Overheated Mediterranean oil market cools as refiners seek other grades

MOSCOW (MRC) -- Premiums for Mediterranean oil grades over dated Brent have eased in the past few days as European refiners turn to cheaper alternatives to Russian Urals and other crudes, said Hydrocarbonprocessing.

The price differential for Russia’s Urals oil surged well above USD2 per barrel a week ago after the loading plan for July showed a 45% fall in exports from Baltic ports from June, but has pulled back significantly since then. Urals crude oil premiums eased to below USD1.50 per barrel on average this week in northwest Europe - down some 80 cents per barrel from a week ago, Refinitiv Eikon data showed.

Cargoes with prompt loading dates traded at a premium below USD1 per barrel, market participants said. “Sellers noticed refiners were well-prepared to leave the Russian grade aside, so they had to either limit their appetite or stay with unsold barrels," a source with an international trading firm said.

European refiners expected Urals oil loadings to be low in July after a surge in Russian gasoline demand in June prompted producers to feed the domestic market. Exports have also been curbed by an OPEC+ output pact. Refiners turned to alternatives available in the market - mostly U.S. oil, which remains relatively cheap, and Nigerian and Angolan crude, two traders said.

"We’ve seen sour refineries taking sweet barrels instead as it’s cheaper now," a trader in European market said. Caspian grades, Kazakhstan’s CPC Blend and Azerbaijan’s Azeri BTC have also dipped against dated Brent from recent multi-year records.

CPC Blend eased by USD1 per barrel this week, while Azeri BTC is down by some 70 cents per barrel, according to Refinitiv Eikon data. "The market got overheated after the quick transition from oil flood to supply deficit,” a trader with refiner in Mediterranean market said. “Now it’s trying to find a balance."

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 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

Amazon eliminates single-use plastic in packaging in India

MOSCOW (MRC) -- Amazon has eliminated all single-use plastic in its packaging across its fulfillment centers in India, delivering on a pledge it made last year to achieve this goal by June, said Techcrunch.

The American e-commerce group said it had replaced packaging materials such as bubble wrap with paper cushions and was also using “100% plastic-free biodegradable” paper tapes. All of Amazon’s 50-plus fulfillment centers in India, one of its key overseas markets, are complying with the new guidelines, the company said. Flipkart, which had made a similar pledge last year, said last month that its reliance on single-use plastic across its supply chain had dropped by 50%. Last year, the Walmart-owned marketplace said it intended to move entirely to recycled plastic consumption in its supply chain by March 2021.

Amazon’s announcement Monday follows Indian Prime Minister Narendra Modi’s directive last year, when he urged Indians to put an end to usage of single-use plastic by 2022. India has been grappling with a major plastic waste problem for several years. Asia’s third-largest economy is struggling with disposing of the 9.4 million tons of plastic waste it generates each year.

Dozens of nations across the world have in recent years moved to address this challenge by imposing curbs and levies on use of single-use plastic. Amazon said today that it still uses some plastic in packaging material, but those are 100% recyclable through available collection, segregation and recycling channels. The company said it is continuing to educate sellers who fulfill customer orders to join in this nationwide change in packaging.

“Our aim is to minimize environmental impact while elevating customer experience. While navigating through unprecedented challenges with the lockdown and pandemic in the last few months, we have continued to take progressive steps towards ensuring that we meet our commitment,” said Prakash Kumar Dutta, director of Customer Fulfillment & Supply Chain at Amazon India, in a statement.

Earlier this month, Amazon expanded Packaging-Free Shipping (PFS), an India-first initiative that sees fulfillment centers either deliver products that are completely packaging-free or have significantly reduced packaging, to more than 100 cities in India. The company said more than 40% of its orders in India today are already using PFS.

Additionally, Amazon said it is collecting and recycling plastic waste equivalent to its usage at a national level from September 2019, and has identified collection agencies to help collect equivalent 100% plastic waste generated from usage across the Amazon fulfillment network.

Earlier this month, Amazon announced it was launching a USD2 billion internal venture-capital fund focused on technology investments to reduce the impact of climate change. The new fund, called The Climate Pledge Fund, will invest in firms across a number of industries, including transportation, energy generation and manufacturing. Through the program, the companies aim to reach a goal of “net zero” carbon emissions by 2040.

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.
MRC

Crude rises as economic optimism trumps US concerns

MOSCOW (MRC) -- Crude oil prices made ground during the European morning trading session on July 6, taking their cue from rising Asian indexes rather than from bad news about coronavirus in the US, reported S&P Global.

As of 1059 GMT, ICE September Brent crude futures were up 50 cents from the close on July 3 at USD43.30/b, while the NYMEX August light sweet crude contract was up 40 cents at USD40.64/b.

"Asian indices opened on a four-month high today, kicking off the week in...positive expectations over the hopes of the Chinese economic engine sustaining global growth, despite rising (coronavirus) cases in the US," Mihir Kapadia, CEO of investment management firm Sun Global Investments, said in a note July 6.

In the US, deaths from COVID-19 reached 129,576 on July 5, and the total number of infections reached 2,841,906, according to the US Centers for Disease Control and Prevention. Texas reported 3,449 cases on July 5, California reported 5,410 cases, and Arizona reported 3,536 cases. This represented a continued rise, analysts said.

There is concern that the rise of COVID-19 related deaths in the US will choke demand and economic growth, analysts said. However, the bulls may interpret this in a positive light.

"I don't think a lot of people will be surprised when we see Q2 2020 earnings, they will see they are bad but not as bad we expected," according to Michael Poulsen, senior oil risk manager at hedging company Global Risk Management.

"I think the market is running a little ahead of itself in its optimism," he said.

Any bad news encourages expectations that central banks will pump more money into various asset classes, he added.

In Europe, the medium-to-short term outlook presents some bearish prospects. European Central Bank President Christine Lagarde said recently that the eurozone faces about two years of downward pressure, before the economy transforms in reaction to coronavirus and recovers.

The pandemic will expedite the pre-existing shift towards digitization and automation, shorter supply chains and greener industries, she said.

This points to more people working from home, which is bearish for oil demand, analysts at investment bank Commerzbank said in a note.

One signpost market players are looking out for is the current OPEC+ deal, which expires at the end of July. Investors are watching for any possible extension at the upcoming July 15 meeting of the OPEC+ Joint Ministerial Monitoring Committee.

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 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

Agilyx appoints new CEO, chairman

MOSCOW (MRC) -- Chemical recycling and post-use plastics specialist Agilyx (Tigard, Oregon) has announced the appointment of Tim Stedman as its new CEO, effective 17 August, reported Chemweek.

He joins from Trinseo, where he was senior vice president/strategy and corporate development.

The current CEO of Agilyx, Joe Vaillancourt, will assume the role of president at Cyclyx International, an affiliated company launched recently by Agilyx to advance its plastics feedstock management business, it says. Peter Norris, chairman of Virgin Group, has assumed the position of board chairman at Agilyx after having served on the company’s board since 2014.

Stedman and Vaillancourt "provide a world-class combination of skills in waste management and the chemical and plastics industries, central pillars to Agilyx’ long-term strategy to transform global plastic recycling rates," Norris says.

As MRC informed earlier, Agilyx Corp. has licensed its technology to Toyo Styrene Co. for use in a new facility to be built in Japan that will recycle post-use polystyrene (PS) back to styrene monomer (SM). The plant, which will be located near Toyo Styrene's existing facility in China Prefecture, will have a processing capacity of up to 10 t/d of post-use PS. Agilyx and Toyo have begun engineering and development of the project. Operations are expected to begin in early 2022.

According to MRC's ScanPlast report, May total estimated consumption of PS and styrene plastics in Russia was 29,990 tonnes versus 41,780 tonnes a year earlier, down by 28% year on year. Russia's overall estimated consumption decreased in the first five months of 2020 by 10% year on year to 186,670 tonnes.
MRC

Pucheng Clean Energy resumes production at MTO plant in China

MOSCOW (MRC) -- Pucheng Clean Energy Chemical Company, has restarted its Methanol-to-olefins (MTO) plant in Weinan, Shaanxi, as per Apic-online.

A Polymerupdate source in China informed that, the company completed turnaround at the plant on 27 June, 2020. The plant was shut for maintenance on May 8, 2020.

Located at Weinan, Shaanxi, China, the MTO plant has an ethylene production capacity of 300,000 mt/year and propylene capacity of 400,000 mt/year.

Pucheng Clean Energy also operates linear low density polyethylene (LLDPE) unit, which can produce 300,000 mt/year, and polypropylene (PP) unit, which has a production capacity of 400,000 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 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC