Pakistan negotiating for a second discounted Russia crude shipment

MOSCOW (MRC) -- Pakistan is negotiating to buy a second shipment of discounted Russian crude oil, the South Asian country's petroleum minister said on Wednesday, said Reuters.

Musadiq Malik told reporters there was no scenario where the country was "not benefiting" from Russian crude and added that Pakistan was "finalizing another cargo".

The first cargo of Russian Urals docked at Karachi port last month and was paid for in China's currency. Islamabad made the first purchase in April.

Pakistan got into Russian the deal in part to save on foreign exchange reserves, which are eaten up mainly by oil imports.

The country has been facing an acute balance of payment crisis, with its central bank reserves barely sufficient to cover a month of controlled imports.

We remind, Shell Plc has decided to exit Pakistan in a setback for the South Asian nation that is going through its worst economic crisis. The oil giant has informed Shell Pakistan Ltd. about its intent to sell its 77.42% stake and also 26% ownership of Pak-Arab Pipeline Co., it said in a statement. It is seeing strong interest from international buyers.

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MOSCOW (MRC) -- North American chemical rail traffic continues to weaken, according to new data from the Association of American Railroads.

During the week ended July 8, chemical railcar volume in North America totaled 40,323 carloads, down 14.6% from the previous week and down 4.6% year over year. The four-week moving average (4wma) came to 43,658 carloads, down 2.3% sequentially and down 4.4% year over year (chart). The increment over the seasonal trendline, as represented by the average for 2014–22, fell to 0.1% — the lowest level since early April and the second lowest since late January, suggesting a weakening trend.

For the year to date, chemical railcar volume is down 2.9%, while total railcar volume is up 2%. In the US, 4wma chemical railcar volume came to 30,194 carloads, down 2.2% sequentially and down 4.4% year over year. For the year to date, US chemical railcar volume is down 4.4%.

In Canada, 4wma chemical railcar volume came to 12,591 carloads, down 2.6% sequentially and down 4.4% year over year. For the year to date, Canadian chemical railcar volume is down 0.9%.

In Mexico, 4wma chemical railcar volume came to 874 carloads, down 1.6% sequentially and down 4.4% year over year. For the year to date, Mexican chemical railcar volume is up 28.8%.

We remind, U.S. railroads originated 903,397 carloads in June 2023, down 0.2 percent, or 1,931 carloads, from June 2022. U.S. railroads also originated 988,766 containers and trailers in June 2023, down 7.0 percent, or 74,306 units, from the same month last year. Combined U.S. carload and intermodal originations in June 2023 were 1,892,163, down 3.9 percent, or 76,237 carloads and intermodal units from June 2022.

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MOSCOW (MRC) -- The sudden suspension of a Venezuelan contract that had boosted its exports of petroleum coke has led to a bottleneck of tankers waiting to load and sent customers scrambling for alternative supplies, according to sources and data, said Hydrocarbonprocessing.

A 2017 contract between Venezuelan state oil company PDVSA and Geneva-based Maroil Trading helped the country's exports of the oil byproduct to grow seven-fold between 2021 and 2022. But the deal was suspended last month amid a dispute over accounts receivable and the extension of the contract.

Venezuela's petcoke exports dropped to 56,000 metric tons in June, from more than 620,000 tons in January. So far this month, only one 70,000-ton cargo has been authorized by PDVSA to load. But as of Tuesday the vessel had not sailed, shipping data seen by Reuters showed.

Eight other vessels are near Venezuelan ports waiting to load a combined 350,000 tons, according to the data. Petcoke is largely used to fire cement kilns in countries from France to China. PDVSA did not reply to a request for comment. A law firm representing Maroil did not provide immediate comment.

Venezuela last year exported some 3.3 million metric tons of petcoke, mostly traded by Maroil, which in recent years has signed commercial agreements with other companies to reach final customers. A senior executive from a cement company in southern India said its Venezuelan petcoke supplier has canceled three contracts since last month, citing uncertainties related to its ability to deliver the product.

"We expect someone else to step in, in place of Maroil now," the company executive said, declining to disclose the name of its suppliers. PDVSA has in recent months approved new buyers and intermediaries for its petcoke sales, a move to expand its customer roster and directly reach overseas buyers. "No Indian buyer should attempt to get Venezuelan material without a guarantee that payment would only be made on discharge," said another customer, citing past delivery delays.

International petcoke prices have fallen this year amid supply-demand imbalances, according to Gujarat-based trader I-Energy Natural Resources. But a similar drop in coal prices, which is an alternative fuel, has motivated some importers in Asia to switch away from Venezuelan petcoke. Venezuela-origin petcoke sold at USD105 per ton at the end of last week. In contrast, Saudi-origin petcoke was priced at USD103 per ton, and U.S. Gulf Coast petcoke for India delivery traded at USD105 per ton in the same period, according to I-Energy.

We remind, Russia's gasoline exports rose in January to June despite the introduction of the European Union's embargo, thanks to healthy supplies of the fuel to Africa and Asia. Gasoline production at Russian refineries rose by about 4% year-on-year in the first half of 2023 to about 21.6 million metric tons, but fuel exports jumped by 30% to almost 3.5 million tons, according to the sources' data and Reuters calculations. That was up from 2.7 million tons exported in January - June 2022.

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MOSCOW (MRC) -- Oil benchmark Brent futures breached USD80 a barrel for the first time since May on Wednesday after U.S. inflation data suggested the interest rate hike cycle in the world's biggest economy is set to finally cool, said Hydrocarbonprocessing.

Data released on Wednesday showed U.S. consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside. Markets expect one more interest rate rise, but that the U.S. rate-hiking cycle has likely peaked. Higher rates can slow economic growth and reduce oil demand.

"This is the lowest number since the pandemic ... but it is important to keep in mind that this is still a transitory situation. But overall, traders are cheering this event," said Naeem Aslam, chief investment officer at Zaye Capital Markets, describing the inflation figures.

Brent futures were 51 cents up at USD79.91 a barrel by 1256 GMT, having risen as high as $80.05 earlier. U.S. West Texas Intermediate (WTI) crude was up 62 cents at USD75.45 a barrel. A weaker dollar, optimism surrounding Chinese stimulus and U.S. stockpile data were also supporting the positive sentiment, said Fiona Cincotta, senior financial markets analyst at City Index.

Meanwhile, forecasts from the U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA) point to the market tightening into 2024. The IEA expects the oil market to stay tight in the second half of 2023, citing strong demand from China and developing countries combined with supply cuts from leading producers. New forecasts from the IEA are expected this week.

"The oil balance gets tighter either when supply is downgraded, or demand is revised up. If both happens at the same time the change can be seismic," said PVM analyst Tamas Varga referring to the EIA's outlook. "Clearly, it is not worried about inflation-induced recession that could potentially dent global oil consumption." Top producer Saudi Arabia pledged last week to extend a production cut of 1 million bpd in August, while Russia will cut exports by 500,000 bpd.

We remind, Oil prices dipped on Monday after weak economic data from top consumers the United States and China, though expected crude supply cuts from Saudi Arabia and Russia limited losses. Brent crude futures fell 19 cents, or 0.2%, to USD78.28 a barrel by 1416 GMT. U.S. West Texas Intermediate crude was down 24 cents, or 0.3%, at USD73.62.

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МОСКВА (MRC) -- BASF has released preliminary figures for the second quarter of 2023. Sales declined by an expected 25% in the second quarter of 2023 to EUR17,305 million (Q2 2022: EUR22,974 million), said the company.

This was mainly driven by considerably lower prices and volumes; negative currency effects also contributed to the sales decline. Sales were thus lower than average analyst estimates for the second quarter of 2023 (Vara: EUR19,355 million).

EBIT before special items of BASF Group amounted to an expected €1,007 million, a decline of 57% compared with the strong prior-year quarter (Q2 2022: EUR2,339 million) but in line with analyst consensus for the second quarter of 2023 (Vara: EUR1,018 million). Compared with the prior-year quarter, the earnings contributions of the Chemicals and Materials segments were particularly weaker.

BASF Group’s EBIT amounted to an expected EUR974 million in the second quarter of 2023, below the figure for the prior-year quarter (Q2 2022: EUR2,350 million) and almost at the level of analyst consensus (Vara: EUR1,003 million).

Net income reached an expected €499 million, below the figure in the prior-year quarter (Q2 2022: EUR2,090 million) and below average analyst estimates for the second quarter of 2023 (Vara: EUR729 million).

We remind, BASF celebrated the opening of Europe’s first co-located center of battery material production and battery recycling in Schwarzheide, Germany. The inauguration of a state-of-the-art production facility for high-performance cathode active materials and the unveiling ceremony for a battery recycling plant for the production of black mass represent important steps toward closing the loop for the European battery value chain – from the collection of used batteries and the recovery of mineral raw materials to their use in the production of new battery materials. Major step in Europe to participate in the rapidly growing global battery market.

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