Saudi Arabia expected to raise February crude prices for Asia

MOSCOW (MRC) -- Top oil exporter Saudi Arabia is expected to raise its official selling prices (OSPs) for Asian buyers for a second straight month in February, tracking stronger benchmark prices and product cracks, reported The Economic Times with reference to a Reuters survey.

Three sources at Asian refiners expect the February OSP for the flagship grade Arab Light to rise by 33 cents a barrel on average, with their forecasts ranging between an increase of 30 cents and 40 cents.

In December strong spot crude purchases pushed up the average differentials to Dubai swaps for the cash Dubai and DME Oman benchmarks by about 41 cents and 17 cents a barrel respectively from last month, data compiled by Reuters showed on Wednesday.

Asia's cracks for a range of oil products - naphtha, gasoil , jet fuel and fuel oil , strengthened this month on improved demand.

Asia's gasoline crack, however, has dipped recently on concerns that restored mobility restrictions to combat a new coronavirus variant would dent near-term demand.

Saudi crude OSPs are usually released around the fifth of each month and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (bpd) of crude bound for Asia.

State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices.

Saudi Aramco officials, as a matter of policy, do not comment on the kingdom's monthly OSPs.

As MRC informed earlier, top oil exporter Saudi Arabia has cut supplies of February-loading crude for some Asian buyer by up to a quarter while meeting requirements of at least four others.

We remind that in October 2019, McDermott International announced that it had been awarded a contract by Saudi Aramco and Total Raffinage Chimie (Total) for their joint venture (JV) Amiral steam cracker project at Jubail, Saudi Arabia. Amiral is a JV in which Aramco holds 62.5% and Total the rest. The plant, designed to produce 1.5 million metric tons/year (MMt/y) of ethylene, will be one of the world's largest mixed-feed crackers.

Aramco and Total launched their USD5-billion Amiral JV project in October 2018. The steam cracker will be fed with a mixture of 50% ethane and refinery off-gases. It will supply ethylene to a downstream 1 MMt/y polyethylene manufacturing complex and other petrochemical products. The project aims to fully exploit operational synergies with the adjacent refinery, owned by Satorp, another JV between Aramco and Total. Third-party investors, including Daelim and Ineos, will locate plants at the value park adjacent to Amiral with a combined investment of USD4 billion. A final investment decision is expected in 2021.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.

Fujian Baihong Petrochemical starts up new PTA line in China

MOSCOW (MRC) -- Fujian Baihong Petrochemical started up its new purified terephthalic acid (PTA) line at Jinjiang, China on Jan. 21, reported S&P Global with reference to market sources.

The new line with the capacity of2.5 million mt/year of PTA is running at half of its capacity currently, market sources said.

Supply of PTA remains relatively tight outside of China, so Northeast Asian PTA producers have no interest in selling to China.

In India, market participants will watch out for the trend in freight this week as the Taiwan-India rate was reportedly slightly lower in the week ended Jan. 22; spot trades likely to remain muted.

As MRC informed previously, Hengli Petrochemical (Dalian) Co. Ltd. is expected to lead the global planned and announced purified terephthalic acid (PTA) capacity additions during the period 2019 to 2023, contributing around 22% of the global growth by 2023. Hengli Petrochemical (Dalian) Co. Ltd. is expected to add a capacity of 5.00 million tonnes per annum (mtpa) from two planned projects by 2023.

PTA is used to produce polyethylene terephthalate (PET), which is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to MRC's ScanPlast report, Russia's estimated PET consumption reached 61,110 tonnes in November 2020, up by 1% year on year. Overall PET consumption in Russia reached 648,110 tonnes in the eleven months of 2020, down by 18% year on year.

SABIC, DSM and Viscofan launch innovative multi-layer film for meat packaging using certified circular polymers

MOSCOW (MRC) -- SABIC, a global leader in the chemical industry, has recently collaborated with DSM and Viscofan in the development of an innovative multi-barrier film for meat casings, as per SABIC's press release.

The film combines layers of a SABIC’s certified circular polyethylene (PE) from its TRUCIRCLE portfolio and a circular polyamide (PA) from DSM Engineering Materials in a more sustainable packaging solution without compromising the high functional and aesthetic performance required in the fresh food packaging market.

The resulting multi-barrier packaging film, manufactured by Viscofan, a world leader in casings for meat products, is designed to help extend the shelf life of products - thus reducing the waste of food - and effectively mitigating against the depletion of fossil resources by capturing the value of used plastic as a feedstock for new food-grade materials. The solution aims to support the growing demand among end-users and consumers for packaging products that can make a significant contribution to reducing the environmental footprint in our society.

“This successful project is notable proof of our determination to partner will players across the value chain willing to share our drive in the industry for implementing a truly circular plastics economy,” states Fahad Al-Swailem, Vice President, PE Business and Sales of Petrochemicals at SABIC. “Relationships like these are instrumental in bringing commercially viable and more sustainable solutions to the packaging market. The certified circular products from our TRUCIRCLE portfolio can help support our environment and can help both packaging manufacturers and the food industry address their sustainability objectives and help stop plastic becoming waste.”

As further demonstration of collaboration across the value chain, SABIC provided certified circular benzene made from feedstock recycling to Cepsa – a global energy and chemical supplier - , who manufactured certified circular phenol that is used as a building block in production process for DSM’s circular PA. Adds Joost d’Hooghe, VP Business Line at DSM Engineering Materials: “By introducing circular PA, we are taking an exciting next step in our sustainability journey towards expanding DSM’s comprehensive materials portfolio by 2030 with a full range of bio-based and/or recycle-based alternatives. The co-development of a recycle-based film for packaging applications underlines our commitment to working closely with partners, customers and suppliers to realize a more sustainable value chain and economy.”

The certified circular SABIC PE and DSM PA polymers in the multi-layered high-barrier film casings are fully accredited under the International Sustainability and Carbon Certification (ISCC PLUS) scheme which uses a mass balance approach. The certified circular polyethylene and benzene in SABIC’s TRUCIRCLE portfolio are based on used and post-consumer plastics which would otherwise be discarded as landfill or lost to incineration. Using advanced recycling, the used plastic is converted into a new feedstock, which then enters the production chain to deliver new virgin-quality materials. Mass balance accounting provides a method of asserting the recycled content in those materials along predefined and transparent rules by independent third-party laboratories.

The certified circular materials offer drop-in solutions for replacing fossil-based plastics in the packaging industry without compromising on product purity and food safety. Packaging film using certified circular PE polymer from SABIC offers an excellent balance of toughness, barrier performance and aesthetics for a wide range of flexible packaging applications. In addition, it easily lends itself to multi-layer film structures manufactured on common production equipment.

“By combining our capacity for innovation and the latest available technology, we today have reached a unique solution in the market using post-consumer recycled plastics”, Oscar Ponz, Chief Plastic Business Officer at Viscofan explains. “Today’s announcement is a result of the shared commitment to make food systems fair, healthy and environmentally friendly for a more sustainable future. This important project is being developed with the collaboration of important Viscofan customers like El Pozo.”

SABIC’s TRUCIRCLE program spans from design for recyclability services and mechanically recycled materials to certified circular products from feedstock recycling of used plastics as well as certified renewable polymers from bio-based feedstock. Read more here.

As MRC reported earlier, in November 2020, SABIC announced the successful commercialization of LEXAN HP92AF Anti-Fog film, targeted especially at demanding COVID-19 protection equipment such as safety face shields and goggles in front-line work environments.

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports.

Saudi Basic Industries Corporation (Sabic) ranks among the world's top petrochemical companies. The company is among the world's market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.

Chinese private refiner Xinhai to more than double refining capacity

MOSCOW (MRC) -- China’s private refiner Xinhai Group expects to more than double its crude oil refining capacity by the end of 2021, according to Hydrocarbonprocessing with reference to a company spokeswoman's statement, which would make it the biggest oil processor in northern China’s Hebei province

Based in the port city of Cangzhou in Hebei, the refiner is adding a crude distillation unit of 8 MMtpy, equivalent to 160,000 bpd, on top of its existing 12,000 bpd plant.

“The new refining facilities are scheduled to be completed and start operation by the end of next year,” the spokeswoman said, but added that the exact start-up date could move ahead of or behind schedule based on the construction.

Xinhai received its first crude oil import quotas in 2017 and was allocated a 3.72-million-ton import quota in 2020.

With the launch of the 400,000 bpd Hengli Petrochemical refiner and a similar-sized one by Zhejiang Petrochemical Corp, Chinese private refiners have been leading the crude processing capacity expansion in the country.

The Xinhai spokeswoman did not say if the company was applying for a bigger import quota for 2021.

Beijing plans to raise its non-state import quota for 2021 by 20% on-year for the non-state refiners.

“It seems very difficult for Xinhai to receive more quotas for 2021, unless they can prove to be an advanced integrated complex with both refining and chemical production lines. Even though, they will still face very fierce competition with other mega-sized complexes across the country,” said Ding Xu, an analyst at China-based Longzhong consultancy.

As MRC informed before, Zhejiang Petroleum & Chemical Co Ltd, one of two new major refineries built in China in 2019, started up the remaining units in the first phase of its refinery and petrochemical complex in January 2020. The company, 51% owned by private chemical group Zhejiang Rongsheng Holdings, started test production at ethylene, aromatics and other downstream facilitiess. The newly started units at Zhejiang Petrochemical should include a second 200,000-bpd crude unit, a 1.2 million tonnes per year (tpy) ethylene unit and a 2 million tpy paraxylene unit, according to several industry sources with knowledge of the plant’s operations.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Crude climbs amid tightened supply outlooks, easing US lockdowns

MOSCOW (MRC) -- Crude futures settled higher Jan. 25 amid tightened supply outlooks and easing COVID-19 restrictions in the US, reported S&P Global.

NYMEX March WTI settled 50 cents higher at USD52.77/b and ICE March Brent was up 47 cents at USD55.88/b.

Oil prices had moved higher overnight amid reports of tightened compliance with OPEC+ production quotas. Iraq is slashing oil production to making up for the excess production over its OPEC+ output quota. It will pump 3.6 million b/d this month and next month, the lowest since 2015 and down from 3.85 million b/d in December.

"OPEC remains steadfast in offering support as noted by Iraq's plan to reduce output to the lowest since 2015 to make up for previous non-compliance," TD Securities analysts said in a note.

Meanwhile, the recent resurgence in Libya's crude exports is under threat as the Petroleum Facilities Guard militia group has begun a strike at the Ras Lanuf, Marsa el-Hariga and Es Sider terminals over a salary dispute. Libyan crude and condensate output had surged to around 1.25 million b/d earlier this month, its highest in more than six years.

US commercial inventories are expected to have declined 1.7 million barrels to around 484.9 million barrels last week, according to analysts surveyed by S&P Global Platts Jan. 25. The counter-seasonal draw down would leave stockpiles around 8% above the five-year average of US Energy Information Administration data, in from 9.3% the week prior and marking the narrowest supply overhang since late November.

NYMEX February RBOB settled 1.24 cents higher at USD1.5611/gal and February ULSD climbed 1.79 cents to USD1.5939/gal.

Against this backdrop the market was also weighing mixed demand signals. In China, a new outbreak of coronavirus in several cities has sparked fears that the country could experience another wave of the pandemic. The local governments have imposed mobility restrictions in the affected cities, including Beijing, and urged citizens to refrain from travel during the upcoming Lunar New Year holiday.

But in the US signs that a post-holiday surge was slowing prompted some states to ease restrictions. California on Jan. 25 lifted a regional stay-at-home order that affected the vast majority of state residents. New York Governor Andrew Cuomo said Jan. 25 said that the state is planning to ease some restrictions amid a slowdown in new cases.

The easing of pandemic restrictions could add a tailwind to already upward trending US gasoline demand, which typically shows a steady climb toward an early March peak, according to EIA data. Apple Mobility data shows that US driving activity was higher for a third straight week last week, climbing nearly 2% from the week prior and up nearly 3% from a late-December nadir.

The front-month ICE New York Harbor RBOB crack versus Brent rallied to USD9.57/b in afternoon trading, on pace for the strongest close since mid-July.

As MRC informed previously, oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, according to an official with International Energy Agency's (IEA) statement.

We remind that the COVID-19 outbreak has led to an unprecedented decline in demand affecting all sections of the Russian economy, which has impacted the demand for petrochemicals in the short-term. However, the pandemic triggered an increase in the demand for polymers in food packaging, and cleaning and hygiene products, according to GlobalData, a leading data and analytics company. With Russian petrochemical companies having the advantage of access to low-cost feedstock, and proximity to demand-rich Asian (primarily China) and European markets for the supply of petrochemical products, these companies appear to be well-positioned to derive full benefits from an improving market environment and global economy post-COVID-19, says GlobalData.

We also remind that in December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on potential investments in Uzbekistan including a major expansion of Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed construction of a new gas chemicals facility. The signed cooperation agreement for the projects includes “the creation of a gas chemical complex using methanol-to-olefins (MTO) technology, and the expansion of the production capacity of the Shurtan Gas Chemical Complex”.

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

According to MRC's DataScope report, PE imports to Russia decreased in January-November 2020 by 17% year on year and reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the greatest reduction in imports. At the same time, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.