Easing COVID-19 emergency restrictions to boost summer gasoline demand in Japan

MOSCOW (MRC) -- Japan's easing of COVID-19 emergency restrictions will boost the gasoline demand in July, when the country kickstarts the summer driving season, but the expected transport restriction for the Tokyo Olympics sent mixed signals for the fuel demand, reported S&P Global.

Japan decided June 17 it will lift its state of emergency measures on nine out of 10 prefectures when it expires on June 20 but will place Hokkaido, Tokyo, Aichi, Osaka, Hyogo, Kyoto and Fukuoka under its COVID-19 priority measures, together with Saitama, Chiba and Kanagawa until July 11.

The state of emergency measures on Okinawa will remain until July 11 but the state of emergency on Okayama and Hiroshima will be lifted on June 20. The priority measures on Gifu and Mie will also be lifted. This means 56% of Japan's population will be under the priority measure, with the state of emergency on Okinawa, accounting for 1% of the population.

"With the easing of state of emergency measures, we expect to see sequential improvement of gasoline demand over the next couple of months," said JY Lim, oil markets adviser at S&P Global Platts Analytics.

"The summer Olympics will also provide some support, but impact will likely not be significant due to the restriction on non-athlete attendees. Overall, we expect to see gasoline growing by 2.5% this year, but still down by 5.7% when compared to pre-COVID levels," Lim said.

Japan's gasoline demand is expected to recover in July on the back of gradual improvement in the pandemic situation and an increase in personal mobility due to the Olympics, among other factors, Petroleum Association of Japan President Tsutomu Sugimori said June 16.

Japan's gasoline demand is estimated to have fallen by 5% year on year in June and down 9% from June 2019 after marking a 14% year-on-year jump in May, when it was down 12% from the same month two years ago, according to Sugimori, who is also chairman of Eneos Holdings, the parent of largest Japanese refiner Eneos.

Japanese refiners and market sources surveyed by S&P Global Platts said June 17 that Japan's July gasoline demand will mark a month-on-month increase and is expected to be between flat year on year to rising 3% from a year ago, taking into account the coronavirus pandemic and the Olympics situation.

Although Japan's gasoline demand is expected to increase in July due to easing COVID-19 emergency measures and the start of the Olympics, regional industry sources expect the impact to be minimal amid bearish fundamentals.

Japan's refinery outage will also soon drop to 685,000 b/d, or 19.8% of the total installed capacity when ENEOS restarts its sole 141,000 b/d crude distillation unit at the Sakai refinery in western Japan in late June, according to Platts calculations.

As MRC wrote previously, ENEOS (formerly JXTG Nippon Oil & Energy) restarted its Sendai refinery in northeast Japanon 18 May, 2021. This refinery was hit by an earthquake on 1 May, 2021. Besides, on 18 May, the company shut down its Sakai refinery in western Japan for maintenance.

We remind that ENEOS Corporation restarted its naphtha cracker in Kawasaki on 1 February 2021. The company shut this cracker with an annual capacity of 515,000 tons/year of ethylene, 300,000 tons/year of propylene, and 105,000 tons/year of butadiene on 4 December, 2020, for repairment after a technical issue reported at the butadiene separation unit and initially planned to resume operations on 28 December, 2020.

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 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- Democratic U.S. congressional members sent a letter to the Environmental Protection Agency, urging the administration to reject any action that would exempt oil refiners from mandates to blend biofuels into the nation's fuel mix, said Hydrocarbonprocessing.

The letter comes after a report from Reuters last week that said President Joe Biden's administration, under pressure from labor unions and U.S. senators including from his home state of Delaware, is considering ways to provide relief to U.S. oil refiners from the mandates.

The letter was signed by lawmakers from both the U.S. Senate and the House of Representatives and states including Iowa and Illinois. It included Senator Amy Klobuchar from Minnesota and Representative Cheri Bustos from Illinois.

The letter was also addressed to the National Economic Council. "We support your efforts to address climate change, but we are concerned that rolling back the RFS obligation for refiners directly contradicts this work," the letter said. "Following through on the actions reportedly under discussion would directly undermine your commitment to address climate change and restore integrity to the RFS (Renewable Fuel Standard) and we urge you to reject them."

Under the RFS, refiners must blend biofuels into their fuel mix or buy credits, known as RINs, from those that do. Refiners can apply for exemptions to the obligations if they can prove the mandates harm them financially. In the letter, the lawmakers asked EPA instead to stabilize the RIN marketplace by issuing a proposed rule for renewable volume blending obligations for 2021 and 2022.

The lawmakers behind Wednesday's letter largely represent corn-producing states. The RFS policy has pitted some oil refiners and corn groups against each other, as oil refiners find the mandates expensive, while they help boost demand for corn-based ethanol.

As MRC wrote previously, POET, the largest biofuels producer in the United States, is in discussions with Flint Hills Resources to acquire the entirety of Flint Hills’ ethanol assets. Flint Hills, a refining, biofuels and petrochemical company, is based in Wichita, Kansas, and is currently the fifth-largest ethanol producer in the United States. Its biofuels division includes six ethanol plants with a combined capacity of about 800 million gallons per year, 1.5 million tons of distillers grains and about 200 million pounds of corn oil, Reint said.

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 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- China's refinery throughput rose 4.4% in May from the same month a year ago to a record high, as margins improved on the back of easing supplies of blending stocks after Beijing announced new taxes, said Hydrocarbonprocessing.

The country processed 60.50 million tons of crude oil last month, data from the National Bureau of Statistics (NBS) showed on Wednesday, equivalent to 14.25 million barrels per day (bpd). That compares with 14.09 million bpd in April and a touch above a previous record at 14.2 million bpd last November. Throughput for the first five months was 292.74 million tons, up 12% from a year earlier.

New taxes on imports of light cycle oil and mixed aromatics are set to cut into supplies of diesel fuel and gasoline and ease supply overhangs, especially of diesel, lending support to refining margins. According to estimates by Shandong-based consultancy JLC, "theoretical" refining margins at independent plants averaged at around 650 yuan (USD101.78) a tonne at end-May, the highest so far this year.

Crude throughput was also supported by a resumption of production at state-run refineries following regular overhauls. The data also showed China's crude oil output in May was 17.03 million tons, or 4.01 million bpd, up 3.5% from a year earlier. Output over January-May gained 2.2% to 82.65 million tons.

Natural gas output last month increased 5.8% from a year earlier to 16.9 billion cubic metres (bcm), the data showed, with total production in the first five months up 10.3% year-on-year at 87.2 bcm.

As per MRC, oil prices are set to remain on a bullish course this year given the strong recovery in global demand following the COVID-19 pandemic-induced slump. Uude demand is expected to further recover in the second half of this year, given the convergence of the pandemic and the revival of economic activity in the United States and Europe.

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 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- Solvay introduces a new biodegradable rheology agent, Rheozan BLC, a natural and ready-to-use liquid polymer solution that delivers high suspension power in home and personal care products, yet without any impact on the formulation viscosity, said the company.

Trends and consumer expectations are shifting toward more naturally derived products. Formulators must develop high-performing products with advanced aesthetics, fewer synthetic chemicals and more eco-friendly materials.

"Solvay’s new Rheozan BLC combines the best of science and nature. It is an innovative and flexible ingredient that leverages the full power of biotechnology with beneficial functions and excellent sustainability credentials," said Jean-Guy Le Helloco, global vice president, home and personal care at Solvay. "This COSMOS-validated ingredient enables new formulation possibilities and addresses the market demand for biodegradable solutions, making it a win-win solution for formulators and consumers."

Rheozan BLC is derived from grey biotechnology. Its synthesis is based on starch fermentation by carefully selected bacterial strains that generate very uniform cellulose fibers. When added to home and personal care formulas, these nature-engineered fibers build a regular three-dimensional mesh, creating a highly effective suspension mechanism. It can suspend and stabilize visual cues such as pigments, natural exfoliating particles, perfume capsules, air bubbles, opacifier or emulsion, and insoluble agents such as zinc pyrithione or minerals.

Solvay’s Rheozan BLC belongs to a new generation of biotechnology-based ingredients that can revolutionize the chemical industry, harnessing the power of nature to combine higher performance with more safety and sustainability toward a more circular economy.

As MRC informed earlier, in August, 2020, through the acquisition of the Solvay polyamide (PA) business, BASF enhanced its R&D capabilities in Asia Pacific with new technologies, technical expertise, and upgraded material and part testing services. BASF is planning to integrate the R&D centers from Solvay into its R&D existing facilities in Shanghai, China, and Seoul, Korea. The enhanced capabilities will boost BASF’s position as a solution provider to develop advanced material solutions for key industries.

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 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.

Solvay is a science company whose technologies bring benefits to many aspects of daily life. With more than 23,000 employees in 64 countries, Solvay bonds people, ideas and elements to reinvent progress. The Group seeks to create sustainable shared value for all, notably through its Solvay One Planet plan crafted around three pillars: protecting the climate, preserving resources and fostering better life. The Group’s innovative solutions contribute to safer, cleaner, and more sustainable products found in homes, food and consumer goods, planes, cars, batteries, smart devices, health care applications, water and air purification systems. Founded in 1863, Solvay today ranks among the world’s top three companies for the vast majority of its activities and delivered net sales of EUR9 billion in 2020.
MRC