Global energy trader eyes Russian expansion, predicts steady crude oil prices

MOSCOW (MRC) -- Global energy trader Gunvor Group is keen to expand its oil dealings in Russia, Chief Executive Torbjorn Tornqvist told Reuters, and sees oil prices staying rangebound over the next few months as the coronavirus pandemic weighs on demand.

“We want to do more in Russia. We are getting more oil there,” Tornqvist said in an interview on Tuesday, without detailing plans.

According to traders, Gunvor will be the largest buyer of Russian Urals from state-firm Rosneft out of the country’s two Baltic ports in April.

Rosneft has been trying to woo traders to invest in its massive Vostok Oil Project in the Arctic. Rival trading firm Trafigura bought a 10% stake in the project last year.

Geneva-based Gunvor’s beginnings were Russia-focused until 2014 when its co-founder Russian businessman Gennady Timchenko was put under sanctions by the US. Treasury that considered him a close ally to President Vladimir Putin. At that point, Gunvor pivoted away from Russia, sold most of its assets and grew into a global business, including expansion into the United States. Russian trading accounted for 5% of its traded volumes in 2020.

Tornqvist said that 2020 was one of the best years for the firm from the trading perspective following a strong performance in 2019 after a difficult 2018 and a company reorganisation. He added that the company had a strong start in 2021 between the extreme cold spells in Asia and in the southern United States that saw prices for liquefied natural gas (LNG), power and natural gas skyrocket.

European refiners still need to contend with low margins and weak demand due to strict COVID-19 lockdowns aimed at curbing a third wave of contagions.

Tornqvist sees oil prices holding rangebound over the next months. Brent oil futures are trading in the low USD60s a barrel . “Stock draws are not going as fast as anticipated and demand is not fully back. Europe is going into another uncertain situation,” he said.

Gunvor mothballed its refinery at Antwerp, Belgium, but still runs two others, at Ingolstadt in Germany and in the Netherlands’ Rotterdam oil hub. The German refinery will undergo a turnaround in 2023 to boost efficiency and cut emissions.

As MRC informed earlier, 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 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.

Gasoline demand in the USA exceeds last year levels for first time in 2021

MOSCOW (MRC) --Gasoline sales in the United States have moved year on year into positive territory for the first time - on the one-year anniversary of the first major declines that resulted from COVID-induced stay at home orders, reported Reuters.

However, demand still trails pre-pandemic levels by a considerable margin, according to the latest data from Oil Price Information Service (OPIS) by IHS Markit.

US gasoline same-store sales in gallons for the week ending March 20, 2021 were 10.1% higher than 2020, according to OPIS Demand, a weekly survey of more than 25,000 fuel stations nationwide.* Nevertheless, same-store gasoline sales were still 16% below pre-pandemic levels.

Prior to the week ending March 20, 2021, gasoline volumes had mostly hovered in the range of 15% to 18% below prior-year levels since the start of 2021. The main exception was the week ending February 20, which saw a year-on-year decline of 22.4% due to impacts from Winter Storm Uri.

Retail gasoline sales volumes moving into positive territory compared to prior-year numbers for the week ending March 20 are not due to a major increase in demand but more reflect the massive declines that were seen at the pump during the same period last year. The week ending March 21, 2020 saw volumes trail 2019 levels by 23.6%, the first week in a four-week stretch that saw weekly U.S. gasoline sales volumes plummet to levels not seen since the Nixon Administration was in office in the early 1970s, culminating with volumes 47.5% behind prior-year levels the week ending April 11.

The extent of the current rebound varies by region.

There is optimism that additional “pent up” demand could be released this summer, with the Biden Administration announcing that every adult in the U.S. will be eligible for the COVID-19 vaccine no later than May 1.

It is possible that gasoline demand could come close to or even surpass pre-pandemic levels at times. But still to be determined are the lasting impacts to work, lifestyle and consumer habits.

As MRC informed before, 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.

We remind that 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). Supply of exclusively PP random copolymer increased.

Blue Point Capital Partners purchased Cascadia Custom Molding

MOSCOW (MRC) -- Private equity firm Blue Point Capital Partners and its IV portfolio company VRC Engineered Solutions have purchased Cascadia Custom Molding, an injection molder that operates out of manufacturing facilities in Coeur d’Alene, Idaho, and Woodinville, Wash, said Canplastics.

The financial terms of the deal have not been disclosed. In a March 30 news release, officials with Blue Point and VRC said that they “value Cascadia’s diverse customer base and focus on complex, low-volume parts, as well as in-house capabilities that further expand VRC’s tooling, materials, production and service capabilities."

“This acquisition strategically marks the next phase of growth for both VRC and Cascadia,” said Blue Point partner Jonathan Pressnell. “Uniting the respective company visions and leveraging their combined capabilities, services, technologies and expertise across all locations will offer significant benefit to our customers. The geographic and end market expansion, along with the potential for cross-selling opportunities, makes the combined company well-positioned for growth."

As MRC informed earlier, in a bid to boost its injection molding and personal care/beauty offerings, plastic container and closure maker Pretium Packaging has acquired Olcott Plastics Inc. for an undisclosed amount. The deal is also designed to allow St. Charles, Ill.-based Olcott to offer blow molded containers and a national footprint to its customers. Founded in 1969, Olcott specializes in injection molding and decorating of single- and double-wall PP jars, as well as injection molding and lining of PP closures.

According to MRC's ScanPlast report, 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.

Cascadia is VRC’s first add-on acquisition since Blue Point acquired the platform in August 2019. Cascadia was formed in May 2016 when two firms – Accurate Molded Plastics and Mold-Rite Inc. – merged after Accurate acquired Mold-Rite.

Covestro starts up pilot plant to demonstrate new innovative technology

MOSCOW (MRC) -- Covestro (formerly Bayer MaterialScience) has recently began operating a pilot plant to demonstrate the process, which depends on an intelligent foam sorting technology. The company has developed an innovative process for the chemical recycling of polyurethane (PU) flexible foam from used mattresses, as per the company's press release.

On average, mattresses contain 15 to 20 kilograms of foam, which results in a large amount of waste at the end of their useful life. The foam is primarily made of two important raw materials. While other chemical recycling approaches mainly focus on processing one of them, the Covestro process now enables the recovery of both raw materials.

Thus, Covestro has recently started operating a pilot plant for flexible foam recycling at its Leverkusen site to confirm the positive laboratory results achieved to date. The first phase is to focus on recycling one of the raw materials, before the recovery of the second component is also to be piloted from summer this year. Covestro?s goal here is to industrialize chemical recycling processes for used flexible foams and ultimately to remarket both recovered raw materials.

In cooperation with the companies Recticel and Redwave – a division of Wolfgang Binder GmbH - and as part of the PUReSmart research project, Covestro has also developed an intelligent sorting solution for separating the different PU foams from post-consumer mattresses. The software uses algorithms to correctly identify the different foam types, which facilitates an effective recycling process. This development is another element of Covestro’s digitalization strategy, combined with the new opportunities it entails for the chemicals and plastics industry.

The project is an important step forward in taking the development of the circular economy at Covestro to entirely new heights. The increased use of used materials further contributes to solving the societal challenge of sustainable disposal of such waste and to achieving the European Union?s goals for the circular economy and for climate and environmental protection.

As MRC reported earlier, Covestro closed the sale of its European polycarbonates (PC) sheets business to the Munich-based Serafin Group effective January 2, 2020. This includes key management and sales functions throughout Europe as well as production sites in Belgium and Italy.

According to MRC's ScanPlast report, Russia's overall consumption of PC granules (excluding exports from Belarus) totalled 8,100 tonnes in January 2021, up by 20% year on year (6,800 tonnes a year earlier).

Covestro (formerly Bayer MaterialScience) is an independent subgroup within Bayer. It was created as part of the restructuring of Bayer AG from the former business group Bayer Polymers, with certain of its activities being spun off to Lanxess AG. Covestro manufactures and develops materials such as coatings, adhesives and sealants, polycarbonates (CDs, DVDs), polyurethanes (automotive seating, insulation for refrigerating appliances) etc. With 2020 sales of EUR 10.7 billion, Covestro has 33 production sites worldwide and employs approximately 16,500 people (calculated as full-time equivalents).

ExxonMobil may post first profit in five quarters on better results across its businesses

MOSCOW (MRC) -- ExxonMobil Corp, US largest private petrochemical company, could post its first profit in five quarters on the back of improved results across its businesses, with higher oil and gas prices providing a lift of as much as USD2.7 billion, offset by costs from a February deep freeze, reported Reuters.

Last year, the company posted consecutive quarterly losses as falling oil prices and refining margins triggered write downs. It slashed operating expenses last year and analysts had forecast a per share profit of 54 cents, according to IBES data from Refinitiv.

Exxon could top Wall Street estimates based on its Wednesday securities filing, according to brokerage Raymond James & Associates. The data point to a quarterly profit of about USD2.55 billion, or 60 cents share, wrote analyst Justin Jenkins in a note.

Shares gained 12 cents to USD55.95 in late trading. The stock has gained more than a third this year to date.

The February freeze that cut power to Texas refineries and chemical plants, and curbed oil and gas supplies, caused up to USD800 million in damages and lost production volumes, Exxon indicated. ConocoPhillips and Devon Energy earlier warned of production losses from the cold snap.

The filing showed refining remains a troubled business despite sequentially improved operating margins. Refineries have been especially hard hit by a pandemic-related drop in fuel demand and a recent rise in feedstock prices.

Exxon’s chemicals operation, its only business to eke out a profit for 2020, could get a USD600 million boost over fourth quarter results on better margins. The business earned USD700 million in the final quarter. Results are scheduled to be released on April 30. Reported first-quarter earnings could hit USD2.34 billion, according to Refinitiv IBES, compared with a year-earlier loss of USD610 million.

As MRC wrote previously, ExxonMobil has shut its aromatics plant in Rotterdam-Botlek, Netherlands, for a six-week maintenance in March-April 2021. This turnaround is part of a larger repairs program at ExxonMobil's interconnected 191,000-b/d Botlek refinery and Rotterdam aromatics plant beginning in the first quarter. The Rotterdam aromatics plant is one of the largest aromatics production facilities globally and produces pure aromatics such as benzene, orthoxylene, paraxylene (PX), and cyclohexane.

Benzene is a feedstock for the production of styrene monomer (SM), which, in its turn, is a feedstock for manufacturing polystyrene (PS).

According to MRC"s ScanPlast report, January 2021 estimated consumption of PS and styrene plastics in Russia rose by 12% year on year, totalling 45,640 tonnes. The estimated consumption increased year on year for all PS grades.

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3% of the world"s oil and about 2% of the world"s energy.