Oil prices at one-month low on demand worries

MOSCOW (MRC) -- Oil prices extended losses, falling by more than 2% to their lowest point since early August, as worries about weaker US gasoline demand and a sluggish economic recovery from the COVID-19 pandemic dented sentiment, reported Reuters.

Brent crude LCOc1 fell USD1, or 2.25%, to USD43.43 a barrel by 1118 GMT. US West Texas Intermediate (WTI) crude CLc1 futures were down USD1.02, or 2.5%, at USD40.49 a barrel.

Both benchmarks fell more than 2% on Wednesday.

US gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier, Energy Information Administration (EIA) data showed on Wednesday, with consumption of other oil products also falling.

“It is the latest data set that possibly caught the eye of those who ran long positions, and not even another record close in the US stock market was able to change the direction of the herd,” Tamas Varga of oil brokerage PVM said.

Other data, such as US private employers hiring fewer workers than expected for a second straight month in August, also fed fears that economic recovery was lagging.

Oil markets, however, drew some support from Iraq’s denial it was seeking exemption from OPEC+ oil cuts during the first quarter of next year.

OPEC’s second largest producer also said it may seek to extend by two months until the end of November the period for making additional compensation cuts under the OPEC+ deal.

Analysts warn that the upcoming refinery maintenance and the end of the summer driving season would also limit crude demand.

WTI crude has come under pressure “after US refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil”, ANZ Research said in a note on Thursday.

Due to shutdowns ahead of Hurricane Laura, US refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity, the EIA said.

“These factors suggest a seasonal drop-off in refinery runs and higher oil inventory levels as we advance through September,” AxiCorp market strategist Stephen Innes said.

As MRC informed earlier, most chemical production facilities in the region between Beaumont-Port Arthur, Texas, and Lake Charles, Louisiana, have shut down in preparation for Hurricane Laura, which was forecast to make landfall near the Texas-Louisiana border last Wednesday night or early Thursday. Several olefin crackers and associated derivative polymer units have been shut down, as has about 2.5 million b/d of refining capacity.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and 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

DIC acquires Brazil-based inks and coatings manufacturer

MOSCOW (MRC) -- Sun Chemical Corp (Parsippany, New Jersey), an affiliate of DIC, has acquired Seller Ink Industria e Comercio de Tintas e Vernizes (Sao Paulo, Brazil), a specialty inks and coatings manufacturer, reported Chemweek.

The cost of transaction was not disclosed.

Seller Ink has a presence in the security ink and metal decorating markets. Sun Chemical says that the acquisition will increase its specialty inks and coatings offering in Latin America. The company will obtain a local manufacturing platform for security inks.

“We have a pipeline of opportunities, and with the support and financial strength of Sun Chemical, we will be well placed to accelerate the conversion of these opportunities into recurrent sales,” says Seller Ink business director Raphael Godoy.

As MRC wrote earlier, in December 2019, DIC Corporation announced that it had increased the annual polystyrene production capacity of its Yokkaichi Plant, in Yokkaichi, Mie Prefecture, to 216,000 metric tonnes, from 208,000 metric tonnes, by reinforcing the plant’s polystyrene production facility and optimizing processes. Investment was not disclosed. The Company has set a target for increasing annual sales of polystyrene by 10% from the fiscal year 2017 level by fiscal year 2023.

According to MRC's ScanPlast report, Russia's estimated consumption of PS and styrene plastics was 225,870 tonnes in the first half of 2020, down by 8% year on year. PS consumption increased by 2% year on year in June 2020, totalling 39,590 tonnes.
MRC

Crude oil futures climb on positive US economic data, stocks drawdown

MOSCOW (MRC) -- Crude oil futures were higher during mid-morning Asian trade Sept. 2 as the US' manufacturing data for August was stronger-than-expected and a private inventory report released late Sept. 1 showed a large surprising decline in the US' commercial crude inventories, reported S&P Global.

At 10:28 am Singapore time (0228 GMT), ICE Brent November crude futures were up 38 cents/b (0.83%) from the Sept. 1 settle at USD45.96/b, while the NYMEX October light sweet crude contract was up 36 cents/b (0.84%) at USD43.12/b. The ICE Brent November crude futures had settled at USD45.58/b at the end of the Sept. 1 trading session, while NYMEX October had settled at USD42.76/b.

"The forward-looking market had another sentiment reinforcement to work with in the form of the August US Institute for Supply Management manufacturing index surprise," Pan Jingyi, market strategist at IG, said Sept. 2.

"The more closely watched reading compared to the Markit index had yielded a surprise for August. Headline ISM manufacturing index having risen to 56.0, had reflected continued expansion for the US economy. It also marks the third consecutive reading above the 50 level," she added.

Better-than-expected US manufacturing data also came a day after a private gauge of Chinese manufacturing activity. The Caixin/Markit manufacturing PMI grew strongly, while official data released by the National Bureau of Statistics of China on Aug. 31 showed Chinese services PMI at its highest since 2018.

Meanwhile, a private inventory report by the American Petroleum Institute released Sept. 1 showed a larger-than-expected drawdown in US crude stockpiles for the week ended Aug. 28.

"With one more week of US driving season left, oil prices received a much needed helping hand from a bullish to consensus oil inventory draw. The American Petroleum Institute reported on Tuesday (Sept. 1) crude oil inventories declined 6.36 million barrels against a 1.8 million consensus," Stephen Innes, chief global markets strategist at AxiCorp, said in a Sept. 1 note.

Market participants will look to the more definitive weekly US inventory report due for release by the Energy Information Administration later Sept. 2 for further cues. Notably, it will be the sixth consecutive week of drawdown in US commercial crude inventories if the official EIA data confirms the API industry report released on Sept. 1 and would be ultimately bullish for the global crude complex.

Earlier this year, as MRC wrote before, 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.

And 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 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

Production capacity at Baiji refinery to reach 280,000 bpd

MOSCOW (MRC) -- Iraqi Oil Minister Ihsan Abdul Jabbar ordered that production capacity at the Sumood refinery in Baiji be increased to 280,000 barrels per day (bpd) as soon as possible, reported Reuters with reference to the ministry's statement.

Production capacity is currently at 75,000 bpd and expected to reach 140,000 bpd over the coming few months, the ministry said in a statement.

As MRC wrote before, in early June 2020, Iraq and Kazakhstan submitted their plans to the OPEC+ alliance on how they will implement deeper oil production cuts in the coming months, following through on pledges to make good on violating their quotas in May. Kazakh energy minister Nurlan Nogayev had said June 9 that his country pumped 3.13 million barrels over its quota over May 1-12. Iraq produced nearly 600,000 b/d over its quota in May, according to Platts latest survey of OPEC output, and oil minister Ihsan Ismaael said June 15 that crude exports in June had already been slashed in an effort to comply with the deal. The OPEC+ alliance's overall compliance with the cuts was 87% for May, the committee said.

We remind that in late May, 2020, Borealis said it will not proceed with the development of a multi-billion-dollar integrated steam cracker and polyethylene (PE) project in Kazakhstan. “The decision to discontinue this project is based on a thorough assessment of all aspects of the prospective venture and impacted by the effects of the COVID-19 (coronavirus disease 2019) pandemic as well as the increased uncertainty of future market assumptions,” Borealis states.

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

Nova enters PCR via food-grade rHDPE deal with Merlin

MOSCOW (MRC) -- Nova Chemicals (Calgary, Alberta, Canada) has entered the post-consumer recyclate (PCR) market through a partnership with Merlin Plastics (Delta, British Columbia, Canada), according to Chemweek.

Under the agreement, Nova will finance a “multimillion-dollar” project supporting Merlin’s expansion into high-density polyethylene (HDPE) PCR suitable for food-contact applications. Merlin will, in turn, supply up to 30 million pounds/year of the material to Nova under a five-year agreement.

“This partnership with Merlin and our forthcoming suite of PCR-containing resins will help meet our customer and brand-owner needs and expand high-quality PCR supply for use in consumer packaging,” says Luis Sierra, president and CEO of Nova.

Merlin is Canada’s largest plastics recycler, with operations in British Columbia and Alberta.

Nova expects the Merlin HDPE PCR to obtain non-objection letter (NOL) status from the US FDA during the first half of 2021. The company will begin sales at the same time to customers in the US and Canada.

Nova says its portfolio of PCR will also include non-NOL recycled HDPE and linear low-density polyethylene (LLDPE) sourced from North American recyclers. Supply agreements are still being negotiated.

Nova says it is not actively pursuing the acquisition of a recycler.

“Initially, the PCR produced as a result of our investment will divert PCR from lower-value applications such as plastic lumber or detergent bottles into higher-quality applications such as flexible packaging,” says Nova. “However, by demonstrating that milk, water, and juice jugs can have a second life in high-value consumer packaging applications, we believe it will help enable a ‘virtuous cycle’ over time where more high-quality packaging is binned, collected, and recycled into FDA NOL recyclate as market demand grows.”

As MRC reported previously, early this summer, NOVA Chemicals (Calgary, Alberta, Canada) says it has developed a new technology for the production of high-density biaxially-oriented polyethylene (HD-BOPE) films. Biaxial orientation extends the physical characteristics of high-density polyethylene (HDPE) films, enabling the manufacture of fully recyclable high-performance film structures without mixing resin types.

According to MRC's ScanPlast report, Russia's HDPE production totalled 1,040,000 tonnes in the first seven months of 2020, up by 84% year on year. ZapSibNeftekhim accounted for the main increase in the output.

NOVA Chemicals Corporation is a plastics and chemical company headquartered in Calgary, Alberta, Canada, and is wholly-owned ultimately by Mubadala Investment Company of the Emirate of Abu Dhabi, United Arab Emirates.
MRC