Oil gains 2% after draws in U.S. product inventories

MOSCOW (MRC) - Oil prices rose 2% on Wednesday, boosted by draws in U.S. inventories of crude, gasoline and distillates that lifted investors' hopes for some return in fuel demand, said Reuters.

Brent crude futures gained 96 cents, or 1.9%, to USD51.04 a barrel by 11:02 a.m. EST (1602 GMT), while U.S. West Texas Intermediate (WTI) crude futures rose 93 cents, or 2%, to USD47.95 a barrel.

U.S. crude inventories fell by 562,000 barrels in the week to Dec. 18 to 499.5 million barrels, the Energy Information Administration said on Wednesday. Gasoline stocks fell by a surprise 1.1 million barrels in the week to 237.8 million barrels, the EIA said, while distillate stockpiles fell by 2.3 million barrels in the week to 148.9 million barrels, more than expected.

"Overall, what this report reflects is that we're starting to see continued improvement in demand," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "It reflects that we're seeing a market that's getting more in balance." A falling U.S. dollar also supported prices. A weak greenback makes dollar-denominated commodities such as crude oil cheaper to holders of other currencies.

Investors also kept an eye on Nigeria, where supply disruptions helped lift prices. Exxon Mobil Corp issued a force majeure on the Qua Iboe crude oil export terminal last week after a fire hit the facility and injured two workers. A source told Reuters production is expected to resume in early January.

The stream was expected to load about 180,000 barrels per day (bpd) in December and 150,000 bpd in January. Still, oil markets remain jittery about the future recovery of oil demand as a new, highly infectious variant of the novel coronavirus has hit Britain, prompting a slew of countries to shut their borders to the country.

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

MOSCOW (MRC) -- On 17 December, BASF opened its ASEAN Technical Development Center adjacent to its existing polyurethane (PU) System House at Bangpoo site in Thailand, as per the company's press release.

The new facility houses a state-of-the-art pre-polymer reactor technology to produce a hardener (component B) - a key component to boost product development efficiency, thereby enabling faster time-to-market of PU materials and solutions.

The advanced reactor technology is further designed to deliver on a much larger capacity, meeting most demanding customer requirements across all grades. The new pre-polymer reactor technology is additionally capable of developing customized PU System products, which helps improve the commercialization of these specialized solutions.

The ASEAN Technical Development Center also boasts several new service upgrades, such as more advanced testing and software capabilities. With the new pre-polymer reactor technology, the ASEAN Technical Center strengthens and complements BASF’s technical support network in China, Korea, and Germany.

“Through the ASEAN Technical Development Center, we are better positioned to support our customers and help them capitalize on growth opportunities in ASEAN across key industries and applications,” said Andy Postlethwaite, Senior Vice President, Performance Materials Asia Pacific, BASF. “Together with the expanded polyurethane system house, we are demonstrating our commitment to ASEAN, with even more reliable supply, as well as technical expertise and innovation capabilities.”

BASF previously increased the production capacity of its polyurethane system house in Bangpoo as part of a move to better meet the growing demand across automotive, consumer, construction, and industrial markets in ASEAN. With a total production area of 2,700 m2, the redesigned system house includes additional mixing vessels, reactors, and storage tanks.

The ASEAN car market by production volume continues to grow with differentiated products and emerging applications. Thailand and Indonesia are among the largest automotive industries in Southeast Asia, while Vietnam is already one of the world’s largest footwear exporters, and its industry is expected to grow as more manufacturers are relocating their manufacturing base there.

As MRC reported before, German chemicals maker BASF said in early November it had put a project to build a petrochemicals complex in India worth up to USD4 billion on hold due to the economic uncertainty caused by the COVID-19 pandemic. BASF signed a memorandum of understanding with Abu Dhabi National Oil Company (ADNOC), Adani Group and Borealis AG in October 2019 to evaluate a collaboration to build the chemical site in Mundra, in India’s Gujarat state.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC

MOSCOW (MRC) -- Enterprise Products Partners LP (Houston) announced Dec. 17 that the first vessel powered by liquefied petroleum gas (LPG) has been loaded at the Enterprise Hydrocarbon Terminal on the Houston Ship Channelm according to BPN.

The Very Large Gas Carrier (VLGC) BW Gemini, which had been retrofitted for dual fuel capabilities, was loaded with a record 590,000 bbl of LPG, including cargo and fuel.

“Enterprise is proud to be part of this milestone achievement which benefits both the supply and demand sides of the LPG value chain, provides environmental benefits, and improves the lives of people around the world,” said A.J. (Jim) Teague, co-chief executive officer of Enterprise’s general partner. “LPG-powered vessels provide another source for growing U.S. shale production and offer enhanced efficiencies and economics for ship owners and their customers by allowing VLGCs to refuel at the loading dock instead of making an additional stop at a bunkering facility. Enterprise is already the largest exporter of propane in the world, and is helping to raise the standard of living and improve the health and quality of life for developing nations around the globe.”

By providing the option for vessels to refuel with LPG, Enterprise is also helping shipping companies reduce their emissions in accordance with the new International Maritime Organization standards (IMO 2020).

As MRC wrote before, Enterprise Products Partners LP (EPP), through one of its affiliates, has entered a long-term agreement with Marubeni Corp. of Japan, under which Marubeni will offtake polymer-grade propylene (PGP) produced from a second (PDH 2) plant currently under construction at EPP’s operations in Mont Belvieu, Tex., for supply to global customers. Concluded on June 16, the PGP offtake agreement is part of a long-term collaboration between EPP and Marubeni that also includes the export of liquefied ethylene, the first 25-million lb vessel of which loaded and sailed from EPP and Navigator Holdings Ltd.’s 50-50 joint venture marine terminal at Morgan’s Point, Tex., in early January, EPP and Marubeni said on June 30.

We remind that in July, 2020, Enterprise Products conducted maintenance at its propane dehydrogenation (PDH) unit in Mont Belvieu, Texas. This PDH unit has the capacity of 750,000 mt/y of propylene.

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

According to MRC's DataScope report, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

1. Asia distillates-jet fuel cash discounts narrow, refining margins gain

MOSCOW (MRC) -- Asia's cash differentials for jet fuel inched higher, while refining margins for the aviation fuel climbed for a second consecutive session, buoyed by a steady increase in the number of scheduled flights in the region, said Reuters. Cash discounts for jet fuel narrowed by 2 cents to 11 cents per barrel to Singapore quotes, the smallest discounts since Dec. 8. Refining margins, or cracks, for jet fuel rose 17 cents to $4.71 per barrel over Dubai crude during Asian trading hours on Thursday. The cracks have gained 48% in the last month. The jet fuel market has been gradually improving in recent weeks after the COVID-19 pandemic brought air travel to a virtual halt this year, and market watchers believe passenger traffic would be steadily on the rise as vaccine roll-outs spur more international flights in 2021.


MRC

MOSCOW (MRC) -- The latest US housing starts data illustrates continued strong demand for polyvinyl chlorie (PVC) in the country, which has bucked the typical seasonal lull seen in colder winter months, reported S&P Global.

November housing starts rose 1.2% to 1.547 million units from October levels, and were 12.8% higher than 1.371 million units in November 2019, according to the data released Dec. 17.

Market sources said a continued push for new dwellings amid the coronavirus pandemic has fueled PVC demand, particularly for single-family housing with separate ventilation systems and more space for consumers working from home.

However, tight supply has supported higher prices. Producers have maintained reduced upstream chlor-alkali rates since April, when rates plunged to 68% from 90% in March amid the height of pandemic-related shutdowns and economic shocks.

Rates had since held in the low to mid-70s percent range until November, when they rose to 80%, according to the latest industry statistics. Rates remained lower year on year, as November 2019 rates were 85%, those statistics showed.

Market sources said high PVC prices may have prompted rates to inch up in November, but rates are not expected to rise significantly given continued weak caustic soda demand.

Chlorine produced in the chlor-alkali process is the first link in the PVC production chain. Caustic soda, a key feedstock for alumina and pulp and paper industries, is a byproduct of chlorine production.

Producers had been reluctant to raise chlor-alkali rates beyond the mid-70s percent range to keep caustic soda inventories in check, but record-high PVC prices may have softened that outlook, sources said.

As MRC informed earlier, as of 8 December, 2020, Westlake Polymers left in force the declared on Aug. 31 force majeure on its North American PVC and upstream vinyl chloride monomer (VCM) plants, after Hurricane Laura adversely impacted its Lake Charles, Louisiana, complex. Westlake's shutdown of its Lake Charles complex idled 38% of its US VCM production, resulting in two VCM plants with a combined capacity of 952,318 mt/year going offline. The complex also has three upstream chlor-alkali plants with a combined capacity of 1.27 million mt/year of chlorine and 1.36 million mt/year of caustic soda - 46% of the company's overall North American chlor-alkali capacity.

According to MRC's ScanPlast report, Russia's overall PVC production reached 891,200 tonnes in the first eleven months of 2020, down by 0.3% year on year. However, two producers managed to increase their PVC output.
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