Asia Distillates-Jet cracks ease from multi-week high as aviation demand struggles

MOSCOW (MRC) -- Asian refining margins for jet fuel dipped on Wednesday after hitting a more than two-month high in the previous session as aviation demand continued to struggle amid surging COVID-19 cases in several countries, said Hydrocarbonprocessing.

Refining profit margins or cracks for jet fuel in Singapore slipped 3 cents to USD2.05 per barrel over Dubai crude during Asian trading hours.

The cracks hit their strongest since July 28 on Tuesday, thanks to tightening supplies. The jet fuel cracks, which have gained about 58% since the end of last week, however, are at their weakest seasonal levels on record, Refinitiv Eikon data showed. Industry analysts said the profit margins were likely to remain a fraction of long-term averages for now as a substantial recovery in aviation demand was not expected until the second half of next year due to reimposed coronavirus restrictions in many markets.

"Strict mitigation measures are being eased in certain markets... although those over the aviation sector will probably be the last ones to go, with imported cases posing real threats to undo individual government efforts to contain local outbreaks," said Peter Lee, a senior oil & gas analyst at Fitch Solutions. "Essential travels and select category of business travels are being permitted in more markets, but the same for leisure flights is perhaps not on the cards, until a vaccine is made available." Cash discounts for jet fuel widened to 52 cents a barrel to Singapore quotes on Wednesday, compared with a 50-cent discount per barrel a day earlier.

As MRC informed earlier, European petrochemical industry faces short-term and longer-term challenges caused by or exacerbated by the COVID-19 pandemic. Speakers on Monday at the European Petrochemical Association’s (EPCA) 54th annual meeting, being held in a virtual format, said the crisis had been a learning experience for the industry.

According to 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.
MRC

MOSCOW (MRC) -- During the week ended 3 October, chemical railcar traffic in North America increased 1.5% year-over-year (YOY) on gains in Canada and Mexico. Volume totaled 44,993 carloads, up 3.9% from the previous week, according to Chemweek with reference to data released on 7 October by the Association of American Railroads (AAR).

On a four-week basis, volume was down 2.8% from 2019 and 5.9% from 2018, about the same as the previous week (chart). For the year to date, chemical railcar traffic in North America was down 4.4% from 2019 and 5.8% from 2018.

Chemical railcar traffic in the United States contributed 31,377 carloads to the total, down 3.8% YOY and up 4.3% from the previous week. For the year to date, US chemical railcar traffic is down 5.1%.

Canadian chemical rail traffic totaled 12,673 carloads, up 16.7% YOY and up 3.6% from the previous week. For the year to date, Canadian chemical railcar traffic is down 2.5%.

Chemical railcar traffic in Mexico totaled 943 carloads, a YOY increase of 11.5% and a sequential decrease of 3.9%. For the year to date, Mexican chemical railcar traffic is down 6.2%.

As MRC informed earlier, Russia's August output of chemical products rose by 5% year on year. At the same time, production of basic chemicals increased in the first eight months of 2020 by 5.3% year on year, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-August output. Thus, August production of primary polymers rose to 888,000 tonnes from 838,000 tonnes in July due to increased capacity utilisation at ZapSibNeftekhim, Stavrolen and Gazprom neftekhim Salavat. Overall output of polymers in primary form totalled 6,630,000 tonnes in January-August 2020, up by 15.2% year on year.

According to MRC's ScanPlast report, Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

MOSCOW (MRC) -- Germany’s chemical industry association VCI (Frankfurt) says that it sees the upcoming vote of the European Parliament on a possible CO2 emission-reduction target of 60% by 2030 as an extremely ambitious project, about which most of the questions remain unanswered, reported Chemweek.

VCI’s announcement follows a call by the EU Parliament in September for greenhouse gas (GHG) emissions to be reduced by 60% in 2030 compared with 1990. It is also in line with an announcement by the VCI in September.

“It is completely unclear how the enormous reduction contributions from all areas of life and economic sectors will come about. We need more realism in politics as to how high we can raise the climate-protection target in the EU without the rest of the world pulling along,” says Wolfgang Gro?e Entrup, managing director at VCI.

He notes that a target as ambitious as 60% by 2030 requires the EU to reduce by five times the average amount of CO2 it has been reducing for the past 30 years. The European Commission recently announced an emission-reduction target of at least 55% by 2030.

The EU needs to show there is a way toward the 60% target, since it is not clear how it can be achieved, VCI says. Questions remain about how the EU-wide expansion of renewables and the necessary networks will be accelerated; energy-efficiency measures such as energetic building renovation can be massively ramped up; and the competitiveness of the European economy can be preserved to create jobs and invest in climate-friendly processes, Gro?e Entrup says.

The EU’s aim should be “to develop a concrete and realistic package of measures so that the necessary infrastructure can be built, climate-friendly technologies are further developed, and jobs are preserved,” Gro?e Entrup adds.

As MRC informed before, in September 2020, Shell announced that it will replace the ethylene steam cracker furnaces at its Moerdijk petrochemicals complex, The Netherlands, in a move that will reduce its greenhouse gas emissions. Shell will install eight new furnaces in place of 16 older units without reducing capacity at the facility. The investment significantly reduces both the site’s energy consumption and its operational greenhouse gas emissions. The CO2 emissions reduction is about 10 percent of Shell Moerdijk’s annual total.

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

According to MRC"s ScanPlast report, Russia"s overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
MRC

MOSCOW (MRC) -- The contract price of propylene in Europe was agreed by EUR12,5/tonne lower than in September. However, some European producers went for a greater reduction in the export price of polypropylene (PP) than the reduction in the price of monomer for supply to the markets of the CIS countries in October, according to the ICIS-MRC Price Report.

Negotiations over October prices of European PP began at the end of last week. All market participants said European producers decided to reduce the export prices of propylene polymers, and in some cases the price decrease is recorded more than the decrease in the price of propylene in the region.

Deals for October shipments of homopolymer propylene (homopolymer PP) were discussed in the range of EUR830-900/tonne FCA, whereas last month's deals were done in the range of EUR840-940/tonne FCA.

Deals for block copolymers of propylene for June delivery were discussed in the range EUR920-980/tonne FCA.
There were no restrictions on October shipments from European producers; moreover, for large volumes of purchases, some producers were ready to go for additional discounts.
MRC

MOSCOW (MRC) -- The Abu Dhabi National Oil Company (ADNOC) has announced the launch of AIQ, its Artificial Intelligence (AI) joint venture (JV) company with Group 42 (G42), an Abu Dhabi-based AI and cloud computing company, said Hydrocarbonprocessing.

The completion of the formation of AIQ follows the signing of the JV agreement between ADNOC and G42 in November 2019 with ADNOC holding a 60-percent stake and G42 a 40-percent stake in AIQ. AIQ will focus on developing and commercializing AI products and applications for the oil and gas industry. The partnership brings together G42’s expertise in AI modeling, supercomputing and its world-class team of data scientists and software engineers with ADNOC’s world-class oil and gas industry know-how, domain experts and its vast amount of data.

H.E. Dr Sultan Al Jaber, minister of Industry and Advanced Technology and ADNOC Group CEO, said: “Through this new joint venture, we are able to accelerate the development of new AI solutions to optimize processes, improve planning and increase profitability for ADNOC and the wider oil and gas industry. This partnership model allows ADNOC to develop AI solutions and applications in a cost-efficient way and strengthens Abu Dhabi’s and our nation’s position as a global hub for AI and technology driven industrial growth."

The chairman of the AIQ Board of Directors is Abdulmunim Saif Al Kindy (ADNOC), with Peng Xiao (G42) Mansoor Ibrahim AlMansoori (G42), Ahmed Al Kuttab (ADNOC) and Alan Nelson (ADNOC) being appointed as Board members. ADNOC’s partnership with G42 represents one of several digital transformation initiatives to embed cutting-edge technology across its entire value chain. Other digital initiatives include its AI and big data-driven “Panorama Digital Command Center,” its smart data analytics “Thamama Subsurface Collaboration Center,” its use of big data modeling tools for value chain optimization, computer vision technologies, predictive maintenance machine learning technologies and use of blockchain for hydrocarbon accounting.

Dr. Alan Nelson, ADNOC Group chief technology officer, said: “We are excited about the launch of our AI joint venture with G42 as it enables us to accelerate ADNOC’s adoption of advanced technologies and further digitalize our value chain to enhance efficiencies, performance and agility. The joint venture is testament to ADNOC’s drive to partner with local technology players to help grow the UAE’s innovation ecosystem and to drive long-term and sustainable value for the nation."

Peng Xiao, Group CEO, G42, said: “This partnership with ADNOC offers the potential to create the AI tools for the oil and gas industry of tomorrow and we look forward to leveraging our state-of-the-art cloud infrastructure and specialized team of AI experts to help develop these new cutting-edge solutions. The use of AI, combined with G42’s supercomputing capabilities, as well as ADNOC’s industrial expertise and breadth of data, will unlock efficiencies across the entire value chain, inspiring new approaches to exploration, production, transportation, processing, distributions and sales."

AIQ has started work on a number of key AI projects across the oil and gas value chain such as drilling performance, reservoir modelling, corrosion detection, and product quality. The scope of projects will be expanded to other areas as the JV progresses.

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