Oil slips as gloom grows over soaring COVID-19 cases, lockdowns

MOSCOW (MRC) -- 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, reported Reuters.

US West Texas Intermediate (WTI) crude futures fell 18 cents or 0.4%, to USD45.58 a barrel at 0153 GMT, while Brent crude futures fell 24 cents, or 0.5%, to USD48.55 a barrel. Both benchmark contracts lost around 1% on Monday.

Globally, a sharp rise in coronavirus cases has led to a string of renewed lockdowns, including strict measures in the US state of California as well as Germany and South Korea.

"The pandemic situation is continuing to be very disruptive in quite a few places in the US and parts of Europe. That's impacting sentiment on demand near term," said Lachlan Shaw, National Australia Bank's head of commodity research.

California on Monday required most of the state to close shop and stay at home under a new order which will last at least three weeks.

Government sources in France said the country may have to delay unwinding some lockdown restrictions next week after signs the downward trend in new cases had flattened out after shops were allowed to reopen late last month.

Following last week's rally in oil prices on the back of vaccine rollout plans and an agreement by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to hold back supply increases, analysts said they were closely watching US lawmakers' efforts to approve a new economic stimulus package.

The stimulus will be needed to drive jobs growth, and, in turn, energy demand.

"For the moment, the market is happy to look past these issues as the vaccine rollout begins; however the economic headwinds are building in the short term," ANZ Research said in a note.

Data due from the American Petroleum Institute later on Tuesday and from the US government on Wednesday is expected to show that US crude stocks fell last week, while refined product stockpiles rose, according to estimates from five analysts polled by Reuters.

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% 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) -- Negotiations over prices of European polyvinyl chloride (PVC) for December shipments to the CIS countries started in the middle of last week. European producers announced another increase in export PVC prices - by EUR20/tonne or more - partially due to higher feedstocks prices, according to ICIS-MRC Price report.

December contract price of ethylene was agreed up by EUR20/tonne from the previous month, which theoretically allows to talk about an increase of EUR10/tonne in the net cost of PVC. But amid a shortage and good demand from both the domestic and export markets, European producers raised their export prices for the CIS markets in December by EUR20-35/tonne.

Demand for PVC has been gradually subsiding from consumers from the CIS countries since October under the pressure of seasonal factors, but European producers do not have a surplus of material either. And even under the circumstances of reduced procurement volumes, some companies still faced the inability to fully replenish their inventories. Consumers of resin with K=70 felt this particularly acutely.

Overall, deals for December shipments of suspension polyvinyl chloride (SPVC) to the CIS markets were negotiated in the range of EUR855-925/tonne FCA, whereas the previous month's deals were discussed in the range of EUR820-905/tonne FCA.
MRC

MOSCOW (MRC) -- Sinopec’s board has approved plans to build a 1.2-million metric tons per annum ethylene plant and downstream units in the Nangang area of the port of Tianjin, China, reported Kemicalinfo with reference to an announcement posted on 4 December.

Sinopec estimates the cost of the project at 28.8 billion renminbi (USD4.4 billion).

Sinopec announced in November that it had signed a framework agreement with the Tianjin authorities to invest about 70 billion renminbi (USD10.7 billion) at Nangang in 2021-25 to build capacity for petrochemicals and other products.

Ethylene is a major product processed from crude oil. In China, over half of the chemical is used to make polyethylene, a key ingredient for plastics used in a wide range of everyday goods and home appliances.

As the Chinese government calls for reduced dependence on chemical imports amid rising geopolitical tensions, state-owned and private oil firms are racing to boost domestic capacity in the world’s top chemical consumer.

China’s total ethylene capacity is forecasted to grow over 50 million tons by 2025, an expert at oil giant, China National Petroleum Corp said.

Sinopec operates 1 million metric tons per annum ethylene plant and downstream complex in the Dagang district of Tianjin in a 50/50 joint venture (JV) with Sabic called Sinopec Sabic Tianjin Petrochemical (SSTPC). The JV announced in 2019 that it would invest 1.5 billion renminbi (USD230 million) to expand ethylene capacity by 300,000 metric tons/year for completion in 2021.

Sinopec also has a wholly-owned 240,000- metric tons per annum ethylene plant at Dagang, operated by its Sinopec Tianjin Co. subsidiary. Nangang and Dagang are both in Tianjin’s Binhai New Area development zone.

As MRC informed previously, SSTPC has brought on-stream its naphtha cracker following a turnaround. The company resumed operations at the cracker on July 12, 2020. The cracker was shut for maintenance on May 9, 2020. Located at Tianjin, China, the cracker has an ethylene production capacity of 1 million mt/year and propylene capacity of 540,000 mt/year.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 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.

China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group"s key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
MRC

MOSCOW (MRC) -- On Tuesday, after a long break at the State Commodity and Raw Materials Stock Exchange of Turkmenistan, the export trades for Turkmenbashi refinery's polypropylene (PP) were resumed. 3,500 tonnes of PP out of the put out for auction 5,000 tonnes of material were sold during one trading day, according to ICIS-MRC Price report.

The trades participants said the last export trades for Turkmenbashi refinery's PP took place at the State Commodity and Raw Materials Stock Exchange back in August, and then only 3,000 tonnes of raffia grade PP were put out for action. On Tuesday, 8 December, 5,000 tonnes of PP were put up for auction in the export trades at a starting price of USD920/tonne FCA.

Only 3,500 tonnes of PP were sold out of the put out for auction 5,000 tonnes in the first trading day, deals were done at prices significantly higher than the starting price - USD1,046/tonne FOB/FCA, with shipment within six months.
MRC

MOSCOW (MRC) – Nordson Corporation entered into a definitive agreement to divest the screws and barrels product line from its polymer processing systems (PPS) division to Altair Investments (Altair), said the company.

This divestiture represents a portfolio realignment consistent with Nordson’s strategy to drive profitable growth through highly differentiated products serving attractive end markets.

Sundaram Nagarajan, Nordson president and chief executive officer, said, “Using NBS Next, Nordson’s growth framework, we are focusing our resources on precision technology solutions that will deliver profitable growth for the company. Our screws and barrels product line is a respected market leader in the polymer processing industry. While this product line no longer fits Nordson’s strategic focus, we believe it will do well with Altair. I want to personally thank the employees, who support this product line, for their contributions to Nordson and wish them success in their future with Altair."

Generating over USD70 million in annual revenue with 500 employees, this global product line has been reported in Nordson’s Industrial Precision Solutions segment. Nordson and Altair anticipate closing the transaction in the first quarter of fiscal 2021. They will work collectively to ensure a smooth transition with no disruption to customer service and support.

Joseph Kelley, executive vice president and chief financial officer, commented, “This strategic portfolio transaction will improve the company’s ongoing earnings and require a one-time, non-cash asset impairment charge of approximately $87 million. This action underscores our commitment to align and focus our resources with the best strategic opportunities for long-term profitable growth."

The company looks forward to providing further color on this pending transaction during its previously announced fourth quarter and fiscal year 2020 webcast. The webcast will be hosted on December 16, 2020, at 8:30 AM ET. To access the webcast.

As MRC informed earlier, Rocheleau Tool & Die Co. has ordered dozens of Nordson Corporation’s Xaloy screws and barrels to equip blow molding machines for use by manufacturers of pipettes that are essential components of COVID-19 test procedures.

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.

Nordson Corporation engineers, manufactures and markets differentiated products and systems used for the precision dispensing of adhesives, coatings, sealants, biomaterials, polymers, plastics and other materials, fluid management, test and inspection, UV curing and plasma surface treatment, all supported by application expertise and direct global sales and service. Nordson serves a wide variety of consumer non-durable, durable and technology end markets including packaging, nonwovens, electronics, medical, appliances, energy, transportation, construction, and general product assembly and finishing. Founded in 1954 and headquartered in Westlake, Ohio, the Company has operations and support offices in more than 35 countries.
MRC