Saudi Arabia may cut September crude oil prices to Asia

MOSCOW (MRC) -- Top oil exporter Saudi Arabia may cut its September official selling price (OSP) for crude sold in Asia, tracking falling Middle East benchmarks and weak refining margins, according to industry sources, said Hydrocarbonprocessing.

Five sources from Asian refineries on average expect the September OSP for flagship Arab Light crude to fall by 61 cents a barrel, though forecasts range from a cut of USD1 to 20-30 cents, a Reuters survey showed. Slow demand recovery amid the second wave of COVID-19 infections has depressed spot prices for Middle Eastern crude this month, while Asia’s refining margins remained weak, they said.

Although the monthly average of cash Dubai’s premium to swaps dipped by only 6 cents so far this month, DME Oman and cash Dubai this week turned to discounts to swaps for the first time since May, data compiled by Reuters showed.

Prompt Dubai has flipped from backwardation into contango in late July. The contango structure, where prompt prices are lower than future prices, usually indicates an immediate oil surplus. Asia’s margins for gasoline, jet fuel and high sulfur fuel oil weakened in July, while cracks for naphtha, gas oil and low sulfur fuel oil showed improvement.

Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia. State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.

Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.

We remind that data collected and tabulated by the American Chemistry Council (ACC) show that due to growth in China, global chemicals production rose by 0.6 percent in June, an improvement from the 0.5 percent decline in May, Production has been declining throughout this year, with the last monthly gain occurring in December 2019. During June, chemical production fell in major regions except Asia-Pacific. Headline global production was off 7.2 percent year-over-year (Y/Y) on a three-month moving average (3MMA) basis and was off 7.4 percent from the peak December level. Global output stood at 109.8 percent of its average 2012 levels.

At the same time, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six months of 2020. 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-June. June production of polymers in primary form fell to 791,000 tonnes from 820,000 tonnes in May partially because of a scheduled shutdown for maintenance at ZapSibNeftekhim. Output of polymers in primary form totalled 4,900,000 tonnes over the stated period, up by 14.8% year on year.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

MRC

Asahi Kasei Apr-Jun net income falls

MOSCOW (MRC) -- Asahi Kasei Corp’s net income fell in April-June this year compared with the same period in 2019 on lower earnings at its material segment due to the economic effects of the coronavirus pandemic, said the company.

Basic materials operating income decreased with reduced shipment volumes, effects of lower market prices for petrochemical feedstocks on inventories, and deteriorated terms of trade for acrylonitrile (ACN).

Performance products operating income decreased as an effect of broad declines in demand among automobile-related markets and apparel-related markets.

Specialty solutions operating income increased with favorable demand related to communications infrastructure and tablet PCs, while lithium-ion battery separator shipments increased firmly.

Operating income in the Homes and Health Care segments increased.

"Year-on-year, Q2 operating income is expected to decrease overall with a decrease in the material and homes segments and an increase in the health care segment," the company said in a statement.

Japanese petrochemical firm Asahi Kasei expects demand for petrochemical products, including acrylonitrile (AN) and functional polymers for automobiles, to recover in the second half of the April 2020-March 2021 fiscal year.

The company thinks demand for petrochemical products hit a bottom in April-June, although a second wave of Covid-19 infections has created further uncertainty in the market.

It forecasts that the use of polymers for automobiles will start to pick up in July-September following a rebound in Japan's domestic car production.

Asahi Chemical plans to close its polymethyl methacrylate (PMMA) plant in Kawasaki, Kawasaki, Japan in mid-October for scheduled maintenance. This enterprise with a capacity of 20 thousand tons of PMMA per year will be closed until mid-November for about 25 days.

Earlier it was reported that Asahi Chemical plans to close the production of methyl methacrylate (MMA) in Kawasaki (Kawasaki, Japan) in September for scheduled maintenance. This enterprise with a capacity of 100 thousand tons of MMA per year will be closed for about 50 days.

As MRC informed earlier, Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six months of 2020. 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-June. Production of benzene was 106,000 tonnes in June 2020, compared to 110,000 tonnes a month earlier. Overall output of this product reached 721,000 tonnes over the stated period, up by 3.9% year on year.
MRC

Gail petchem unit operating loss narrows

MOSCOW (MRC) -- Gail NSE -1.33 % (India) reported a 56.43 per cent year-on-year fall in net profit at Rs 654.33 crore for the quarter ended June 30, said Chemweek.

The figure stood at Rs 1,503.67 crore in the corresponding quarter last year. Consolidated revenue of the company declined 34 per cent YoY to Rs 12,180.62 crore.

The performance of the company was impacted due to nationwide lockdown, GAIL (India) said in a release. However, it added that the same is expected to reach to normal levels during upcoming period in FY 2020-21.

Segment wise, revenue from natural gas marketing declined 37.83 per cent YoY to Rs 11,635.38 crore. Likewise, topline from transmission services and city gas slipped 12 per cent and 35 per cent YoY, respectively.

However, revenue from petrochemicals increased 9.79 per cent YoY to Rs 1,221.69 crore. Shares of the company traded 0.87 per cent down at Rs 97.20 at around 2.20 pm (IST), while the benchmark BSE Sensex traded almost flat at 38,355.

As MRC informed earlier, GAIL (India) Ltd. has approved the revival of an existing liquefied petroleum gas (LPG) plant for conversion into a new polypropylene (PP) complex in Usar, Raigad district of Maharashtra, India. The "first of its kind project in India" will have 500,000 t/y of PP capacity, as well as an integrated propane dehydrogenation unit, at an estimated cost of Rs 8,800 crore. The project is scheduled to be commissioned by fiscal year 2023-2024.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Gas Authority of India Limited (GAIL) is the largest state-owned natural gas processing and distribution company in India. It is headquartered in New Delhi. It has the following business segments: natural gas, liquid hydrocarbon, liquefied petroleum gas transmission, petrochemicals, city gas distribution, exploration and production, GAILTEL and electricity generation.
MRC

Tronox turns in USD4 million loss on sharp decline in volume

MOSCOW (MRC) -- Tronox reports a second-quarter loss of USD4 million, up from a loss of USD55 million in the year-ago period. Revenue totaled USD578 million, down 27% year-over-year from USD791 million, reported Chemweek.

Adjusted earnings per share of 3 cents beat the average analyst estimate of 2 cents as compiled by Refinitiv (New York).

Including the contribution of Cristal, which was acquired in April 2019, pro forma net income in the year-ago period was USD32 million and revenue totaled USD827 million.

"Tronox delivered solid financial results in the quarter despite the significant reduction in demand and other challenges associated with the COVID-19 pandemic,” says Jeffry N. Quinn, chairman and CEO. “Our results were consistent with the outlook provided at the time of our first quarter earnings release. TiO2 volumes declined 19% quarter-over-quarter, and TiO2 pricing was sequentially flat. Zircon sales volumes and price were both up by 2% sequentially owing to shipment timing and favorable product mix.”

Adjusted EBITDA came to USD142 million, and the adjusted EBITDA margin was 25%.

"As we look to the third quarter, we are encouraged by the momentum carried forward from June, the strongest month of the second quarter. While the timing of re-opening of economies across the globe remains uncertain and subject to week-by-week developments, as of today, we anticipate TiO2 volumes to continue to improve in the third quarter relative to the second quarter and for the zircon market to remain relatively stable as compared to the last several quarters.”

As MRC informed before, in late March, 2020, Tronox Holdings provided an investor update in light of the current global pandemic, to emphasize the strength of the company's cash flow, balance sheet, and sources of liquidity. The first quarter was expected to close better than anticipated, due to positive market trends and developments thus far in 2020. The company anticipated adjusted EBITDA in the first quarter to reach USD160–170 million, adjusted earnings per share of USD0.10–0.18, and revenue of USD700–730 million.

We remind that Russia's output of chemical products rose in June 2020 by 2.6% year on year. However, production of basic chemicals increased year on year by 4.9% in the first six months of 2020. 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-June. June production of polymers in primary form fell to 791,000 tonnes from 820,000 tonnes in May partially because of a scheduled shutdown for maintenance at ZapSibNeftekhim. Output of polymers in primary form totalled 4,900,000 tonnes over the stated period, up by 14.8% year on year.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

PVC imports to Ukraine down by 14% in Jan-Jul 2020, exports up by 14%

MOSCOW (MRC) -- Imports of suspension polyvinyl chloride (SPVC) into Ukraine decreased in the first seven months of 2020 by 14% year on year to about 23,000 tonnes. Sales of Ukrainian PVC to foreign markets rose by 14% year on year, according to MRC's DataScope report.


Last month's SPVC imports to the Ukrainian market dropped to 1,700 tonnes from 3,500 tonnes in June, the introduction of an 18% import duty significantly affected purchasing in foreign markets. Overall imports of suspension reached 23,000 tonnes in January-July 2020, compared to 26,900 tonnes a year earlier. The high level of capacity utilisation even amid strong demand from the domestic market allowed the Ukrainian producer to increase its exports.

European producers with the share of about 82% of the total imports over the stated period were the key suppliers of resin to the Ukrainian market. Producers from the USA with the share of about 16% were the second largest suppliers.


Karpatneftekhim was forced to reduce its export sales last month because of stronger demand from the domestic market, export sales of Ukrainian resin were 2,600 tonnes versus 12,700 tonnes in June. Overall, about 105,000 tonnes of PVC were shipped for export in January-July 2020, compared to 92,400 tonnes a year earlier.

MRC