Oil complex retreats as economic uncertainty clouds demand outlook

MOSCOW (MRC) -- The oil complex settled lower July 23 as demand outlook came under pressure amid growing economic uncertainty following a weak US jobs report, according to S&P Global.

NYMEX September WTI settled 83 cents lower at USD41.07/b and ICE September Brent was down 98 cents on the day at USD43.31/b.

Oil futures, which were already trending off overnight highs, turned lower ahead of US trading after US Labor Department data showed initial unemployment claims climbed to 1.416 million in the week ended July 18.

"The recovery appears to be stalling as jobless claims rose for the first time since March and as continuing claims remain elevated," OANDA senior market analyst Edward Moya said. "The economy does not seem to be on sound footing anymore and with high uncertainty with the direction of the coronavirus, businesses will likely struggle to justify hirings."

NYMEX August RBOB settled 2.42 cents lower at USD1.2586/gal and August ULSD was down 1.66 cents at USD1.2541/gal.

"We had that big EU package earlier this week but there is still a lot of uncertainty about what (the US) is going to do," Tradition Energy analyst Gene McGillian said. "As we get close to the end of the CARES package, if there isn't anything to be done, worries about how the economy will perform in the second half of the year could bring some more selling out of the woodwork."

On July 21, EU leaders announced a Eur750 billion (USD869.71 billion) stimulus package aimed at offsetting the economic impact of the coronavirus crisis. But there is little clarity regarding what action, if any, Congress will take to address the expiration later this month of a federally-funded USD600 weekly unemployment stipend.

US President Donald Trump has pushed for any relief package to include a payroll tax cut. However, the idea faces opposition from both Congressional Republicans and Democrats.

US Treasury Secretary Steven Mnuchin said July 23 that a Republican plan to extend enhanced unemployment benefits would be based on a 70% wage replace scheme, according to media reports.

On July 22, media reports suggested that Senate Republicans were considering extending the benefit package through December, but at a reduced rate of $100 per week.

Meanwhile, the US oil and gas rig count rose by six on the week to 294, rig data provider Enverus said July 23, marking the second consecutive week of increases after more than four months of steep contraction amid pandemic-induced low crude prices and the decimation of global oil demand.

The WTI forward structure turned more bearish. While the contango in front-month versus second-month futures was steady at 14 cents/b, it opened to USD1.51/b for the front-month versus year-ahead contract, out from USD1.19/b on July 22.

As MRC informed previously, 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.

And 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- US weekly crude exports fell to their lowest level November in early July, according to US Energy Information Administration oil data July 8, as arbitrage incentives to Northeast Asia have eroded, reported S&P Global.

The US exported just 2.39 million b/d of crude for the week ended July 3, their lowest since the 2.37 million b/d seen in early November. Exports last week were down more than 700,000 b/d from the week prior.

Arbitrage economics for WTI into Asia have been difficult to work. For example, WTI MEH delivered into Japan at a scant 14 cent/b discount to Russian ESPO in Japan over June, according to S&P Global Platts Analytics crude Arbflow data. As recently as April, economics favored WTI MEH by over USD7/b. In fact, the data shows WTI MEH delivering at a small premium to ESPO at the start of this week.

Additionally, the closure of the Dakota Access Pipeline (DAPL), which has been ordered by a US Judge to be shut by Aug 5, would lower the volumes of light sweet crude available on the USGC, thus leading to higher values for sweet grades, like WTI MEH. Indeed, since the July 6 ruling, differentials for WTI MEH have risen by 20 cents/b while differentials for Light Louisiana Sweet crude have gained 70 cents/b.

While US exports have waned in recent months, the nascent US crude export market is still recording new firsts. The first VLCC exported from the US to Canada, the Eliza, is set to reach the Irving Oil Refinery in Saint John, New Brunswick on July 13, according to Kpler data. The vessel loaded at the Louisiana Offshore Oil Port on April 7, and spent some time floating in the USGC before moving towards its current destination, according to Kpler data.

The Irving Oil Refinery in Saint John can process around 320,000 b/d of crude oil, and more than half of the finished product is exports to the Northeast US, according to the company's website.

As MRC wrote before, refiner Irving Oil will lay off 6% of its global workforce due to economic challenges presented by the coronavirus pandemic, according to the company's statement. The layoffs will affect 250 workers across its operations in Canada, the United States, Ireland and the UK.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Siegwerk, one of the leading global providers of printing inks for packaging applications and labels, becomes a strategic partner of , a frontline initiative, co-founded by Borealis and SYSTEMIQ, that designs, implements and scales circular economy solutions to marine plastic pollution in Southeast Asia, said Chemweek.

Since its launch in 2017, Project STOP has welcomed various industrial and governmental partners designing, implementing, and scaling circular economy solutions to prevent plastic waste pollution. Siegwerk is now joining this strong network of system relevant players that are committed to support the establishment of on the ground solutions in Indonesia.

Every year, roughly 12 million tons of plastic waste end up in the ocean impacting community health, wealth and polluting the environment. An estimated 50% of marine debris originates from just five Asian economies: China, Indonesia, the Philippines, Vietnam, and Thailand. With an annual consumption of more than 6 million tons of plastic and an estimated ocean leakage of 1 million tons per year, Indonesia is the second largest contributor to ocean plastics. In response, the Indonesian government has created a Marine Debris Action Plan in 2017 committing itself to reduce Indonesia’s ocean plastic levels 70% by 2025. Project STOP has four core objectives; zero leakage of waste into the environment; creating more circular systems; achieving economic sustainability; and benefits to local community via creation of new jobs and reducing impact of mismanaged waste on public health, tourism and fishers.

The initiative works hand in hand with local municipalities and environmental agencies to contribute to developing a low cost and circular waste management infrastructure through city partnership projects across Indonesia. “We strongly believe that creating a circular economy is the solution to today’s global waste problem and we see it as our responsibility as global player to actively support its realization”, explains Alina Marm, Head of Circular Economy Hub at Siegwerk.

"As strategic partner of Project STOP, we are now able to deliver on our commitment in a way that empowers local communities by building a circular system to successfully tackle the very real and immediate problems of plastic waste pollution. The initiative’s overall goal is to increase recycling rates, achieve zero ocean leakage and create social benefits for local communities. It combines a rapid acceleration of waste management systems at city level with system level policy, investment, behavior change and innovation in material design approaches. By joining Project STOP we have the exciting opportunity to be an active part of a system-changing “impact” initiative concretely supporting areas with minimal to no waste management services and high plastic leakage rates by building infrastructures, empowering circular processes and encouraging behavior change”, adds Ralf Hildenbrand, President Americas and Member of the Board.

As MRC informed earlier, an estimated 11 million metric tons (MMt) of plastic waste enter the ocean every year and this will almost triple by 2040, to 29 MMt, if immediate and sustained action is not taken, according to a newly published in-depth report. This is equivalent to dumping 110 lbs (50 kilograms) of plastic on every meter of coastline around the world, it says. However, it is possible to reduce annual flows of plastic into the ocean.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC

MOSCOW (MRC) -- Wacker announced that it will spend “mid-double digit million euros” to expand capacity of its Amsterdam, Netherlands biotech facility, said Chemweek.

Projects include expansion of the biologics, live microbial products and vaccines manufacturing units. The company will build a new 1,500 liters fermentation line and set up new cleanroom structures.

"By investing in new plants and production equipment, we are continuing to upgrade the Amsterdam site two years after Wacker took it over, and are making our company fit for the future," says Jorg Lindemann, managing director of Wacker Biotech, the company’s Dutch subsidiary.

The new fermentation line will replace an existing facility with the same capacity after a transition period. At the same time, new, improved clean room structures in the area of the existing 270-liter production line are to be created. The existing clean rooms will be gutted, completely renovated and fitted with new equipment. Among other improvements, new utility supplies are planned. These will prepare the plant to produce new classes of actives, such as pDNA and mRNA-based vaccines. These nucleic acid-based actives classes are currently playing a role in the search for a vaccine against the new SARS Cov-2 corona virus.

"The strategic investment in our Amsterdam site is an important step in our continued growth in the fast-growing market for pharmaceuticals,” says Susanne Leonhartsberger, head of Wacker Biosolutions, the company’s life science division. “The new structures, new equipment and new fermentation line will also enable us to reliably meet our customers’ demand in the next years. We will strengthen our position as one of the leading contract manufacturers in the field of microbial production of biologics," says Guido Seidel, head of the biopharmaceuticals business and managing director of Wacker Biotech GmbH.

As a contract development and manufacturing organization, Wacker Biotech combines Wacker’s biopharmaceutical activities. Wacker acquired the Amsterdam site in 2018, doubling the company’s biologics capacity. The portfolio was expanded with the production of vaccines, including polysaccharides, and live microbial products. The site has two fermentation lines currently with capacities of 1,500 and 270 liters. They manufacture microbial-derived biopharmaceuticals for clinical testing and for the commercial market. Further manufacturing potential is offered by single-use fermenters with a capacity of 250 liters together with the ancillary equipment. The site also has a fill-and-finish facility for filling and lyophilization, which enables the complete manufacture of pharmaceuticals from the active agent to the filled product.

As MRC informed earlier, Wacker Chemie operates a 90 ktpa EVA compounding plant at the Ulsan site, consisting of two lines. The second line with a capacity of 40 thousand tons of products per year was launched in 2013.

According to MRC's DataScope, in June of this year, EVA imports to Russia fell by 22.57% to 2,940 tonnes from 3,800 tonnes in the same month of last year, and by the end of January-June 2020, imports of this type of ethylene copolymer in the Russian Federation decreased by 8.16% - to 17,440 tonnes (18,980 tonnes in January-June 2019).

Wacker Chemie manufactures and markets EVA dispersions under the VINNAPAS brand name. VINNAPAS polymer dispersions are used in a wide range of industries: for the production of complex thermal insulation systems, building and tile adhesives, plaster, building mixtures and mortars, cement sealing slurries and nonwovens.
MRC

MOSCOW (MRC) -- EU Plastic Tax approved by European Council: A Danger for the EU Single Market & Recovery, said Polymercomplyeurope.

The plan foresees a EUR0.80/kg levy on non-recycled plastic packaging waste to be paid by member states into the EU budget.

While the tax has been presented by the European Commission as “contribution to the EU budget designed to incentivise member states to increase recycling from plastic waste”, the European plastics industry is warning that it might have the opposite effect. Further fiscal measures are not the most efficient tool to drive innovation and investments that are needed to meet the intended policy objectives of the Green Deal.

"As the revenues of the EU plastic tax are not earmarked to be invested into the waste and recycling infrastructure, it will not increase the recycling of plastic waste in Europe,” Said EuPC Managing Director Alexandre Dangis. "Instead, it will further increase the cost of plastic recycling and encourage the shift to other packaging materials with a bigger environmental impact. To truly increase recycling rates across Europe and protect the environment, taxation of the landfilling of plastic packaging waste would be more efficient.

Improving the recycling of plastics packaging requires considerable investment by the entire plastics value chain in innovation, new machinery, and the ecological design of plastic packaging. With expected revenues of around €6-8 billion per year flowing into the general budget of the EU, this money would not be available anymore to be invested in the transition towards a circular economy.

As a next step, further details on the tax will have to be worked out in a specific law and approved by the European Parliament and Council of the EU. While much of the details remain obscure up to now, it is already clear that the member states will have large freedom in the implementation of the measures to collect the funds to be transferred to the EU. The implementation and complexity of different schemes from country to country will lead to a host of heterogeneous measures destroying the single market.

As MRC informed earlier, an estimated 11 million metric tons (MMt) of plastic waste enter the ocean every year and this will almost triple by 2040, to 29 MMt, if immediate and sustained action is not taken, according to a newly published in-depth report.

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC