Refiner Phillips 66 post smaller-than-expected loss on higher retail margins

MOSCOW (MRC) -- Phillips 66 posted a smaller-than-expected loss as the refiner's retail marketing business, which buys and resells petroleum products, benefited from a decline in prices following the coronavirus crisis, reported Reuters.

The unit buys refined products from others and resells them, pocketing the difference and benefiting from improved margins when prices are down. The unit also sells other specialty products, including lubricants.

Credit Suisse analyst Manav Gupta said the marketing segment's earnings before interest and taxes of USD293 million beat the brokerage's estimate of USD220 million.

Refiners are seeing signs that fuel demand is picking up gradually worldwide as travel restrictions are eased, but a second wave of cases could lead to renewed lockdowns and derail demand recovery.

Rival PBF Energy Inc, which posted a bigger-than-expected loss, said the low point of demand, particularly for gasoline and diesel, appears to have passed with demand rebounding to about 80% of pre-COVID levels.

The company said jet fuel will likely take much longer to recover, and that it will continue to operate at lower volumes till "sustained product demand justifies higher production."

Phillips 66 reported a loss of 74 cents per share, smaller than the 93 cents analysts had expected, according to IBES data from Refinitiv.

"We believe this will be a trend this quarter and both MPC (Marathon Petroleum Corp) and DK (Delek US Holdings Inc) will put up earnings upside surprises driven by retail businesses," Gupta said.

Smaller rival Valero, which reported a smaller-than-expected loss on Thursday, said it saw a rapid recovery in demand in the second quarter and forecast current-quarter throughput, the amount of crude processed at its refineries, to rise over 5% sequentially.

As MRC informed earlier, US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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

Samsung wins contract for second phase of Sarawak PetChem methanol plant

MOSCOW (MRC) -- Samsung Engineering Co. said it has received a USD55.5-million contract from Sarawak PetChem to conduct the second phase of its planned methanol facility in Malaysia, according to Apic-online with reference to Yonhap News Agency.

The 5,000-t/d methanol project, to be built in Bintulu, will be based on Air Liquide E&C's Lurgi MegaMethanol technology. Operations are planned to begin in 2023.

Samsung and Air Liquide E&C entered into a partnership to carry out the front-end engineering design (FEED) study for the project in April 2019. At the time, Air Liquide said the FEED contract would be exclusively converted to a licensor, engineering, procurement, construction and commissioning contract at the end of the year, subject to a final decision.

As MRC reported earlier, in late April, 2020, the first phase of Connell Chemical Industry Ltd.'s 600 KTA MTO complex, a 300 KTA MTO plant, successfully started up and produced on-spec ethylene and propylene. This project is the first large-size chemical project brought online during period when Chinais in the process of restarting the economy while fighting COVID-19 pandemic. The MTO plant started feed-in at 8:18 AM on April 15, produced on-spec propylene at 7:00 AM on April 18, and produced on-spec ethylene at 4:00 AM on April 20.

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

COVID-19 - News digest as of 31.07.2020

1.Crude oil futures steady to higher on a weaker US dollar

MOSCOW (MRC) -- Crude oil futures were steady to higher during mid-morning trade in Asia July 28 as a weaker US dollar boosted risk appetites and provide support for the global crude complex, as per S&P Global. NYMEX September WTI settled up 31 cents at USD41.60/b, and ICE September Brent was up 7 cents on the day at USD43.41/b. At 11:05 am Singapore time (0305 GMT), ICE Brent September crude futures was up 19 cents/b (0.44%) from the July 27 settle to USD43.60/b, while the NYMEX September light sweet crude contract was up by 6 cents/b (0.14%) at USD41.66/b. The US Dollar Index was at 93.64, down 0.02% from the close of the US trading session. The weaker US dollar is trading below the 94.0 level, its lowest since May 2018, continuing to boost investor appetite for risk assets, such as crude oil. With an upcoming Federal Open Market Committee meeting on July 28 and 29 where Federal Reserve chairman Jerome Powell is expected to express continued support for the Fed's dovish monetary policy, the decline in the US dollar is likely to continue, keeping oil prices buoyant. "Oil markets are receiving support from expectations of the FOMC's firmer commitment in the upcoming policy meeting towards allowing above-target inflation to occur for some time, which should be viewed as incredibly positive for risk assets. And oil prices will continue to draw support from the Fed's dovish policy, which sees the US dollar move lower," Stephen Innes, chief global markets analyst at AxiCorp, said in a note July 28. Meanwhile, the US' Senate Majority Leader McConnell had formally announced details of a newly proposed trillion-dollar fiscal stimulus package on July 27, which will provide most Americans with a one-time, $1,200 stimulus check and cut enhanced weekly unemployment benefits by two-thirds, from the current USD600 to about USD200 a week, according to media reports. Negotiations over the final details of the fiscal stimulus package will ensue just as the weekly USD600 unemployment benefits from the USD2.2 trillion Coronavirus Aid, Relief and Economic Security Act expires.


MRC

US May caustic soda exports fall on month as prices rise

MOSCOW (MRC) -- US caustic soda exports fell 23% in May from April, as prices rose compared with other major producing regions, reported S&P Gllobal with reference to the latest US International Trade Commission data,released in July.

The US exported 554,991 mt of caustic soda in April, down 2.6% from March as chlor-alkali rates fell to April's 68% from March's 90% on sharply lower demand for chlorine and downstream products made with it. Those products include construction staple polyvinyl chloride (PVC) and hydrochloric acid, used in oil and gas production, as construction and oil and gas activity cratered amid widespread global shutdowns to stem the spread of the coronavirus pandemic.

Caustic soda, a key feedstock in alumina and pulp and paper industries, is a byproduct of chlorine production.

However, as economies began reopening in May, caustic soda exports slid further despite industry data that showed chlor-alkali rates rebounded to 75%.

Market sources said the decline likely stemmed from buyers turning to imports from Asia and Europe, where prices for export material were lower than US pricing.

As MRC informed earlier, May production of sodium hydroxide (caustic soda) in Russia 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.
MRC

Sinopec Shanghai Petrochemical resumes production at HDPE plant

MOSCOW (MRC) -- Sinopec Shanghai Petrochemical has restarted its high density polyethylene (HDPE) unit in Shanghai, according to Apic-online.

A Polymerupdate source in China informed that, the company resumed operations at the unit on July 8, 2020. The unit was shut for brief maintenance on June 30, 2020.

Located at Shanghai in China, the unit has a production capacity of 260,000 mt/year.

As MRC reported earlier, Sinopec Shanghai Petrochemical took off-stream its HDPE plant on January 2, 2018 owing to technical issues. Further details of duration of shutdown could not be ascertained.

According to MRC's DataScope report, June HDPE imports to Russia decreased to 19,300 tonnes from 22,100 tonnes a month earlier on weaker shipments from Uzbekistan and Europe. Overall HDPE imports into the country totalled 147,400 tonnes in the first six months of 2020, down by 14% year on year. Film grade and pipe grade HDPE accounted for the greatest decrease in shipments.

China Petroleum & Chemical Corporation, or Sinopec Limited is a Chinese oil and gas company based in Beijing, China. It is listed in Hong Kong and also trades in Shanghai and New York . Sinopec is the worlds fifth biggest company by revenue.
MRC