Coca-Cola Q4 sales volumes drop on global COVID-19 shutdowns

MOSCOW (MRC) -- Coca-Cola expects its sales volume to rebound in 2021 as COVID-19 vaccinations grow, following fourth-quarter 2020 drops in all regions except Latin America, reported S&P Global with reference to executives' statement on Feb. 10.

"There is no doubt the near-term trajectory of our recovery will still be impacted by the presence of the virus in most markets," CEO James Quincey said during the company's Q4 2020 earnings call.

Coca-Cola, a top buyer of virgin and recycled polyethylene terephthalate (PET), a resin used to make plastic bottles, saw volumes decline when the coronavirus pandemic hit in 2020, prompting shutdowns of major gatherings where bottled drinks sell heavily, such as sports events, concerts.

The company's quarterly volumes in China showed gains, while Japan showed soft traffic in vending machine sales and India showed signs of recovery in sales outside of homes, Quincey said.

Europe, Middle East and Africa regions showed resilience despite varied levels of lockdowns in Q4, and North America's away-from-home volumes saw impacts in multiple states with restrictions on indoor dining and at bars, Quincey said.

The company's net revenues fell 5% in the quarter to USD8.6 billion. The company reported Q4 net income of USD1.456 billion, down 28.7% from USD2 billion in the year-ago period. For the year, Coca-Cola reported profits of USD7.747 billion, down 13% from USD8.92 billion in 2019.

CFO John Murphy said the company expects to be dealing with COVID-19 for the better part of 2021, with the first half more challenging than the second.

He said sales volumes so far in 2021 were down to mid-single digits, and "to the degree the top line is driven by away-from-home recovery, we'd expect the channel and package pressures experienced last year to abate."

US virgin PET prices were last assessed Feb. 3 at USD1,069/mt DDP US West Coast, a 12-month high in formula-based pricing stemming from upstream feedstock costs, S&P Global Platts data showed. Recycled PET clear flakes were last assessed Feb. 9 at 45 cents/lb (USD992.08/mt) FOB Los Angeles, Platts data showed.

Coca-Cola on Feb. 9 announced the launch of its first-ever 13.2oz bottle in the US made from 100% recycled PET. The company will start distributing Coke products in those bottles in February in the US Northeast, Florida and California. Larger 20oz rPET Coke bottles also will be available in February in California and New York, followed by Texas in spring 2021.

As MRC informed earlier, Coca-Cola will not ditch single-use plastic bottles because consumers still want them, the firm's head of sustainability told the BBC in late January, 2020. Customers like them because they reseal and are lightweight, said Bea Perez. The firm, which is one of the biggest producers of plastic waste, has pledged to recycle as many plastic bottles as it uses by 2030.

According to MRC's ScanPlast report, Russia's overall PET consumption totalled 71,830 tonnes in December 2020, up by 8% year on year. In 2020, PET consumption in all sectors (injection moulding, fibers/filaments, films) exceeded the level of 2019 by 17% and amounted to 717,310 tonnes.
MRC

Shell pulls out of joint venture to build UK sustainable jet fuels plant

MOSCOW (MRC) -- Shell has pulled out of a joint venture with British Airways and Velocys to build a flagship sustainable jet fuels plant in the UK - in a blow to Boris Johnson’s claims that Britain could deliver the world’s first zero-emission long-haul flight, reported The Guardian.

The oil firm was named last year as one of the top companies set to “turbocharge government plans” for sustainable aviation fuels, the centrepiece of the so-called “jet zero” plan to decarbonise flights.

Shell said it would leave the Altalto project, to be built in Immingham, Humberside, days after the company agreed to join a project in Canada which plans to produce more than double the green fuel from less than half the waste.

Shell’s departure was by mutual consent, and the project would continue “according to its existing development plan”, the three parties behind the project said. Immingham could begin supplying its first aviation fuel from non-recyclable household waste within five years.

But Shell’s decision to exit the UK’s burgeoning green fuels industry is likely to compound scepticism over Johnson’s promise that Britain would be in the “vanguard of green innovation” by pioneering zero-emission transatlantic flight.

The departure comes after a number of false starts for BA’s plans for UK production of sustainable fuels. The airline shelved a proposed waste-to-fuel factory in Thurrock, Essex, which was due to open in 2017, blaming a lack of government support.

Shell’s head of new fuels, Matthew Tipper, said the oil company was “pursuing multiple opportunities across our global portfolio”.

“On this occasion, we have decided to focus our resources on other lower-carbon fuels opportunities which leverage our own technology. We will continue to work with the aviation industry and the UK government, as part of the jet zero council, to help decarbonise UK aviation,” he said.

Shell announced plans earlier last month to take a 40% interest in the Varennes Carbon Recycling project, the first waste-to-low-carbon-fuels plant in Quebec, which will useMontreal-based cleantech company Enerkem’s proprietary technology.

The pair plan to treat more than 200,000 tonnes of non-recyclable and wood waste annually to produce nearly 125m litres of low carbon fuels to help cut emissions from Canada’s transport industries. The UK’s Immingham Altalto project will use 500,000 tonnes of household and municipal waste to make 60m litres a year of higher-grade kerosene jet fuel.

Velocys and BA said they had been in talks for several months with other potential sources of finance for the project, which was well placed to achieve significant government funding.

BA’s parent company, IAG, was the first airline group to pledge that its operations would become net zero by 2050, albeit largely through offsetting. BA’s chief executive, Sean Doyle, said: “Sustainable aviation fuel is vital to the decarbonisation of aviation and to helping us achieve our net zero target. We are excited to continue to work with Velocys, with the support of government and other private-sector partners.”

Velocys said it was looking forward to moving to the next stage of development this year. The chief executive, Henrik Wareborn, said: “Altalto Immingham is ready to take advantage of the strong push from both government and industry for the decarbonisation of aviation, especially using waste feedstocks.”

While manufacturers have said that hybrid-electric, or even hydrogen, short-haul commercial passenger jets could be feasible by 2035, long-haul net zero flights, if possible, are assumed to depend on sustainable jet fuels.

As MRC wrote before, Shell’s chemicals business has reported strong fourth-quarter earnings of USD367 million on a current cost of supply (CCS) basis, swinging from a loss of USD78 million in the prior-year period, reflecting “higher realized margins in base chemicals and intermediates from a stronger price environment”. The earnings are also substantially higher sequentially on the company’s third-quarter segment earnings of USD131 million.

We remind that Royal Dutch Shell has reported an outage at its olefins plant in Deer Park, Texas, USA, on 5 January, 2021. The plant flared for 16 hours following unspecified process upset. Maximum steam cracker operating rate in Texas falls to 89%.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
MRC

Asia Distillates-Jet fuel cracks post biggest weekly gain in 2 months

MOSCOW (MRC) -- Asian refining margins for jet fuel rose on 5 February, posting their biggest weekly gain in two months, while cash discounts for the aviation fuel narrowed amid limited supplies, reported Reuters.

The regional jet fuel market is expected to pick up further strength gradually as countries ease travel restrictions in coming months, although the usual seasonal boost during the Lunar New Year holidays would mostly remain dampened this year, trade sources said.

Refining margins, or cracks, for jet fuel rose to USD4.43 per barrel over Dubai crude during Asian trading hours, the strongest since Jan. 18. The cracks have gained 25.5% this week, the steepest weekly rise since Dec. 4. "Our forecast is for traffic to return to half of 2019 levels in 2021," Alexandre de Juniac, director general and chief executive of the International Air Transport Association (IATA) said in a statement this week. "But the proliferation of restrictions on travel that we have seen since the beginning of the year could make even that modest outlook very challenging," he added.

Global air passenger demand in 2020 was 65.9% lower than 2019 levels, while global air cargo demand last year was about 11% below 2019, IATA data showed on Wednesday. Some market watchers believe aviation passenger demand might see a surge soon after the majority of travel restrictions are lifted as a lot of people are bored of not travelling. Cash differentials for jet fuel were at a discount of 15 cents per barrel to Singapore quotes on Friday, compared with a 21-cent discount a day earlier.

ARA STOCKS - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 3.4% to 2.7 million tonnes in the week to Feb. 2, data from Dutch consultancy Insights Global showed.

The data showed ARA jet fuel inventories climbed 3.8% to 937,000 tonnes.

Sri Lanka's Ceylon Petroleum Corp (Ceypetco) is seeking gasoil for delivery into Colombo over the eight months between May and December this year.

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 polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).
MRC

Borealis declares force majeure on PP at Kallo, Belgium

MOSCOW (MRC) -- Borealis (Vienna, Austria) has declared force majeure on “certain polypropylene (PP) grades and related compounds” at its production site in Kallo, Belgium, according to Chemweek.

The company made the declaration on 5 February due to “a technical incident outside the scope of our control,” a spokesperson tells Chemweek.

“Affected customers have been informed accordingly. At this point, we are unable to predict when exactly the force majeure can be revoked,” she says.

As MRC reported previously, Borealis began to restart of its 625,000-metric tons/year steam cracker at Stenungsund, Sweden, in early January, 2021, but the declaration of force majeure remained in place then. The process of restarted lasted for several weeks. Force majeure at Stenungsund was declared after a fire started at the cracker on 10 May last year. A restart of the cracker was initially planned for the fourth quarter of 2020. The force majeure was lifted on 29 January, 2021.

According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

Borealis is a leading provider of innovative solutions in the fields of polyolefins, base chemicals and fertilizers. With headquarters in Vienna, Austria, Borealis currently employs around 6,500 and operates in over 120 countries.
MRC

About 600 gallons of oil spilled from Chevron Richmond site

MOSCOW (MRC) -- About 600 gallons of petroleum and water mixture that leaked from Chevron Corp's wharf at its Richmond, California, oil refinery has been contained, reported Reuters with reference to the regional air pollution regulator's official twitter account.

The investigation is ongoing, the Bay Area Air Quality Management District (BAAQMD) said in a tweet.

Chevron in an emailed response said a sheen was observed at around 3 p.m. (2300 GMT) on the water near the wharf at its 245,271 barrel-per-day Richmond refinery. The release was stopped, while clean up was ongoing, it added.

“We have issued a community notice and ask the public to remain clear of the area so crews can quickly contain and clean up the released volumes,” the company said, adding it is working with the US Coast Guard and the Office of Spill Prevention and Response (OSPR).

The spill triggered a “Level 2” incident alert and health advisory from the Contra Costa Health Department for residents of Richmond, North Richmond and San Pablo, according to local media reports.

California State Assembly member Buffy Wicks plans to introduce a bill to increase fines and penalties in order to provide more effective deterrence, Contra Costa County Supervisor John Gioia tweeted.

“Park District closed local beaches and petroleum washed ashore along South Richmond shoreline which will harm wildlife and marine life,” Gioia said.

As MRC informed previously, in December 2020, Chevron Corporation made a 2021 organic capital and exploratory spending program of USD14 billion and lowered its longer-term guidance to USD14 to USD16 billion annually through 2025. This capital outlook will continue to prioritize investments that are expected to grow long-term value and deliver higher returns and lower carbon, including over USD300 million in 2021 for investments to advance the energy transition.

We remind that in March 2018, Chevron Phillips Chemical Company LP successfully introduced feedstock and commenced operations of a new ethane cracker at its Cedar Bayou facility in Baytown, Texas. At peak production, the unit will produce 1.5 million metric tons/3.3 billion lbs. per 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 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020).

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
MRC