COVID-19 - News digest as of 24.09.2021

1. Lower diesel exports from China proving a boost to Asia refiners

MOSCOW (MRC) -- Slumping diesel exports from China are proving a boon to other refiners in Asia, with the profit from producing the fuel rising to the highest in 18 months, reported Reuters. China has been Asia's second-highest exporter of gasoil, the building block for middle distillate fuels that include diesel, heating oil and jet kerosene, but its shipments have slumped in recent months amid lower refinery processing and a lack of export permits. China's diesel exports dropped in August to the lowest since May 2015, slumping to 540,000 tonnes, equivalent to about 135,000 barrels per day (bpd), from 1.39 million tonnes in July, according to official customs data released on Sept. 18. Diesel exports have been on a downward trend since March this year, when they were 2.81 million tonnes, or about 680,000 bpd. The total for the first eight months of the year is now 3.5% below the same period in 2020.

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MOSCOW (MRC) -- Crude oil futures were lower in mid-morning trade in Asia trade Sept. 24 amid profit-taking after an overnight rally, but the outlook remains bullish, reported S&P Global with reference to market sources.

At 10:40 am Singapore time (0240 GMT), the ICE November Brent futures contract was down 15 cents/b (0.19%) from the previous close at USD77.10/b, while the NYMEX November light sweet crude contract was 20 cents/b (0.27%) lower at USD73.10/b.

"There seems to be some profit-taking this morning. We will expect higher volatility in the coming day as crude is in a recalibration mode with an eye on the Europe gas crunch," Vandana Hari, CEO of Vanda Insights, said Sept. 24.

ANZ research analysts noted that Brent crude oil prices were still at a three-year high above USD77/b and that a prolonged recovery from Hurricane Ida disruptions and robust demand were eating into oil stockpiles.

Other analysts shared similar sentiment, with IG market strategist Yeap Jun Rong saying that recent drawdowns in US crude inventories have added support in the oil market.

US oil supply remains tight in the wake of Hurricane Ida as operators in the US Gulf of Mexico struggle to return to full production. Around 294,214 b/d or 16.18% of total Gulf production remained shut-in as of Sept. 23, according to the Bureau of Safety and Environmental Enforcement. Despite the proportion of offline production easing from a week earlier, full recovery in the near term was unlikely due to damage to pipeline infrastructure.

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.
MRC

MOSCOW (MRC) - Nizhnekamskneftekhim (NKNKh, part of TAIF Group) plans to place exchange-traded bonds totaling Rb17.2 bn, follows from the company's message.

The placement of Rb17.2 mln bonds with a par value of Rb1,000 is scheduled to begin on 22 September. The company collected offers from potential buyers on Thursday. The maturity of the securities is 7 years.

The loan is planned to be attracted under the program of exchange-traded bonds with a total volume of Rb40 bn rubles, which Nizhnekamskneftekhim approved back in 2018. The first coupon rate of the bonds is set at 8.2% per annum.

Currently, there is one issue of NKNK's exchange-traded bonds in the amount of Rb15 bn due in 2028. The funds of the second issue of exchange-traded bonds, as well as of the first issue, will be used to finance the investment program.

Earlier it was reported that Nizhnekamskneftekhim (NKNKh, part of TAIF Group) predicts an increase in sales of rubbers and a decrease in sales of plastics in physical terms compared to last year.

As per ICIS-MRC Price report, Nizhnekamskneftekhim (NKNKh, part of TAIF Group) shut its polyethylene (PE) production capacities for a scheduled turnaround on 17 September. 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.

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) -- Imports of suspension polyvinyl chloride (SPVC) into Russia totalled 42,700 tonnes in the first eight months of 2021, up by 20% year on year. At the same time, exports decrease by 13%, according to MRC's DataScope report.

Last month's SPVC imports to Russia exceeded 14,000 tonnes from 8,700 tonnes in July. Good seasonal demand and a shortage of polymer from Russian producers led to a jump in imports in July-August.
Overall imports totalled 42,700 tonnes in the first eight months of 2021, compared to 35,700 tonnes a year earlier, with PVC from China accounting for the main increase in imports.

After a spike in May export sales, driven by high prices in foreign markets, exports of Russian SPVC decreased permanently in the following months.

6,100 tonnes of PVC were exported in August versus 11,800 tonnes a month earlier. Overall exports totalled 127,300 tonnes in January-August 2021, compared to 145,500 tonnes a year earlier.
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MOSCOW (MRC) -- Slumping diesel exports from China are proving a boon to other refiners in Asia, with the profit from producing the fuel rising to the highest in 18 months, reported Reuters.

China has been Asia's second-highest exporter of gasoil, the building block for middle distillate fuels that include diesel, heating oil and jet kerosene, but its shipments have slumped in recent months amid lower refinery processing and a lack of export permits.

China's diesel exports dropped in August to the lowest since May 2015, slumping to 540,000 tonnes, equivalent to about 135,000 barrels per day (bpd), from 1.39 million tonnes in July, according to official customs data released on Sept. 18.

Diesel exports have been on a downward trend since March this year, when they were 2.81 million tonnes, or about 680,000 bpd. The total for the first eight months of the year is now 3.5% below the same period in 2020.

A recovery in China's diesel exports isn't on the cards for September, with commodity consultants Kpler estimating shipments of around 134,600 bpd, roughly in line with August's depressed level.

The absence of Chinese cargoes is boosting profits for other export-focused refiners in Asia, with the crack, or profit margin, for producing a barrel of gasoil from Dubai crude at a Singapore refinery rising to an 18-month high of USD7.96 a barrel on Sept. 17.

The crack did slip back a tad to USD7.92 on Monday, but it is still more than double the 2021 low of USD3.44 a barrel recorded on Aug. 24. That's a rally of 130% in the past four weeks.

The move has helped drive overall profits for a typical Singapore refinery using Dubai crude to more than double the average for the past year. The overall margin for refining a barrel of Dubai was USD5.54 on Monday, up from an average of USD3.19 for August and USD2.04 for the past 365 days.

While the profit for producing diesel is recovering, the same cannot be said for gasoline, with the crack for making the motor fuel from Brent crude at a Singapore refinery dropping to USD6.87 a barrel on Monday, down from a 2021 peak of USD9.92 on Aug. 5.

China's exports of gasoline have also been declining, dropping to 570,000 tonnes, or about 156,000 bpd, in August, from 740,000 tonnes in July and the lowest since February 2019. Gasoline exports have been in a downward trend since January, when they were 1.89 million tonnes, equivalent to about 518,000 bpd.

It's not just China that is exporting less gasoline, with shipments from India expected by Refinitiv Oil Research to drop for a fourth straight month in September, while Singapore is also forecast to export less in September than in August.

Asia's overall fuel demand has been lagging the recovery seen in Europe and North America, given several major countries remain in some form of lockdown.

We remind, as MRC informed earlier, that China's domestic polyvinyl chloride (PVC) market hit a record-high Sept. 22 following the Mid-Autumn Festival holiday, due to concerns over supply after the government ordered some provinces to cut power consumption. Several provinces including Xinjiang, Ningxia, and Shaanxi, where major carbide-based PVC producers are based, were asked to shut, or reduce industrial operations due to higher-than-planned energy consumption in the first half of 2021.

According to MRC's ScanPlast report, Russia's overall production of unmixed PVC totalled 580,500 tonnes in the first seven months of 2021, up by 4% year on year. At the same time, one producer reduced its output.
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