COVID-19 - News digest as of 13.08.2021

1. COVID-19 infection halts China second-busiest container port in Ningbo

MOSCOW (MRC) -- A terminal at China's second-busiest container port, Ningbo Zhoushan, suspended operations Aug. 11 after a port worker tested positive for COVID-19, fueling worries that export cargoes will be further delayed heading into the August-November peak season for shipments to the US and Europe, reported S&P Global. Meidong Container Terminal halted inbound and unloading services from 3:30 a.m. local time Aug. 11. A similar outbreak at Shenzhen's Yantian port in May curtailed operations for a month, contributing to severe congestion at nearly all major North American ports in early August as Yantian ramped up operations to clear backlogs of cargo.


Crude oil futures going down in Asia on COVID-19 concerns and bearish IEA report

Crude oil futures going down in Asia on COVID-19 concerns and bearish IEA report

MOSCOW (MRC) -- Crude oil futures were lower during midmorning Asia trade Aug. 13 as pandemic concerns continued to keep prices in check, with the sentiment also taking a hit after the International Energy Agency (IEA) said global oil demand recovery had reversed its course in July, reported S&P Global.

At 11:15 am Singapore time (0315 GMT), the ICE October Brent futures contract was down 48 cents/b (0.67%) from the previous close at USD70.83/b while the NYMEX September light sweet crude contract was down 51 cents/b (0.74%) at USD68.58/b.

The spread of the delta variant of the coronavirus can potentially jeopardize the global economic recovery and sap demand for oil and energy, analysts said.

Parts of major Asia-Pacific regional economies, including India, China and Australia, have imposed mobility restrictions in a bid to curb infection numbers. The market is particularly concerned about the world's second largest oil consumer China, which is currently dealing with its broadest outbreak since 2019.

"Crude oil fell as concerns of weaker demand amid the spreading Delta variant grew. A COVID-zero approach by Chinese authorities has seen strict guidelines on movement," ANZ analysts said in an Aug. 13 note.

The situation was also grim in the West, with COVID-19 infection numbers in the US and countries in Europe remaining elevated.

The delta variant has spread so rapidly in the US that the Centers for Disease Control and Prevention said more than 90% of the counties are experiencing substantial or high transmission rates. The seven-day moving average of infections in the US has surged to 124,234 as of Aug. 11, the highest since early February, data from The New York Times showed.

Amid rising infection numbers, the IEA said in its latest oil market report released Aug. 12 that the global oil demand recovery went into reverse in July, when oil demand fell by 120,000 b/d. In the report, the agency lowered its estimate for 2021 demand growth to 5.3 million b/d from 5.4 million b/d, while raising its 2022 growth estimate to 3.2 million b/d from 3 million b/d.

As MRC informed earlier, crude oil stockpiles fell modestly last week, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.

We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.

We also remind that BP raised Aug. 3 its 2025 oil price assumption by USD5/b to USD60/b to reflect an expected supply constraint, while promising a recovery in its own production volumes following a maintenance-related slump in the second quarter.

August prices of European PE drop for CIS markets

August prices of European PE drop for CIS markets

MOSCOW (MRC) -- August contract price of ethylene in Europe was agreed up by EUR53/tonne from the previous month. However, some European producers announced a slight reduction in export polyethylene (PE) prices for August shipments to the CIS markets, according to ICIS-MRC Price report.

Negotiations over August prices of European PE began in the middle of last week. All market participants said some European producers reduced their export prices of ethylene polymers by EUR10-20/tonne for this month's shipments. At the same time, there were quite many cases of a roll-over of July prices. A shortage of some PE grades still remained in Europe.

August deals for low density polyethylene (LDPE) were done in the range EUR1,600-1,650/tonne FCA, whereas last month's deals were done in the range of EUR1,610-1,670/tonne FCA.

Deals for high density polyethylene (HDPE) were discussed in the range of EUR1,240-1,320/tonne FCA versus EUR1,250-1,340/tonne FCA a month earlier.

Many buyers said all European producers still had export restrictions, at the same time, demand for European PE was weak due to more attractive prices of producers from Central Asia and the Middle East.

Lummus Technology announces the start-up of ZPC mega alkylation unit in China

Lummus Technology announces the start-up of ZPC mega alkylation unit in China

MOSCOW (MRC) -- Lummus Technology announced the start-up of its CDAlky alkylation unit at Zhejiang Petroleum & Chemical Co. Ltd.'s (ZPC) refinery in Zhejiang Province, China, according to Hydrocarbonprocessing.

The unit has a capacity of 45,000 BPSD of alkylate product, making it the largest alkylation unit ever licensed by Lummus.

"The successful start-up for ZPC, plus the one we announced recently for Valero, underscore the best-in-class technology solutions we offer to major operators all over the world," said Leon de Bruyn, President and Chief Executive Officer of Lummus Technology. "Given the unit's unique and advanced features, such as the scale and the nature of the feedstock, this achievement reflects Lummus' ability to adapt, innovate and collaborate closely with our customers."

The start-up is the second Lummus CDAlky unit at ZPC's complex for a combined capacity of 59,000 BPSD of alkylate production, making it the second largest alkylation complex in the world.

The new alkylation unit processes C4s from upstream refining and petrochemical units, resulting in a very high concentration of isobutylene in the total olefins blend while producing a superior alkylate quality.

Earlier this year, Lummus announced the successful start-up of the first C5 CDAlky unit in the world, and Lummus' first CDAlky unit in the US located at Valero's Saint Charles Refinery in Norco, Louisiana. The ZPC and Valero start-ups demonstrate CDAlky's flexibility to process olefins from different sources and to produce premium alkylate with lower capital and operating costs.

As MRC reported before, in June 2021, DuPont Clean Technologies (DuPont) announced the startup of the STRATCO alkylation units at the Zhongke Refinery and Petrochemical Company LTC refinery in Zhejiang, China and the Sinopec Shanghai Company (SPC) refinery in Jinshan, Shanghai, China. Both STRATCO alkylation units at Sinopec Zhongke and Sinopec Shanghai are designed to process MTBE raffinate feedstock and produce 9,240 bpsd (360 kmta) and 10,240 bpsd (400 kmta) of alkylate, respectively.

We remind that state-backed Sinopec Corp. has recently started a 5.17 billion yuan (USD811 million) refinery upgrade at a subsidiary plant in eastern China that aims to produce cleaner fuels and boost output of higher-value chemicals. The investment in Yangtze Petrochemical Corp, in Nanjing city in the province of Jiangsu, covers eight key facilities, such as a 2.6-million-tonne-per-year residue hydrocracker and a 2.8 MMtpy catalytic cracker.

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 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.

ExxonMobil an Chevron seek to make renewable fuels without costly refinery upgrades

ExxonMobil an Chevron seek to make renewable fuels without costly refinery upgrades

MOSCOW (MRC) -- ExxonMobil, along with Chevron, is seeking to bulk up in the burgeoning renewable fuels space by finding ways to make such products at existing facilities, reported Reuters with reference to sources familiar with the efforts.

The two largest US oil companies want to produce sustainable fuels without ponying up billions of dollars that some refineries are spending to reconfigure operations to make such products. Renewable fuels account for 5% of US fuel consumption, but are poised to grow as various sectors adapt to cut overall carbon emissions to combat global climate change.

Both Chevron and Exxon have massive refining divisions that contribute heavily to their overall carbon emissions. The companies have been criticized for a less urgent approach to renewable investments than European rivals Royal Dutch Shell Plc and TotalEnergies, and have generally spent a lower percentage of their capital than those companies on "green" technologies.

The companies are looking into how to process bio-based feedstocks like vegetable oils and partially-processed biofuels with petroleum distillates to make renewable diesel, sustainable aviation fuel (SAF) and renewable gasoline, without meaningfully increasing capital spending.

Commercial production of renewable fuels is costlier than making conventional motor gasoline unless coupled with tax credits.

A task force was created at Exxon's request within international standards and testing organization ASTM International to determine the capability of refiners to co-process up to 50% of certain types of bio-feedstocks to produce SAF, according to the sources.

Exxon did not respond to a request for comment.

Chevron is looking into how to run those feedstocks through their fluid catalytic crackers (FCC), gasoline-producing units that are generally the largest component of refining facilities.

"Our goal is to co-process biofeedstocks in the FCC by the end of 2021," a Chevron spokesperson told Reuters, to supply renewable products to consumers in Southern California.

The company is partnering with the US Environmental Protection Agency (EPA) and California Air Resources Board (CARB) to develop a path to produce fuel that would qualify for emissions credits.

A source familiar with the matter said if approved by the EPA and CARB, Chevron would be able to produce and generate credits for renewable gasoline. That product is not yet commercially available, but can reduce carbon dioxide emissions by 61% to 83%, depending which feedstock is used, according to the California Energy Commission.

Chevron said on its earnings call earlier this month that in the second phase of its process, it would be the first US refiner to use the cat cracker to produce renewable fuels.

We remind that, as MRC informed earlier, ExxonMobil and SABIC have announced that their joint venture, Gulf Coast Growth Ventures located near Corpus Christi, Texas, has reached mechanical completion of a monoethylene glycol (MEG) unit and two polyethylene (PE) units. Project startup is expected to begin ahead of schedule, likely in the fourth quarter of 2021.

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.

Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.