COVID-19 - News digest as of 01.03.2021

1. Chinese refiners cool on crude purchases as oil futures rally

MOSCOW (MRC) -- China's crude oil imports are set to slow in the second quarter after Brent prices hit a 13-month high, cooling demand and capping refiners' margins as they prepare to shut for planned maintenance, industry sources and analysts said, as per Hydrocarbonprocessing. Expectations of a recovery in global fuel demand and tighter oil supplies from Saudi Arabia and the United States pushed front-month Brent futures to their highest since January 2020 this week, up around 30% from January. Chinese independent refiners, who account for a fifth of the country's import demand, have become reluctant to buy cargoes as they enter a low-demand season, while domestic margins have yet to catch up with strong gains in international prices, the sources said.


Crude slides on stronger dollar; market eyes OPEC+ supply boost

MOSCOW (MRC) -- Crude oil futures finished the week sharply lower as a stronger dollar and expectations of rising global supply continued to pull prices off 13-month highs seen earlier last week, reported S&P Global.

NYMEX April WTI settled USD2.03 lower at USD61.50/b and ICE April Brent declined 75 cents to USD66.13/b.

Notably the Feb. 26 session was the last day of trading for the April Brent contract, and its prompt expiry may explain why it showed a relatively modest 1% decline compared with front-month WTI, which slid more than 3% in the session. The second-month Brent contract settled down around 2.6% on the day.

Oil price declines accelerated late in the session as the US dollar tested three-week highs. The ICE US dollar index was around 0.8% higher in afternoon trading at around 90.905, the highest since Feb. 17 and testing levels last seen in early February.

NYMEX March RBOB settled down 1.53 cents at USD1.8770/gal and March ULSD finished 5.01 cents lower at USD1.8565/gal.

Rising US bond yields as investors priced in expected higher inflation as a result of government stimulus and a quick economic recovery were driving the dollar higher. A stronger dollar makes oil more expensive for buyers using other currencies.

A University of Michigan report released Feb. 26 showed February consumer sentiment exceeded market expectations but was still down from January. The report showed inflation expectations of 3.3% for 2021, unchanged from the previous month's report and the highest since 2014.

Expectations of an announcement of supply increases from OPEC+ at its next meeting on March 4 and concerns over the scale of spare Saudi capacity were also dragging on oil prices.

"A return to the originally planned phase 3 would mean an increase in supply of 2.25 million b/d versus March levels," HSBC's Global Head of Oil and Gas Equity Research, Gordan Gray, said. "Market fundamentals could probably just about absorb such an amount in Q2 - if demand recovers enough - but an announcement of an immediate increase on this scale would risk spooking the market badly. The most likely outcome is a staged move to phase 3 supply levels - probably a 0.5 million b/d increase at most in April."

"A conservative agreement should support prices in the short term but there's still much more spare capacity in OPEC+ than there is likely demand growth," Gray said. "Global demand could conceivably be 5-6 million b/d higher in H2 2021 than in Q1, but this must be seen against around 8 million b/d of OPEC+ supply curbs still in place."

ICE New York Harbor RBOB crack versus Brent edged up to USD16.37/b in afternoon trading, just 5 cents under the one-year high seen last week.

The majority of the plants along Texas's refinery row are in the process of restarting, these plants are not likely to return to their pre-storm capacity until mid-March, according to company statements and filings made with state regulatory agencies detailing emissions events, which go along with plant restarts.

S&P Global Platts Analytics estimates that about 5.4 million b/d of US Gulf Coast crude capacity was down for the week ended Feb. 26, out of the region's 9.96 million b/d. Almost all of the outages were in Texas, which has 5.1 million b/d of crude processing capacity at its coastal refineries and 742,000 b/d of inland refining capacity, according to US Energy Information Administration data.

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 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). Supply of exclusively PP random copolymer increased.

Petronas mulls over maintenance shutdown at PE plant in Malaysia

MOSCOW (MRC) -- Malaysian state-owned energy giant Petroliam Nasional Berhad, or Petronas, is planning to shut its polyethylene (PE) plants in Kerteh, Malaysia in March 2021 for a brief turnaround, according to CommoPlast.

The tentative plan calls for two to three weeks offline of all PE units, however, the producer has yet to form a concrete decision on the timeline.

The Kerteh complex houses an linear low density polyethylene (LLDPE)/high denisty polyethylene (HDPE) swing line with an annual output of 250,000 tons/year and a standalone 50,000 tons/year LLDPE line.

As MRC wrote earlier, in June 2019, 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.

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.

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.

Celanese extends CO contract with Linde for Singapore facilities

MOSCOW (MRC) -- Celanese Corporation, a global chemical and specialty materials company, has announced its Singapore subsidiary, Celanese Singapore Pte. Ltd., has recently extended its long-term contract with Linde Gas Singapore Pte. Ltd. for the supply of carbon monoxide to its Singapore acetyls chemical facility located on Jurong Island, Singapore, as per the company's press release.

Financial details of the contract were not disclosed.

Linde operates large integrated gasification facilities in Singapore to produce gases including hydrogen and carbon monoxide. Celanese began its acetic acid operations in Singapore in 2000 and has been supplied by Linde since 2004.

Carbon monoxide is a key feedstock in the production of acetic acid. The extended contract will provide Celanese’s Singapore facility with an ongoing, reliable and strategically advantaged supply of carbon monoxide for its 600 kiloton acetic acid plant and acetyls production processes.

“Linde has been a valued partner for Celanese as our carbon monoxide supplier to the Singapore site, and this extension will continue to provide the site with a flexible and reliable supply of carbon monoxide supporting our acetyl chain business,” said John Fotheringham, Senior Vice President, Acetyls. “Our close cooperation with Linde has enabled Celanese to enhance our operational flexibility in support of our long-term strategy based upon low cost, flexible production designed to meet our customers’ needs in all regions of the world.”

“Linde is proud to strengthen our longstanding relationship with Celanese, a key global customer, while putting our Singapore business in an even stronger position for the future,” remarked Binod Patwari, Head of ASEAN, Linde. “This reflects our commitment to the region and, in particular, to our business and customers in Singapore. We look forward to continue working closely with Celanese to meet their supply needs safely and reliably.”

With manufacturing and distribution in all regions, Celanese is a leading, global producer of acetic acid, which is a basic chemical used in paints and coatings, adhesives, food packaging and construction materials. The Celanese Singapore facility produces acetyl intermediate products including acetic acid, butyl acetate, ethyl acetate, VAE emulsions and VAM, among other chemical products.

As MRC reported earlier, in H2 February, 2021, Celanese declared force majeure on its products in the Americas and EMEA region due to the severe winter weather that has heavily curtailed US petrochemicals and refinery production and operations on the US Gulf Coast.

According to MRC's DataScope report, January EVA imports to Russia rose only by 0,07% year on year to 3,084 tonnes from 3,087 tonnes a year earlier, and overall imports of this grade of ethylene copolymer into the Russian Federation dropped in January-December 2020 by 3,41% year on year to 38,170 tonnes (39,520 tonnes in 2019).

Linde is a leading global industrial gases and engineering company with 2020 sales of USD27 billion (EUR24 billion). We live our mission of making our world more productive every day by providing high-quality solutions, technologies and services which are making our customers more successful and helping to sustain and protect our planet.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Based in Dallas, Celanese employs approximately 7,700 employees worldwide and had 2020 net sales of USD5.7 billion.

Yansab extends EG plant turnaround in Saudi Arabia for additional repairs

MOSCOW (MRC) -- Yanbu National Petrochemical Company (Yansab), part of Saudi Basic Industries Corporation (Sabic), is expected to take additional three days of repairs at its 700,000-metric tons/year ethylene glycol unit at Yanbu, reported Chemweek.

This plant has been off-line since 1 February, 2021.

As MRC informed before, Yansab has restarted its cracker after a planned turnaround. Thus, the cracker in Yanbu, Saudi Arabia, which can produce 1.38 mln mt/year of ethylene and 400,000 mt/year of propylene, resumed operations on 15 February, 2021. It was shut for a turnaround on 5 February.

The company also has polyolefin plants at the same site with production capacity of 400,000 tons/year of polypropylene (PP) and linear low density polyethylene (LLDPE) each. They were also taken off-line for maintenance on 5 February. Both plants resumed production in mid-February.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and 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). Supply of exclusively PP random copolymer increased.

Yansab is the most recent SABIC, (Saudi Basic Industries Corp), affiliate in Saudi Arabia, and will be the largest Sabic petrochemical complex. It will have an annual capacity exceeding 4 million metric tons (MT) of petrochemical products including: 1.3 million MT (metric-tons) of ethylene; 400,000 MT of propylene; 900,000 MT of polyethylene; 400,000 MT of polypropylene; 700,000 MT of ethylene glycol; 250,000 MT of benzene, xylene and toluene, and 100,000 MT of butene-1 and butene-2.

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.