Crude oil futures rise on large US stock draw, weakening dollar

MOSCOW (MRC) -- Crude oil futures rose in mid-morning trade in Asia Jan. 13 on a larger-than-expected draw in US crude inventories and a weakening US dollar, reported S&P Global.

At 10:29 am Singapore time (0229 GMT), the ICE Brent March contract was up 55 cents/b (0.97%) from the Jan. 12 settle at USD57.13/b, while the February NYMEX light sweet crude contract was up 49 cents/b (0.92%) over the same period at USD53.70/b. The markers had risen 1.65% and 1.84%, respectively, on Jan. 12.

American Petroleum Institute data released Jan. 12 showed a 5.821 million-barrel decline in US crude inventories for the week ended Jan. 8. This was larger than expected; analysts surveyed by S&P Global Platts had predicted a 3.8 million-barrel draw.

The API data also showed a 1.876 million-barrel build in gasoline and 4.433 million-barrel build in distillate inventories, but the market ignored these indications of depressed fundamentals in downstream markets.

At 10:29 am, the NYMEX February RBOB contract was trading 1.64 cents/gal (1.06%) higher than the Jan. 12 settle at USD1.5694/gal, and the NYMEX February ULSD contract was up 1.24 cents/gal (0.78%) over the same period at USD1.6091/gal.

Market participants are awaiting the release of more comprehensive inventory data by the US Energy Information Administration slated for later in the day for confirmation of the draw.

Analysts noted that oil prices were also benefitting after the US dollar resumed its downtrend after a brief rally.

"Crude oil prices gained as a weaker USD saw investor appetite improve. The recent strength in the USD has been a headwind for commodity markets over the past week; although underlying fundamentals have helped offset it," ANZ analysts said in a Jan. 13 note.

Amid tightened supply outlooks following Saudi Arabia's 1 million b/d production cut and upward-trending demand projections, the EIA in its monthly Short-Term Energy Outlook released Jan. 12 revised its crude price forecast higher.

The EIA now expects Brent crude prices to average USD52.75/b in 2021, up USD4.25/b from its December forecast, and the WTI price to average USD49.75/b, up USD4/b.

Despite the upward revision, the EIA's forecast remains less bullish than some banks including Citibank, which sees Brent crude averaging USD59/b in 2021 and WTI USD56/b.

As MRC informed previously, global oil demand may have already peaked, according to BP"s latest long-term energy outlook issued in September 2020, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

Earlier last 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 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.
MRC

MOSCOW (MRC) -- The COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to Hydrocarbonprocessing with reference to GlobalData, a leading data and analytics company.

With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

Dayanand Kharade, Oil and Gas Analyst at GlobalData, comments: “Oil and gas majors in the country are reducing spend in response to a substantial drop in crude prices and disruptions caused by the COVID-19 outbreak. Sibur Holding, one of the largest petrochemical producers in Russia, has lowered its capital expenditure (capex) outlook for 2020, which is approximately 30% lower in comparison to its initial budget. However, companies continue to evaluate their capital structure and focus on key projects ensuring sustainable growth.”

The majority of the upcoming projects in Russia are in the early stages of development, for example, pre-construction phase. Changes in supply/demand patterns, due to reduced economic activity across the globe, is likely to affect the pace of progress of these projects. Major announced projects such as Baltic Chemical project and EuroChem- Northwest Kingisepp project in Leningrad Oblast, and Gazprom and Novatek projects in Yamalo-Nenets Autonomous Okrug could face delays in startup. However, companies should continue to assess the impact based on prospective developments.

Kharade concludes: “With economic growth correlated to petrochemicals growth, the short-term outlook is expected to result in lowered petrochemical demand in the country. However, with an improving market environment, Russian producers are well-positioned to derive full benefit with the country’s access to low-cost feedstock.”

As MRC reported before, in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins [MTO] technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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.
MRC

MOSCOW (MRC) -- China's Nanjing Yangzi Petrochemical Rubber, part of Sinopec Group, shut its 100,000 mt/year butadiene-rubber unit and 100,000 mt/year styrene-butadiene-rubber plant in Jiangsu province Jan. 12 following a fire at the petrochemical complex, reported S&P Global with reference to a source with direct knowledge of the matter's statement Jan. 13.

The fire was extinguished on Jan. 12, according to the source.

The rubber plants may remain shut for two to three months, the source said, but this could not be officially confirmed with the company.

As MRC informed earlier, Sinopec Corp's Qilu refinery resumed operations after a more than three-month overhaul of its 160,000 barrels per day (bpd) crude processing facility, according to the company's statement on 17 December, 2020. The refinery, based in China's oil refining hub Shandong province, has total crude oil processing capacity of 13 million tonnes per year, or 260,000 bpd.

Butadiene is the main feedstock for the production of acrylonitrile-butaiene-styrene (ABS).

According to ICIS-MRC Price report, ABS imports into Russia rose in the first eleven months of 2020 by 2% year on year to 32,000 tonnes from 31,300 tonnes a year earlier. South Korean shipments accounted for 62% (19,900 tonnes) in January-November 2020 versus the share of 58% (18,200 tonnes) a year earlier.

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) -- Lacerta Group, Inc., a leading designer and manufacturer of specialty thermoformed packaging solutions, announced today a strategic investment from funds advised by SK Capital Partners, LP, a New York-based private investment firm focused exclusively on the specialty materials, chemicals and pharmaceuticals sectors, said the company.

SK Capital is acquiring a majority interest in the Mansfield, Mass.-based business. Lacerta’s co-founders, Ali and Mory Lotfi, will continue to retain a significant ownership stake in the Company. Terms of the deal were not announced.

Privately held since it was founded in 1993, Lacerta is a leading provider of innovative packaging solutions primarily serving the food sector. The Company offers a comprehensive range of custom PET packaging products, including a leading line of tamper-evident products sold under the “Fresh N’ Sealed” brand. Lacerta has experienced top-line growth of 25% annually since 2013 driven by a customer-centric model that is supported by product innovation and fulfilment through its extensive in-house manufacturing capabilities. Given that the vast majority of its products are 100% recyclable, and the packaging solutions produced by the Company can be made with up to 100% recycled content, Lacerta promotes a more circular and sustainable approach to food packaging.

Lacerta offers a complete range of manufacturing services, from concept development, prototyping and mold making, to thermoforming, extrusion, printing and quality assurance. The Company operates thermoforming machines capable of producing millions of packages per year. It also has CNC milling machines for mold making and in-house prototyping thermoformers to help turn around prototypes –– usually within one week. In a rapid response to the needs created by the current pandemic, the Company has also developed a face shield made from PET resin for use by healthcare and retail workers.

SK Capital Senior Director Dave Mezzanotte added, “We view Lacerta as a platform that can be grown in a multitude of ways to serve a wider range of its customers’ requirements. We’re especially excited about the opportunity Lacerta has to enable its customers to meet their internal sustainability targets by utilizing packaging that’s fully recyclable and incorporating recycled content at increasingly higher levels."

Latham & Watkins LLP acted as legal counsel to SK Capital, and debt financing was led by Citizens Bank, N.A. Citizens M&A Advisory acted as exclusive financial advisor to Lacerta.

As per MRC, SK Capital Partners completed the acquisition of a 39.75% stake, roughly 42.4 million shares, in titanium dioxide maker Venator from Huntsman for roughly USD100 million. The deal includes a 30-month option for the purchase of Huntsman’s remaining approximate 9.5 million shares by SK at US2.15/share. Huntsman spun off Venator in a 2017 initial public offering.

As MRC reported earlier, Nanjing Jinling Huntsman, a joint venture between Huntsman and Sinopec Jinling, planned to shut its propylene oxide plant in Nanjing (Nanjing, Jiangsu Province, China) on November 1 for scheduled maintenance. This plant with a capacity of 240,000 tonnes/year of propylene oxide will be closed until approximately 25 November.

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

MOSCOW (MRC) -- The Solvay Group agreed to sell its North American and European amphoteric surfactant business to OpenGate Capital, a private equity firm with headquarters in Los Angeles, as per the company's press release.

The sale includes the three main production sites supporting the amphoteric product lines located in University Park, Illinois (USA), Genthin, Germany, Halifax, United Kingdom, and a tolling business in Turkey. The agreement also includes tolling and service agreements between Solvay and OpenGate to ensure a seamless transition and minimal customer disruption.

“This agreement represents another critical step in the execution of our strategic plan as we further focus our home & personal care portfolio on growing specialty formulations and custom solutions,” commented Michael Radossich, president of Solvay's Novecare global business unit.

In OpenGate Capital, Solvay has identified a strong buyer for the North American and European amphoteric surfactant business while the sale will generate additional resources for Solvay to invest in its strategic growth segments as part of its portfolio simplification journey. Solvay expects to close the sale by the end of March pending completion of all required social dialogues and regulatory approvals.

As MRC reported earlier, in August, 2020, through the acquisition of the Solvay polyamide (PA) business, BASF enhanced its R&D capabilities in Asia Pacific with new technologies, technical expertise, and upgraded material and part testing services. BASF is planning to integrate the R&D centers from Solvay into its R&D existing facilities in Shanghai, China, and Seoul, Korea. The enhanced capabilities will boost BASF’s position as a solution provider to develop advanced material solutions for key industries.

We remind that BASF-YPC, a 50-50 joint venture of BASF and Sinopec, undertook a planned shutdown at its naphtha cracker on 30 April 2020. The company initially planned to start turnaround at the cracker on April 5, 2020. The plant remained under maintenance unitl 18 June, 2020. Located in Jiangsu, China, the cracker has an ethylene capacity of 750,000 mt/year and propylene capacity of 400,000 mt/year.

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.

Solvay is a science company whose technologies bring benefits to many aspects of daily life. With more than 24,100 employees in 64 countries, Solvay bonds people, ideas and elements to reinvent progress. The Group seeks to create sustainable shared value for all, notably through its Solvay One Planet plan crafted around three pillars: protecting the climate, preserving resources and fostering better life. The Group’s innovative solutions contribute to safer, cleaner, and more sustainable products found in homes, food and consumer goods, planes, cars, batteries, smart devices, health care applications, water and air purification systems. Founded in 1863, Solvay today ranks among the world’s top three companies for the vast majority of its activities and delivered net sales of EUR10.2 billion in 2019. Solvay is listed on Euronext Brussels (SOLB) and Paris and in the United States, where its shares (SOLVY) are traded through a Level I ADR program.
MRC