Crude oil futures rangebound on the back of latest EIA data

MOSCOW (MRC) -- Crude oil futures were rangebound during mid-morning Asian trade May 6 following the release of the US Energy Information Administration's latest data, which was mixed, reported S&P Global.

At 11:30 am Singapore time (0330 GMT), the ICE Brent July contract was up 24 cents/b (0.35%) from the May 5 settle at USD69.20/b, while the June NYMEX light sweet crude contract was up 15 cents/b (0.23%) at USD65.78/b.

The EIA data released late May 5 showed US crude inventories experiencing their largest draw since the week ended Jan. 1. According to the data, US crude inventories declined 7.99 million barrels to 485.12 million barrels in the week ended April 30.

The draw in crude inventories not only exceeded analysts' expectations of a 3.9 million-barrel fall, but was also ahead of the American Petroleum Institute's May 4 report of a 7.69 million-barrel decline in inventories.

The EIA's crude draw came on the back a 62% surge in US crude exports to 4.12 million b/d and a 1.5% increase in total refinery net crude input to 15.24 million b/d, according to the data.

The data, however, also had bearish elements, as it showed that total US gasoline stocks had climbed for a fifth-straight week, moving 740,000 barrels higher to 235.81 million barrels in the week ended April 30. US implied gasoline demand also edged 10,000 b/d lower to 8.86 million b/d, a six-week low.

Implied demand for distillates was down by nearly 5% at 4.13 million b/d, even as inventories declined 2.9 million barrels to a one-year low of 136.15 million barrels.

Meanwhile, the market continues to monitor the evolving pandemic situation in Asia, and in particular India, where burgeoning COVID-19 infection and fatality numbers have forced parts of the country to go under lockdown. The mobility restrictions imposed in the country are expected to weigh on oil demand.

As MRC informed earlier, 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 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 the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.
MRC

MOSCOW (MRC) -- Global record high prices for suspension polyvinyl chloride (SPVC) proportionally affected prices of polymer in Russia. Russian producers intend to achieve an increase in prices of Rb10,000/tonne or more, according to the ICIS-MRC Price Report.

PVC prices broke new records in many regions of the world in April due to a shortage; a number of producers also intend to increase prices for shipments in May further. Russian market was also affected by this trend, the situation on foreign markets has been putting serious pressure on PVC prices since the middle of last year. Since January of this year, Russian converters have got an import alternative, but it does not restrain the rise in prices in the market.
Domestic producers announced a price increase of Rb10,000/tonnes and more for May shipments.

The export prices from Russian producers remains at a good level, and prices in the domestic market were far from it in April. At the moment, the export prices from producers varies in the range of Rb132,000-150,000/tonne FCA, including VAT, FCA, depending on the region. And this factor has a huge impact on pricing in the domestic market.

After a long period of tight supply and rising prices for PVC in the domestic market, Russian converters got an import acetylene PVC from China in January. As a result, the volume of imports increased in the first quarter, but still does not allow balancing the Russian market and stopping the rise in prices. Today, taking into account all taxes, the price of Chinese acetylene PVC is about Rb125,000/tonne, including VAT, and delivery.

But complex logistics and limited export quotas from Chinese producers do not allow talking about the possibility of a serious increase in PVC supplies from China. Despite the record level of Russian PVC prices, the demand for PVC from the domestic market in the first four months was at a good level. Although export volumes in the first quarter still grew by 14%.

There was no surplus of PVC supply in the market, and the April quotas were actually sold by producers in the first ten days of the month. At the same time, the converters reported disruptions in shipments from at least two producers. PVC K58/70 accounted for the acutest shortage of export quotas.

Despite the long weekend ahead, discussions on prices for the May supplies of Russian PVC began only in the middle of the week, with some producers postponing the start of negotiations several times. This week, deals for the supply of Russian PVC with K64 / 67 were discussed in a very wide range: Rb135,000-150,000/tonne CPT Moscow, including VAT for volumes up to 500 tonnes, against Rb121,500-130,000/tonne CPT Moscow, including VAT in March.

MRC

MOSCOW (MRC) -- Taiwan's Formosa Petrochemical Corp plans to ramp up operating rates at its refinery in May to 74% once it restarts a gasoline-making unit after maintenance and as refining margins have improved, reported Reuters with reference to the company's spokesman.

Formosa intends to process 400,000 barrels per day (bpd) of crude in May, or 74% of its total capacity, up from 340,000 bpd in March and April, spokesman KY Lin told Reuters.

The higher utilisation rate comes as Asian gasoline refining margins have returned to pre-COVID-19 levels. Formosa is among the largest oil products exporters in Asia and a ramp-up in its output is expected to lead to more exports.

Formosa's refinery has been operating at about 60% between February and April due to maintenance, while its No.2 residue desulfurizer unit is undergoing repairs following a fire in July.

Formosa operates three crude distillation units with a capacity of 180,000 bpd each at its complex in Mailiao.

As MRC wrote earlier, Formosa Plastics Company (FPC), part of Formosa Petrochemical, is in plans to take off-stream its No. 1 cracker in Mailiao, Taiwan for a scheduled turnaround on 8 June, 2021. This cracker with an annual capacity of 700,000 tons of ethylene and 350,000 tons of propylene is expected to remain shut unitl mid-July, 2021.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.

Formosa Petrochemical is involved primarily in the business of refining crude oil, selling refined petroleum products and producing and selling olefins (including ethylene, propylene, butadiene and BTX) from its naphtha cracking operations. Formosa Petrochemical is also the largest olefins producer in Taiwan and its olefins products are mostly sold to companies within the Formosa Group. Among the company's chemical products are paraxylene (PX), phenyl ethylene, acetone and pure terephthalic acid (PTA). The company"s plastic products include acrylonitrile butadiene styrene (ABS) resins, polystyrene (PS), polypropylene (PP) and panlite (PC).
MRC

MOSCOW (MRC) -- Maire Tecnimont S.p.A. announced that its subsidiaries Tecnimont S.p.A. and Mumbai-based Tecnimont Private Limited have been awarded an EPCC (Engineering, Procurement, Construction and Commissioning) Lump Sum contract by Indian Oil Corporation Limited (IOCL), for the implementation of a new paraxylene (PX) plant and the relevant offsites facilities, according to Kemicalinfo.

The plant will be located in Paradip, in the State of Odisha, in Eastern India. The overall value of the contract is about USD450 million.

The scope of work entails Engineering, Procurement, Construction and Commissioning activities up to the Performance Guarantees Test Run. Once completed, the new PX plant will have a capacity of 800,000 tons per year.

The time schedule is 33 months for Mechanical Completion from the award date, the company said.

The PX produced will be used to feed the adjacent PTA (Purified Terephthalic Acid) unit, thus ensuring availability of world-class feedstock that will provide a significant boost to India’s manufacturing industry, it added.

As MRC informed before, in March 2021, Indian Oil announced plans to expand the capacity of its refinery at Panipat, India, from 15 million metric tons/year (MMt/y), to 25 MMt/y. The company will also build a polypropylene (PP) unit and a catalytic dewaxing unit at the site. The cost of the project is 329.46 billion Indian rupees (USD4.45 billion). The plan is the latest in a series of projects approved by Indian Oil to improve integration with petrochemicals at the company's refinery sites. The capacity of the planned PP facility has not been disclosed.

PX is a feedstock for the production of purified terephthalic acid (PTA). PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, Russia's estimated PET consumption reached 64,750 tonnes in March 2021, which corresponds to the last year's figure (64,520 tonnes). Overall estimated PET consumption in Russia decreased by 5% year on year to 182,300 tonnes in January-March, 2021.
MRC

MOSCOW (MRC) -- Deepak Nitrite Ltd., a chemical manufacturer in India, has announced its results for the final quarter and financial year ended 31 March 2021. The company’s net profit increased 68.4% to Rs 290.11 crore (USD39.2 million) in the quarter ended March 2021 against Rs 172.3 crore (USD23.3 million) during the prior year quarter, according to Kemicalinfo.

Sales grew 39% to Rs 1469.17 crore (USD198.7 million) in the quarter ended March 2021 as against Rs 1057.74 crore (USD143 million) during the previous quarter ended March 2020.

For the full year, net profit rose 27% to Rs 775.81 crore (USD104.9 million) in the year ended March 2021 as against Rs 611.03 crore (USD82.6 million) during the previous year ended March 2020.

The company's sales dropped 2.7% to Rs 4381.27 crore (USD592.5 million) in the year ended March 2021 as against Rs 4264.91 crore (USD576.8 million) during the previous year ended March 2020.

The growth was driven by specific business segments with Phenolics business growing 77% at Rs 937 crore (USD126.6 million). The company reported 30% growth in the fine and specialty chemicals vertical to Rs 206 crore (USD27.8 million).

As MRC reported before, Deepak Nitrite’s fully-owned subsidiary Deepak Phenolics started up its new phenol/acetone plant, located at Dahej in the state of Gujarat, on 16 August 2018. The plant, which is operated under Deepak Nitrite’s wholly-owned subsidiary Deepak Phenolics Limited, is able to produce 200,000 tonnes/year of phenol and 120,000 tonnes/year of acetone. There is also the potential for a capacity expansion in the future. Deepak Phenolics’ plant is the largest phenol/acetone plant in India.

Deepak Phenolics shut its phenol/acetone plant in Dahej on 25 March, 2020, because of the nationwide lockdown because of the spread of coronavirus. It resumed operations in late April, 2020.

Phenol is one of the main feedstocks for the production of bisphenol A (BPA), which, in its turn, is used for the production of polycarbonate (PC).

According to MRC's ScanPlast report, overall estimated consumption of PC granules in the Russian market totalled 25,000 tonnes in the first quarter of 2021 (excluding imports and exports to/from Belarus), compared to 22,700 tonnes a year earlier. Demand increased by 10%.
MRC