Oil prices sending mixed signals for higher production in near future

MOSCOW (MRC) -- Oil prices are sending mixed signals about the production-consumption balance in the second half of 2021 and early 2022, implying the market is currently tight but likely to see significantly more output in the near future, reported Reuters.

In the physical market, Brent’s five-week calendar spread is trading around USD1.50 per barrel, which puts it in the 93rd percentile for all trading days since 2010, confirming the market is currently short of crude.

In futures, Brent’s six-month spread is around USD3.70 per barrel, also in the 93rd percentile for all trading days since 1990, signalling traders expect inventories to remain below average.

But front-month futures prices have risen less than 10% over the last two months, implying traders anticipate substantially more crude could be made available to the market without much further increase.

The current mix of flat prices and spreads is consistent with the view OPEC+ will increase production significantly in the remainder of 2021 and early 2022 to satisfy increasing demand while keeping stocks relatively low.

As MRC wrote before, The OPEC+ producer group, on July 18, reached a deal to increase its production quotas by 400,000 b/d each month starting in August, amounting to a 2 million b/d total increase by the end of the year. The agreement also involved an extension of the coalition's supply management pact through to 2022. The OPEC+ resolution puts an end to an acrimonious spat between Saudi Arabia and the UAE, which had arisen after the UAE had objected to Saudi Arabia's plan to tie OPEC+ production increases to a lengthening of the supply management pact, insisting that its baseline production level, from which its quota is determined, be raised first.

We remind that China's crude oil imports fell 3% from January to June versus a year earlier, in the first first-half contraction since 2013, as an import quota shortage, refinery maintenance and rising global prices curbed buying. Imports totalled 40.14 million tonnes last month, data released by the General Administration of Customs showed on Tuesday, equivalent to 9.77 million barrels per day (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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- OQ Chemicals (Monheim am Rhein, Germany) has announced a price increase in North America and Mexico for trimethylolpropane (TMP), according to Coatings World.

The nominated price rise of USD0.10 per pound is due to supply and demand and is effective 1 August or as contracts allow.

The company announced several price increases in North America and Mexico in May and June for various oxo intermediate and polyols products due to unprecedented strong demand and limited availability.

As MRC reported earlier, in September 2020, OQ Chemicals entered into an agreement to license its advanced proprietary technology for the production of ethylene and propylene derivatives to Duqm Refinery and Petrochemicals Industries Company (DRPIC) in Oman. DRPIC, a joint venture between Oman Oil Company and Kuwait International Oil Company, is a planned grassroots petrochemical complex at Duqm, Oman. In all, DRPIC awarded twelve license packages to international licensors.

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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.

OQ Chemicals, formerly Oxea, is a global manufacturer of oxo intermediates and oxo derivatives, such as alcohols, polyols, carboxylic acids, specialty esters, and amines. These products are used for the production of high-quality coatings, lubricants, cosmetics and pharmaceutical products, flavours and fragrances, printing inks and plastics. OQ Chemicals is part of OQ, an integrated energy company that delivers sustainability and business excellence. OQ operates in 16 countries and covers the entire value chain from exploration and production to the marketing and distribution of its products.
MRC

MOSCOW (MRC) - The Delta-Pak company (Rossosh, Voronezh region) plans to organize the production of fully recyclable polymeric combined polyethylene film (Full-PE), which is used for a wide range of food and non-food products, Interfax reports.

The project meets the objectives of the national project "Ecology" and the achievement of national development goals to create a comfortable and safe environment for life. During the implementation of the project, eight highly productive jobs will be created.

It is noted that the implementation of the project will increase labor productivity by 40%, including thanks to the IDF loan in the amount of 300 mln rubles. under the program "Labor productivity".

In total, the expert council of the Industrial Development Fund (VEB.RF Group) approved six loans for the implementation of projects in the Arkhangelsk, Pskov, Samara, Lipetsk, Voronezh and Sverdlovsk regions. The amount of loans from the IDF will be about 1.2 bn rubles, and the total budget for the implementation of projects - 1.9 bn rubles.

Previously, the company put into operation a five-layer extrusion-blown line with a unit for monoaxial orientation of films (MDO) manufactured by HOSOKAWA ALPINE.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High density polyethylene (HDPE) shipments decreased.

LLC "Delta-pack" was registered in the Voronezh region in May 1999, its main activity is the production of other plastic products "not included in other groups, except for their plastic sealing devices." Authorized capital - 7.7 million rubles. At the end of 2020, the company's revenue amounted to RUB 1.1 billion, net profit - RUB 125.2 million. The general director and sole owner is Viktor Doroshevsky.
MRC

MOSCOW (MRC) -- Chevron U.S.A. Inc., through its Chevron Products Company division (Chevron), and Cummins Inc., a global power and hydrogen technologies leader, have announced a memorandum of understanding (MOU) to explore a strategic alliance to develop commercially viable business opportunities in hydrogen and other alternative energy sources, according to BusinessWire.

The MOU provides the framework for Chevron and Cummins to initially collaborate on four main objectives: advancing public policy that promotes hydrogen as a decarbonizing solution for transportation and industry; building market demand for commercial vehicles and industrial applications powered by hydrogen; developing infrastructure to support the use of hydrogen for industry and fuel cell vehicles; and exploring opportunities to leverage Cummins electrolyzer and fuel cell technologies at one or more of Chevron’s domestic refineries.

“Chevron is committed to developing and delivering affordable, reliable, ever-cleaner energy, and collaborating with Cummins is a positive step toward our goal of building a large-scale business in a lower-carbon area that is complementary to our current offerings,” said Andy Walz, president of Chevron’s Americas Fuels & Lubricants. “Hydrogen is just one lower-carbon solution we are investing in that will position our customers to reduce the carbon intensity of their businesses and everyday lives. We’ve also invested in developing and supplying renewable natural gas, blending renewables into our fuels, coprocessing biofeedstocks in our refineries, and abatement projects that will reduce the carbon intensity of our operations.”

As MRC reported previously, Chevron Corp is considering permanently closing the gasoline-producing fluidic catalytic cracker (FCC) at its 112,229 barrel-per-day (bpd) Pasadena, Texas refinery as part of a possible reconfiguration of the plant. Idling the shut 52,000-bpd FCC would be part of converting the refinery on the Houston Ship Channel to a simpler hydroskimming configuration.

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 953,400 tonnes in the first five months of 2021, which virtually corresponded to the same figure a year earlier. High denisty polyethylene (HDPE) shipments decreased. At the same time, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.

Chevron is one of the world’s leading integrated energy companies. Chevron produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance our business and the industry.

Cummins Inc., a global power leader, is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from diesel, natural gas, electric and hybrid powertrains and powertrain-related components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, batteries, electrified power systems, hydrogen generation and fuel cell products. Headquartered in Columbus, Indiana (US), since its founding in 1919, Cummins employs approximately 57,800 people and earned about USD1.8 billion on sales of USD19.8 billion in 2020.
MRC

MOSCOW (MRC) - SIBUR-Neftekhim, a part of SIBUR, the largest petrochemical holding in Russia and Eastern Europe, has started a project that will increase the capacity for the production of ethylene oxide and at the same time reduce the company's environmental impact, said the company.

Within the framework of the project, at the production of ethylene oxide and glycols (POEiG), reactor, dynamic, column, power and heat exchange equipment will be installed or partially replaced. This will allow using cheaper and, at the same time, more selective catalysts, converting the heat generated in the production process into process steam, and reducing the consumption of electricity and water.

The project developed by ThyssenKrupp Industrial Solutions (RUS) has passed the Main State Expertise. After its implementation, the productivity of POEiG for equivalent ethylene oxide will be increased by 18.6% to 355,670 tonnes, and for commercial ethylene oxide - by 29% to 168,000 tonnes per year.

Earlier it was reported that SIBUR-Neftekhim completed the technical re-equipment of the production of ethylene oxide and glycols in January. The capacity for the production of monoethylene glycol (MEG) increased by 25,000 tonnes per day or by 3.1% - up to 830 tonnes per day.

MEG, along with terephthalic acid (PTA), is one of the main components for the production of polyethylene terephthalate (PET).

According to MRC's ScanPlast, in May the total estimated PET consumption in Russia increased by 15% compared to the same indicator a year earlier and amounted to 85,850 tonnes. In total, for the period January - May 2021, the estimated consumption in Russia amounted to 349,940 tonnes of material, which is 22% higher than the indicator of 2020.

The Dzerzhinsk enterprise of SIBUR has been operating since February 1982. Today, the annual production capacity of SIBUR-Neftekhim is 130 thousand tons of ethylene oxide, 320.5 thousand tons of glycols, 35.5 thousand tons of acrylic acid. At the same time, the POEiG of the enterprise alternately operates in "oxide" and "glycol" modes, maximizing the output of a particular product, depending on the market situation.

SIBUR-Neftekhim products are used in the production of technical fluids for process equipment, cars and aircraft, materials for oil and gas drilling, raw materials for the production of synthetic threads and polymers, cosmetics, paints and varnishes, complex adhesive compositions and other industrial and household goods.
MRC