Crude oil futures down in Asia on dollar soaring despite bullish China, US stocks data

MOSCOW (MRC) -- Crude oil futures fell in mid-morning trade in Asia June 17 as a hawkish slant from the US Federal Reserve sent the US dollar soaring, but markets remained supported by bullish data from China's National Bureau of Statistics and the US Energy Information Administration, reported S&P Global.

At 10:17 am Singapore time (0217 GMT), the ICE August Brent futures contract was down 77 cents/b (1.04%) from the previous settle at USD73.62/b, while the NYMEX July light sweet crude contract was down 72 cents/b (1.00%) at USD71.43/b.

Market analysts attributed the downward trajectory in oil prices to a stronger US dollar, which IG market strategist Yeap Jun Rong said was fueled by hawkish signals from the latest Federal Reserve meeting concluded June 16.

"The Fed may have delivered a more hawkish message for markets than many would have expected, with Fed officials leaning towards two rate increases by the end of 2023 based on median estimates, he said in a June 17 note. "With the more hawkish tilt in the Fed's dot plot, the US dollar has broken out of its previous consolidation zone, jumping to its six-week high," he added.

At 10:17 am Singapore time, the ICE US Dollar Index was trading at 91.32, up 0.9% from its previous settle. Strength in the US dollar makes dollar-denominated assets like oil futures more expensive for investors holding foreign currencies, and hence dents the demand for such assets.

The fall in crude prices in early Asian trade came despite support from National Bureau of statistics data June 16 that showed China's crude throughput in May rose 4.4% year on year to a record high of 60.5 million mt.

May marked the first time China's monthly crude throughput has crossed 60 million mt, and analysts said throughput was expected to remain high until year end, when demand seasonally slows down as winter approaches and independent refineries run out of crude import quota.

Data from the EIA was also shoring up sentiment in the market, showing that US commercial crude stocks fell 7.35 million barrels in the week ended June 11 to a four-month low of 466.67 million barrels.

The strong refinery runs underpinning the draw also led to US gasoline inventories rising 1.95 million barrels to 242.98 million barrels in the week, leaving them above the five-year average for the first time since mid-February. US distillate inventories fell 1.02 million barrels over the same period to 136.19 million barrels, the data showed.

The EIA data echoed the market's expectation of strong downstream products demand in the US amid the country's rising vaccination rates and easing mobility restrictions.

We remind that as MRC informed earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world"s third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased. At the same time, PP deliveries to the Russian market were 523,900 tonnes in January-April 2021, up by 55% year on year. Supply of homopolymer PP and PP block copolymers increased, whereas shipments of PP random copolymers decreased.
MRC

MOSCOW (MRC) -- Overall polyethylene (PE) imports into the Ukrainian market reached 103,300 tonnes in the first five months of 2021, down by 8% year on year. Only high density polyethylene (HDPE) accounted for the decrease in imports, according to MRC's DataScope report.

Last month's PE imports to Ukraine were 19,800 tonnes versus 19,500 tonnes in April, local companies increased their purchases of linear low density polyethylene (LLDPE). Thus, overall PE imports reached 103,300 tonnes in January-May 2021, compared to 112,700 tonnes a year earlier. These were mainly HDPE imports that decreased, whereas imports of other PE grades increased.

The structure of PE imports by grades looked the following way over the stated period.

Last month's HDPE imports were 6,600 tonnes, which corresponded to the April figure. Overall HDPE imports into the country totalled 33,100 tonnes in the first five months of 2021 versus 46,600 tonnes a year earlier.

May low density polyethylene (LDPE) imports were 5,400 tonnes versus 5,800 tonnes a month earlier, Ukrainian companies reduced their purchases in Russia. Overall LDPE imports reached 31,600 tonnes in January-May 2021, which corresponded to the last year's figure.

Last month's LLDPE imports were 6,000 tonnes, compared to 5,700 tonnes in April, shipments of film grade LLDPE from Russia increased. However, overall LLDPE imports reached 31,700 tonnes in the first five months of 2021, compared to 29,300 tonnes a year earlier.

Imports of other PE grades, including ethylene-vinyl-acetate (EVA), totalled 6,900 tonnes over the stated period, compared to 5,400 tonnes a year earlier.

MRC

MOSCOW (MRC) -- Epsilyte (The Woodlands, Texas), a leading North American producer of expandable polystyrene (EPS), has announced a reduction in its prices for all EPS grades for June shipments, said the company.

Thus, the price of the company's EPS grades dropped by 3 cents/pound (cts/lb) or USD66/tonne, effective 1 June, 2021 or as contracts permit.

The present adjustment reflects current EPS supply and demand dynamics as well as expected feedstock trends.

As MRC reported earlier, Epsilyte raised its May EPS prices in the region by 8 cts/lb or USD176/tonne.

EPS is a rigid form of polystyrene (PS) used in insulation foams for the construction industry as well as for packaging.

According to ICIS-MRC Price report, last week's prices of Russian EPS remained at the level as of early June. Prices of SIBUR-Khimprom's spot EPS quantities were at Rb167,000-175,000/tonne CPT Moscow, including VAT. Plastik, Uzlovaya shipped material at Rb178,000-180,000/tonne CPT Moscow, including VAT, depending on the grade.

Epsilyte is owned by private equity firm Balmoral Funds (Los Angeles, California). Epsilyte is one of North America’s leading producers of expandable polystyrene resin. The company is focused on solving customer needs for efficient, high-R value EPS. This includes reducing energy usage in buildings, ensuring safe and healthy food through innovative packaging technology, and participating in infrastructure investment both in the United States and abroad.
MRC

MOSCOW (MRC) -- Uzbekistan's state energy company, Uzbekneftegaz, and UOP Limited, a subsidiary of Honeywell International, are in talks about upgrading the Central Asian nation's Bukhara Oil refinery, reported Reuters with reference to the Uzbek government's statement.

The companies have discussed a project worth USD184 million which would involve financing from the United States' EXIM Bank, the authorities said.

As MRC informed earlier, in April 2021, Honeywell announced that Lotte GS Chemical Corp. will use Honeywell UOP Q-Max, Phenol 3G, and Evonik MSHP technologies to produce more than 565,000 metric tons per year of phenol and acetone at its petrochemicals facility in Yeosu, Korea. UOP is providing a license for the technology, in addition to basic engineering design services, key equipment, catalysts and adsorbents and technical services.

Along with phenol, acetone is largely used to produce bisphenol A (BPA), which, in its turn, is used in the production of plastics such as polycarbonate (PC) and epoxy resins.

According to MRC's ScanPlast report, Russia's estimated consumption of PC granules (excluding imports and exports to/from Belarus) totalled 34,000 tonnes in the first four months of 2021, up by 11% year on year (30,500 tonnes a year earlier).
MRC

MOSCOW (MRC) -- Axens and Sulzer Chemtech (GTC Technology) have formed an alliance to license an advanced process for fluid catalytic cracking (FCC) naphtha processing, said the company.

The combined offering is based on Axens’ Prime-G+® hydrodesulfurisation technology and Sulzer Chemtech’s GT-BTX PluS® extraction technology. Axens' Prime-G+ technology is a leading technology for FCC gasoline selective desulfurisation with more than 300 references worldwide and Sulzer Chemtech is a leader for aromatics recovery for downstream FCC applications through its extractive distillation technology GT-BTX PluS. The combined solution of both technologies brings outstanding advantages for the gasoline and the petrochemical segments.

The combination offers a unique solution to reduce octane loss to a very low level for the gasoline pool. The technology is especially important in countries that are upgrading fuel specifications to meet environmental requirements, and it can be applied in new, or retrofits of existing units in operation to maximise profit.

It also provides refiners the option of converting FCC gasoline into petrochemical products – BTX and additional propylene – and obtaining additional margin in regions where gasoline demand is not sufficient. For those, the combined offer can convert their excess gasoline into petrochemical products to adapt to the market change with minimum investment.

Axens’ Process Licensing Global Business Unit Executive Vice-President Patrick Sarrazin said: “We look forward to collaborating with Sulzer Chemtech, to provide a comprehensive, high-quality processing solution to different players in the oil refining sector. The combination of Prime-G+ and GT-BTX PluS will help them address current and future market demands as well as increase their competitiveness."

"We are excited about the partnership with Axens. We are committed to delivering state-of-the-art technologies and are confident that this combined solution will bring many benefits to our customers. It will allow them to prepare for the changing gasoline and petrochemicals demand in both the near and longer term,” added Sander van Donk, Head of Global Technology Business at Sulzer Chemtech.

As per MRC, Baltic Chemical Complex (BHK), a subsidiary of JSC Rusgazdobycha, and the international company Axens signed an agreement on the supply of technology for the production of alpha-olefins used for the production of polyethylene. The technology will be applied within the framework of a project for the construction of a gas chemical complex as part of an ethane-containing gas processing complex near Ust-Luga in the Leningrad Region.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 744,130 tonnes in the first four month of 2021, up by 4% year on year. Shipments of all PE grades increased.

Axens is an international company providing technologies (licensor), catalysts, adsorbents and services (technical assistance, consulting) for the refining, petrochemical, gas and alternative fuels industries. Axens focuses primarily on the processing of oil, gas, biomass and coal into fuels and basic petrochemical intermediates.

MRC