Crude futures pare back overnight gains on pandemic concerns

MOSCOW (MRC) -- Crude oil prices pared back sharp overnight gains in mid-morning trade in Asia Nov. 10 as concerns over weak near-term demand fundamentals weighed on the rally spurred by the announcement of progress in the development of a vaccine, according to S&P Global.

At 10.40 am Singapore time (0240 GMT), ICE Brent January crude futures were down 46 cents/b (1.08%) from the Nov. 9 settle at USD41.94/b, while the NYMEX December light sweet crude contract was down 55 cents/b (1.37%) at USD39.74/b.

The markers had surged 7.48% and 8.48% Nov. 9 after Pfizer and BioNTech announced their COVID-19 vaccine had proven more than 90% effective in a phase 3 trial, but subsequently lost steam as more immediate concerns over the progression of the pandemic took precedence.

This came after New York City mayor Bill DeBlasio DeBlasio warned the city was "dangerously close" to second wave of the pandemic that could prompt another lockdown and shutter some parts of the economy, and New Jersey Governor Phil Murphy imposed light restrictions in the state and warned they could be tightened if the outbreak worsened, local media reported.

With many countries in Europe already under lockdowns of varying severity, the prospect of renewed restrictions in the US weighed on the market, with analysts noting that Pfizer and BioNTech's vaccine was still months away from commercial production and widespread distribution.

"Unquestionably the vaccine will be a game-changer for the oil complex. However, the pandemic still matters most for near-term concerns," AXI chief global market strategist Stephen Innes said in a Nov. 10 note. "As lockdowns in Europe accelerate and localized outbreaks in the US [become more severe], the oil market's top-side ambitions will be held in check; it will likely take six months for many of us to receive the vaccine," he added.

Meanwhile, indications of OPEC+ intervention continued to spur optimism, with Saudi energy minister Prince Abdulaziz bin Salman saying Nov. 9 at the ADIPEC virtual conference that the alliance may "tweak" its current supply agreement "beyond what the so-called analysts are talking about," depending on how circumstances evolve.

Analysts generally expect the OPEC+ alliance to maintain its current production cuts into 2021 instead of easing them by almost 2 million b/d as originally planned, but OPEC+ delegates have told S&P Global Platts that the cuts could even be deepened.

However, unanimous agreement by all OPEC+ members would be required for any change to be ratified.

"We have the ability to tweak if we have to tweak, but we have to all be convinced that that tweak is required," UAE energy minister Suhail al-Mazrouei 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

MOSCOW (MRC) -- BP and Danish renewable energy group Orsted have partnered to develop zero-carbon hydrogen at a German oil refinery, BP's first full-scale project in a sector that is expected to grow rapidly, reported Reuters.

The project will produce so-called green hydrogen at the Lingen refinery in north-west Germany through the electrolysis of water using wind power from the North Sea.

It is in its early stages and initially aims to build a 50 megawatt (MW) electrolyser to replace 20% of natural gas-based hydrogen at the plant, BP said in a statement. Production is expected to start in 2024.

The project could be expanded to up to 500 MW at a later stage to replace all of Lingen’s fossil fuel-based hydrogen, Louise Jacobson Plutt, BP’s senior vice president for hydrogen, told Reuters.

Hydrogen is today mostly used in the industrial sector as feedstock to make products such as fuels.

But the use of green hydrogen is expected to grow sharply in the coming decades as the European Union and governments around the world seek to reduce greenhouse gas emissions to net zero by 2050.

BP aims to expand its hydrogen output to 10% of the market by 2030.

Green hydrogen is however much more expensive than natural gas-based, or grey, hydrogen. Reducing its cost of production will be key to expand the use of the fuel.

“We see a path to (price) parity with grey hydrogen by the end of the decade” as more green hydrogen projects are launched and technology advances, Anders Nordstrom, Orsted vice president for hydrogen said.

The projected cost of the projected was not disclosed.

As MRC wrote previously, BP Australia plans to shut its 146,000 b/d Kwinana refinery in Western Australia and convert it into a fuel import terminal, according to the company's statment Oct. 30. The continued growth of large scale, export-oriented refineries throughout Asia and the Middle East has structurally changed the Australian market, BP said, adding that regional oversupply and sustained low refining margins mean the Kwinana refinery is no longer economically viable. Converting the refinery into an import terminal will help ensure ongoing security of fuel supply for Western Australia, the company said. Refining activities will wind down over the next six months and conversion works will carry on out to 2022.

We remind that a “technical defect” disrupted production at part of the Gelsenkirchen integrated refinery and petrochemicals complex in Germany, in late October. The company operates plants in the Horst and Scholven districts at Gelsenkirchen, with the defect occurring at Horst. BP sais it was working to resume normal operations as soon as possible. It did not specify which unit has been affected, with sources suggesting it was the fluid catalytic cracker, but this was not confirmed by the company.

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.

BP plc (formerly The British Petroleum Company plc and BP Amoco plc) is a British multinational oil and gas company headquartered in London, United Kingdom. It is one of the world's seven oil and gas "supermajors", whose performance in 2012, made it the world's sixth-largest oil and gas company, the sixth-largest energy company by market capitalization and the company with the world's 12th-largest revenue (turnover). It is a vertically integrated company operating in all areas of the oil and gas industry, including exploration and production, refining, distribution and marketing, power generation and trading. It also has renewable energy interests in biofuels, wind power, smart grid and solar technology.
MRC

MOSCOW (MRC) -- ALPLA (Hard, Austria), a global specialist for packaging solutions and recycling, plans to build a EUR15 million, 15,000-metric tons/year facility for the production of post-consumer recycled high-density polyethylene (HDPE) in Toluca, Mexico, reported Chemweek.

The company says it will begin construction in fall, with completion slated for the second half of 2021. The recycled material will be marketed for non-food applications, primarily in Mexico and neighboring countries.

ALPLA says the new operation will help build a market for recycled HDPE in Mexico. “This is how we generate demand among collection companies and support the development of the necessary infrastructure,” says Carlos Torres, regional manager/Mexico. “In addition, we can offer our regional customers the ‘circularity’ demanded of recyclable materials.”

ALPLA entered the field of HDPE recycling in November 2019, through the acquisition of two plants in Spain. The company has been recycling post-consumer polyethylene terephthalate (PET) in Mexico since 2005, and it currently produces 15,000 metric tons/year of food-grade PET recyclate in the country.

As MRC informed previously, ALPLA Group is acquiring a facility in Western India for the production of preforms for PET bottles from the packaging company Amcor. Thus, ALPLA Group has taken over a plant for rigid plastics in India from the global packaging specialist Amcor with effect from September 28, 2020. The plant in Alandi, West India, is in the immediate vicinity of the metropolis of Pune. It manufactures preforms for the production of PET bottles for the beverage industry. Customers include Coca-Cola and the Indian dairy company Amul.

According to MRC's ScanPlast report, September estimated HDPE consumption in Russia fell to 55,790 tonnes from 119,750 tonnes a month earlier. ZapSibNeftekhim increased its export polyethylene (PE) sales. Kazanorgsintez's production capacities were also shut for a turnaround. Overall HDPE shipments to the Russian market totalled 911,650 tonnes in the first nine months of 2020, up by 6% year on year. Production grew significantly, whereas imports slumped by 27%.

ALPLA Inc. is a member of Hard, Austria-based Alpla-Werke Alwin Lehner GmbH & Co. KG, which has more than 20,000 employees at 178 manufacturing sites in 46 countries. Alpla makes bottles, closures, moulded parts and packaging systems. The company ranks No 5 among North American blow moulders, with estimated blow moulding sales in the region of USD1.1bn (EUR990m).
MRC

MOSCOW (MRC) -- Braskem's third-quarter net loss widened on the back of an additional provision related to its former mining operation in Alagoas and the depreciation of the Brazilian real (R) against the US dollar, said the company.

The Company's recurring EBITDA was USD699 million, 126% higher than 2Q20, mainly explained by (i) the better spreads of PE in Brazil, PP in the United States and PE in Mexico and (ii) an increase in sales volume in Brazil and in the United States due to the recovery in demand for resins in the Brazilian market and PP in North America. In relation to the same period of the previous year, the Company's recurring EBITDA in US dollars was 69% higher, due to (i) the better spreads of PE and PVC in Brazil, PP in Europe and PE in Mexico and (ii) the increase in sales volume in Brazil, United States and Mexico. In Brazilian Real, the recurring EBITDA was R3,765 million, 127% and 129% higher than 2Q20 and 3Q19, respectively, due to the depreciation of the Brazilian Real against the US dollar.

Braskem incurred an additional provision of R3.56bn in the third quarter related to the geological damage caused by its former salt mining operation in the state of Alagoas in northeast Brazil.

In the third quarter, due to the recovery in demand for resins in the Brazilian market and demand for polypropylene (PP) in North America, the utilisation rate of the crackers in Brazil normalised to 87%, as well as the operation rate of the industrial units in the US.

Production at Braskem's new PP plant in the US was at 36,000 tonnes in October, close to the monthly production capacity of the plant of around 38,000 tonnes.

As MRC reported previously, Brazilian petrochemical producer Braskem's 450,000 mt/year polypropylene (PP) plant in LaPorte, Texas, along the Houston Ship Channel completed its initial commercial production, as per the company's statement as of Sept. 10. "The launch of commercial production at our new world-class PP production line in La Porte clearly affirms Braskem's position as the North American polypropylene market leader," Braskem America CEO Mark Nikolich said in a statement. With a USD750 million investment, the new PP plant's construction started in October 2017 and was completed in June, 2020.

Braskem operates five other US PP plants in Texas, Pennsylvania, and West Virginia, with a cumulative capacity of 1.57 million mt/year that the company acquired. The new plant in La Porte, Texas, is Braskem America's first PP new build.

According to MRC's ScanPlast report, 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.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
MRC

MOSCOW (MRC) -- US chemical leaders called on President-elect Biden's administration to maintain policies that ensure continued access to US shale resources as well pursue more predictable trade policy, said Chemweek.

"As always, we stand ready to constructively engage with the White House and bipartisan leaders in Congress to help drive the solutions for a future that will better serve all Americans – one that is safer, healthier, stronger, and more sustainable," ACC said in a statement.

ACC said it would work with a Biden administration and both parties in Congress to ensure robust and responsible energy and infrastructure development to keep industry and the US economy on a path to strong growth. “Maintaining the vitality of our industry and its ability to produce these life-saving materials means maintaining access to our country’s vast shale gas resources," ACC said in a statement."Thanks to these resources the chemical industry continues to drive a manufacturing renaissance yielding USD205 billion in new chemical industry projects in the United States with the potential to create hundreds of thousands of jobs and nearly USD290 billion in new economic output."

ACC noted that chemicals remain one of the US's largest exporters with USD136 billion in exports in 2019, 10% of all US goods exports. "Robust trade in raw materials and finished products helps fuel the growth of our sector here at home – but current costly tariff policy continues to cut into our industry’s competitive advantage," ACC said. "We strongly urge President-elect Biden and his administration to chart a different path for US trade policy. Reducing trading costs and promoting a more predictable trading environment can help rebuild our economy, continue to attract investment in the US and ensure that America can maintain its position as one of the world’s leading innovators."

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