Oil Market at The Mercy of Pandemic as Crude Slips to Negative Values, Will Things Turn Worst Now?

1. Edition: 22nd April 2020 #TheChemAnalystExpress Oil Market Key Headlines •Crude Oil Melts Down to Negative Values Creating History With 300% Crash •Natural Gas Rebounds in Response to the Crude Crash •Exxo Bridgestone Corporation to Shutdown All its Production Units Temporarily •India’s Stated Owned Oil Refineries to Resume Work as Restrictions Ease on Nationwide Lockdown •Sonatrach Signs MOU With ExxonMobil to Seek Exploration Opportunities •Sekisui Proposes Investment in Waste-Based Bioethanol Production Asia Pacific Chemicals Pricing (Key Products) •Ethylene- Prices of Ethylene continued to slump on drifting values of upstream crude oil along with dwindling demand from downstream industries affected by containment measures of the pandemic. Prices of Ethylene settled at $365/ tonnes CFR North East Asia, down by $10/tonne from last revision. •MEG- Prices of MEG remained in doldrums on reduced consumption from industries at the back of production cut and turnarounds amid coronavirus. MEG plunged to $405/ tonne CFR Southeast Asia, witnessing a fall of $5/tonne. •Benzene: Benzene further tumbled in Southeast Asia on diving values of upstream crude oil followed by excess supply of the product against stagnant demand. CFR Prices Southeast Asia settled at $355/ tonne, down by $15/tonne from previous revision. •Acetone: Acetone prices edged higher in China on improved demand as downstream industries resumed production after prolonged shutdown. CFR Prices of Acetone were assessed at $ 550/tonne, raised by $60 per tonne. Exclusive News and Analysis A Historic Day in The Oil Industry as Crude Oil Spirals Below $1 A week after the historic agreement between OPEC and non-OPEC nations last week, crude oil collapsed unprecedentedly below 0 on Monday. The day will be marked in history of oil and gas sector as WTI crude was priced at $0.01 at 14:20 eastern time and at 14:22 eastern time, it collapsed to -$1.43 which fifteen minutes later, fell gradually to -$20 for the May contract. Burning in the flame of coronavirus and lockdown measures to contain it, crude melted to reach a negative territory closing out the day at -$37 per barrel. Oil Market at The at The Mercy Mercy of of Pandemic Pandemic as as Crude Crude Slips to Negative Values, Will Things Turn Worst Now? Slips to Negative Values, Will Things Turn Worst Now?

2. That truth behind the unprecedented price slump Industrialists say that the sudden crash since Monday is because the May crude oil futures contract was about to expire on Tuesday (21st April), so June and July prices are not expected to be this catastrophic and bet that the crude will regain values to the previous levels of around $20. Some players are also agreeing to the fact that the decline in price is because there are no more vessels to fill the oil, so those who are holding oil will have to look for buyers and empty their cargo vessels for the next few days before oil returns to its previous levels. Although OPEC+ had agreed for the production cuts, but this was not meant for April. Moreover, as per Industrialists, the cuts are not enough to nullify the demand destruction caused due to the pandemic. Impact of this freefall on global industries Losses •The offshore drilling market is set to be one of the worst hit sectors Without available storage, and production shutdowns happening, which is a costly endeavour the price crash indicates that producers are awaiting the buyers to take the oil off their hands. The situation becomes troublesome for U.S. drillers who have already shed 260 rigs in five weeks and are likely to continue with production halts if the storage fills ups with this rate. •Global Indexes closed almost red! As soon as the crude oil dived on Monday, the Energy stocks started bearing the pressure. Following are some industry leaders which witnessed significant decline in their share after the crude lost all its gains in the past few days: 1.Sasol’s year to date loss went down to 85.83% on Tuesday morning. The chemicals group share fell by almost a quarter to R43.51, a fall by almost 21.76%. The company has already been battered in 2020 due to decline in the demand which further heightened because of increased expenditure at its Lake Charles project in the U.S. which suffered and explosion in early 2020. 2.Schlumberger suffered the blow as the crude turned to negative territory and confirmed that the demand destruction has caused a grave uncertainty in the market. The company shares fell by 5.23% on Tuesday. 3.As the market opened on Tuesday, the Dow Jones Industrial Average plunged by more than 500 points, or 2.3% and the Nasdaq Composite slid nearly 150 points, or 1.75%. 4.Share price of India’s Reliance Industries fell 6.43% to INR 1164, whereas ONGC stock lost 8.71% to INR 67.6 on BSE. Stock of Indian oil explorer OIL India fell 6.84% to INR 84.4. Indian Oil share price fell 4.91% to INR 83.3 on BSE. Gains Natural Gas producers are likely to benefit from the massive drop in crude oil prices as this will pressurize rigs to shut meaning less associated natural gas. Industrialists anticipate that a significant decrease in the natural gas supply is on the cards, which is backed by an increase in weather-driven demand expectations over the weekend. The May Nymex gas WTI Crude $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Natural Gas $2.50 $2.00 $1.50 $1.00 $0.50 $0.00

3. futures contract rose, and settled the on Monday at $1.924, up 17.1 cents from Friday’s close. Is the situation so grave? Although the crude oil market seems bleak right now, analysts anticipate that the curtains are not yet closed for the oil industry. July and June oil prices are still trading above $20 per barrel which although are less but are going low only by some dollars than their prices in the previous weeks of this month. As per the industry experts, the contracts usually move in unison. So, today’s trading for the nearby oil contract really would have no impact on the next month’s contract. The worst of the oil meltdown will eventually be over, and the world will need oil to power the recovery from the coronavirus. Industry Research International Plant Shutdown News •Exxo Bridgestone Corporation Announced Temporary Shutdown in all its Production Plants Bridgestone Corporation, a downstream industry of elastomers announced suspension in operations in 11 out of 15 plants situated in Japan as an outcome of dwindling demand amid coronavirus pandemic. The company has planned to halt production from late April till the first week of May in order to cope up with losses in revenue due to sputtering global economy as ripple effect of measures taken to curb the virus. •Total Suspends Operation in Mozambique LNG Amid Rising Concerns of Coronavirus Total, a renowned petrochemical company in Africa has announced suspension in operations at LNG Mozambique to constrain the spread of Coronavirus at the plant site in Cabo Delgado. The management came up with this decision after several workers were reported to test positive after the first case on 1st April. The plant capacity at Mozambique LNG plant is around 12.9 million tonnes per year for LNG. •Galp Energia Halts Production in its largest Refinery due to Plunging Demand Galp Energia, a major petrochemical corporation in Portugal, halts operations in Sines largest refinery as oil dived 21 year low on falling demand amid Coronavirus outbreak. The corporation has announced suspension of operations in its refinery for a period of one month starting from May 3 on excessive inventories and lack of storage facilities. Plant Resumptions and New Projects •Fertilizer Manufacturer in Karnataka to Restart Production Amid Lockdown Karnataka’s only fertilizer manufacturers, Mangalore Chemicals and Fertilizers (MCF) has announced to resume production in its plant facilities amid lockdowns. The plant was initially shut for several days for scheduled maintenance, this shut was exacerbated by containment measures of Coronavirus outbreak in India. The company comprises a plant capacity for around 36000 tonnes per month of urea and 25000 tonnes per month of Diammonium Phosphate along with 15000 tonnes per month of Ammonium Bicarbonate. •Stated Owned Oil Refineries to Resume Work on Easing Restrictions Amid Lockdown State Owned Refineries like Indian Oil Corporation, Oil and Natural Gas Corporation (ONGC), and Oil India Limited to resume operations in 511 projects involving immediate investment of around INR 4200 Million. These companies have been braced by the government to resume their work in order to ease the economic tension by generating revenue for the country. The departments resuming operations include oil and gas exploration, development and construction, Impact on Asia’s Chemical Industry Asia’s petrochemicals markets responded feebly to this price crash, as pandemic has already hit hard the demand outlook. The Asian petrochemical industry slipped into doldrums this week with the market becoming highly susceptible to crude crash and demand destruction as countries found no other means but to extend lockdown to contain the virus spread. In response to the 300% crash in crude on Monday, the shares of petrochemical firms in Asia fell abruptly on Tuesday.

4. distribution and administration. Moreover, these projects are also anticipated to relief the employability concern in the nation. •Nova Chemicals to Resume Construction Work at its New Polyethylene Plant Nova Chemicals, a renowned chemical and plastic company in Canada has announced to resume construction activities at its new Polyethylene and cracker expansion plant at Corunna Site. The company stated that it will be taking utmost precautionary measures to ensure the safety and health of its employees. The new Polyethylene Plant project of Nova Chemicals is worth $ 2.2 Billion and is anticipated to achieve completion by 2021. Strategic Investments •Thailand’s Electricity Generating Authority to Buy Spot LNG Cargoes from Petronas Thailand’s EGAT has announced its decision to buy a second spot market LNG on Tuesday. The first shipment was in December 2019 and the two shipments will serve as a trial to judge whether the spot market LNG purchases are viable in future or not. State owned PTT’s Map Ta Phut LNG receiving terminal will receive the 65,000 tonne of LNG cargo from Malaysia’s Petronas. Currently, Thailand is working on its power development plant and looking forward for imports to liberalise the country’s LNG market. However, due to the pandemic, EGAT has decided to review its LNG procurement plant for 2020-2022. Merger and Acquisitions •Covid-19 Delays Nippon Shokubai And Sanyo Chemical Merger Japanese Nippon Shokubai and Sanyo Chemical Industries have recently declared in their board meeting to postpone their merger agreement and joint venture formation due to the pandemic. The companies have decided to review their economic, financial and business performance during the pandemic and then think about their share transfer ratios and other integration related plans. The JV was about to get established on 1 October 2020. However, the recent MOU signed between the two parties state that the establishment will now happen on 1 April 2021. •Sonatrach Signs MOU With Exxonmobil Algeria’s Sonatrach has signed an MOU with ExxonMobil corporation towards starting conversation on exploration opportunities in the OPEC member country. The North African country has been constantly searching partnership opportunities to boost output and exports which have shown a significant decline in recent years due to lack of foreign investments. Latest Technological Investments •Sekisui To Enter into Waste-Based Bioethanol Production Japanese chemical giant Sekisui Chemical is planning to initiate research on the bioethanol output produced from waste by the end of FY22. The company set up the JV Sekisui Bio Refinery on 16th April with the state-owned tech investor Japan Investment Corporation (INCJ). The bioethanol production plant will be located in north Japan’s Iwate prefecture, and will initiate commercial operations by financial year 2025-26. The Sekisui and INCJ joint venture comprise 66% and 34% share respectively and uses the technology proposed by US recycling venture Lanza Techwill that turns flammable waste into bioethanol. The plant will have the capacity to convert 7300TPA of waste into 1200TPA bioethanol. Get the Chemical and Petrochemical Industry News on Daily Basis, Weekly- Trend & Forecast and Monthly-Analyst Views 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

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