PP imports to Belarus down by 1.6% in Jan-Aug 2020

MOSCOW (MRC) -- Overall polypropylene (PP) imports into Belarus dropped in the first eight months of 2020 by 1.6% year on year to 72,300 tonnes. Only propylene copolymers accounted for weaker demand, according to MRC's DataScope report.

August PP imports to Belarus rose to 9,500 tonnes, whereas this figure was 7,300 tonnes a month earlier, local companies raised their purchasing of all propylene polymers in Russia. Overall imports of propylene polymers reached 72,300 tonnes in January-August 2020, compared to 73,500 tonnes a year earlier, demand for propylene homopolymer (homopolymer PP) increased, whereas demand for propylene copolymers decreased.

The supply structure by PP grades looked the following way over the stated period.

August imports of homopolymer PP reached 7,100 tonnes versus 6,300 tonnes a month earlier, purchases of injection moulding homopolymer PP in Russia increased. Overall imports of homopolymer PP reached 53,000 tonnes in the first eight months of 2020, up by 7% year on year.

August imports of propylene copolymers to Belarus were 2,300 tonnes versus 1,000 tonnes a month earlier, local companies significantly raised their procurement of injection moulding block-copolymers of propylene (PP block copolymer) from Russian producers. Thus, overall imports of propylene copolymers reached 19,300 tonnes in January-August 2020, down by 19.6% year on year.

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MOSCOW (MRC) -- Hexcel has reported net income down 87.9% year-on-year (YOY), to USD9.7 million, on net sales down 49.9%, to USD286.9 million. Adjusted earnings amounted to a 29 cents/share net loss, short of analysts’ consensus estimate of an 8 cents/share gain, as reported by Refinitiv (New York, New York), said Chemweek.

A dramatic decline in demand from the commercial aerospace sector has significantly impacted the company’s results. “As the year has progressed, the dramatic downturn especially in the commercial aerospace market has become clearer and, as a result, we believe these channel adjustments will take another two to three quarters to work through the system,” says Hexcel chairman and CEO Nick Stanage.

Commercial aerospace segment sales were down 66.6% YOY, to USD128.8 million. Space and defense segment sales fell 0.9% YOY, to USD108.8 million. Industrial segment sales fell 25.8% YOY, to USD49.3 million.

As MRC informed earlier, Hexcel and Arkema have signed a strategic alliance to develop thermoplastic composite solutions for the aerospace sector combining the expertise of Hexcel in carbon fiber and that of Arkema in PEKK. The partnership announced today aims to develop carbon fiber-reinforced thermoplastic tapes to produce lightweight parts for future generations of aircraft. In addition to lightweighting, these new composites will provide lower cost and faster production speeds for customers in the aerospace and the space and defense sectors.

We remind that Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight months of 2020, 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-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year.

At the same time, August production of primary polymers rose to 888,000 tonnes against 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 over the stated period, up by 15.2% year on year.

Hexcel Corporation is a leading advanced composites company. It develops, manufactures and markets lightweight, high-performance structural materials including carbon fibers, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, adhesives, engineered core and composite structures for use in commercial aerospace, space and defense and industrial applications.
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MOSCOW (MRC) -- Crude futures fell during mid-morning Asian trade Oct. 16, extending overnight losses, as a decline in US exports and escalating coronavirus restrictions overshadowed the large draw in US crude inventories, reported S&P Global.

At 10.45 am Singapore time (0245 GMT), ICE Brent December crude futures were down 30 cents/b (0.7%) from the Oct. 15 settle to USD42.86/b, while the NYMEX November light sweet crude contract was down 26 cents/b (0.63%) at USD40.70 /b. Both international crude markets had dipped 0.37% and 0.19% to settle at USD43.16/b and USD40.96/b, respectively, on Oct. 15.

The drop in oil prices comes after the Energy Information Association released its latest data on Oct. 15, which showed that US crude exports had fallen to 2.135 million b/d in the week ended Oct.9, the lowest in 14 months.

While part of the reason for this could have been the shuttered production during Hurricane Delta, the figure nevertheless emphasized that export demand remained weak, with both market analysts and traders not expecting a recovery in the near term.

A trading source said: "Exports are tough in November, demand is weak and (arbitrage) isn't there." The trader added that he expects demand to be weak in December and January as well.

The export data casts a shadow on an otherwise bullish EIA report, which showed that in the week ended Oct. 9, US commercial crude stocks had dropped 3.82 million barrels to 489.1 million barrels, putting them just 10% above the five-year average inventory - the lowest supply overhang since mid-May.

The EIA report, however, may have failed to make a bigger impact on the market, as it was conservative compared with the American Petroleum Association's report released on Oct. 14, which had quantified the drop in crude inventories at 5.4 million barrels the same week.

The EIA also reported a 1.63 million-barrel and 7.25 million-barrel draw in US gasoline and distillate inventories, respectively. Refined products supplied, EIA's proxy for demand, jumped 1.13 million b/d to 19.48 million b/d, indicating that fundamentals in downstream oil markets were improving.

Stephen Innes, chief market strategist at AXI, said in an Oct. 16 note: "US oil and product stockpiles offered up some glimmer of hope that the fragile demand recovery is rebalancing at a better pace than expected in the world's largest consumer of oil, the US markets."

Meanwhile, the coronavirus pandemic continued to weigh down sentiment for oil, after France, Portugal and Italy all reported record high daily cases, and after the UK introduced new restrictions, including a ban on visiting others indoors in some parts of the country.

ANZ analysts said in an Oct. 16 note: "Crude oil started the session on the back foot, as investors became increasingly concerned about the economic fallout from the resurgence in coronavirus cases."

Amid the impending economic distress, OPEC Secretary General Mohammed Barkindo acknowledged that the outlook for oil looked bleak.

"We are on the course to recovery, but we have to be realistic that this recovery is not picking up pace at a rate that we earlier expected in the year," Barkindo said on Oct. 15 at the Energy Intelligence Forum.

Barkindo's statements in the forum reignited market talk that the OPEC+ alliance will extend the production cuts from 2021 instead of easing them as planned, even after UAE energy minister Suhail al-Mazrouei said on Oct. 13 that there are no such plans at the moment.

Innes said: "Barkindo suggested the 'OPEC Put' remains alive and well when replying to questions whether the market could handle another 2 million b/d if the OPEC+ further relaxes the current cuts in January as planned."

As MRC wrote before, US crude stocks moved lower last week as Hurricane Delta shut in Gulf of Mexico output and exports hit a 14-month low, according to US Energy Information Administration data showed Oct. 15.

We reming that in August, 2020, US refiner Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

We remind that 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 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.
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MOSOW (MRC) -- Saudi Aramco and Saudi Basic Industries Corporation (SABIC) have decided to reevaluate their crude-oil-to-chemicals project in Yanbu on the kingdom's west coast, reported S&P Global with reference to an Oct. 18 statement on the Tadawul stock exchange, as they slash spending due to low prices.

The USD20 billion project may be downsized to use Aramco's existing facilities in the port city, instead of building a new plant, the statement posted by SABIC said.

"Both parties intend to re-evaluate the scope of the crude-oil-to-chemicals (COTC) complex project and study the integration of Saudi Aramco's existing refineries in Yanbu with a world-scale mixed feed steam cracker and downstream olefin derivative units," the statement said.

The COTC project was announced in November 2017, before Aramco announced it intended to acquire a majority stake of SABIC. At the time, the project was intended to process 400,000 b/d of crude oil, to produce about 9 million mt/yr of chemicals and base oils, after entering commercial operation in 2025.

In 2018, the project management and front-end engineering contracts were awarded to Wood and KBR, respectively.

It was part of an ambitious downstream push by Aramco to double its crude processing capacity to create outlets for its crude oil. But Aramco, the world's biggest company, has been severely hit by the oil price downturn and diminishing demand caused by the COVID-19 pandemic.

In August, Saudi Aramco, the world's biggest company, saw its profit crash by 73% in Q2 to Riyals 24.62 billion ($6.6 billion). It has announced drastic cutbacks in its capex program, as a result.

As MRC wrote befire, in June, Aramco said it had completed the share acquisition of a 70% stake in SABIC from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyals 259.125 billion (USD69.1 billion). Combined, in 2019 Aramco and SABIC recorded petrochemicals production volume of nearly 90 million mt, including agri-nutrient and specialty products.

Aramco's Q3 results will be announced on Nov. 3.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
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