COVID-19 - News digest as of 15.03.2021

1. Hexion loss narrows on higher sales, improving volumes

MOSCOW (MRC) -- Hexion has reported a fourth-quarter net loss that narrowed to USD35 million, from USD46 million in the year-ago period. Net sales grew 4.0% year on year (YOY), to USD655 million, reported Chemweek. Segment EBITDA was up 39.6% YOY, to USD74 million. Volumes were up, led by increases in formaldehyde, and specialty epoxy and epoxy resins, while pricing cut into sales figures due to higher raw material costs. “In the fourth quarter of 2020, our Adhesives segment reflected continued strength in North America residential construction and gains in our global formaldehyde business,” says Hexion chairman and CEO Craig Rogerson. “Segment EBITDA in our coatings and composites segment increased more than 100% year over year owing to strong results in specialty epoxy from wind energy demand and versatic acids and derivatives due to increasing demand in architectural coatings, as well as improved results in our base epoxy resins.”


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MOSCOW (MRC) -- Crude oil futures rose during the mid-morning trade in Asia March 15, as the market fell back on bullish macro fundamentals amid an absence of fresh cues, reported S&P Global.

At 10:21 am Singapore time (0221 GMT), the ICE Brent May contract was up 68 cents/b (0.98%) from the March 12 settle to USD69.90/b, while the April NYMEX light sweet crude contract also gained 68 cents/b (1.04%) to USD66.29/b.

Market analysts noted a lack of new drivers in the market this morning, adding that the rise in price is the result of the market buying into the narrative that an improved economic climate will push up oil demand.

"There are no specific oil-related headlines that have come up this morning. The market just wants to buy the growth recovery trade, and oil is one of the assets that it has its eye on," Jeffrey Halley, senior market analyst at OANDA, told S&P Global Platts on March 15.

"The fundamentals for oil are good, and the market really needs no excuse to buy oil when there is a price dip," Halley added, as he alluded to the downward price movement seen in the market at the close of week ended March 13.

Both the Brent and NYMEX light sweet crude markets ended lower 0.59% and 0.62% on the day to settle at USD69.22/b and USD65.61/b, respectively on March 12.

Stephen Innes, chief global market strategist at Axi, said in a March 15 note that crude prices are likely to extend gains, as US gasoline demand is on the verge of a resurgence.

"Prices should continue to dance higher into the summer, especially to the chime of gasoline pumps turning over. And given the rosy US reopening narrative, more and more folks take the highways ahead of what is likely to be the biggest pent up driving season on record as the US could reach herd immunity from COVID-19 by summer vacation time," Innes said.

Some market analysts were a little more cautious, saying the higher prices could derail demand recovery.

ANZ analysts, in a March 15 note, said that crude prices had come under pressure last week on concerns that high prices may hamper demand. They further noted that already in India, amid higher pump prices, February fuel sales were lower.

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 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.
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MOSCOW (MRC) -- Michael Regan has been confirmed as EPA administrator and is expected to play a large role in President Biden’s climate agenda as well as in strengthening environmental protections following rollbacks by the Trump administration, according to Chemweek.

Regan, who is the first black EPA administrator, was formerly secretary of the North Carolina Department of Environmental Quality and former member of the federal government’s air quality office. Regan’s resume includes leading negotiations that resulted in the cleanup of the Cape Fear River, which had been contaminated with per- and polyfluoroalkyl substance (PFAS), as well as the creation of North Carolina’s first Environmental Justice and Equity Advisory Board to address societal disparities exacerbated by environmental issues.

“[The selection] cements the Biden administration’s commitment to environmental justice, a concept in search of execution in practice,” Lynne L. Bergeson, managing partner at Bergeson & Campbell (Washington, DC), told CW in December upon Regan’s nomination. “He seems to be highly regarded and solicitous of broad stakeholder engagement when faced with challenging issues.”

American Chemistry Council says it looks forward to working with Regan to “help ensure the nation’s key environmental statutes are administered in a way that protects human health and the environment.”

As MRC reported earlier, in January 2021, the US Environmental Protection Agency (EPA) granted three waivers to oil refiners that exempt them from US biofuel blending obligations, a last-minute move before President Donald Trump left office. The agency granted two waivers for the 2019 compliance year and one waiver for the 2018 compliance year. The announcement followed four years of controversy around the waiver program under the Trump administration, but left many questions unresolved. Some 30 waiver requests remain outstanding for 2019 and 15 for 2020, which the incoming administration of Joe Biden will need to deal with.

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.
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MOSCOW (MRC) -- Power generation company Uniper (Dusseldorf, Germany) and the Port of Rotterdam Authority say they are studying the potential construction of a large-scale green hydrogen production plant at Uniper’s existing site in the Maasvlakte area of Rotterdam, Netherlands, reported Chemweek.

The parties aim to build a plant with an initial capacity of 100 megawatts (MW) by 2025, with plans to then expand capacity to 500 MW. The feasibility study will be completed this summer, they say. The proposed facility would utilize renewable energy from offshore wind farms to carry out water electrolysis for the production of hydrogen. No potential investment figure has been given.

The proposed project has already successfully prequalified for the EU’s IPCEI (Important Projects of Common European Interest) program, with the conceptual design and technical dimensions of the hydrogen plant to be developed over the next few months, says Uniper. The potential market for sustainable hydrogen, both in the Rotterdam port area and in Germany, will also be studied. The project team is also looking at options for import, storage, and export at Maasvlakte, it says.

As MRC wrote previously, in January, 2021, Vopak (Rotterdam, Netherlands) said its new 63,000-cubic meter styrene storage hub at Botlek, Rotterdam, will be operational for customers in February 2021.

Styrene is the main feedstock for the production of polystyrene (PS).

According to MRC's ScanPlast report, January 2021 estimated consumption of polystyrene (PS) and styrene plastics in Russia rose by 12% year on year, totalling 45,640 tonnes.
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MOSCOW (MRC) -- Kuraray says that its certain production sites at Texas have been suspended since mid-February because of the big freeze in the United States. The company says that its affected sites at La Porte, Bayport, and Pasadena are in preparation for the resumption of operations and are presently undergoing inspection, according to Chemweek.

Kuraray has temporarily stopped the production of vinyl acetate monomer (VAM) and poval resin at La Porte; poval resin at Bayport; and ethylene vinyl alcohol copolymer (EVOH) and thermoplastic elastomer (TPE) at Pasadena.

The company says that it is evaluating the financial impact of the closure of the sites. Kuraray will announce the findings if the financial impact is found to have been significant, it adds.

According to the data by IHS Markit, Kuraray at La Porte produces VAM with a production capacity of 330,000 metric tons/year; EVOH, Pasadena 58,000 metric tons/year; and TPE, Pasadena 25,000 metric tons/year.

The company in February increased the price of its Eval brand EVOH resin.

As MRC reported earlier, in October 2019, Kuraray took off-stream its VAM production in Okayama, Japan) for a scheduled maintenance. This production with a capacity of 160,000 mt/year was shut for about one month.

VAM is the main feedstock for the production of ethylene-vynil-acetate (EVA).

According to MRC's DataScope report, January EVA imports to Russia rose only by 0,07% year on year to 3,084 tonnes from 3,087 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-December 2020 by 3,41% year on year to 38,170 tonnes (39,520 tonnes in 2019).
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