Asia Distillates-Gasoil refining margins climb to highest in over 4 months

MOSCOW (MRC) -- Asian refining margins for 10 ppm gasoil rose last Tuesday to their strongest in more than four months, partly buoyed by optimism that economies would rebound with accelerated approvals for COVID-19 vaccines, reporte Reuters.

Refining margins, or cracks, for 10 ppm gasoil climbed 63 cents to USD6.20 a barrel over Dubai crude during Asian trading hours, their highest since Aug. 6.

Regional gasoil demand is expected to pick up through the remainder of this year and in the first quarter of 2021, primarily led by India, but a resurgence in COVID-19 cases and related restrictions in several other Asian markets might put a dampener on, analysts said. "The economic recovery globally should be sharp and robust due to the extreme low base set in 2020, and the oil price rebound forecast should help to pull diesel prices higher over the next 12 months," said Peter Lee, senior oil and gas analyst at Fitch Solutions. "Although the bulk of the recoveries are expected to occur late in H121 and H221, as key markets continue to struggle with elevated infection rates," Lee added. Cash differentials for gasoil with 10 ppm sulphur content were at a discount of 13 cents a barrel over Singapore quotes on Tuesday, compared with a discount of 22 cents per barrel a day earlier. Meanwhile, cash differentials for jet fuel flipped into a discount of 2 cents a barrel to Singapore quotes on Tuesday, compared with a premium of 3 cents on Monday.

Global air cargo demand was 6.2% lower than previous year's levels in October, the International Air Transport Association (IATA) said on Monday. - Asia-Pacific airlines saw demand for international air cargo drop 11.6% in October year-on-year, but this was a second consecutive month of improvement, the IATA said.

Airlines battered by COVID-19 are prepping for key roles in the mass vaccine rollout that promises to unlock an immediate boost for the sector - and beyond that, its own recovery and survival. Oil prices fell on Tuesday, adding to losses from the previous session that came as California tightened its pandemic lockdown through Christmas and coronavirus cases continued to surge in the United States and Europe.

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 1,760,950 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.
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MOSCOW (MRC) -- Supermarket giant Tesco has revealed it has removed over 20 million pieces of plastic from its Christmas range, said Packagingnews.

Tesco, which won two awards at this year’s UK Packaging Awards, has made changes to its packaging. Its own label crackers will be sold in cardboard packaging while 312,000 Christmas light will be packaged in recyclable cardboard packs.

It has also removed a layer of plastic in Christmas puddings and sponges, which is said to cut 1.78 million pieces of plastic. Tesco has also stopped using glitter for its single-use products and packaging.

Tesco quality director Sarah Bradbury said: "It is an absolute priority of ours to remove and reduce the amount of plastic in our stores to the minimum and ensure everything we use is recycled and kept out of the environment – Christmas time is no exception and we want to do our bit to help customers have more sustainable celebrations."

As per MRC, plastic packaging use in the UK fell by 6% in 2019 year-on-year, according to WRAP’s annual report on the progress of the UK Plastic Pack. Data from WRAP has shown that “unnecessary” plastic has been reduced by 40% during 2019, with an uplift in the amount of plastic packaging being recycled. The organisation said that 400 million items classified as “problematic or unnecessary” were sold by members of its UK Plastics Pact initiative. Plastic items deemed unnecessary include straws, stirrers and cotton buds.

According to MRC's ScanPlast report, October estimated EPS consumption in Russia was 10,310 tonnes versus 10,740 tonnes a month earlier. Russia's estimated EPS consumption was about 80,000 tonnes in January-October 2020, down by 4% year on year. In November, demand was moderate in the Russian EPS market, whereas in the second half of the month, there was a decrease in activity in the EPS market as compared to October. Domestic prices of Russian material were in the range of Rb98,000-111,000/tonne CPT Moscow, including VAT.
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MOSCOW (MRC) -- Plastic packaging use in the UK fell by 6% in 2019 year-on-year, according to WRAP’s annual report on the progress of the UK Plastic Pack, said Packagingnews.

Data from WRAP has shown that “unnecessary” plastic has been reduced by 40% during 2019, with an uplift in the amount of plastic packaging being recycled. The organisation said that 400 million items classified as “problematic or unnecessary” were sold by members of its UK Plastics Pact initiative. Plastic items deemed unnecessary include straws, stirrers and cotton buds.

In addition, plastic packaging recycling in the UK has increased from 44% in 2018 to 50% in 2019. The average recycled content has also risen from 9% in 2018 to 13% in 2019. Members of the pact include Heinz, Tesco, Danone, PepsiCo, Waitrose, Coca-Cola, Unilever, Asda and Morrisons.

WRAP chief executive Marcus Gover said: “Of course we will always need to do more to deliver our bold ambition for 2025. I am looking forward to UK Plastics Pact members eliminating more unnecessary plastic and further increasing the recyclability of packaging in 2021.

“Developing solutions to overcome the challenges of recycling flexible plastic packaging will be a particular priority. Collection points for plastic bags and films at supermarkets will be an important step in the right direction, but we need all supermarkets to collect all plastic films to make this work. Together we can. Together we will."

Environment Minister Rebecca Pow added: “I’m very pleased to see the progress of The UK Plastics Pact which is tackling one of the greatest threats to our environment, and I thank all those involved who are working on this vital project. "We must continue to go further and faster to tackle unnecessary plastic, and that’s why we have recently banned the supply of plastic straws, stirrers and cotton buds and confirmed the extension of the single-use carrier bag charge to all retailers, which has already cut sales by 95% in the main supermarkets."

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) -- Legislation aimed at supporting sustainable chemical innovations has passed the Senate and is expected to be signed into law shortly, reported Chemweek.

The Fiscal Year 2021 National Defense Authorization Act (NDAA) includes the bipartisan Sustainable Chemistry Research and Development Act of 2019, led by US Senator Chris Coons (D-DE) and cosponsored by Senators Susan Collins (R-ME), Amy Klobuchar (D-MN) and Shelley Moore Capito (R-WV). The bill will support American manufacturing and American jobs while also protecting human health and the environment by helping to realize the full innovation and market potential of sustainable chemistry technologies. The bill now heads to the president's desk.

The bill coordinates government efforts to drive innovation and build and strengthen talent. It also removes barriers to technology commercialization and eliminates duplicative funding and research efforts.

“The chemical sector is an integral part of Delaware’s economy, and I am proud that this legislation will support green chemistry innovation, create new companies and jobs, and promote sustainable use of resources,” Senator Coons said in a statement. “By creating a cohesive national vision for sustainable chemistry research and development, improving training of chemists and other professionals, and building new partnerships with the private sector, this bill is an exciting opportunity to maintain our scientific leadership and ensure the sustainability of our chemical enterprise for years to come.”

The Sustainable Chemistry Research and Development Act of 2019 is endorsed by the GC3 Sustainable Chemistry Alliance, the American Chemical Society, the American Chemistry Council, the American Sustainable Business Council, 3M, Ashland, BASF, Beautycounter, the Biotechnology Innovation Organization (BIO), Chemours, Delaware Sustainable Chemistry Alliance, The Dow Chemical Company, DuPont, Environmental Working Group, The LEGO Group, Nohbo LLC, Procter & Gamble, and the University of Delaware.

As MRC informed before, the ACC's Chemical Activity Barometer (CAB) for November showed continued economic recovery in the US, with the three-month moving average (3MMA) rising 0.8% sequentially, versus a 1.0% gain in October and a 1.5% gain in September. The figure last declined in May. Year-over-year (YOY), the October 3MMA CAB declined 2.4%.

We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, 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-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.
MRC

MOSCOW (MRC) -- Chemical production is rebuilding momentum after shocks linked to the global COVID-19 pandemic, according to Chemweek with reference to the American Chemistry Council’s (ACC) Year-End 2020 Chemical Industry Situation and Outlook.

US chemical production volume excluding pharmaceuticals is expected to fall by 3.6% in 2020 followed by growth of 3.9% in 2021. The US decline is the sharpest since 2008 and 2009, during the financial crisis.

Global chemical volumes are expected to fall 2.6% in 2020, the largest drop in at least 40 years, followed by a 3.9% rebound next year. ACC estimates a 7.8% drop in activity from peak-to-trough in headline global production, from December 2019 lasting until roughly June 2020. “China was the first nation to emerge from the downturn and by September this year, had fully recovered and entered an expansion stage of the cycle,” says ACC chief economist Kevin Swift. “Other nations have not fared as well, but at a global level, a trough was reached in June and a recovery emerged. As of mid-November, nearly all nations and regions are participating in recovery.”

The year has been difficult but industry is well into recovery, says Martha Moore, senior director of policy analysis and economics at ACC. “We’re maybe even ahead of some of our manufacturing peers,” Moore says. “Long-term prospects continue to be very positive because of the energy advantage that we have in the United States. We really need this health crisis to abate, however, and we expect that to happen in 2021. Once that health crisis abates we’re going to see that the recovery gains some traction and domestic and use markets are going to recover.” ACC expects the highest growth to be in basic chemicals, followed by consumer products and specialties.

ACC’s Chemical Activity Barometer, a leading indicator of broader industrial activity, rose for a seventh straight month in November. “Key indicators were mixed (in November), but remain largely positive,” said Swift. CAB readings are consistent with continued economic recovery into 2021.

US GDP tumbled 3.8% during 2020, down from a 2.3% gain in 2019. US growth is expected to rebound 3.7% in 2021, led by stronger consumer spending. Industrial production fell 6.9% in 2020 with declines occurring in nearly every sector. Industrial production is expected to rise 3.7% in 2021. Growth is anticipated for nearly all sectors in 2021, with the largest gains in motor vehicles, aerospace, appliances, iron and steel, petroleum refining, and plastic and rubber products.

“The post-pandemic outlook is for broad-based growth in chemicals supported by solid fundamentals,” Moore says. “Growing customer demand, stabilizing export markets, and a competitive edge linked to domestic supplies of shale gas and natural gas liquids (NGLs) are among the factors pointing to continued gains in US chemistry.”

US basic chemicals demand fell 1.3% in 2020, helped a bit by continued growth in plastic resins, one of the areas to maintain positive growth, up 0.9%, this year. Basic chemicals should rebound with 5.0% growth in 2021, led by 6.9% growth for plastic resins. US specialties volumes were down 10.8% in 2020 as lockdowns were especially negative for the oilfield chemicals, rubber processing, foundry chemicals, and printing ink sectors. Specialty volumes are forecast to improve 2.4% in 2021, led by recovery in rubber processing, antioxidants, plastic compounding, catalysts, plastic additives, and lubricant additives.

US chemicals trade was notably lower in 2020, and it will be a year or two before total trade flows return to pre-COVID-19 levels, Swift says. Total chemicals trade is projected to shrink 7%, to USD220.8 billion, in 2020. Exports will fall 9%, to USD124.0 billion, in 2020 before expanding 8% 2021. Imports will fall 5%, to USD96.8 billion, in 2020, then recover 9% 2021. Potential changes in global supply chains could affect trade levels longer term. “Concern about supply chain disruptions will lead to near and on-shoring, accelerating any such decisions already in consideration prior to the pandemic,” Swift says.

The US will remain a preferred destination for chemical investment thanks to advantaged energy and feedstock access. ACC estimated a nearly 40% gain in basic olefins capacity during the 2010s. Basic olefins capacity could expand another 20% over the next decade. During recent years, the chemical industry accounted for nearly one-half of total construction spending by the US manufacturing sector even though it accounts for about 15% of manufacturing value-added. Some 345 new chemical production projects, valued at more than $207 billion altogether, have been announced through late November 2020. The rate of increase will slow from the 2010s boom, but ACC still forecasts average annual gains of over 4%/year in US chemical industry capital spending in the 2021–25 period.

As MRC reported earlier, the ACC's Chemical Activity Barometer (CAB) for November showed continued economic recovery in the US, with the three-month moving average (3MMA) rising 0.8% sequentially, versus a 1.0% gain in October and a 1.5% gain in September. The figure last declined in May. Year-over-year (YOY), the October 3MMA CAB declined 2.4%.

We remind that Russia's output of chemical products rose in October 2020 by 7.2% year on year. At the same time, production of basic chemicals grew in the first ten months of 2020 by 6.3% year on year, 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-October output. October production of polymers in primary form grew to 857,000 tonnes from 852,000 tonnes in September. Overall output of polymers in primary form totalled 8,340,000 tonnes over the stated period, up by 17% year on year.
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