US becomes global supplier of petroleum

US has succeeded in replacing OPEC  as the marginal supplier of petroleum to the world because of the shale gas revolution. US imports of crude has been reduced drastically. 

Imports in the beginning of this year were 5.2 million bpd, down from 11.2 million at the start of 2009. Due to the ban on exporting crude/petroleum, US shale oil has not been sent overseas.

However, the tremendous growth in US output has made a significant impact on the global markets in the form of reduced crude imports and increased exports of gasoline and other refined products.

US refiners and traders are trying to work around the ban by importing inexpensive domestic oil instead of foreign crude.

In 2013, total imports of crude dropped to 9.8 million bpd from 13.7 million bpd in 2005. During the same time period, product exports rose from 1.1 million bpd to 3.6 million bpd. Exports of diesel nearly doubled and gasoline, LPG and petroleum coke exports have also increased dramatically.

Canada, Mexico and Saudi Arabia are the three greatest suppliers to US. These three suppliers have maintained their sales volumes. However, imports from countries in West Africa, Latin America and the Middle East have been reduced drastically, leaving them with no alternative but to turn to markets in Asia.

US has reduced imports of gasoline from Europe and has become a key supplier of LPG and diesel to countries in Latin America.

The energy revolution in North America and the rapidly developing Asian markets have led to a reversal in the energy flow. The energy flow initially was from East to West. Now the flow is from West to East.

The shale gas revolution in the US has also shifted the marginal source supply to Texas, Oklahoma and North Dakota from Africa, Latin America and the Middle East.

With greater diversification comes greater security. Global oil markets have been largely unaffected by the loss of millions of barrels per day from Syria, South Sudan, Iran and Libya.

Efforts to find shale opportunities in other countries have failed. While US continues to raise production with the help of improved technology, other countries lack specialist crews and equipments, small scale oil producers and private mineral rights.

Shale opportunities are enormous and the financial gains are extremely high. US shale revolution has affected the global oil market. New shale gas developments might arise in Ukraine, South Africa, UK, Argentina and

China by the end of the decade.

Follows us:
Facebook, Twitter, Linkedin
For More info: www.globalchemicalprice.com

OPEC expects oil demand to remain unchanged at 91.2 million bpd in 2014

In March, global crude oil markets were sluggish as a result of slow growth in China, reduced refinery demand and abundant supply, which offset supply issues and geopolitical crisis.

The forecast for global economic growth for this year stands at 3.4 per cent and the growth estimate for the previous year was 2.9 per cent. The OECD is expected to grow by 2 per cent in 2014. In 2013, China’s growth estimate was 7.7 per cent, which has been revised down to 7.5 per cent for 2014. India’s growth is expected to remain at 5.6 per cent in 2014.

Global demand for oil is expected to increase by 1.14 mb/d in 2014, largely unchanged from the previous year’s estimate, to average 91.2 mb/d. Global oil demand in 2013 increased by 1.05 million bpd to average 90.01 million bpd. Majority of thus demand growth came from non-OECD.

In 2014, non-OPEC oil supply growth is expected to be 1.37 million bpd, while the growth estimate for 2013 was at 1.34 mb/d. For this year growth is largely expected to come from Canada, Brazil and the US.

Product markets located in the Atlantic Basin have started losing their sheen since March primarily due to reduced support from heating fuel demand in the US. European product markets have also weakened because of declining exports. In Asia, the recovery in light distillates was offset by poor performance.

In March, dirty tanker spot freight charges declined due to reduced tonnage demand and refinery maintenance in the east. Tanker spot freight charges decline by 5 per cent because of tonnage availability on some major routes. However, clean tanker spot freight charges have increased.

In February, OECD commercial oil stocks declined due to reduced products. Crude and products stocks exhibited a deficit of 35 mb and 96 mb respectively when compared to the five-year average. US commercial oil stocks in March improved but remained 36.0 mb below the five year average. 

In 2014, demand for OPEC crude is expected to decline 0.1 million bpd to average 29.6 million bpd. In 2013, demand for OPEC crude was at 30.0 million bpd.

Follows us:
Facebook, Twitter, Linkedin
For More info: www.globalchemicalprice.com

The growing petrochemical industry driven by abundant shale gas output

The shale gas revolution in the U.S. has led to exponential growth of the petrochemical industry. Investment in the industry has been gradually rising, specially in the ethylene value chain. The U.S. economy is expected to witness investments worth 110 billion dollars in petrochemical plants and projects.

Production capacity of ethylene is likely to rise by nearly 40 per cent. Nearly 10 mtpa of ethylene capacity   will come on stream likely within the next 4-5 years.

Demand for ethylene derivatives in emerging and developed markets  is rapidly increasing. The recent economic crisis, however, has resulted in a decline in demand for all major ethylene derivatives.

The reason for this decline could be reduced exports. There is still considerable debate over whether the U.S. petrochemical industry exports can change this situation.

China seems to be the preferred destination for exports. China has experienced tremendous increase in demand for petrochemicals- a growth driver for an export-oriented economy. However, now that Chinese market is gradually moving toward becoming a developed economy demand for several commodities, including petrochemicals, is expected to  moderate. The economy will likely move at a sustainable pace of growth. China is also planning a transition from export-based economic model to one that is focused on improving local consumption. Subsidies to firms to export may stop and this could reduce output.

China is heavily dependent on imports, even for petrochemicals, and this has been a cause of concern for the government. However, over the last few years China has ramped up its output which has changed the global supply situation. There are a number of coal-based projects being established in order to produce petrochemicals, including PVC and polyolefins. 5 propane dehydrogenation units are to add 3 mtpa of propylene capacity. Technology to produce MEG from coal is also expected to interest investors.

China is also likely to be home to another shale gas revolution. The country is said to have the largest shale gas reserves. But tapping into this vast resource will likely take time.

Sinopec has been making a lot of progress in developing China's first shale gas field. Analysts expect that the shale gas boom will most likely support petrochemical production.

China will remain an importer, but the reliance is expected to be much smaller than before primarily due to decline in demand and increase in local output.

US petrochemical companies dependent on shale gas will have an high cost position for ethylene and derivatives. These companies will also be extremely competitive in Europe. Increased petrochemical output from the U.S. will lead to reduced capacity in Europe, pushing smaller players to withdraw from the market.

However, there won't be any large-scale closures as this would affect energy security of the region.

There is a possibility that the shale gas boom in the U.S. could lead to closure of older and higher cost plants in order to construct new facilities with latest technology.

An export-oriented petrochemical growth is highly unlikely because majority of the consumers prefer local production. Firms also rely on suppliers who can quickly fulfil their demands. This argument supports investments in the developing markets.

Follows us:

Facebook, Twitter, Linkedin

For More info: www.globalchemicalprice.com

Chinese chemical industries might see the new stimulus package

Over past few days the moods of the Chinese chemical industries have improved owing to strong indication from Beijing about the launch of new stimulus package. As per the industry experts, this stimulus package will not be anything like the giant 2008-09 stimulus package or that of July 2013. To ensure that the Chinese government meets the economic target this year, the country has bowed towards an old standby policy of using the government spending to enhance economic growth, rolling out a mini-package of stimulus measures on 2nd April, 2014.

This fresh stimulus package includes railway construction, investment on slum clearance and affordable housing for low-income earners and tax relief for struggling small businesses. According to the central government, the Chinese State Council on 2nd April, 2014 had released plans to sell USD 24 billion US of bonds this year to build railways in the less-developed central and western regions and has also plans fund USD 35 billion to rail financing.

However until end of 2016, for the chemical industry and the existing tax breaks for small businesses will be extended and the tax verge for small businesses will also be raised. In China most of the chemical buyers are by and large small and medium sized industries. Just as the growth appeared to be the losing steam, this stimulus package was announced and for this year the country had also set a target of economic growth of about 7.5% which is less than 7.7% recorded last year and  will lower the levels of recent years.

This economic growth has been targeted as to what the Chinese government perceives as sustainable areas of economic growth and consequently this involves no new money for oversupplied industries such as steel and aluminum. However, the economic data in the first quarter of 2014 was unsatisfactory and market players are expecting economic growth in the period to be lower than the full-year target level.

According to the economist, it is palpable that the leaders feel the need to stabilise growth and on the whole the 7.5% growth target means that the government still cares a lot about economic growth.

The mini-package of stimulus measures which was unveiled on 2nd April was similar to the tools which Beijing used last year when growth seemed to be flagging and it recommended that the government leaders were not taking chances. According to the State Council, the external and internal economic conditions remain complicated.

As stated by Premier Li Keqiang at the annual session of parliament in the month of March that the government needs to achieve its economic objectives for the year and in addition to hit the growth target, those objectives also integrated the creation of 10 million new jobs as well as keeping urban unemployment below 4.6%.

Hence, now that all the froth is being taken out of consumption the chore for the solvent companies relics to work out what the demand growth will be in 2014. Moreover, due to augmented growth opportunities in the northern and western provinces the chemical companies will have to look hard at their spread of resources across China.

Follows us:

Facebook, Twitter, Linkedin

For More info: www.globalchemicalprice.com

US decision to lift crude export ban will bring down oil prices

Analysts have stated that in the event of U.S. lifting the 39 year old ban on exporting crude oil from the United States gasoline prices would drop, which will benefit domestic consumers.

This new study was conducted by consulting firms ICF International and EnSys Energy.

Plans to export fossil fuel have often been criticized as it would lead to higher prices at home. However, a recent study suggested that exporting U.S. crude would be economically viable for consumers. Increased exports would not only bring down gasoline prices but also lead to increased supplies and jobs in America.

The study also suggested that allowing crude oil export would bring down cost of heating oil and diesel fuel. Reduced prices will help American consumers save nearly $5.8 billion every year between 2015 and 2035. Prices would drop 3.8 cents per gallon in 2017, and 2.3 cents per gallon from 2015 to 2035.

Lifting the ban could also help generate 300,000 additional jobs in 2020, make a significant contribution (nearly $38 billion) to the U.S. economy and reduce the country’s trade deficit by $22 billion within the same year.

In 1970s, the U.S. government barred exports of crude oil. However, the country has witnessed significant changes in the oil and gas industry, brought about by the new technology for drilling shale.

In 2013, U.S. produced nearly 7.84 million barrels of crude oil per day, which accounts for over 10 per cent of the total global production.

By 2020 the country is expected to make a transition from being a net importer to a net exporter, primarily due to the increasing shale production which has exceeded domestic demand. Reports also suggest that on a supply-demand basis, the United States will soon succeed in accomplishing a self-sufficiency rate of 90 per cent.

Oil companies want the U.S. government to lift the ban as they are eager to sell shale oil in the international market for a higher price. Over-supply within the country has forced them sell oil at cheaper rates.

A new era is believed to have dawned for American energy. Once the energy trade policies are modified, U.S. will be able to further consolidate its position as the global energy superpower.

Follows us:
Facebook, Twitter, Linkedin
For More info: www.globalchemicalprice.com

U.S. to soon become a top suppliers of LPG to China

China which is noted as the largest consumer of LPG in the world is a condensed mixture of propane and butane, using about 874,000 bpd despite the fact that the bulk of this is for heating or transport, and also for making petrochemicals it is nowadays progressively being considered more. Moreover, in the petrochemical sector only 5% of LPG is being used. An agreement between the top refiner of China – Sinopec Corp. and Phillips 66 could be fixture changer which signals the U.S. to turn into one of the top suppliers of LPG to the next largest economy of the world.

In next to no time Sinopec Corp. will be importing around 34,000 barrels/day of LPG from US and alluding to the rising importance of LPG one of the major deal with Phillips 66, around USD 850 million/day of this compressed mixture of propane and butane will compose its way across the world to Sinopec starting from the year 2016. This deal will be noted as the fifth largest company by revenue.

Most of the Chinese refining companies are in anticipation of using LPG as a substitute to the petrochemical feedstock which could be counted as a cheaper substitute than the alternatives, as petrochemicals are basically used in manufacturing everything rite from plastics to cosmetics to solar panels. Due to cheaper pricing and shortages of the traditional feedstock Naphtha which is produce from processing Crude oil, Sinopec which also know at the top Ethylene producers of China is awaiting to use US LPG for building petrochemical units.

According to the industry expert, the US shale boom could lead to a fresh way of developing the petrochemical sector of China. In the production of LPG the US shale boom has led to a heave as the demand in China raises, which helps in bring down the global prices and an exigent established suppliers in the Middle East.

As per the market experts, by the year 2020, the exports of LPG from US might almost triple from last year to around 635,000 – 795,000 barrels/day. According to the buyers, nearly 100,000 barrels/day has been lined up by China for long term US LPG imports with supplies mostly starting from the 2015-16 which will include the Sinopec deals and other chiefly involving smaller firms.

By the year 2020, the total LPG imports of China might reach half a million bpd, which is nearly up by four folds from last year and overtaking other Asian imports such as Singapore and Indonesia. In the year 2013, nearly 80% of LPG imports of 132,000 barrels/day of China were collectively supplied by the suppliers from Middle East such Qatar, the United Arab Emirates and Saudi Arabia.

Last in the month June 2013, Sinopec had proposed to build up Ethylene plant costing USD 3.1 billion in Eastern China. With this plan the company would be considered as first to use natural gas and LPG as a feedstock. For May delivery to China, the traders have currently estimated U.S.LPG value approximately USD 850/tonne and USD 50-100/tonne lower than Middle East supplies.

Follows us:
Facebook, Twitter, Linkedin
For More info: www.globalchemicalprice.com

Chemical research & innovations – the key resources for industry

Chemical research & innovation are the two important factors which are widely used in various ways right from the birth to death. Most of the policy-makers and researchers believe that basic research is very essential for society as well as for innovation and economic growth. Nations which are having affluent cultures of research, invention and experimentation are not necessarily the richest nations but have grown in wealth as a result of their investment into research and innovation. Several chemical and petrochemical industries have opted this as their key resources as a first step towards green environment.

In today’s world these key factors are used in every part of the world in form of education, chemical and petrochemical industries, infrastructures and several other segments. For chemical and petrochemical industries innovation has been considered as the cornerstone for growth and profitability, also a prerequisite for long-term performance.

Nowadays, in India most of the chemical and petrochemical industries are now following the prologue of research friendly policies, in particularly in the year 2005 the introduction of the product patenting where a significant rise in investment in research and development across industries has been seen.

In the chemical world, research has considerably increased in the sectors such as pharmaceutical, biotechnology and agriculture. The majority of the chemical industries has adopted the eco-friendly theme and has announced ambitious sustainability plans to diminish their carbon footprint and save environment. Specialty chemicals plays an immense role, with their unique properties which the helping the chemical companies to realize their green goals.

Today the Indian pharmaceutical industry is nearly spending around 18% of its revenue on R&D and 11% of CAGR of the last decade. According to the industry experts, the chemistry is the heart of these researches and in India it is yet to adequately come into its own. As per the Planning Commission document, the number of industry patent applications filed in India is one-tenth the number filed in China and one-fifteenth the number filed in the US. In India nearly 25% of the companies have R&D centres adjacent to 40% in China and 60% in US.

Moreover, looking towards the future frontier technologies such as stem cell therapy, green substitutes to waste management, the search for a vaccine against HIV, the nano structure of materials, the search for life and viable environments on other planets and many more are all in the vital scrutiny, reliant on the research in chemistry. Consequently, just as the automobile industry has been a sign for development in the engineering industries, the growth of the chemical industry is a clear indication of overall industrial development.

However with the help of two major factors research and innovation, chemical industries can thus follow the root of sustainability by making the best out the waste.

Follows us:

Facebook, Twitter, Linkedin

For More info: www.globalchemicalprice.com

European chemicals giant Solvay has an accurate venture

The world leading European chemicals giant – Solvay  Chemicals is 150 year old Belgian company which has pioneered various chemical innovations and processes in its time and for future the company has also fanatical to an enormous projects. The founder of Solvay Ernest Gaston Solvay had developed and patented a process for manufacturing soda ash using seawater, ammonia and carbolic acid. The Solvay group which the European Chemicals giant had astoundingly kept hold of its manufacturing secrets even after surviving from two world wars and is now headquartered in Brussels.

Ernest Gaston Solvay had set up his first plant in Charleroi, the Belgian town that Ryanair made eminent when it called it Brussels and within few decades, the company gradually expanded into other countries such as UK, Germany, Russia and USA. In the early 1950s, the company had resumed its worldwide expansion and in the present day it has global revenue of Euro 10 billion with 70 plants worldwide, a presence in 55 countries, 29,000 employees and 13 major global R&D centers with 2,000 researchers and registered 500 patents in the past three years.

In 2008, deprived by the pharmaceutical business the company now focus on producing chemical and plastic like soda ash, peroxide, silica, food and flagrance, flavours and many others. Moreover, in next two years the company will invest BNG 55 millions for a new distiller in Devnia based in Bulgaria. The Devnia plant is the largest of its kind in Europe and the construction of new distillery will be noted as the largest soda ash plant of Europe which will considerably reduce the production costs, consume less steam and emit less CO2. Almost 90% of its production is being used for exportation.

The year 2013 for Solvay Chemicals had showed a mixed one with sales of Euro 10 billion and operating profit of Euro 1.6 billion, as its turnover and operating profit had slightly plummeted. In May 2013 the European chemical giant had announced a joint venture with Swiss based Ineos Group. In November 2013, the European Commission commenced a thorough investigation into the proposed 50-50 deal, where the two the chemical giants Solvay SA and Ineos Group AG had offered to sell a number of plants across Europe which they said would create the third largest chorvinyls business in the world.

Furthermore, in Asian and pacific region the sales surged to 6pc to almost 30pc of group sales and in India and consolidation in China and Thailand, the presence of the company was being enhanced with an increasing capacity. Today upto two-fifth of the company sales is in the high-growth countries and one-third of its workforces. Moreover in the countries like Russia, China, India and South Korea, half of the Solvay investments are now being commenced.

Follows us:

Facebook, Twitter, Linkedin

For More info: www.globalchemicalprice.com