Crude oil futures continue rising in Asia amid bullish demand outlook and supply constraint

Crude oil futures continue rising in Asia amid bullish demand outlook and supply constraint

MOSCOW (MRC) -- Crude oil futures were higher in mid-morning trade in Asia trade Sept. 27 amid bullish demand outlook and supply tightness, reported S&P Global.

At 10:05 am Singapore time (0205 GMT), the ICE November Brent futures contract was up 1.14 cents/b (1.46%) from the previous close at USD79.23/b, while the NYMEX November light sweet crude contract was 1.12 cents/b (1.51%) higher at USD75.10/b.

"Supply tightness continues to draw on inventories across all regions," said ANZ research analysts on Sept. 27, adding that the rally in the natural gas price improved the price parity for oil to produce power, which is exerting upward pressure on oil.

Concerns remained over tightness in energy markets, particularly for natural gas, as the gas market continues to trade at elevated levels amid tight supply going into winter.

"These higher gas prices will lead to some gas to oil switching, which would be supportive of oil demand. This stronger demand coupled with supply losses in excess of 30 million barrels from the US Gulf of Mexico due to Hurricane Ida suggest a tighter than expected market," said ING market analysts in a note Sept. 27.

The US Bureau of Safety and Environmental Enforcement reported Sept. 23 that around 294,414 b/d, or 16.18%, of the Gulf's oil production remained offline post-Ida. Despite the proportion of offline production easing, full production recovery is not expected until early 2022, with Shell reporting extensive damage to its infrastructure.

Meanwhile, market watchers will track the OPEC+ meeting, which is scheduled to have on Oct. 4 to discuss about the strength in energy markets. In the previous meeting on Sept. 1, OPEC+ alliance agreed to stick with its existing plan to release 400,000 bpd to the market in October.

As informed earlier, Shell said earlier this month it observed damage from Hurricane Ida to its transfer station West Delta-143 offshore facilities in the Gulf of Mexico. West Delta-143 serves as the transfer station for all production from its assets in the Mars corridor in the Mississippi Canyon area of the Gulf of Mexico to onshore crude terminals. Shell said then it was not yet safe to send personnel offshore to learn the full extent of the damage and estimate the effect on production.

We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also 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.
MRC

ADNOC to supply full-term oil quantities to most Asian refiners for December

ADNOC to supply full-term oil quantities to most Asian refiners for December

MOSCOW (MRC) -- The Abu Dhabi National Oil Company (ADNOC) has allocated full-term volumes to most Asian refiners for December loading, contrary to previous months where term allocations were issued with some cuts in volumes, according to market participants surveyed by S&P Global Sept. 27.

Several refiners in China, Taiwan, India and Japan confirmed receiving their term crude supplies from the producer without any reductions, sources told S&P Global.

ADNOC could not be reached for a comment on the matter.

ADNOC has raised supplies to term buyers in recent months. Term allocation for October and November supplies saw a cut of only 5% each compared with September, when allocations were cut by 15%.

Murban exports by ADNOC are expected to rise, starting with 1.175 million b/d in October 2021 and increasing gradually to a high of 1.437 million b/d in August 2022, according to an ADNOC report.

Amid an increase in oil supplies by the OPEC+ group, Middle Eastern producers have been raising supplies, sources said.

Meanwhile, spot buying appetite could continue to remain tepid despite soaring gas prices weighing on winter season demand for many Asian buyers while spread of the pandemic could further pressure sentiment, traders said.

As MRC wrote before, in August 2021, ADNOC partnered with Fertiglobe for the sale of blue ammonia to Idemitsu in Japan, for use in its refining and petrochemicals operations.

We remind that in June 2021, Indian refining giant Reliance Industries signed an agreement with ADNOC to build a multi-billion-dollar chemical project in Ruwais, marking the group’s first investment in a greenfield overseas project.

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 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.
MRC

Demand for rPET increases in Asia with lockdowns lifting

Demand for rPET increases in Asia with lockdowns lifting

MOSCOW (MRC) -- With the lifting of lockdowns in various Southeast Asian countries, there are signs of demand improvement in consumer markets of recycled polyethylene terephthalate (rPet), reported S&P Global.

Demand for rPET is increasing especially for packaging and flexible film, which could potentially provide some supply for more recycled plastics, though the overall market fundamentals will remain tight in Southeast Asia.

Asian R-PET sellers are expected to release new offers for October in the week starting Sept. 27, though some are still facing a backlog of orders amid container shortage and high freight.

We remind that, as MRC informed earlier, Alpek (Monterrey, Mexico) expects to finish commissioning and begin production at a Reading, Pennsylvania, rPET facility in the third quarter of 2021, said CEO Jose de Jesus Valdez in August, 2021. DAK Americas, Alpek's US subsidiary, bought the facility in late-May for USD98.1 million at an auction in the bankruptcy case of California recycled PET producer CarbonLite.

Valdez said the recycling and pelletization facility is one of the largest recycled PET units in the Americas, and can produce food-grade pellets.

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.
MRC

Hilcorp evaluating purchase of Phillips 66 Louisiana refinery

Hilcorp evaluating purchase of Phillips 66 Louisiana refinery

MOSCOW (MRC) -- Houston-based oil producer Hilcorp is evaluating Phillips 66’s refinery in Alliance, Louisiana, for conversion into an oil export terminal, reported Reuters with reference to four sources familiar with the matter, a move that would eliminate it as a source of motor fuels.

Hilcorp, the largest privately owned U.S. oil producer, with operations from Alaska to Pennsylvania to Texas, did not reply to questions about its interest in the facility, which occupies 2,400 acres along the Mississippi River.

Phillips 66 declined to comment on Hilcorp’s interest.

The hurricane-damaged refinery remains for sale and its “marketing process is ongoing,” said Phillips 66 spokesperson Bernardo Fallas. The company plans to repair the storm damages and restart the facility, he said.

In August, Phillips 66 began meeting with potential buyers of the 255,600 barrel-per-day (bpd) refinery in Louisiana, on the state’s southeast coast. It was knocked out of commission by Hurricane Ida last month when a protective wall gave way, flooding the plant.

“The US refining business in the future is going to be smaller, not bigger,” Phillips 66 Chief Executive Officer Greg Garland said last month as he laid out plans to advance businesses in renewable diesel, hydrogen and materials for electric-car batteries.

Most of the several feet of water that flooded the plant has been removed and most employees have returned to clean-up of the plant, said people familiar with its operations.

In June, the US Energy Information Administration said national refining capacity last year fell by 4.5%, or 848,385 bpd, because of weak refining profits with work-from-home policies slashing gasoline demand.

As MRC informed previously, Worley has been recently awarded a front-end engineering services contract by Phillips 66 to convert its San Francisco refinery in Rodeo, California, USA into a renewable fuels-manufacturing facility. Under the contract, Worley will provide front-end engineering design services for the facility, which will be executed by Worley’s North America West team with support from Worley’s Global Integrated Delivery team.

Besides, in October 2020, Phillips 66 said it plans to reconfigure its refinery in Rodeo, California to produce renewable fuels from used cooking oil, fats, greases and soybean oils.

We remind that US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

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 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.

Phillips 66 is a diversified energy manufacturing and logistics company. With a portfolio of Midstream, Chemicals, Refining, and Marketing and Specialties businesses, the company processes, transports, stores and markets fuels and products globally. Phillips 66 Partners, the company’s master limited partnership, is integral to the portfolio. Headquartered in Houston, the company has 14,300 employees committed to safety and operating excellence. Phillips 66 had USD55 billion of assets as of Dec. 31, 2020.
MRC

LANXESS developed black pigment for coloring recyclable plastic packaging

MOSCOW (MRC) -- LANXESS has developed a black pigment for coloring recyclable plastic packaging, said the company.

This enables plastics to be identified efficiently and cost-effectively with the aid of NIR detectors like those used for sorting waste. “Plastic packaging colored with carbon black, on the other hand, as is used in large part today, does not reflect any radiation and therefore cannot be detected in sorting plants,” says Bartolucci.

Properly separating waste and producing recycling materials that are separated according to type is expensive. It is difficulties in sorting waste that are currently causing the recycling rate of plastic to remain far too low worldwide. Composite materials and black plastic are particularly difficult to sort, as are foils that are glued together or small transparent trays made from PET. The LANXESS pigment Bayferrox 303 T can make a decisive contribution to recycling black plastic packaging.

In automated recycling plants, near-infrared detection (NIR spectroscopy) is used to quickly sort plastic waste into different types. To this end, infrared cameras are installed above the conveyor belts in most cases. However, black plastic packaging such as foils cannot be identified correctly by the optical sensors due to its color and consequently cannot be sorted. Unlike the carbon black pigments often used in the plastics industry, Bayferrox 303 T reflects infrared radiation, thus allowing identification with the aid of NIR detectors. As a result, black plastic items such as packaging films or trays can be better identified with the iron-manganese mixed oxide and sent for recycling.

Nowadays, three types of pigments are principally used to color plastic packaging. In terms of quantity, carbon black is the pigment most frequently used for black packaging materials, as it is available at low cost on the market and exhibits high color strength. But it does not reflect infrared radiation and items made with it remain virtually invisible in sorting plants. Thus large quantities of plastic packaging cannot be sent for recycling.

The reduced magnetic properties of Bayferrox 303 T make it ideal for coloring plastic packaging. Magnetizable pigments can trigger false alarms during quality control processes in the food industry, for example, disrupting production as a result. After all, metal detectors cannot distinguish between pigments and pieces of metal in an edible item. This is why metal contaminants must be avoided in both the masterbatch and the packaging.

As per MRC, LANXESS is continuing the systematic expansion of its production for synthetic iron oxide pigments. The company is the only supplier worldwide to produce these pigments using the Laux process. Specialty chemicals company LANXESS has expanded its capacity for black synthetic iron oxide pigments at its Krefeld-Uerdingen site by more than 5,000 metric tons per year.

According to ICIS-MRC Price report, the deficit for PET remained in the Russian domestic and foreign markets. Spot PET prices have been increasing since the beginning of the month, and spot buyers of the material have to pay a much higher price for PET chips at the end of the third quarter than contractual ones.

LANXESS is a leading specialty chemicals company with sales of EUR 6.1 billion in 2020. The company currently has about 14,800 employees in 33 countries. The core business of LANXESS is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. LANXESS is listed in the leading sustainability indices Dow Jones Sustainability Index (DJSI World and Europe) and FTSE4Good.
MRC