Asia Distillates-Jet cracks continue going down on worries of renewed coronavirus lockdowns

MOSCOW (MRC) -- Asian refining margins for jet fuel decreased for a second straight session on Friday, weighed by worries that renewed coronavirus lockdowns in several markets would dampen aviation demand recovery, reported Reuters.

Refining margins, or cracks, for jet fuel dropped to USD4.59 per barrel over Dubai crude during Asian trading hours, 15 cents lower from Thursday. Jet cracks have gained 10% this week, but still remain 63% lower than the ten-year seasonal average for this time of the year, Refinitiv Eikon data showed.

While pockets of demand have emerged from some domestic routes, a majority of international flights remain grounded due to prolonged border restrictions amid fresh virus waves in many parts of Asia. Business travel is still being avoided as much as possible across sectors.

Jet fuel supplies in the region are limited as refiners have kept a cap on production due to weaker refining margins, but persistent weakness in demand continues to put a damper on sentiment, market watchers said.

Cash discounts for jet fuel were at 36 cents a barrel to Singapore quotes on Friday, compared with a discount of 62 cents per barrel a day earlier.

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 polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.
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Crude futures fall as COVID-19 pandemic concerns mar bullish economic outlook

MOSCOW (MRC) -- Crude oil futures slipped during mid-morning Asian trade April 19, as concerns on the COVID-19 pandemic front pulled the market back after it ended higher last week on bullish data releases and improved demand forecasts, reported S&P Global.

At 10:55 am Singapore time (0255 GMT), the ICE Brent June contract was 20 cents/b (0.28%) lower than the April 16 settle at USD66.57/b, while the May NYMEX light sweet crude contract was 11 cents/b (0.17%) lower at USD63.02/b.

COVID-19 cases in key European economies, such as Germany and France, remain elevated, while analysts expressed further concerns over the rise in case numbers in India and Japan. India reported a record high 261,394 cases on April 17, latest data from John Hopkins University showed. The data also showed that cases in Japan have crept up to 4,802 by April 17, the highest on record since late January.

"There is no real conviction in the market that the end of the pandemic is near, and that is limiting the upside for oil," David Lennox, resource analyst at Fat Prophets, told S&P Global Platts on April 19.

"After positive economic data releases forced a rally in oil prices last week, the market has grown cautious, and is now looking over its shoulder," he added.

In the week ended April 16, the June contract for Brent had edged 5.91% higher to settle at USD66.67/b on April 16, whereas the May contract for NYMEX light sweet crude rose 6.42% to USD63.13/b. Last week's rise came on the back of a confluence of bullish factors, including signs of improved economic conditions in oil-consuming behemoths, namely the US and China, an improvement in OPEC's and the International Energy Agency's demand outlooks, and a rapidly weakening US dollar.

A rebound in economic activity in the US and China, as demonstrated by a slew of data released last week, is expected to be accompanied by an increase in oil and energy demand. These effects are noted in the market, with ANZ analysts referencing the Department of Transportation's data in an April 19 note, which stated that New York City's toll traffic is set for its busiest April in seven years.

ANZ analysts also noted strong oil demand in China as its National Bureau of Statistics' April 16 data showed a 17.8% year-on-year growth in crude throughput in Q1 to 14.17 million b/d. Market sentiment had also received a boost last week when OPEC and the IEA raised their 2021 crude oil demand forecast by 190,000 b/d and 230,000 b/d from their previous forecasts, respectively.

While the US dollar weakness pushed the market higher last week, an appreciation in the dollar this morning has had the opposite effect. At 10:43 am, the June contract for ICE Dollar Index was trading at 91.680, up 0.149% from the previous settle.

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 polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.
MRC

Ukraine could have diesel shortages in May

MOSCOW (MRC) -- Ukraine could face diesel shortages in May because of planned maintenance at the Belarus Mozyr refinery coinciding with a break in supply from Russia's Rosneft, five trading sources told Reuters.

Swiss-based trader Proton Energy Group, which supplied Rosneft diesel and liquefied petroleum gas to Ukraine, stopped exports from April 1 and new supplier Coral Energy has yet to take over, sources have said. Ukraine consumes more than 7 million tons of diesel a year, importing two thirds of its needs, mainly from Russia and Belarus. After Proton stopped supplies, Ukraine sought to increase seaborne imports but volumes have been insufficient.

Rosneft, which supplied about 1.75 million tons of diesel to Ukraine last year via pipelines and railways, does not plan to resume exports next month and Belarus Mozyr refinery is set for planned maintenance from May 15 to June 15, traders said.

Mozyr is expected to supply about 150,000 tons of diesel to Ukraine in May, down from the usual 240,000 tons a month, traders said. "We expect a deficit of around 270,000 tons in May," one of the sources said.

Another source estimated that the diesel shortages could be between 150,000 and 200,000 tons next month, when major grain producer Ukraine would be in the middle of its sowing season. Ukraine has previously increased imports from sea ports and by rail to compensate for shortages, but it was not clear how it would act on this occasion, traders said.

Rosneft, Coral Energy, Mozyr refinery and the Ukranian Energy Ministry did not respond immediately to Reuters' requests for comment.

As per MRC, The Bashkir Soda Company (BSK) has been excluded from the list of a number of organizations against which Ukraine has imposed sanctions. Head of State Volodymyr Zelenskyy signed a decree on the enactment of the decision of the National Security and Defense Council of the country on sanctions, the document was published on the president's website. The sanctions against the BSK were imposed in May 2020 for a period of three years. Restrictions were imposed on trade operations, blocking of assets, complete cessation of the transit of resources, flights and transportation to the territory of Ukraine, suspension of the fulfillment of economic and financial obligations, as well as a ban on participation in the privatization and lease of state property.

According to MRC's DataScope report, last month's PE imports to Ukraine were 28,700 tonnes versus 17,700 tonnes in February, local companies increased their purchases of all PE grades. Thus, overall PE imports reached 63,600 tonnes in January-March 2021, compared to 39,900 tonnes a year earlier. HDPE imports decreased significantly, whereas imports of other PE grades increased.
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PPG acquires German automotive wheel coatings producer Cetelon

MOSCOW (MRC) -- PPG completed the acquisition of Germany-based automotive wheel coatings manufacturer Cetelon Lackfabrik, said the company.

PPG announced that it has acquired Cetelon Lackfabrik GmbH, a manufacturer of coatings for automotive and light truck wheel applications. Financial details of the transaction were not disclosed.

Cetelon develops and manufactures a wide range of coating systems for the wheel industry, including certain proprietary technologies. It operates production and sales offices in Ditzingen, Germany, from which it serves many leading wheel suppliers worldwide. Founded in 1948 in Stuttgart, Germany, Cetelon became part of the Berlac Group in 2011. The company employs approximately 95 people globally.

"The strategic acquisition of Cetelon will allow PPG to further build upon its existing coatings product portfolio, liquid and powder coating technologies and color matching capabilities,” said Rebecca Liebert, PPG executive vice president. “Cetelon’s long-standing and established customer relationships will be complementary to PPG’s existing customer base and global presence, and will allow us to continue to deliver industry-leading solutions and drive growth within the transportation industry."

"The sale of Cetelon to PPG is a great result for both companies,” said Daniel Kesselring, chairman, Berlac Group. “While PPG gains Cetelon’s long-standing expertise in the wheel industry, Cetelon will benefit from a highly complementary product offering and from PPG’s global reach."

As MRC informed earlier, in February 2020, PPG completed its acquisition of Industria Chimica Reggiana (ICR, Reggio Emilia, Italy), a maker of automotive refinish products. Financial terms of the deal, including purchase price, were not disclosed. The deal was announced on 8 January. ICR was founded in 1961 and employs about 180 people. ICR manufactures automotive refinish products, including putties, primers, basecoats and clear coats. It also makes a range of coatings, enamels and primers for light commercial vehicles and other light industrial coatings applications. ICR employs about 180 people and sells its products in more than 70 countries in Europe, Africa, the Middle East, the US and Latin America.

We remind that Russia's output of chemical products rose in February 2021 by 5.3% year on year. Thus, production of basic chemicals increased year on year by 7.5% in the first two months of 2021, according to Rosstat's data. Last month's production of polymers in primary form in Russia was 861,000 tonnes versus 196,000 tonnes in January. Overall output of polymers in primary form totalled 1,770,000 tonnes over the stated period, up by 8.4% year on year.
MRC

Refinery output in China rises nearly 20% on robust demand

MOSCOW (MRC) -- China’s daily refinery throughput surged 19.7% in March from a year earlier, as refiners ramped up operations to meet robust fuel demand and to build up inventory before shutting down for overhaul, reported Reuters.

China processed 59.79 million tons of crude oil last month, data issued by the National Bureau of Statistics (NBS) showed on Friday. That is equivalent to 14.08 million barrels per day (bpd), easing off 14.13 million bpd averaged in the first two months.

The strong year-on-year growth was in part due to a low base a year earlier when Chinese fuel demand was badly hit by coronavirus that forced refineries to slash production.

Throughput for the first quarter of this year was 174.04 million tons, up 16.5% year.

Crude oil output rose 3.3% in March versus the same month a year ago to 17.09 million tons, or 4.02 million bpd. Output for the January-March period climbed 1.4% year-on-year at 49.18 million tons.

Natural gas output last month jumped 12.1% from a year earlier to 18.5 billion cubic meters (bcm), and was up 13.1% at 53.3 bcm for the first quarter.

As MRC wrote previously, Zhejiang Petrochemical Co Ltd (ZPC) has started up its No. 2 cracker in Zhoushan, China, which is part of the company's phase 2 petrochemical project in the cournty. Thus, the cracker with an annual capacity of 1.4 million tons/year of ethylene and 700,000 tons/year of propylene began trial runs in early April, 2021. The commercial production at this facility is expected in the coming weeks.

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

According to MRC's ScanPlast report, Russia's estimated polyethylene (PE) consumption totalled 356,370 tonnes in the first two month of 2021, down by 9% year on year. Shipments of exclusively low density polyethylene (LDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market was 246,870 tonnes in January-February 2021, up by 30% year on year. Supply of homopolymer PP and PP block copolymers increased.
MRC