in a statement.

"It was stated that this multilateral agreement, reached with the active support of the presidents of Russia and the United States, would lead to a gradual restoration of oil demand and price stabilization," the Kremlin said.

The OPEC+ accord calls for 9.7 million b/d in production cuts for May and June, before easing to 7.7 million b/d for the second half of the year, then to 5.8 million b/d for January 2021 through April 2022.

"A confirmation of the meeting along with suggestions from members on the willingness to comply may be necessary to keep prices thriving at current levels. Any leap through the resistance zone may still boil down to demand," IG market strategist Pan Jingyi said in a note June 2.

Apart from OPEC+ commitment, investors have been monitoring Chinese demand recovery and US product demand, along with any fresh developments in the US-China trade tensions.

The OPEC+ meeting may be moved up to June 4, from the scheduled June 9-10, so July nominations can factor in any changes to oil production quotas, S&P Global Platts reported earlier citing sources familiar with the discussions.

As MRC informed previously, global oil consumption cut by up to a third in Q1 2020. 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.

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 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 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- Abu Dhabi, the oil-rich emirate in the seven-member UAE federation, is forecast to see its economy contract by 7.5% in 2020 due to the oil price crash and coronavirus outbreak, S&P Global Ratings said.

Abu Dhabi, which pumps most of the UAE's oil, is projected to rebound with economic growth averaging 2.2% between 2021-2023, the agency said Friday.

The emirate is forecast to pump on average of 2.8 million b/d in 2020, down from 3.1 million b/d in 2019, S&P Global Ratings said.

The emirate generates about 90% of its income from oil and derives 50% of its GDP from crude, according to S&P Global Ratings.

The UAE, OPEC's third largest oil producer, is trimming an extra 100,000 b/d in June, on top of its OPEC+ commitments, as it joins Saudi Arabia and Kuwait in helping to rebalance the oil market.

OPEC+ is cutting a record 9.7 million b/d in May and June as part of an agreement that will ease curbs through to April 2022.

"Even before the pandemic began, economic growth had been subdued, averaging 1.3% over 2018-2019, largely as a result of oil production cuts under the previous OPEC agreement," S&P Global Ratings said.

The ratings agency said the emirate's financial assets will help it offset the impact of oil price volatility and the pandemic.

"The exceptional strength of the government's net asset position provides a buffer to counteract the effect of oil price swings and COVID-19 on economic growth, government revenue, and the external account, as well as the effect of increasing geopolitical uncertainty in the Gulf region," S&P Global Ratings said.

The agency is also forecasting that Abu Dhabi's fiscal deficit will widen to 12% of GDP in 2020 from 0.3% in 2019 due to the low oil prices.

As MRC informed earlier, UAE's ADNOC is keeping a beat ahead of the OPEC+ members by ensuring customers of its crude oil in Asia of sufficient supplies as demand for Middle East sour crude returns.

We remind that in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- Zhejiang Petrochemical Co Ltd has delayed the start-up of its new acrylonitrile (ACN) plant to around mid-June, 2020, reported S&P Global.

Based in Zhejiang, China, this plant is able to produce 260,000 tons/year of ACN. Initially, the company planned to begin operations at this production in early May, but then postponed the start to the second half of May. Zhejiang Petrochemical past announced May 20 to be the start.

As MRC informed earlier, Zhejiang Petrochemical Co Ltd started up its ethylene cracker in late December 2019 and its polyolefin plants in late December 2019-January 2020.

Market sources reported then that one of its polypropylene (PP) plant with capacity of 450,000 tons/year started up by 30 December 2019, followed by another line with same capacity by 15 January 2020.

Meanwhile its 450,000 tons/year of linear low density polyethylene (LLDPE) and 300,000 tons/year of high density polyethylene (HDPE) were launched around similar time with PP plants.

We also remind that China's greenfield Zhejiang Petrochemical will use a range of process technology from Honeywell UOP for the second phase of its integrated refining and petrochemical complex in Zhoushan, Zhejiang province, according to a document, quoting a senior Honeywell official. "This second phase of the complex by itself will process 20 million tons per year of crude oil and produce another six million tons per year of aromatics when completed," Bryan Glover, vice president and general manager, Process Technology and Equipment, at Honeywell UOP, stated in the document as of January 2019.

ACN is the main feedstock for the production of acrylonitrile-butadiene-styrene (ABS).

According to MRC's ScanPlast report, Russia's ABS output was 920 tonnes in March. Russian producers manufactured 2,600 tonnes of ABS plastics in January-March 2020, down by 59% a year earlier.
MRC

MOSCOW (MRC) -- Arkema said today that it has finalized the divestment of its functional polyolefins business to SK Global Chemical, reported Chemweek.

The divestment was announced last year. Arkema says the sale forms part of its strategy to refocus the group’s activities on specialty materials.

With sales of around EUR250 million (USD279.2 million), the functional polyolefins business, which is part of the polymethyl methacrylate (PMMA) activity, comprises ethylene copolymers and terpolymers for the food packaging, cable, electronics and coatings markets. The business employs around 100 people in France and has an international sales network of 30 people who will be joining SK Global Chemical, a subsidiary of South-Korean group SK.

Based on an enterprise value of €335 million, this divestment is in line with the group’s strategy to become a pure specialty materials player by 2024, centered around three segments: adhesive solutions, advanced materials and coating solutions. As part of that focus, Arkema will implement different strategies for its intermediates division, consisting of methyl methacrylate (MMA) and PMMA, fluorogases and the acrylics business in Asia.

The company is planning to divest the MMA and PMMA business, explore possible alternatives to minimize its exposure to the most emissive applications of its fluorogases, and rebalance Asia Acrylics between upstream and downstream.

As MRC informed earlier, in October 2019, Arkema successfully brought on stream a new 90,000-ton acrylic acid reactor at its Clear Lake, Texas site to support the growth of its North American customers in the superabsorbents, paints, adhesives and water treatment markets.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Arkema is a global manufacturer in specialty chemicals and advanced materials, with 3 business segments - High Performance Materials, Industrial Specialties, and Coating Solutions - and globally recognized brands. The Group reports annual sales of EUR8.8 billion. Buoyed by the collective energy of its 20,000 employees, Arkema operates in close to 55 countries.
MRC