Lockdowns in Europe and slow vaccine rollouts restrain global fuel demand recovery

MOSCOW (MRC) -- Renewed lockdown restrictions in Europe and slower than expected vaccine rollouts are likely to check a global recovery in fuel demand and make OPEC+ oil producers take a cautious stance when the group reassesses output policy this week, reported Reuters.

With its extensive vaccination program, Europe was central to forecasts for demand recovery, especially as many Europeans were hoping for a return to normality by the summer and holidays abroad. That now seems unlikely.

Germany, Europe's biggest oil consumer, has extended its lockdown until April 18 to contain a third COVID-19 wave.

A third of French people have entered a month-long lockdown, and most of Italy, including its capital Rome and its financial centre Milan, have curbs on business and movements.

Lockdowns in Austria, Norway and Switzerland have also been tightened.

When the Organization of the Petroleum Exporting Countries and other oil producing nations, a group known as OPEC+, meet on Thursday, it will be difficult for them to ignore the new lockdowns that most analysts had ruled out for the medium term because of their economic cost.

With oil prices making steady gains earlier this year, OPEC+ had hoped to ease output cuts, but industry sources say those plans in jeopardy.

The renewed lockdowns and problems with vaccination could prevent the recovery of up to 1 million barrels per day (bpd) of oil demand in 2021, Rystad Energy said.

Energy Aspects forecasts European demand to be lower by 800,000 bpd year-on-year in March, but expects the demand to continue recovering, rising by 2.7 million bpd in third quarter versus first quarter 2021.

Globally, Energy Aspects expects August demand to be 8.2 million bpd higher versus March, as summer discretionary driving peaks.

In the United States, the situation has been more stable. The US vaccine rollout has outpaced Europe's, and additional widespread lockdown measures have not been imposed.

The United States is the world's biggest gasoline consumer, and gasoline demand has mostly been rising week on week, Energy Information Administration data shows.

Demand increased in the week to March 19 to 8.6 million bpd, the highest since November except for the first week of March, when demand hit 8.7 million bpd. Traders are waiting for demand this year to hit a sweet spot of 9 million bpd, which will indicate stronger levels of consumption, said John Kilduff, partner at Again Capital LLC in New York.

Gasoline demand in Asia was also stable and there are no renewed widespread lockdowns.

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 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC

MOSCOW (MRC) -- Kuwait's Oil Minister Oil Mohammad Abdulatif al-Fares expressed "cautious optimism" that the global oil demand will improve as COVID-19 vaccination programs gather pace and industrial output recovers, as per Rueters.

Speaking ahead of a joint meeting of the Organization of Petroleum Exporting Countries and other major oil producers, he said the market supply/demand balance has largely improved as result of output cuts implemented by the group known as OPEC+, according to state news agency KUNA. He called on the group to the fully comply with these cuts.

As MRC informed earlier, U.S. crude oil and gasoline stockpiles fell unexpectedly last week as refiners ramped up runs to their highest in about a year to meet improved demand, the Energy Information Administration said. Crude inventories fell by 876,000 barrels in the week to March 26, compared with analysts' expectations in a Reuters poll for an increase of 107,000 barrels. Midwest crude stocks fell to their lowest since March 2020. Crude stocks at the Cushing, Oklahoma, delivery hub for futures rose by 782,000 barrels, EIA said.

As per MRC, Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 1.2% in March on a three-month moving average (3MMA) basis, following a 1.0% increase in February. On a year-over-year (Y/Y) basis, the barometer rose 5.5% in March. The unadjusted data show a 1.2% gain in March following a 0.9% gain in February, ACC said. The diffusion index rebounded to 82% in March, well above the long-term average of 58%.

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

MOSCOW (MRC) -- U.S. crude oil and gasoline stockpiles fell unexpectedly last week as refiners ramped up runs to their highest in about a year to meet improved demand, the Energy Information Administration said, said Hydrocarbonprocessing.

Crude inventories fell by 876,000 barrels in the week to March 26, compared with analysts' expectations in a Reuters poll for an increase of 107,000 barrels. Midwest crude stocks fell to their lowest since March 2020. Crude stocks at the Cushing, Oklahoma, delivery hub for futures rose by 782,000 barrels, EIA said.

U.S. crude futures extended gains after the data was released, trading up 42 cents a barrel at USD60.97 by 10:53 a.m. ET (14:53 GMT). Brent crude pared losses, trading down USD23 cents a barrel at USD63.91. "The refiners are bouncing back from the Texas power outages and are ramping up to meet improving demand," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "The drawdown in gasoline supplies is very bullish," he said.

Refinery utilization rates rose by 2.3 percentage points to 83.9% of total capacity, their highest since March 2020. Refinery crude runs rose by 552,000 barrels per day to 14.9 million bpd, also was the highest since March 2020. East Coast refiner crude net input rose to 698,000 bpd, its highest since February 2020.

Increased refinery runs helped to buck the trend of five consecutive crude stockpile builds, said Matt Smith of ClipperData. "Gasoline inventories fell despite increased refining activity, as implied demand continues to rebound," he said. Gasoline stocks fell by 1.7 million barrels, compared with analysts' expectations for a 730,000-barrel gain.

Distillate stockpiles, which include diesel and heating oil, rose by 2.5 million barrels, versus forecasts for a 171,000-barrel increase, the EIA data showed. Net U.S. crude imports fell last week by 170,000 bpd, while crude production rose 100,000 bpd to 11.1 million bpd.

As per MRC, Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), rose 1.2% in March on a three-month moving average (3MMA) basis, following a 1.0% increase in February. On a year-over-year (Y/Y) basis, the barometer rose 5.5% in March. The unadjusted data show a 1.2% gain in March following a 0.9% gain in February, ACC said. The diffusion index rebounded to 82% in March, well above the long-term average of 58%.

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

MOSCOW (MRC) -- The Borealis Supervisory Board has announced the formal appointment of Thomas Gangl (49) as new CEO of Borealis AG, effective 1 April 2021, as per the company's press release.

Thomas Gangl succeeds Alfred Stern (56), who assumes the role of OMV’s Executive Board member for Chemicals & Materials.

With Thomas Gangl, Borealis gains an exceptional manager and expert from among OMV’s ranks. His appointment was first announced in early February 2021.

With over 20 years of experience in OMV, Thomas Gangl has not only played a significant part in shaping the refining and petrochemicals business in the OMV Group but more recently was also responsible for establishing chemical recycling and thereby laying the foundation for OMV’s circular economy strategy.

OMV owns a 75% stake in the Borealis joint venture, with the remaining 25% held by Mubadala (Abu Dhabi, UAE).

During his 13 year tenure at Borealis, Alfred Stern has successfully proven visionary leadership by driving Borealis’ transformation from a virgin polyolefins producer to a leading provider of advanced and circular polyolefin solutions, and firmly establishing the company as an innovation and technology leader. He has led Borealis on the way to become a purpose-driven organization, significantly growing enterprise value, while further expanding its geographical footprint in North America.

As MRC reported earlier, Borealis continued to operate its steam cracker in Stenungsund, Sweden at 100% capacity utilisation in March, 2021. The cracker with the capacity of 625,000 mtyear of ethylene was restarted on 15-17 January, 2021, and force majeure was lifted on 29 January. And the company reached full capacity utilisation at this cracker in early February. The 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.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.

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

MOSCOW (MRC) -- Neste is preparing to execute a major turnaround at its Porvoo refinery starting in early April, 2021, after thorough planning work, according to Hydrocarbonprocessing.

Neste secures the safe and undisrupted operations of the Porvoo refinery in Finland with major turnarounds, executed approximately every five years. The Porvoo refinery major turnaround was originally planned for the spring 2020, but due to the coronavirus pandemic, the turnaround execution in planned scope was not possible and only the most critical maintenance works were completed in spring 2020.

Thus, the company plans to start shutting down process units at its Porvoo refinery in stages on Monday, 5 April 2021. The duration of the turnaround is approximately 12 weeks. After the maintenance work, the refinery is expected to be operating normally by the end of June.

In the major turnaround, the refinery is subject to regulatory inspections, maintenance works and selected asset improvement initiatives that are required for the refinery's operations. The total investments of the Porvoo refinery major turnaround are estimated to be around EUR 330 million.

“Major turnaround is a significant investment to secure safety, availability and competitiveness of the Porvoo refinery for the next operating cycle. During the turnaround, we will execute several investment projects related to the development of the refinery, including extensive asset, automation and electrification renewals,” says Marko Pekkola, Executive Vice President, Oil Products.

In order to manage the pandemic situation during the turnaround, a detailed health security plan has been prepared. It defines the planned extensive measure to mitigate the impacts of the coronavirus. The measures include, for example, mandatory usage of face masks, keeping a safe distance and enhanced hand hygiene at the site, a negative test result prior to entering the site and regular testing during the turnaround, as well as effective monitoring of compliance throughout the turnaround.

The turnaround will not affect the product deliveries to Neste’s customers. The Neste harbour and distribution terminal in Porvoo are operating normally during the major turnaround.

As MRC reported earlier, Neste has recently announced that it would acquire Bunge Loders Croklaan's refinery plant in Rotterdam, the Netherlands. The refinery plant is located next to Neste’s existing biorefinery and it consists of a pretreatment facility, tank farm, jetties and has a pipeline connection to Neste’s site. The acquisition has been approved by regulatory authorities, and the transaction has been completed on 1 March 2021. The transition of operations and employees will be implemented in phases with the refinery plant’s full and modified pretreatment capacity available for processing Neste’s feedstock by the end of 2024.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC