European PP prices increased by EUR200/tonne for CIS market in February

MOSCOW (MRC) -- The February contract price of propylene was settled in Europe up by EUR85/tonne from the previous month. But due to a deficit in the region, all European producers announced a greater increase in export prices of polypropylene (PP) to be shipped to the CIS markets in February, than the rise of monomer prices, according to ICIS-MRC Price report.

Negotiations on February prices of European PP began in the first days of the month. All market participants reported that European producers have gone for a significant increase in export prices for propylene polymers due to a serious deficit in the European market. In some cases, prices have increased at the level of EUR230/tonne.

For several months now, all producers in Europe have had serious export restrictions, which were largely a result of the shortage of propylene in the region. For the second month in a row, several producers do not sell PP to the markets of the CIS countries.

Deals for February shipments of homopolymer PP were done in the range of EUR1,250-1,310/tonne FCA, whereas last month's deals were done in the range of EUR1,040-1,100/tonne FCA. Deals for block copolymers of propylene (PP block copolymers) started from EUR1,270/tonne FCA and more, versus EUR1,100/tonne FCA a month earlier.
Some producers this week announced an additional increase in export prices by another EUR100/tonne compared to the previous week.

The situation with Middle Eastern PP was similar, local producers also raised their export prices under the pressure of higher crude oil prices and strong demand. Since December, from month to month, the quotas for shipments to the markets of the CIS countries have been constantly decreasing.

The deals for shipments of the Middle Eastern homopolymer PP were done in the range of USD1,380 - 1,420/tonne CIF, while a month earlier the deals were agreed in the range of USD1,280 - 1,360/tonne CIF.

COVID-19 - News digest as of 11.02.2021

1. Rohm warns of global feedstock crunch for methacrylates market

MOSCOW (MRC) -- Rohm (Darmstadt, Germany) says the methacrylates market is facing “a global shortage of several petrochemical raw materials” as a result of global business and service disruptions, which could lead to extended product lead and delivery times, reported Chemweek. The company says its methacrylates monomer team is “currently addressing a number of challenges” and that it remains in close contact with its suppliers in order to “effectively manage supply and continue production” of its product portfolio for customers. Rohm says in its latest market update it is monitoring and managing “external constraints in intercontinental logistics, including container shipping shortages, and limited availability of packaging materials.” Seasonal high water levels at the Rhine river in Europe have put “additional stress on the supply chain of raw materials and finished goods,” it says.


Crude oil futures fall on build in US gasoline stocks

MOSCOW (MRC) -- Crude oil futures were lower during mid-morning trade in Asia Feb. 11 on the back of a build in US gasoline inventories and despite the sharp drop in crude oil stocks, reported S&P Global.

At 10:55 am Singapore time (0255 GMT), ICE April Brent crude futures fell 37 cents/b (0.6%) from the Feb. 10 close at USD61.10/b while the NYMEX March light sweet crude contract was 34 cents/b (0.58%) lower at USD58.34/b.

US commercial crude oil inventories fell 6.6 million barrels to 469 million barrels in the week ended Feb. 5, according to the latest weekly report by the US Energy Information Administration released late Feb. 10. However, total motor gasoline inventories, said to be one of the key determinants in gauging demand sentiment for the overall fuel complex, rose by 4.3 million barrels.

"Crude oil stockpiles fell to their lowest level since March 2020. However, sentiment was curtailed by a rise in gasoline inventories," ANZ analysts said in a note Feb. 11.

Oil prices have hit highs in recent trading sessions, due to an amelioration of bullish factors such as vaccine rollouts, expectations of demand recovery, and OPEC+ production cuts. This has led some analysts to warn that the market may be in danger of overheating.

Some noted that the higher prices may induce producers to supply more, thereby sending prices south instead.

"Oil prices couldn't hold onto its gains possibly on the expectation that Saudi Arabia could roll back their unilateral February/March production cuts and that OPEC could signal more production coming back online at the March meeting given the sizzling recovery in oil prices," Stephen Innes, chief global markets strategist at Axi, said in a note Feb. 11.

Beyond the short term, market participants still hold much optimism and believe that the pace of demand recovery will be such that supply will not be able to keep up.

French oil major Total said in its Q4 earnings call on Feb. 9 that global shortfall in supply could be 10 million b/d from now till 2025.

"There is a risk of supply crunch in the mid-term," Helle Kristoffersen, Total's president for strategy and innovation said on the call.

"We have seen in 2020 how OPEC managed to bring back market discipline. We've seen the cracks in the US shale model, and we've seen a continued underinvestments in the oil industry as a whole," he added.

As MRC informed before, Total posted better than expected earnings in the fourth quarter as oil prices stabilized, and said it would change its name as part of a push to diversify and grow renewable power and electricity production. The French oil and gas major, which like rivals suffered in 2020 as fuel consumption tumbled during the pandemic, said it would rebrand as TotalEnergies as it tries over the next decade to reduce oil products to a third of its sales from over half now.

We remind that in November 2019, Total disclosed that itis evaluating construction of a new gas cracker at its Deasan, South Korea, joint venture (JV) with Hanwha Chemical.

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).

US crude stockpiles plunge as refining activity picks up

MOSCOW (MRC) -- US crude oil stocks plunged unexpectedly last week, tumbling by more than 6 million barrels, as refiners ramped up production rates to pre-pandemic levels in March amid rising fuel demand, reported Reuters with reference to the Energy Information Administration's statement.

Crude inventories fell by 6.6 million barrels in the week to Feb. 5 to 469 million barrels, compared with expectations in a Reuters poll for a 985,000-barrel rise.

Refinery utilization rates rose by 0.7 percentage point in the week to 83%, the highest level of refining utilization since March.

Refinery crude runs rose by 152,000 barrels per day in the last week, the EIA said, as refiners expect fuel demand to continue to rebound from last year's coronavirus-induced weakness.

Fuel demand was also higher, with refined product supplied rising to 20.2 million bpd. Gasoline demand over the last four weeks, however, is still 10% lower than at the same time a year ago.

Crude prices were little changed after the data, with US futures up six cents to USD58.43 a barrel as of 10:49 a.m. EST (1549 GMT), while Brent rose 19 cents to USD61.28 a barrel.

"A combination of higher refining activity and lower imports resulted in a fourth consecutive draw to oil inventories, and a chunky one at that," said Matt Smith, director of commodity research at ClipperData.

Net US crude imports rose last week by 216,000 bpd, EIA said.

US gasoline stocks rose by 4.3 million barrels in the week to 256.4 million barrels, compared with expectations for a 1.8 million-barrel rise.

Distillate stockpiles, which include diesel and heating oil, fell by 1.7 million barrels in the week, versus expectations for a 790,000-barrel drop.

As MRC wrote before, in its January Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) expects global demand for petroleum liquids will be greater than global supply in 2021, especially during the first quarter, leading to inventory draws. As a result, EIA expects the price of Brent crude oil to increase from its December 2020 average of USD50 per barrel (b) to an average of USD56/b in the first quarter of 2021. The Brent price is then expected to average between USD51/b and USD54/b on a quarterly basis through 2022.

We remind that global oil demand is expected to rise by nearly 7% this year, boosted by quicker vaccine distribution and a better economic outlook, according to consultancy Wood Mackenzie's statement. Total liquids demand is expected to average 96.7 million barrels per day (bpd) in 2021, 6.3 million bpd higher than last year when the Covid-19 pandemic caused an unprecedented oil demand shock. Refineries under the threat of closure could repurpose the facilities to produce liquid renewables instead of converting into a terminal, which could help oil companies’ aim of achieving carbon neutrality.

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).

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.