COVID-19 - News digest as of 30.12.2021

1. Crude oil prices rise on lower US oil inventories and concerns that rising coronavirus cases might reduce demand

MOSCOW (MRC) -- Oil prices rose on Wednesday, after government data showed US crude and fuel inventories fell last week, offsetting concerns that rising coronavirus cases might reduce demand, reported Reuters. Brent crude rose 29 cents to settle at USD79.23 a barrel. US West Texas Intermediate (WTI) crude rose 58 cents to settle at USD76.56 a barrel. In the United States, the average number of daily confirmed coronavirus cases hit a record high of 258,312 over the last seven days, a Reuters tally on Wednesday found. Both oil futures contracts earlier traded at their highest in a month after US government data showed lower oil inventories.

MRC

LLDPE production rose by 15% in January-November in Russia

MOSCOW (MRC) -- Russia's overall linear low density polyethylene (LLDPE) production totalled 5,531,000 tonnes in the first eleven months of 2021, up by 15% year on year. ZapSibNeftekhim accounted for the main increase in the output, according to MRC's ScanPlast report.

November total LLDPE production in Russia increased to 58,600 tonnes, whereas this figure was at 35,600 tonnes a month earlier, all producers decreased their capacity utilisation in October. Thus, overall LLDPE output reached 5,531,000 tonnes in January-November 2021, compared to 4,2829,000 tonnes a year earlier. All producers raised their output of LLDPE, but ZapSibNeftekhim accounted for the greatest increase in production.

Structure of PE production over the reported period looked as follows.

November LLDPE production at ZapSibNeftekhim's facilities reached 32,300 tonnes against 18,400 tonnes a month earlier. In general, the total output of linear polyethylene at the Tobolsk plant reached the level of 304,900 tonnes in January-November, up 20% year on year.

Last month, LLDPE production at the facilities of Nizhnekamskneftekhim increased to 17,900 tonnes against 13,700 tonnes in October, the Nizhnekamsk producer stopped production in October for a short turnaround. Thus, overall production of this PE grade totalled 205,400 tonnes over the stated period, up by 4% year on year.

Kazanorgsintez for eleven months of this year produced 42,800 tonnes of linear polyethylene against 30,800 tonnes a year earlier.

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Odfjell to expand terminals storage capacity for petrochemicals in Houston

Odfjell to expand terminals storage capacity for petrochemicals in Houston

MOSCOW (MRC) -- Odfjell is constructing a new tank bay at Odfjell Terminal Houston (OTH), continuing to expand and invest in its terminals platform to support ongoing regional growth in the chemical industry, as per the company's press release.

Odfjell is investing in and expanding its terminals platform with the addition of a new, modern, automated tank bay. Bay 13 at Odfjell Terminals Houston (OTH) will increase capacity by approximately 9% to 413,400 cubic meters (cbm). The expansion project is consistent with OTH's strategy of positioning itself for healthy demand for storage capacity in the specialty/petrochemical industry in the US Gulf Coast region, where OTH has been operating at or near full capacity for years.

Bay 13's nine new tanks will be comprised of a mix of stainless steel and carbon-steel, with a total capacity of 32,400 cbm. The new tanks will allow OTH to relocate and consolidate products of existing customers and optimize the use of its current storage capacity for new customers and products.

The tank bay will be highly automated, requiring less manual intervention, and will benefit from the ongoing Digital Transformation Program, which includes an advanced ERP system and automated control systems.

Bulk chemicals, including intermediate and specialty chemical products exports in the US Gulf are expected to increase by 2.3 million metric tonnes by 2024, while import volumes are expected to increase by 389,000 metric tonnes by 2030. As a result, storage demand is expected to rise and the development of Bay 13 will assist in further optimizing OTH and allow Odfjell Terminals to support industry growth for new and existing customers.

OTH has been a leading provider of storage, transfer, and distribution services to the liquid bulk chemical industry for nearly four decades.

With its current 119 tanks, two deep water ship docks, four barge berths and one of the largest stainless steel storage capacities of any independent tank terminal in the world, OTH is strategically located near the entrance of the Houston ship channel and serves as a major international hub for chemical import and export to and from the United States. Along with the east coast presence of its terminal in Charleston, SC, Odfjell’s strategically located assets are well placed to continue to play an integral role in the global and regional chemical trades to and from the United States.

Bay 13 is set to begin construction in the first quarter of 2022 and is expected to be operational by the end of 2023. The expansion will be fully financed through an existing credit facility.

As MRC informed earlier, in July, 2020, Odfjell (Bergen, Norway) says a significant expansion of its European chemicals storage capacity had been completed at the port of Antwerp, Belgium.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.

Odfjell Terminals Houston (OTH), is owned by the Joint Venture Odfjell Terminals US which is owned 51% by Odfjell SE and 49% by Northleaf Capital Partners.
MRC

Russian producers rolled over December PVC prices for January shipment

Russian producers rolled over December PVC prices for January shipment
MOSCOW (MRC) -- Negotiations for January delivery of Russian PVC started last week. Despite increased availability and lower prices globally, producers have rolled over December prices for January shipments, according to the ICIS-MRC Price Report.

The global availability of PVC began to improve in November, with the largest price decline over the past two months was in Asia. Nevertheless, the great remoteness from the Russian market and the problems with logistics for supplies from a number of regions of the world predetermine the almost complete absence of pressure on Russian producers from imports.

As a result, Russian producers managed to keep the December price level for suspension PVC in January, and converters accepted the fact of the absence of the alternative. Local producers in Asia have twice reduced their PVC prices since November, and the price reductions were quite significant. But even in the new price realities, due to complex and expensive logistics, Asian PVC is difficult for Russian converters to buy and it is quite expensive.
The situation is similar with North American PVC.

Export quotas from local producers have increased, while PVC prices have fallen in price for export. Prices for North American PVC are close to the level of Russian producers, but long shipping times stop interest in current purchases of PVC from the United States.

Nevertheless, despite all the difficulties with logistics, imports of suspension PVC this year increased by 36% compared to the same indicator in 2020 and exceeded 60,000 tonnes in eleven months. Key import volumes were from the producers from China.

Negotiations on the January shipment of Russian PVC started in the middle of last week, but some producers started discussing supply this week. Converters, in turn, for a number of reasons are no longer trying to reduce the prices of domestic PVC.

The demand for PVC from the Russian market has decreased, some converters intend to stop their production facilities for maintenance works during the New Year holidays, and some for a longer period. Some converters reported a serious reduction in demand for finished products.

Russian PVC prices in rouble terms broke a historical record in December, and the December price level was rolled over for January supplies. Deals for PVC with K64/67 were discussed in the range of Rb175,000-200,000/tonne CPT Moscow, including VAT, for volumes less than 500 tonnes. Discussions for K70 resin started from Rb205,000/tonne CPT Moscow, including VAT, and higher.

MRC

Petrobras completes sale of 27 onshore fields for USD156 mln

Petrobras completes sale of 27 onshore fields for USD156 mln

MOSCOW (MRC) -- -Petroleo Brasileiro SA, or Petrobras, said Wednesday it completed the sale of 27 onshore oil fields in the Cricare cluster for up to USD156 million, according to MarketWatch.

The buyer is Karavan Seacrest SPE Cricare, which is 51% owned by Karavan O&G Participacoes e Consultoria Ltda. and 49% owned by Seacrest Capital Group Ltd.

The cluster is located in the state of Espirito Santo and in January through November produced an average of 1,300 barrels per day of oil and 15,400 cubic meters of gas per day.

Petrobras received a closing payment of USD27 million, in addition to an USD11 million payment made at the signing of the contract. Petrobras is also set to receive another USD118 million in payments, though the amount might be adjusted based on future oil prices, the company said.

Petrobras has been selling off onshore and shallow-water production fields to focus its efforts on its rich deep and ultra deepwater fields.

As MRC reported before, Brazil’s state-controlled oil producer has taken a step closer to selling its stake in the Braskem petrochemicals business after the board approved a share offering. Rio de Janeiro-based Petrobras can sell up to 100% of its preferred Braskem shares in a follow-on offering, it said in a filing earlier this month.

We remind that Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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 2,047,100 tonnes in the first ten months of 2021, up by 17% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,226,530 tonnes in January-October 2021, up by 26% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding stat-copolymers of propylene (PP random copolymers) decreased significantly.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.
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