COVID-19 - News digest as of 16.06.2021

1. Oil futures up on large draw in US crude inventories and bullish demand outlook

MOSCOW (MRC) -- Crude oil futures jumped during morning trade in Asia June 16, as data from the American Petroleum Institute showed a large draw in US crude inventories, and as the market continued to buy into the global demand recovery narrative, reported S&P Global. At 10:23 am Singapore time (0223 GMT), the ICE August Brent futures contract was up 62 cents/b (0.84%) from the previous settle at USD74.61/b while the NYMEX July light sweet crude contract was up 59 cents/b (0.82%) at USD72.71/b. The rise in prices came as API data, released June 15, indicated improved fundamentals in the market, showing an 8.54 million-barrel decline in US crude inventories in the week ended June 11. Given the striking crude draw figure, markets largely overlooked more bearish downstream product inventory data, which showed US gasoline and distillate inventories rising by 2.85 million barrels and 1.96 million barrels, respectively. Part of the reason why the markets dismissed the downstream product inventory data was that US product demand, especially US gasoline demand, remains robust amid rising vaccination rates and easing mobility restrictions.

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Oil futures up on large draw in US crude inventories and bullish demand outlook

Oil futures up on large draw in US crude inventories and bullish demand outlook

MOSCOW (MRC) -- Crude oil futures jumped during morning trade in Asia June 16, as data from the American Petroleum Institute showed a large draw in US crude inventories, and as the market continued to buy into the global demand recovery narrative, reported S&P Global.

At 10:23 am Singapore time (0223 GMT), the ICE August Brent futures contract was up 62 cents/b (0.84%) from the previous settle at USD74.61/b while the NYMEX July light sweet crude contract was up 59 cents/b (0.82%) at USD72.71/b.

The rise in prices came as API data, released June 15, indicated improved fundamentals in the market, showing an 8.54 million-barrel decline in US crude inventories in the week ended June 11.

Given the striking crude draw figure, markets largely overlooked more bearish downstream product inventory data, which showed US gasoline and distillate inventories rising by 2.85 million barrels and 1.96 million barrels, respectively.

Part of the reason why the markets dismissed the downstream product inventory data was that US product demand, especially US gasoline demand, remains robust amid rising vaccination rates and easing mobility restrictions.

The improving pandemic situation in the US is best exemplified by New York, whose Governor Andrew Cuomo on June 15 lifted most pandemic-related restrictions after the statewide vaccination rate for adults hit the 70% threshold, according to media reports. Meanwhile, California, which now has one of the lowest infection rates in the country, also did the same on June 15, media reports said.

Even prior to the removal of these restrictions, the improving pandemic situation in the US was already having an effect on the country's traffic conditions.

A similar trend was seen across Europe, which market analysts said was supportive of the sentiment for oil. With a demand recovery also expected in major Asian economies, where COVID-19 infection numbers have also been on a downtrend, the market expects prices to continue their hot streak.

"Even non-energy traders are placing bets that oil prices will continue to rise," Edward Moya, senior market analyst at OANDA, said in a June 16 note.

"The crude demand outlook is very robust as recoveries across the US, Europe and Asia will have demand return to pre-COVID levels in the second half of next year," he reasoned.

The rosy demand outlook and potential supply constraints have led to traders entertaining the idea of oil prices reaching USD100/b this year.

We remind that as MRC informed earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world"s third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.

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 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
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ChinaCoal Mengda postpones turnarounds at its PE and PP plants

ChinaCoal Mengda postpones turnarounds at its PE and PP plants

MOSCOW (MRC) -- Inner Mongolia ChinaCoal Mengda New Energy & Chemical Industry Co Ltd (Zhongmei Mengda Chemical) has postponed scheduled maintenance works at its polyethylene (PE) and polypropylene (PP) plants to 15 July, 2021, according to CommoPlast with reference to market sources.

Based in Inner Mongolia, China, the company has PP and linear low density polyethylene (LLDPE) plants with production capacity of 300,000 tons/year each.

Both plants were initially scheduled for maintenance by early July, however, due to the celebration of 100th Anniversary of the Communist Party, the local government of Erdos, Inner Mongolia is emphasizing plants to have stability on production. The celebration of the anniversary will be held starting 15 June for a month.

As MRC reported earlier, the company started up its PE and PP plants in Inne Mongolia in Q1 2017.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
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South Korean Hyundai Oilbank targets listing in 2022

South Korean Hyundai Oilbank targets listing in 2022

MOSCOW (MRC) -- Hyundai Oilbank, the refinery unit of Hyundai Heavy Industries Holdings, has decided to pursue a listing in the South Korean market during 2022, reported Reuters with reference to Hyundai Heavy' statement in a regulatory filing.

Hyundai Oilbank had previously pursued a listing in 2018 but had delayed the plan until this year due to regulatory scrutiny of its balance sheet.

Hyundai Heavy Industries Holdings held 74.1% of the refiner as of end-March, while Saudi Aramco owns 17% of the refiner through an overseas unit, according to a Hyundai Oilbank filing.

As MRC informed earlier, Hyundai Oilbank shut its one crude distillation (CDU) unit, a residual desulphurises and a fluid catalytic cracker (FCC) unit at its Daesan refinery for a maintenance turnaround on April 8, 2020. The refinery remained off-stream for around 30-45 days. Located at Daesan in South Korea, the refinery has a crude processing capacity of 395,000 bpd.

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 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

PP imports to Ukraine increased by 4% in January-May

MOSCOW (MRC) -- Ukraine's polypropylene (PP) imports totalled about 49,800 tonnes in January-May of this year, up 4% year on year.
The volumes of imports of propylene copolymers have increased, according to MRC DataScope.

May PP imports into Ukraine increased to 10,100 tonnes from 9,700 tonnes a month earlier. Local companies have increased their supply of injection moulding propylene block copolymers (PP block copolymers). Overall imports of propylene polymers reached 49,800 tonnes in January-May 2021, compared to 47,700 tonnes a year earlier. At the same time, external supplies of exclusively propylene copolymers increased, while imports of homopolymer PP decreased.

The structure of PP imports by grades looked the following way over the stated period.

In the last month of spring, external supplies of propylene homopolymers to the Ukrainian market exceeded 6,600 tonnes due to the Middle Eastern producers, while in April this figure was about 6,400 tonnes. Thus, overall homopolymer PP imports reached 36,400 tonnes in the first five months of 2021, down 2% year on year.

Last month's imports of block copolymers of propylene (PP block copolymers) were about 1,400 tonnes, compared to 1,000 tonnes in April, demand for injection moulding PP block copolymers increased. About 5,300 tonnes of PP block copolymers were imported in the five months of this year, compared to 4,100 tonnes a year earlier.

May PP random copolymers imports decreased to 1,800 tonnes from 1,900 tonnes a month earlier, supplies of pipe polypropylene decreased.
Overall imports of PP random copolymer reached 6,600 tonnes in the first five months of 2021 versus 5,800 tonnes a year earlier. Overall imports of other propylene copolymers totalled slightly over 1,400 tonnes over the stated period.


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