COVID-19 - News digest as of 02.12.2021

1. Dow expects Q4 earnings decrease

MOSCOW (MRC) -- Dow expects Q4 earnings before interest, tax, depreciation and amortisation (EBITDA) to be about USD150-200m lower than market consensus, said the company. The reason: higher raw material costs and lower polyethylene (PE) and co-product pricing. However, the company is seeing continued economic and supply recovery in Q4, it said. It noted “robust” end-market demand strength across industrial and consumer markets, as well as improving supply positions following weather-related outages, turnarounds and start-up of new PE capacity in the US Gulf Coast region. Nevertheless, logistics challenges continue to constrain demand, it said.

MRC

MOSCOW (MRC) -- Epsilyte (The Woodlands, Texas), a leading North American producer of expandable polystyrene (EPS), has announced an increase in its prices of all EPS grades for December shipments on higher feedstock and logistics costs, said the company.

Thus, the price of the company's EPS grades rose by 5 cents/pound (cts/lb) or USD110/tonne, effective 1 December, 2021 or as contracts allow.

Escalating cost pressure felt throughout the supply chain, including raw materials and freight, necessitate this adjustment.

As MRC reported earlier, Epsilyte increased its October and November EPS prices in the region by the same amount.

EPS is a rigid form of polystyrene (PS) used in insulation foams for the construction industry as well as for packaging.

According to ICIS-MRC Price report, in Russia, demand for material will continue to subside seasonally in November. Consumer activity was moderate in the domestic EPS market, which corresponded to the current season. Russian producers did not adjust their selling prices last week. Domestic prices of Russian material were in the range of Rb183,000-205,000/tonne CPT Moscow, including VAT.

Epsilyte is owned by private equity firm Balmoral Funds (Los Angeles, California). Epsilyte is one of North America’s leading producers of expandable polystyrene resin. The company is focused on solving customer needs for efficient, high-R value EPS. This includes reducing energy usage in buildings, ensuring safe and healthy food through innovative packaging technology, and participating in infrastructure investment both in the United States and abroad.
MRC

MOSCOW (MRC) - The seasonal decline in demand does not affect the prices of polyvinyl chloride (PVC) in the Russian market. Most producers have agreed to roll over November prices for December, but there are exceptions, according to the ICIS-MRC Price Report.

There was a noticeable decrease in PVC prices in Asia in the second half of November, including in China. In other regions, the price situation was steady, prices remain at a record high. A similar situation was in the Russian PVC market.

The seasonal decline in demand for the second month in a row does not put pressure on PVC prices in Russia.
Local producers agreed to roll over the November price level for December shipment, but in some cases, converters also reported that prices have increased up by Rb5,000/toone.

Imports of suspended PVC in the current year increased by 31% compared to the same time in 2020 and reached almost 55,800 tonnes in ten months. However, imports could not saturate the Russian market with PVC, including due to a significant increase in demand.

In addition, the bulk of imports comes with long delays due to global problems with logistics, which also makes its own adjustments to the work of converters. In a number of areas, imported PVC is much cheaper than Russian material, but it is more an alternative in "theory".

Exchange rate risks and difficulties with logistics in the last couple of months have led to a significant drop in PVC purchases in foreign markets, and this situation is unlikely to change in the near future. Negotiations on the December shipment of Russian PVC started in the middle of last week, but not all producers started discussing supplies.

Negotiations continued this week, but they were unsuccessful for the converters - PVC did not fall in price, and in some cases even rose in price again. Since the summer months, the range of prices for Russian PVC was quite large at manufacturers. Deals for December PVC supplies with K64/67 were in the range of Rb175,000-201,000/tonne CPT Moscow, including VAT. PVC K 70 from one of the producers has risen in price.
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MOSCOW (MRC) -- Indonesia will need to increase the bio-content of its palm oil-based biodiesel to 40% by 2024 or risk missing its renewable energy targets, reported Reuters with reference to a senior official's statement on Wednesday.

Indonesia has a mandatory biodiesel program with 30% palm oil content known as B30. Longstanding plans to increase the palm content to 40% by 2021 were delayed due to cheaper fuel costs and record high palm prices.

"The use of (only) B30 will not achieve the RUEN target for 2025," Dadan Kusdiana, the director general of the country's energy ministry, told a virtual conference.

He was referring to Indonesia's goal to increase renewable energy use to 23% of its total energy consumption by 2025, which required biodiesel consumption of 13.9 kiloliters that year.

"The ministry will prepare B40 blending mandatory regulation to ensure investment certainty," Dadan said, adding that more studies and road tests were required.

Indonesia's energy ministry earlier on Wednesday said it will increase its 2021 biodiesel allocation to meet higher demand for fuel. Next year's biodiesel consumption meanwhile, is set to jump to over 10 MM kiloliters.

While fuel prices bottomed out during the thick of the global pandemic, petrol and diesel prices at the pump in Asia and Europe reached near-record peaks this year, making palm a more attractive feedstock for biofuels.

As MRC wrote before, deployment of carbon capture storage (CCS) in Indonesia by American energy giant ExxonMobil Corp could cost about USD500 mln. In November 2021, Pertamina and ExxonMobil signed a MoU during the COP26 summit to look at ways of using CCS in Southeast Asia's largest country. CCS facilities are likely to be implemented in two Indonesia oil and gas fields, namely the Gundih field in Cepu and the Sukowati field in Bojonegoro, in Central and East Java respectively.
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MOSCOW (MRC) -- The European Union plans to capture five MM tons of CO2 from the atmosphere each year by 2030 through technologies, and create an EU system to certify carbon removals, according to a draft document seen by Reuters.

The EU has committed to reach net zero emissions by 2050, eliminating the more than 3 B tons of CO2 equivalent it currently emits each year.

To help meet that target, Brussels wants to scale up carbon removals both by using technology to capture CO2 and place it in long-term storage sites, and by encouraging farmers and landowners to store more CO2 in trees, soil and wetlands.

"The development and deployment at scale of carbon removal solutions is indispensable to climate-neutrality and requires significant targeted support in the next decade," said the document, which the European Commission is due to publish on Dec. 14.

The Commission will also propose in 2022 an EU system of certifying carbon removals, by measuring and verifying CO2 removals from individual land holdings, the draft said. A robust certification system could also lay the groundwork for an EU regulated market for carbon removals - an option that could happen after 2030, the draft said.

As MRC informed earlier, in November 2021, a coalition of 19 countries including Britain and the United States agreed to create zero emissions shipping trade routes between ports to speed up the decarbonization of the global maritime industry.

We remind that ExxonMobil last month offered to lease 500,000 acres off the Texas coast, securing space for what could become a massive project to capture and store carbon emissions. Under pressure by investors to address climate change, Exxon in April floated an up to USD100 B industry hub to collect planet-warming emissions from Gulf Coast petrochemical plants and bury them under the Gulf of Mexico.

Besides, ExxonMobil also said earlier last month it is on track to meet its 2025 emissions reduction targets by the end of this year - four years earlier than planned - and has vowed to ramp up investments to further cut emissions.
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