PVC prices keep rising in Russia in October

MOSCOW (MRC) - The situation in the global suspension polyvinyl chloride (SPVC) market and the devaluation of the rouble continue to put pressure on prices in the Russian market. Russian producers announced a further price increase of Rb2,000-3,000/tonne, according to ICIS-MRC Price Report.

Russian producers traditionally cut SPVC prices in September - October in the previous years in the domestic market, including due to a decrease in demand. The current year was not typical for both the Russian and the global PVC markets in general.

Tight PVC supply in several regions of the world and record price levels put a serious pressure on PVC prices in Russia, as well as the weakening of the rouble. Russian producers also intend to achieve a price rise of Rb2,000-3,000/tonne for October shipments.

The demand for SPVC from Russian converters in September was at a good level, although some converters were cautious about purchases at the beginning of the month. At the same time, supply of PVC K58/70 has been tight since the middle of summer due to insignificant imports and problems with production from some producers.
Many converters intend to reduce the volume of PVC purchases in October, wishing to optimise their stocks of raw materials and finished products by November.

Nevertheless, weaker demand does not affect the prices of PVC from Russian producers, since the latter have an increased demand for PVC from consumers from other regions of the world. In addition, in some areas of export, PVC prices were significantly higher than the prices that Russian producers offer for supply to the domestic market in October. In particular, in Turkey last week PVC prices exceeded USD1,200/tonne CFR Istanbul. Prices in Asia have exceeded USD1,000/tonne CFR. Kaustik Volgograd plans to shut its 90,000 tonnes/year PVC capacities for the turnaround in the first ten days of October.

For most consumers in Russia, the current price situation was not typical. Buyers were used to the fact that in previous years, prices have been gradually decreasing since September until the end of the year.

And, as a result, consumers were not ready for the next wave of SPVC price increases. October deals for Russian PVC with K64/67 were negotiated in the range of Rb83,000-86,000/tonne CPT Moscow, including VAT, for quantities of less than 500 tonnes.
MRC

Historic milestone for ADNOC as new trading arm begins derivatives

MOSCOW (MRC) -- The Abu Dhabi National Oil Company (ADNOC) has announced that one of its new trading entities, ADNOC Trading, has started derivatives trading as a direct market participant, said Hydrocarbonprocessing.

This represents a major milestone for the company, as it moves from being a traditional marketer of its products to a more sophisticated global trader. ADNOC has incorporated two trading units, ADNOC Trading (AT), which focuses on the trading of crude oil, and ADNOC Global Trading (AGT) a joint venture with ENI and OMV that will focus on the trading of refined products. The new offices of both AT and AGT are located in Abu Dhabi’s International Financial Centre at Abu Dhabi Global Market (ADGM).

ADNOC Trading is now operational and ADNOC Global Trading is on track in establishing the required processes, procedures and systems to begin operations in the coming months. The AGT trading team are already optimizing ADNOC’s flows (crude, feedstock and product optimization), and, as its new trading systems are finalized will ramp up its activities.

By entering trading, ADNOC is able to offer a broader range of services to its customers and capture more value through new revenue streams from the sale of its growing crude and refined products portfolio. This significant step is a critical enabler of ADNOC’s 2030 strategy and its drive to become a more commercially-driven and performance-led organization.

H.E. Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Group CEO, said: "This historic achievement is yet another important milestone for ADNOC as we become a more modern, agile and progressive energy company. Our steadfast focus is on providing a better service to our customers, while also stretching the margin from every barrel of oil that we produce, refine and trade. Our move into trading supports both of these goals."

“The opening of our trading offices at Abu Dhabi Global Market (ADGM) further reinforces its position and reputation as a leading and growing commodities trading hub for our nation and the Middle East region." HE Ahmed Ali Al Sayegh, UAE Minister of State and Chairman of Abu Dhabi Global Market, said: “We congratulate ADNOC on the auspicious launch of their trading operations, and setting another major milestone as they continue to unlock new potential and opportunities to further the UAE economy. We are pleased that ADNOC Global Trading and ADNOC Trading have chosen ADGM as their home base and warmly welcome the teams to the ADGM family. As an International Financial Centre, ADGM is committed to supporting ADNOC and Abu Dhabi institutions in their strategic development and future endeavors via our financial and business platforms. We will work closely together as one entity to propel the economic growth of Abu Dhabi and the UAE well into the future."

The opening of its trading offices further demonstrates ADNOC’s resilience in overcoming the unprecedented challenges of the COVID-19 pandemic. Khaled Salmeen, Executive Director of ADNOC’s Marketing, Supply and Trading directorate and Chairman of ADNOC Trading said: “ADNOC has continually adapted during COVID-19 to deliver on its commitments to domestic and international customers, including our landmark move to forward pricing of Abu Dhabi crudes. In 2020, our plans for ADNOC Trading and ADNOC Global Trading become a reality. In the weeks and months ahead, Trading will become integral to how ADNOC manages its business, helping us to better manage our product flows, deliver greater efficiencies, and provide our customers with a broader service and more integrated solutions."

Safeguards are in place to oversee and track all trading activity. The trading systems used by AGT and AT have undergone thorough testing to ensure that they are ‘air-tight and water-tight’ before operations begin. In order to manage and control risk, the expert trading teams use a suite of energy trading and risk management systems that cover the full life cycle of every trade.

The establishment of ADNOC’s new trading entities is part of the company’s broader transformation in its customer-facing Marketing, Supply and Trading directorate (MS&T). ADNOC’s marketing arm is moving from a supplier that customers historically collected products from, to a more customer and market-centric, shipping & integrated logistics, storage and trading organization. By better integrating its marketing related companies and capabilities, ADNOC will provide a broader service to its customers, better manage and optimize its product flows and ultimately deliver greater value to its customers, its shareholders and the UAE.

In shipping, ADNOC Logistics & Services (ADNOC L&S) is the largest, fully integrated logistics and shipping company in the UAE and provides highly specialized services that cover the entire oil and gas supply chain. ADNOC L&S is expanding its merchant fleet in line with ADNOC’s growing upstream and downstream portfolio and the company’s move into trading.

In storage, in addition to substantial storage in the UAE and international storage in Japan and India, ADNOC announced in 2019 a strategic investment in global storage terminal owner and operator VTTI BV (VTTI). VTTI is an independent global owner of 15 hydrocarbon storage terminals across 14 different countries, many of which are in locations that are complementary to ADNOC’s trade flows. Finally, by entering trading, ADNOC will be able to provide a wider offering to its customers, more nimbly take advantage of changing market dynamics, and better manage its product flows, assets and risks.

As MRC informed earlier, in early May, 2020, Abu Dhabi National Oil Company (ADNOC) began a gradual restart of its Ruwais oil refinery complex after a scheduled maintenance shutdown. The Ruwais complex, which has capacity of 835,000 barrels per day, was shut down early this year, the ADNOC spokesman said. And in late July 2019, ADNOC said its Ruwais refinery west cracker was offline for maintenance.

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

Preem drops USD1.65B Swedish refinery expansion plan

MOSCOW (MRC) -- Preem announced it has scrapped plans for the expansion of Sweden’s biggest oil refinery that would potentially have created the country’s biggest polluter, blaming the economy, said Hydrocarbonprocessing.

The government had not yet decided whether to allow the planned USD1.65 billion (15 billion crown) expansion. A court ruled in June it could go ahead, running counter to the Social Democrats-Greens coalition’s promise to cut emissions.

"In light of the economic future prospects, Preem’s Board of Directors has decided that the environmental permit application for Preemraff Lysekil will be withdrawn, and that the ROCC (Residue Oil Conversion Complex) project will be discontinued,” Preem said.

It said the impact of the COVID-19 pandemic had contributed to the project no longer being commercially viable. “Dismantling the ROCC project is a commercial decision,” Magnus Heimburg, CEO at Preem since August, said in a statement. Climate activists and others had opposed the expansion.

Greenpeace this month in protest blocked a tanker from delivering crude oil to the refinery. It said the expansion would result in increasing carbon dioxide emissions by up to 1 MM tons per year, making it Sweden’s largest source of CO2 emissions.

Teen activist Greta Thunberg, who has said Sweden would fail to live up to its commitments to the Paris Agreement if it allowed the expansion, said on Twitter the news was “a huge victory for the climate and environmental movement”. Preem, owned by Ethiopian-born Saudi billionaire Mohammed Hussein al-Amoudi, is the largest refining company in Sweden. The group said it now instead planned to start production of renewable fuels at the Lysekil refinery.

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

US propane/propylene stocks jump 4.1 million bbl on week

MOSCOW (MRC) -- US propane and propylene stocks surged 4.1 million bbl during the week ended 25 September, according to the US Energy Information Administration (EIA), said Chemweek.

Nationwide stocks totaled 102 million bbl, up 4.2% on the week and 5.9% above year-ago levels. An OPIS survey of market participants on Tuesday called for an average build of 2.2 million bbl on the week, with estimates ranging from 500,000 bbl to 4 million bbl.

Demand, as suggested by product supplied, tumbled over the reporting period, coming in at 615,000 b/d, down 434,000 b/d. At the same time, refiner and blender net production increased by 123,000 b/d to 2.351 million b/d. Exports of propane and propylene increased by 276,000 b/d to 1.315 million b/d for the latest reporting week, while imports rose by 51,000 b/d to 161,000 b/d.

Regionally, PADD 3 (Gulf Coast) stocks rose 3.6 million bbl to 59.5 million bbl and were 2.8 million bbl higher than last year. PADD 2 (Midwest) increased by 400,000 bbl to 27.8 million bbl and were 300,000 bbl ahead of 2019. PADD 1 (East Coast) rose by 100,000 bbl on the week to 9.2 million bbl, up 1.3 million from 2019, and PADDs 4 and 5 fell 100,000 bbl to 5.4 million bbl (1.3 million bbl over last year).

Spot propane prices had limited reaction to the EIA data, with no post-report transactions confirmed at Mont Belvieu and bid/ask ranges largely holding to levels done earlier in the morning. TET (Lone Star) transacted from 49.5-51 cts/gal and non-TET (Enterprise) at 49.75-50.875 cts/gal. Conway propane last traded at 48.125 cts/gal, incrementally higher than a pre-EIA range of 46.5-48 cts/gal.

As per MRC's DataScope report, Russian companies significantly raised their purchasing of PP in foreign markets in August partially because of a major increase in demand, imports were 21,200 tonnes versus 17,200 tonnes a month earlier. Thus, overall PP imports into Russia reached 143,200 tonnes in January-August 2020, compared to 120,100 tonnes a year earlier. Purchasing of all grades of propylene polymers in foreign markets increased, with homopolymer PP imports accounting for the most noticeable rise.
MRC

Trump-backed Canadian railway to Alaska could free landlocked oil, faces high hurdles

MOSCOW (MRC) -- A private-sector proposal, endorsed by U.S. president Donald Trump, to build a railway from Canada’s oil sands to ports in Alaska would free landlocked crude but faces numerous steep challenges, said Hydrocarbonprocesing.

Trump wrote on Twitter over the weekend that he would issue a permit for the Alaska-Alberta Railway Development Corporation (A2A Rail) project to move Alberta crude 1,600 miles (2,570 km) to the Alaskan coast, as well as freight in the other direction. “I will be issuing a Presidential Permit for the A2A Cross-Border rail,” Trump said. He said his decision was based on the recommendation of fellow Republicans Dan Sullivan, a U.S. senator, and Don Young, a U.S. representative. Projects that cross the U.S. border require presidential permits.

The USD17 billion project, which backers hope will be in service by the end of the decade, was first proposed in 2015 by Canadian infrastructure financier Sean McCoshen. It could carry up to 2 MM barrels of oil per day, along with potash, sulfur and grain that often back up at Canada’s Vancouver port, said Mead Treadwell, A2A’s vice-chair, Alaska. “The diversity of commodities helps reduce the risk,” he said.

The case for A2A has involved often-congested pipelines that move Alberta crude to U.S refineries. However, new pipelines are now under construction. Options to move crude from Canada, the world's fourth-largest producer, are useful, but A2A is "a very challenged project," said Dennis McConaghy, a former pipeline executive at TransCanada Corp, now known as TC Energy Corp.

Transportation costs to reach Asian or U.S. Gulf Coast refiners would be substantially higher than those involving pipelines, he added.“This project makes sense if it’s absolutely the last resort,” McConaghy said. A2A would require numerous regulatory clearances in the United States and Canada that would likely take years. Discussions with shippers have not yet happened in depth, Treadwell said. He added that A2A would offer indigenous groups in the area a chance to invest.

Shipping oil by rail has caused several high-profile accidents in both Canada and the United States in recent years. “At a time when California is banning gas-powered cars and China is pledging to transition off fossil fuels, it’s hard to imagine a bigger waste of money than building a rail line to move oil trains over the melting permafrost,” said Keith Stewart, senior energy strategist at Greenpeace Canada.

The White House did not respond to a request for comment on how soon Trump would issue the permit. Such a rail link “has been a dream for many generations,” said Alaska Governor Mike Dunleavy in a statement. Funded privately, it would reduce Alaska’s costs of goods and services, he said.

Alberta supports A2A as it would unlock new markets for the province’s exports, said Kavi Bal, senior press secretary for its energy ministry.

As MRC informed earlier, Russia's output of products from polymers grew in August 2020 by 4.1% year on year. However, this figure increased by 1.9% year on year in the first eight months of 2020. According to the Russian Federal State Statistics Service, August production of unreinforced and non-combined films rose to 126,300 tonnes from 118,200 tonnes a month earlier. Output of films products grew in January-August 2020 by 8.3% year on year to 863,200 tonnes. Last month's production of non-porous polymer boards, sheets and films exceeded 38,700 tonnes versus 36,400 tonnes in July. Thus, overall output of these products reached 271,900 tonnes over the stated period, up by 3.5% year on year.
MRC