Crude oil futures rise on vaccine momentum despite near-term pandemic concerns

MOSCOW (MRC) -- Crude oil futures ticked higher during mid-morning Asian trade Nov. 17 as reports of a highly effective Moderna vaccine carried the markets despite rising concerns over the number of COVID-19 infections and increased lockdown measures, reported S&P Global.

At 11:25 am Singapore time (0325 GMT), ICE Brent January crude futures were up 30 cents/b (0.68%) from the Nov. 16 settle to USD44.12/b, while the NYMEX December light sweet crude contract was up 24 cents/b (0.58%) at USD41.58/b.

Both ICE Brent January crude futures and WTI futures had jumped 2.43% and 3.02% on Nov. 16 to settle at USD43.82/b and USD41.34/b, respectively, as the market was lifted by a confluence of bullish developments, including the ratification of the Regional Comprehensive Economic Partnership, indications that the incoming Biden administration is reluctant to impose nationwide lockdowns and reports of a Moderna vaccine found to be almost 95% effective in preliminary trials.

Optimism over the Moderna vaccine continued to lift sentiment in early Asian trade, with ANZ analysts highlighting in a Nov. 17 note that it is likely to be easier to distribute than the Pfizer and BioNTech vaccine due to its long shelf-life and stability at refrigeration temperatures for up to 30 days.

Vandana Hari, chief executive officer of Vanda Insights, agreed in a discussion with S&P Global Platts on Nov. 17, saying: "The momentum from the preliminary success of the Moderna vaccine is carrying crude this morning", but added that sentiment was also supported by indications from the Joint Technical Committee meeting held on Nov. 16 that most members of the OPEC+ alliance are amenable to an extension of the current production cuts.

"The market is waiting for definitive statements from the Saudi or Russian energy ministers during the Nov. 17 Joint Ministerial Monitoring Committee meeting, but for the time being, an extension in output cuts is almost baked into the oil prices," Hari said.

Hari, however, added that given the recent price rally, it seems less likely that OPEC+ may deepen the production cuts, as was initially insinuated by Saudi energy minister Prince Abdulaziz bin Salman during the ADIPEC virtual conference on Nov. 9.

"It remains to be seen for exactly how long the alliance will extend the production cuts for, but it seems that it will steer clear of the option to deepen the cuts," Hari said.

Meanwhile, concerns over the near term development of the pandemic remained, with Austria entering into a nationwide lockdown Nov. 17 and other European countries mulling tighter restrictions amid burgeoning infection numbers.

ANZ analysts said: "(The lockdown restrictions are) weighing on demand for gasoline and distillate, which has had a close correlation with falling mobility data, presenting a difficult backdrop for the OPEC+ alliance."

As MRC informed previously, global oil demand may have already peaked, according to BP's latest long-term energy outlook, as the COVID-19 pandemic kicks the world economy onto a weaker growth trajectory and accelerates the shift to cleaner fuels.

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).

ccording to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

World Methanol Conference: Methanol demand to lag GDP growth for next 10 years

MOSCOW (MRC) -- Worldwide demand for methanol is forecast to expand at rates below GDP growth for the first time, reported Chemweek with reference to Mike Nash, vice president/syngas chemicals at IHS Markit.

Speaking on Tuesday in a panel session at the 38th World Methanol Conference, being held by IHS Markit in a virtual format, Nash said that global methanol demand is predicted to grow on average 2.8%/year during the next 10 years, lagging world GDP growth of 3.2%/year. The methanol market is “at a turning point,” Nash said.

The current and forecast lower crude oil price means less demand for methanol from the fuels industry, according to Nash. Meanwhile, low crude prices are helping to weaken the economics of methanol-to-olefins (MTO) production. Growth in MTO capacity in China has kept methanol demand growth above GDP growth in recent years, Nash said. MTO plants have operated at high rates and generated high margins in 2020, but there is “a challenging time to come,” he said.

Utilization of MTO plants in China has averaged about 80% between January and November 2020, equivalent to about 1.25 million metric tons of methanol consumption per month, said Xiaomeng Ma, director/methanol and base chemicals at IHS Markit in the panel session. “There has been healthy methanol demand into MTO,” she said.

However, the crude oil price crash early in the COVID-19 pandemic and persistently soft prices since then have weakened the relative profitability of MTO facilities. MTO units are relatively high-cost plants in an environment of low crude oil prices, Nash said. “MTO is at the top end of the ethylene/propylene cost curve,” Nash said. This is exacerbated by the large volumes of ethylene and propylene capacity coming onstream at steam crackers and propane dehydrogenation units around the world. “MTO economics will be challenged in the coming years,” he said.

IHS Markit forecasts that operating rates at MTO facilities will fall to just below 70% in 2022 and stay low in the following four years. “We are forecasting a difficult time for MTO producers in the 2022–26 period,” Nash said. “This will have an impact on methanol demand.”

Two new MTO plants are scheduled to start up in China by the middle of 2021, which will boost methanol demand until then. But after next year, no new MTO production is expected. “We’re not seeing growth in MTO capacity,” Nash said. “It’s the end of the first wave of MTO capacity in China.” He noted that the investment decisions for plants in the first wave were taken at a time of higher average crude prices.

Forecasts are also clouded by a lack of clarity around the Chinese government’s so-called E10 fuel policy on ethanol content in gasoline. China changed the E10 fuel policy last year to “encouraged” from “mandatory” and provided no update on implementation, which had been due in 2020.

China’s push to E10 would normally reduce demand for methanol and methyl tert-butyl ether (MTBE) in gasoline. Methanol demand into the gasoline pool has decreased steadily in the last few years, Nash said.

MTBE will remain the biggest demand outlet for methanol in China, said Ma. “Methanol into energy applications in China is driven by government policies and requires motivation from the consumer side,” she said. However, currently, “there is no strong policy for methanol fuel usage in China,” she added. Ma remains optimistic nevertheless on long-term developments for methanol in gasoline in the country.

IHS Markit is forecasting that a combined 1 million metric tons/year (MMt/y) of methanol capacity will close in central and eastern China in the coming years. “Most of the plants are old units using old gasification technology and their feedstocks are quite expensive,” Ma said.

However, IHS Markit predicts that 5 MMt/y of methanol capacity will come onstream in China during the same period, all based on coal gasification. “Capacity additions will be higher than capacity rationalizations,” she said.

The closure of older, less efficient methanol plants also reflects Chinese government policy to close chemical plants that are not in chemical parks and move the capacity to chemical parks, said Nash. “The new methanol plants we are seeing are big, modern, efficient units,” he said. “It is now difficult to get approval for smaller coal-based methanol units in China.”

As MRC informed previously, in early September 2020, Ningxia Baofeng Energy Group Co. (Baofeng Energy) selected KBR's proprietary cracker technology for its new methanol-to-olefins (MTO) project to be built in Ningxia, China. Under the contracts, KBR will provide process technology licensing and process design packages for Baofeng Energy's 500,000-t/y coal-to-olefins facility and its 500,000-t/y C2-C5 comprehensive utilization project. Once complete, the complex will be the "largest" single-train MTO plant in the world, KBR noted.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC

LG Chem cracker might remain shut for up to three months after the fire

MOSCOW (MRC) -- LG Chem, a South Korean petrochemical major, might extend the shutdown of its naphtha cracker in Yeosu up to three months, following a fire, reported CommoPlast.

The company said earlier that the fire broke out at its central control room at the Yosu cracker complex at around midnight local time (15:00 GMT) on 5 November, 2020. Then, the country's largest chemical company said it was in the process of figuring out the cause of the fire.

The facility can process about 1.2 million tonnes of ethylene per year (tpy).

Initially, the cracker's shutdown was expected to last for approximately three weeks.

As MRC informed earlier, LG Chem is planning to spend USD2.4-billion to expand its naphtha cracking center (NCC) and polyolefin (PO) plant in Yeosu, South Korea. The project, which will expand the NCC and PO facility by 800,000 t/y each, is expected to be completed in the second half of 2021.

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

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers" inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

LG Chem Ltd., often referred to as LG Chemical, is the largest Korean chemical company and is headquartered in Seoul, South Korea. It has eight domestic factories and global network of 29 business locations in 15 countries. LG Chem is a manufacturer, supplier, and exporter of petrochemical goods, IT&E Materials and Energy Solutions.
MRC

Ohio cracker project remains priority, says PTTGC

MOSCOW (MRC) -- PTT Global Chemical (PTTGC; Bangkok, Thailand) says that its planned 1.5-million metric tons/year steam cracker project at Belmont County, Ohio, remains the top priority for its affiliate PTTGC America (PTTGCA), according to Chemweek.

The company says that the project has not at any point been put on hold. PTTGCA says that it looks forward to making announcements of the project’s progression in the weeks and months ahead.

PTTGC earlier in September this year signed an ethane supply agreement with Range Resources Corp. (Forth Worth, Texas). Range will supply 15,000 b/d of ethane to a facility that includes a cracker with ethane feed capacity of 100,000 b/d and multiple facilities for creating ethylene derivative products.

The downstream configuration has yet to be decided, especially in view of Daelim Chemical USA’s (DCA) withdrawal from the project. PTTGC and DCA were equal partners in the project. PTTGC is in the process of seeking a new partner while working toward a final investment decision. This is likely to delay the completion of the project to 2027–28.

Original plans revolved around different configurations, including for the entire ethylene output being used to make the equivalent volume of high-density and linear low-density polyethylene, or some of the ethylene being used to make ethylene glycol. Most of the output would be sold on the US market.

As MRC wrote before, in June, PTTGCA said it delayed making a final investment decision to build the ethane cracker in US, which analysts estimate will cost USD5.7 billion, from the first half of 2020 to the first half of 2021 due to the coronavirus.

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

ccording to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, exluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

PTT Global Chemical is a leading player in the petrochemical industry and owns several petrochemical facilities with a combined capacity of 8.45 million tonnes a year.
MRC

Lummus, TCG form digital JV

MOSCOW (MRC) -- Lummus Technology has formed a joint venture (JV) with TCG Digital aimed at the implementation of digital analysis and operative solutions for refining, petrochemical, and gas processing facilities, reported Chemweek.

The new JV business, Lummus Digital, will work with Lummus’s existing customers and potential clients, it says. TCG Digital and Lummus Technology are both subsidiaries of The Chatterjee Group (TCG; New York). The partnership will enable both companies “to build on their core competencies and strengths, addressing the fast-evolving needs of the refining and petrochemicals industry,” says Debdas Sen, TCG Digital CEO.

Lummus Digital will work with asset operators to provide big data, advanced analytics, artificial intelligence, process simulations, proprietary know-how, and advisory services, it says. The focus will be on digitalizing operations and assets to make them more profitable, efficient, safe, and to “provide flexibility to quickly adapt operations to take advantage of changing market dynamics,” it adds.

Lummus Technology was acquired in July from McDermott International for USD2.725 billion by Haldia Petrochemicals (Haldia, India), TCG’s flagship company, and investment funds affiliated with Rhone Capital.

As MRC informed earlier, in October, 2020, Lummus Technology announced that it had been awarded a contract by Enter Engineering Pte. Ltd. for the Shurtan Gas Chemical Complex in Uzbekistan. Lummus’ scope includes the design and supply of four proprietary Short Residence Time VI and VII type cracking furnaces, which will more than double the production of ethylene at Shurtan’s facility. Lummus was selected due to its leading ethylene technology position and its extensive experience with ethylene furnaces, having developed pyrolysis furnaces as part of its proprietary equipment portfolio.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased.
MRC