Crude oil futures steady in Asia as pandemic concerns in key oil-consuming economies remain at the forefront

MOSCOW (MRC) -- Crude oil futures were steady during mid-morning trade in Asia Aug. 6, as the spread of the delta variant of the coronavirus in key oil-consuming economies continued to limit the market's upside and as participants await the upcoming US nonfarm payrolls data to gauge the country's economic conditions, reported S&P Global.

At 11:32 am Singapore time (0332 GMT), the ICE October Brent futures contract was up 14 cents/b (0.2%) from the previous close at USD71.48/b, while the NYMEX September light sweet crude contract rose 12 cents/b (0.17%) at USD69.21/b.

The front month Brent and NYMEX light sweet crude markers had settled 1.29% and 1.38% higher on Aug. 5, rising in tandem with the broader financial markets on risk-on sentiment following the release of a positive weekly unemployment claims report from the US Labor Department.

The oil rally, however, fizzled during this morning's Asian trading session, as investors remained concerned over the economic fallout from the region's battle against the pandemic.

The market has been especially anxious over the situation in China, where previously successful efforts to contain the pandemic had been thwarted by the spread of the more transmissible delta variant of the coronavirus.

"Oil has been under pressure this week as moves to reinstate travel restrictions in China reflected the situation across Asia. At least 46 cities have advised against travelling, and authorities have suspended flights and stopped public transport," ANZ analysts said in an Aug. 6 note.

Nervousness over the surge in the delta-driven COVID-19 infection numbers in the west, including in the US and major European economies, has also put a cap on oil prices.

The market nevertheless remains optimistic that oil demand in the US, and in the west, will defy the rise in COVID-19 cases, as higher vaccination rates may preclude the need for lockdown measures.

We remind that as MRC informed earlier, Saudi Arabia, the world's top crude oil exporter, will supply full contractual volumes of August-loading crude to at least five Asian customers. However, Saudi Aramco has turned down two of the buyers' requests for extra barrels.

We also remind that Mukesh Ambani, chairman and managing director of Reliance Industries Ltd (RIL), said in June he expects the company's deal with Saudi Aramco to materialise this year. Meanwhile, Yasir Al-Rumayyan, chairman of Saudi Aramco and the Governor of the Public Investment Fund, joined the board of Reliance as an independent director.

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 density 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) -- Negotiations over prices of European polyvinyl chloride (PVC) to be shipped in August to the CIS countries began this week. The sentiment of European producers has remained unchanged for several months already, buyers reported another increase of EUR40-50/tonne in export prices, according to ICIS-MRC Price report.

The August contract price of ethylene was agreed up by EUR53/tonne from the previous month, which theoretically allows to talk about an increase of EUR27/tonne from July in the net cost of PVC. But feedstocks prices have not played the key role in the pricing of European producers for several months in a row. Scheduled and unscheduled shutdowns of production capacities in the region are going on, and on the back of this, an acute shortage of PVC also remained. And this factor determined the upward trend in the region. European producers announced an increase of EUR40-50/tonne in August export prices for the CIS countries.

The rise in export PVC prices in Europe has been going on for over a year now, and many buyers no longer believe that this can ever stop. Prices of resin have more than doubled over this long period.

As a month earlier, some buyers reported the absence of PVC export quotas for August shipments from some European producers because of scheduled maintenance works.

Overall, deals for August shipments of suspension polyvinyl chloride (SPVC) to the CIS markets were discussed in the range of EUR1,440-1,500/tonne FCA, whereas the previous month's deals were negotiated at EUR1,390-1,460/tonne FCA.
MRC

MOSCOW (MRC) -- US refiner Hollyfrontier and its pipeline partner will buy almost all of Sinclair Oil's assets in two deals totaling around USD2.6 billion, the companies said, adding new refining, pipeline and storage assets to their portfolio, reported Reuters.

The deals come as US fuel demand continues to recover from last year's coronavirus-led record lows, with states starting to reopen and road travel trending toward pre-pandemic levels.

A new company, HF Sinclair Corp, will replace HollyFrontier as the public company trading on the New York Stock Exchange, it said in a statement.

HollyFrontier said that at the closing of the deal, expected in mid-2022, HollyFrontier shares will convert into shares of HF Sinclair on a one-for-one basis. HF Sinclair will then issue about 60.2 million shares to stockholders of The Sinclair Companies, Sinclair Oil's parent, giving them 26.75% of proforma ownership in the new company.

Sinclair earlier this year became embroiled in a controversy surrounding three last-minute biofuel waivers granted to it by the US Environmental Protection Agency (EPA) under the Trump administration.

The waivers were vacated by a US appeals court in May after a motion filed by the EPA in April, under the Joe Biden administration.

As part of the deal, HollyFrontier will buy Sinclair's branded marketing unit, renewable diesel unit and two Rocky Mountain-based refineries.

Holly Energy Partners (HEP.N), HollyFrontier's transportation business, will buy Sinclair's 1,200 miles of pipeline assets and storage terminals with around 4.5 million barrels of capacity.

The Holly Energy Partners deal is expected to be worth around USD758 million in cash and stock. Stockholders of The Sinclair Companies will own about 16.6% of Holly Energy after the deal closes.

The HollyFrontier deals will not include exploration and production assets owned by Sinclair Oil & Gas, the companies said.

As MRC reported earlier, HollyFrontier Corp said in May, 2021, it would purchase a 149,000-bpd refinery in Washington from Shell as part of the European company"s strategy to reduce its global refinery footprint. HollyFrontier will buy the Puget Sound refinery near Anacortes for USD350 million in cash, plus hydrocarbon inventory to be valued at closing with an estimated current value of USD150 MM-USD180 MM, the companies said. The transaction is expected to close in the fourth quarter of 2021, subject to regulatory clearance.

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) -- Maire Tecnimont S.p.A. announces that its subsidiaries Tecnimont Planung & Industrieanlagenbau GmbH and MT Russia LLC have been awarded by Kazanorgsintez PJSC (KOS) an EP contract (Engineering and Procurement) for the execution of a low ensity polyethylene (LDPE)/ethylene-vinyl-acetate (EVA) plant, to be implemented inside the existing KOS facilities, located in Kazan, in Tatarstan (Russian Federation), as per Maire Tecnimont's press release.

KOS is one of Russia's largest polyethylene (PE) producers, supplying its products to 36 countries worldwide. The contract signing ceremony was held in Maire Tecnimont Group’s Milan headquarters and attended by KOS General Director Farid Minigulov and Maire Tecnimont Group Chief Executive Officer Pierroberto Folgiero, together with several top executives of both companies.

The overall EP contract value is approximately EUR130 million. The contract is under a Lump Sum scheme for the Engineering and Procurement Services and under a Reimbursable scheme for the Equipment and Material supply.

The scope of the project includes the implementation of a new LDPE/EVA plant with a capacity of 100,000 tons per year. The project will be mainly aimed at expanding the production capacity of polyolefins, and its completion is expected within about 40 months from the contract signing date.

As MRC reported earlier, Kazanorgsintez (part of the TAIF group) plans to reconstruct reactor B of the low-density polyethylene (HDPE) production and processing plant.

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.

PJSC Kazanorgsintez is one of the largest enterprises in the Russian Federation (PJSC TAIF Group of Companies). It produces 40% of all Russian polyethylene and is its largest exporter. Currently, PE, polycarbonate (PC), polyethylene pipes, phenol, acetone, bisphenol A are produced. KOS is the only Russian PC manufacturer. There are 170 types of products in total. The annual production volume is 1.6 million tons. The enterprise is the largest producer of low-pressure polyethylene (HDPE) pipes in Russia. The annual production capacity of HDPE is 540,000 tonnes, and LDPE - 225,000 tonnes.
MRC

MOSCOW (MRC) -- Marathon Petroleum, the largest US refiner, is "hopeful" that the US refining sector will recover as demand for gasoline and diesel picks up, but remains cautious about the impact of the spreading delta variant of the coronavirus, reported S&P Global.

"We are going to have to see how the COVID plays itself out in the second half of the year and (as) we approach another winter season," said Marathon CEO Mike Hennigan on the company's Aug. 4 results call.

Noting the stalled vaccination rate has increased infections, he said "there's obviously going to be some restraint on the demand as a result."

Marathon expects to process 2.67 million b/d of crude in the third quarter, down from the 2.71 million b/d in the second. This is due in part to work planned during the third quarter at its Robinson, Illinois, and Mandan, North Dakota, refineries, and weakening demand.

"We're close to the summer driving season, which is typically our strongest time of year," Hennigan said.

"Gasoline demand is currently 2% to 5% below 2019 levels, with the West Coast lagging 10%. Overall, jet demand remains down nearly 30% below pre-pandemic levels," he added.

Wildfires sweeping the Pacific Northwest, parts of Canada and Northern California have reduced demand, while California's coronavirus infection rates have risen. About 10,000 new cases reported on Aug. 3, according to the New York Times.

Regardless of the impact of the coronavirus, Marathon has succeeded in lowering its refining costs to about USD5/b in 2021 from USD6/b in 2020, said executive vice president and CFO Maryann Mannen on the call. However, that could be changed by the increase in natural gas prices. Used to power refineries, the price of natural gas has risen by about USD1/MMBtu and is anticipated to be a "headwind for the third quarter," she said.

Marathon ran its refineries at 94% utilization in the second quarter, up from the 83% in the first, Mannen said, especially in the Midcontinent where cracks improved 57% from the first quarter.

As MRC informed earlier, in May, 2021, US refiner Marathon Petroleum Corp said its board had approved the conversion of the Martinez refinery in California to a renewable diesel plant. Besides, the company made a final investment decision regarding this project. Martinez, once complete, will be one of the largest renewables facilities in the country.

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 density 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.

Marathon Petroleum Corporation (MPC) is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation's largest refining system. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets.
MRC