Edition: 27th March 2020 #TheChemAnalystExpress

What Will Hit the Chemical Sector Most: Covid-19 Or Crude Oil?
Key Headlines
• WTI crude futures slipped by 0.2 % while Brent crude futures rose by 0.4 %
• Ethylene and PP prices drop in Asia
• Iran starts rigorous planning to boost oil production
• Schlumberger and Halliburton announce capex cuts to combat oil price drop
• Indian Govt. to reduce import reliance through new API/Bulk drugs schemes

Asia Chemical Price Scenario (Top Products)

• Acrylonitrile-butadiene-styrene (ABS): ABS producers slashed the product cost as the feedstock Styrene
Monomer (SM) and Butadiene witnessed downward pressure. ABS prices CIF NS, Mumbai were around USD
1290-1300/MT.
• Styrene Monomer (SM): Styrene Monomer CFR prices dropped to about $500 per MT due to fall in the
feedstock benzene.
• Polypropylene: Polypropylene (PP) prices followed a downtrend due to muted demand in the APAC region amid
coronavirus related lockdowns. PP prices CFR Asia stood around $ 800/tonne.
• PET: Bearish upstream markets have continued to affect PET prices in Northeast Asia with its prices hitting a
record low at $700/tonne FOB.
• Paraxylene: Paraxylene prices in Southeast Asia witnessed a gradual recovery and were marked at $ 490/ tonne
CFR China.

Crude Oil Scenario

Index Units Price
Oil prices remained muted on Thursday due to acute WTI Crude Oil (Nymex) USD/bbl. 24.07
volatility in demand prospects as several countries head
Brent Crude (ICE) USD/bbl. 27.22
towards prolonged lockdowns due to coronavirus spread.
As per the analysts, oil demand is likely to contract by more Natural Gas (Nymex) USD/MMBtu 1.64
than 10 million barrels per day if the situation does not improve soon. The demand loss will eventually lead to supply
glut as refineries in the Middle East are planning to boost their oil production. As recently said by the US Energy
Information Administration, US crude inventories rose by 1.6 million barrels in this week, marking the ninth straight
week of increases. The uncertainty in crude is likely to trigger significant fluctuations in the global petrochemicals and
chemicals market.
 Exclusive News & Analysis

Polymer Industry Tumbles; Oil Price War and Covid-19 Worst Encounters yet!

Polymer producers around the world are forced to curtail their production activities as the combined blow of
Coronavirus and crude oil crash has hard hit the sector. Prices of Polyethylene and Polypropylene in the international
markets have followed a downtrend as feedstock ethene, ethane and propylene witnessed downward pressure due to
sudden slump in crude oil. The oil price war initiated by Saudi Arabia has brought a huge downturn in the oil industry
which is anticipated to impact almost all the economy driving sectors of the world.
When China is resuming factory operations, the unprecedented campaigns launched by the governments in rest of the
countries to prevent the spread of the contagious virus have almost put a halt on the economic activities. Asian refiners
are curtailing production sensing muted demand from the downstream polymer industry.

Demand Outlook

Demand for polymers being used in food packaging, healthcare products and sanitizers is high as consumption trends
boost due to coronavirus outbreak. Polypropylene demand has plummeted due to shutdown of automobile plants
across several countries although demand for non-woven PP has boosted appreciably. Moreover, demand for
80
78
Global Polypropylene Demand

76
74
(Million Tonnes)

72
70
68
66
64
62
60
2019 2020

Polyethylene Terephthalate (PET), which is majorly used for making bottles for sanitizers and beverages show a positive
growth outlook. LLDPE and HDPE markets remained almost muted throughout March due to feeble demand prospects
and cheaper feedstocks. Analyzing the complete scenario, growing demand from medical and healthcare has slightly
eased the continuous decline being faced by polymer and resin industry, but it is certainly not enough to uplift
prolonged dull market.

Industry Research

International Plant Shutdown News

• ABEL Chemical goes for indefinite shutdown in its Styrene Monomer Plant
ABEL Chemicals with an installed capacity of 250 KT Styrene Monomer at Jiangsu, China underwent an indefinite shut
down with no prior information on the date for resuming of operations. This temporary shutdown is anticipated to be
influenced by slowdown in international chemical sector that has caused a plunge in demand for the products.

• Saudi Aramco to shut its largest refinery for 6 weeks from June 1, 2020
Oil producing giant, Saudi Aramco has reported to shut its largest oil refinery for a period of 5-6 weeks from June 1,
2020. The purpose of turnaround is to connect new units and replace the older ones for obtaining cleaner and superior
quality fuel. Moreover, the company has announced the addition of a new catalytic reforming unit having 90,000 bpd
capacity along with several other units.
India Plant Shutdown News

• BPCL to withdraw shutdown of its several refining units

BPCL, a state-owned company, reported that it has delayed turnarounds at its Mumbai and Kochi refineries due to
shortage of manpower and availability of material. Lack of resources as an outcome of lockdown made the company to
delay its plans for any changes in the operating process.

• Oriental Carbon and Chemicals Shuts All Plants Amidst Pandemic Concerns
Oriental Carbons and Chemicals has reported a complete shut in all its plants and offices till 14 April 2020. This
temporary shut is a compliance of the preventive measures such as lockdowns and curfews implied by the government
to curb the spread of the virus. The Company is a globally respected manufacturer and supplier of Insoluble Sulphur to
several tyre manufacturers of the world.

• Kothari Sugars and Chemical Limited goes for a Turnaround at Two of its Plants
Kothari Sugars and Chemicals, a company engaged primarily in the manufacturing of sugars and co-generation of
distillery, bio-compost and powers has announced temporary shutdown at its Kattur and Sathamangalam plant in
response to the measures taken to curb Covid-19.

Strategic Expansions and Global Footprints

• J K Tyres, a downstream industry of elastomers has reported an increase in the number of stakes from 69 per
cent to 71.91 per cent in Cavendish Industry. According to the company, purpose of this acquisition is to
strengthen long term finances for company’s administration and future expansions. This increment is likely to
boost the demand for elastomers in the Indian market.
• MOL Hungarian Oil and Gas PLC is an integrated oil and gas company which is involved into production of crude
oil, bitumen, petroleum products and natural gas. The company has recently converted a windshield washer
production line at its facilities in Almasfuzito, Hungary, into sanitizer production unit which can produce up to
50,000 liters per day of hand sanitizer. This extraordinary step taken by the company is to satisfy the demand
for hand sanitizers in Europe after the region became the epicenter of the coronavirus. The new unit is
operating 24x7 in three shifts and contributing to the country’s fight against Covid-19.

Latest Technological Investments

• Chevron Lummus to Provide Engineering Service for a Base Oil Group II Project
Chevron Lummus, a company engaged in engineering services has received a contract for engineering, licensing along
with supply of equipment and proprietary catalyst by a South Asian refiner for its Base Oil Group II Project. The South
Asian refiner is presently engaged in the production of Group I Base Oil, and with its upcoming 5200 bpd unit for Group
II base oil it is aiming to expand its footprint in the Global chemical sector. The company will be using the state-of-the-
art ISOTREATING, ISODEWAXING and ISOFINISHING technologies for premium lube-base oil production.

• Researchers Develop a New Hydrogen Fuel Producing Technology

Aalto University Researchers have developed a novel graphene–carbon nanotube catalyst, which can be used to control
chemical reactions involved in production of hydrogen fuel. As the world is looking forward to establishing Hydrogen
fuel-based economy, it becomes equally important to work upon the fuel cells and water electrolyzers that are used in
reactions. The newly developed electrocatalyst drives these reactions more efficiently than other bifunctional catalysts
currently available.
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