Crude rises as IEA expects lower OPEC+ production in 2021

MOSCOW (MRC) -- Crude prices rose Jan. 19 after data released by the International Energy Agency expected a 300,000 b/d drop for OPEC oil production in 2021 at 27.7 million b/d, and on favorable economic signals in the US and China, reported S&P Global.

At 12:29 pm London time (1229 GMT), the ICE March Brent contract was up 62 cents/b from the Jan. 18 settle at USD55.38/b while the NYMEX February light sweet crude contract was up 50 cents/b at US52.55/b.

IEA data released Jan. 19 also showed a 240,000 b/d reduction in its outlook for oil demand across 2021 at 5.5 million b/d, emphasizing the mixed fundamentals in the crude oil market.

"Despite rising COVID-19 cases, crude oil prices are well supported by financial, economic and market fundamentals," the IEA said.

The recovery picture in the crude oil market would likely continue to stay mixed, with bullish data pointing to both rising domestic demand for refined products as well as the potential for more supply to be offered to the wider global oil market. Data from China's National Bureau of Statistics showed that 7.3% more crude oil was imported in 2020 than in 2019, signaling a robust demand recovery in the country.

"There are bearish and bullish arguments. Almost every news can be interpreted in several different ways," said Eugen Weinberg, analyst at Commerzbank.

Crude oil prices also found some support from favorable US news, as Janet Yellen, US President-elect Joe Biden's nominee to run the Treasury Department, will tell the Senate Finance Committee later Jan. 19 that the US government must "act big" with its next coronavirus relief package. Biden had outlined a USD1.9 trillion stimulus package proposal in the week ended Jan. 16, stressing that a bold investment was needed to jump-start the economy and accelerate the distribution of vaccines.

Stephen Innes, chief global markets strategist at Axi, said oil remains resilient despite the mixed picture. "There are many Covid jitters out here, still Oil continues to hold and looks to nudge higher eying support from the weaker US dollar as oil sensitive currencies are showing the way."

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.
MRC

MOSCOW (MRC) -- Overall polyethylene (PE) imports into the Ukrainian market reached 265,900 tonnes in 2020, down by 1% year on year. Linear low density polyethylene (LLDPE) accounted for the main reduction in imports, according to MRC's DataScope report.

Last month's PE imports to Ukraine were 20,900 tonnes versus 20,200 tonnes in November, local companies increased their purchases of high density polyethylene (HDPE). Thus, overall PE imports exceeded 265,900 tonnes in January-December 2020, compared to 268,700 tonnes a year earlier. LLDPE imports decreased significantly, whereas HDPE imports increased.

The supply structure by PE grades looked the following way over the stated period.

Last month's HDPE imports were 8,700 tonnes, compared to 7,700 tonnes in November, Ukrainian companies raised their purchases of film grade PE. Overall HDPE imports totalled 97,300 tonnes in 2020 versus 95,000 tonnes a year earlier.

December imports of low density polyethylene (LDPE) into Ukraine were 6,100 tonnes versus 5,900 tonnes a month earlier. Overall LDPE imports reached 79,300 tonnes over the stated period, compared to 79,600 tonnes a year earlier.

Last month's LLDPE imports were 5,100 tonnes, compared to 5,600 tonnes in November, shipments of Middle Eastern film grade LLDPE decreased. Overall LLDPE imports reached 75,900 tonnes last year, compared to 81,700 a year earlier.

Imports of other PE grades, including ethylene-vinyl-acetate (EVA), totalled 13,400 tonnes over the stated period, compared to 12,500 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Imports of suspension polyvinyl chloride (SPVC) into Ukraine slumped in 2020 by 32% year on year to 33,400 tonnes. Sales of Ukrainian polyvinyl chloride (PVC) to foreign markets dropped by 5% year on year in favour of the domestic market, according to a MRC's DataScope report.

Last month's SPVC imports into the Ukrainian market rose to 2,400 tonnes from 2,100 tonnes in November, shipments of resin from Europe increased. Overall imports of suspension reached 33,400 tonnes in 2020, compared to 49,000 tonnes a year earlier. At the same time, stronger demand from the domestic market amid the increased capacity utilisation of the Ukrainian producer led to lower export sales.

European producers with the share of about 83% of the total imports over the stated period were the key suppliers of resin to the Ukrainian market. Producers from the USA with the share of about 15% were the second largest suppliers.

Last month, Karpatneftekhim significantly increased sales in the foreign markets on the back of record high global prices, export sales of Ukrainian resin were 15,800 tonnes versus 3,200 tonnes in November. Overall, about 155,300 tonnes of PVC were shipped for export in 2020, compared to 163,300 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Hanbang Petrochemical, also known as China Prosperity Jiangyin Petrochemical, has taken its purified terephthalic acid (PTA) unit in Jiangsu province offline on 6 January 2021 for maintenance, reported CommoPlast with reference to market sources.

The unit has an annual capacity of 2.2 million tons/year and would remain shut for around one month.

Meanwhile, the producer owns a smaller PTA unit at the same location with a capacity of 700,000 tons/year that has been shut since May 2020. The restart date at this plant in uncertain at the moment.

As MRC informed earlier, Hanbang Petrochemical shut its No. 2 PTA unit in Jiangsu province on May 19, 2020, for unspecified reason. The unit, which initially was slated to remain off-line for about two weeks, resumed operations on 21 June, 2020.

We remind that in March 2016, Hanbang Petrochemical successfully started up its second PTA at Jiangyin, Jiangsu. The plant has two production lines, each with an annual capacity of 1.1 million mt/year.

PTA is used to produce polyethylene terephthalate (PET), which, in its turn, 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 estimate 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 first eleven months of 2020, down by 18% year on year.

Hanbang Petrochemical, also known as China Prosperity Jiangyin Petrochemical, is situated in Jiangyin city within China's Jiangsu province.
MRC

MOSCOW (MRC) -- LG Chem, a South Korean petrochemical major, is expected to restart its naphtha cracker in Yeosu this week, following the last year's fire, reported Chemweek with reference to market sources.

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 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.

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