COVID-19 - News digest as of 12.03.2021

1. Crude oil futures rise on bullish EIA products data; supportive macroeconomic developments

MOSCOW (MRC) -- Crude oil futures rose during mid-morning trade in Asia March 11 as bullish US products data from the Energy Information Administration negated a large build in US crude inventories, with the market also gaining support from the US Congress' approval for fiscal relief and the depreciation of the dollar, reported S&P Global. At 11:08 am Singapore time (0308 GMT), the ICE Brent May contract was up by 53 cents/b (0.78%) from the March 10 settle to USD68.43/b, while the April NYMEX light sweet crude contract was up by 54 cents/b (0.84%) to USD64.98/b. Data released by the EIA late March 10 showed a massive 13.8 million-barrel build in US crude inventories in the week ended March 5. The build pushed stocks to 498.4 million barrels, and at 6%, opened up the widest surplus to the five-year average since mid-January.

2. Operating profit of German chemical giant BASF down 23% in 2020

MOSCOW (MRC) -- BASF's net income surged to EUR1.01bn in the fourth quarter amid stronger prices and higher volumes, the German chemicals major said in its press release. Sales in the fourth quarter of 2020 increased by 8 percent to EUR15.9 billion. Volumes were up by 7%. Prices also increased by 7%, driven mainly by the Surface Technologies, Agricultural Solutions and Materials segments. Portfolio effects contributed 1 percent and resulted from the acquisition of the polyamide business from Solvay. Currency effects had a negative impact of 7 percent on sales. EBITDA before special items rose by 15 percent in the fourth quarter to EUR2.1 billion. EBITDA amounted to EUR2.0 billion, compared with EUR1.6 billion in the fourth quarter of 2019. EBIT before special items rose in the fourth quarter by 32 percent to EUR1.1 billion. This increase was primarily due to significantly higher earnings in the Materials, Chemicals and Industrial Solutions segments. This more than offset lower contributions from the other segments as well as from Other. Special items in EBIT amounted to minus EUR181 million, as compared with minus EUR263 million in the fourth quarter of 2019. EBIT in the fourth quarter of 2020 rose by 61 percent to EUR932 million.


MRC

MOSCOW (MRC) -- On Wednesday, the export trades for Turkmenbashi refinery's polypropylene (PP) were held at the State Commodity and Raw Materials Stock Exchange of Turkmenistan. 1,500 tonnes of PP were sold during one trading day, prices broke another record, according to ICIS-MRC Price report.

According to the bidders, on Wednesday, 10 March, 1,500 tonnes of Turkmenbashi refinery's PP raffia grade were put up for export sale at the State Commodity and Raw Materials Exchange of Turkmenistan. The starting price was set at USD1,515/tonne FOB/FCA. PP prices were growing dynamically during the trades and finally reached another record - USD1,775/tonne FOB/FCA, the total volume of PP was sold in one day.

Deals were done with shipment within six months.

The previous export trades for Turkmenbashi refinery's PP were held back on 20 February 2021, and only 1,000 tonnes of PP raffia grade were sold then at USD1,515/tonne FOB/FCA.

It is also worth noting that back in March 2020, export PP sales were at USD750/tonne FOB/FCA.
MRC

MOSCOW (MRC) -- Evonik is announcing a price increase of 8% for all grades of Hydrogen Peroxide, marketed under the brands of HYPROX, CLARMARIN, PERSYNT, PERTRONIC, OXTERIL, AOPACK, DUROX and Peracectic Acid, namely PERACLEAN, OXYPURE, VIGOROX and BIOPER, as per the company's press release.

The price increase applies in Europe, Middle East, and Africa as of April 1st, 2021.

Existing contract will be honored.

As MRC informed earlier, in February, 2020, Dow and Evonik entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.

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

According to MRC's ScanPlast report, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 36,000 employees.
MRC

MOSCOW (MRC) -- Throughout much of its history, the US has imported more petroleum (which includes crude oil, refined petroleum products, and other liquids) than it has exported. That status changed in 2020, reported Hydrocarbonprocessing.

The US Energy Information Administration’s (EIA) February 2021 Short-term Energy Outlook (STEO) estimates that 2020 marked the first year that the United States exported more petroleum than it imported on an annual basis. However, largely because of declines in domestic crude oil production and corresponding increases in crude oil imports, EIA expects the United States to return to being a net petroleum importer on an annual basis in both 2021 and 2022.

EIA expects that increasing crude oil imports will drive the growth in net petroleum imports in 2021 and 2022 and more than offset changes in refined product net trade. EIA forecasts that net imports of crude oil will increase from its 2020 average of 2.7 million barrels per day (b/d) to 3.7 million b/d in 2021 and 4.4 million b/d in 2022.

Compared with crude oil trade, net exports of refined petroleum products did not change as much during 2020. On an annual average basis, US net petroleum product exports - distillate fuel oil, hydrocarbon gas liquids, and motor gasoline, among others averaged 3.2 million b/d in 2019 and 3.4 million b/d in 2020. EIA forecasts that net petroleum product exports will average 3.5 million b/d in 2021 and 3.9 million b/d in 2022 as global demand for petroleum products continues to increase from its recent low point in the first half of 2020.

EIA expects that the United States will import more crude oil to fill the widening gap between refinery inputs of crude oil and domestic crude oil production in 2021 and 2022. US crude oil production declined by an estimated 0.9 million b/d (8%) to 11.3 million b/d in 2020 because of well curtailment and a drop in drilling activity related to low crude oil prices.

EIA expects the rising price of crude oil, which started in the fourth quarter of 2020, will contribute to more U.S. crude oil production later this year. EIA forecasts monthly domestic crude oil production will reach 11.3 million b/d by the end of 2021 and 11.9 million b/d by the end of 2022. These values are increases from the most recent monthly average of 11.1 million b/d in November 2020 (based on data in EIA’s Petroleum Supply Monthly) but still lower than the previous peak of 12.9 million b/d in November 2019.

As MRC informed earlier, global oil demand is expected to rise by nearly 7% this year, boosted by quicker vaccine distribution and a better economic outlook, according to consultancy Wood Mackenzie's statement. Total liquids demand is expected to average 96.7 million barrels per day (bpd) in 2021, 6.3 million bpd higher than last year when the Covid-19 pandemic caused an unprecedented oil demand shock. Refineries under the threat of closure could repurpose the facilities to produce liquid renewables instead of converting into a terminal, which could help oil companies’ aim of achieving carbon neutrality.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC

MOSCOW (MRC) -- BP and SABIC have signed a new agreement to work together to drive circular economy in the petrochemical activities at the Gelsenkirchen (Germany) chemical complex, according to Hydrocarbonprocessing.

Building on a long established relationship between the two companies at the production site, the new collaboration will help to increase production of certified circular products that take used mixed plastics to make feedstock, thereby reducing the amount of fossil resources needed in the petrochemical plants at the site.

Certified circular polymers are part of SABIC’S TRUCIRCLE portfolio and are produced using advanced recycling to convert low quality mixed and used plastic, otherwise destined for incineration or landfill, into pyrolysis oil. The oil, which acts as an alternative feedstock to traditional fossil materials, will be processed at bp’s Gelsenkirchen refining site and then used by SABIC in its Gelsenkirchen polymer plants to produce certified circular products. The final material has identical properties to virgin-based polymers and allows plastics to be recycled over and over again, with no loss of properties or characteristics. After successful trials in December 2020, polymer production using the alternative feedstock started at the site early this year.

“SABIC is committed to helping to create a new circular economy where plastic never becomes waste. Advanced recycling allows us to increase the production of more sustainable materials and use our planet’s resources wisely, whilst reducing the use of conventional approaches such as landfill and combustion. Advanced recycling has a crucial role to play in the current recycling mix as it can capture value from plastic waste streams that have traditionally been ignored or discarded,” said Fahad Al Swailem, Vice President, PE & Sales at SABIC. “We continue to increase our collaborations with upstream suppliers and downstream customers, and this new initiative with our long-term partner bp takes us one step further to achieving our vision.”

bp and SABIC have a collaboration going back decades in petrochemicals at the Gelsenkirchen site, which is the starting point for the value chain of the chemical industry’s network in the northern Ruhr Area. The refining and petrochemicals site in Gelsenkirchen plays an important role within the chemical industry in North Rhine-Westphalia, Germany’s most populous state. bp operates one of the largest olefin plants in Germany, with a production capacity of around two million tonnes.

“This is an important milestone in our vision of achieving up to 30 percent of our ethylene and propylene production from sustainable, recyclable raw materials by 2030,” says Wolfgang Stuckle, Vice President Refining and Specialities Solutions Europe & Africa at bp. “It is a fantastic achievement on the part of the Gelsenkirchen team, after more than a year’s preparation, to set up the new initiative with our partners at SABIC. At the same time, it is what bp’s recently announced Net Zero strategy is all about.”

The certified base chemicals from bp and the certified circular polymers from SABIC are recognised through the International Sustainability and Carbon Certification plus (ISCC+) scheme that certifies content and standards across the value chain from source to end product. The ISCC+ certification works on what is known as a ‘mass balance system’, meaning that for each tonne of circular feedstock fed into the cracker and substituting fossil-based feedstock, a tonne of the output can be classified as circular.

The circular polymers form part of SABIC’s TRUCIRCLE portfolio and services for circular innovations. The TRUCIRCLE portfolio spans design for recyclability, mechanically recycled products, certified circular products from feedstock recycling of used plastic, certified renewable products from bio-based feedstock and closed loop initiatives to recycle plastic back into high quality applications.

As MRC reported previously, in early February, 2021, Rosneft Oil Company and BP signed a Strategic Collaboration Agreement focused on supporting carbon management and sustainability activities of both companies. The agreement builds on years of partnership between the two companies and formalises key elements of their collaboration on sustainability and work to identify carbon reduction activities and low carbon opportunities.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

Saudi Basic Industries Corporation (Sabic) ranks among the world's top petrochemical companies. The company is among the world's market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

BP is one of the world's largest oil and gas companies, serving millions of customers every day in around 80 countries, and employing around 85,000 people. BP’s business segments are Upstream (oil and gas exploration & production), and Downstream (refining & marketing). Through these activities, BP provides fuel for transportation; energy for heat and light; services for motorists; and petrochemicals products for plastics, textiles and food packaging. It has strong positions in many of the world's hydrocarbon basins and strong market positions in key economies.
MRC