Crude oil futures retreat after overnight rally on vaccine news, US stock draw

MOSCOW (MRC) -- Crude oil futures slipped during mid-morning trade in Asia Dec. 3 after rallying overnight following fresh reports of COVID-19 vaccine approvals in the UK, crude oil inventory draw in the US and as signs of progress on OPEC+ talks emerge, reported S&P Global.

At 10:40 am Singapore time (0240 GMT), ICE Brent February contract was 13 cents/b (0.27%) lower from the Dec. 2 settle at USD48.12/b, while the January NYMEX light sweet crude contract was down 15 cents/b (0.33%) at USD45.13/b.

The markers retreated slightly during early Asian trade Dec. 3 after rising 1.75% and 1.64% to settle at $48.25/b and USD45.28/b, respectively, on Dec.2 as outlooks improved amid COVID-19 vaccine optimism and an unexpected US crude inventory draw.

In addition, analysts noted that emerging signs point to the fact the OPEC+ alliance has made progress on a deal. The coalition is scheduled to meet Dec. 3, two days later than originally scheduled.

"OPEC's major producers, Saudi Arabia, Russia and the UAE are said to have had constructive talks. Russia is also said to have settled its position after talks with its own oil companies, with a gradual tapering of production cuts within the first quarter of 2021," ANZ analysts said in a Dec. 3 report.

Demand-side factors, however, remain key for the oil markets, with crude stocks providing cues on current end-user demand, analysts said.

Running contrary to a Dec. 1 report by the American Petroleum Institute, the US Energy Information Administration data on Dec. 2 showed a 680,000-barrel decline in US commercial crude oil inventories in the week ended Nov. 27 to 488.04 million barrels.

The API report had indicated a 4.15 million-barrel US crude build for the same week. Analysts surveyed by S&P Global Platts on Nov. 30 had expected a 1.7 million-barrel crude draw.

"The current level of demand via global inventory status and the shape of the curve will provide the immediate tell for traders," Axi chief global market strategist Stephen Innes said in a note Dec. 3.

"Anything that will bridge the gap to the time when the vaccine effect, while working its magic through the real economy, while simultaneously OPEC+ to present a unified front should work for oil traders," Innes said.

Reports indicated late Dec. 2 that the UK had approved the Pfizer-BioNTech COVID-19 vaccine and would begin administering it as soon as next week.

In addition, Pfizer-BioNTech and Moderna are both seeking permission from the US Food and Drug Administration to administer the vaccine in the US. The FDA is expected to hold a meeting on Dec. 10 to decide on the approval of the vaccine.

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 PE and PP.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- A fire hit Thai petrochemical producer HMC Polymers' polypropylene (PP) production complex at Mab Ta Phut, in Rayong province on 30 November, according to Polyermupdate.

The fire hit its silo farm, where PP pellets are stored and bagged. The fire was extinguished in around an hour and there were no injuries.

After the incident, the company shut one of its three PP units, with a nameplate capacity of 360,000 t/year. The shutdown is expected to last two weeks to a month, according to market sources.

The producer also operates a propane dehydrogenation (PDH) plant with 310,000 t/yr of propylene capacity and two other PP plants with the capacities of 200,000 t/year and 250,000 t/year. Production at all of these units was unaffected.

As MRC reported earlier, HMC Polymers, part of Thaniland's petrochemical major - PTT Global Chemical, is planning to launch its fourth PP plant in Map Ta Phut site, Rayong Province of Thailand. The new PP unit would have an annual capacity of 220,000 tons. HMC Polymers announced plans for this plant's construction on 26 June 2019. The company has already completed the Licence Agreement with LyondellBasell to use the Spherizone technology for the new plant. Together with the three existing units, the new plant would boost HMC’s total PP output to1.03 million tons per year, making it the largest PP producer in Southeast Asia region.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.

HMC Polymers is one of the leading companies in the manufacturing and marketing of polypropylene (PP) for Asia and worldwide. HMC Polymers is the first PP manufacturer in Thailand with its first PP production facility to have been established in Rayong Province, Thailand in 1987. The company's PP production facilities output is over 750,000 metric tons per year and comprise two Spheripol lines and a latest technology Spherizone line from LyondellBasell. HMC Polymers produces a wide range of Moplen polypropylene grades including homopolymer, heterophasic and random copolymer resins, as well as specialty polypropylene resins such as Adstif, Clyrell and Purell. In addition, a strategic investment in upstream integration was made in parallel with the construction of a Propane Dehydrogenation plant (PDH) at a site adjacent to our Map Ta Phut plant.
MRC

MOSCOW (MRC) -- Archroma (Reinach, Switzerland) says it is increasing the selling prices of its fluorocarbon polymer products by up to 20%, reported Chemweek.

The company says the price increase is necessary to support the increasing regulatory and other costs, as well as ongoing investments that the company continuously makes in its own manufacturing technology and process, to produce sustainable products. The price increase will be effective in all regions and markets for all new orders and as contracts allow, it says.

Fluorocarbon polymers are used in applications where a water and/or oil barrier is needed, including personal protective equipment for health professionals, or other technical textiles, the company says.

As MRC wrote before, BASF India completed the sale of its global textile chemicals business to Archroma (Reinach, Switzerland) in 2015.

We remind that in late November, BASF increased its production capacity for advanced additives at its wholly-owned site in Nanjing, China. The new asset with state-of-the-art technologies will allow BASF to produce high molecular weight dispersing agents, slip and leveling agents and other additives locally for Asian markets.

We also remind that Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. September production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.

Archroma is a global color and specialty chemicals company, headquartered in Reinach near Basel, Switzerland. It operates with approximately 3,000 employees over 35 countries. Through its three businesses: Textile Specialties, Paper Solutions and Emulsion Products, Archroma delivers specialized performance and color solutions to meet customer needs in their local markets.
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 polycarbonate (PC) grades in Europe, as per the company's press release.

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

- CALIBRE PC resins - by EUR250 per metric ton.

As MRC informed earlier, Trinseo last raised its prices for all PC grades in Europe on 1 November 2020 by EUR150 per metric ton.

According to MRC's ScanPlast report, Russia's overall consumption of PC granules (excluding imports and exports to/from Belarus) rose in January-October 2020 by 21% year on year to 79,500 tonnes (65,600 tonnes a year earlier).

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) -- Russia's overall polypropylene (PP) production increased in the first ten months of 2020 by 31% year on year to about 1,529,000 tonnes. ZapSibNeftekhim accounted for the main increase in the output, according to MRC's ScanPlast report.

Russian plants' total PP production dropped to 152,000 tonnes in October from 158,200 tonnes a month earlier ZapSibNeftekhim and Poliom's production capacitites were shut for maintenance. Russia's overall PP production reached 1,529,000 tonnes in January-October 2020, compared to 1,170,300 tonnes a year earlier. Six out of eight producers raised their capacity utilisation, with a new producer - ZapSibNeftekhim - accounting for the main increase in the output.

The structure of PP production by plants looked the following way over the stated period.

SIBUR Tobolsk raised its capacity utilisation in October, the plant's production rose to 51,800 tonnes versus 49,200 tonnes a month earlier. The Tobolsk plant's overall PP production reached 404,600 tonnes in January-October 2020, up by 7% year on year.

ZapSibNeftekhim, the Tobolsk producer, manufactured about 32,000 tonnes of PP in October, compared to 42,300 tonnes in September. The plant's overall output totalled 357,000 tonnes in the first ten months of 2020.

Omsk Poliom shut its production for a scheduled turnaround in October, having produced 5,800 tonnes of PP, as a result, compared to 17,100 tonnes a month earlier. Overall, the Omsk plant produced 150,500 tonnes of PP in January-October 2020, down by 14% year on year.

Nizhnekamskneftekhim produced 17,700 tonnes of propylene polymers in October versus 18,300 tonnes a month earlier. The Nizhnekamsk plant's overall output of polymer reached 182,500 tonnes in the first ten months of 2020, compared to 174,900 tonnes a year earlier.

Tomskneftekhim produced 13,500 tonnes of propylene polymers in October versus 7,000 tonnes a month earlier, in September, the producer shut its production for a two-week maintenance. The Tomsk plant's overall PP output reached 123,200 tonnes in January-October 2020, up by 1% year on year.

Ufaorgsintez's October PP production was 7,600 tonnes versus 3,200 tonnes in September; the Ufa producer carried out scheduled maintenance works in the first two months of autumn. The Ufa plant's overall output of polymer reached 97,700 tonnes in January-October 2020, down by 9% year on year.

Neftekhimiya (Kapotnya) produced 11,900 tonnes of PP in October, compared to 12,400 tonnes a month earlier. The plant's overall PP output reached 124,300 tonnes in the first ten months of 2020, up by 2% year on year.

Stavrolen (LUKOIL) increased its capacity utilisation in October, and, as a result, it produced 11,700 tonnes of propylene polymers versus 8,600 tonnes in September. The Budenovsk plant's overall production of propylene polymers exceeded 89,400 tonnes in the first ten months of 2020 versus 85,500 tonnes a year earlier.

MRC