COVID-19 - News digest as of 20.01.2022

1.Oil refining capacity down for first time in 30 years in 2021

MOSCOW (MRC) -- Global oil refining capacity fell for the first time in 30 years last year, as new capacity was outweighed by closures, reported Reuters with reference to the International Energy Agency's (IEA) statement in its monthly oil market report on Wednesday. Refining capacity was down by 730,000 bpd in 2021, the IEA said, but net additions were expected to amount to 1.2 MMbpd in 2022.

MRC

January prices of European PE fall for CIS markets

January prices of European PE fall for CIS markets

MOSCOW (MRC) -- The January contract price of ethylene was agreed in Europe at the last month's level. However, some European producers announced a slight reduction in export polyethylene (PE) prices for shipments to the CIS markets, according to ICIS-MRC Price report.

Negotiations over January prices of European PE began in the first decade of the month. All market participants said some European producers reduced their export prices of ethylene polymers by EUR30-60/tonne for this month's shipments. But demand for European PE was very weak from companies from the CIS countries, buyers reported significantly lower prices of suppliers of Middle Eastern and North American PE.

January deals for low density polyethylene (LDPE) were discussed in the range EUR1,750-1,820/tonne FCA, whereas last month's deals were done in the range of EUR1,800-1,880/tonne FCA.

Deals for January shipments of high density polyethylene (HDPE) were negotiated in the range of EUR1,430-1,560/tonne FCA versus EUR1,460-1,590/tonne FCA a month earlier.

Many buyers do not plan to purchase PE in January, citing weak demand, as well as more attractive offer prices for PE shipments from other regions. Thus, Middle Eastern HDPE for January shipments was offered at USD1,480/tonne CFR and lower. Suppliers of North American HDPE for February shipments reduced their prices well below USD1,350/tonne CFR.

A similar situation was registered for LDPE shipments.
MRC

Hanwha Total cut capacity utilisation at PE plants in Daesan to 70% in January

Hanwha Total cut capacity utilisation at PE plants in Daesan to 70% in January

MOSCOW (MRC) -- Hanwha Total Petrochemical has reportedly reduced operating rates at its polyethylene (PE) plants in Daesan, South Korean amid the negative profit margins, according to CommoPlast with reference to market sources.

The producer owns PE plants at this site with the combined capacity of 1.1 million mt/year of PE, which have been operating at 70% capacity since early January 2022.

Hanwha Total Petrochemical has yet to set the date to restore normal run rates at its PE units.

At the same time, it is unclear on the operating rates at the company's polypropylene (PP) and polyvinyl chloride (PVC) plants in Daesan at the time of this report.

As MRC informed before, Hanwha Total Petrochemical Co Ltd said in December 2017 that it planned to spend USD331.29 MM on a new factory in South Korea to increase PE output by 400,000 mt by 2019. The joint venture of South Korean conglomerate Hanwha Group and French oil and gas company Total SA in a statement said the factory will raise its PE capacity to 1.12 mln mt/year when completed by the end of 2019. However, the new PE plant started up in January, 2020.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased.

Hanwha Group is one of the largest business conglomerate in South Korea. Founded in 1952 as Korea Explosives Inc., the group has grown into a large multi-profile business conglomerate, with diversified holdings stretching from explosives, their original business, to retail to financial services.
MRC

Hanwha Total operates its two SM plants in Daesan at 70% in January

Hanwha Total operates its two SM plants in Daesan at 70% in January

MOSCOW (MRC) -- Hanwha Total Petrochemical has reportedly cut operating rates at its styrene monomer (SM) plants in Daesan, South Korean amid the negative profit margins, according to CommoPlast with reference to market sources.

The producer operates two plants with a capacity of 400,000 tons/year and 650,000 tons/year of SM, respectively, which have been operating at 70% capacity since early January 2022.

The producer has yet to set the date to restore normal run rates at its SM plant in Daesan.

As MRC reported earlier, Hanwha Total Petrochemical declared force majeure on SM supply from its No. 2 unit in Daesan im mid-May, 2019, due to an ongoing labour strike.

According to MRC's ScanPlast report, Russia's overall estimated consumption of PS and styrene plastics was 518,560 tonnes in January-November 2021, up by 14% year on year. November estimated consumption of PS and styrene plastics rose by 7% year on year, totalling 48,620 tonnes.

Hanwha Group is one of the largest business conglomerate in South Korea. Founded in 1952 as Korea Explosives Inc., the group has grown into a large multi-profile business conglomerate, with diversified holdings stretching from explosives, their original business, to retail to financial services.
MRC

Crude oil prices slip from 2014 highs

MOSCOW (MRC) - Oil slipped on Thursday as investors took profitsfollowing a month-long rally in prices, but strong demand and short-term supply disruptions continue to support prices close to their highest levels since late 2014, reported Reuters.

Brent crude futures fell 49 cents, or 0.6%, to USD87.95 a barrel as of 0740 GMT, after falling more than USD1 earlier. The global benchmark rose to USD89.17 a barrel on Wednesday, its highest since October 2014.

US West Texas Intermediate (WTI) crude futures for February delivery were down 6 cents, or 0.1%, at USD86.90 a barrel, after dropping nearly USD1 earlier. WTI climbed to as much as USD87.91 on Wednesday, the highest since October 2014.

The February WTI contract will expire on Thursday and the most-actively traded contract, for March delivery, is at USD85.41 a barrel, down 0.5%.

"The International Energy Agency said global oil demand is on track to hit pre-pandemic levels," analysts at ANZ bank said in a note.

"Shorter-term supply disruptions are also helping tighten markets. Brent crude rallied sharply after reports a key oil pipeline running from Iraq to Turkey was knocked out by an explosion."

However, the flow of crude oil through the Kirkuk-Ceyhan pipeline has resumed, after it was halted on Tuesday due to a blast near the pipeline in the southeastern Turkish province of Kahramanmaras, officials said on Wednesday.

Supply concerns have mounted this week after Yemen's Houthi group attacked the United Arab Emirates, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC). Meanwhile Russia, the world's second-largest oil producer, has built up a large troop presence near Ukraine's border, stoking fears of invasion and subsequent supply uncertainties.

Underpinning oil prices is the broad post-coronavirus pandemic recovery in demand for fuel.

OPEC officials and analysts say that an oil rally may continue in the next few months, and prices could top USD100 a barrel as demand shrugs of the spread of the Omicron COVID-19 variant.

OPEC+, which groups the cartel with Russia and other producers, is struggling to hit a monthly output increase target of 400,000 barrels per day (bpd).

US crude and gasoline stocks rose while distillate inventories fell last week, according to market sources citing American Petroleum Institute figures on Wednesday. Crude stocks rose by 1.4 million barrels for the week ended Jan. 14. Gasoline inventories rose by 3.5 million barrels while distillate stocks fell by 1.2 million barrels, according to the sources, who spoke on condition of anonymity.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

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 was expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, EIA said in a monthly report earlier last year, a smaller decline than its previous forecast for a drop of 210,000 bpd.
MRC