Indian CGD Players Eye on Profits as Global LNG Crashes to Record Breaking Lows

1. Edition: 16th April 2020 #TheChemAnalystExpress Indian CGD Players Eye on Profits as Key Headlines •Aramco Offers Refiners in Asia And Europe New Terms to Combat Oil Crisis •Crude Retreats By 5 Per Cent Despite OPEC+ Deal •Cabot Corporation Closes $115 Million Deal to Acquire Shenzhen Sanshun •Valero Implements Shutdowns and Output Cuts in U.S. Refineries as The Country Battles Covid Crisis •GAIL Predicts Speedy Recovery in Natural Gas Demand Despite Lockdown Asia Pacific Chemicals Pricing (Key Products) •Propylene: Propylene prices in Asia edged high amid improved demand for the product as major consuming industries in China resumed their production activities after a prolonged shutdown. Prices of the product was assessed at $720/tonne, up by $55tonne. •ABS: ABS prices continued to drift in Far East Asia amid bearish market sentiments of the products from electrical and electronic sector. CFR prices for ABS dropped to $1090/tonne, down by $ 50/tonne Far East Asia. •HDPE: HDPE market witnessed a much-needed gain on recovery in demand for the product in downstream polymer industries. CFR prices of raffia grade HDPE climbed to $760 per tonne, spiked by $ 20/tonnes South East Asia. •Naphtha: Naphtha witnessed a marginal gain influenced by slight recovery in dynamics of upstream crude oil. CFR Prices for Naphtha in Far East Asia settled between $179-181 per tonne on Wednesday. Crude Oil Scenario Pressurized by the supply glut and demand crash, crude oil prices declined by 5 per cent to around $28 per barrel on Wednesday. As per the recent monthly analysis report of International Energy Agency (IEA), the April oil demand will show a dive by 29 million barrel per day (bpd) to break the records in the last 25 years. The report stated that the proposed output cuts will not be able to control the near-term falls facing the market. Shedding off earlier gains, Brent crude fell by 5 per cent, to $28.11 per barrel as of 08:27 GMT and US WTI crude slid by 2.5 per cent, to $19.60. Huge inventories which have reportedly touched 13.1 million barrels as on Tuesday, will put downward pressure on the crude oil prices in the coming months. This happened just few days after the Organization of the Petroleum Exporting Countries, along with Russia and other producing countries (called OPEC+) collaborated with other oil-pumping nations like the U.S. for a deal aimed at implementing production cuts. Falling crude reflects that the crude oil industry is deeply wounded by the demand uncertainties and it might take longer than expected to reverse its collapsing situation. Indian CGD Players Eye on Profits as Global Global LNG LNG Crash Crashes to Record Breaking Lows es to Record Breaking Lows Index WTI Crude Oil Brent Crude Natural Gas (U.S.) Units USD/bbl. USD/bbl. USD/MMBtu Prices 19.60 28.11 1.591

2. Exclusive News & Analysis India’s LNG Imports Threatened After Lockdown Extends As countrywide lockdown increases in India until May 3, after Prime Minister Narendra Modi declared on Tuesday that it is an essential step towards country’s battle against the coronavirus pandemic, Indian refiners would be prompted to cut runs further and offer more oil product cargoes for exports. This is also likely to pressurize country’s Liquefied Natural Gas (LNG) demand and risk the imports. In India, imported LNG is used as a feedstock by city gas distribution (CGD) companies, fertilizer manufacturing companies, oil refineries, gas-based power plants, petrochemical companies and other industrial units. Demand India’s LNG imports jumped 68 per cent to 3453 Million Standard Cubic Meter (MMSCM) in February this year as compared to the same month in 2019. This happened because the country’s gas-based power plants, oil refineries and gas marketing companies took advantage of substantial decline in LNG prices, due to significant drop in demand from China, as the country declare force majeure due to Covid-19. Energy Sector analysts indicated that the consumers aggressively grabbed cheaper LNG cargoes in February in anticipation of robust natural gas demand in the country. Available cargoes due to cancelled shipments were sold merely at the rate of $2.7 per mmbtu causing Indian buyers to turn opportunistic. According to a recent report, all the major sectors which consume imported LNG witnessed a big leap in demand in February this year. Demand from power sector jumped by 107 per cent, while that from refineries rose by 40 per cent with about 31 per cent rise from Petrochemicals and 20 per cent from fertilizer as compared to Feb last year. Till February 2020, India has been one of the main bright spots for LNG demand, however, the imposed lockdown measures to a greater extent have forced several companies to shut their plants, thereby hampering the overall demand. Prices India has been one of the key LNG consumers in the Asian market. The coronavirus outbreak incurred a significant drop in the LNG spot prices to 3.1/mmBtu in March 2020 as compared to $4.7/mmBtu in January 2020. The fall in price is much significant as compared to the January month of last fiscal when LNG spot prices were recorded as $8.4/mmBtu. Indian CGD companies like Gujarat Gas, IGL and ML are likely to benefit from the low spot LNG prices. Although LNG prices follow a downtrend in the month of April as well, Indian players are anxious as restricted imports may put a halt on their procurement strategies. Impact of Covid on LNG players In response to the lockdown, Petronet LNG and Gujarat State Petroleum Corp (GSPC) issued force majeure notices to their LNG suppliers. Although imports are cheap, the players are anxious as uncertainty in the overall LNG demand prevails till the lockdown is not lifted. Experts believe that the recovery would depend upon several factors such as a decline in the sales of Compressed Natural Gas (CNG), weaker demand from gas-based power plants triggered by fall in electricity demand and refinery output cuts by the oil refiners. Source-wise gas consumption by Indian power plants 25 20 15 10 5 0 Spot LNG Long-term RLNG Domestic gas APM/Non-APM Source: CEA

3. Industry Research International Plant Shutdowns •Valero Shuts 8 Plants and Cuts Production at 6 Plant Facilities Battling Demand Destruction Valero Energy, a company primarily engaged in the manufacturing and marketing of ethanol fuel has announced suspension of operations in 8 production plants in addition to production cuts in 6 units. The decision was taken considering the loss in revenue due to drifting demand of products on pronged pandemic stress in global market. However, the company has reported to continue essential business services including transportation and logistics facilities to avoid inconvenience to the existing customers. Valero comprises a total of 14 ethanol production facilities with a combined production capacity of around 1.73 billion gallons per year. •Ineos to Postpone Maintenance Turnaround in Forties Pipeline Ineos, a UK based multinational chemical company has postponed the maintenance turnaround of its North Sea Fortis Pipeline to serve its customers in tough times of pandemic stress. The shutdown was previously delayed till August but now it has been rescheduled for spring in 2021. Concerning this step, the company stated that it is their sole responsibility to continue the production of the most demanded chemicals like ethanol and iso propyl alcohol amid rising panic of Coronavirus. Global Plant Resumptions •Zhong Restarts Production at Polypropylene and Polyethylene Plant Facilities Zhong An United, a Coal Chemical Corporation and renowned chemical and petrochemical company in China has announced the restart in operations of its Polyethylene and Polypropylene Plants. The plants were formerly shut on April 9 at the back of some technical issues. These two production units of Zhong An accounts for the combined production capacity of around 350KTPA. •Welspun Corporation restarts facilities at Anjar Plant After an Unplanned Shutdown Welspun Corporation, a downstream industry of polymer and resin, has reported the partial restart in operations at its Anjar Plant facilities with an official permit by the governing authorities. For now, Welspun has just started operations in LSAW but is planning to resume operations at all facilities on improvement in Pandemic stress. Moreover, the company has ensured to take care of the sanitization and health of the workers considering the gravity present circumstances. Mergers and Acquisitions •Cabot Corporation Closes Acquisition of Shenzhen Sanshun Worth $ 115 Million Cabot Corporation, a company engaged in the business of specialty chemicals and performance materials has announced the complete acquisitions of Shenzhen Sanshun Nano New Materials Corporation, a renowned producer of carbon nanotubes. The acquisition worth $ 115 million aims at strengthening the position of Cabot in the global electrical market. Moreover, this deal outgrows Cabot as the only company to supply carbon additives having commercially proven CNT, carbon nanostructure, carbon black and dispersion capabilities. Strategic Investments •Refining NZ Planning to Permanently Idle Oil Refining Units Refining NZ, the single largest oil refinery in New Zealand, is planning to step out of its refining business and completely devote itself into trading of fuel. According to the authorities, the company has come up with this critical move as the investments it previously made on the refinery haven’t delivered considerable profits. Moreover, the present scenario where the producers are encountering consistent loss due to weak oil values has highlighted negative aspects for the creditability of this business in future. The company stated that the final call over this decision will be announced in June, this year.

4. Technological Advancements •Exxon Mobil Conducting Trials of Methane Monitoring Technology Exxon Mobil, a multinational petrochemical corporation, is carrying out field trials on eight methane detection advancements along with aerial and satellite surveillance monitoring. The tests are being conducted at nearly 1000 sites in New Mexico and Texas. These tests are examining effectiveness and reliability of this next generation technology in order to accurately detect leaks and come up with potential solutions that can serve the global petrochemical sector. •Thai Oil Adopts Haldoe Topsoe Technology to Produce Cleaner Fuels Thai Oil Public Company Limited has entered into an agreement to adopt Topsoe’s SNOXTM to promote cleaner fuel production in Sriracha Refinery. With the help of this technology, the company aims to effectively remove harmful compounds like sulfur and nitrogen in addition to dust emissions. This agreement is in line with Thai Oil’s Clean Fuel Project worth $5 Billion. This project is anticipated to enhance production to 40000 bpd along with improvising efficiency and reducing environmental impact. Get the Chemical and Petrochemical Industry News on Daily Basis, Weekly-Trend & Forecast and Monthly-Analyst View Subscribe Today! News on WhatsApp/WeChat/Mail First 15 days free news WhatsApp No. +91-9914868686 For sales related query, dial +91-9958299626 or email at sales@chemanalyst.com About ChemAnalyst About ChemAnalyst ChemAnalyst is ‘one stop’ online portal that offers comprehensive market intelligence data and in-depth analysis on the Indian chemical and petrochemical industry. Our aim is to provide competitive advantage to the industry stakeholders by offering ‘cutting edge’ information and analysis that help our customers leverage on the emerging opportunities in their businesses. ChemAnalyst’s team of 100+ analysts are engaged in tracking Chemical Prices daily, production capacity, demand and supply outlook, manufacturing plant locations, foreign trade data and news/deals for more than 400 major chemicals produced in India. ChemAnalyst’s Interactive subscription platform provides the most comprehensive data and analysis in your industry to help you decide the future. ChemAnalyst is promoted by TechSci Research (TSR). TSR is an award winning research based management consulting firm providing market research and advisory solutions to the customers worldwide, spanning a range of industries including Chemicals & Material, Automotive, Consumer & Retail, ICT, Energy & Power, Aerospace & Defense, Water and Waste Management, BFSI and more. For more information, please visit us at www.chemanalyst.com