Oil rises, as investors focus on vaccine rollout, brush off recovery concerns

MOSCOW (MRC) -- Oil prices rose on Tuesday as investors focused on the rollout of COVID-19 vaccines, looking past tightening lockdowns in Europe and forecasts for a slower-than-expected recovery in fuel demand, reported Reuters.

Brent crude settled at USD50.76 a barrel, rising 47 cents, or 0.9%. US West Texas Intermediate (WTI) crude settled at USD47.62 a barrel, gaining 1.3%, or 63 cents.

The United States began vaccinating people on Monday as the country’s COVID-19 death toll crossed the 300,000 mark. Britain and Canada have also begun to administer shots.

“The crude market continues to seize upon the future outlook of the post-pandemic period, which could be as soon as next summer,” said John Kilduff, partner at Again Capital in New York.

Crude oil throughput rose by 3.2% year-over-year in China in November,a record. That helped investor sentiment about coming increases in fuel demand, said Phil Flynn, senior analyst at Price Futures Group in Chicago. China has been one of the rare countries where oil demand has fully recovered from earlier this year.

“People would assume that the oil demand surge is right around the corner,” Flynn said.

Still, the International Energy Agency said on Tuesday any impact of vaccines on demand is still several months away, while OPEC said on Monday oil demand will rise more slowly than expected.

Brent hit USD51.06 on Dec. 10, highest since March, supported by vaccine approvals, even as the infection rate has surged in most regions worldwide.

London stepped up pandemic rules requiring bars and restaurants to close, Italy is considering more stringent steps over Christmas, and Germany is likely to be under lockdown until early 2021.

The latest snapshot of US oil supplies showed crude oil stocks unexpectedly rose last week, according to the American Petroleum Institute, an industry group.

Crude inventories swelled by 2 million barrels in the week to Dec. 11 to about 495 million barrels, compared with analysts’ expectations in a Reuters poll for a draw of 1.9 million barrels, API said.

Official government data was scheduled for Wednesday.

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 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.
MRC

Ineos to form energy, low-carbon technologies group, appoints former BP CFO as chairman

MOSCOW (MRC) -- Ineos says it will form a new energy group combining all of its existing oil and gas assets and its low-carbon technologies and activities it has under development. Brian Gilvary, who left his role as CFO of BP in June this year, has been appointed as the energy group’s executive chairman, said Chemweek.

Gilvary was at BP for 34 years and held the role of CFO from 2012 until his retirement in June. "We are delighted that someone of Brian’s caliber has agreed to join us to head up this exciting new venture at a time of significant transformation in the energy industry,” says Ineos chairman Jim Ratcliffe. “We are determined that Ineos will be at the forefront of the industry and that Brian will provide the experience and leadership to achieve that aim."

The new combination of assets and technologies within Ineos Energy means the company can play a leading role in the upcoming energy transition “at a time of tremendous change within our industry,” says Gilvary.

As MRC informed earlier, Ineos Oxide, an Ineos subsidiary, has declared force majeure on propylene output from one of the two steam crackers at Dormagen. This declaration was not confirmed by Ineos. There are two steam crackers at Dormagen, one with a capacity of 670,000 metric tons/year and another with a capacity of 530,000 metric tons/year.

Propylene is the main feedstock for the production of polypropylene (PP).

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.

Ineos Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.
MRC

Asahi Songwon Colors JV starts up pigments plant in India

MOSCOW (MRC) -- Asahi Songwon Colors on Monday announced the commencement of commercial operations at the Dahej plant of Asahi Tennants Color, its joint venture with Tennants Textile Colours Limited (TTC) of UK, said Chemweek.

Gokul Jaykrishna, CEO of Asahi Songwon Colors said, “The commencement of operations of the JV company gives Asahi the perfect launching pad to widen its presence as a leading global supplier of pigments, and make a mark in the AZO pigment space."

In the JV, Asahi holds a controlling stake of about 51% while the remaining 49% is held by TTC. The JV which was announced in October 2019, launched the plant on December 12, 2019, with an expected date of commissioning in March 2021.

Asahi in its regulatory filing highlighted that the state-of-the-art Dahej plant will make Red & Yellow pigments. The installed capacity of the AZO pigment plant is 2400 metric tonnes per annum. The plant has been set up for Rs82cr.

Arjun Jaykrishna, Executive Director, Asahi Songwon Colors, said, “It is our pleasure to announce that in spite of the Covid-19 pandemic, we successfully commissioned the plant on December 14, four months before the original target date. We are going to work towards full capacity utilisation at the plant, and aim to double capacity by 2022."

The Dahej plant will enable Asahi to extend its global pigment presence, which is currently dominant in the phthalocyanine pigment space, to the full range of pigment colours, the company pointed out. On Sensex, Asahi Songwon completed at Rs243.50 per piece up 3.53%.

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

OQ raises amines prices on supply, demand

MOSCOW (MRC) -- Oxo intermediates and derivatives producer OQ Chemicals (Monheim am Rhein, Germany) says it will increase prices for several of its amines products due to supply and demand as of 1 January 2021 or as contracts allow, said Chemweek.

The price of isopropylamine will rise to EUR150/metric ton ($183/metric ton) in Europe, by 8 cents (cts) per pound (lb) in North America and Mexico, and by USD182/metric ton in the rest of the world. Prices for butylamine, dibutylamine, and tributylamine will each be increased by EUR100/metric ton in Europe, 5 cts/lb in North America and Mexico, and USD121/metric ton in the rest of the world.

The company hiked its prices for other oxo intermediates and carboxylic acids earlier this week.

As per MRC, OQ Chemicals (Monheim am Rhein, Germany) is raising its prices globally for carboxylic acids, starting 1 January 2021 or as contracts allow. The company says that due to supply and demand the price of 2-ethylhexanoic acid (2-EHA) will rise in Europe by EUR85/metric ton (USD103/metric ton), in the US by USD0.05/lb, and in the rest of the world by USD110/metric ton. The prices of n-butyric acid and isobutyric acid will each increase in the US by USD0.05/lb and USD110/metric ton in the rest of the world but will not rise in Europe.

As MRC wrote earlier, in September 2020, OQ Chemicals entered into an agreement to license its advanced proprietary technology for the production of ethylene and propylene derivatives to Duqm Refinery and Petrochemicals Industries Company (DRPIC) in Oman. DRPIC, a joint venture between Oman Oil Company and Kuwait International Oil Company, is a planned grassroots petrochemical complex at Duqm, Oman. In all, DRPIC awarded twelve license packages to international licensors.

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.

OQ Chemicals, formerly Oxea, is a global manufacturer of oxo intermediates and oxo derivatives, such as alcohols, polyols, carboxylic acids, specialty esters, and amines. These products are used for the production of high-quality coatings, lubricants, cosmetics and pharmaceutical products, flavours and fragrances, printing inks and plastics. OQ Chemicals is part of OQ, an integrated energy company that delivers sustainability and business excellence. OQ operates in 16 countries and covers the entire value chain from exploration and production to the marketing and distribution of its products.
MRC

Asia distillates-jet fuel cracks linger close to nine-month highs

MOSCOW (MRC) -- Asian refining margins for jet fuel rose on Monday, buoyed by an uptick in passenger traffic on some domestic flight routes and firmer air cargo demand ahead of the peak holiday season, reported Reuters.

Refining profit margins, also known as cracks, for jet fuel rose 36 cents to USD4.83 per barrel over Dubai crude during Asian trading hours, hovering close to a near nine-month peak touched last week.

Cracks for the aviation fuel in Singapore, which also determines the profitability of closely-related kerosene, have more than doubled in the last four weeks, Refinitiv Eikon data showed.

The jet fuel market, however, is expected to take years to go back to pre-pandemic levels, market watchers said. "For jet fuel, hit hardest by the pandemic... ultimately, a true rebound would require the resumption of international flights and cross-border tourism, which may be among the lasts to be returned, as COVID-19 headwinds ease," said Peter Lee, senior analyst at Fitch Solutions.

Cash differentials for jet fuel were at a discount of 27 cents a barrel to Singapore quotes, compared with a discount of 26 cents per barrel on Friday.

From Air Canada to China's CDB Aviation, airlines and leasing firms are rushing to permanently convert older passenger jets into freighters, betting on a boom in e-commerce as the value of used planes tumbles amid the pandemic.

Aviation analytics firm Cirium expects the number of P2F conversions globally will rise by 36% to 90 planes in 2021, and to 109 planes in 2022.

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.
MRC