Oil rises as US inflation cools

Oil rises as US inflation cools

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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BASF Group achieves Q2 2023 EBIT before special items in line with analyst consensus and adjusts outlook for 2023

BASF Group achieves Q2 2023 EBIT before special items in line with analyst consensus and adjusts outlook for 2023

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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Borealis completes Stenungsund cracker furnace revamp

Borealis completes Stenungsund cracker furnace revamp

MOSCOW (MRC) -- Borealis announces the successful completion of a major upgrade to its steam cracker operation in Stenungsund, Sweden, said the company.

The seven-year construction project is a resounding success with respect to health, safety, and the environment (HSE), with no major accidents and no process safety incidents whatsoever. This capital investment ensures that the Stenungsund cracker – already one of the most feedstock-flexible in all of Europe – can operate even more reliably, and with greater energy efficiency. As a key supplier of ethylene and propylene to the Stenungsund Chemical Cluster, the OMV Group, and the Borealis Group’s international customers, its enhanced reliability is especially needed to support the rapidly growing wire and cable industry.

The Stenungsund steam cracker, which has a nameplate capacity of 625 kilotons per year, is a facility that thermally “cracks” feedstock – such as ethane, naphtha, propane, butane, and liquefied petroleum gas (LPG) – into smaller molecules. Furnaces are the “heart” of every cracker. In the Stenungsund revamp, four existing furnaces have now been upgraded and revamped to modern process safety, reliability, and thermal efficiency standards. Three other furnaces will augment their output, while two aging furnaces will be decommissioned and shut down completely at the end of the year. Because scheduled cracker productions continued nearly uninterrupted throughout the construction period, considerable operational restrictions prevailed, for example limited room to maneuver for cranes and other heavy lifting equipment. Each furnace had to be removed, demolished, then rebuilt separately, one after the other.

Despite pandemic-related complications, the Stenungsund project is distinguished by its excellent safety record, with no major accidents (personal safety) and no incidents (process safety) due to heightened safety protocols.

We remind, Borealis will acquire Italian mechanical recycled polypropylene (R-PP) compounder Rialti. Rialti has a nameplate output capacity of 50,000 tonnes/year of compounded R-PP. The announcement comes amid tough trading conditions for flake and pellet producers and compounders in the R-PP chain. As a result of tough trading conditions, players across recycled polymers have been predicting consolidation would occur in the chain since Q4 - either through mergers and acquisitions or through bankruptcy.

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BASF signs NPG supply deal with China’s Zhejiang Guanghua

BASF signs NPG supply deal with China’s Zhejiang Guanghua

MOSCOW (MRC) -- BASF and China’s Zhejiang Guanghua Technology Co (KHUA) have signed a Letter of Intent for the supply of neopentyl glycol (NPG) from BASF’s Zhanjiang Verbund site to KHUA, BASF said in a news release.

KHUA, a manufacturer of saturated polyester resins for the powder coatings industry, is planning to build a 100,000 tonne/year production plant for high-end powder coatings resins in Zhanjiang, where BASF is building an 80,000 tonne/year NPG plant.

The new NPG facility in Zhanjiang is expected to come on stream in the fourth quarter of 2025, boosting BASF’s global capacity of the product to 335,000 tonne/year from 255,000 tonne/year.

This strategic move will create synergies that benefit both parties, including enhanced collaboration and supply reliability, faster delivery, access to shared resources, and reduced costs.

In addition, this partnership will help to meet the growing demand for eco-friendly powder coatings in China and the wider Asia Pacific region, according to the statement.

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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Saudis to supply full oil volumes to Asia in August, China requests less again

Saudis to supply full oil volumes to Asia in August, China requests less again

MOSCOW (MRC) -- Saudi Aramco has informed some clients in North Asia they will receive full nominated volumes of crude oil in August, several sources with knowledge of the matter said on Tuesday, while top buyer China once again requested for less supply, said Hydrocarbonprocessing.

The world's biggest oil exporter last week said it would extend its 1 million barrels-per-day (bpd) output cut by another month to August and hiked the prices for most of the crude grades it sends to Asian customers for a second month. Some Chinese refiners, however, both state-owned and mega-sized independent refineries, have asked for lower supply in August, according to four trading sources.

The sources estimated the combined volume could be about 8 million barrels less than they took for July. China's intake of the kingdom's crude was at a low base in June and July as refineries were seeking cheaper alternatives from the spot market in response to high Saudi oil prices.

Chinese refiners are expected to buy more arbitrage cargoes from West African and Latin American regions as the spread between Brent- and Dubai-pegged oil narrows. Meanwhile, China's onshore commercial crude oil inventory reached about 980 million barrels by end-June, about 20 million barrels shy of a historical high set in August 2020, according to data analytic firm Vortexa.

We remind, OPEC oil output has fallen only slightly in June as increases in Iraq and Nigeria limited the impact of cutbacks by others, despite a wider OPEC+ deal and voluntary cuts by several members to support the market. The Organization of the Petroleum Exporting Countries has pumped 28.18 million barrels per day (bpd) this month, the survey found, down 50,000 bpd from May's revised figure. In May, output dropped by 240,000 bpd as the latest cut took effect.

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