Oil dips further as China worries counter supply cuts

MOSCOW (MRC) -- Oil prices dipped on Monday as concerns about China's faltering economic recovery and a stronger dollar took the momentum out of seven weeks of gains on tight supply, said Hydrocarbonprocessing.

Brent crude futures were down 63 cents at $86.18 a barrel by 11:55 a.m. EDT (1555 GMT), while U.S. West Texas Intermediate crude lost 59 cents to $82.60 a barrel. Market participants are torn, weighing a tight supply-demand balance against signs of weakening demand from China, said Phil Flynn, analyst at Price Futures Group.

"Part of it seems to be the Monday morning blahs. I think we still have to face a market that's very tight," Flynn said.
Vandana Hari, founder of oil market analysis provider Vanda Insights, said a correction may be on the cards for crude markets.

"Crude has been in overbought territory for some time now, defying expectations of a correction," Hari said. She added that the focus had been on U.S. economic optimism, to the exclusion of economic headwinds in the euro zone and China. Weighing on oil prices, the U.S. dollar index extended gains after a slightly bigger increase in U.S. producer prices in July. That lifted Treasury yields despite expectations the Federal Reserve is at the end of hiking interest rates.

A stronger dollar pressures oil demand by making the commodity more expensive for buyers holding other currencies. Separately on Monday, a Shell spokesperson said exports of Nigeria's Forcados crude oil resumed on Sunday, roughly a month after loadings of the medium sweet grade were suspended because of a potential leak at the export terminal.

We remind, China's state-controlled Shaanxi Yanchang Petroleum Group is expected to double its purchases of Russian ESPO blend this year to about one million metric tons, according to two sources familiar with the plant's operations. The company is due to start up a 50,000 barrels per day crude processing unit at its refinery in landlocked Shaanxi province in the north later this month, after retooling work that allows the plant to process more crude.

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MOSCOW (MRC) -- Following the rejection by the European Parliament in February 2020 of the European Commission’s derogations (special exclusions) covering recycling of legacy PVC compounds — which were part of a proposed wider update of restrictions on use of lead and lead compounds in PVC — the Commission has published a new and revised regulation, said Amiplastics.

Implemented as part of REACH and already in force, it addresses Parliament’s previous concerns while still including a number of derogations designed to achieve a balance between encouraging material circularity and mitigating long-term health risks.

We remind, in June, the European chlorine production reached 597,178 tonnes. With 19,906 tonnes, the June 2023 average daily production was 0.8% lower than in the previous month (May 2023: 20,065 tonnes) and 12.5% lower than in June 2022 (22,759 tonnes), according to European chlor-alkali industry association Euro Chlor. With 207,417 tonnes, the June 2023 caustic soda stocks were 22.5% lower than in the previous month (May 2023: 267,745 tonnes) but 14,363 tonnes above the level of June 2022 (193,054 tonnes).

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MOSCOW (MRC) -- The board of Uponor has recommended that its stakeholders accept a takeover offer from Georg Fischer, said the company.

Georg Fischer has made an offer of EUR 28.85/share for Uponor, valuing the company at more than EUR 2 bn.

The offer will run from 26 Jun 2023 to 1 Sep 2023. The combined piping system of Fischer and Uponor will create a business with a combined sales of about EUR 3.6 bn, while Georg Fischer would become a EUR 5.4 bn company.

We remind, Uponor Corporation, the Finland-based systems & solutions provider for safe drinking water delivery and energy-efficient radiant heating & cooling infrastructure, has opened its first manufacturing facility in Taicang (China).

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MOSCOW (MRC) -- Belgium-headquartered global manufacturer of PVC window, door and building solutions Deceuninck said it has opened a factory for laminating of PVC profiles in Donja Bistra, northern Croatia, following investment of almost 7 million euro (USD7.5 mln), said Seenews.

“This way, Deceuninck which so far operated at three different locations in Croatia, has brought in one place all the business processes - from warehousing and production, to management and administration,” the company said in a press release.

The new factory spreading on 17,000 square metres will ensure increased production capacity, improved efficiency and faster delivery to more than 500 partners in Europe.

Deceuninck also said it plans to add 40 employees to its current workforce of 160 people in Croatia by the end of the year. The company operates production facilities in 17 countries and delivers its products in 90 countries worldwide.

Last year, Deceuninck which has a total of 3,709 employees, reported a revenue of 974.1 million euro.

As MRC informed earlier, Deceuninck, a large international manufacturer of polyvinyl chloride (PVC) systems for windows and doors, acquired the Turkish company Pimas, a manufacturer of PVC window profiles.

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MOSCOW (MRC) -- India's Mangalore Refinery and Petrochemicals Ltd plans to phase out fuel exports in the next two to three years as it expands its local retail network to diversify its sources of revenue, its managing director said, as per Reuters.

MRPL, a subsidiary of state-controlled Oil and Natural Gas Corp, operates a 300,000 barrel-per-day coastal refinery in southern Karnataka state, mostly supplying the state refiners that own about 90% of India's retail fuel stations and exporting the remainder.

Sanjay Varma told Reuters that MRPL plans to expand its retail outlets in southern India to 1800 by 2027 from about 71 now. "When refining margins are low (retailers) make a handsome profit because marketing margins are good. It gives a natural hedge if we have marketing margins," Varma said.

MRPL's exports, previously 2-3 cargoes each of diesel and jet fuel monthly, have suffered in the last six months as maintenance shutdowns at other refiners raised demand for its fuel. "Our plan is to go for zero exports as we would like to push volumes through our retail outlets," Varma said.

In the current fiscal year to March 31, MRPL aims to operate its refinery at about 107-108% capacity, down from 115% a year ago, with plans for a 35-40 day maintenance outage of a 60,000 bpd crude unit and secondary units from late August.

MRPL would cut crude imports from countries including Russia in August and September because of the outage, Varma said. "We don't want to carry a higher crude inventory level," he said, adding that MRPL did not plan to enter into a term contract for Russian oil as spot prices offered "more flexibility" to secure cheaper supplies.

MRPL in 2016 announced a plan to expand its refinery's capacity to 360,000 bpd. Given an expected rise in local demand for petrochemicals, it is now looking to set up an oil to chemical plant with a view to producing specialty chemicals and active pharma ingredients, Varma said. The company is aiming to have a detailed feasibility report in 6-7 months.

We remind, Mangalore Refinery and Petrochemicals Ltd (MRPL) has signed a six-month deal to supply BP with 80,000 tons of diesel per month from October, said two trade sources close to the matter. MRPL will supply diesel to BP for the Australian market at a premium of about USD1.40 a tonne for the six months, the sources said, with pricing based on the average of Argus and Platts' Mideast Gulf spot assessments of 10ppm sulphur gasoil.

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