Crude oil futures continue downward trend in Asia as risk-off sentiment sweeps market

Crude oil futures continue downward trend in Asia as risk-off sentiment sweeps market

MOSCOW (MRC) -- Crude oil futures fell further during mid-morning trade in Asia June 18, extending overnight losses, as risk aversion gripped the market after hawkish signals from the US Federal Reserve, even as the global demand recovery narrative remained intact, reported S&P Global.

At 10:50 am Singapore time (0250 GMT), the ICE August Brent futures contract was down 64 cents/b (0.88%) from the previous settle at USD72.44/b, while the NYMEX July light sweet crude contract was 56 cents/b (0.79%) lower at USD70.48/b.

The Brent and the NYMEX light sweet crude markers had fallen 1.76% and 1.54% overnight to close at USD73.08/b and USD71.04/b respectively, halting the recent dizzying rally.

Vandana Hari, CEO of Vanda Insights, told S&P Global Platts on June 18 that the downturn in prices comes as the market consolidates after recent gains, and was triggered by a hawkish tilt in the US Federal Reserve's dot plots from a meeting concluded June 16.

The dot plots show that Federal Reserve officials are leaning towards two interest rate increases by the end of 2023 based on median estimates. The prospect of higher rates has fueled risk-off sentiment in broader financial markets.

Some analysts said oil prices also faced headwinds from concerns over the deteriorating pandemic situation in the UK, which reported 11,007 new COVID-19 infections June 17, the highest since Feb. 19, government data showed. That surge despite high vaccination rates has called into question the nascent recovery on the pandemic front in the rest of the western hemisphere, analysts said.

However, Hari said that the global demand recovery narrative remains intact despite the surge in UK cases.

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

Shurtan Gas Chemical Complex invests in expansion of PE and PP production capacities

Shurtan Gas Chemical Complex invests in expansion of PE and PP production capacities

MOSCOW (MRC) - Shurtan Mining and Chemical Complex is investing USD1.8 billion in expanding its PE and PP production capacities, the company said in a statement.

It is noted that for the implementation of the project, Gazprombank will provide a loan in the amount of USD300 million. In addition, to raise funds, work is currently underway with the State Development Bank of China, the Sinoshur Export Credit Agency and European financial institutions.

The project provides for the creation of a production facility for up to 430 thousand tons of polyethylene and up to 280 thousand tons of polypropylene per year. Chevron Pilliphs Chemical and McDermott have been selected as licensors of the project.

The Shurtan gas chemical complex was put into operation in 2001 on the basis of the Shurtan gas condensate fields (GCF). The enterprise processes up to 3.9 bcm of feed gas per year. The complex is designed for the production of 150 grades of high, medium and low density linear polyethylene.

In 2017, the government of Uzbekistan planned to expand the production capacities of the Shurtan Gas Chemical Complex (ShGKhK, Uzbekneftegaz) in the Guzar district of the Kashkadarya region in order to increase the production of export and import-substituting raw materials by deepening the processing of naphtha raw materials at the Uzbekneftegaz GTL plant.

The American company Chevron Pilliphs Chemical (polyethylene production) and McDermott (polypropylene production and naphtha cracking unit) have been selected as licensors of the project. To implement the project, a contract was signed with Singapore-based ENTER Engineering for detailed design, purchase and construction of equipment.

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.

NHK "Uzbekneftegaz" is a vertically integrated three-level holding company. The company includes six joint stock companies. It is engaged in the development of oil and gas fields, the extraction of oil, gas and gas condensate, the processing of natural gas, etc.

The main products of Shurtan Gas Chemical Complex are low-density polyethylene (HDPE), linear low-density polyethylene (LLDPE), liquefied gas, sulfur, gas condensate. The production capacity of Shurtan Gas Chemical Complex is 140 thousand tons of ethylene per year, 125 thousand tons of HDPE and linear low-density polyethylene (LLDPE) per year.
MRC

Stavrolen to increase its PE and PP output during the production upgrade

MOSCOW (MRC) -- Stavrolen (Budennovsk, part of Lukoil), a major polyolefins producer in the Russian Federation, plans to upgrade its technical equipment and to increase its production of polyethylene (PE) and polypropylene (PP) as part of modernization, according to "Expert South " with reference to the statement of the Ministry of Energy, Industry and Communications of the region.

Prospects for the plant's development were discussed during the working visit of the Governor of the Stavropol Territory Vladimir Vladimirov and the executive vice president of Lukoil Vadim Vorobyov to Budennovsk.

Stavrolen's General Director Anatoly Afonin said that the modernization of the plant's production will go in accordance with four investment reconstruction projects worth Rb18.8 billion. According to V. Vorobyov, it is planned to expand the plant's PE production up to 420,000-450,000 tonnes and PP production - up to 120,000-130,000 tonnes per year.

"Today, the company is one of the largest industrial taxpayers in the region: from 2018 to 2020 alone, the company's activities brought almost Rb3 billion in tax payments to the budget of the Stavropol Territory," commented Vitaly Shulzhenko, Minister of Energy, Industry and Communications of the Stavropol Territory.

Lukoil intends to complete the implementation of an investment project in the Budennovsky District of the Stavropol Territory by 2027.

As reported earlier, in the first week of September 2020, Stavrolen resumed PP production after a forced and long outage due to technical problems. In fact, the plant did not produce PP since 16 July.

According to MRC's ScanPlast report, Stavrolen produced slightly over 11,000 tonnes of PP in April versus 10,700 tonnes a month earlier. The Budenovsk plant's overall output of propylene polymers reached 42,900 tonnes in the first four months of 2021, up by 4% year on year.

Lukoil is one of the leading vertically integrated oil companies in Russia. The main activities of the company include operations for exploration and production of oil and gas, production and sale of petroleum products. Lukoil is the second largest private oil company worldwide by the proven hydrocarbon reserves. Lukoil's structure includes one of the largest Russian petrochemical plant - Stavrolen.

Stavrolen, Lukoil's subsidiary, is Russia's second largest high density polyethylene (HDPE) producer after Kazanorgsintez and the fifth largest PP manufacturer. Stavrolen's HDPE and PP production capacities are 300,000 tonnes and 120,000 tonnes per year, respectively, the plant also produces 80,000 tonnes of benzene and 50,000 tonnes of vinyl acetate per year.
MRC

Borealis signs supply agreement with Renasci enabling Borealis to offer commercial volumes of recycled base chemicals and polyolefins

Borealis signs supply agreement with Renasci enabling Borealis to offer commercial volumes of recycled base chemicals and polyolefins

MOSCOW (MRC) -- Borealis has signed an exclusive agreement with Renasci Oostende Recycling NV to acquire the entire chemically recycled feedstock output from its high-tech recycling centre in Oostende, Belgium, as per the company's press release.

With the projected 20kT output/year delivered to Borealis, this agreement will enable Borealis to become one of the leading global suppliers of chemically recycled base chemicals and polyolefins. The portfolio of products enable the transformation of plastic waste into circular high-performance products and applications.

The waste feedstock processed at Renasci’s ISCC PLUS-certified recycling centre is derived from mainly dried household waste and some industrial waste. In a first step, the waste is sorted multiple times to extract the best value plastic material for mechanical recycling. The waste feedstock which cannot be mechanically recycled is then chemically recycled; this chemically-recycled feedstock will be subsequently processed in the Borealis steam crackers, initially at its production location in Porvoo, Finland. The Borealis Porvoo location’s - the global standard for certified recycled and bio-based materials - enables mass balance production of renewable and chemically recycled products.

“Our agreement with Renasci is a welcome complement to the OMV ReOil chemical recycling project,” explains Martijn van Koten, Borealis Executive Vice President Base Chemicals and Operations. “Life demands progress. We notice a strong increase in demand for chemically recycled products. Borealis and OMV aim to increase supply of these more circular base chemicals and polyolefins in order to help our customers deliver on their own sustainability targets.”

“In the true spirit of we accelerate action to plastics circularity through collaboration,” says Lucrece Foufopoulos, Borealis Executive Vice President Polyolefins, Innovation & Technology and Circular Economy Solutions. “The cooperation with Renasci allows us to offer our customers and partners virgin-like polyolefins from chemically recycled post-consumer waste in material quantities effective this quarter. This is how we re-invent for more sustainable living, and expand our portfolio with a Borcycle C offering.”

As MRC reported earlier, in April 2021, Borealis commenced a new project to secure an increased supply of chemically recycled feedstock for the production of more circular base chemicals and polyolefin-based products. A feasibility study for a chemical recycling unit to be established at the Borealis production location in Stenungsund, Sweden, is now underway.

We remind that Borealis began to restart of its 625,000-metric tons/year steam cracker at Stenungsund, Sweden, in early January, 2021, but the declaration of force majeure remained in place then. The process of restarted lasted for several weeks. 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. The force majeure was lifted on 29 January, 2021.

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.

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

Easing COVID-19 emergency restrictions to boost summer gasoline demand in Japan

Easing COVID-19 emergency restrictions to boost summer gasoline demand in Japan

MOSCOW (MRC) -- Japan's easing of COVID-19 emergency restrictions will boost the gasoline demand in July, when the country kickstarts the summer driving season, but the expected transport restriction for the Tokyo Olympics sent mixed signals for the fuel demand, reported S&P Global.

Japan decided June 17 it will lift its state of emergency measures on nine out of 10 prefectures when it expires on June 20 but will place Hokkaido, Tokyo, Aichi, Osaka, Hyogo, Kyoto and Fukuoka under its COVID-19 priority measures, together with Saitama, Chiba and Kanagawa until July 11.

The state of emergency measures on Okinawa will remain until July 11 but the state of emergency on Okayama and Hiroshima will be lifted on June 20. The priority measures on Gifu and Mie will also be lifted. This means 56% of Japan's population will be under the priority measure, with the state of emergency on Okinawa, accounting for 1% of the population.

"With the easing of state of emergency measures, we expect to see sequential improvement of gasoline demand over the next couple of months," said JY Lim, oil markets adviser at S&P Global Platts Analytics.

"The summer Olympics will also provide some support, but impact will likely not be significant due to the restriction on non-athlete attendees. Overall, we expect to see gasoline growing by 2.5% this year, but still down by 5.7% when compared to pre-COVID levels," Lim said.

Japan's gasoline demand is expected to recover in July on the back of gradual improvement in the pandemic situation and an increase in personal mobility due to the Olympics, among other factors, Petroleum Association of Japan President Tsutomu Sugimori said June 16.

Japan's gasoline demand is estimated to have fallen by 5% year on year in June and down 9% from June 2019 after marking a 14% year-on-year jump in May, when it was down 12% from the same month two years ago, according to Sugimori, who is also chairman of Eneos Holdings, the parent of largest Japanese refiner Eneos.

Japanese refiners and market sources surveyed by S&P Global Platts said June 17 that Japan's July gasoline demand will mark a month-on-month increase and is expected to be between flat year on year to rising 3% from a year ago, taking into account the coronavirus pandemic and the Olympics situation.

Although Japan's gasoline demand is expected to increase in July due to easing COVID-19 emergency measures and the start of the Olympics, regional industry sources expect the impact to be minimal amid bearish fundamentals.

Japan's refinery outage will also soon drop to 685,000 b/d, or 19.8% of the total installed capacity when ENEOS restarts its sole 141,000 b/d crude distillation unit at the Sakai refinery in western Japan in late June, according to Platts calculations.

As MRC wrote previously, ENEOS (formerly JXTG Nippon Oil & Energy) restarted its Sendai refinery in northeast Japanon 18 May, 2021. This refinery was hit by an earthquake on 1 May, 2021. Besides, on 18 May, the company shut down its Sakai refinery in western Japan for maintenance.

We remind that ENEOS Corporation restarted its naphtha cracker in Kawasaki on 1 February 2021. The company shut this cracker with an annual capacity of 515,000 tons/year of ethylene, 300,000 tons/year of propylene, and 105,000 tons/year of butadiene on 4 December, 2020, for repairment after a technical issue reported at the butadiene separation unit and initially planned to resume operations on 28 December, 2020.

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