Brent hits nine-month high as OPEC+ commits to partial quota extension

MOSCOW (MRC) -- Oil prices settled higher Dec. 3 after an OPEC+ meeting ended with a compromise deal that would see production rising incrementally after December, reported S&P Global.

NYMEX January WTI settled 36 cents higher at USD45.64/b, while ICE February Brent was up 46 cents at USD48.71/b.

Unable to agree on a long-term production plan, OPEC and its partners will set output levels month to month, aiming to release crude gradually onto the market without tipping it into a supply glut during an uncertain recovery from the pandemic, ministers said Dec. 3.

Front-month ICE Brent last settled higher March 5, while WTI finished just under its most recent high seen Nov. 25.

The deal calls for the OPEC+ alliance to boost production by an initial 500,000 b/d in January, after which ministers will meet monthly to determine whether to adjust that for the month ahead.

NYMEX January RBOB settled 2.18 cents higher at USD1.2617/gal, while January ULSD climbed 2.71 cents to USD1.3933/gal.

The OPEC+ group, which controls roughly half of global crude production capacity, is currently cutting 7.7 million b/d from November 2018 levels. Without a deal, the curbs were scheduled to ease about a quarter to 5.8 million b/d from January. Now the cuts will scale back to 7.2 million b/d and then be fine-tuned as market conditions warrant.

"I think energy markets are content with the modest increase and I think it will still allow (OPEC+) to provide that goal of getting the market toward balance," OANDA senior market analyst Edward Moya said. "No one knows how the crude demand outlook is going to unfold in the next few months depending on how quickly things get back to normal, so we will probably have monthly decisions become the norm until the outlook is a lot clearer."

The OPEC+ deal proved more bullish for Brent futures, which are typically considered to be more exposed to global fundamentals. Year-ahead Brent futures settled at a 99 cent/b discount to the front-month, the widest backwardation in that part of the curve since Feb. 21.

WTI prices, while also higher, faced headwinds from the continued threat of pandemic lockdowns across the US. The one-year WTI spread moved to 64-cent/b backwardation, out from 29 cents/b the session prior, but near-term contracts remained in contango. Second-month WTI settled at a 15 cent/b premium to front-month and the sixth-month contract settled in a 29 cent/b contango.

A weakened US dollar added further support to crude prices. The ICE US Dollar Index was holding at around 90.7 in afternoon trading, on pace to close at the lowest level since April 2018.

Los Angeles County - the largest in the US - issued a stay-at-home order Dec. 2 restricting non-essential travel and businesses. The order, reminiscent of broader lockdowns seen in spring, is among the most restrictive seen in the US in recent weeks as the nation battles to contain a resurgent pandemic.

In New York City, the seven-day average COVID-19 positivity rate climbed to 5.19% Dec. 1, prompting mayor Bill de Blasio to warn of an impending second-wave pandemic. New York Governor Andrew Cuomo Nov. 30 ordered hospitals to take emergency precautions in the face of rising caseloads and suggested the state could again implement lockdown measures similar to those this past spring.

As MRC informed earlier, 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

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

HMC Polymers PP complex in Thailan hit by fire

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

Archroma increases prices of fluorocarbon polymers by 20%

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

Trinseo raises December PC prices in Europe

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