Crude oil futures continue rising in Europe as supply outlooks hold firm

MOSCOW (MRC) -- Crude oil futures continued its upward trajectory during mid-morning trade in Europe on Oct. 25 as supply sentiment remains firm while OPEC+ holds steady on crude oil production rises, reported S&P Global.

At 11:44 AM (1044 GMT) London time, the ICE December Brent futures contract was USD0.61/b (0.71%) higher from the previous close at USD86.14/b, while the NYMEX December light sweet crude contract was USD0.73/b (0.87%) higher at USD84.49/b.

"Comments from the Saudi energy minister which suggests that OPEC+ will continue to take a cautious approach in increasing output is likely providing some support to the market, particularly with other members of OPEC+ echoing the Saudi view," analyst from ING said Oct. 25.

Demand recovery from impacts of COVID-19 coupled with a conservative approach from the OPEC+ alliance to raise its crude oil production has been providing support to the complex lately.

The supply tightness is being further exacerbated by the inability of some OPEC+ countries to raise production quickly to match monthly increments in quotas.

Market participants are now gearing up for the next OPEC+ meeting scheduled for Nov. 4, where the alliance is expected to review production decisions for December.

Concerns over resurging rates of COVID-19 as many countries head into the winter months - a time when flu infection rates usually rise - have been subsided for now.

"For now, the market does not appear concerned about the COVID-19 outbreak in a number of provinces in China. China has, however, demonstrated multiple times that it is able to get outbreaks under control fairly quickly," they said.

As MRC wrote previously, China's September crude oil throughput extended its downtrend to dip 0.7% from August to a 17-month low of 13.7 million b/d amid a slow down in the economy and product destocking activity. The country's crude throughput was last lower at 13.16 million b/d in April 2020.

Meanwhile, China's crude oil imports fell 4.7% on the month to 10.03 million b/d in September, according to the latest data from the General Administration of Customs, or GAC, on Oct. 13. The reduction indicated weak momentum for imports for the rest of the year, analysts said.

We remind that China's oil consumption is likely to peak around 2026 at about 16 million barrels per day and that of natural gas by around 2040, said a top executive of Sinopec Corp. in September 2021.

We also remind that in August 2021, China Petroleum and Chemical Corp, also known as Sinopec, the world's petrochemical major, launched the first phase of the Gulei refining complex in Zhangzhou city in China’s southeastern Fujian province. The refining complex, a 50:50 joint venture between Sinopec’s Fujian Petrochemical Company Ltd and Taiwan Xuteng Investment Company Ltd, invested 27.8 billion yuan (USD4.28 billion) in the first phase. That will result in an 800,000 tonnes per annum ethylene plant, a 600,000 tonnes per annum styrene unit and seven other downstream petrochemical units, Sinopec said.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.
MRC

MOSCOW (MRC) -- Global oil demand is expected to reach pre-pandemic levels by early next year as the economy recovers, although spare refining capacity could weigh on the outlook, reported Reuters with reference to producers and traders' statements.

The outlook is in line with a bullish forecast from the Organization of the Petroleum Exporting Countries (OPEC), but ahead of estimates from the International Energy Agency (IEA).

Global demand is seen rising to 100 million barrels per day (bpd) by end-2021 or in the first quarter of 2022, Hess Corp President Greg Hill said.

The world consumed 99.7 million bpd of oil in 2019, according to the IEA, before the COVID-19 pandemic hammered economic activities and fuel demand.

While a persistent rise in COVID-19 cases across markets has hurt recovery in demand for some refined products such as jet fuel, consumption trends of petrol and diesel indicate growth, industry leaders noted at the APPEC 2021 conference.

Recovering demand is expected to boost profits for refiners and create room for returning or new production, but experts warn that spare refining capacity would be a drag.

"There's still a lot of unutilised capacity and a lot of capacity has been taken off stream," said Eugene Leong, president of BP Singapore and CEO of BP's trading & shipping arm of Asia Pacific and the Middle East. "The spare (refining) capacity is probably going to act as a little bit of a cap on margins," he said. "This year alone we've seen some mega refining (and) petrochemical complexes start up, so I think that's going to be challenging for refining."

In China, new mega refiner Shenghong Petrochemical is set to start trial operations soon, while Zhejiang Petrochemical completed two new crude units this year.

Malaysia's Petronas also hopes to restart operations at its 300,000 barrels-per-day refinery-petrochemical complex with Saudi Aramco by year end, said Arif Mahmood, Petronas' executive vice president and CEO of downstream.

The OPEC sees global oil demand averaging 100.8 million bpd in 2022, exceeding pre-pandemic levels, while the IEA expects it to average 96.1 million bpd in 2021 and 99.4 million bpd in 2022, versus 90.9 million bpd in 2020.

As MRC wrote before, Indian refiner Nayara Energy hopes to operate its 400,000 bpd refinery at close to 100% capacity in 2021 as fuel demand picks up, CEO Alois Virag said.

India's fuel demand is likely to rise by 9%-11% as its economy is "steered towards higher growth" after the easing of the second wave of COVID-19 infections, he said.

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

MOSCOW (MRC) -- GAIL (India) Limited has selected Lummus Technology’s CATOFIN process and Clariant’s tailor-made catalysts for India’s first PDH (propane dehydrogenation) plant, said Kemicalinfo.

This will be Lummus Technology, and its catalysts partner, Clariant Catalyts’ another major contract award in India that will expand their global share of the PDH market.

This upcoming 500,000 metric tons per year PDH facility in Usar, Maharashtra, will be integrated with a downstream polypropylene (PP) unit.

The USD1.2-billion PDH-PP project is expected to start operations by 2024.

“Getting the first PDH award in India is very exciting, considering the anticipated growth of the petrochemicals market here. This award displays the innovative strength of the partnership between Lummus and Clariant,” said Leon de Bruyn, President and Chief Executive Officer of Lummus Technology.

"Lummus is grateful to GAIL for getting selected and is committed to providing best-in-class PDH technology that offers a reliable, optimized and low-carbon route to propylene."

“We are extremely proud of the ever-increasing global demand for CATOFIN – and we couldn’t have achieved this without our long-time partner, Lummus Technology,” said Stefan Heuser, Senior Vice President and General Manager of Clariant Catalysts.

"Thanks to our collaboration, we are able to offer GAIL (India) excellent performance and profitability by combining the best of PDH expertise with catalyst innovation."

As per MRC, American W.R. Grace & Co. will provide its polypropylene (PP) technology to UNIPOL for the new plant of the Indian company GAIL in Usar (Usar, Maharashtra, India). The 500 ktpa plant will be the largest propane dehydrogenation (PDH) and polypropylene (PP) plant in India to date, licensed by WR Grace using UNIPOL technology.

According to MRC's ScanPlast report, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

GAIL (India) Limited is an oil and gas company in India. The company owns 6,700 km of gas pipelines with a total throughput of 54 billion cubic meters. m per year, 7 LPG plants with a total capacity of 1.2 million tons per year, a gas chemical complex in the city of Pata (Uttar Pradesh state), 1,922 km of LPG gas pipelines. In addition, the company manufactures petrochemical products including ethylene and polyethylene.
MRC

MOSCOW (MRC) -- Braskem SA, Latin America’s biggest petrochemical company, said on Wednesday its Mexican subsidiary Braskem Idesa has obtained shareholder and creditor approval for support measures to build an ethane import terminal in Mexico, reported Reuters.

The terminal will be built with Mexican state-owned oil company Petroleos Mexicanos , better known as Pemex, along with Pemex’s logistical arm and other government entities in Mexico.

Expanding the ethane import operation, Braskem said, reinforces its commitment to Mexico and the search for more raw materials for the Mexican plastics industry.

Additionally, Braskem Idesa has completed its debt refinancing plan, it said in a securities filing. The remaining balance of US1.35 billion in project finance will be replaced by new debts with an extended profile, increasing its average debt term to nine years.

Braskem’s USD358 million in guarantees to its subsidiary will extinguish, in line with the company’s long-term sustainable development strategy, the filing said.

As MRC informed before, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

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 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
MRC

MOSCOW (MRC) -- DSM says it has acquired the remaining 61.5% of shares in Midori USA, Inc. (Boston, Massachusetts), a biotechnology startup that specializes in the development of targeted eubiotics, for USD63 million, said the company.

DSM already owned 38.5% of Midori, and with the purchase of the remaining equity has now become the sole owner, it says. Midori has developed a technology platform that identifies glycans derived from natural food sugars that can precisely modulate how the gut microbiome functions in animals, DSM says. The use of eubiotics has grown significantly as farming practices shift to become more sustainable and along with the need to provide antibiotic alternatives, it says.

Midori's platform is highly synergetic with DSM's bioscience capability and current eubiotics portfolio, according to DSM, which says it will launch its first targeted glycan in collaboration with Midori later this year.

As MRC informed earlier, DSM formed a 50/50 joint venture (JV) with VDL Groep (Eindhoven, Netherlands), called Dutch PPE Solutions, to produce medical facemasks and establish the first permanent production of critical facemask components in the Netherlands. The companies are investing several million euros to purchase manufacturing equipment and build manufacturing facilities to produce meltblown polypropylene (PP), the critical material layer in medical facemasks that filters viruses, and make medical masks.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,638,370 tonnes in the first eight months of 2021, up by 10% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 989,570 tonnes in the first eight months of 2021, up by 30% year on year. Deliveries of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas shipments of injection moulding PP random copolymers decreased significantly.

DSM Resins & Functional Materials, which includes the Sustainable Coatings and Functional Materials divisions, provides highly market-specific products such as resins for use in paints, plastics and other industrial applications, and coatings for optical fibers. DSM Advanced Solar manufactures high performance anti-reflective coatings for glass. DSM Advanced Solar produces PV module sheets.

MRC