Petronas warns of challenging fourth quarter amid volatile oil prices

MOSCOW (MRC) -- Malaysian state-owned energy giant Petronas warned on Friday that the remainder of the year would remain tough due to prolonged low oil prices and moderate demand recovery hampered by the coronavirus, as it recorded a third-quarter loss, reported Reuters.

“Amid the fluid operating environment brought about by the pandemic as well as prolonged volatility of oil prices, Petronas is adopting a cautious outlook and anticipates that the remainder of 2020 will be challenging,” said Tengku Muhammad Taufik, president and group chief executive officer.

“We expect our performance to be continuously affected by the volatility of oil prices aggravated by the ongoing COVID-19 pandemic,” he said in a statement.

Petronas, or Petroliam Nasional Berhad, said it would continue to uphold “disciplined capital and operational spending” and preserve liquidity to ensure business sustainability.

The world’s fourth-biggest LNG exporter said its Pengerang Integrated Complex (PIC) will be operational by early next year, with the Atmospheric Residue Desulphurisation Train 1 and Train 2 expected to be ready-for-start-up (RFSU) by the beginning of 2021.

The Diesel Hydro Treating unit is expected to be RFSU in the fourth quarter of 2021, while the restart-up of the Refinery and Petrochemical plants is planned for the first quarter, the firm said.

Petronas reported a post-tax loss of 3.4 billion ringgit ($835.8 million) for the July to September period, against 7.4 billion ringgit in the same quarter last year.

Its second straight quarterly loss was attributed to a higher impairment loss on assets and higher tax expenses as a result of the lower oil and gas price outlook.

Revenue fell 25% to 41.1 billion ringgit.

As MRC reported earlier, in June 2019, Malaysian state oil company Petroliam Nasional Bhd, or Petronas, and Saudi Aramco started operations at their new 1.2-million-tonnes-per-year naphtha cracker. The cracker is part of the USD2.7 billion joint-venture oil refinery and petrochemical project known as RAPID - or Refinery and Petrochemical Integrated Development - located in Pengerang in the state of Johor, at the southern tip of peninsular Malaysia.

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.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
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Crude oil futures struggle as near-term pandemic considerations weigh

MOSCOW (MRC) -- The trajectories of the ICE Brent futures and NYMEX crude futures were in opposite directions during the mid-morning trade in Asia Nov. 27, as the latter underwent a price correction, not having fallen as much as the former during the trading session on Nov. 26, with both markers further weighed down by heightened concerns over the pandemic situation in the US, reported S&P Global.

At 11:36 am Singapore time (0336 GMT), ICE Brent January contract was up 10 cents/b (0.21%) from the Nov. 26 settle at USD47.90/b, while the NYMEX January light sweet crude contract was down 70 cents/b (1.53%) at US45.01/b.

Both the ICE Brent January contract and the NYMEX January contract had fallen 2.39% and 0.57% on Nov. 26 to settle at USD47.80/b and USD45.71/b, respectively, as vaccine optimism had fizzled out, and near-term pandemic considerations had resurfaced.

NYMEX crude futures, having resisted as steep a fall as Brent futures on Nov. 26, buckled during pressure from a gloomy demand outlook brought about by the unabated spread of coronavirus in the US.

According to the COVID Tracking Project, virus-related hospitalizations in the US reached a new record for the sixteenth consecutive day on Nov. 25, and the daily death toll was the highest since early May.

"The market is getting somewhat worried over how the pandemic situation is playing out in the US. We have significant number of cases but no action is being taken," David Lennox, resource analyst at Fat Prophets, told S&P Global Platts on Nov. 27.

"While inaction is helping demand at the moment, it is like waiting for a firecracker to go off once you have lit the wick - at some point we might see drastic measures and that is what the concern is all about."

Meanwhile, the market is also jittery in the run-up to the Dec. 1 OPEC and non-OPEC Ministerial Meeting, which is seen as the next risk-point for oil prices. The meeting is expected to provide a definite statement over whether the alliance will roll-over the current 7.7 million b/d production cuts into next year. However, even before the meeting, the market has already priced in a three-to-six month extension of the cuts.

The decision to maintain the current production cuts will be complicated by the surge in oil prices seen in November. There has been market talk over fissures within the OPEC+ alliance, with UAE reportedly reconsidering whether membership is in its long-term interest. Further, Iraq deputy Prime Minister Ali Allawi said on Nov. 23 that the alliance needs to take into account the economic and political conditions of the members before imposing "one size fits all" production quotas.

"I do think they will extend the current production cuts as the economic climate remains weak, but it will not be an easy decision and there will be a lot of squabbles during the meeting," said Lennox.

Stephen Innes, chief global market strategist at Axi, concurred, as he cautioned in a Nov. 27 note that while an extension of the cuts was still expected to be the default outcome, the rollover might not be an incremental positive, and a failure to extend cuts would hit market negatively.

As MRC reported 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% 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).

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

Indian refiner October oil processing highest since March

MOSCOW (MRC) -- Crude oil processed by Indian refiners rose to its highest in seven months in October as fuel demand picked up although throughput remained lower than a year earlier, hurt by the coronavirus pandemic’s impact on industrial and transport activity, said Hydrocarbonprocessing.

Crude oil throughput in October dropped 16.1% from a year earlier to 4.35 million bpd (18.39 million tons), but was the highest since March when the country went into a nationwide lockdown, provisional data issued by the government showed on Wednesday. Pointing to a recovery in economic activity, India’s fuel consumption registered its first year-on-year increase since February last month, data showed earlier.

Daily coronavirus cases in the country have declined steadily since having peaked in September, although it remains the second-highest number of cases in the world, after the United States. Crude oil throughput in October rose 0.5% from September’s 4.33 MMbpd (17.71 million tons). Indian refiners operated at an average rate of 86.7%, highest March, compared to 86.2% in September, data showed.

A major maintenance shutdown at Nayara Energy’s 400,000 bpd Vadinar refinery pulled down the nation’s average refinery run rates. Nayara’s plant operated at 33% capacity last month, the data showed. The country’s largest refiner, Indian Oil Corp (IOC) operated its directly owned plants at 95.64% capacity, the data showed. Reliance, owner of the world’s biggest refining complex, operated its plants at 94.33% capacity. Crude oil production fell by 6.2% to 2.57 million tons (608,000 bpd), the monthly report showed.

As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

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 density 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

S&P Global agrees to buy IHS Markit for USD44 billion.

MOSCOW (MRC) -- S&P Global, the owner of stock indexes like the Dow and the S&P 500, said on Monday that it plans to acquire IHS Markit for USD44 billion, including debt, reported The New York Times.

The transaction would create a financial information powerhouse at a time when data increasingly fuels automated trading.

The all-stock deal - the biggest announced so far this year - would give S&P Global control of IHS Markit, whose software is used by many of the world’s biggest financial institutions.

It is the latest show of strength by big companies amid the pandemic. Corporate boards have increasingly come to believe that getting bigger will help them ride out the turbulence caused by the coronavirus, while investors have encouraged companies to use stocks and cheap debt to buy growth.

Other big deals struck so far this year include Nvidia’s USD40 billion takeover of the computer chip designer Arm and Aon’s USD30 billion acquisition of its rival insurance broker Willis Towers Watson.

Financial data has long been one of the most coveted commodities on Wall Street, as demonstrated by the multibillion-dollar value of Bloomberg L.P., the empire of former New York City Mayor Michael R. Bloomberg.

Big deals in recent years have further illustrated its worth: Last year, the parent of the London Stock Exchange agreed to buy Refinitiv, the former data arm of Thomson Reuters, for USD14.5 billion.

IHS Markit itself was the product of a 2016 merger between IHS, which was founded in 1959 as a repository for aerospace data, and Markit, which was created in 2003 as a source of price information about the financial derivatives known as credit-default swaps.

Under the terms of the deal, S&P Global will own nearly 68% of the combined company, while investors in IHS Markit will own the remainder.

The companies expect the deal to close in the second half of next year, pending approval from shareholders and antitrust regulators.

As MRC informed earlier, the coronavirus pandemic has provided some opportunities hygiene products, but there are also risks in other petrochemical products, Borealis CEO Alfred Stern told S&P Global following their third quarter results Nov. 4. The company saw polyolefin sales volumes increase in the third quarter compared with the same quarter in 2019, as hygiene and healthcare segments experienced strong demand amid the coronavirus pandemic. Demand from the automotive and pipes sector was subdued in early summer but climbed higher in Q3, with automotive demand recovering to 90% of 2019 levels.

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

India extends anti-dumping duty on fluoroelastomers imports from China for 5 years

MOSCOW (MRC) -- India has imposed anti-dumping responsibility on imports of fluoroelastomers from China by 5 years beginning November 27, the Central Board of Oblique Taxes and Customs (CBIC) stated in a notification issued Friday, reported Kemicalinfo.

The Board stated that the choice has been taken after the Directorate Basic of Commerce Cures (DGTR) requested for additional extension of the anti-dumping responsibility on the products originating in or exported from China, as there was a chance of continuation of dumping and harm to home trade in case the anti-dumping responsibility is stopped presently.

“There’s enough proof to point that the cessation of anti-dumping responsibility at this stage will result in continuation of dumping and harm to the home trade,” the CBIC stated in its notification. The responsibility ranges between USD1.04 and USD8.6 per kg.

“The anti-dumping responsibility imposed beneath this notification shall be efficient for a interval of 5 years (except revoked, outdated or amended earlier) and shall be paid in Indian foreign money,” it added.

The DGTR had initiated an evaluation in January on whether or not the products being imported had been hurting home trade, and concluded it final month.

India had first imposed the responsibility in January 2019, which was prolonged in July these 12 months until October 27, after which additional to November 27.

Fluoroelastomers are synthetic rubbers with principal applications such as temperature-resistant O-rings, seals, and gaskets used in aerospace and industrial equipment.

As MRC informed previously, earlier this month, India terminated the anti-dumping investigation on monoethylene glycol (MEG) imports from Kuwait, Oman, the UAE and Singapore. The applicant, Reliance Industries Limited, withdrew the application on anti-dumping investigation via a letter on 18 November stating that “in view of the current situation, they have withdrawn the aforesaid application with a liberty to resubmit the same”, according to a notification from the Ministry of Commerce and Industry. The anti-dumping investigation was launched on 9 December 2019.

MEG is mainly used in the production of polyester fibres, resins and films (around 80% of global consumption), followed by use in polyethylene terephthalate (PET) resin. It is also used as automotive antifreeze.

As per MRC' ScanPlast, calculated consumption of polyethylene terephthalate (PET) reached 52,71o tonnes in September 2020, down 27% compared to the same time a year before. Total consumption of PET in Russia in the nine months of 2020 reached 530,750 tonnes, down 22% than the same indicator last year.
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