COVID-19 - News digest as of 16.06.2020

1. Thai energy group PTT cuts 2020 investment

MOSCOW (MRC) -- State-owned Thai oil and gas company PTT Pcl said it would cut its investment budget across the group by 10-15% this year and some projects will be delayed as partners face challenges from the coronavirus, according to Hydrocarbonprocessing. Chief Executive Auttapol Rerkpiboon, who took up the post last month, said the PTT group faced "double effects" from the oil price slump and the coronavirus outbreak.




MRC

MOSCOW (MRC) -- Korea Petrochemical Industry Co (KPIC) is presently running its steam cracker at maximum capacity levels, according to Apic-online.

A Polymerupdate source in South Korea informed that the company is currently operating at the plant at 100% production capacity rates. Earlier, the plant was operating near 90% of production capacity rate in May 2020.

Located at Onsan city in South Korea, the cracker has an ethylene production capacity of 800,000 mt/year and propylene capacity of 410,000 mt/year.

As MRC informed previously, in June 2017, KPIC finilized the expansion of its ethylene production capacity. Thus, KPIC started commercial operation at its Ulsan-based Naphtha Cracking Center (NCC) from Jun 23, 2017. Earlier, KPIC produced about 470,000 mt/year of ethylene from its Ulsan-based NCC. With the expansion, the company added 330,000 mt/year of ethylene, and its combined ethylene capacity reached 800,000 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 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.

KPIC is one of the key producers of ethylene in South Korea. The companyпїЅs ethylene capacity accounted for about 6% of total ethylene production in South Korea before the expansion was completed, and now the companyпїЅs market share will be increased to nearly 10%.
MRC

MOSCOW (MRC) -- Crude oil futures were trading lower in mid-morning trade in Asia June 12 as a rise in COVID-19 cases in the US clouded the overall outlook for oil demand recovery, reported S&P Global.

At 10:10 am Singapore time, ICE Brent August crude futures were down 58 cents/b (1.50%) from the June 11 settle at USD37.97/b, while the NYMEX July light sweet crude contract was 72 cents/b (1.98%) lower at SD35.62/b.

"A surprise stockbuild in the US last week as well as increasing concerns over a second wave of coronavirus cases in the US have been the main catalysts for oil's slide," OCBC analysts said in a June 12 note.

Bearish sentiment spilled over into early Asia trading after crude settled sharply lower June 11 on concerns a resurgent COVID-19 pandemic would dampen economic recovery.

"The oil markets turned unreservedly defenseless to a post-lockdown uptick in COVID-19 infections in the world's largest oil consuming economy, the humongous US market," AxiCorp's chief global markets strategist Stephen Innes said in a June 12 note.

Around six US states have seen an increase in new COVID-19 cases, including Texas and Arizona, according to media reports. The total number of cases in the US had surged past 2 million as of June 11.

"If a widespread secondary outbreak is confirmed, it will undoubtedly threaten to bring the US economy and global market to its knees once again," Innes added.

On the OPEC+ front, focus remains on supply cut compliance after the alliance agreed on June 6 to extend a record 9.6 million b/d of output cuts through to the end of July.

Several OPEC+ delegates have recently voiced concerns over plans for the group to meet monthly to assess production levels, S&P Global Platts reported earlier.

Meanwhile, the US oil rig count fell by seven on the week to 199, Enverus data showed June 11. This indicated that drilling activity has slowed, but failed to spur an uplift in sentiment.

As MRC wrote previously, OPEC, Russia and allies agreed on Saturday to extend record oil production cuts by one month until the end of July.

We remind that 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 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 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) -- Oil prices edged higher last Friday but were on track for their first weekly fall as new US coronavirus cases spiked, raising the prospect of a second wave hitting demand, reported Reuters.

Brent was up 27 cents, or 0.7%, at USD38.82 a barrel by 1204 GMT, having lost more than USD1 earlier in the session.

After falling more than 5% on Friday, West Texas Intermediate was up 19 cents, or 0.52% to USD36.53 a barrel. Both contracts ended around 8% lower on Thursday.

The oil benchmarks are heading for weekly declines of more than 8%, their first after six weeks of gains which have lifted them off their April lows.

Fears that the coronavirus pandemic may be far from over has brought the rally to a halt, with about half a dozen US states seeing a spike in new infections.

Barclays on Friday raised its oil price forecasts for this year by USD4 per barrel, citing a bigger deficit in the second half of the year, although it expressed caution on a slow recovery in the near term.

"The rate of change in fundamentals is likely to moderate significantly as incremental demand improvement will depend more on consumer behaviour than the easing of enforced movement restrictions," the British bank said in a note.

Producers from the United States, as well as from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, have been cutting supply.

OPEC+ cut oil supplies by 9.7 million barrels per day (bpd), about 10% of pre-pandemic demand, and agreed last weekend to extend the reduction.

US crude and gasoline stockpiles grew last week, government data showed. US crude inventories hit a record 538.1 million barrels, as cheap imports from Saudi Arabia flowed into the country.

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