Friday, April 17, 2020
Energy, Petrochemicals and Plastics 60
1 Oil Set for Weekly Loss on Feeble Demand
https://www.rigzone.com/news/wire/oil_set_for_weekly_loss_on_feeble_demand-17-apr-2020-161799-article/
Oil was stuck near $20 a barrel and set for a second weekly loss after a wave of gloomy demand forecasts outweighed optimism that a deal from the world’s biggest producers would alleviate virus-led demand losses.
OPEC expects demand for its crude to fall to the lowest in three decades as the coronavirus outbreak freezes the global economy, the group said Thursday. That followed a prediction from the International Energy Agency that 2020 could be the worst year in the history of the oil market. Futures slumped to an 18-year low this week, even after a historic agreement to curb supply.
2 Higher Natural Gas Prices Are On The Horizon
https://oilprice.com/Energy/Energy-General/Higher-Natural-Gas-Prices-Are-On-The-Horizon.html
The oil price crash has attracted all the media attention to the dire state of the U.S. crude oil-producing sector with cash-strapped drillers struggling to make any money at $20 oil. The collapse of the price of oil, however, could be the first step toward higher U.S. natural gas prices as early as next winter, helping the gas-oriented shale firms who survive the next few months to have their gas selling for more than double the current rates.
3 Weekly Resin Report: Prices Slip, but Don’t Crater, in Spot PE Market
https://www.plasticstoday.com/resin-pricing/weekly-resin-report-prices-slip-don-t-crater-spot-pe-market/124589085562827
Spot polyethylene (PE) prices were steady to a penny lower last week, while polypropylene (PP) prices firmed a cent based on higher propylene monomer costs, reports the PlasticsExchange in its Market Update.
4 Setback or shock: when will plastics demand bounce back from coronavirus?
https://www.britishplastics.co.uk/blogs/guest-blog/setback-or-shock-when-will-plastics-demand-bounce-back-from-/
The immediate challenge revolves around supply chain disruptions. Given the global and complex nature of sourcing, many industry participants have had significant challenges accessing and delivering material. Border controls have tightened, leading to lengthy logistics delays.
These difficulties have had an immediate impact. As the coronavirus spread in China, we saw a sudden surge in both producer and trader polyethylene inventories.
5 Single-use plastic turns out to be an unlikely hero in corona battle
https://www.livemint.com/news/india/single-use-plastic-turns-out-to-be-an-unlikely-hero-in-corona-battle-11586723058100.html
Single-use plastic (SUP), which is considered an environmental hazard, is now redeeming itself in an uncanny way by protecting doctors and other health workers from the deadly virus.
The threat of a ban loomed large over SUP till a few months ago. However, the demand for the product, which is used in making personal protective equipment (PPE), has nearly doubled since the virus outbreak.
6 Rethinking the value chain | Hydrocarbon Engineering
https://www.hydrocarbonengineering.com/special-reports/14042020/rethinking-the-value-chain/
Downstream organisations with exposure to logistics and marketing (including retail marketing) have typically seen higher earnings than pure independent/merchant refiners. The importance of vertical integration was clearly seen in 2015 – 2016 when oil prices fell to multi-year lows. Vertically integrated downstream companies – those with marketing channels, as well as midstream operations – fared better during this downturn than the pure-play merchant refiner selling at the rack. Marketers saw strong margin uplift through their branded channels and midstream operations provided ratable income.
7 Western Canadian Select Falls Below $5
https://oilprice.com/Latest-Energy-News/World-News/Western-Canadian-Select-Falls-Below-5.html
Canadian oil is struggling. And I mean really, really having a tough time. Alberta’s benchmark, Western Canadian Select, is now cheaper than a pint of beer. Sitting at $4.71 at the time of writing, WCS is facing a nightmare scenario.
8 Oil Demand Won’t Bounce Back Anytime Soon
https://oilprice.com/Energy/Energy-General/Oil-Demand-Wont-Bounce-Back-Any-Time-Soon.html
Oil demand is expected to be down by nearly 30 million barrels per day (mb/d) in April and down by almost 10 mb/d for the entire year, according to the latest estimates. But some forecasts still optimistically assume that demand bounces back in the second half of the year, a scenario that may not come to pass.
9 US shale oil output set to drop in 2020 as cuts forecast to reach more than 2 million bpd in last quarter
https://www.rystadenergy.com/newsevents/news/press-releases/us-shale-oil-output-set-to-drop-in-2020-as-cuts-forecast-to-reach-more-than-2-million-bpd-in-last-quarter/
Due to the combined effect of the Covid-19 pandemic and the low oil prices, US shale operators are reducing spending, production and overall activity in 2020. Although the country’s oil production was previously poised for annual growth of 8.1%, based solely on interpretation of operators’ guidance, Rystad Energy is projecting a decline of at least 2.7% year-on-year (US Lower 48 excl. Gulf of Mexico).
10 Coronavirus Has Wiped Out A Decade Of Oil Demand Growth
https://oilprice.com/Energy/Crude-Oil/Coronavirus-Has-Wiped-Out-A-Decade-Of-Oil-Demand-Growth.html
But the destruction in oil demand is both larger and much more immediate. April demand is expected to be down by 29 mb/d, according to the International Energy Agency (IEA). Oddly, so many forecasts from investment banks have predicted a V-shaped recovery for the global economy, but that scenario appears increasingly optimistic.
11 Saudis and Russia Hint at Further Action
https://www.rigzone.com/news/wire/saudis_and_russia_hint_at_further_action-17-apr-2020-161801-article/
Saudi Arabia and Russia signaled they may be open to further output cuts after the latest OPEC+ deal to curb global oil supplies failed to stem crude’s downward spiral.
The two nations will “continue to closely monitor the oil market and are prepared to take further measures jointly with OPEC+ and other producers if these are deemed necessary,” Russian Energy Minister Alexander Novak and his Saudi counterpart Prince Abdulaziz bin Salman said in a joint statement published after a phone call.
12 Coronavirus chaos could lead to new order for LNG markets
https://blogs.platts.com/2020/04/16/coronavirus-new-order-lng-markets/
Amid the coronavirus outbreak, the ephemeral nature of energy markets makes it difficult to offer certainty regarding our mainstays of forecasting: supply, demand, inventory, or price.
How much the new normal will be different from the old normal will not be revealed anytime soon, but in the case of global gas and LNG markets, it’s constructive to focus on structural problems that existed well before anyone ever heard of “social distancing.”
13 U.S. natural gas slips as exports decline, coronavirus demand destruction worries
https://www.bicmagazine.com/industry/natgas-lng/u-s-natural-gas-slips-as-exports-decline-coronavirus-demand-/
U.S. natural gas futures slipped for a fifth day in a row on Wednesday as pipeline and liquefied natural gas (LNG) exports declined and on long-term forecasts government steps to slow the spread of coronavirus will cut demand in coming months, as reported by Reuters.
Traders noted those price decline came despite a slowdown in output and short-term forecasts for cooler weather and higher heating use over the next two weeks than earlier expected.
14 Oil Price Crash Is Upending The Petrochemicals Industry
https://oilprice.com/Energy/Energy-General/Oil-Price-Crash-Is-Upending-The-Petrochemicals-Industry.html
While the U.S. shale production decline is the immediate outcome of the price collapse, low crude oil prices have triggered a chain of events in the energy markets that will inevitably impact the supply chain of the petrochemicals industry, analysts say.
There could be trouble brewing in the petrochemicals supply chain because of the oil price collapse, IHS Markit said in a recent analysis.
15 COVID-19: 3m b/d oil demand at risk if travel habits change
https://blogs.platts.com/2020/04/17/coronavirus-oil-demand-risk-travel/
Global air, road and rail travel have been massively reduced as governments attempt to limit the spread of coronavirus, taking a heavy toll on short-term oil demand.
Clearly, the mandated restrictions will lift when the pandemic eases and low oil prices will further aid in stimulating oil demand. However, it is possible that consumer behavior could be altered structurally, with impacts that persist even once the pandemic has ended.
16 Automotive-linked petrochemicals brace for deeper car industry slump
https://www.icis.com/explore/resources/news/2020/04/17/10497155/automotive-linked-petrochemicals-brace-for-deeper-car-industry-slump
Petrochemicals extensively used in the automotive sector are bracing for a deeper industry downturn as consumer priorities change amid a pandemic-induced global recession.
Synthetic rubbers, polypropylene (PP), acrylonitrile-butadiene-styrene (ABS), polystyrene (PS), among others will witness an unprecedented slump in demand.
17 Shell greenlights $6.4 billion Australia natural gas project
https://www.reuters.com/article/us-shell-petrochina-australia-idUSKBN21Z08C
Royal Dutch Shell said on Friday it had taken a final investment decision to develop the first phase of Australia’s biggest coal seam gas resource in Queensland state.
18 Why Mexico is the winner in OPEC+ deal, Rystad explains
https://www.offshore-energy.biz/why-mexico-is-the-winner-in-opec-deal-rystad-explains/
Following a historic OPEC+ deal to reduce global oil output in an effort to save the oil industry, Mexico came out as an unlikely winner since it was able to negotiate a production cut of only 100,000 barrels per day. Rystad Energy estimates that this will in effect be at a 50,000 bpd reduction at most.
19 Mexico Pacific hires financial advisor as it looks towards LNG FID
https://www.offshore-energy.biz/mexico-pacific-hires-financial-advisor-as-it-looks-towards-lng-fid/
Japan’s MUFG is one of the world’s largest publicly traded financial institutions and Mexico Pacific believes that this move would largely help the developer in advancing its Pacific Coast LNG export project.
“With its breadth of knowledge and experience and strong relationships with leading lenders and investors globally, MUFG’s appointment represents another important milestone in Mexico Pacific’s aggressive advancement to FID”, said chief executive Douglas Shanda.
20 Petrobras to shut down 62 offshore platforms in Brazil
https://www.offshore-energy.biz/petrobras-to-shut-down-62-offshore-platforms-in-brazil/
In an update on Wednesday, Petrobras said it would shut down 62 platforms in shallow water fields in the Campos, Sergipe, Potiguar, and Ceará basins.
These measures are part of Petrobras plan communicated to the market on 26 March and is part of a series of actions to preserve jobs and the company’s sustainability in what is the worst crisis in the oil industry in a hundred years.
21 New setback for Keystone XL oil pipeline as U.S. court rules against new permit
https://www.cbc.ca/news/business/keystone-xl-montana-ruling-1.5533863
A U.S. court on Wednesday ruled against the U.S. Army Corps of Engineers’ use of a permit that allows new energy pipelines to cross water bodies, in the latest setback to TC Energy Corp.’s plans to build the Keystone XL oil pipeline.
Keystone XL, which would carry 830,000 barrels per day of crude from Alberta to the U.S. Midwest, has been delayed for more than a decade by opposition from landowners, environmental groups and tribes, but construction was finally supposed to start this spring following a major investment by the Alberta government.
22 Medical Tubing Demand for Ventilators Soars amid COVID-19 Pandemic
https://www.plasticstoday.com/medical/medical-tubing-demand-ventilators-soars-amid-covid-19-pandemic/11766089662839
The urgent need for medical products stemming from the COVID-19 pandemic has caused some companies to enter uncharted territory. Carmakers from Ford Motor Co. to Mercedes suddenly are tasked with producing respirators and 3D printing medical components. Lego has retooled some of its injection molding lines to make visors for medical personnel. The list goes on. For companies with a medical manufacturing pedigree, the issue is not the learning curve, but suddenly ramping up production to meet soaring demand. That is the case for extruders of medical tubing, many of which are looking to add capacity, according to Graham Engineering Corp. Headquartered in York, PA, the company offers medical extrusion systems through its American Kuhne product line.
23 Borealis Completes Acquisition of Nova’s 50% Ownership Share in Novealis
https://www.ptonline.com/news/borealis-completes-acquisition-of-novas-50-ownership-share-in-novealis
Borealis AG (U.S. office in Houston, Texas) and Nova Chemicals Corp. (U.S. office in Pittsburgh) have announced that Borealis has complete the acquisition of Nova’s 50% ownership interest in Novealis Holdings LLC.
Formed in 2018, Novealis is the joint venture between affiliates of Borealis and Nova Chemicals, which subsequently formed a 50/50 joint venture with an affiliate of Total S.A (U.S. office in Houston, Texas) to launch Bayport Polymers LLC (“Baystar”) in Houston.
24 PEMEX expects its oil hedges to generate $311 million this year
http://www.worldoil.com/news/2020/4/15/pemex-expects-its-oil-hedges-to-generate-311-million-this-year
Mexico’s Petroleos Mexicanos expects to receive some relief from its oil hedge this year as producers grapple with a record slump in demand.
“The Finance Ministry has full coverage, and in the case of Pemex it is a part of our production,” said Pemex Chief Executive Officer Octavio Romero at a press conference in Mexico City, attended by President Andres Manuel Lopez Obrador.
25 U.S. crude stocks jump by a record 19 million barrels as refiners cut back: EIA
https://www.reuters.com/article/us-usa-oil-eia-idUSKCN21X280
U.S. crude oil stockpiles rose by 19 million barrels last week, the biggest one-week increase in history, the U.S. Energy Information Administration said, as refiners throttled back activity due to slumping demand as a result of the coronavirus pandemic.
26 Plastic Film Market Outlook Remains Positive Despite Short-Term Impact of COVID-19
https://www.plasticstoday.com/packaging/plastic-film-market-outlook-remains-positive-despite-short-term-impact-covid-19/36796064662834
Plastic film is getting a lot of attention, as awareness grows of the need for safety in packaging. The U.S. stretch and film market, like the manufacturing sector overall, is seeing a major short-term impact, both in terms of sales and production during the ongoing pandemic, said the Freedonia Group’s latest study on the stretch and shrink film market.
27 Soaring mask demand raises Chinese polypropylene prices; China announces quality, price controls
https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/041520-soaring-mask-demand-raises-chinese-pp-prices-china-announces-quality-price-controls
Chinese polypropylene prices surged 35% on the week at Yuan 8,600/mt ex-works for raffia grade Monday on reduced raffia supply and stronger fiber-grade demand for making masks. The prices corrected Yuan 350/mt day on day at Yuan 8,250/mt ex-works Tuesday after the government announced strict quality and price controls amid rising demand.
28 China Plans To Copy Mexico’s Mega Oil Hedge
https://oilprice.com/Energy/Crude-Oil/China-Plans-To-Copy-Mexicos-Mega-Oil-Hedge.html
This weekend, OPEC and its partners managed to agree on a historic oil production cut to the tune of 9.7 million bpd. The initial number the cartel eyed was 10 million bpd, some 300,000 bpd higher than what it managed to agree upon.
Most global oil producers were happy to cut output in the face of the greatest glut in history, but one nation wasn’t keen on participating.