Reliance courts Indian diesel market with cheaper supply

India's Reliance Industries Ltd has turned its sights on the domestic market, offering a high-performance diesel at a lower price than fuel sold by state-owned retailers, said Reuters.

Jio-bp, the retail fuel joint venture of Reliance and bp will sell diesel mixed with detergents and dispersants at 1 rupee cheaper per liter than gasoil sold by the state-run companies, such as, Hindustan Petroleum Corp and Bharat Petroleum.

The additive-enhanced diesel helps to clean dirt deposits in engines and can improve fuel efficiency, Jio-bp said in a statement.

Diesel is the main fuel used by truckers in India's transport sector and accounts for about two-fifths of the country's overall refined fuel consumption.

Higher local sales could lower diesel exports from Reliance Industries' 660,000 barrels per day (bpd) refinery at Jamnagar complex in western India. Reliance also operates a 704,000 bpd export-focused refinery at the complex.

Reliance was selling diesel for much of last year at a higher rate than sold by state-owned retailers, who had capped prices since May 2022 to shield consumers and aid the government's efforts to control inflation.

That pushed Reliance and fellow private refiner Nayara Energy to focus on exports of diesel to benefit from high profit margins on overseas sales.

Diesel margins have fallen substantially from June 2022's record of more than USD71 a barrel following Russia's invasion of Ukraine, making local sales economically feasible.

The refining margin for gasoil with a sulfur content of 10 parts per million fell to around USD15 a barrel on Tuesday.

We remind, Reliance Industries Limited (RIL) unveiled India’s first Hydrogen Internal Combustion Engine technology solution for heavy duty trucks flagged off by Honourable Prime Minister Narendra Modi at the India Energy Week in Bangalore. The Hydrogen Internal Combustion Engine (H2ICE) powered trucks will emit near zero emissions, deliver performance on par with conventional diesel trucks and reduce noise and with projected reductions in operating costs thus redefining the future of Green Mobility.

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MOL’s Q1 2023 clean current cost of supplies (CCS) earnings before interest, taxes, depreciation and amortisation (EBITDA) for its petrochemical division slumped year on year to a loss of $48m as margins remained under substantial pressure, the Hungarian producer said.

MOL’s petrochemical integrated margin fell 33% to EUR329/tonne in the first quarter of 2023 from EUR488/tonne in the first quarter of 2022. In the fourth quarter of 2022, it stood at €398/tonne. By April 2023, it was recorded at EUR371/tonne.

Q1 2023 petrochemical product sales volume amounted to 325,000 tonnes, versus 359,000 tonnes in Q1 2022 and 280,000 tonnes in Q4 2022.

MOL noted petrochemicals clean CCS EBITDA remained in the red for a second straight quarter. The Q1 2023 loss of $48m followed on from a Q4 2022 loss of USD7m.

Overall, MOL, an integrated oil, gas and petrochemicals group, recorded a net profit of Hungarian forint (Ft) 160.6bn (USD471.5m) in the first quarter, marking a decline of 28% from Ft222.3bn in the fourth quarter of 2021.
Q1 2023 group net sales were up 8% year on year to Ft2.05tr.

We remind, MOL expects to be able to choose between Russian or non-Russian crude for its refineries by 2026, its Chairman and Chief Executive Zsolt Hernadi told Reuters, by implementing substantial investments.

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Unipar’s sales and earnings plunged in the first quarter because of lower margins as selling prices for most of its products fell, the Brazilian chemicals producer said.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) stood at Brazilian reais (R) 490m (USD98.6m), down nearly 41% year on year. Quarter on quarter, however, Unipar posted improved financial metrics.

Unipar produces chlorine, caustic soda, and derivatives such polyvinyl chloride (PVC), vinyl chloride monomer (VCM), ethylene dichloride (EDC) or hydrochloric acid, among others.

Unipar said the average utilisation rate at its three plants of Cubatao and Santo Andre, in Brazil, and Bahia Blanca, in Argentina, stood in the first quarter at 83.3%, down from 87.7% in the first quarter of 2022.

Quarter on quarter, however, the utilisation rate improved from the fourth quarter’s 80% in the fourth quarter. “The main highlight being the Santo Andre plant, which recorded an average capacity utilisation of 88% in the quarter, with a sharp increase compared to Q4 due to customer demand/inventory replenishment and the scheduled shutdown in October 2022,” said Unipar.

Despite the sequential improvement from the fourth quarter, Unipar adopted the same downbeat tone about the economic outlook it had already displayed in March, when it published its Q4 results.

The company cited a report by Abiclor, the Brazilian trade group for the chlor-alkali and derivatives sector, showing production of chlorine in January and February in the country had fallen by 4.3%, compared with the same two-month period of 2022.

We remind, Unipar’s earnings and net income fell sharply in 2022 despite an increase in sales on the back of higher costs for feedstocks. The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA), the best metric to measure a company’s financial soundness, fell by nearly 16% to Brazilian reais (R) 3.16bn (USD605m). In the fourth quarter of 2022 alone, EBITDA fell by more than 56%, year on year.

Unipar produces polyvinyl chloride (PVC), caustic soda, vinyl chloride monomer (VCM), ethylene dichloride (EDC) and other chlorine derivatives, among others; its three main production facilities are in Cubatao and Santo Andre, Brazil, and Bahia Blanca in Argentina.

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Sales of fuel, also known as bunker fuel, hit three-month highs in the world's biggest refueling hub Singapore in April, the latest official data showed, as prices were more competitive than regional ports, said Reuters.

Singapore's bunker sales data are an indicator of sentiment at one of the world's most major ports and demand also affects fuel oil refining margins in Asia. Sales climbed for a second consecutive month to 4.25 million tons, up 2% month-on-month and 14% from a year earlier, Singapore's Maritime and Port Authority data showed.

The rise reflected higher vessel calls for bunkering, which totaled 3,495 calls in April, extending gains after hitting two-year highs in March. "Singapore VLSFO prices were more competitive versus Zhoushan in April, which led to more vessels bunkering in Singapore," said Ivan Mathews, FGE's head of Asia refining and global fuel oil.

"Prices continue to be cheaper than Zhoushan in May to-date, which should continue to support VLSFO sales in Singapore." Bunker prices for very low sulfur fuel oil (VLSFO) at Singapore were USD5 to USD20 lower than China's Zhoushan in April and May so far, according to bunker traders.

Sales of LSFO grades totaled 2.71 million tons in April, up 5% month-on-month, the port authority data showed. Meanwhile, sales of high sulfur fuel oil grades eased 4% from March to 1.19 million tons in April, though climbing 26% from the same month last year, while marine gasoil sales were slightly lower at 327,400 tons.

"Demand in April did pick up compared with February and March, it looks okay in May so far, but I am not sure if it will hold as fuel oil cargo premiums have eased," said a senior bunker fuel trader based in Singapore.

We remind, Germany plans to adjust its Energy Security Act to allow a quick sale of Russian energy group Rosneft's stake in the Schwedt refinery without the need for prior nationalization, a draft law showed. Under the planned adjustment to the law, the condition of prior nationalization of assets put under government trusteeship could be withdrawn if the sale of the assets is needed to ensure that Germany's energy sector remains functional, the draft law.

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Indorama Ventures Public Company Limited, a global sustainable chemical producer, was upgraded to "A" from "BBB" in MSCI’s ESG rating, reaffirming the company’s effective management of sustainability related risks and opportunities, said the company.

MSCI (Morgan Stanley Capital International), an independent provider of research-based indices and analytics, ranked Indorama Ventures among the top 14% of 65 companies worldwide in the commodity chemicals industry. The rating has placed it in the top quartile for opportunities in clean tech, water stress, corporate governance, and corporate behavior.

Indorama Ventures is committed to reducing water intensity by 10% by 2025 and 20% by 2030. It developed a Water Risk Assessment Report on its contributions to achieving sustainable management of water targets and the United Nations Sustainable Development Goals (UN SDGs). For improved corporate governance, the company provides whistleblowers with protection from retaliation, and has policies on business ethics and anti-corruption. Relating to opportunities in clean tech, Indorama Ventures’ is investing in recycling technology and biomass feedstock under its Vision 2030, and is also investing in operational efficiencies, carbon capture technology, renewable energy, and phasing out coal to reduce Scope 1 and Scope 2 greenhouse gas emissions.

Yash Lohia, Chairman of the ESG Council at Indorama Ventures, said, “We are proud to achieve the rating of 'A', which underscores our efforts to build resilience around ESG risks, aligned with our purpose of reimagining chemistry together to create a better world."

We remind, Indorama Ventures Public Company Limited (IVL) are collaborating to use flake from recycled PET trays to produce PET film suitable for food packaging trays, said the company. The partnership is an important step in diverting PET trays from landfill or incineration to support the EU’s recycling targets and create a circular economy for PET trays.

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