Oil &Petrochemicals Monthly

Transcription

1 1 Petrochemical prices edge up in July Saudi Aramco cuts propane and butane prices: Propane prices declined 10.4% MoM to USD 345 per ton in July, while butane prices dropped 6.4% MoM to USD 365 per ton. The PP-propane spread expanded to USD 659 per ton in July from USD 604 per ton in June. The PP-butane improved to USD 639 per ton in July from USD 599 per ton in the previous month. Naphtha prices hit 2-month high: Naphtha prices rose 13.8% MoM to USD 455 per ton in July, after declining 9.1% MoM in June. The MoM rise was in line with the increase in crude prices. Recovery in PP and PE prices: PP prices were up 5.6% MoM to USD 1,040 per ton, in tandem with propylene prices, which increased 3.0% MoM. HDPE, LDPE, and LLDPE prices rose 0.5% MoM, 1.3% MoM, and 0.5% MoM, respectively. Polystyrene prices rise for second consecutive month: Polystyrene prices gained 2.0% MoM to USD 1,280 per ton in July, supported by a rise in styrene prices (up 4.1% MoM). PVC prices advanced 2.9% to USD 890 per ton in July after declining 0.6% in June. MEG prices continue to rally: MEG prices advanced 11.5% MoM to USD 870 per ton in July. Ethylene prices rose 3.3% MoM to USD 950 per ton after declining for two consecutive sessions, while methanol prices remained flat at USD 320 per ton. Titanium dioxide price at 32-month high: The weighted average price of titanium dioxide rose 9.6% MoM to USD 3,129 per ton in July. Fertilizer prices continue to weaken: Ammonia and urea prices extended their downtrend and declined to USD 195 per ton (down 7.1% MoM) and USD 190 per ton (down 2.6% MoM), respectively, in July. DAP prices fell 2.8% MoM to USD 345 per ton. Recovery in crude oil price Oil prices rebound to USD 50 per barrel in July: Oil prices surpassed USD 50 per barrel at the end of July after leading producer Saudi Arabia pledged to cut oil exports and Nigeria agreed to join the OPEC pact, once it stabilizes its output. The recovery in oil prices was further supported by a decline in US inventories, which, according to the EIA, fell 6.5mn barrels to 475.4mn barrels (down 3.6% YoY) in the week ended August 4. However, investors remain worried as OPEC and other oil producers struggle to comply with the output deal. Oil prices recover in July: Brent and WTI advanced 9.6% MoM and 8.0% MoM, respectively, in July. The Brent-WTI spread expanded to about USD 2.81 per barrel in July from USD 1.88 per barrel in June. Brent and WTI closed at USD 52.5 per barrel and USD 49.7 per barrel, respectively. Meanwhile, Henry Hub natural gas prices declined 3.1% MoM to USD 2.94 per mmbtu. EIA forecast for US crude production remains unchanged: In its latest Short-Term Energy Outlook, the EIA has predicted that the US s oil output would average 9.3 mbpd in and 9.9 mbpd in OPEC s oil production increases 173 kbpd in July : According to the Monthly Oil Market Report (MOMR), OPEC s oil production increased to mbpd in July. OECD commercial inventories were up 252 mn barrels from the latest five-year average, with a forward cover of 63.8 days. US oil rig count drops: In the week ended August 11, the US rotary rig count fell by 5 WoW to 949. The number of rigs increased about 0.2% MoM vis-à-vis 1.9% MoM in July. The rig count was up 103% YoY. Of the total number of rigs, 768 (up 3 WoW) were used to drill oil and 181 (down 8 WoW) for natural gas. Table 1: Petchem Prices July Price Name (USD pet ton) MoM % YTD % Naphtha % -6.2% Saudi Propane % -9.2% Saudi Butane % -13.1% Ethylene % -12.8% Propylene-Asia % 1.8% HDPE % -6.0% LDPE % -12.3% LLDPE % -6.9% PP-Asia % -3.3% Styrene-Asia % -5.8% Polystyrene % -3.0% TiO 2 * % 25.2% PVC-Asia % -2.2% MEG % 1.2% Methanol % -8.6% DAP-Gulf % 6.2% Urea-Gulf % -22.4% Ammonia-Gulf % -4.9% MTBE-Asia % -8.7% EDC % -23.0% Butyl-A % -13.1% BPA 1 4.3% 7.1% PX-Asia % -3.6% EVA % -11.9% Source: Argaam, Reuter Eikon, AlJazira Capital Research * Weighted average Table 2: Economic Calendar Date Country Event 16-Aug to 22-Aug KSA CPI YoY 17-Aug KSA Crude Oil Data Published: JODI 21-Aug to 27-Aug KSA Non-Oil Exports YoY 24-Aug KSA Current Account Balance 24-Aug KSA SAMA Net Foreign Assets SAR 24-Aug KSA M1, M2, M3 Money Supply YoY 30-Aug US GDP Annualized QoQ 29-Aug to 31-Aug KSA Hajj Statistics 01-Sep US Unemployment Rate 05-Sep KSA Emirates NBD Saudi Arabia PMI Sep 05,12,19,26 US Weekly Petroleum Status Report 06-Sep US Trade Balance 12-Sep US EIA Short-term Energy Outlook 12-Sep 13-Sep OPEC Monthly Oil Market Report IEA Oil Market Report Source: Bloomberg, IEA, EIA, OPEC Analyst Jassim Al-Jubran j.aljabran@aljaziracapital.com.sa

2 Key comments from international energy agencies IEA (Oil Market Report Published on 11 August) Global oil demand is expected to grow by 1.5 mbpd in (up 0.1 mbpd from the previous month s estimate) to 97.6 mbpd, further increasing by 1.4 mbpd in 2018 to 99.0 mbpd. In 4Q18, demand will reach mb/d. OPEC s oil output raised 230 kbpd to mbpd in July due to increased production by Saudi Arabia and higher output from Libya. Global oil supplies rose by 520 kbpd in July supported by increased production by OPEC and non-opec producers. It was the third consecutive monthly increase. The OECD s commercial inventories declined 19.3 mbpd in June as a result of strong refinery runs and oil product exports. Inventories exceeded the five-year average by 219mn barrels in June, down from 266mn barrels in May. Global refining activity is expected to reach a record high of 81.4 mbpd in 3Q17, up about 1.2 mbpd QoQ. The US is expected to drive throughput growth in 3Q17. OPEC (Monthly Oil Market Report Published on 10 August) Global oil demand averaged mbpd in Oil consumption growth is expected to rise by 1.37 mbpd to average mbpd in (up 0.1 mbpd from the previous month s estimate) and further increase by 1.28 mbpd (up 0.02 mbpd from the previous month s estimate) to average mbpd in In June, OPEC s oil production increased 173 kbpd to mbpd (according to secondary sources). Non-OPEC supplies were estimated to have averaged 57.3 mbpd in Non-OPEC oil supply is projected to increase 0.78 mbpd (down 0.03 mbpd from the previous month s estimate) to average mbpd in and 1.10 mbpd (down 0.04 mbpd from the previous month s estimate) to average mbpd in OECD s commercial oil stocks fell in June to 3,033 mn barrels. OECD commercial inventories were 252 mn barrels higher than the latest five-year average, with a forward cover of 63.8 days (up by 4.1 days from the previous five-year average). Demand for OPEC crude is projected to increase 0.4 mbpd (up 0.1 mbpd from the previous month s estimate) to average 32.4 mbpd in. In 2018, demand for OPEC crude is projected at 32.4 mbpd, at the same level as in. EIA (Short-Term Energy Outlook Published on 08 August) Brent is projected to average USD 51 per barrel in and USD 52 per barrel in WTI is expected to average USD 2 per barrel lower than Brent in 18. US crude production averaged 8.9 mbpd in US crude production is projected to average 9.3 mbpd in and 9.9 mbpd in The forecast for 2018 exceeds the 1970 production record of 9.6 mpbd. As on July 28,, the US s natural gas inventory stood at 3,010bn cubic feet (up 4.2% MoM). Global consumption of petroleum and other liquid fuels is expected to rise 1.4 mbpd in (down 0.1 mbpd from the previous month s estimate) and 1.6 mbpd in Non-OPEC production is projected to increase 1.1 mbpd in (up 0.1 mbpd from the previous month s estimate) and 1.1 mbpd in 2018 (down 0.1 mbpd from the previous month s estimate). On average, OPEC members produced 32.7 mbpd of crude in 2016 (up 1.0 mbpd from 2015). Crude production is forecast to average 32.5 mbpd in and 33.0 mbpd in OPEC s unplanned oil supply disruptions averaged 1.1 mbpd in July (down 0.2 mbpd from June). OECD inventories are projected to rise to 3.01bn barrels by end- and to 3.06bn barrels by end

3 Figure 1: TASI versus Materials sector /01 / /01 / /02 / /02 / /03 / /04 / /04 / /05 / /05 / /06 / /07 / /07 / /08 /2016 TASI 24/08 / /09 / /09 / /10 / /11 / /11 / /12 /2016 TASI Materials 28/12 / /01 / 02/02 / 20/02 / 10/03 / 28/03 / 15/04 / 03/05 / 21/05 / 08/06 / 26/06 / 14/07 / 01/08 / Figure 2: Materials sector versus Oil (Brent) Feb-16 Mar-16 May-16 Jun-16 Jul-16 Sep-16 Brent Oct Jan-17 TASI Materials Feb-17 May-17 Jun-17 Aug-17 Table 3: World Oil Demand and Supply (mbpd) 2016 E E 2018E World Crude Oil & Liq. Fuels Supply Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 OPEC Supp Non-OPEC Suppl Total World Supply World Crude Oil & Liq. Fuels Cons. OECD Consumption Non-OECD Consumption Total World Cons OECD Inventory (mn bbls) 2,997 3,037 3,043 2,967 3,011 3,043 3,030 3,013 2,967 2,967 3,013 3,060 OPEC Surplus Crude Oil Prod. Cap Source: EIA STEO March 2016, EIA STEO, AlJazira Capital Research The gap between crude supply and consumption is expected to expand to 0.14 mbpd by 4Q from a negative 0.21 mbpd (consumption is greater than supply) in 3Q. Crude inventories are anticipated to stabilize in, ending the year at 3,013 mn barrels. OPEC s surplus production capacity is expected to expand to 2.04 mbpd by 4Q from 1.96 mbpd in 3Q. 3

4 Table 4: OPEC monthly oil production Prod. ( 000bpd) Cap. Apr May June July % MoM Chg. Algeria 1,150 1,040 1,040 1,060 1, % Angola 1,870 1,660 1,630 1,670 1, % Ecuador % Gabon % Eq. Guinea % Iran 4,000 3,760 3,760 3,760 3, % Iraq 4, 4,410 4,420 4,480 4, % Kuwait 3,000 2, 2,710 2,710 2, -0.4% Libya % Nigeria 2, 1, 1,750 1, % Qatar % Saudi Arabia 11, 9,950 9,930 10,020 10, % U.A.E. 3,150 2, 2,860 2, 2, % Venezuela 2, 1,980 1,980 1,970 1, % Total OPEC 36,655 31,895 32,290 32,660 32, % Source: Bloomberg Figure 3: OPEC July Oil Production Equatorial Guinea Gabon Ecuador Qatar Libya Algeria Angola Nigeria Venezuela Kuwait U.A.E. Iran Iraq Saudi Arabia 0 2,000 4,000 6,000 8,000 10,000 ('000 bpd) Source: Bloomberg Figure 4: US Weekly Oil Inventories 483 mn bbls 350 Jan-14 Mar-14 May-14 Jul-14 Sep Jan-15 Mar-15 Apr-15 May-15 Jul-15 Aug-15 Nov Mar-16 May-16 Jun-16 Sep-16 Oct Jan-17 Feb-17 Jun-17 Source: US EIA, AlJazira Capital Research Figure 5: World Oil Production and Forecast Jan-14 Mar-14 May-14 Jul-14 Sep-14 Jan-15 Mar-15 May-15 Jul-15 Nov-15 Mar-16 May-16 Jul-16 Sep-16 Jan-17 May-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 mbpd Source: Bloomberg 4

5 Corporate announcements Name of company Date Announcement Rabigh Refining and Petrochemical Co. (Petro Rabigh) June 13, Petro Rabigh s Rabigh Phase II project started producing thermoplastic olefin (TPO). The product will be offered at competitive prices in KSA and most of the project s products are expected to come into the market by 4Q. Saudi Arabian Mining Company (Maaden) July 10, The company announced the commencement of initial production at its subsidiary Maaden Waad Al Shamal Phosphate Company (MWSPC). The production is expected to be gradually increased until it reaches 3mn tons production capacity. Saudi Arabian Mining Company (Maaden) Saudi Basic Industries Corp. (SABIC) July 31, May 03, Maaden s subsidiary, Maaden Waad Al Shamal Phosphate Company (MWSPC), has signed two financing agreements worth SAR 2.1bn with the Saudi Industrial Development Fund (SIDF). The first loan facility worth SAR mn will be used to finance the construction of MWSPC s phosphoric acid plant and phosphate concentrate plant in the city of Waad Al Shamal, whereas the second loan facility of SAR mn will be used to finance construction of MWSPCs ammonia plant in Ras Al-Khair (RAK) SABIC s chief executive stated the company is evaluating potential investments worth USD 6bn in the petrochemical, specialty chemical, and fertilizer segments. SABIC plans to conclude its first deal by 4Q. The company is seeking these acquisitions in North America, China, and Africa. Saudi Basic Industries Corp. (SABIC) June 09, SABIC inked a renewable six-month MoU with United Chemical Kazakhstan to study the development of a petrochemical complex. The project is part of SABIC s strategy to achieve geographical diversification and expansion into new markets. Saudi Basic Industries Corp. (SABIC) June 11, SABIC s Ibn Sina Polyoxymethylene (POM) Project is expected to begin commercial operations in 3Q. The project s performance and operational capacity is still being tested; any financial impact is expected to show up after commercial operations. Saudi Basic Industries Corp. (SABIC). July 09, SABIC commenced operations at its synthetic rubber ethylene-propylene-dienemonomer unit, and its thermoplastic specialty polymers and halobutyl rubber units in Al-Jubail Petrochemical Co., SABIC s JV with Exxon Chemical Arabia. The financial impact of this will be reflected in 3Q s financial statements. Saudi International Petrochemical Co. (Sipchem) July 18, The company signed a long-term agreement with Saudi Aramco Shell Refinery Co. (SASREF) to supply its subsidiary the International Methanol Co. (IMC) with carbon dioxide. The financial impact of the deal is expected to reflect on 1Q2019 results. Saudi International Petrochemical Co. (Sipchem) July 02, Saudi International Petrochemical Co. announced that it resumed operations at the carbon monoxide plants of its subsidiaries, International Gases Co. and International Acetyl Co. and at the vinyl acetate monomer plant at International Vinyl Acetate Co. (another subsidiary). Saudi International Petrochemical Co. (Sipchem) May 25, Sipchem started scheduled periodic turnaround maintenance at its subsidiaries, Carbon Monoxide of International Gases Co. (IGC) and Acetic Acid of International Acetate Co. (IAC). The maintenance program would be completed within five weeks. Saudi International Petrochemical Co. (Sipchem) May 31, Sipchem started scheduled periodic maintenance at its vinyl acetate monomer plant, which is owned by its subsidiary, the International Vinyl Acetate Co. (IVC). The maintenance process would be completed within three weeks. Source: Tadawul, AlJazira Capital Research 5

6 Oil and gas price trends Figure 6: Brent Crude (USD per Barrel) Figure 7: WTI Crude (USD per Barrel) Jun - 14 Sep Mar - 15 Jun - 15 Sep Apr - 16 Jul- 16 Oct - 16 Jan- 17 Apr - 17 Jul Jun - 14 Sep Mar - 15 Jun - 15 Sep Apr - 16 Jul- 16 Oct - 16 Jan- 17 Apr - 17 Jul- 17 Jun - 14 Sep Mar - 15 Jun - 15 Sep Apr - 16 Jul- 16 Oct - 16 Jan- 17 Apr - 17 Jul- 17 Figure 8: OPEC Reference Basket Figure 9: Henry Hub Natural Gas (USD per mmbtu) Jun - 14 Sep Mar - 15 Jun - 15 Sep Apr - 16 Jul- 16 Oct - 16 Jan- 17 Apr - 17 Jul- 17 6

7 Petchem price trends Figure 10: Naphtha (USD per Ton) Figure 11: Ethylene (USD per Ton) 980 1, , , 1,620 1, 1, 1, 1,045 Figure 12: HDPE (USD per Ton) Figure 13: LDPE (USD per Ton) 1, 1, 1,720 1, 1, 1, 1,050 Figure 14: LLDPE (USD per Ton) Figure 15: MTBE (USD per Ton) 1, 1,610 1,130 1, 1, 1, 1,040 7

8 Figure 16: Propylene (USD per Ton) Figure 17: Polypropylene (USD per Ton) 1,440 1,560 1, 1, 1, 1, Figure 18: Styrene (USD per Ton) Figure 19: Polystyrene (USD per Ton) 1, 1,690 1, 1,815 1, 1, 1, 1, 1, 1, 820 1,040 Figure 20: EDC (USD per Ton) Figure 21: PVC (USD per Ton) ,

9 Figure 22: Methanol (USD per Ton) Figure 23: DAP (USD per Ton) Figure 24: Urea (USD per Ton) Figure 25: Ammonia (USD per Ton) Figure 26: TiO 2 Europe Figure 27: TiO 2 America 3, 3,260 3, 3,465 3, 3,000 3, 2, 3,100 2, 2, 2, 2, 2,000 2,150 2, 2, 2,645 9

10 Petchem Spreads Naphtha prices averaged USD 426 per ton in July, up from USD 413 per ton in June. Polypropylene prices rose to USD 1,004 per ton in July from USD 989 per ton in June. The HDPE-Naphtha spread contracted to USD 656 per ton in July from USD 680 per ton last month. The PP-Naphtha spread increased to USD 578 per ton from USD 576 per ton. The LDPE-Naphtha and LLDPE-Naphtha spreads contracted to USD 702 per ton and USD 635 per ton, respectively, in July. The PP-Propane spread and the PP-Butane spread expanded to USD 659 per ton and USD 639 per ton, respectively, in July. The HDPE-Ethylene, LDPE-Ethylene, and LLDPE-Ethylene spreads contracted to USD 171 per ton, 217 per ton, and USD 150 per ton, respectively, in July. The PVC-EDC spread expanded to USD 631 per ton in July from USD 594 per ton in June. Figure 28: HDPE-Naphtha Figure 29: LDPE-Naphtha Figure 30: LLDPE-Naphtha Figure 31: PP-Naphtha

11 Figure 32: HDPE-Ethylene Figure 33: LDPE-Ethylene Figure 34: LLDPE-Ethylene Figure 35: PP-Propane (Saudi) Figure 36: PVC-EDC Figure 37: Polystyrene-Propane 1,085 11

12 Table 5: Petchem Price Performance Name Price * (USD per ton) MoM % Chg. QoQ % Chg. YoY % Chg. YTD % Chg. Naphtha % 0.0% 30.0% -6.2% Saudi Propane % -10.4% 16.9% -9.2% Saudi Butane % -6.4% 17.7% -13.1% Ethylene % -18.5% -10.4% -12.8% Propylene-Asia % 7.5% 21.3% 1.8% HDPE % -3.5% -4.4% -6.0% LDPE % -6.6% -3.4% -12.3% LLDPE % -3.6% -4.4% -6.9% PP-Asia % 3.5% 2.0% -3.3% Styrene-Asia % 5.6% 11.9% -5.8% Polystyrene-Asia % 2.0% 8.0% -3.0% TiO % 20.3% 31.4% 25.2% PVC-Asia % 2.3% 10.6% -2.2% MEG % 25.2% 42.6% 1.2% Methanol % -11.1% 16.4% -8.6% DAP-Gulf % -5.5% 3.0% 6.2% Urea-Gulf % -5.0% 2.7% -22.4% Ammonia-Gulf % -45.8% -33.9% -4.9% MTBE-Asia % -1.6% 37.0% -8.7% EDC % -26.6% -4.1% -23.0% Butyl-A % 19.0% 40.0% -13.1% BPA 1 4.3% -5.5% 9.1% 7.1% PX-Asia % 1.3% 4.5% -3.6% EVA % -11.3% 0.4% -11.9% *Weighted average Note: : *Prices as of July 25, Table 6: Petrochemical Products by Saudi Petrochemical Companies Company Finished Products SABIC Polyethylene, polypropylene, poly styrene, ethylene glycol (MEG), methyl tert-butyl ether (MTBE), benzene, urea, ammonia, PVC, and PTA 12 SAFCO YANSAB Tasnee Saudi Kayan Petro Rabigh Petrochem Sahara Petrochemicals Saudi Group Sipchem Advanced Alujain CHEMANOL NAMA MAADEN Urea, ammonia Polyethylene, polypropylene, MEG, MTBE, and benzene Polyethylene, polypropylene, and propylene (TiO2) Polyethylene, polypropylene, MEG, polycarbonate, and bisphenol A Polyethylene, polypropylene, propylene oxide, and refined petroleum products Polyethylene, polypropylene, and polystyrene Polyethylene, polypropylene Styrene, benzene, cyclohexene, and propylene Methanol, butanol, acetic acid, and vinyl acetate monomer Polypropylene Polypropylene Formaldehyde improvers concrete Epoxy resin, hydrochloric acid, liquid caustic soda, and soda granule Ammonia and DAP Source: Argaam Plus

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