COVID-19 - News digest as of 20.09.2021

1. Exports grew in August in Japan although COVID-19 hits supply chains

MOSCOW (MRC) -- Japan’s exports extended double-digit gains in August, led by strong shipments of chip manufacturing equipment, although the pace of growth weakened as COVID-19 hit key Asian supply chains and slowed factory production, said Reuters. The trade growth is unlikely to dispel worries about the outlook for Japan’s economy, which has not yet recovered to pre-pandemic levels after taking an enormous hit from a collapse in global trade in the first quarter of 2020. Exports rose 26.2% in August compared with the same month a year earlier, the Ministry of Finance said on Thursday, marking the sixth straight month of double-digit growth as strong demand for chip-making equipment offset slowing U.S and European Union-bound shipments of cars.

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MOSCOW (MRC) -- Crude oil futures moved lower during mid-afternoon trade in Asia Sept. 20 as supply concerns subsided on an increase in the US rig count amid recovery in the Gulf of Mexico, and as investors awaited the US Federal Reserve meeting in coming days for more pricing cues, reported S&P Global.

At 2 pm Singapore time (0600 GMT), the ICE November Brent futures contract was down 39 cents (0.52%) from the previous close at USD74.95/b, while the NYMEX October light sweet crude contract was down 47 cents (0.65%) at USD71.50/b.

"After a fourth weekly gain, crude prices slumped after oil rig counts delivered their biggest increase in a month and as risk aversion sent the dollar higher," said Edward Moya, OANDA's senior market analyst, the Americas, in a note.

Supply woes seem to be easing as Baker Hughes reported the US oil and gas rig count, a gauge of future output, at 512 Sept. 17, adding nine rigs in the past week and taking the total to the highest since April 2020.

Production and refining capacities in the Gulf of Mexico continue to push toward full recovery. The US Bureau of Safety and Environmental Enforcement reported Sept. 17 that 422,078 b/d or 23.19% of the Gulf's oil production remains offline, and 765,540 b/d or 34.43% of gas production - figures that were much improved from last week, when 66.36% of oil production and 75.55% of gas production was offline.

A stronger dollar also placed downward pressure on prices. At 2 pm Singapore time (0600 GMT), the ICE US Dollar Index was trading at 93.295, up 0.128% from the previous close. A stronger dollar results in dollar-denominated assets like oil futures becoming less attractive to investors holding foreign currencies, thus lowering demand for these assets.

The market will be closely watching the US Federal Open Market Committee meeting over Sept. 21-22 for clues on the pace of the Federal Reserve's tapering of its bond buying program. Fed Chairman Jerome Powell signaled last month that it would be appropriate for the tapering to occur by the end of this year, which would buoy interest rates and strengthen the US dollar, putting downward pressure on energy prices.

As informed earlier, Shell said earlier this month it observed damage from Hurricane Ida to its transfer station West Delta-143 offshore facilities in the Gulf of Mexico. West Delta-143 serves as the transfer station for all production from its assets in the Mars corridor in the Mississippi Canyon area of the Gulf of Mexico to onshore crude terminals. Shell said then it was not yet safe to send personnel offshore to learn the full extent of the damage and estimate the effect on production.

We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
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MOSCOW (MRC) -- Nizhnekamskneftekhim (NKNKh, part of TAIF Group) shut its polyethylene (PE) production capacities for a scheduled turnaround on 17 September, according to ICIS-MRC Price report.

According to the producer's clients, producer started the scheduled shutdown of linear low density polyethylene (LLDPE) on 17 September. The shutdown will be short and will last for about 10 days. As it was reported earlier, Nizhnekamskneftekhim shut its ethylene production for scheduled turnaround from 14 September to 16 September.

Earlier it was reported that Nizhnekamskneftekhim (NKNKh, part of TAIF Group) signed contracts with Lummus Technology LLC for the provision of licenses and technologies for the production of ethylbenzene, styrene and propylene for the olefin complex.

Facilities include a 250 ktpa ethylbenzene and styrene unit using EBOne and CLASSIC SM technologies, and a 150 ktpa olefin metathesis unit for polymer-grade propylene using Lummus ethylene dimerization and olefin conversion technology Technology. The units will operate as part of the olefin complex under construction (EP-600).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1.176,860 tonnes in the first six months of 2021, up by 5% year on year. Shipments of only low density polyethylene (LDPE) decreased. PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year.
Shipments of propylene homopolymer (homopolymer PP) and block copolymers of propylene (PP block copolymer) increased. Supply of injection moulding statistical copolymer of propylene (PP-random) has decreased.

Nizhnekamskneftekhim is one of the largest petrochemical companies in Eastern Europe, occupying a leading position among domestic producers of synthetic rubbers, plastics and ethylene. Part of the TAIF group of companies, Tatarstan. The nomenclature of manufactured products includes more than 120 items. The products of the joint-stock company are exported to 50 countries in Europe, America and Southeast Asia. The share of exports in the total volume of production is about 50%.

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MOSCOW (MRC) -- Borealis has declared a force majeure (FM) at its steam cracker in Stenungsund, Sweden after a fire, according to Plasteurope.

The FM at the Swedish cracker with the capacity of 625,000 mtyear of ethylene was declared on 14 September, 2021, and the cracker was shut on 11 September due to a malfunction and the fire.

A Borealis spokesperson said that the duration of the force majeure was not yet clear.

As MRC reported earlier, the cracker in Stenungsund was restarted on 15-17 January, 2021, and force majeure was lifted on 29 January. And the company reached full capacity utilisation at this cracker in early February. The FM at Stenungsund was declared after a fire started at the cracker on 10 May last year. A restart of the cracker was initially planned for the fourth quarter of 2020. The company began the process of the cracker restart in early January, 2021.

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 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
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MOSCOW (MRC) -- U.S. oil producer Chevron pledged to triple to USD10 billion its investments in low-carbon fuel and projects through 2028 amid pressure to boost clean-energy markets, said Hydrocarbonprocessing.

Oil producers globally have stepped up plans to transition to a less carbon intensive production. Shareholders and governments are insisting they address their role in climate change and plot a path to sharply cut greenhouse gas emissions by 2050.

Chevron outlined plans to develop hydrogen energy, biofuels as well as carbon capture. It reaffirmed a goal of paring greenhouse gas intensity by 35% through 2028, compared to 2016 levels from its oil and gas output. European oil producers have ambitious plans to shift away from fossil fuels with large investments in renewables. Chevron, Exxon Mobil Corp and Occidental Petroleum sought to reduce carbon emissions per unit of output while backing carbon capture and storage.

BP Plc has said it will invest USD3-4 billion a year in low-carbon projects by 2025 and shrink oil and gas production by 40% in the next decade. Royal Dutch Shell Plc in February set annual investments of USD2-3 billion in clean energy.

Chevron said it would expand renewable natural gas production to 40 billion British thermal units (BTUs) per day and increase renewable fuels production capacity to 100,000 barrels a day to meet customer demand for renewable diesel and sustainable aviation fuel. "With the anticipated strong cash generation of our base business, we expect to grow our dividend, buy back shares and invest in lower-carbon businesses," Chief Executive Michael Wirth said in a statement.

Chevron plans to grow hydrogen production to 150,000 tonnes a year to supply industrial, power and heavy duty transport customers and raise carbon capture and offsets to 25 million tonnes a year by developing regional hubs along with others. Its focus is on offsetting emissions from oil and gas output, not reducing oil output, environmentalists said.

"Chevron's new announcement does not represent a particularly large strategic shift," said Axel Dalman, an associate analyst with climate change researcher Carbon Tracker. "The main item is that they plan to spend more on 'lower-carbon' business lines."

The company this year announced the creation of a new unit to manage the second-largest U.S. oil producer's low-carbon investments, with an initial focus on alternative energy sources such as hydrogen and technologies including carbon capture. Chevron reaffirmed its expectation to generate USD25 billion in cash flow, above its dividend and capital spending, over the next five years.

As MRC reported earlier, in August 2021, Chevron and other partners said they are investing in a startup to build modular waste-to-green hydrogen and renewable synthetic fuel facilities in northern California with tentative plans to eventually grow worldwide. The USD20 million investment in Wyoming-based Raven SR is focused on technology to develop combustion-free, green hydrogen for transportation that is cleaner than so-called blue hydrogen derived from natural gas.

We remind that Chevron Phillips Chemical, a joint venture of Phillips 66 and Chevron, will make a final investment decision on a new cracker in far southeast Texas in 2022, followed by an FID in 2023 on an USD8 billion joint venture petrochemical complex along the US Gulf Coast in 2023.

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 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

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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