COVID-19 - News digest as of 30.11.2020

1. Two-thirds of Canadian business owners negatively impacted by COVID-19

MOSCOW (MRC) -- Two-thirds (68%) of Canadian business owners continue to feel the negative impacts of COVID-19, a new study from CIBC finds, with more than half (57%) believing businesses in their area are in crisis mode and 43% believing businesses are in recovery mode, said Canplastics. According to the study, top concerns are a reduced demand for their products and services (37%) and worries about the overall viability of operations (23%). Despite this, the majority (75%) of business owners remain optimistic they will rebound once the pandemic subsides.

MRC

MOSCOW (MRC) -- The ExxonMobil-operated, 110,000-metric tons/year butyl rubber plant at Fawley in the south of the UK is set for a full-scale turnaround in 2022, according to sources with links to the plant, said Chemweek.

The unit is one of the largest producers in the world of halobutyl rubber, supplying one third of all ExxonMobil's global output, according to IHS Markit. "We are the major European manufacturer of halobutyl rubber, which is used to line tires—the majority of tires manufactured in Europe contain some Fawley halobutyl rubber," the ExxonMobil website states.

Fawley typically produces 750,000 metric tons/year of chemical products, according to ExxonMobil. Halobutyl rubber and methyl ethyl ketone (MEK) are the main products produced at Fawley's chemical operations. The 135,000-metric tons/year MEK unit went offline in September 2019 for maintenance work.

Fawley's chemical division has helped ExxonMobil to offset a difficult year for the neighboring 270,000-b/d refinery, which sends feedstock to the integrated site's chemical operations. Sources at Fawley say that its chemical plants operated at a combined utilization rate of just over 90% in the first eight months of this year—above the annual averages seen in the previous two years that were slightly below 90%. By contrast, the refinery operated at just over 60% of capacity over January-August, amid poor oil product demand and dismal refining margins, according to the Fawley sources.

When asked to confirm both the 2022 maintenance work and the utilization rate at the Fawley chemicals units, a spokesperson for ExxonMobil told OPIS, "We never comment on turnarounds before they are underway." Output rates are "commercially confidential," the spokesperson added.

We remind that ExxonMobil has undertaken a planned shutdown at its cracker in Singapore. The company halted operations at the cracker for maintenance on September 14, 2020. The cracker is expected to remain off-line till end-October, 2020. Located at Jurong Island, Singapore, the cracker has an ethylene production capacity of 1 million mt/year and a propylene production capacity of 450,000 mt/year.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.

MRC

MOSCOW (MRC) -- Malaysian state-owned energy giant Petronas warned on Friday that the remainder of the year would remain tough due to prolonged low oil prices and moderate demand recovery hampered by the coronavirus, as it recorded a third-quarter loss, reported Reuters.

“Amid the fluid operating environment brought about by the pandemic as well as prolonged volatility of oil prices, Petronas is adopting a cautious outlook and anticipates that the remainder of 2020 will be challenging,” said Tengku Muhammad Taufik, president and group chief executive officer.

“We expect our performance to be continuously affected by the volatility of oil prices aggravated by the ongoing COVID-19 pandemic,” he said in a statement.

Petronas, or Petroliam Nasional Berhad, said it would continue to uphold “disciplined capital and operational spending” and preserve liquidity to ensure business sustainability.

The world’s fourth-biggest LNG exporter said its Pengerang Integrated Complex (PIC) will be operational by early next year, with the Atmospheric Residue Desulphurisation Train 1 and Train 2 expected to be ready-for-start-up (RFSU) by the beginning of 2021.

The Diesel Hydro Treating unit is expected to be RFSU in the fourth quarter of 2021, while the restart-up of the Refinery and Petrochemical plants is planned for the first quarter, the firm said.

Petronas reported a post-tax loss of 3.4 billion ringgit ($835.8 million) for the July to September period, against 7.4 billion ringgit in the same quarter last year.

Its second straight quarterly loss was attributed to a higher impairment loss on assets and higher tax expenses as a result of the lower oil and gas price outlook.

Revenue fell 25% to 41.1 billion ringgit.

As MRC reported earlier, in June 2019, Malaysian state oil company Petroliam Nasional Bhd, or Petronas, and Saudi Aramco started operations at their new 1.2-million-tonnes-per-year naphtha cracker. The cracker is part of the USD2.7 billion joint-venture oil refinery and petrochemical project known as RAPID - or Refinery and Petrochemical Integrated Development - located in Pengerang in the state of Johor, at the southern tip of peninsular Malaysia.

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.

Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
MRC

MOSCOW (MRC) -- The trajectories of the ICE Brent futures and NYMEX crude futures were in opposite directions during the mid-morning trade in Asia Nov. 27, as the latter underwent a price correction, not having fallen as much as the former during the trading session on Nov. 26, with both markers further weighed down by heightened concerns over the pandemic situation in the US, reported S&P Global.

At 11:36 am Singapore time (0336 GMT), ICE Brent January contract was up 10 cents/b (0.21%) from the Nov. 26 settle at USD47.90/b, while the NYMEX January light sweet crude contract was down 70 cents/b (1.53%) at US45.01/b.

Both the ICE Brent January contract and the NYMEX January contract had fallen 2.39% and 0.57% on Nov. 26 to settle at USD47.80/b and USD45.71/b, respectively, as vaccine optimism had fizzled out, and near-term pandemic considerations had resurfaced.

NYMEX crude futures, having resisted as steep a fall as Brent futures on Nov. 26, buckled during pressure from a gloomy demand outlook brought about by the unabated spread of coronavirus in the US.

According to the COVID Tracking Project, virus-related hospitalizations in the US reached a new record for the sixteenth consecutive day on Nov. 25, and the daily death toll was the highest since early May.

"The market is getting somewhat worried over how the pandemic situation is playing out in the US. We have significant number of cases but no action is being taken," David Lennox, resource analyst at Fat Prophets, told S&P Global Platts on Nov. 27.

"While inaction is helping demand at the moment, it is like waiting for a firecracker to go off once you have lit the wick - at some point we might see drastic measures and that is what the concern is all about."

Meanwhile, the market is also jittery in the run-up to the Dec. 1 OPEC and non-OPEC Ministerial Meeting, which is seen as the next risk-point for oil prices. The meeting is expected to provide a definite statement over whether the alliance will roll-over the current 7.7 million b/d production cuts into next year. However, even before the meeting, the market has already priced in a three-to-six month extension of the cuts.

The decision to maintain the current production cuts will be complicated by the surge in oil prices seen in November. There has been market talk over fissures within the OPEC+ alliance, with UAE reportedly reconsidering whether membership is in its long-term interest. Further, Iraq deputy Prime Minister Ali Allawi said on Nov. 23 that the alliance needs to take into account the economic and political conditions of the members before imposing "one size fits all" production quotas.

"I do think they will extend the current production cuts as the economic climate remains weak, but it will not be an easy decision and there will be a lot of squabbles during the meeting," said Lennox.

Stephen Innes, chief global market strategist at Axi, concurred, as he cautioned in a Nov. 27 note that while an extension of the cuts was still expected to be the default outcome, the rollover might not be an incremental positive, and a failure to extend cuts would hit market negatively.

As MRC reported 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% 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 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

MOSCOW (MRC) -- Crude oil processed by Indian refiners rose to its highest in seven months in October as fuel demand picked up although throughput remained lower than a year earlier, hurt by the coronavirus pandemic’s impact on industrial and transport activity, said Hydrocarbonprocessing.

Crude oil throughput in October dropped 16.1% from a year earlier to 4.35 million bpd (18.39 million tons), but was the highest since March when the country went into a nationwide lockdown, provisional data issued by the government showed on Wednesday. Pointing to a recovery in economic activity, India’s fuel consumption registered its first year-on-year increase since February last month, data showed earlier.

Daily coronavirus cases in the country have declined steadily since having peaked in September, although it remains the second-highest number of cases in the world, after the United States. Crude oil throughput in October rose 0.5% from September’s 4.33 MMbpd (17.71 million tons). Indian refiners operated at an average rate of 86.7%, highest March, compared to 86.2% in September, data showed.

A major maintenance shutdown at Nayara Energy’s 400,000 bpd Vadinar refinery pulled down the nation’s average refinery run rates. Nayara’s plant operated at 33% capacity last month, the data showed. The country’s largest refiner, Indian Oil Corp (IOC) operated its directly owned plants at 95.64% capacity, the data showed. Reliance, owner of the world’s biggest refining complex, operated its plants at 94.33% capacity. Crude oil production fell by 6.2% to 2.57 million tons (608,000 bpd), the monthly report showed.

As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.

We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.

Ethylene and propylene are feedstocks for producing 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 density 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