Crude oil futures drop in Asia as investors see selling opportunities

Crude oil futures drop in Asia as investors see selling opportunities

MOSCOW (MRC) -- Crude oil futures settled lower during mid-afternoon trade in Asia Aug. 26 as investors saw selling opportunities, but analysts remain bullish as COVID-19-driven apprehensions took a back seat amid continued demand recovery and unexpected supply tightness, reported S&P Global.

At 2:38 pm Singapore time (0638 GMT), the ICE October Brent futures contract was down 15 cents/b (0.21%) from the previous close at USD72.10/b while the NYMEX October light sweet crude contract was down 28 cents/b (0.41%) at USD68.08/b.

"Sentiment has turned bullish after the US drug regulator granted full approval to the Pfizer Inc/BioNTech COVID-19 vaccine, stoking investor hopes that higher fuel demand will follow a potential step up in US coronavirus vaccination rates," said Avtar Sandu, senior manager commodities at Phillip Futures in an Aug. 26 note. "China's apparent success in fighting the Delta variant had boosted demand sentiment further with no cases of transmitted infections."

Data from the Energy Information Administration showed US crude inventories falling by 3 million barrels to 432.6 million barrels for the week ending Aug. 20, bringing inventory levels to roughly 6% below the five-year seasonal average.

The draw was significantly higher than the 1.6-million-barrel figure indicated by the American Petroleum Institute's weekly report, and closer to analysts' expectations of a 3.2-million-barrel draw.

Over the same period, gasoline stocks also fell by 2.2 million barrels to about 3% below the five-year seasonal average, while distillate stocks climbed 0.6 million barrels to about 8% below the five-year seasonal average.

"The fact that inventories fell at the same time as net imports into the US rose suggests Delta (variant) is having limited impact on demand. Inventories at Europe's key oil trading hub are also low, having fallen to its lowest level since March 2020 amidst supply disruptions from Russia," ANZ research analysts said in an Aug. 26 note.

As MRC informed previously, crude oil stockpiles fell modestly in early August, 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.

Fujian Gulei to start up its new MEG plant in China

Fujian Gulei to start up its new MEG plant in China

MOSCOW (MRC) -- China's Fujian Gulei Refining & Chemical, a joint venture between Fujian Petrochemical Company Limited (FPCL) and Taiwan Xuteng Investment Company Limited, plans to start up its new monoethylene glycol (MEG) unit in Zhangzhou, Fujian by the end of August after a successful launch of its new naphtha-fed ethylene cracker, reported S&P Global with reference to multiple sources.

Thus, trial runs at the company's new MEG plant with the capacity of 700,000 mt/year began on 7 August, 2021, and Gulei Refining & Chemical is in the proces of ramping up its production capacity.

As MRC informed earlier, Fujian Gulei Petrochemical received commercial production at its new steam cracker in Zhangzhou (Zhangzhou, Fujian Province, China) on August 18, 2021. And before that, the company supplied naphtha to this cracker with a capacity of 800,000 mt/year of ethylene on August 17, thereby starting test production there.

MEG is one of the main feedstocks for the production of polyethylene terephthalate (PET).

According to MRC's ScanPlast report, Russia's estimated PET consumption totalled 411,200 tonnes in the first six month of 2021, up by 12% year on year. Russian companies processed 62,910 tonnes in June, compared to 85,890 tonnes a month earlier.

Fujian Gulei Petrochemical Co. Ltd. headquartered in Xiamen (Xiamen, China) was established in November 2016. The company is a 50:50 joint venture between China's Fujian Petrochemical Company Limited (FPCL, part of Sinopec) and Taiwan's Taiwan Xuteng Investment Company Limited. It was established for the construction of an integrated petrochemical complex in Zhangzhou, Fujian province, southeastern China.

HDPE prices increased in August on upcoming turnarounds in Russia

HDPE prices increased in August on upcoming turnarounds in Russia

MOSCOW (MRC) - The supply of high density polyethylene (HDPE) in Russia fell significantly in August, which immediately led to an increase in prices. Two Russian producers will shut down their capacities for scheduled maintenance works, which will further reduce the supply of HDPE on the market, according to the ICIS-MRC Price Report.

HDPE supply was excessive in July on the Russian market in line with low demand, prices remained steady. The situation in the HDPE market will change dramatically in August. All Russian producers, due to objective reasons, have reduced the supply of HDPE to the domestic market, and the volume of imports has also decreased. The lack of polyethylene has led to a price rise and quite serious for some grades.

The upcoming turnaround of Kazanorgsintez and Stavrolen are aggravating the situation on the market. Gazprom neftekhim Salavat shut down its HDPE production for a rather lengthy repairs from 20 July. The resumption of the production is expected on 5 September.

The shutdown of the capacities in Salavat has led to a serious reduction in the supply of natural pipe HDPE in the Russian market. The situation in the market was aggravated by the postponement of the shipments of this polyethylene to the third decade of August from Stavrolen due to technical problems.

Supply of film and blow moulding HDPE was limited in August both from Russian producers and some importers.
The restrictions were partly a result of the sellers' desire to build additional stocks of polyethylene for September.
September and October, in fact, will be quite difficult for buyers of HDPE due to shutdowns of plants for repairs.
Kazanorgsintez will be the first to stop its production in mid-September for scheduled maintenance works (the annual capacity is 540,000 tonnes), the resumption of production is planned in the second decade of October.

The longest shutdown is expected at Stavrolen. The outage starts on 3 October and will last 36 days. The plant's annual production capacity is 300,000 tonnes. The most noticeable rise in price in August was for film HDPE; in the second half of the month, prices for some sellers exceeded the level of Rb130,000/tonne, including VAT and delivery.

At the same time, even at such prices, the supply of polyethylene was limited. Also, a fairly high level of prices was reported for blow moulding HDPE for small containers, prices approached the level of Rb135,000/tonne, including VAT, and delivery.


US heavy oil prices go up on disruption of supplies from Mexico after fire that cut Pemex oil output by 25%

US heavy oil prices go up on disruption of supplies from Mexico after fire that cut Pemex oil output by 25%

MOSCOW (MRC) -- Prices of heavy sour crude oil grades have been rising in the US Gulf Coast, traders said, as the market braces for a disruption of supplies from Mexico in the wake of a fire that has cut state-run Pemex's oil output by about 25% since Sunday, reported Reuters.

At least five workers were killed and six injured in the blaze, which broke out on an offshore platform in the southern Gulf of Mexico operated by Petroleos Mexicanos, halting production of more than 400,000 barrels per day (bpd), the company said.

It could take weeks for output and exports to return to normal, people familiar with the matter said, even as work is underway to restore power to the facility by Wednesday, and later connect 125 idled wells at the Ku-Maloob-Zaap (KMZ) cluster, Mexico's largest with a 750,000-bpd average output.

Pemex did not reply to a request for comment.

On Monday, Chief Executive Octavio Romero Oropeza said Mexico's monthly production and exports could fall, but the overall impact of the accident has not yet been estimated.

Prices of sour crudes at the US Gulf Coast, the largest recipient of Mexican oil, have begun rising as refiners begin to seek replacement barrels, traders said.

Chevron Corp, Phillips 66 and Valero Energy are scheduled to receive Mexican crude cargoes in coming days, according to people familiar with the trade. Valero aims to load a cargo on Tuesday, sourcing the barrels from onshore Pemex storage tanks at the Pajaritos terminal, they said. Pemex's Deer Park, Texas, refinery has not been affected, a spokesperson said.

Chevron, Phillips 66 and Valero did not respond to requests for comment.

Refining and trading firms are preparing for cargo delivery delays and the possibility of force majeure by Pemex, traders said.

We remind that, as MRC informed previously, an intense blaze at Mexican national oil company Pemex's largest refinery was quickly put out, but it remained unclear what sparked the fire. Local and social media had published images of bright orange flames burning near the facility's distillation towers from early on Saturday, 7 August, 2021. The Salina Cruz refinery, on the coast of southern Oaxaca state, can process up to 330,000 barrels of crude oil per day and is a key Pemex trading and logistical hub along Mexico's Pacific coast.

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.

Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world's second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).

Lubrizol appoints Chris Brown as its new CEO

Lubrizol appoints Chris Brown as its new CEO

MOSCOW (MRC) -- Additives manufacturer Lubrizol Corp. has named Chris Brown, currently the CEO at Berkshire Hathaway Energy Infrastructure, as its new president and CEO, according to Canadian Plastics.

Brown succeeds Eric Schnur, who will remain in an advisory role. Schnur joined Lubrizol in 1987, and held a variety of roles including president of the company’s Advanced Materials business segment, and president and chief operating officer. He became CEO in January 2017.

Lubrizol, headquartered in Wickliffe, Ohio, was acquired by Berkshire Hathaway in 2011.

Brown joined Berkshire Hathaway in October 2020. Prior to that, he served for about eight years at Vestas as president for sales and service operations in the US and Canada, growing the business into a major supplier of wind turbines in North America. His background also includes two years as chief operating officer of the city of Detroit, plus time as a senior executive in the offshore wind industry, a large US utility, and an international utility.

As MRC reported before, this summer, Lubrizol announced the next phase of its staged, multi-million dollar investment in thermoplastic polyurethane (TPU) capacity and capabilities to serve the rapidly growing global Paint Protection Films (PPF) market. This comes on top of investments of over USD20 million over the last three years in capacity, application and testing capabilities, and market insights.

We remind that more than 5,250 tons of chemicals, oil and fuel additives burned in a massive fire at US specialty chemical firm Lubrizol in Rouen, France, in late September, 2019. Lubrizol managed to resume operations at its plant at Rouen in northwest France after the fire only in late December, 2019.

The Lubrizol Corporation, a Berkshire Hathaway company, is an innovative specialty chemical company that apart from its production develops and supplies technologies to customers in the global transportation, industrial and consumer markets. Lubrizol is providing innovative solutions for its customers high-performance application needs and remains committed to ongoing investment in its CPVC capabilities that support future growth. With headquarters in Wickliffe, Ohio, Lubrizol owns and operates manufacturing facilities in 17 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has approximately 8,000 employees worldwide.