COVID-19 - News digest as of 15.01.2021

1. IEA says oil market outlook clouded by vaccine roll-out variables

MOSCOW (MRC) -- Oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, reported Reuters with reference to an official with International Energy Agency's (IEA) statement. "Producers are grappling with huge uncertainty about where this goes from here," Tim Gould, head of energy supply outlooks and investment, told the Gulf Intelligence forum. "That's not just in terms of economic recovery but indicators we wouldn't necessarily normally be looking at: (such as the) levels of trust in different countries about vaccines."



MRC

MOSCOW (MRC) -- The January contract price of ethylene was settled in Europe up by EUR65/tonne from the previous month. However, all European producers announced a much greater increase in export polyethylene (PE) prices for January shipments to the CIS markets, than the rise of monomer prices, according to ICIS-MRC Price report.

Negotiations over January prices of European PE began in the first days of the month. All market participants said European producers significantly raised their export prices of ethylene polymers. Moreover, some producers adjusted their export prices twice in the first two weeks of January. In some cases, the price increase was EUR100/tonne, and in other cases, the price rise reached EUR170/tonne and higher.

It is also worth noting that all European producers have major export restrictions, and some producers do not even plan to sell PE to the CIS countries this month.

Deals for January shipments of high density polyethylene (HDPE) were done in the range EUR950-1,030/tonne FCA, whereas last month's deals were done at EUR850-925/tonne FCA. Deals for low density polyethylene (LDPE) were done in the range of EUR1,140-1,200/tonne FCA, versus EUR970-1,020/tonne FCA a month earlier.

The situation with Middle Eastern PE was similar, local producers also raised their export prices under the pressure of higher crude oil prices and strong demand. Quotas for shipments to the CIS markets were reduced noticeably in comparison with December. Prices of Middle Eastern PE were also affected by an additional pressure from the rising sea freight.

Deals for January shipments of Middle Eastern HDPE were done in the range of USD1,120-1,180/tonne CIF. Offer prices for butene linear low density polyethylene (LLDPE С4) reached USD1,220/tonne CIF.
MRC

MOSCOW (MRC) -- US silicones company Momentive has reached a definitive agreement to acquire the silicones business of its largest shareholder, South Korea’s KCC Corp., said Chemweek.

The acquisition consolidates and combines the companies' silicones operations and brings new synergies, Momentive's CEO Sam Conzone said in a statement on Wednesday. It would expand Momentive’s technological capabilities and geographic footprint while strengthening its position in the Asia-Pacific region, Conzone added.

With the sale of the silicones business to Momentive, KCC is increasing its stake in Momentive to 60%. Financial or other terms were not disclosed.

Momentive develops advanced silicone and specialty products for customised applications in healthcare, telecommunications, electronics, personal care, construction, transportation, agriculture, energy, and many other industries.

The company, based in Waterford, New York, has more than 50 manufacturing and commercial locations globally.

As per MRC, Momentive Performance Materials Inc. (Waterford, N.Y.) outlined a series of steps to accelerate its global transition from commodity basics chemicals to specialty silicones – actions that will focus the company’s strengths and expertise on advanced technologies. The steps include a USD15-million investment in specialized Electronic Materials Production and the sale of its Consumer Sealants Business. The company also envisions a two-year transition away from basics chemicals production at its Waterford facility, which began operations in 1947.

We remind that Russia's output of chemical products rose in November 2020 by 9.5% year on year. At the same time, production of basic chemicals increased in the first eleven months of 2020 by 6.6% 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-November 2020 output. November production of polymers in primary form rose to 896,000 tonnes from 852,000 tonnes in October. Overall output of polymers in primary form totalled 9,240,000 tonnes over the stated period, up by 17.1% year on year.
MRC

MOSCOW (MRC) -- US oil major Chevron Corp said it has invested in Blue Planet Systems Corp, a startup that manufactures and develops carbon capture technology to reduce carbon footprint, reported Reuters.

"This investment is made through our Future Energy Fund which focuses on startups with lower-carbon technologies that can scale commercially," said Barbara Burger, president of Chevron Technology Ventures, the venture capital division of the company.

Chevron and San Jose-based Blue Planet also signed a letter of intent to collaborate on potential pilot projects and commercial development in some geographies.

Last year, Chevron said it was investing in nuclear fusion start up Zap Energy Inc as energy companies face increasing pressure from investors to reduce emissions, spend more on low-carbon energy and disclose the impact of their fossil fuel production on climate change.

As MRC informed previously, in March 2018, Chevron Phillips Chemical, part of Chevron Corp, successfully introduced feedstock and commenced operations of a new ethane cracker at its Cedar Bayou facility in Baytown, Texas. At peak production, the unit will produce 1.5 million metric tons/3.3 billion lbs. per year. This unit is one of the largest and most energy efficient crackers in the world. In September 2017, the company announced the successful commissioning and start-up of two new Marlex polyethylene (PE) units in Old Ocean, Texas, based on the company’s proprietary MarTech technologies. Together, these assets form the bulk of the company’s US Gulf Coast Petrochemicals Project (USGCPP), which was first announced in 2011.

Ethylene and propylene are feedstocks for producing 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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
MRC

MOSCOW (MRC) -- Crude prices settled higher Jan. 14 as a weaker US dollar offset reports of weakened Chinese crude demand, reported S&P Global.

NYMEX February WTI settled 66 cents higher at USD53.57/b, and ICE March Brent was up 36 cents at USD56.42/b.

The US dollar turned lower in US trading after Federal Reserve Chairman Jerome Powell reaffirmed the Fed's commitment to lower interest rates. Powell also said any tapering of asset purchases would be telegraphed in advance.

"Fed Chair Powell affirmed the Fed's playbook and has tentatively put an end to any taper talk," OANDA senior market analyst Edward Moya said in a note. "Dollar weakness resumed following Fed Chair Powell's dovish commitment and on nervous anticipation over Biden's stimulus package announcement later today."

President-elect Biden is expected to present a sweeping pandemic relief and stimulus plan later Jan. 14 he has said previously would be worth "trillions."

NYMEX February RBOB settled 51 points higher at USD1.5539/gal, and February ULSD finished up 2.05 cents at USD1.6194/gal.

In its closely watched oil market report released Jan. 14, OPEC kept its 2021 global demand forecast little changed at 95.91 million b/d, compared with 95.89 million b/d last month. The forecast is still 5.9 million b/d higher than 2020.

While rising COVID-19 infections and additional lockdown measures are affecting most major OECD countries, "the situation in emerging economies seems to have improved lately," OPEC said.

But pandemic risks continue to stalk the market. Initial US unemployment claims jumped to a five-month-high 945,000 in during the week-ended Jan. 9, Labor Department data showed Jan. 14, exceeding market expectations of around 800,000 claims.

A weak labor market is likely to create headwinds for refined product demand recovery, especially gasoline. US driving activity edged 0.2% higher in the week ended Jan. 8, according to Apple mobility data, but was still near levels last seen in late May.

The ICE New York Harbor RBOB crack against Brent narrowed to USD8.81/b in afternoon trading, in from USD8.90/b the session prior.

China's crude imports fell to a 27-month low of 9.096 million b/d, or 38.47 million mt, in December, according to General Administration of Customs data released Jan. 14.

The more than 15% year-on-year and month-on-month fall was sharper than had been expected, with analysts pointing to a shortage of crude import quotas and destocking activity as the key reasons for the decline, even as they forecast a strong rebound for January imports.

Having imported record volumes earlier in the year when crude prices were lower, the drop in December indicated that the country was well stocked and imports could fall back this year, some analysts said.

Total imports over 2020 were up 7% year on year to 10.86 million b/d, data showed.

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