COVID-19 - News digest as of 21.06.2021

1. Asia Distillates-Gasoil cash differential falls but ends week higher on improving demand in the region

MOSCOW (MRC) -- Cash discounts for cargoes of Asia's 10 ppm gasoil slipped on Friday on weaker physical deal values in the Singapore trading window, but ended the week higher on signs of improving demand in Asia, reported Reuters. The 10 ppm cash differential was at a four-session low of minus 4 cents a barrel below Singapore quotes on Friday, down from minus 2 cents in the previous session. The differential climbed to a more than two-week high premium of 5 cents a barrel on Wednesday. Sentiment, however, was capped by concerns of rising regional supplies as refiners in north Asia resume operations following seasonal refinery turnarounds.



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MOSCOW (MRC) -- South Korea's imports of US crude oil rose 21.3% from a year earlier in May, marking the first year-on-year increase in 12 months, as local refiners continued to raise middle distillate output amid improving transportation fuel demand and a widening Brent-Dubai price spread made North American barrels competitive, reported S&P Global with reference to latest data from Korea Customs Service.

The world's fifth-largest crude importer received 1.227 million mt, or 8.99 million barrels, of US oil in May, up from 7.41 million barrels a year earlier, the customs data showed. The country has been receiving more than 4 VLCCs/month from the US since February.

The majority of US crudes that South Korean refiners purchase are light sweet grades rich in middle distillate yield, including WTI and Eagle Ford.

South Korean refiners are expected to continue raising light sweet US crude purchases - and overall feedstock imports - as industrial and consumer fuel demand is set to strengthen on the back of robust economic recovery with the nationwide vaccination program gathering pace, refinery officials and analysts at Korea National Oil Corp. and Korea Petroleum Association told S&P Global.

The country is forecast to consume 240,000 b/d of gasoline in Q2, up from 224,000 b/d in Q1, according to latest data from Platts Analytics.

In total, South Korea imported 10.912 million mt, or 79.98 million barrels, of crude oil in May, up 1.5% year on year, the customs data showed.

South Korea's May crude imports from top supplier Saudi Arabia fell 18.7% year on year to 23.47 million barrels, while shipments from Kuwait fell 37.8% to 8.19 million barrels and from Iraq fell 5.1% to 5.07 million barrels, the customs data showed. However, local refiners are expected to see Middle Eastern crude intake increase gradually in coming months after OPEC and its allies on June 1 agreed to follow through on plans to hike crude production through July.

Saudi Aramco has allocated most Asia-Pacific refiners with their requested term crude volumes for loading in July, Platts reported earlier based on a survey of multiple feedstock procurement managers and refinery officials across Asia. The allocation of full volumes is largely in line with market expectations, with Saudi plans to raise supplies after the OPEC+ group's decision to ease production cuts amid firming demand cues aided by the global recovery.

In addition, South Korean refiners could trim some of their North Sea and West African crude purchases, while increasing Middle Eastern crude procurement, in the second half of the year as spot cargoes from the west of Suez appear expensive after the Brent-Dubai price spread flipped to a lofty premium in recent trading cycles, according to feedstock procurement managers at two South Korean refiners.

The refiners are also keen to pick up more US crude cargoes in the spot market as North American grades are often traded on a Dubai pricing basis in the Northeast Asian market.

South Korea's crude stockpiles fell 14.4% year on year to 41.75 million barrels in April, KNOC data showed. But the

As MRC informed earlier, GS Caltex, a major South Korean petrochemical producer, is planning to start up its new mixed-feed cracker in Yeosu in June 2021. This schedule is earlier than the initial plan of 2022. The new cracker can produce 790,000 tons/year of ethylene and 430,000 tons/year of propylene.

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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MOSCOW (MRC) -- Crude oil futures rose during mid-morning Asian trade June 21 as markets continued to price in a recovery in global oil demand, while keeping an eye on the recently resumed Joint Comprehensive Plan of Action negotiations, reported S&P Global.

At 11:28 am Singapore time (0328 GMT), the ICE August Brent futures contract was up 47 cents/b (0.64%) from the previous settle at USD73.98/b, while the NYMEX WTI July light sweet crude contract was up 55 cents/b (0.77%) at USD72.19/b.

This morning's rise extends the uptrend from that of last week ended June 18, during which the Brent and NYMEX light sweet crude markers rose 1.13% and 1.03% to close at USD73.51/b and USD71.64/b, respectively.

The uptrend in the oil markets come despite hawkish signals from the US Federal Reserve, which is pushing the dollar higher, and can be attributed to markets buying into the global demand recovery narrative.

With rising vaccination rates, and easing mobility restrictions, the US and Europe are at the forefront of this recovery, and analysts have said that the record crude throughput seen in China in May is likely to persist until winter.

ANZ analysts have also noted nascent signs of improvement in India's downstream products demand, as parts of the country relax lockdown restrictions following a sustained downtrend in COVID-19 infections.

In other news, negotiations over the Joint Comprehensive Plan of Action have resumed in Vienna on June 20 after the election of Ebrahim Raisi as Iran's president. Raisi had earlier said that he is committed to the JCPOA.

Raisi's top energy adviser, Alireza Zeyghami, a former deputy oil minister, told S&P Global Platts that under Raisi, Iran would seek a quick return to its pre-sanctions crude production of near 4 million b/d, with or without an agreement. Many buyers of Iranian crude, however, will await the restoration of the JCPOA before purchasing Iranian crude, as they will not want to risk incurring sanctions penalties.

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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MOSCOW (MRC) -- Bayport Polymers LLC (Baystar) plans to start up its new polyethylene (PE) plant in Pasadena, Texas in the first quarter of 2020, reported S&P Global.

The new plant with a production capacity of 625,000 mt/year of high density polyethylene (HDPE) is now under construction, which began in 2019. The contract for the engineering, procurement and construction of the new unit had been awarded to McDermott, said the company on its site.

It will use Borstar technology and more than double the company's site’s PE capacity to 1.1 mt/year after the start-up.

The HDPE plant in Pasadena will receive feedstock from Baystar's cracker in Port Arthur, a joint venture of France's Total and Austria's Borealis, with a capacity of 1 million mt/year, which is in the progress of start-up at the moment.

According to MRC's ScanPlast report, Russia's overall HDPE production totalled 653,500 tonnes in the first four months of 2021, up by 9% year on year. At the same time, only one Russian producer increased its HDPE output.

Bayport Polymers LLC (Baystar) was created as a joint venture in 2018 between three established petrochemical industry leaders, Total S.A. (Total), Borealis Holdings LLC and NOVA Chemicals.
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MOSCOW (MRC) -- Chevron temporarily shut in production June 18 from two offshore Gulf of Mexico oil and gas platforms and evacuated some staff, ahead of a weather system that was expected to strengthen into a tropical storm and make landfall in southeast Louisiana, reported S&P Global.

Other producers in the Gulf, including BP, Shell and W&T Offshore, said they were monitoring the track of Potential Tropical Cyclone Three, but as of early afternoon had not yet evacuated any staff from platforms or shut in any offshore output. Later in the day, Shell said no crew-change flights were scheduled out of Houma and marine operations would remain limited in areas affected by the storm and elevated seas.

With the storm tracking well east of gas liquefaction facilities in southwest Louisiana and southeast Texas, producers there did not expect any impacts to export operations. Officials at Cheniere Energy, the biggest US LNG exporter with facilities at Sabine Pass in Louisiana and Corpus Christi in Texas, and Freeport LNG, which operates a liquefaction facility south of Houston, said they would continue to monitor the storm.

In Chevron's case, it wasn't taking any chances.

In preparation for the tropical weather, the company transported all non-essential personnel from the Big Foot, Jack/ St. Malo and Tahiti platforms. All personnel from its Genesis facility were also moved onshore, spokesman Tyler Kruzich said in an email responding to questions.

While production was temporarily shut-in at the Jack/ St. Malo and Tahiti platforms, output at other Chevron-operated Gulf of Mexico assets remained at normal levels, Kruzich said. Production at Jack/ St. Malo and Tahiti was expected to return to full levels over the weekend, Kruzich said.

Louisiana refiners in the path of the storm were also monitoring the situation.

"Phillips 66 is closely monitoring Potential Tropical Cyclone Three in the Gulf of Mexico," said spokesperson Allison Stowe. "Based on the storm's projected path, our Alliance Refinery in Belle Chasse, Louisiana, has activated its storm preparedness plan and remains focused on maintaining safe and reliable operations. There's no impact to operations at this time."

As MRC wrote previously, Chevron Corp has restarted the 112,229 barrel-per-day (bpd) Pasadena, Texas, refinery night after completing a multi-unit overhaul that was extended because of the COVID-19 pandemic. The entire refinery was shut from mid-April, 2020, until mid-July, 2020 with the last units returning to production on Tuesday, 14 July. The overhaul was originally to finish in mid-June, but was extended to mid-July.

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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
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