COVID-19 - News digest as of 18.01.2021

1. Global chemicals output climbs for sixth month

MOSCOW (MRC) -- Data collected and tabulated by the American Chemistry Council (ACC) show that global chemicals production rose 1.9% in November, up from 1.7% in October and extending the recovery that began in June. During November, chemical production grew in all regions except the Former Soviet Union (FSU), said Hydrocarbonprocessing. Headline global production was up 3.7% year-over-year (Y/Y) on a three-month moving average (3MMA) basis and is now 2.9% above the pre-COVID peak last December. Global output stood at 122.0 percent of its average 2012 levels. During November, global capacity rose 0.1% and was up 2.2% Y/Y. With improving production, capacity utilization in the global chemical industry rose 1.5 points to 82.9%. This is up from 81.7% in October and the pre-COVID peak in December 2019, but below the long-term (1987-2017) average of 86.5%.



MRC

MOSCOW (MRC) -- The US Environmental Protection Agency said it would propose to extend deadlines for refiners to prove compliance with biofuel laws, but signaled it would not decide on a slew of pending waiver requests submitted by the industry, reported Reuters.

The agency’s proposal represented mixed news for refiners hard hit by slumping energy demand during the coronavirus pandemic and eager to sidestep regulatory costs associated with US biofuel blending policy. It also marks one of the last actions from President Donald Trump’s EPA before he leaves office on Jan. 20.

The agency said it is proposing to extend the compliance deadline for 2019 biofuel blending obligations to Nov. 30, 2021, and an associated deadline for submission of attest engagement reports to June 1, 2022. The EPA is also proposing to extend the 2020 deadlines to Jan. 31, 2022, and June 1, 2022.

Refiners must hand in credits to the EPA each year to prove they complied with their annual biofuel blending obligations for the previous year.

The agency also said it was not taking a position on the availability of 2019 small refinery waivers, which can exempt oil refiners from biofuel blending obligations. The agency said the decision was related to pending litigation regarding the waiver program.

EPA could not be reached by Reuters to clarify whether that meant the agency was not issuing any additional waivers before Trump leaves office.

The proposal was outlined in a document seen by Reuters that is scheduled to be posted on the Federal Register on Friday.

Under the US Renewable Fuel Standard, refiners must blend billions of gallons of biofuels like corn-based ethanol into their fuel mix, or buy credits from those that do. Refiners can apply for exemptions if they can prove the obligations would cause them financial harm.

Because of the coronavirus pandemic, EPA had not enforced compliance for some refineries for the 2019 compliance year.

“While we don’t agree that EPA needs to wait as long as it is proposing, particularly for the 2020 compliance year, we do agree with EPA that the outgoing administration should refrain from any further action on the pending small refinery petitions,” said Geoff Cooper, president of the Renewable Fuels Association.

US senators including Joni Ernst and Chuck Grassley of Iowa urged EPA Administrator Andrew Wheeler in a letter dated Thursday not to grant small refinery exemptions until ongoing litigation is resolved.

Renewable fuel (D6) credits for 2020 traded at 90 cents each on Thursday, up from 79 cents in the previous session, traders said.

As MRC informed earlier, last year, US lawmakers introduced a relief bill that would include aid to biofuel producers after demand for the fuel plummeted because of the coronavirus pandemic, causing mass shutdowns in the industry. The bill, introduced by House Democrats, would reimburse producers that suffered unexpected market losses because of the pandemic from January 1 through May 1. It is not clear whether the bill as proposed will be passed into law.

We remind that within the framework of its net zero strategy, Total will convert its Grandpuits refinery (Seine-et-Marne) into a zero-crude platform and will invest more then EUR500 mln into this project. By 2024 the platform will focus on four new industrial activities: production of renewable diesel primarily intended for the aviation industry, production of bioplastics, plastics recycling and operation of two photovoltaic solar power plants.

We also remind that in November 2019, Total disclosed that itis evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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) -- Crude oil futures tumbled during the mid-morning trade in Asia Jan. 18, as rising coronavirus cases in China raised fresh demand-side concerns, while the spread of mutated strains of the virus also weighed down sentiment in the market, reported S&P Global.

At 11:10 am Singapore time (0310 GMT), the ICE Brent March contract was down 45 cents/b (0.82%) from the Jan. 15 settle to USD54.65/b, while the February NYMEX light sweet crude contract was down 38 cents/b (0.73%) to $51.98/b. The Brent marker had fallen 1.59% in the week ended Jan. 15 to USD55.10/b, whereas the NYMEX light sweet crude marker had ticked up 0.23% to USD52.36/b.

The fall in oil futures comes as a jump in coronavirus cases in China threatened to derail crude's demand recovery.

Towards the end of the week to Jan. 16, several Chinese cities were placed under lockdown to curb the spread of the virus. Even though the lockdown is due to be lifted by Jan. 19, fears of further restrictions remain heightened after the country reported over a hundred COVID-19 infections during each day of the weekend, according to media reports.

"We are seeing a continuation of the downward momentum from last week. Oil's rally stalled in second half of last week after the market started to emerge from under the spell of the surprise Saudi production cut, and started paying attention to the worsening pandemic situation in the western hemisphere and the worrying outbreaks in China," Vandana Hari, CEO of Vanda Insights, told S&P Global Platts on Jan. 18.

Hari further added that, against the backdrop of the fresh outbreaks, the market took little solace from the reasonably strong Chinese economic growth data, which may have instead drawn more attention to China's current struggle with the pandemic.

"It is not just the outbreaks in China that have rattled the markets, it is also the spread of three different and more contagious coronavirus strains reported in the UK, South Africa and Brazil," Hari said.

Despite the escalation of the pandemic, analysts retained a largely bullish outlook in the medium-term, noting that oil remains supported by the 1 million b/d cuts from Saudi Arabia, the vaccine roll-outs and hopes of further stimulus in the US.

"Despite the pullback in prices last week, the market remains supported by Saudi Arabia's output cut. Assuming demand growth remains stable, this should see the drawdown on global inventories rise to 1.1mb/d in Q1," said ANZ analysts in a Jan. 18 note.

Hari agreed, saying: "Majority of the premium from the Saudi cuts remains intact as 1 million b/d over two months is a substantial reduction in supply. However with the resurgent pandemic, it remains a two step forward, one step back situation for now."

As MRC informed previously, 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, according to an official with International Energy Agency's (IEA) statement.

We remind that 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 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.

We also remind that 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) -- Ineos says it is rescheduling its EUR5-billion ($6 billion) olefins project at Antwerp, Belgium, and will build the planned complex’s ethane cracker before its propane dehydrogenation (PDH) plant, according to Chemweek.

When it announced the project in January 2019, Ineos said the PDH unit and cracker would be built at the same time with the PDH facility due onstream a year ahead of the cracker.

The decision reflects anticipated demand for ethylene relative to propylene, Ineos says. “There is a growing need for ethylene, and it makes more sense for us to build the cracker first and then the PDH unit,” the company says in a statement. “We are simply rephasing the project.” Ineos confirms that work on the planned complex, called Project One, is "continuing."

Ineos has not provided details of the revised schedule. The company updated CW in mid-2020 on the Antwerp project and said it was at the front-end engineering and design (FEED) phase with a final investment decision expected in 2021. The company awarded a FEED contract to SK Engineering & Construction for the 750,000-metric tons/year PDH unit, which will use Lummus Catofin technology.

Land preparation at the Antwerp site was due to begin in mid-2021 with construction scheduled to start later in the year, Ineos said. Completion of the project was expected in 2025.

The planned ethane cracker will have the capacity to produce 1.25 million metric tons/year of ethylene. It will be the first ethylene plant to be constructed in Europe for more than 20 years.

Other companies are planning PDH units in Europe including Borealis, which is also building a 750,000-metric tons/year plant at Antwerp. The Borealis PDH plant was originally due online by the end of 2022, but Borealis told CW last year the schedule was likely to slip because of COVID-19.

As MRC informed earlier, in June, 2019, Ineos announced Antwerp as the location for its new petrochemical investment. The EUR3 billion investment will be the biggest ever made by Ienos and is first cracker to be built in Europe in 20 years.

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

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

MOSCOW (MRC) -- U.S. crude oil production was down more than 2 million barrels per day (bpd) in October from earlier this year, as weak prices and tepid demand due to the coronavirus pandemic weighed on output, a government report showed, said Hydrocarbonprocessing.

The report suggested that crude demand in the world’s largest economy remained below the highs of earlier this year, and production was largely flat since cuts began in the spring. Total U.S. oil demand in October was down by 2.15 million bpd, or more than 10% below the same month a year earlier. The decline was sharper than the 9.5% seen in September.

Output has fallen from a record-high monthly average of 12.86 million bpd in November, 2019. Production dropped sharply in May as low demand and prices forced widespread drilling cuts. Oil output dropped by 442,000 barrels per day to 10.42 million bpd in October, the latest month for which data was available. The losses were led by declines in the offshore U.S. Gulf of Mexico, according to the Energy Information Administration report.

Storms that month caused offshore production shut-ins, contributing to the losses. Still, even without the Gulf declines, production remained below pre-pandemic levels. Top onshore producers Texas and North Dakota reported modest gains in the month as some producers brought into production wells that had been shut, as prices improved.

Meanwhile, U.S. natural gas production for October was 99,568 million cubic feet a day, down from 100,221 in September.

As MRC reported earlier, 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, according to an official with International Energy Agency's (IEA) statement.

We remind that 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 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.

We also remind that 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