COVID-19 - News digest as of 29.07.2020

1. 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."


Recyclers greet EU plastic tax proposals with skepticism, confusion

MOSCOW (MRC) -- The EU's proposed plastic tax has been met with skepticism and confusion by some participants in the recycling sector, who said investment decisions that need to be made straight away cannot be taken until there is more clarity on how the tax will operate, reported S&P Global.

The proposed plastic tax, announced July 21 as part of the EU's larger Eur750 billion (USD870 billion) recovery fund, would look to levy Eur800/mt on non-recycled plastic packaging waste.

"At this stage, it is completely unmanageable because no one knows the details," one recycler said.

Ultimately, participants feared the levy would force the packaging sector away from plastic toward other forms of packaging such as glass, paper and aluminum, which they say can have a greater impact on the environment than plastic.

However, once it was clearer how the tax worked, recyclers did show some optimism that it would give a welcome boost to the recycled plastic market at a time when demand this summer had been low.

Three main areas of concern were put forward by market participants on the announcement of the tax.

The first was how the weight of non-recycled plastic packaging waste would be calculated, at which stage of the waste stream this would take place, and on whom the burden for reporting this information would fall.

"No one has good enough data on this. Will they count it at the recycler or finished product? They don't understand the differences between collection rates, recycling rates and yields," a PET recycler said.

This is a crucial aspect of the tax, which has yet to be clarified, since weight of waste input is different to the weight of usable output from a recycling plant. Additionally, some recyclers fear that if reporting this data falls solely on them, they will be responsible for the majority of investment, which would be difficult given the current economic climate.

The second area of concern is that individual EU member states would be responsible for reporting data and achieving the goals, but currently there is no harmonized approach toward effective recycling.

"There needs to be auditing of data provided to Eurostat," one polyolefin recycler said, suggesting this would be the source of data used to determine whether member states are liable for the tax. "Data reported to Eurostat varies from country to country and is inconsistent."

Currently, member states adopt different approaches to waste collection and sorting, to varying degrees of success. However, sources put forward that a one size fits all approach to taxation would only be effective if reporting standards and waste collection and sorting systems were harmonized across the EU.

The third area of concern is that effective recycling for many plastics used in packaging, such as polystyrene and polyvinyl chloride, are not advanced enough for participants in those markets to be able to adhere to the tax.

Recycling infrastructure in Europe has, for many years, focused on the PET market and, more recently, polyethylene. However, large sections of the PS and PVC industry are made up of packaging, and there is significantly less infrastructure in these markets to both effectively collect and to recycle these polymers.

"For PET it is manageable, but we need to figure out what to do with small flexibles and other polymers, that slip through the net. To meet this new EU target needs several million more tonnes (of all plastic) to be collected and recycled," another recycler said.

In order to boost recycling in these markets, participants suggested that countries had to move away from mixed curbside collection systems and into segregated waste streams, such as the deposit return schemes for PET bottles in many countries. This, however, requires significant investment at a government level.

As MRC informed before, members of the European Parliament (MEPs) are proposing ways to step up green energy storage solutions such as hydrogen or home batteries, in a report that was adopted in one of the Parliament’s voting sessions on Friday, 10 July. The proposals outlined in the report are set to play a crucial role in reaching the goals of the Paris Agreement on Climate Change, as more efficient energy-storage options in the EU will help "spur decarbonization," the EU Parliament says. In addition, since solar and wind have a variable electricity output, more storage solutions should become available to secure supply, MEPs say.

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.

RusVinyl resumes PVC production

MOSCOW (MRC) -- RusVinyl, joint venture of SIBUR and Solvay, has resumed its polyvinyl chloride (PVC) production after a scheduled turnaround, according to ICIS-MRC Price report.

The plant's customers said RusVinyl had brought on-stream its production capacities by 28 July, as scheduled, after maintenance works. The outage was short and lasted for about two weeks.

As reported earlier, SayanskKhimPlast shut its PVC production for a 30-day turnaround on 8 July, whereas Kaustik Volgograd idled its production capacities in May-June. Bashkir Soda Company does not plan to shut its production for maintenance works this year.

RusVinyl was put into operation in the second half of 2014. The plant's design capacity is 300,000 tonnes/year of suspension polyvinyl chloride (SPVC) and 30,000 tonnes/year of emulsion polyvinyl chloride (EPVC). Its caustic soda production capacity is 225,000 tonnes/year.

PVC imports to Kazakhstan up by 25% in Jan-May 2020

MOSCOW (MRC) -- Imports of unmixed polyvinyl chloride (PVC) into Kazakhstan rose in the first five months of 2020 by a quarter year on year to 24,000 tonnes, reported MRC analysts.
Demand for PVC increased from local companies in May under the pressure of seasonal factors, and May imports of unmixed PVC were 5,400 tonnes versus 4,200 tonnes a month earlier. Thus, overall imports of resin reached 24,000 tonnes in January-May 2020, compared to 19,300 tonnes a year earlier. It is also worth adding that such a significant increase in this year's imports was caused by a further resale of resin to Russia.
Due to the geographical position, Chinese producers with the share of about 94% of the local market over the stated period were the main PVC suppliers to Kazakhstan. Russia was the second largest PVC supplier, shipments of Russian resin reached 3,900 tonnes over the stated period.


PE imports to Kazakhstan up 18% in January-May 2020

MOSCOW (MRC) - Imports of polyethylene (PE) into Kazakhstan increased to about 73,800 tonnes in January-May 2020, up 18% compared with the same time a year earlier, according to MRC analysts.

The greatest increase in demand occurred for high density polyethylene (HDPE), according to MRC DataScope. PE imports to Kazakhstan exceeded 16,000 tonnes in May, compared to 13,400 tonnes a month earlier, local companies purchased ethylene polymers in Russia. In general, PE imports into the country were 73,800 tonnes in January - May of this year, compared with 62,300 tonnes in the same time a year earlier. HDPE and LLDPE imports increased significantly, whereas imports of low density polyethylene (LDPE) decreased.

The structure of PE imports by grades looked the following way over the stated period.
May imports of LDPE to Kazakhstan increased to 13,600 tonnes, compared with 11,300 tonnes in April, with the main bulk of purchases occurred for the Russian material. Overall HDPE imports totalled 60,800 tonnes in the first five months of 2020, up by 28% year on year.

May LDPE imports decreased to 1,400 tonnes, compared with 1,500 tonnes in April. Overall LDPE imports exceeded 8,200 tonnes over the stated period, down by 19% year on year.

May imports of LLDPE to Kazakhstan exceeded to 1,000 tonnes from 600 tonnes a month earlier. Overall output of these products exceeded 4,800 tonnes in January-May 2020, up by 3% year on year.