ACC Chemical Activity Barometer up in June by 19.5% YOY

ACC Chemical Activity Barometer up in June by 19.5% YOY

MOSCOW (MRC) -- The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose by 0.8% in June on a three-month moving average (3MMA) basis following a 1.3% gain in May. On a year-over-year (YOY) basis, the barometer rose 19.5% in June (3MMA), as the year-ago period was hit hard by COVID-19 shutdowns, accoriding to Chemical Engineering with reference to ACC's statement.

The unadjusted data show a 0.1% decline in June, primarily due to weakness in equities, following a 1.3% gain in May. The diffusion index reached 85% in June. The diffusion index marks the number of positive contributors relative to the total number of indicators monitored. The CAB reading for May was revised upward by 0.73 points and that for April was revised upward by 0.35 points. The June data are provisional and subject to revision.

“In summary, the latest CAB reading is consistent with expansion of commerce, trade and industry,” said Kevin Swift, chief economist at ACC. “The year-over-year gains have likely peaked, suggesting a potentially slower pace of expansion.”

The CAB has four main components, each consisting of a variety of indicators: 1) production; 2) equity prices; 3) product prices; and 4) inventories and other indicators.

In June, production-related indicators were positive. Trends in construction-related resins and related performance chemistry were solid. Resins and chemistry used in other durable goods were strong. Plastic resins used in packaging and for consumer and institutional applications were positive. Performance chemistry for industry was largely positive. Exports were positive, while equity prices fell back. Product and input prices were positive, as were inventory and other supply chain indicators.

As MRC informed before, Russia's output of chemical products rose in March 2021 by 5.4% year on year. Thus, production of basic chemicals increased year on year by 6.7% in the first moths months of 2021. March production of polymers in primary form was 958,000 tonnes versus 861,000 tonnes in February. Overall output of polymers in primary form totalled 2,740,000 tonnes over the stated period, up by 8.5% year on year.

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.

The CAB is a leading economic indicator derived from a composite index of chemical industry activity. Due to its early position in the supply chain, chemical industry activity has been found to consistently lead the US economy’s business cycle, and the barometer can be used to determine turning points and likely trends in the broader economy. Month-to-month movements can be volatile, so a three-month moving average of the CAB reading is provided. This provides a more consistent and illustrative picture of national economic trends.
MRC

Eni signs deal for hydrogen production in Egypt as part of its transition into renewables

Eni signs deal for hydrogen production in Egypt as part of its transition into renewables

MOSCOW (MRC) -- Eni, state-owned Egyptian Electricity Holding Company (EEHC) and Egyptian Natural Gas Holding Company (EGAS) signed a deal to asses the feasibility of producing hydrogen in Egypt, reported Reuters with reference to the Italian energy group's statement on Thursday.

The move is part of Eni’s major overhaul launched last year to transition into renewables and taper off its oil and gas output.

This agreement builds on Eni’s target of eliminating Scopes 1, 2 and 3 net emissions by 2050, cancelling out relative emission intensity and referring to the entire life cycle of energy products sold. The projects also fits with Egypt’s national strategy for energy transition, diversifying energy mix and developing hydrogen projects in cooperation with major international companies.

The groups will conduct a study into joint projects to produce both green hydrogen, using electricity generated from renewables, and blue hydrogen, through the storage of carbon dioxide. The review will also analyse potential local consumption of hydrogen and opportunities for exports.

As MRC wrote before, in April 2021, Honeywell announced Italy’s largest energy company, Eni, is producing renewable fuels at its refinery in Gela, Italy, using the Ecofining technology jointly developed by Eni and UOP.

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.

Eni S.p.A. (Ente Nazionale Idrocarburi) is an Italian oil and gas company headquartered in Rome. Eni operates in 70 countries around the world.
MRC

Hyundai Oilbank plans IPO in 2022 in a move to take full advantage of domestic demand recovery and strong refining margins

Hyundai Oilbank plans IPO in 2022 in a move to take full advantage of domestic demand recovery and strong refining margins

MOSCOW (MRC) -- South Korean oil refiner Hyundai Oilbank plans to list its shares on the country's main bourse next year as the fuel producer aims to take full advantage of the country's upbeat oil demand recovery outlook and strong refining margins, while favorable capital market conditions amid low interest rates bode well for raising funds, reported S&P Global.

Hyundai Oilbank's board members have approved a plan to push for an initial public offering, or IPO, some time in 2022, a company official told S&P Global.

Hyundai Oilbank is owned 74.13% by Hyundai Heavy Industries Holdings that runs South Korea's top shipbuilder Hyundai Heavy Industries, while Saudi Aramco holds a 17% stake as the second-biggest shareholder.

Hyundai Heavy Industries Holdings said its board has also approved the refining subsidiary's IPO plan.

This is the second attempt to list Hyundai Oilbank on South Korea's stock exchange after the refiner aborted its first IPO bid in late 2018 in the wake of a deal by Hyundai Heavy Industries to sell a 17% stake in Hyundai Oilbank to Saudi Aramco in January 2019 for USD1.24 billion.

The refiner's IPO plan comes at a strategically appropriate time as South Korea's domestic consumer and industrial fuel demand is poised to stage a steady recovery from the lows seen in 2020 due to the outbreak of the coronavirus pandemic, industry and market participants said.

"South Korea is likely to be among the first batch of countries to emerge out of the pandemic thanks to the fast pace of the country's vaccination progress... subsequently, domestic oil products demand has started to pick up in recent months, improving the fuel sales outlook, which would be highly positive for investor sentiment," said a marketing source at Hyundai Oilbank.

Over January-April, South Korea's oil products consumption rose 1.4% year on year to 297.291 million barrels, latest data from state-run Korea National Oil Corp. showed.

Consumer demand for transportation fuels in particular will likely continue improving in line with increasing population mobility as the nationwide vaccination program gathers pace, refinery officials and market analysts said.

Hyundai Oilbank reported an operating income of Won 412.8 billion (USD369 million) in the first quarter, recovering from a Won 563.2 billion operating loss in the same period a year earlier and a Won 78.6 billion operating loss in Q4 2020. Its Q1 sales rose 2.7% year on year to W4.54 trillion.

The sharp uptrend in Asian middle distillate crack spreads would continue supporting the refiner's domestic product sales and export earnings, while jet fuel margins may eventually recover as international flights are bound to flourish when the pandemic ends, the company official and marketing source said.

Hyundai Oilbank's IPO bid was also largely driven by favorable capital market conditions as ample liquidity in the financial market amid record-low interest rates, on top of the country's rosy economic recovery outlook, will likely spur investor appetite, the company official and fixed income market analysts in Seoul said.

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

COVID-19 - News digest as of 08.07.2021

1. US fossil fuel consumption down by 9% in 2020 - EIA

MOSCOW (MRC) -- In 2020, total consumption of fossil fuels in the United States, including petroleum, natural gas, and coal, fell to 72.9 quadrillion British thermal units (Btu), down 9% from 2019 and the lowest level since 1991, according to Hydrocarbonprocessing with reference to US Energy Information Administration's (EIA) Monthly Energy Review. Last year marked the largest annual decrease in US fossil fuel consumption in both absolute and percentage terms since at least 1949, the earliest year in our annual data series. Economic responses to the COVID-19 pandemic in 2020, including a 15% decrease in energy consumption in the US transportation sector, drove much of the decline. The United States also had relatively warmer weather in 2020, which reduced demand for heating fuels.

MRC

Crude oil futures extend losses in Asia on fears of OPEC+ disunity, stronger dollar

Crude oil futures extend losses in Asia on fears of OPEC+ disunity, stronger dollar

MOSCOW (MRC) -- Crude oil futures extended overnight losses during mid-morning Asian trade July 8 as the release of bullish American Petroleum Institute data failed to lift market sentiment, amid fears of a breakdown in OPEC+ cooperation, while a stronger US dollar providing further headwinds for prices, reported S&P Global.

At 11:06 am Singapore time (0306 GMT), the ICE September Brent futures contract was down 20 cents/b (0.27%) from the previous close at USD73.23/b, while the NYMEX August light sweet crude contract was down 31 cents/b (0.43%) at USD71.94/b. The Brent and NYMEX light sweet crude markers had fallen 1.48% and 1.59% overnight to settle at USD73.43/b and USD72.20/b, respectively.

Market analysts attributed the downslide to concerns that the OPEC+ agreement could break down after the producer group cancelled its July 5 meeting before agreeing on an increase in production quotas August onward.

The fears were kindled by media report, which said that the UAE could raise output outside of the OPEC+ agreement, with analysts saying such a move could prompt other members to follow suit in the ensuing battle for market share. The UAE had earlier, during OPEC+ negotiations, objected to Saudi Arabia's plan to tie the production increases to a lengthening of the supply management pact through to the end of 2022, insisting that its baseline production level from which its quota is determined be raised first to reflect its current capacity.

Outside of the OPEC+ saga, oil prices were also weighed down by a stronger US dollar, with the US dollar index trading at 92.77 at 10:56 am, up 0.24% from the previous settle. Analysts said the appreciation of the dollar was driven by signs of strength in the US labor market following the release of the May Job Openings and Labor Turnover Survey, or JOLTS, report.

A stronger US dollar makes dollar denominated assets such as oil more expensive for buyers holding foreign currency, and hence dampens their demand.

OPEC+ concerns and the strength of the US dollar negated the impact of the bullish API data, released late July 7. The API data showed US crude inventories falling by 7.98 million barrels in the week ended July 2, and US gasoline inventories falling 2.74 million barrels. Distillate inventories registered a build, rising 1.09 million barrels.

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.
MRC