COVID-19 - News digest as of 14.07.2020

1. IEA raises 2020 oil demand forecast but oil refining may fall more than IEA anticipates

The International Energy Agency (IEA) bumped up its 2020 oil demand forecast on Friday but warned that the spread of COVID-19 posed a risk to the outlook. But oil refining activity in 2020 is set to fall by more than the IEA anticipated last month and to grow less in 2021, reported Reuters with reference to its statement. The Paris-based IEA raised its forecast to 92.1 million barrels per day (bpd), up 400,000 bpd from its outlook last month, citing a smaller-than-expected second-quarter decline. "While the oil market has undoubtedly made progress ... the large, and in some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside," the IEA said in its monthly report.



MRC

Crude futures rangebound in Asia trade on OPEC+ compliance as COVID-19 cases rise

MOSCOW (MRC) -- Crude oil futures were steady to lower in mid-morning trade in Asia July 8 as the market continued to be supported by compliance with OPEC+ production cuts, with further gains were capped by rising COVID-19 case counts in the US, reported S&P Global.

At 10 am Singapore time (0200 GMT), ICE Brent September crude futures were down 11 cents/b (0.26%) from the July 7 settle at USD42.97/b, while the NYMEX August light sweet crude contract was 11 cents/b (0.27%) lower at USD40.51/b.

The number of confirmed coronavirus cases in the US is nearing 3 million amid a surge in new infections across California, Texas, Florida and Arizona, latest data from John Hopkins University showed. Australia's second-largest city, Melbourne, has also re-imposed strict lockdown measures for six weeks after a spike in infections.

"Oil price rally runs on thin ice amid resurgence of COVID-19 cases," ANZ analysts said in a note July 8.

However expectations of further inventory withdrawals in the US and continued compliance with OPEC+ production cuts was keeping market sentiment positive, providing enough support to keep crude prices rangebound.

OPEC's crude output in June hit a three-decade low of 22.31 million b/d, according to an S&P Global Platts survey. This pushed the group's compliance to 106% of its committed production cuts, up from 85% in May, according to Platt's calculations.

"Without a significant shift in the narrative, price action is floundering as traders become more accustomed to minor retracements and rallies, while taking a more noticably defensive posture, not wanting to run with the bull or bear baton too far ahead of the oil market's immediate economic realities," AxiCorp chief global markets analyst Stephen Innes said in a note July 8.

The US Energy Information Administration in its monthly report published July 7 boosted its 2020 outlook for crude futures and US oil production on OPEC+ supply cuts and rising demand after many regions eased movement restrictions and lifted lockdowns in June.

The EIA now sees Brent prices averaging USD40.50/b in 2020 and expects output to average 11.63 million b/d in they year, up 70,000 b/d from its June forecast, and forecast global oil demand contraction will fall to 8.15 million b/d, down from 8.34 million b/d projected last month.

As MRC informed before, global oil consumption cut by up to a third in Q1 2020. What happens next in the oil market depends on how quickly and completely the global economy emerges from lockdown, and whether the recessionary hit lingers through the rest of this year and into 2021.

Earlier this year, BP said the deadly coronavirus outbreak could cut global oil demand growth by 40 per cent in 2020, putting pressure on Opec producers and Russia to curb supplies to keep prices in check.

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 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

Ningxia Baofeng Energy shuts MTO unit in China for turnaround

MOSCOW (MRC) -- Ningxia Baofeng Energy has taken off-stream its (methanol-to-olefins) MTO unit for a maintenance turnaround, as per Apic-online.

A Polymerupdate source in China informed that, the company halted operations at the unit on July 1, 2020. The unit is likely to remain shut till end-July, 2020.

Located at Yinchuan, Ningxia, China, the MTO unit has an ethylene production capacity of 300,000 mt/year and propylene capacity of 300,000 mt/year.

As MRC wrote previously, in June 2019, Johnson Matthey (JM) announced that Ningxia Baofeng Energy Group had "successfully" commissioned a new methanol plant at Ningxia Baofeng's 600,000-t/y coal-to-olefins complex in Ningxia Province, China. The 6,600-t/d methanol unit, based on technology from JM, utilizes syngas feedstock and combines advanced JM catalysts to produce stabilized methanol, which is used to produce olefins in a downstream facility.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
MRC

BEWiSynbra establish recycling company in Denmark

MOSCOW (MRC) -- BEWiSynbra Group, a leading producer of expandable polystyrene (EPS) in Europe, announces that it has entered into an agreement to acquire certain assets deriving from the Danish recycling company EPS Recycle, and thereby establish the recycling company BEWiSynbra Circular Denmark A/S, said the company.

"I am very pleased that we have established BEWiSynbra Circular Denmark A/S, confirming our commitment to lead the EPS industry’s change towards a circular economy. This acquisition fits very well with our strategic priorities," says Jonas Siljeskar, CEO of BEWiSynbra Group.

BEWiSynbra has launched an ambitious target of recycling 60,000 tonnes of EPS annually. Since the launch of BEWiSynbra Circular in October 2018, the group has acquired three recycling companies, established a recycling company in Portugal and introduced several recycling initiatives. With the acquisition of assets deriving from EPS Recycle, BEWiSynbra will expand and strengthen its activities for collection and recycling of EPS in Denmark. The operations will be run as BEWiSynbra Circular Denmark A/S and headed by Karl Erik Olesen, who is also the Managing Director at BEWiSynbra Denmark A/S.

"I am very excited about this acquisition that enables us to further develop our recycling activities. The operation solves a waste problem by transforming cellular foam into plastic granules that can be used in new plastic and EPS products, and thereby contribute to establishing an efficient resource loop,” says Karl Erik Olesen, Managing Director of BEWiSynbra Circular in Denmark.

As MRC informed earlier, Sulzer Chemtech has completed the design, installation and start-up of an advanced production line for expandable polystyrene (EPS) for the BEWiSynbra Group.

As per ICIS-MRC Price Report, spot prices of Russian EPS grew to the range of Rb90,000-96,000/tonne CPT Moscow, including VAT. Spot prices rose in July, despite lower contract prices. Formula prices for the largest buyers fell to the lowest level - Rb81,000-82,000/tonne CPT a converter's warehouse, including VAT, in July. Their recovery is expected in the coming months. Prices of Chinese plants were still in the range of USD990-1,020/tonne CFR St Petersburg, excluding VAT, this week.

BEWiSynbra Group is one of the largest vertically integrated producers of expandable polystyrene (EPS) in Europe, focusing on sustainable solutions for packaging and components, as well as insulation. Innovation is a key driver for the Group’s competitive advantage and sustainability, and BEWiSynbra has an ambitious approach to its recycling initiatives.
MRC

Explosion rocks at biofuel plant in south China

MOSCOW (MRC) -- Two people were missing and two injured after an explosion on Sunday at a biofuel plant in China’s Fujian province, reported Reuters with reference to the local fire department and state media's statements.

The blast occurred around 10:10 a.m. (0210 GMT) at Longyan Zhuoyue New Energy Co Ltd, a Shanghai-listed biofuel producer based in the southern city of Longyan, as workers were doing maintenance, CCTV said.

The fire was continuing as of 0600 GMT, as more than 100 firefighters were dispatched to the site and nearby residents had been evacuated, CCTV said.

Longyan Zhuoyue New Energy processes gutter oil into biodiesel, the company website says.

We remind that, as MRC informed earlier, China is reviving a USD20 billion petrochemical project in eastern Shandong province as part of efforts to dial up infrastructure spending to support an economy struggling with the impact of the coronavirus pandemic. The 400,000 barrel-per-day (bpd) refinery and 3 million ton-per-year ethylene plant in Yantai, Shandong, the country’s hub for independent oil refineries, was proposed years ago but approval has been slowing in coming because of China’s struggle with excess refining capacity.

Ethylene is the main feedstock for the production of polyethylene (PE).

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