June prices of some LDPE grades rise significantly in Russia

MOSCOW (Market Report) -- Demand for low density polyethylene (LDPE) increased significantly in the Russian market in June partially because of seasonal factors. And already in the second half of the month, some polyethylene (PE) grades became scarce and rose in price substatially, according to ICIS-MRC Price report.

Quarantine restrictions due to the coronavirus pandemic in April - May led to a major reduction in demand for LDPE. But already in June, the situation changed dramatically, demand for PE began to recover gradually, whereas supply of some grades was dynamically reduced due to upcoming shutdowns for maintenance at several plants simultaneously. As a result, 108 grade PE had become scarce by end-June, and some sellers' prices rose by Rb13,000/tonne.

PE, namely 108 grade PE, was in high demand at its lower price range. Demand was affected by converters' desire to build up additional LDPE inventories before shutdowns for turnarounds at several plants. Demand was also pressured by the end of the quarter and the need to "spend" VAT.

Angarsk Polymers Plant shut its production capacities for a 30-day turnaround on 22 June. A similar shutdown for a scheduled maintenance is expected at Gazprom neftekhim Salavat's LDPE production capacities from 1 July. And in the second half of July, Tomskneftekhim will take off-stream its production for a two-week turnaround.

Amid stronger demand and shutdowns for maintenance at several plants, supply of 108 grade LDPE began to decrease dynamically already in the second decade of June, while some sellers had sold out all their quantities by the middle of the month. And as supply of PE subsided, prices went up.

Tight supply and stronger demand led to price records last week. Deals for July shipments of Kazanorgsintez's 108 grade LDPE exceeded Rb72,000/tonne FCA Kzan, including VAT, in the electronic trades.

The completely opposite situation was in the 158 grade and 153 grade LDPE markets in June. There was no shortage of PE in the market, despite restrictions on shipments from Kazanorgsintez and the upcoming shutdowns at the plants in Salavat and Tomsk. PE prices of some sellers, including the Belarusian producer rose, but the price increase was not as significant as in the 108 grade LDPE segment.
MRC

MOSCOW (MRC) -- Middle East crude producers Saudi Aramco and Abu Dhabi National Oil Company will likely raise the official selling price differentials of their respective crude for the third consecutive month on the back of a strong uptick in the region's crude structure, market participants said, said S&P Global.

Aramco is expected to raise the OSP differential of its Arab Light crude bound for Asia in August by between 80 cents/b to USD3/b, participants surveyed by S&P Global Platts said this week.

Earlier in June, the oil producer raised the Asian OSP differential of the crude by USD6.10/b from minus USD5.90/b for June to a premium of 20 cents/b for July. The main driver for the expected rise in OSP differentials is the uptick in the benchmark Dubai crude structure, reflected by the spread between physical cash Dubai and same-month Dubai futures, also known as the M1-M3 spread.

The spread has risen largely due to supply side factors, with OPEC+ alliance extending the production cut of 9.6 million b/d to July. The alliance have also increased pressure on Iraq, Nigeria, Angola and Kazakhstan to comply with the deal, with compensatory cuts expected to be made over July-September in addition to the countries' set quotas.

A key price indicator for Middle East sour crude market, the M1-M3 spread has risen to average at 83 cents/b premium in June so far -- the widest since January, and up USD3.56/b from minus USD2.73/b average over May, Platts data showed.

The price indicator, tracked by Middle East producers to define the core direction and extent of price hikes or cuts, suggests that producers could raise their respective OSP differentials for August. Similarly, Platts cash Oman spread to Dubai futures has risen USD3.31/b from minus USD2.44/b average in May to a premium of 87 cents/b in June.

"Our model says USD3/b increase but [it also] depends on production increase I believe," said a Singapore-based crude trader with a European oil firm. Middle East producers will likely pare down the potential increase in their respective OSPs in view of oil product cracks, which have risen from previous month but have remained largely fragile, some said.

Participants surveyed also indicated that they expect the medium, heavy crude grades to receive a larger increase compared to the lighter grades.

As MRC informed earlier, Saudi Aramco on June 17 said it completed the share acquisition of a 70% stake in petrochemicals company Saudi Basic Industries Corporation, or SABIC, from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for a total purchase price of Riyal 259.125 billion (USD69.1 billion). However, the transaction terms have been changed to increase the timeline over which Aramco makes the payments by almost three years. An upfront cash payment of 36% of the deal value has also been eliminated from the deal.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC

MOSCOW (MRC) -- Crude oil futures fell in midmorning trade in Asia June 30 after climbing overnight June 29 on better-than-expected US economic data and rising global demand, said S&P Global.

At 10:44 am Singapore time (0244 GMT), ICE August Brent crude futures was down 21 cents/b (0.50%) from the June 29 settle at USD41.50/b, while the NYMEX August light sweet crude contract was down 27 cents/b (0.68%) at USD39.43/b.

The National Association of Realtors, or NAR, reported June 29 that US pending home sales for May rose 44.3% month on month after two previous months of declines. This is the highest month-over-month gain in the index, and beats the 19.3% gain expected in a Bloomberg survey of economists, according to media reports.

"This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery," according to Lawrence Yun, NAR's chief economist, in the same report. Meanwhile, rising refinery demand and an expected surge in exports likely weighed on US crude supply in the week ended June 27, according to analysts.

Commercial US crude stocks are expected 2.7 million barrels lower on the week at around 538 million barrels, analysts surveyed by S&P Global Platts said. The drawdown would snap three successive weekly builds that each pushed inventories to fresh all-time highs, largely due to an uptick in crude exports amid cheaper VLCC freights and rising margins for US crude abroad.

"The cyclical data globally continues to point to a robust reopening narrative and remains one of the primary bullish price tenets beyond OPEC+ unwavering compliance. Suggesting that that oil prices are supported by real demand, not just OPEC+ production cuts and the compensation principle — implying that both supply and demand curves will continue to move in opposite but bullish directions," said Stephen Innes, chief global markets analyst at AxiCorp, in a note June 30.

Total US gasoline demand is also expected to have climbed around 2% during the week ended June 27, according to S&P Global Platts Analytics data. "However, the market is holding its breath as it looks ahead to the key 4 July holiday, where increased travel is expected. A reluctance of consumers to hit the roads could dent expectations of a recovery in demand for gasoline during the US summer," ANZ analysts said in a note June 30.

Meanwhile, coronavirus cases continued to surge in the US and other parts of the world. Texas Governor Greg Abbot ordered on June 26 for bars to close and restaurants to operate at 50% capacity while his counterpart in Arizona, Doug Ducey, has also ordered public schools to delay the start of classes at least until Aug. 17, according to media reports.

We remind that, in September 2019, six world's major petrochemical companies in Flanders, Belgium, North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region) announced the creation of a consortium to jointly investigate how naphtha or gas steam crackers could be operated using renewable electricity instead of fossil fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP, LyondellBasell, SABIC and Total, aims to produce base chemicals while also significantly reducing carbon emissions. The companies agreed to invest in R&D and knowledge sharing as they assess the possibility of transitioning their base chemical production to renewable electricity.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
MRC

MOSCOW (MRC) -- Indian Oil Corporation Ltd (IOC), the nation''s biggest oil firm, last Thursday opened a new centre at Paradip in Odisha for doing research on applications and products that can be developed from polymers such as personal protective suits and face masks, reported Outlook India.

The Production Application and Development Centre (PADC) has been set up adjacent to the firm''s giant oil refinery and petrochemical complex at Paradip, an official statement said.

Set up an investment of Rs 43 crore, the centre is equipped with 50 latest sophisticated polymer testing and processing equipment to cater to the needs of customers and new investors, it said in a statement.

PADC will act as an incubation centre for new entrepreneur development in and around Odisha in the field of plastics, it said.

"The centre will render assistance to customers and investors in product and application development for polymer finished products such as molded furniture, houseware, woven sacks for packaging cement, fertiliser, healthcare applications like baby diaper, personal protective suit, mask etc," the statement said.

The centre will carry out testing and developmental activities for investors of Paradeep Plastic Park and other clusters like Balasore and Khurda.

It will impart requisite product and process training to the prospective and budding investors including hand holding activities for plant set-up, selection of machinery and material.

"PADC will provide quality assurance, complaint handling, customer support, benchmarking studies, new and niche grade development and application development activities," it said.

The centre was inaugurated by Oil Minister Dharmendra Pradhan and Odisha Chief Minister Naveen Patnaik through a video conference.

Speaking on the occasion, Pradhan said the state holds immense potential in petrochemicals, steel, mines and coal, aluminium, tourism, textile, agri entrepreneurship.

"The world class facility inaugurated today will ensure availability of raw material, facilitate entrepreneurs in the petrochemicals sector and provide training to the prospective and budding investors," he said.

Patnaik said the centre will not only perform a pivotal role in developing new material and innovative applications, but also help investors to set up manufacturing units in plastic and polymers sectors.

IOC has been acting as an anchor in development of plastics and polymer industry in the state, and the new Centre will further support the innovation and entrepreneurship in the area, he added.

As MRC informed earlier, LyondellBasell, the world’s largest licensor of polyolefin technologies, has recently announced that Indian Oil Corporation Ltd. (IOCL) will use the LyondellBasell Spheripol technology for a new facility. The process technology will be used for a 450 KTA polypropylene (PP) plant to be built in Panipat, Haryana State, India.

According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.

Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.
MRC

MOSCOW (MRC) -- BASF has developed a chemical recycling process for used mattresses and is starting pilot tests at the Schwarzheide site in Brandenburg, Germany, said the company.

The materials from old mattresses are to be recycled in such a way that they can be used for the production of new mattresses. "The target is to recover the raw materials with a quality comparable to that of non-recycled/virgin raw materials", says Shankara Keelapandal, Business Management Isocyanates Europe. In doing so, BASF is breaking new ground and responding to the raised expectations regarding sustainability of the foam and mattress industry as well as those of consumers. It is an important step to possibly re-enter post-consumer waste back into product lifecycles.

BASF’s process breaks down the flexible polyurethane and delivers the initially used polyol. From there BASF can produce new foam with a significantly lower carbon footprint, because fewer fossil resources are used. “It makes projects of that nature quite attractive because, while mattresses are easy to collect and to sort out, at the end of their lifecycle they currently end up being either incinerated or in a landfill, explains technical project manager Arno Volkmann. First volumes of the recycled material will be delivered to project partners later this year to develop pilot projects together. "The project is technically complex, but the potential to reduce waste volumes and save resources makes it all worth it" comments Keelapandal.

With the new process, BASF steps up its efforts to increase sustainability and takes one step further toward a circular economy. Aiming to decouple economic growth from the use of finite resources, BASF accelerates the adoption of the circular economy principle into its day-to-day operations. "This is why we develop a solution to closing the loop for soft polyurethane foam with the chemical recycling of mattresses," adds Keelapandal.

We remind that BASF has restarted its No. 1 steam cracker following a maintenance turnaorund. Thus, the company resumed operations at the plant on September 30, 2019. The plant was shut for maintenance in mid-August, 2019. Located at Ludwigshafen in Germany, the No. 1 cracker has an ethylene production capacity of 235,000 mt/year and a propylene production capacity of 125,000 mt/year.

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.

BASF is the leading chemical company. It produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries. BASF generated sales of EUR59 billion in 2019.
MRC