COVID-19 - News digest as of 23.06.2021

1. BP aims to stick with oil and gas to benefit from rising oil prices

MOSCOW (MRC) -- BP will continue producing hydrocarbons for decades to come and will benefit from rising oil prices even as it reduces output as part of its shift to low-carbon energy, Chief Executive Bernard Looney told Reuters. The recent rally in crude prices, which climbed on Tuesday to a more than two-year high above USD75 a barrel, is likely to continue, Looney said in an interview at the Reuters Events: Global Energy Transition conference. "There's a very strong possibility that these prices will sustain over the coming years, and if they do, that's very good for our strategy." Higher oil prices mean BP will be able to raise more cash from selling assets that will go towards building its renewables and low-carbon business, as well as returning money to shareholders via share buybacks, he said. The 50-year old Irishman brushed aside investor concerns that BP might miss out on the rally because of its plan to slash oil output by 40% and grow its renewables output 20 fold by 2030 as part of its energy transition.


MRC

MOSCOW (MRC) -- Crude oil futures ticked higher in mid-morning trade in Asia June 23 after the American Petroleum Institute (API) reported a large draw in US crude inventories as the market awaited the July 1 OPEC+ meeting, according to S&P Global.

At 10:35 am Singapore time (0235 GMT), the ICE August Brent futures contract was up 38 cents/b (0.51%) from the previous settle at USD75.19/b, while the NYMEX August light sweet crude contract was 29 cents/b (0.4%) higher at USD73.14/b.

The uptick in prices comes after the API late June 22 reported a 7.2 million-barrel draw in US crude inventories in the week ended June 18. Downstream product inventories in contrast continued to trend higher, with the API reporting a 959,000-barrel rise in US gasoline inventories in the week, and a 992,000-barrel rise in distillate inventories.

However these builds did not dampen sentiment in the market as they were largely attributed to rising refinery utilization in the US, which analysts surveyed by S&P Global expected to have increased 0.5 percentage points to 93.1% of total capacity in the week ended June 18.

In Asia, there was some consternation in the market after the Wall Street Journal reported June 22 that China intends to keep border restrictions in place for at least another year due to the emergence of new coronavirus variants and a schedule of sensitive events such as a once-in-a-decade power transition within the ruling Communist Party and the Winter Olympics next February.

"The global reopening of the economy is key for the crude demand outlook, so China's plan to keep the pandemic border restrictions for another year also was a drag on sentiment," OANDA senior market analyst Edward Moya said in a June 23 note.

Nevertheless, analysts said that the market remained buoyed by rising mobility rates globally, and especially in the western hemisphere and China, where vaccination rates are rising rapidly.

Parts of India have also rolled back their lockdown measures, while the Japanese government has announced its intension to slowly ease the coronavirus state of emergency in Tokyo and several other prefectures in time for next month's opening ceremony of the Tokyo Olympics, local media reported. The gradual easing of lockdown restrictions globally portends well for downstream products demand, which will also shore up the crude complex.

Amid this rosy demand outlook for crude, the OPEC+ group is considering raising output further in August, according to media reports citing unnamed OPEC+ sources. The producer group is currently holding crude production at 6.2 million b/d below October 2018 levels to balance demand and supply during the pandemic, and intends to taper this output cut to 5.76 million b/d in July.

The OPEC+ coalition meets right after an OPEC meeting on July 1, where the market expects the coalition to decide on production quotas for August and possibly beyond.

We remind that as MRC reported 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) -- Trinseo, a global materials company and manufacturer of plastics, latex binders, and synthetic rubber, and its affiliate companies in Europe, have announced a price increase for Methyl Methacrylate (MMA) in Europe, according to the company's press release as of June 15.

Effective July 1, 2021, or as existing contract terms allow, he price for MMA monomer will rise by EUR200/tonne.

As MRC reported earlier, in May, 2021, Trinseo announced the closing of the previously announced transaction to acquire Arkema’s polymethyl methacrylates (PMMA) business. PMMA is a transparent and rigid resin with a wide range of end uses that augments Trinseo’s existing offerings across several end markets including automotive, building and construction, medical and consumer electronics.

The main application, consuming approximately 75% MMA, is in the production of polymethyl methacrylate acrylic plastics (PMMA). Methyl methacrylate is also used to produce methyl methacrylate-butadiene-styrene copolymer (MBS), used as a modifier for polyvinyl chloride (PVC).

According to ICIS-MRC Price report, situation in the Russian PVC market was quite calm last week, most deals for June PVC shipments have already been completed. Some converters have even already agreed on July supplies of Chinese PVC.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD3.0 billion in net sales in 2020, with 17 manufacturing sites around the world, and approximately 2,600 employees.
MRC

MOSCOW (MRC) -- The Supervisory Board of Borealis appointed Wolfram Krenn as Executive Vice President Base Chemicals & Operations and member of the Borealis Executive Board, effective 1 July 2021, as per the company's press release.

He succeeds Martijn van Koten, who was appointed OMV Executive Board member responsible for the Refining division.

Wolfram Krenn looks back at a long-standing career at OMV. He joined the company in 1998 as process engineer, then moved to production and operations, joining OMV Petrom in 2014 as lead for the Petrobrazi Refinery, Romania. In 2018 Wolfram Krenn was appointed Senior Vice President Site Management Schwechat, Austria, before taking over his current role role of Senior Vice President for Refining Assets in 2019.

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