Index of chemical production in Russia grew by 5.4% in January - May

MOSCOW (MRC) -- Russia's output of chemical products rose by 4.4% year on year in May 2020 . Thus, production of basic chemicals increased year on year by 5.4% in the first five months of 2020, according to Rosstat's data.

According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the output in January-May.

Production of benzene was 110,000 tonnes in May 2020, which equalled the figure a month earlier. Overall output of this product reached 615,000 tonnes over the stated period, up by 1.7% year on year.

May production of sodium hydroxide (caustic soda) was 112,000 tonnes (100% of the basic substance) versus 101,000 tonnes a month earlier. Overall output of caustic soda totalled 543,000 tonnes in the first five months of 2020, up by 1.4% year on year.

2,283,000 tonnes of mineral fertilizers (in terms of 100% nutrients) were produced in May 2020 versus 2,055,000 tonnes a month earlier. Overall, Russian plants produced slightly less than 10,400,000 tonnes of fertilizers in January-May 2020, up by 3.1% year on year.

Last month's production of polymers in primary form grew to 820,000 tonnes from 775,000 tonnes in April. Overall output of polymers in primary form totalled 4,115,000 tonnes over the stated period, up by 16.6% year on year.
MRC

Russian energy ministry expects average oil price of USD35/b in 2020

MOSCOW (MRC) -- The Russian energy ministry expects the average Urals price to be USD35/b in 2020, minister Alexander Novak said in an interview with German daily Handelsblatt published June 20, reported S&P Global.

Russia's 2020 budget is based on an oil price of USD42/b, officials said previously. Novak said he currently only expects oil services providers, who have been hit hard by Russia's significant oil production cut under the OPEC+ agreement, to require state support.

"We have very flexible taxation for oil producers, dependent on the oil price," the report quoted Novak as saying. "Our oil companies can continue to produce even when the oil price is low, thanks to reserves and then low taxes."

He added that large Russian oil and gas companies will continue investment programs, with some cuts of up to 20%, but no fundamental changes.

Novak added that he does not expect oil demand to return to pre-crisis levels in the near term.

"Certainly not this year," Novak said. "We hope that it will happen in 2021. But maybe it will take two or three years. Because people will fly less, drive less, travel less and do more online. The economy will grow again, but the demand for oil from transport will remain lower."

Russia does not currently see a need to deepen oil production cuts under the OPEC+ agreement, but the group will continue to discuss the situation monthly, Novak said.

"In July the agreement will result in two million fewer barrels of oil on the market than originally planned," Novak said. "Then we'll see. There is a lot that is unclear: consumer demand, and whether there will be a second wave of coronavirus that many expect. That would again disrupt markets considerably."

Novak also discussed volatility in the gas market as a result of the coronavirus pandemic, recent warm winters and increasing LNG capacity.

"I hope that the worst is behind us on the gas market," he said in the interview. "Although it is much more difficult here because there is no regulatory body like OPEC in the gas sector, and coordination is much more difficult. This is why the gas market is more chaotic and bankruptcies will occur."

Novak said that he does not expect gas prices to go negative for a sustained period.

"This is hardly possible, at most it may happen on small local markets, like in the US for oil, where at times it could not be transported or stored," Novak said. "On the gas market there was a very short time on a European gas hub, but these are very short-term slumps. I rule out a longer, system-relevant negative gas price."

As MRC informed before, 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

Ohio EPA approves one-year extension for air permit for proposed PTT cracker

MOSCOW (MRC) -- The Ohio EPA has granted a one-year extension to PTTGC’s air quality permit for the possible Belmont County cracker project, according to NewsBreak.

The initial permit was for one year, and was to expire Sunday.

The Ohio EPA's air permit to install was issued in December 2018 and Thursday it issued a one-year extension for the permit, as PTT Global Chemical America had requested an extension.

The permit allows the company to construct a 1.5 million tons per year plant.

The EPA made some modifications that reportedly ensure the facility won't have an adverse impact on the environment.

As MRC reported earlier, a final investment decision regarding the ethane cracker plant has been delayed until later this year or early next 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.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC

Petronas restarts No. 2 methanol unit

MOSCOW (MRC) -- Petronas Chemical Group (PCG) is in plans to bring on-stream its No. 2 Methanol unit following a turnaround, as per Apic-online.

A Polymerupdate source in Malaysia informed that, the company is likely to resume operations at the unit on June 22, 2020. The unit was shut for maintenance on June 7, 2020.

Located at Labuan in Malaysia, the unit has a production capacity of 1.7 million mt/year.

As MRC wrote before, in early May, 2020, Petronas Chemicals (Kuala Lumpur), Malaysia’s leading petrochemicals player, reported a drop in first-quarter sales and earnings citing the coronavirus disease 2019 (COVID-19) pandemic. The sharp decline in petrochemical product prices following the outbreak of COVID-19, the deepening industry downcycle as crude oil prices collapsed due to the OPEC+ fallout, and the recessionary global economic outlook have hurt results, the company says.

We remind that PRefChem, owned by Petronas and Saudi Aramco (50:50), received commercial ethylene and propylene at its new cracker in Pengerang (Malaysia,) on 13 September, 2019.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.

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 firs 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

Oil steadies amid increase in coronavirus cases

MOSCOW (MRC) -- Oil prices steadied, supported by tighter supplies from major producers but held in check by concerns over a record rise in global coronavirus infections that could stall a recovery in fuel demand, said Hydrocarbonprocessing.

Brent crude LCOc1 rose 5 cents, or 0.1%, to USD42.24 a barrel by 0941 GMT. U.S. crude CLc1 was down 10 cents, or 0.2%, at USD39.65. South Korea on Monday said for the first time that it is in the midst of a ‘second wave’ of the coronavirus. The World Health Organization reported a record increase in global cases on Sunday, with the biggest increase from North and South America.

“Infections are rising in key markets around the world and there are valid concerns that the world is in for a prolonged period of dealing with its consequences,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen. Oil prices have been supported by a recovery in fuel demand globally as nations resume economic activity after coronavirus lockdowns.

Signalling a recovery in global markets and tighter supplies, Brent has moved into backwardation, where oil for immediate delivery costs more than supply later. Both contracts rose about 9% last week. However, after weeks of rising, prices of physical oil have begun to ease, traders and analysts say, as the rally succumbs to the reality of poor refinery margins and brimming storage tanks.

“I find it more difficult for oil to move higher at this point, especially with the growing concern about second-wave contagion,” said Howie Lee, an economist at Singapore’s OCBC Bank. In Canada and the United States, the number of operating oil and natural gas rigs fell to a record low last week, even as higher oil prices prompt some producers to resume drilling.

The OPEC+ group, consisting of the Organization of the Petroleum Exporting Countries and allies such as Russia, has yet to decide whether to extend a record supply cut of 9.7 million barrels per day (bpd) for a fourth month in August. Russia sees between USD40 and USD50 to the barrel as a fair and balanced oil price, Deputy Energy Minister Pavel Sorokin said.

As MRC informed previously, 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.

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