COVID-19 - News digest as of 16.08.2021

1. European and US gasoline stocks down to near pre-pandemic levels but road ahead may be bumpy

MOSCOW (MRC) -- European and US gasoline stocks have fallen to near pre-pandemic levels as Western holiday-makers hit the roads, but the end of the driving season and the spread of the Delta variant of the coronavirus could slow the recovery in global oil demand, reported Reuters. The pandemic and resulting lockdowns around the world destroyed demand for oil products and led to massive stock builds in 2020 which have been gradually depleting this year. The International Energy Agency said on Thursday that global oil demand surged by 3.8 million barrels per day month-on-month in June, led by increased mobility in North America and Europe, but reversed course in July and is set to proceed more slowly for the rest of the year due to the spread of the Delta variant.


Crude oil futures down in Asia as investors wary of delta variant spread

Crude oil futures down in Asia as investors wary of delta variant spread

MOSCOW (MRC) -- Crude oil futures were lower during mid-morning Asian trade Aug. 16 as investor concerns over the fast spreading delta variant resurfaced amid restrictive movement curbs in oil consuming giant China and growing number of cases in the US, reported S&P Global.

At 10:51 am Singapore time (0251 GMT), the ICE October Brent futures contract was down 80 cents/b (1.13%) from the previous close at USD69.79/b, while the NYMEX September light sweet crude contract similarly fell 77 cents/b (1.13%) at USD67.67/b.

"The delta (variant) worries are tightening their grip on oil market sentiment," Vandana Hari, CEO of Vanda Insights, said. "The summer travel and tourism boom in the West is petering out, while the virus continues to fester in pockets across the world."

Oil demand in China has taken a hit in recent weeks after growing COVID-19 cases in the country prompted the government to impose strict movements curbs to bring the virus under control.

Most notably, the country's zero-tolerance approach to COVID-19 led to the closure mid-last week of its Meishan terminal at the world's third-busiest port, namely the Ningbo-Zhoushan port, which is expected to disrupt supply chains globally.

"The centre of demand remains China, where a COVID-zero approach by Chinese authorities has seen strict guidelines on movement to curb more infections," ANZ analysts said in a note.

"At least 144 areas, including 20 cities, have been (categorized) as having a medium to high virus risk, a measure that could see all public transport shut down," they added.

Nonetheless, recent case numbers in China suggest the movement curbs are working. The National Health Commission recorded 24 locally transmitted cases in the country as of Aug. 14, down by 6 on the day and also significantly lower than the high of 108 cases for the month on Aug. 10.

Analysts said the Aug. 16 dip in oil markers may be short-lived as investors take time to reassess the supply-demand outlook as the week progresses.

COVID-19 case numbers in the US have continued to grow. The US Centers for Disease Control and Prevention on Aug. 12 reported its highest number of COVID-19 cases since January 2021 at 146,949. The seven-day moving average stood at 119,523 as of Aug. 13, more than six times the average at the start of July.

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.

Central Bank of Russia registers additional issue of SIBUR shares for TAIF acquisition

Central Bank of Russia registers additional issue of SIBUR shares for TAIF acquisition

MOSCOW (MRC) -- On 10 August, the Central Bank registered an additional issue of ordinary shares of PJSC SIBUR Holding, the largest petrochemical holding in Russia and Eastern Europe, reported BusinessOnline, citing Interfax.

Now the authorized capital of PJSC SIBUR Holding is Rb21,784, 791. There are 2,178,479.1 ordinary shares in circulation with a par value of Rb10 each one.

In accordance with the decision on the additional issue, the issuer is placing 384,437,000.489 new ordinary shares by private subscription.

The shareholders of TAIF PSC and their affiliates participate in the placement of shares.

As MRC informed earlier, on 23 April 2021, SIBUR announced a merger with TAIF by exchanging 15% of its shares for 50% + 1 share in TAIF. The scope of the transaction includes only TAIF's petrochemical and generating companies. This merger will increase the scale of SIBUR's operations and strengthen its market leadership. SIBUR and TAIF expect to reach final terms and close the deal in the second half of 2021. TAIF together with SIBUR will spend more than Rb1 trillion for the implementation of joint projects. In total, the companies plan to realize over 30 projects.

It was also reported that the petition for the acquisition of 100% of the voting shares of TAIF PJSC by SIBUR Holding PJSC was received by the FAS of Russia on 26 May, and on 20 July the FAS granted SIBUR's petition to acquire 100% of the voting shares of TAIF.

As a result of the merger, the total capacity share of the new SIBUR-TAIF group will be 100% for linear low density polyethylene (LLDPE) production, 87.4% - for polypropylene (PP), 80.8% - for high density polyethylene (HDPE) and 59.3% - for low density polyethylene (LDPE).

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.

SIBUR manufactures and sells petrochemical products in the Russian and international markets in two business segments: olefins and polyolefins (polypropylene, polyethylene, BOPP, etc.), as well as plastics, elastomers and intermediate products (synthetic rubbers, expanded polystyrene, PET, etc.).

PSC "TAIF" was established in 1995 and is the parent company of the group with the same name, which includes enterprises structured in four business areas: oil and gas processing, chemistry and petrochemistry (energy); investment and financial services; building; telecommunications and complex services, including trade. TAIF Group of Companies is a large Russian holding that controls 96% of the chemical, petrochemical and oil and gas processing industries in Tatarstan. The most important of its areas is the Chemical, Petrochemical and Oil and Gas Processing Divisions, which include the leading Russian polymer producers Nizhnekamskneftekhim and Kazanorgsintez.

Gazprom Neft to redeem two bond issues of Rb15 bln ahead of schedule

Gazprom Neft to redeem two bond issues of Rb15 bln ahead of schedule

MOSCOW (MRC) -- Gazprom Neft will redeem BO-01 and BO-04 series bonds ahead of schedule on 24 August, said Finam with reference to the company's statement.

Bonds are repaid ahead of schedule at the outstanding part of the par value, while the coupon yield is paid for the coupon period, on the date of payment of which the securities are repaid ahead of schedule.

Bond issues with a total par value of Rb15 bln. were placed in 2016 with maturity in 2046.

As MRC reported before, Gazprom Neft's net profit as per IFRS totalled Rb84.16 bln in the first quarter of 2021 versus a loss of Rb13.8 bln a year earlier. Gazprom Neft's revenue for the reporting period increased by 18.7% to Rb610.98 bln.

Gazprom Neft (headquartered in St. Petersburg, part of Gazprom, which owns 95.68% of its shares) is one of the largest Russian oil companies. In 2015, Gazprom Neft remained one of the leaders in the oil industry in terms of key performance indicators - the level of operating profit and return on invested capital. In 2015, Gazprom Neft produced 79.7 mln tonnes of hydrocarbons, increasing production by more than 20% compared to 2014 and thus achieving the highest production growth in the Russian oil industry.

Gazpromneft - Moscow Oil Refinery is a subsidiary of Gazprom Neft. The plant's production capacity is 12.15 mln tonnes/year of hydrocarbons. The company produces motor gasolines, diesel, marine and aviation fuel, fuel oil, high-octane additives to motor gasoline, bitumen and gases for various purposes, as well as polypropylene (PP). And in 2010, Moscow Oil Refinery and SIBUR created a joint venture for PP production - NPP Neftekhimiya LLC.

Aurora Plastics acquired by private equity firm Nautic Partners

Aurora Plastics acquired by private equity firm Nautic Partners

MOSCOW (MRC) -- Aurora Plastics LLC, a U.S.-based supplier of PVC compounds with operations in Quebec, has been acquired by private equity firm Nautic Partners for an undisclosed amount, said Canpastics.

Prior to the ownership change, Aurora Plastics was majority owned by Chicago-based Wind Point Partners (WPP) and the Toronto-based Ontario Teachers’ Pension Plan (OTPP). WPP and OTPP purchased Aurora Plastics in August 2016.

Aurora Plastics CEO Darrell Hughes and the senior executive team will continue to lead the company, which is headquartered in Streetsboro, Ohio. "Together with our investors, employees, and suppliers, we have created a strong polymer compounding platform, supporting the growth of our key customers, accelerating the release of new strategic products, enhancing our long-term customer partnerships, and increasing our overall levels of quality, service, and profitability. In doing so, we have delivered an excellent return for our investors,” Hughes said in an Aug. 11 news release. “We thank our previous owners – WPP in Chicago and OTPP in Canada for being tremendous sponsors over the last five years, and we are happy to have fulfilled their vision."

"The mission at Aurora Plastics remains the same – we want to be our customers’ first choice in polymer compounds,” Hughes said. “With Nautic as our new investor and majority shareholder, we will benefit from their strong record of creating value with teams just like ours. We look forward to continued innovation and providing the best in service to all our customers."

Last year, U.S.-based private equity firm Nautic Partners LLC added a second plastics company to its portfolio with the acquisition of pipe distribution company Harrington Industrial Plastics LLC.

According to MRC's ScanPlast report, July total production of unmixed PVC fell to 64,600 tonnes from 83,800 tonnes a month earlier, Bashkir Soda Company and SayanskKhimPlast shut their production capacities for scheduled turnarounds. Overall output of polymer totalled 580,500 tonnes in January-July 2021, compared to 556,800 tonnes a year earlier. Only Bashkir Soda Company reduced its production, whereas three other producers showed an increase in the output of resin.

Founded in 1997, Aurora Plastics supplies PVC, TPE, and customized alloy compounds for customers across North America. In addition to the Streetsboro production facility, the company has manufacturing capabilities in North Carolina, Quebec, Massachusetts, and Texas.