Price rally extends as supply outlooks tighten following US crude draw

MOSCOW (MRC) -- Oil futures settled higher Nov. 4 as the market eyed tightened supply outlooks following a US inventory draw and the possibility of extended OPEC+ production cuts, reported S&P Global.

NYMEX December WTI climbed USD1.49 to settle at USD39.15/b and ICE January Brent was up USD1.52 at USD41.23/b.

US commercial crude stocks moved 8 million barrels lower in the week ended Oct. 30 to 484.43 million barrels, US Energy Information Administration data showed Nov. 4. The draw puts inventories at the lowest since the week ended April 3 and leaves them just 6.8% above the five-year average for this time of year, marking the narrowest surplus since early April.

The US crude draw was the largest weekly downturn since late August, and added to a tightening supply narrative that has been supportive of markets in recent days.

The market is increasingly pricing in the prospects that the OEPC+ group will approve an at least three-month extensions of their current levels of production cuts through March 2021.

OPEC, Russia, and other key partners in a supply accord are scheduled to taper their collective 7.8 million b/d production cuts by more than one-quarter to 5.8 million b/d from January, having banked on a robust rebound in oil demand from the coronavirus pandemic in the second half of the year. But a rising global caseload and the return of broad lockdowns across Europe have put these assumptions in doubt, producing a consensus within the alliance that the increase in production needs to be delayed, delegates told S&P Global Platts on Nov. 3.

NYMEX December RBOB settled 3.01 cents higher at USD1.1462/gal and December ULSD climbed 3.66 cents to USD1.2977/gal.

Total gasoline inventories climbed 1.54 million barrels to 227.67 million barrels, EIA said, putting them more than 4% above the five-year average - the largest surplus since mid-August. The build comes as gasoline demand continued to trend downward, with the four-week moving average falling to 8.44 million b/d - the lowest since the week ended June 26 and more than 10% behind year-ago levels.

The front-month ICE New York Harbor RBO crack against Brent pulled back around 4 cents in afternoon trading to USD5.06/b, on pace to close just off two-month low of USD5/b seen Nov. 2.

The outcome of the US presidential election had yet to be determined late Nov. 4 as mail-in ballots continued to be counted. The future of US energy and climate policy hangs on the races for president and several tightly contested US Senate seats.

In the longer term, a Donald Trump victory could be supportive for oil prices, analysts said.

"A Trump win is bullish for oil prices as he will prevent Iranian oil from returning to the market in 2022 with continued sanctions. This also means it is less risky for OPEC+ to make more production cuts without the concern they will be undermined by this supply," SEB Bank's Chief Commodities Analyst, Bjarne Schieldrop, said.

But a Biden presidency is expected to be more supportive of stimulus spending, fostering faster economic growth and a weaker dollar, according to S&P Global Platts Analytics -- both bullish for oil prices. However, with Republicans likely to retain control of the Senate, the administration's ability to pass a stimulus bill may be curtailed. Also, longer term, Biden would embrace a shift to clean energy through climate policy, tougher environmental regulations and restrictions on federal oil and gas permitting.

ICE US Dollar Index futures were holding at around 93.4 late Nov. 4, down from a five-week high 94.15 on Nov. 2.

As MRC informed earlier, as of midday Oct. 29, the storm Zeta 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

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, and its affiliate companies in Europe, have announced a price increase for all polystyrene (PS), acrylonitrile-butadiene-styrene (ABS) and acrylonitrile-styrene copolymer (SAN) in Europe, according to the company's press release as of 3 November.

Effective Noveber 1, 2020, or as existing contract terms allow, the contract and spot prices for the products listed below rose as follows:

- STYRON general purpose polystyrene grades (GPPS) -- by EUR110 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech high impact polystyrene grades (HIPS) - by EUR110 per metric ton;
- MAGNUM ABS resins - by EUR110 per metric ton;
- TYRIL SAN resins - by EUR80 per metric ton.

As MRC informed before, Trinseo last raised its prices for all PS, ABS and SAN grades on 1 October 2020, as stated below:

- STYRON GPPS -- by EUR75 per metric ton;
- STYRON and STYRON A-Tech and STYRON X- Tech and STYRON C- Tech HIPS - by EUR75 per metric ton;
- MAGNUM ABS resins - by EUR50 per metric ton;
- TYRIL SAN resins - by EUR30 per metric ton.

According to ICIS-MRC Price report, in Russia, market participants continued to report strong demand in the HIPS and GPPS market and a shortage of Russian PS last week. And the shortage of material is expected to remain in November. Prices of Nizhnekamskneftekhim's material will rise by Rb3,000/tonne in November. November GPPS prices will be in the range of Rb92,000-98,000/tonne CPT Moscow, including VAT, whereas HIPS prices will be at Rb96,000-102,000/tonne CPT Moscow, including VAT. Prices for November quantities of Penoplex's GPPS will be in the range of Rb95,000-97,000/tonne CPT Moscow, including VAT, this month.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.8 billion in net sales in 2019, with 17 manufacturing sites around the world, and approximately 2,700 employees.
MRC

MOSCOW (MRC) -- SIBUR third-quarter earnings jumped 20% year on year as the Russian chemicals major continues ramping up polymers output at its large ZapSibNeftekhim (ZapSib) complex, said the Russian petrochemical company.

Sibur Holding sustained a net loss of 24.6 bln rubles (USD309 mln) under the International Financial Reporting Standards (IFRS) in the first nine months of 2020 due to exchange rate differences.

For reference, the company had a net profit of 103.16 bln rubles (USD1.3 bln) in the same period last year. The adjusted net profit for the reporting period (excluding the exchange rate difference) amounted to 71.9 billion rubles (USD905 mln), Sibur notes.

The company's revenue for nine months decreased by 6.6% - to 369.33 billion rubles (USD4.6 bln). The company's EBITDA decreased by 3.3% to 122.03 billion rubles (USD1.5 bln) driven by narrowed spreads for the majority of Sibur's product groups due to the adverse price dynamics.

EBITDA margin was 33%. The holding's capital expenditures in the reporting period fell by 19.9% to 80.25 billion rubles (USD1.01 bln).

As MRC informed earlier, Sibur selected Univation’s licensed process for three 600,000-metric tons/year PE lines at Amur. The lines will be part of the integrated project, located near Svobodny in the Amur region close to Russia’s border with China, which will have a total polyolefin design capacity of 2.7 million metric tons/year.

As per MRC's ScanPlast, September PE production in Russia was 233,200 tonnes, whereas this figure was 258,700 tonnes a month earlier, in the first month of autumn several producers stopped their capacities for repairs at once. Thus, overall PE output reached 2,204,200 tonnes in January-September 2020, compared to 1,349,000 tonnes a year earlier. Production of all PE grades rose, but LLDPE accounted for the greatest increase, which was provided by ZapSibNeftekhim.
MRC

MOSCOW (MRC) -- LG Chem, a South Korean petrochemical major, has shut down its naphtha cracker in Yeosu following a fire at dawn, a company spokesman said on Thursday.

The company said a fire broke out at its central control room at the Yosu cracker complex at around midnight local time (15:00 GMT) today.

The country's largest chemical company said it was in the process of figuring out the cause of the fire.

The facility can process about 1.2 million tonnes of ethylene per year (tpy).

The cracker shutdown is expected to last at least three weeks.

As MRC reported earlier, LG Chem is planning to spend USD2.4-billion to expand its naphtha cracking center (NCC) and polyolefin (PO) plant in Yeosu, South Korea. The project, which will expand the NCC and PO facility by 800,000 t/y each, is expected to be completed in the second half of 2021.

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.

LG Chem Ltd., often referred to as LG Chemical, is the largest Korean chemical company and is headquartered in Seoul, South Korea. It has eight domestic factories and global network of 29 business locations in 15 countries. LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.
MRC

MOSCOW (MRC) -- Scientists of the Rosneft United Research and Development Centre have developed an innovative technology for processing acetone produced by Rosneft’s enterprises into isopropyl alcohol (isopropanol), a high-margin product that is now mainly imported in Russia, said the company.

The technology includes hydrogenation of acetone with the Company’s own heterogeneous metal-containing catalyst, obtained from raw materials available in the country. Technological potential development is one of the key items of the Rosneft-2022 Strategy. The Company pays special attention to innovation and breakthroughs, recognising the technological leadership as an essential element for competitive performance on the oil market.

The isopropanol will be used as an anti-icing agent in the production of the high-quality, odourless (as opposed to propylene-based isopropanol), frost-free car windscreen wiper fluid for the Company’s retail network. Isopropanol is also a component of solvents, reagents and a number of cosmetic products. Furthermore, it is the basis for highly effective antiseptics designed to combat the spread of infections, which is why the demand for isopropanol in Russia and worldwide is expected to grow significantly.

An industrial-grade acetone-to-isopropanol unit and in-house isopropanol-based windscreen wiper unit are to be constructed at Rosneft’s Novokuibyshevsk Petrochemical Company that has the relevant petrochemical profile.

As MRC informed earlier, Rosneft United Research and Development Centre, the institute of the corporate R&D complex of Rosneft Oil Company, has developed a laboratory unit for synthetic crude oil. The unit, which completed a synthetic oil production run, is capable of converting methane to synthetic liquid hydrocarbons. Rosneft said its technology for obtaining synthetic oil from associated petroleum gas has undergone a series of expert reviews, including international ones, and has been assessed as advanced process solution.

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