Crude futures rise on ECB stimulus expectations, robust US economic data

MOSCOW (MRC) -- Crude oil futures rose during mid-morning trade in Asia Oct. 30, as traders took advantage of weak crude prices to pick up some bargains following an overnight plunge, with indications of a new round of monetary stimulus from the European Central Bank and better-than-expected US economic data also providing relief to markets, reported S&P Global.

At 11.14 am Singapore time (0259 GMT), ICE Brent December crude futures were up 25 cents/b (0.66%) from the Oct. 29 settle to USD37.90/b, while the NYMEX December light sweet crude contract was up 25 cents/b (0.69%) at USD36.42/b.

ICE Brent and NYMEX crude futures had dived 3.76% and 3.26% to settle at USD37.65/b and USD36.17/b, respectively on Oct. 29, as the market digested the demand-side implications of nation-wide lockdowns in Germany and France, Europe's largest and second largest economy, respectively.

Reflecting on uptrend in prices, Vandana Hari, chief executive officer at Vanda Insights told Platts Oct. 30: "Like yesterday, traders in Asia are taking advantage of the low prices to carry out some bargain hunting."

Meanwhile, ANZ analysts attributed the rise in prices to robust US economic data and the possibility of an ECB stimulus in December, saying in an Oct. 30 note: "The release of GDP for US showing a record strong rebound in Q3 saw crude oil reverse some of (their losses). Sentiment was also supported by the ECB signalling a new package of monetary stimulus in December."

The ECB had said in an Oct. 29 statement that when it meets again in December, it will "carefully assess the incoming information" relating to the pandemic and "recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favorable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path."

Furthermore, US Commerce department data had shown that GDP had surged 33.1%, or USD1.64 trillion, to USD21.16 trillion in the third-quarter, while the US Labor Department data showed that the country's weekly unemployment claims had fallen 40,000 to 751,000 in the week ended Oct. 24.

Hari, however, stressed that economic data are backward looking and therefore will not offer significant comfort to markets, especially when they are staring down the barrel of subdued demand due to a resurgence in coronavirus cases in the US and amid European lockdowns.

"With demand-side fundamentals still looking bleak, the only thing that could put a floor on prices right now is a supply-side response...the market wants to hear from OPEC+ leaders Saudi Arabia and Russia that the alliance will reconsider the scheduled roll-back in production quotas," Hari said. "Time is running out for the OPEC+ to make a decision."

Meanwhile, analysts said that the market also gained some support from the larger-than-expected shut-ins caused by Hurricane Zeta in the US Gulf Coast. According to data by the US Bureau of Safety and Environmental Enforcement, as of Oct. 29, 1.57 million b/d of crude output, or 84.8% of the US Gulf's crude capacity, had been shuttered and 35% of the region's platforms and rigs, or 231 facilities, had been evacuated.

However, this support may be transient, as the latest advisory from the National Hurricane Center issued late Oct. 29 showed that Zeta, which has now degraded into a Post-Tropical Cyclone, should dissipate on Oct. 30, paving the way for the region's production to resume.

As MRC informed earlier, as of midday Oct. 29, the storm had shut in an estimated 1.57 million b/d of crude production reflecting 84.8% of US Gulf output, according to the US Bureau of Safety and Environmental Enforcement. The Category 2 storm also caused disruptions at Shell's 227,400 b/d Norco Refinery, PBF Energy's 190,000 b/d Chalmette Refinery and potentially others, but damages were limited and the restart processes have begun, the companies said.

We remind that Royal Dutch Shell plc. said in October, 2020, that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. Currently under construction, the plant is in Beaver County, about 48 km northwest of Pittsburgh, and will be self-sustained with its natural gas power plant and water treatment facility. The plant’s costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

Lummus supplying ethylene cracking furnaces to Baltic Chemical Plant

MOSCOW (MRC) -- Lummus Technology will supply 14 cracking furnaces for a Gas Chemical Complex that is part of the Ethane-rich Gas Processing Complex (GCC EGPC) located near Ust-Luga, Leningrad Oblast, Russia, on the Gulf of Finland, said Hydrocarbonengineering.

The contract is awarded within the framework of an EPC Contract for the GCC EGPC project between China National Chemical Engineering & Construction Corporation Seven, LTD (CC7), and the Baltic Chemical Plant LLC. Lummus' scope includes engineering and supply of the company's proprietary Short Residence Time (SRT®) VI cracking furnaces. The equipment is expected to yield a total ethylene product amount (ethylene crackers 1 and 2) of up to 3 million tpy, will be supplied under the ethylene technology license agreement entered in between Baltic Chemical Plant LLC, a Project Operator (and a subsidiary of RusGazDobycha), and Lummus Technology in 2019.

The cracking furnace is the core process element of an ethylene plant. The process inside a cracking furnace is based upon pyrolysis of hydrocarbons (ethane/propane mixture) in the presence of steam with release of cracked gas. The gas is further fed into the olefins recovery section to produce polymer grade ethylene used as feedstock for polyethylene production as well as other byproducts.

"The Gas Chemical Complex Project relies on the most advanced, highly-efficient and eco-friendly process solutions available in the world. At the current stage of the project, the team is dealing with purchasing long-lead equipment. The benefits offered by Lummus Technology include significant reduction in the output of by-products and specific consumption of utilities. The process also offers feedstock flexibility as it is possible to feed of up to 10% propane in case of ethane shortage," shared Konstantin Makhov, General Director of Baltic Chemical Plant LLC.

"This is the second major award announced recently for our world-class SRT ethylene furnaces, which optimise reliability in capacity, run-length and energy efficiency. It is another step forward in our services for the Baltic Chemical Plant and builds on our experience in Russia, which is among our key markets and where we are recognised as a leading licensor of this technology," said Leon de Bruyn, President and CEO of Lummus Technology.

"This is the first experience of partnering between Lummus Technology and CC7 for ethylene integration project both in Russian and international markets. Following the Process Design Package Contract covering the ethane cracking unit engineering for Baltic Chemical Plant signed in November 2019, a new equipment engineering & supply contract has been now signed. The relationships between the two companies have been evolving, and cooperation experience gained in this project will build a reliable foundation for future strategic partnership in the international market," underlined Long Haiyang, Vice-President at CC7.

As per MRC, Lummus Technology has been awarded a contract by Enter Engineering Pte. Ltd. for the Shurtan Gas Chemical Complex in Uzbekistan. Lummus’ scope includes the design and supply of four proprietary Short Residence Time (SRT) VI and VII type cracking furnaces, which will more than double the production of ethylene at Shurtan’s facility.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

Shin-Etsu reports lower income on reduced PVC, silicone earnings

MOSCOW (MRC) -- Shin-Etsu Chemical Co., Ltd. (SHECF.PK,SHECY.PK) reported that its net income attributable to owners of parent for the first half of the fiscal year ending March 31, 2021 decreased to 140.31 billion yen from 165.03 billion yen last year, said Chemweek.

Net sales for the period declined to 710.53 billion yen from 786.54 billion yen in the previous year. The year-end dividend for the fiscal year ending March 31, 2021 is expected to be130 yen per share, an increase of 20 yen per share from the interim dividend of 110 yen per share.

The company projects that the dividend on an annual basis will be 240 yen per share, an increase of 20 yen per share from the dividend for the previous year of 220 yen per share.

Looking ahead for the fiscal year ending March 31, 2021, the company now expects net income attributable to owners of parent to be 283.0 billion yen or 681 yen per share, operating income of 377.0 billion yen, and net sales of 1.43 trillion yen.

Previously, the company expected net income attributable to owners of parent to be 314.0 billion yen or 755 yen per share, operating income of 406.0 billion yen, and net sales of 1.54 trillion yen.

According to MRC"s ScanPlast report, September total production of unmixed PVC grew to 86,000 tonnes from 75,500 tonnes a month earlier, SayanskKhimPlast and RusVinyl increased their capacity utilisation. Overall output of polymer were 718,500 tonnes in the first nine months of 2020 versus 720,500 tonnes a year earlier, only two producers raised their production volumes, and RusVinyl cut its output.
MRC

Oil and gas EPC majors shift to cleaner energy

MOSCOW (MRC) -- Major oil and gas engineering, procurement, and construction (EPC) companies are increasingly shifting their strategies toward cleaner energy segments, according to Hydrocarbonprocessing.

With a bleak investment outlook for the sector in the wake of COVID-19, now is seen as good a time as any for major oil and gas companies to make strategic shifts in energy transition, according to analysis by GlobalData.

Major oil and gas EPCs, which have traditionally relied on projects within the oil and gas value chain and have had relatively little exposure to renewables, are now looking to renewables and other clean energy sectors for future growth.

EPC companies are adopting diverse strategies to position themselves for the energy transition. Aker and TechnipFMC, for example, have restructured their businesses to create dedicated units for low-carbon projects. Petrofac aims to achieve net zero in Scope 1 and Scope 2 emissions by 2030. Despite these varying approaches, the most common target segments among major oil and gas EPC companies are offshore wind and carbon capture and storage (CCS).

“COVID-19 brought a major oil and gas demand shock, delayed projects and raised additional questions about the potential for future oil demand growth. Oil and gas investment is likely to flatline at best over the coming years, and companies will need to look to the growth markets of new energy sectors to support their businesses,” said Will Scargill, GlobalData managing oil and gas analyst.

“The targeting of offshore wind and carbon capture is a common theme among companies from the oil and gas sector looking to adapt for the energy transition due to the potential for knowledge synergies. Oil and gas EPCs looking to target new segments will also hope to benefit from existing partnerships with clients making a similar transition. However, their growth plans will face a challenge from incumbent players in the renewables space,” Scargill added.

As MRC informed earlier, the coronavirus pandemic underscored BP's efforts to "reimagine energy" by taking a leading role in the push to cleaner, low-carbon fuels, said CEO Bernard Looney in July, 2020. Rising levels uncertainty over the future demand for oil, oil price volatility, a growing attractiveness of stable returns from some renewables, and an increased awareness of "the fragility of the world we live in" mean BP is taking the right path to pursue lower-carbon fuels, Looney said.

We remind that in July, 2020, the Turkish Competition Council gave permission to SOCAR and BP to establish a joint venture that will operate in the petrochemical sector. Earlier it was reported that SOCAR and BP applied to the relevant institutions in Turkey to establish a joint petrochemical company, which will be called Mercury complex, in April 2020. Recall that on December 20, 2018 SOCAR and BP signed contractual principles for evaluation of plans for creation a world-class petrochemical complex in Turkey and establishment of a joint venture to manage it.

Construction of the complex was planned to begin during the current year in order to put the enterprise into operation in 2023-2025. However, due to low oil prices and to the COVID-19 pandemic, the project implementation has been postponed until 2021. The Mercury complex will be built near the Petkim petrochemical complex and the STAR refinery in Aliaga region. The enterprise will produce 1.25 million tons of purified terephthalic acid (PTA), 840 thousand tons of paraxylene (PX), 340 thousand tons of benzene.

PTA is the main raw material in the production of polyester from which beverage and food containers, packaging materials, photo and film and other consumer and industrial goods are derived.

According to ICIS-MRC Price report, consumption of PET chips by Russian converters decreased in October, which is generally in line with the current season. Market participants reported weak demand in the Russian PET chips market at the end of last month and expect its further decline in early November. The revival of the domestic PET market is expected in the second half of November, before the New Year holidays.
MRC

Celanese completes sale of stake in Polyplastics

MOSCOW (MRC) -- Celanese has completed the sale of its 45% equity investment in Japanese engineering plastics company Polyplastics to Daicel Corp for USD1.575bn in cash, the US chemicals company said.

Daicel now owns all of Polyplastics, which makes liquid crystal polymers, polyphenylene sulphide (PPS), as well as polyoxymethylene (POM) copolymer, known as polyacetal. With the sale, announced in July, Celanese has monetised a “historically passive investment” and expects to deploy the proceeds into higher value-generating opportunities, it said.

As noted in the July 20, 2020, announcement, Celanese has been investing in and rapidly growing its own Engineered Materials base business globally over the last 10 years, independent of Polyplastics, with a footprint in Asia significantly greater now than when the Company entered the region more than 50 years ago through Polyplastics. The sale of Polyplastics is an intentional departure from a legacy relationship to a more contemporary approach to independently drive future growth, advance application development with customers, and pursue high-return expansion opportunities for the benefit of Celanese and its customers.

"Celanese is well-positioned to continue its growth trajectory as we increase investment in new product development to serve customer demand in growth segments and key geographies,” said Tom Kelly, Senior Vice President, Engineered Materials, Celanese. “We will continue to invest in product expansion to serve the growing demand in applications such as 5G, advanced mobility, medical/pharma, and sustainable materials. Celanese also plans to expand its manufacturing capacity and advance its T&I capabilities in Asia to meet rapidly growing demand in the region."

As MRC informed earlier, Clariant, Celanese, and Orbia have been fined a total of EUR260 million (USD296 million) by the European Commission for breaching EU competition rules by participating in a cartel related to ethylene purchases in Europe. Westlake, which also participated in the cartel, received full immunity by revealing the breach, avoiding an aggregate fine of about EUR190 million, the Commission says.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2019 net sales of USD6.3 billion.
MRC