Crude oil tests top of recent rage amid tightened supply outlooks

MOSCOW (MRC) -- Crude oil futures settled near 11-month highs Feb. 1 as tightened supply outlooks overshadowed pandemic-related demand concerns, reported S&P Global.

NYMEX March WTI settled USD1.35 higher at USD53.55/b and ICE April Brent climbed USD1.41 to $56.45/b.

Feb. 1 marked the start of Saudi Arabia's 1 million b/d voluntary crude production cuts, setting the stage for a much tighter supply outlook in the coming months. The start of the Saudi production cuts comes amid strong compliance from OPEC+ as a whole, underscoring bullish market sentiment and overshadowing near-term risks to the demand outlooks posed by lockdowns in Europe and Asia.

"We are probably going to continue to see the current virus concerns sort of weigh on the medium-term demand outlook, but overall markets are pretty much content that there will not be a big wave of oversupply concerns and that is going to be very positive for crude prices," OANDA senior market analyst Edward Moya said.

Front-month WTI settled just 2 cents shy of its most recent 11-month high seen Jan. 14, but Brent futures remained well within their recent range amid global demand growth concerns.

Chinese manufacturing purchasing managers index data for January was weaker month on month and below what the market was expecting, raising questions about the country's oil demand in coming weeks.

Recent pandemic flare-ups have prompted Chinese officials to discourage citizens from traveling during the upcoming Lunar New Year holiday but, despite these efforts, the negative impact on transportation fuel demand is likely to be limited compared with the same period of 2020.

S&P Global Platts Analytics projected China's gasoline demand at about 3.4 million b/d in January through February, up 20% year on year but 5.5% below the same period of 2019.

"It is very unlikely to repeat the demand damages in last year. There is not much room for downward adjustment of the demand forecast for January and February this year," a London-based analyst said.

Diesel futures received an extra boost from forecasts for the polar vortex to bring record cold weather to the northern US in the coming days.

NYMEX March ULSD settled 4.85 cents higher at USD1.6496/gal, up nearly 3% from the session prior, while March RBOB climbed 3.74 cents to settle at USD1.5901/b.

Latest forecast models show large swaths of the upper Midwest, including Chicago and Detroit, are expected to see unseasonably cold weather, with temperatures that will fall below zero next week.

Platts ULSD Chicago Buckeye was assessed at a 75 cent/gal discount to NYMEX ULSD Feb. 1, steady with the prior session.

US distillate inventory draws are expected to extend during the week ended Jan. 29, analysts surveyed by Platts said, with stocks likely falling 1.3 million barrels to 161.5 million barrels. The counter-seasonal drawdown would narrow the surplus to the five-year average to 7%, the lowest since the week ended Jan. 6.

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) -- Innovation, along with sustainability and ensuring supply security, is the key to the future of the cleaning chemicals and products sector, reported Chemweek with reference to speakers at a session at the American Cleaning Institute’s (ACI) 2021 virtual summit last week.

The panel discussion on the future of cleaning focused the massive change wrought in the industry by the COVID-19 pandemic, and how that change will be carried forward into the future.

Consumer behavior shifted during the pandemic, obviously, with consumers purchasing cleaning products online and demand for many products, such as hand sanitizers and Clorox-branded sanitary wipes, skyrocketing. At the same time, demand for institutional and industrial cleaning products cratered. “There was much higher demand for home and household care, but the institutional and industrial (I&I) cleaning segment was hit hard by the pandemic,” Rui Zheng, head of marketing/home care and I&I at BASF said during the panel.

The pandemic wreaked havoc on supply chains, at least initially. “The first phase was panic buying, then there were shortages,” said Rachel Watson-Clark, director/research and development at The Clorox Company. “There were shortages of packaging, of raw materials, even of people.”

The shortages experienced during the pandemic speak to the ways in which cleaning products manufacturers, and their materials suppliers, will need to be mindful of supply chains even as the world reopens. “To maintain supply during COVID-19, we needed a higher level of agility and transparency, not just within our teams but with our customers,” Zheng said. “So we took steps to reduce complexity in this process, and heightened information-sharing and communication with and outside our organization.” The steps “will continue to be part of normal practice going forward,” she added.

That collaborative spirit will also be necessary to drive innovation, both Zheng and Watson-Clark said. COVID-19 created a renewed consumer emphasis on product efficacy, but sustainability remains a key, and growing, concern. “Sustainability is a…continued pillar for BASF,” Zheng said. “We think there will be a combination (of sustainability and efficacy).”

The critical challenge for innovation in the cleaning products space will lie in finding ways to enhance both sustainability and efficacy. “Innovation is all about…finding solutions that aren’t necessarily a compromise that takes everything down, but a synergy that brings everything up,” Watson-Clark said. “That’s what you are looking for. Finding solutions that are better across the board should be our goal as innovators.”

Other trends, such as increased consumer adoption of e-commerce, are also likely here to stay and will be innovation drivers. “There is strong collaboration across the value chain in industry for topics like compaction,” Zheng said. This could play into both e-commerce and sustainability, as compacted products are simpler to ship and require less plastic packaging.

Overall, the collaborative spirit that helped the cleaning products industry withstand the pandemic will help it meet the challenges of the future, including innovation around sustainability and changing consumer needs the panelists said. “Innovation is going to be key,” Watson-Clark said. ““Collaboration, creativity, and innovation is how we are going to figure all this out.”

As MRC informed earlier, BASF says its 420,000-metric ton/year steam cracker in Ludwigshafen, Germany is continuously running and has not caused any interruption of supply to its customers. Earlier, several media outlets reported that unscheduled flaring started on 13 January at the northern part of the Ludwigshafen site and was expected to last until 17 January and that an unspecified unit was shut, which "was not the case", as per the company's letter received by MRC.

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) -- SK Innovation Co Ltd, the owner of South Korea's top refiner SK Energy, said on Friday refining margins are expected to gradually recover this year on a pick-up in fuel demand as the impact of COVID-19 eases, according to Reuters.

The company, which has been battered by weak margins during the global pandemic, posted an operating loss of 243 billion won (USD218 million) in the October-December quarter.

It was the fourth straight quarterly operating loss, and compared with an operating profit of 88 billion won for the year-ago period.

SK Innovation, which has a total refining capacity of 1.115 million barrels per day (bpd) at plants in Ulsan and Incheon, said it operated it facilities at 61% of capacity on average in the quarter, down from 79% a year earlier.

It flagged in October that the CDU utilization rate would fall in the fourth quarter from the third quarter's 72%.

The rate will be held at about 60-70% during the current quarter, a company official told Reuters.

Capital spending for 2021 was expected at about 4-4.5 trillion won this year, similar to last year's level, the company said.

About 70% of the funds have been earmarked for its small but growing battery and material related businesses. The battery business accounted for only about 6.5% of SK Innovation's total revenue during the quarter. The company said the business aims to turn a profit in 2022.

SK Innovation supplies electric car batteries to Volkswagen and Ford Motor Co among others, and said on Friday it plans to invest 1.3 trillion won at its battery unit in Hungary to build a third battery plant.

Construction will start in third quarter, with first production targetted for early 2024, it said in a regulatory filing.

Shares of SK Innovation were up 5.2% as of 0248 GMT, against the broader market KOSPI's 0.8% fall.

As MRC wrote before, SK Advanced is planning to start up the new polypropylene (PP) plant in Ulsan, South Korea this March 2021 as construction works are nearly completed. The PP unit is a joint venture between PolyMirae and SK Advanced, using the “Spheripol” process of LyondellBasell, and have an annual output of 400,000 tons/year. The unit will be utilizing the propylene output from SK’s 600,000 tons/year propane dehydrogenation (PDH) unit at the same complex. It is expected that SK Advanced would have a smaller propylene allocation for export once the new PP line comes online.

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) -- Competition Commission of India (CCI) has cleared the proposed acquisition of Indo Gulf Fertilizers by Indorama India Private Ltd (IIPL), according to Kemicalinfo.

Indo Gulf Fertilizers is a part of Grasim Industries Ltd (GIL).

Indorama will acquire the business as a going concern on a slump sale basis, as per a notice filed with the watchdog.

“Commission approves acquisition of Indo Gulf Fertilizers (fertilizer business division of Grasim Industries Limited) by Indorama India Private Limited,” the fair trade regulator said in a tweet.

IIPL is principally engaged in manufacture, trading and sale of fertilisers, primarily, phosphatic fertilisers and speciality plant nutrients.

GIL is engaged in production of viscose staple fibre, chloralkali, fertiliser (through Target Business), textiles and insulators. It is also engaged in producing cement and providing financial services through its subsidiaries.

The target business, Indo Gulf Fertilizers is principally engaged in manufacture, trade and sale of urea, customised fertilisers, agri-inputs, crop protection, plant and soil health products and speciality fertilisers, the release added.

As MRC informed earlier, Indorama Ventures Sines, a subsidiary of Indorama Ventures Company Ltd (IVL), halted production at its purified terephthalic acid (PTA) plant in Sines (Sines, Portugal) in mid-November, 2020, to conduct a scheduled maintenance. The turnaround at this plant with the capacity of 700,000 tonnes/year of PTA continued for one month. Thus, the PTA plant was to return back to operations in mid-December, 2020.

PTA is on of the main feedstocks for the production of polyethylene terephthalate (PET).

According to MRC's ScanPlast report, Russia's overall estimated PET consumption totalled 71,830 tonnes in December 2020, up by 8% year on year. PET consumption in all sectors (injection moulding, fibers/filaments, films) exceeded the level of 2019 by 17% and amounted to 717,310 tonnes.

Indorama Ventures Public Company Limited, listed in Thailand (Bloomberg ticker IVL.TB), is one of the world’s leading petrochemicals producers, with a global manufacturing footprint across Africa, Asia Pacific, Europe and Americas. The company’s portfolio comprises Integrated PET, Olefins, Fibers, Packaging and Specialty Chemicals. Indorama Ventures products serve major FMCG and automotive sectors, i.e. beverages, hygiene, personal care, tire and safety segments. Indorama Ventures has approx. 24,000 employees worldwide and consolidated revenue of US$ 11.4 billion in 2019. The Company is listed in the Dow Jones Emerging Markets and World Sustainability Indices (DJSI).
MRC

MOSCOW (MRC) -- Clariant’s methanol synthesis catalyst, MegaMax 800, has recently demonstrated its excellent performance at the methanol synthesis plant in the by-produced coke oven gas to olefin project of Ningxia Baofeng Energy Group Co; Ltd., according to Hydrocarbonprocessing.

The 1.5-million-metric-tons-per-annum methanol unit was loaded for the first time with the MegaMax 800 catalyst in June 2018. The superior catalytical performance enabled Baofeng Energy to increase the plant load to 117% design capacity producing 3.7 million metric tons of MTO (Methanol to Olefin) grade methanol in total. This resulted in an increased methanol yield of 160,000 metric tons compared with previous operation performance.

Stefan Heuser, Senior Vice President and General Manager at Clariant Catalysts stated, “We are very proud that MegaMax 800 performed so extremely well in Baofeng’s methanol synthesis plant in the by-produced coke oven gas to olefin project. We had promised to help Baofeng Energy improve their process efficiency through our innovative solution, and we delivered.”

The MegaMax 800 catalyst exhibited excellent activity at low operating temperatures. The average inlet temperature was 19°C lower at the same steam drum pressure. It also outperformed in carbon efficiency; both inlet and outlet carbon monoxide concentrations were lower by 4-6 points while using similar make-up gas.

Chaoshan Yi, Chief Engineer of Baofeng Energy Group, added, “We were very pleased with the results of the catalyst’s performance, especially the high activity which sets the foundation for the higher yield of the methanol plant. This is the most important reason why we decided to continue with MegaMax 800 and reordered the catalyst for our new load this year.”

Ningxia Baofeng Energy Group Co; Ltd (Baofeng Energy), is one of Chinese leading coal chemical and new materials enterprises in China. The company relies on the region’s substantial coal resources to build a highly integrated product chain including coal, coke, gas, methanol, olefins, polyethylene, polypropylene, and fine chemicals. Baofeng Energy is now focusing on innovation and incorporating novel technologies to pioneer improvements in coal-to-chemicals processes and clean & highly efficient utilization of coal resources.

As MRC reported earlier, in October 2020, Clariant (Muttenz, Switzerland) announced the construction of a new state-of-the-art catalyst production site in China. This project represents a significant investment which further strengthens Clariant’s position in China and enhances its ability to support its customers in the country’s thriving petrochemicals industry.

The new facility will be primarily responsible for producing the Catofin catalyst for propane dehydrogenation, which is used in the production of olefins such as propylene. Thanks to its excellent reliability and productivity, Catofin delivers superior annual production output compared to alternative technologies, resulting in increased overall profitability for propylene producers, says the company. Construction at the Dushan Port Economic Development Zone in Jiaxing, Zhejiang Province was scheduled to commence in Q3 2020, and Clariant expects to be at full production capacity by 2022.

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.

Clariant AG is a Swiss chemical company and a world leader in the production of specialty chemicals for the textile, printing, mining and metallurgical industries. It is engaged in processing crude oil products in pigments, plastics and paints.
MRC