Crude futures surge as US election uncertainty eases

MOSCOW (MRC) -- Crude oil prices surged during the mid-morning trade in Asia Nov. 9, shadowing the movement in other risk assets, as uncertainty subsided over the US presidential election result, reported S&P Global.

At 10.21 am Singapore time (0221 GMT), ICE Brent January crude futures were up 99 cents/b (2.51%) from the Nov. 6 settle to USD40.44/b, while the NYMEX December light sweet crude contract was USD1/b (2.69%) higher at USD38.14/b.

The markers rose 3.98% and 3.77% in the week ended Nov. 6 as indications that the OPEC+ alliance could extend its current production cuts outweighed the uncertainty surrounding the the US elections. With Democrat Joe Biden declared winner of the 2020 race to the White House, oil resumed its uptrend.

"We are seeing sort of a sunshine effect caused by the provisional Biden victory, which is causing oil to rally this morning in line with the other risk assets and a weaker dollar," OANDA senior market analyst Jeffrey Halley told S&P Global Platts Nov. 9.

"The markets believe that the Biden administration will be more positive for international trade and could bring the US back into that framework, lifting global economic growth and providing a boost to global oil consumption," he added.

Strong economic data from China was adding to the uptrend, with customs data showing October exports were 11.4% higher on the year, Halley said.

AXI chief global market strategist Stephen Innes said in a Nov. 9 note: "Oil is trading a bit higher this morning in line with broader risk assets and a slightly weaker dollar as Joe Biden was declared the President, while on the data front, both the US jobs number and China's resilient exports number released over the weekend paint a better picture for the global growth outlook than expected."

However both analysts noted that market fundamentals remained bearish, with Innes adding that "what matters for oil is the pandemic and not the US election results."

With coronavirus infections in the US setting daily new records and the lockdowns in Europe likely to derail economic recovery, the outlook for oil demand remains bleak.

Against this gloomy backdrop, supply-side concerns were also heightened after Libya's National Oil Corp. reported Nov. 7 that Libya had doubled its oil output to 1 million b/d in the just over two weeks since its rival factions agreed to a peace deal on Oct. 23.

"Given the bearish fundamentals in the market, I am taking the rise in oil prices this morning with a pinch of salt. As far as I am concerned, oil remains a sell-on-rally asset for me," Halley said.

As MRC informed previously, global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

And in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

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

ccording 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

Odfjell swings to profit despite seasonal tanker market slowdown

MOSCOW (MRC) -- Odfjell (Bergen, Norway) reports net earnings of USD3.9 million for the third quarter of 2020, swinging to a profit from a net loss of USD1.1 million in the prior-year period, reported Chemweek.

The earnings are down, however, from USD30.9 million in the second quarter, reflecting a seasonal slowing of the chemical tanker market and a high number of vessel dry dockings in the third quarter, it says.

EBITDA rose 40% year on year (YOY) to USD71.7 million on sales that increased 6% to USD247.7 million, although both figures are down on the second quarter by 12% and 2%, respectively.

Despite the challenging macro environment, Odfjell continues to renew vessel contracts at higher rates compared to last year, “which is an encouraging sign,” says CEO Kristian Morch. “We expect the fourth quarter results to be in line with the third quarter,” he says.

Odfjell’s tankers business reported net earnings of USD2.6 million, swinging to profit from a loss of USD14.8 million a year earlier, but down sequentially from USD19.3 million in the second quarter. EBITDA of USD63.6 million was up almost USD20 million YOY but down USD10 million on the previous quarter, due mainly to lower tanker spot rates during the seasonal slowdown. The company shipped 3.1 million metric tons of product during the third quarter, in line with the second quarter. “The western hemisphere market improved relative to the previous quarter, while activity in the eastern hemisphere slowed down and has also been the area impacted the most by increased competition from swing tonnage operators,” Odfjell says. The global chemical tanker orderbook stands at 5.6% of the current fleet, with 16 new orders for chemical tanker vessels concluded during the quarter.

The International Monetary Fund’s (IMF) latest economic outlook has forecast an expected recovery in global GDP growth from a contraction of 4.4% in 2020 to growth of 5.2% in 2021, according to Morch. “IMF expects the speed of recovery to differ between regions, with large chemical importers like Europe and Asia to grow faster than the larger chemical exporters. This should lead to continued regional supply and demand imbalances, leading to continued stimuli for seaborne trade of chemicals,” he says.

Most industries requiring liquid chemicals have seen steady demand during the pandemic, with the exception of the automotive and construction industry, according to the company. “Continued recovery within construction and automotive are key to ensure that global inventory levels normalize, and growth rates climbs back to historical levels,” it states.

Odfjell is forecasting chemical tanker demand growth to average 3% between 2021 and 2023 relative to supply growth of 1% over the same period.

The company’s tank terminals business reported net earnings of USD1.5 million, down from USD13.2 million a year earlier and USD10.0 million lower than the second quarter of this year. EBITDA of USD7.8 million was up slightly both YOY and sequentially. Underlying demand for storage “continues to be strong” with an average commercial occupancy rate of 99% in the third quarter, it says. Activity levels at its terminals are rebounding, with the average total number of handlings up by approximately 16% compared to the second quarter, with throughput volumes showing signs of reaching normalized levels in the latter part of the third quarter, it adds.

Growth plans for its Houston tank terminal are on track, with Odfjell nearing a final investment decision on its Bay 13 expansion project, due onstream in 2022. The expansion represents an increase of 32,000 cu meters in storage capacity specifically for specialty chemicals, catering to truck, rail, ship, and barge modalities, it says. Subsequent phases of its Houston expansion plans are expected to come into operation from 2024 onwards, it adds.

As MRC informed earlier, in July, 2020, Odfjell (Bergen, Norway) says a significant expansion of its European chemicals storage capacity had been completed at the port of Antwerp, Belgium.

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

Univation PE process selected for delayed Duqm petchems project

MOSCOW (MRC) -- Duqm Refinery & Petrochemical Industries Co. LLC (DRPIC), let a contract to Univation Technologies LLC to license technology for a new polyethylene (PE) unit at the petrochemical portion of DRPIC’s long-planned 230,000-b/d integrated refining complex under construction in the Duqm Special Economic Zone (SEZAD) in Duqm, Al Wusta Governate, on Oman’s southeastern coast along the Arabian Sea, about 600 km south of Muscat, said OGJ Online.

As part of the contract, Univation Technologies will license its proprietary UNIPOL PE process and associated ACCLAIM High-Density PE (HDPE) catalyst technology for a 480,000-tonne/year line with the flexibility to shift between production of high-performance unimodal HDPE resins and linear low-density PE (LLDPE), the service provider said.

The flexible production capabilities of the UNIPOL PE process line comes as a key component of DRPIC realizing its objective to become a major player in the region by satisfying evolving customer demand for PE products in both domestic and key international markets, said Dr. Salim Al Huthaili, DRPIC’s chief executive officer.

Univation Technologies disclosed neither a value of the contract nor a timeframe for its work on the project.

This latest contract follows DRPIC’s recent award to Lummus Technology LLC to deliver proprietary licensing technology and the process design package for the complex’s 1.6-million tpy ethylene unit, NGL extraction units, a butadiene extraction unit, and a combined methyl tertiary butyl ether (MTBE)-1-Butene separation unit.

Primarily designed to produce and recover naphtha, jet fuel, diesel, and LPG, the Duqm refinery will include units for hydrocracking, hydrotreating, delayed coking, sulfur recovery, hydrogen generation, and Merox treating.

As of Sept. 25, 2020, the nearly $6-billion refinery project was 70.5% completed, DRPIC said.

DRPIC most recently said it hopes to launch preliminary test runs at the refinery site by yearend 2021. Specific details regarding commissioning of the project’s second-stage petrochemical development have yet to be revealed.

As MRC informed earlier, Duqm Refinery and Petrochemical Industries Company (DRPIC) has announced the suspension of the Front-End Engineering Design (FEED) work for its proposed Duqm Petrochemical Project (DPP). The company seeks to assess the impact of COVID-19 on its future works.

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

Vopak earnings plunge, unveils chemicals storage expansion in Brazil

Vopak earnings plunge, unveils chemicals storage expansion in Brazil

MOSCOW (MRC) -- Vopak (Rotterdam, Netherlands) has reported a 71% year-on-year (YOY) plunge in net profit including exceptional items to EUR79.5 million (USD94.5 million) for the third quarter of 2020, on sales that dipped 4% to EUR297.0 million, reported Chemweek.

Its net earnings are down 31% sequentially on the second quarter, although sales rose by EUR4.6 million compared to the previous quarter.

Excluding exceptional items, net earnings were down 9% YOY to EUR82.9 million and almost flat with the second quarter. Vopak in September announced the acquisition jointly with investment firm BlackRock of three industrial terminals from Dow on the US Gulf Coast for USD620 million, and says an exceptional item for transaction-related costs of EUR4.4 million was recognized in the third quarter.

The company also announced a 20,000-cubic meter expansion of its terminal at Alemoa, Brazil, specifically for chemical products. “The expansion will further strengthen the position of Vopak in the port of Santos, the biggest port in Latin America,” it says. Commissioning of the additional storage is expected to take place in the second quarter of 2023, subject to construction permit approval, it adds.

Planned inspection and maintenance out-of-service capacity at subsidiary companies, mainly at terminals in Rotterdam and Singapore, totaled 1.1 million cu meters in the third quarter, a decrease compared to the previous quarter this year. Cost efficiency measures are “progressing well and tracking below our revised target of €600 million for the year,” it says.

It had also delivered 169,000 cu meters of new capacity by the end of the quarter at its terminals in: Durban, South Africa; Merak, Indonesia; and Vlissingen, the Netherlands. Vopak says it expects to make growth investments of between EUR500-600 million, including the Dow transaction, in 2020. The Dow deal is expected to conclude by the end of this year, and will add 852,000 cu meters of storage capacity.

It adds that it aims to allocate EUR300-350 million of growth investments in 2021 through existing projects already sanctioned, new business development, and pre-final investment decision feasibility studies in new energies including hydrogen.

Vopak’s worldwide storage capacity at the end of the third quarter was 34.6 million cubic meters, down 0.9 million cu meters on the prior-year period but up slightly from the second quarter of 2020. Its proportional tank storage occupancy rate rose by 9% YOY to 92%,

In chemicals, Vopak says storage was stable in the third quarter, with reduced throughput and different demand patterns for durable and non-durable products. There was a “slight volume improvement in key end-markets, including automotive and construction, during the quarter, it says. In its gas storage business, it says the sharp rebound in naphtha prices in the third quarter has increased the appeal for liquefied petroleum gas (LPG) cracking.

As MRC informed earlier, Indonesia's largest petrochemical producer Chandra Asri and Netherlands-based storage and terminal operator Vopak are planning to set up an infrastructure joint venture in Indonesia. The two companies signed a letter of intent on 5 October to set up the partnership, which aims to establish a new jetty and tank farm business that will serve third-party customers and to build secondary infrastructure at Chandra Asri's new petrochemical complex.

Chandra Asri's second petrochemical complex will include a 1.1mn t/yr naphtha-based cracker, 450,000 t/yr high-density polyethylene (HDPE) unit, 300,000 t/yr low-density polyethylene unit (LDPE) and a 450,000 t/yr polypropylene (PP) unit. The producer is aiming to commission the complex in 2024, barring any delays because of the Covid-19 pandemic. Chandra Asri currently operates a 136,000 t/yr HDPE unit, two linear low-density polyethylene/HDPE swing units with nameplate capacity of 200,000 t/yr and 400,000 t/yr respectively and a 590,000 t/yr PP plant at its complex in Cilegon.

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

Asahi Kasei earnings, sales decline YOY, sequential improvement seen

MOSCOW (MRC) -- Asahi Kasei reports a 39.9% year-on-year (YOY) decline in net profit for its fiscal first half, ended 30 September, to Yen 46.8 billion (USD453 million) on sales down 7.4%, to ?989.4 billion. The result reflects the impacts of COVID-19 during the six-month period, reported Chemweek with reference to Asahi's statement.

However, there was an improvement in the overall market environment during the first half due to a recovery in demand, with the company's fiscal second-quarter results exceeding those of the first quarter. Asahi’s operating income for the fiscal second quarter ended 30 September was Yen 46.7 billion, an increase from ?30.1 billion in the first quarter. Second-quarter sales were Yen 534.2 billion, up from Yen 455.2 billion in the preceding quarter.

The impact of COVID-19 has centered on Asahi Kasei’s materials business, which registered an overall decrease in net sales of 21.8% and operating income of 63.4% in the fiscal first half, to ?438.4 billion and ?20.8 billion, respectively. However, demand for various products in the materials segment recovered as the period progressed with an improved market environment especially in automotive. Firm sales of electronic materials continued. The business increased shipments of lithium-ion battery (LIB) separators and electronic materials. Lower market prices for petrochemical products and sluggish demand in automotive and apparel markets, resulting from COVID-19, helped drive the operating-income decrease, Asahi says.

In basic materials, part of the materials segment, there was an inventory-valuation loss by the gross average method due to decreased prices for feedstocks such as naphtha. In performance products, also part of the materials segment, there were decreased shipments of automobile-related products, and of fiber products for apparel applications. In specialty solutions, there were increased shipments of LIB separators, and higher shipments of electronic materials for communications infrastructure and tablet PCs, but lower shipments of automobile-related products.

In Asahi Kasei’s homes segment, expected delays in construction materialized in order-built homes due to infection-preventing measures, but deliveries proceeded more smoothly than expected. As a result, the segment's first-half operating income slipped 3.1% YOY, to ?31.7 billion but sales increased 1.6% to Yen 338.7 billion.

Operating income increased 36.6% YOY to Yen 35.4 billion in Asahi Kasei’s health care segment centered on the critical care business, which registered a firm performance, the company says. Sales grew 22.2% YOY to Yen 204.9 billion.

Asahi forecasts declines in group earnings and sales for the full fiscal year ending 31 March 2021. Net profit is expected to be Yen 87 billion, a decline of 16.3% from the previous fiscal year. The company anticipates full-year operating profit of Yen 140 billion, a decline of 21.0%. Sales are expected to be Yen 2.03 trillion, a 5.5% decrease from the previous fiscal year..

The impact of COVID-19 remains unpredictable, Asahi says. The sequential improvement trend is expected to continue in the fiscal second half, with a gradual strengthening of the market environment, particularly in automotive, it says.

In the materials segment, increased shipments and improved terms of trade for acrylonitrile (ACN) are predicted, although lower overall market prices for petrochemical feedstocks are forecast. Asahi expects a net sales and operating income increase from the fiscal first half to the second half for materials.

As MRC informed before, in March 2020, Asahi Kasei decided to discontinue its business for the styrenic resins SAN (Styrene-acrylonitrile resin), ABS (Acrylonitrile butadiene styrene), and ACS. According to the company, the operations of SAN plant at Kawasaki Works will be closed in March 2021. The business to be discontinued began with the 1962 start-up of the SAN plant in Kawasaki, now part of Asahi Kasei’s Kawasaki Works, followed by the 1964 start-up of the ABS plant at the same site (function transferred to Mizushima in 1978). The ACS business began in 1995. The ABS plant at Asahi Kasei’s Mizushima Works, which started up in 1967, was closed in 2015 due to deteriorating profitability as domestic Japanese demand decreased significantly.

According to MRC's ScanPlast report, Russia's consumption of material in the ABS segment decreased in January-September 2020 by 8% year on year, totalling 32,240 tonnes.
MRC