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Oil prices are unlikely to increase as ‘sharply’ from now on, IEA says – Crude Oil prices IEA

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Oil prices are unlikely to increase as ‘sharply’ from now on, IEA says

  • The International Energy Agency (IEA) believes a recent spike in the oil price could soon start to ease, helping to alleviate concerns that surging prices could hurt demand and global economic growth.
  • “Prices are unlikely to increase as sharply as they did from mid-2017 onwards and thus the dampening effect on demand will be reduced,” the Paris–based organization said in its latest monthly report published Wednesday.

Crude Oil prices IEA
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The International Energy Agency (IEA) believes a recent spike in the oil price could soon start to ease, helping to alleviate concerns that surging prices could hurt demand and global economic growth.

“Prices are unlikely to increase as sharply as they did from mid-2017 onwards and thus the dampening effect on demand will be reduced,” the Paris–based organization said in its latest monthly report published Wednesday.

Rising oil prices have created question marks over the strength of demand, but the IEA left its oil demand growth forecast for 2019 largely unchanged, at 1.4 million barrels a day (mb/d), similar to this year’s level.

However, it cautioned that there are possible downside risks to the demand outlook, including “the possibility of higher prices, a weakening of economic confidence, trade protectionism and a potential further strengthening of the U.S. dollar.”

In terms of supply, the IEA revised upwards its estimate for 2018 non-OPEC production growth to 2 mb/d and said 2019 would also see what it called “bumper growth” of 1.7 mb/d. Most of that non-OPEC supply growth would come from the U.S., it said.

The IEA’s latest report comes amid uncertainty over the amount of oil production we can expect to see from major producers in coming months.

OPEC and non-OPEC producers including Russia are continuing with a deal to curb their supply, but the strategy is seen to have been effective with Brent and West Texas Intermediate (WTI) now trading around $75 and $66, respectively.

The OPEC and non-OPEC producers agreed back in November 2016 to curb supply in order to boost then-low oil prices. There are now fears that prices could rise steeply if supplies are disrupted from OPEC members Venezuela and Iran. The former is experiencing economic turmoil and the latter is facing a re-imposition of sanctions after the U.S. withdrawal from Iran’s nuclear deal.

OPEC and non-OPEC producers are meeting in Vienna on June 22 to discuss the supply situation. The encounter could be fractious with arguments expected between producers over whether to increase production or maintain supply as it is — given rising prices and potential supply disruptions. There is also the specter of competition from U.S. shale oil producers and a reluctance to cede more market share to them.

Saudi Arabia and Russia are reportedly ready to increase oil output, while others like Iran and Iraq are against such a move.

The IEA said that, for its part, it had looked at a scenario (not a forecast, it emphasized) that by the end of next year output from these two countries could be 1.5 mb/d lower than it is today.

It said Middle East OPEC producers could make up for the loss and increase production by about 1.1 mb/d. “And there could be more output from Russia on top of the increase already built into our 2019 non-OPEC supply numbers,” it added.

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German investor outlook slumps to six-year low on weaker demand, trade tensions and Italy – German investor outlook demand trade tensions Italy

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German investor outlook slumps to six-year low on weaker demand, trade tensions and Italy

Source:ICIS News

German investor outlook demand trade tensions Italy   LONDON (ICIS)–German investor confidence weakened in June as sluggish economic demand and fears over the new Italian government exacerbated global trade tensions to drive business outlook to its lowest ebb in nearly six years, research group ZEW said on Tuesday.

The agency’s metric of German economic sentiment slipped by 7.9 points in June compared to the previous month to stand at minus 16.1 points, compared to a long-term average of 23.3 points, the most bearish score since September 2012.

Investor confidence has slumped in the country in recent months compared to the record high seen in January this year, as the momentum of eurozone economic growth has sputtered and geopolitical tensions have intensified.

ZEW’s investor confidence index had remained at minus 8.2 points in April and May, a deeper slump than in the upheaval following the UK’s Brexit vote in mid-2016.

The escalation of a potential trade dispute between the US and the EU and fears of the implications of an electoral upset in Italy soured outlook further, exacerbated by economic data pointing to weaker-than-expected exports, production and orders for German businesses in April, according to ZEW president Achim Wambach.

“The recent escalation in the trade dispute with the US as well as fears over the new Italian government pursuing a policy which potentially destabilises the financial markets have left their mark on the economic outlook for Germany,” said Wambach.

Expectations for the current and near-term economic development of the eurozone were even worse-hit, falling by double-digit levels month on month as a result of concern over the implications for Europe’s financial markets of an Italian populist, eurosceptic coalition taking office, ZEW added.

German investor outlook demand trade tensions Italy

Pictured: Container ships being loaded at Hamburg’s harbour. German manufacturers have reported a sharp decrease in export orders
Source: Hans Lippert/imageBROKER/REX/Shutterstock

By Tom Brown

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Foreign producers in Russia urge Putin to block controversial bill – Foreign producers Russia Putin controversial bill

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Foreign producers in Russia urge Putin to block controversial bill

Foreign producers of technical textiles and nonwovens, operating in Russia, have called on Russian President Vladimir Putin to block a new, controversial federal bill, which was approved last week by the Russian Parliament State Duma. The bill poses a serious threat to their business in Russia, according to the producers and senior officials from the Russian Presidential Administration.

The newly approved bill has introduced criminal responsibility for the observance of sanctions, which were imposed against Russia by the US and the EU, for all producers from the US and the EU, operating in the Russian market. The new law means producers will have to be cautious whilst conducting business in Russia and will have to at least avoid securing long-term contracts with their local suppliers and other Russian partners.

Foreign producers Russia Putin controversial bill

Currently all technical textiles and nonwovens producers, operating their own production facilities in Russia, have a wide range of local suppliers, sourcing most of their raw materials for their Russian production locally. This is mainly because the majority of these companies have been working in Russia for almost 30 years and have strong business, political and economic connections in the country, both with federal and regional authorities.

As a rule, due to a traditional monopolies situation in the Russian economy, many of these suppliers are controlled by large vertically integrated holding companies (large corporations such as Rostec, some subsidiaries of which, have business relations with Western nonwovens and technical textiles producers, operating in Russia) whose top management and shareholders are on the sanctions list of the US and the EU.

In accordance to the newly adopted Russian legislation, refusal to cooperate with these suppliers, due to their presence in Western sanctions’ lists, will result in the initiation of criminal proceedings for foreign producers. In other words, any company from the US blacklist can force any business to deal, threatening partners with a complaint to the law enforcement agencies.

In a joint statement, representatives of producers, mainly from Germany, as well as US majors such as P&G, Kimberly Clark, specializing in the production of consumer goods based on nonwovens, such as diapers and feminine care products, said: “The adoption of this bill is categorically intolerable. It will increase administrative pressure on the business and contradicts the position of the Russian president, who is against excessive criminal liability for entrepreneurs.”

Foreign producers Russia Putin controversial bill

The producers’ statement lists several risks that the bill carries – violation of the sanctions regime threatens with secondary sanctions from the US and the EU, while following Western sanctions in Russia will be punished within the territory of the country by local authorities.

Threat to textile machinery suppliers

In the meantime, the new law also poses a threat to Western manufacturers of machinery who supply Russian technical textiles and nonwovens producers, as their refusal to supply  their products to any Russian company from the sanctions list of the EU and the US may result in the initiation of criminal proceedings against them in Russia. That may force these companies to suspend cooperation with their Russian partners and leave the market.

At the same time, the latter will have a catastrophic effect on the entire industry of innovative textile materials in Russia, which depends on high-quality Western machinery for their production facilities. Currently the majority of high-tech machinery and equipment for the needs of Russian producers comes from Germany and Netherlands, and a small amount from the US and Canada.

Threat to Russian state security?

The potential suspension of cooperation with Western machinery producers may even pose a threat to Russian state security – the Russian military is a large consumer of hi-tech textile materials. According to the Russian legislation, the supplies of imported high-tech textiles for the needs of the country’s aerospace, defence and other strategic industries is prohibited, however the ban does not apply to domestically-produced products on the basis of Western technologies and equipment.

The draft law introduced a prison sentence of up to four years and a fine of up to 600,000 Rubles (US$10,000) for the execution of sanctions against Russia within its territory, as well as up to three years and up to 500,000 Rubles for actions that lead to the introduction of new sanctions.

Interpretation and explanation

Sources close to producers have also added that the articles of the new law are extremely vague, which create conditions for their loose interpretation and explanation. In addition, according to the same sources, the new legislative amendment will negatively affect the level of competition in the local market, providing serious competitive advantages to domestic rivals.

In contrast to the domestic technical textiles and nonwovens industries, where in recent years the share of domestic producers has significantly increased, the majority of Russian consumer goods based on nonwovens, is still controlled by foreigners.

Currently the share of global majors in the Russian diapers’ market is estimated at 90%, the same as ten years ago. This is negatively accepted by some local producers – major competitors, who historically hoped to undermine domination of some US and the EU companies.

In the meantime, an official spokesman of the Russian Presidential Administration said they have already received a petition from producers, which is expected to be considered during the next two weeks, with a final decision, expected to be taken by this time.

Author:
Innovation in Textiles

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Faurecia and FAW Group ink cockpit and sustainable mobility agreement – Faurecia FAW Group sustainable mobility agreement

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Faurecia and FAW Group ink cockpit and sustainable mobility agreement

Faurecia FAW Group sustainable mobility agreement Global supplier Faurecia has signed a strategic partnership framework agreement with leading Chinese automaker FAW Group to develop, the pair said in a statement, “cockpit of the future technologies and sustainable mobility solutions”.

Within this strategic cooperation, several fields have been defined:

  • Develop cockpit of the future solutions and services for a personalised and intelligent user experience in particular for the Hongqi (Red Flag) luxury FAW brand. In addition, the two groups will cooperate on the industrial design and perceived quality for this brand
  • Develop connected, versatile and predictive seat solutions for different use cases and driving mode scenario
  • Provide zero emission and air quality technologies for commercial and passenger vehicles in the fields of battery pack and fuel cell systems and lightweight composite solutions

Faurecia CEO Patrick Koller said: “We are very honoured to have signed this strategic partnership with FAW, a leading OEM with a strong desire to disrupt the Chinese automotive industry.

“Faurecia is uniquely positioned to provide smart, predictive and connected technologies for a unique user experience. This collaboration will continue to reinforce our intimacy and collaboration with Chinese OEMs.”

According to just-auto‘s QUBE database, China’s privately owned but state-controlled FAW Group Corporation, along with its subsidiaries, designs, develops, manufactures, and sells passenger cars, trucks, and buses. The Changchun-based company offers light, medium, and heavy-duty trucks; automobiles; city buses and luxury tourist coaches; bus chassis; mini-vehicles; SUVs and pickups; limousines; and components and parts.

China FAW Group Corporation was formerly known as First Automotive Works. FAW Group has three stockmarket listed subsidiaries: FAW Car Company; Tianjin FAW Xiali (50% ownership since 2002) and Changchun FAWAY Automobile Components. FAW makes vehicles under the Besturn, FAW, Oley and Hongqi brands. Tianjin FAW Xiali builds Tianjin and Xiali branded products and operates the Tianjin FAW Toyota joint venture.

As well as Toyota products, FAW also manufactures Volkswagen and Audi products in China under separate joint ventures, while the company’s FAW Mazda and FAW Hainan divisions are respectively a joint venture and an alliance with Mazda.

FAW Group was established in 1953. In 2017, annual sales passed 3m units.

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Making cars and planes lighter and cleaner using unidirectional fibre tapes – An EU initiative has developed a cost-effective way to produce unidirectional (UD) tape to manufacture and reinforce parts in cars and planes – Cars planes unidirectional fibre tapes

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Making cars and planes lighter and cleaner using unidirectional fibre tapes

FORTAPE — Result In Brief

Project ID: 636860
Funded under: H2020-EU.2.1.5.1.
Country: Spain
Domain: Industry, Transport
An EU initiative has developed a cost-effective way to produce unidirectional (UD) tape to manufacture and reinforce parts in cars and planes. The solution will make them lighter and more environmentally sound.

Cars planes unidirectional fibre tapes

Automobiles are among the biggest culprits in generating greenhouse emissions, raising the costs for both the environment and manufacturers. One solution is to make vehicles lighter by using new materials such as UD fibre tapes. However, until now these tapes were costly and difficult to produce in sizeable quantities.

To address this issue, the EU-funded FORTAPE grouped 10 partners from 5 European countries covering the entire value chain. The broad range of stakeholders was needed in developing new integrated technologies with the most efficient use of materials and energy. This was done to adapt UD tapes for use in vehicles and aeroplanes.

UD tapes can be used to enhance the mechanical properties of a plastic part. They can also be used to manufacture structural parts, consolidating and thermoforming several layers.

Barriers to extensive use

But, this new high-performance material comes with some obstacles to widespread use in industry, says project coordinator Raquel Ledo Bañobre. The main hurdles are high consumption of resources, lower rates of automation, high production of defective materials and the subsequent rise in manufacturing costs.

“In global terms, industry needs to reduce vehicle weight in order to lessen greenhouse emissions and fulfil EU requirements using a cost-efficient solution,” she adds. “Despite their huge mechanical properties and lightweight potential, there were several issues that needed to be addressed to guarantee their extensive use in the industry.”

The project focused on three main axes: tapes manufacturing, part manufacturing, and the modelling of processes and parts. Three different technologies for fibre impregnation were researched to develop the innovative process in manufacturing UD carbon and glass fibre tapes with increased fibre content.

Drastically reducing price

FORTAPE was able to optimise the manufacturing process to produce 16 tapes at a time at the right width. This helped to considerably slash the tape price.

Another output was an automated method to use UD tapes as reinforcement for a window regulator. This will help to meet cycle times and production volume needs for the auto industry. A window frame manufacturing process using fireproof polyamide UD tapes was developed for the aeronautical sector.

Also developed was a comprehensive model of the UD tapes as reinforcement to predict the mechanical properties of the part and the injection moulding process. Both aspects are key to introducing new materials in the automotive sector.

The most significant achievement is energy and material savings. FORTAPE was able to beat all targets on material savings. The goal for aeronautics parts was originally set at 75 %, and reached nearly 92 %. Similarly, the savings for automotive parts reached almost 57 % from 40 % initially. The project matched all but one target for energy savings. All EU requirements were fulfilled.

The technical and economic feasibility of the processes have been successfully demonstrated. To achieve industrial implementation, new adjustments and optimisations will be required. Bañobre says the plan is to continue to explore the possibilities of maturing the innovation and bringing it to the market.

“The reduction achieved in terms of material and energy consumption will enable companies to decrease their manufacturing costs and reduce the environmental impact,” she concludes.

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Oil demand defies gloomy forecasts but in ‘last gasp’ of growth: Fesharaki – Crude Oil demand forecasts

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Oil demand defies gloomy forecasts but in ‘last gasp’ of growth: Fesharaki

Crude Oil demand forecasts
The oil market is finely balanced, according to FACTS Global Energy. AP
by Angela Macdonald-Smith

Global oil demand has outdone dire predictions of an early end but is in its “last gasp” of growth as fuel efficiency and the rise of electric vehicles look set to bring growth in gasoline use to a standstill by 2030, according to energy expert Fereidun Fesharaki.

The world’s consumption of crude oil has been increasing faster than most expected, boosted in recent years by the crash in oil prices in 2014-15, noted Dr Fesharaki, chairman of London-based consultancy FACTS Global Energy.

But he said the market was now in its last phase of growth, with consumption expected to expand by 0.7 per cent each year on average through to 2040 to reach 115 million barrels a day.

“We are in the last gasp of the oil,” Dr Fesharaki, a former energy adviser to the prime minister of Iran, said in an interview in Sydney, where he is due to address Credit Suisse’s annual energy conference.

“We still grow but we get to a level and we will stop. Peak oil is not going to come for a long time but peak gasoline is in front of us, peak gasoline [globally] is 2030, peak gasoline in Asia is 2040.”

The consultancy is expecting that improvements in fuel economy will erode 12 million barrels a day of oil demand between 2016 and 2040, double the amount of demand to be eroded by the rise of electric vehicles.

Meanwhile, however, oil demand is racing along, with FGE recently raising its forecast for growth this year to 1.7 million barrels a day from 1.5 million b/d.

The robust consumption, combined with disciplined production by OPEC and its allies and a drop in production from Venezuela, have wiped out the excess inventories that have plagued the market over recent years, putting prices on a northwards track, Dr Fesharaki said.

Brent oil was trading at about $US76.50 a barrel on Tuesday and has risen about 58 per cent in the past 12 months.

Dr Fesharaki said OPEC had to play a balancing act at its upcoming June 22 meeting to satisfy calls by US President Donald Trump and Russia’s Vladimir Putin for lower prices, but with US sanctions to be reimposed on Iran on November 4, which could remove another 1 million-1.5 million barrels a day from the market and send prices “easily” up to $US100.

At the same time, “two big mysteries” still overhang the market: the limits to US shale oil production and the position that Saudi Arabia Crown Prince Mohammad bin Salman, known as MBS, will take on oil, whether he is prepared to cut production to support prices.

“It’s a fragile balance … The pressure is now huge on OPEC to do something,” he said. “If the higher prices kill the demand, that would be a very serious blow for the oil market because it is the demand growth which has filled all these gaps.

“I think there is good understanding among everybody that this is a pretty OK situation – let’s not kill the golden goose,” he said, suggesting prices in the $US70-$US72 range may be “reasonable” for everyone.

In LNG, Dr Fesharaki is forecasting a fresh squeeze to hit the market at the end of 2022 after a dearth of fresh commitments to build new supply projects in recent years.

He said a lack of appetite among LNG buyers to sign new long-term purchase contracts would make it difficult for new projects to go ahead and said Woodside Petroleum’s Scarborough project in Western Australia was the “one potential story” for new Australian growth.

“Scarborough is going to be developed there is no question on that one,” he said, while still noting the task ahead on signing up customers and final decisions yet to be made on whether the gas would be processed at the Pluto or North West Shelf plants.

Dr Fesharaki said that while expansion in Papua New Guinea was the lowest cost LNG project in the region, there were several issues still to be sorted before it could move ahead, including financing, an agreement with the PNG government and LNG sales contracts

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Tight NE Asia propylene supply to limit H2 price fluctuations – Tight propylene (C3) supply in northeast Asia amid a heavy turnaround schedule in 2018 will continue supporting regional prices of the material into the second half- NE Asia propylene price fluctuations

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Tight NE Asia propylene supply to limit H2 price fluctuations

Source:ICIS News

NE Asia propylene price fluctuations SINGAPORE (ICIS)–Tight propylene (C3) supply in northeast Asia amid a heavy turnaround schedule in 2018 will continue supporting regional prices of the material into the second half.

Sellers are likely to continue passing on high cost to buyers, which are wary of October, when heavy propylene production losses are expected.

 

NE Asia propylene price fluctuations

Buyers’ resistance in the key China market would keep any further increase in propylene prices in check, with some downstream producers considering cutting output due to high feedstock costs.

At the start of June, propylene prices have weakened, ending the strong general uptrend since end-March, tracking weakness in China’s domestic market as demand softened due to turnarounds at downstream polypropylene (PP) plants.

But the downward pressure on regional prices may be temporary as overall supply in Asia is expected to be tight.

Based on latest assessment, spot propylene prices in northeast Asia were about 9% higher from the start of 2018, according to ICIS data.

NE Asia propylene price fluctuations

The year started on a bullish note, fueled by a heavier cracker turnaround schedule compared with 2017, and higher premium levels concluded for contract cargoes.

The uptrend was sustained into February due to restocking activities in various import markets in northeast Asia before the Lunar New Year, which was on 16 February.

Before the holidays, some South Korean producers were convinced the market will experience supply shortage as both GS Caltex’s fluid catalytic cracking (FCC) unit with a 250,000 tonne/year propylene capacity, and Yeochun NCC’s (YNCC) cracker – which can produce 280,000 tonnes/year of propylene – due for maintenance in February through to April.

But propylene prices surprisingly weakened from 9 February to end-March without demand support from China’s weak PP market, which struggled through sluggish sales and high inventory after the country’s week-long Lunar New Year holiday (15-21 February).

A renewed wave of scheduled turnarounds at regional plants tightened supply and drove up propylene prices in April and May.

In Taiwan, Formosa Petrochemical Corp (FPCC) took its residue fluid catalytic cracking (RFCC) unit with a 350,000 tonne/year propylene capacity off stream from 1 March to mid-April; while CPC Corp shut its 100,000 tonne/year FCC unit off stream on 10 April and restarted in early June.

In South Korea, GS Caltex also had a turnaround at its FCC unit with a 250,000 tonne/year propylene capacity from 19 February to 5 April.

SK Advanced shut its propane dehydrogenated (PDH) unit with 600,000 tonne/year propylene capacity on 21 April to early May.

Focus article by Joson Ng

Picture: Ningbo-Zhoushan port in east China’s Zhejiang province. (Source: Imaginechina/REX/Shutterstock)

By Joson Ng

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